COSTSCentral
Section 35 of The Code of Civil Procedure, 1908
Costs.
- (1)Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of an incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.
- (2)Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing. 1* * * * * *[35. Costs.(1) In relation to any commercial dispute, the Court, notwithstanding anything contained in any other law for the time being in force or Rule, has the discretion to determine:
- (a)whether costs are payable by one party to another;
- (b)the quantum of those costs; and
- (c)when they are to be paid. Explanation.-- For the purpose of clause (a), the expression costs shall mean reasonable costs relating to--
- (i)the fees and expenses of the witnesses incurred;
- (ii)legal fees and expenses incurred;
- (iii)any other expenses incurred in connection with the proceedings.
- (2)If the Court decides to make an order for payment of costs, the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party: Provided that the Court may make an order deviating from the general rule for reasons to be recorded in writing. Illustration The Plaintiff, in his suit, seeks a money decree for breach of contract, and damages. The Court holds that the Plaintiff is entitled to the money decree. However, it returns a finding that the claim for damages is frivolous and vexatious. In such circumstances the Court may impose costs on the Plaintiff, despite the Plaintiff being the successful party, for having raised frivolous claims for damages.
- (3)In making an order for the payment of costs, the Court shall have regard to the following circumstances, including--
- (a)the conduct of the parties;
- (b)whether a party has succeeded on part of its case, even if that party has not been wholly successful;
- (c)whether the party had made a frivolous counterclaim leading to delay in the disposal of the case;
- (d)whether any reasonable offer to settle is made by a party and unreasonably refused by the other party; and
- (e)whether the party had made a frivolous claim and instituted a vexatious proceeding wasting the time of the Court.
- (4)The orders which the Court may make under this provision include an order that a party must pay--
- (a)a proportion of another partys costs;
- (b)a stated amount in respect of another partys costs;
- (c)costs from or until a certain date;
- (d)costs incurred before proceedings have begun;
- (e)costs relating to particular steps taken in the proceedings;
- (f)costs relating to a distinct part of the proceedings; and
- (g)interest on costs from or until a certain date.] STATE AMENDMENTS Jammu and Kashmir and Ladakh (UTs).-- In Section 35, in sub-section (1) omit "Commercial". [Vide the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, Notification No. S.O. 3774(E), dated (23-10-2020).]
Summary
- Courts have the discretion to decide who should pay the legal costs of a suit.
- The court determines the amount of costs and when they must be paid.
- Even if a court does not have the jurisdiction to hear a case, it can still order a party to pay costs.
- If a judge decides that the winner should not get their costs paid, the judge must explain the reason in writing.
- For commercial cases, the court considers the conduct of the parties and any reasonable attempts to settle the dispute.
Practical examples
1Rahul wins a case against a neighbor, and the judge orders the neighbor to pay all of Rahul's legal fees and witness expenses.
2A small court realizes it cannot hear a complex case, but it still orders the plaintiff to pay the defendant's travel costs for showing up.
3In a business lawsuit, the court orders the winner to pay the loser's costs because the winner refused a very fair settlement offer before the trial.
FAQ
1. Who decides the legal costs under Section 35 of The Code of Civil Procedure, 1908?
Under Section 35 of The Code of Civil Procedure, 1908, the costs of all suits are in the discretion of the court.
2. Can I get my costs back if the court had no power to hear the case under the 1908 Code?
Yes, Section 35 of the 1908 Code states that a lack of jurisdiction is no bar to the court exercising its power to award costs.
3. Does the winner always get their costs paid under Section 35 of the Civil Procedure Act?
Generally, yes, but Section 35 of the Act requires the court to state its reasons in writing if it decides the costs should not follow the event.
4. What counts as "costs" in a commercial dispute under the 1908 Act?
According to Section 35 of the 1908 Act, costs in commercial disputes include witness fees, legal fees, and other expenses related to the proceedings.
Test yourself
1.Under Section 35 of The Code of Civil Procedure, 1908, what is required if the court decides costs shall NOT "follow the event"?
2.Can a court that has NO jurisdiction over a case still award costs under Section 35 of The Code of Civil Procedure, 1908?
3.In a commercial dispute under Section 35 of The Code of Civil Procedure, 1908, which factor might cause a court to order a party to pay costs?
4.Under Section 35 of The Code of Civil Procedure, 1908, who has the "full power" to determine out of what property costs are paid?