What are Costs in CPC? Explain the different types of Costs awarded in Civil Cases.

1. General Costs (Section 35): Reimbursement for Legal Expenses

General costs refer to the expenses incurred by the successful party throughout the litigation process. The principle of “costs follow the event” is generally applied, meaning that the losing party is liable to pay the winning party’s costs. However, the court retains discretion to deviate from this principle if there are valid reasons, which must be recorded in writing.

Principles Governing General Costs:

• Discretion of the Court: The court has wide discretion to determine the amount of costs to be awarded, provided this discretion is exercised judiciously.
• Costs Follow the Event: Ordinarily, the successful party is entitled to costs unless the court finds reasons to deviate from this rule.
• Recording of Reasons: If the court chooses not to award costs, or awards costs to the losing party, it must explicitly state the reasons for such a decision.

Relevant Case Law:

• In Amarendra Komalam v. Usha Sinha, the court emphasized that while awarding costs is discretionary, the decision must be transparent. If the court does not award costs, it must record the reasons for its decision. This case reinforced the need for transparency in judicial decision-making regarding costs.

2. Miscellaneous Costs (Order 20A): Specific Litigation Expenses

Order 20A of the CPC permits the award of specific miscellaneous costs that a party incurs during litigation, such as:

• Giving legal notices
• Typing charges
• Inspection of court records
• Producing witnesses
• Obtaining certified copies of documents

These miscellaneous costs aim to cover expenses beyond legal fees and ensure that litigants are fairly compensated for legitimate expenditures that arise during the litigation process.

Relevant Case Law:

• In Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust, the Supreme Court addressed the issue of nominal cost awards, observing that such awards are often inadequate. The Court held that miscellaneous costs should reflect actual expenses incurred, ensuring fairness in the litigation process.

3. Compensatory Costs for False or Vexatious Claims (Section 35A): Penalizing Frivolous Litigation

Section 35A provides for compensatory costs in cases where a party brings a false or vexatious claim or defense. This section is intended to deter parties from abusing the legal process by filing baseless suits designed to harass the opposing party.

Conditions for Awarding Compensatory Costs:

• The claim or defense must be false or vexatious.
• The opposing party must raise an objection, proving the vexatious nature of the claim or defense.
• The claim must be disallowed, withdrawn, or abandoned.

It is important to note that the maximum compensatory cost that can be awarded under this section is ₹3,000, a limit that applies only to suits, not to appeals or revisions. However, this cap has been widely criticized for being insufficient in modern litigation.

Relevant Case Law:

• In T. Arivanandan v. T.V. Sathyapal, the court emphasized the importance of awarding compensatory costs in cases of malicious litigation. The court noted that such costs serve as an essential deterrent to litigants who seek to misuse the judicial process.

4. Costs for Causing Delay (Section 35B): Discouraging Delay Tactics

Section 35B of the CPC penalizes parties who cause undue delays in litigation. This provision empowers the court to impose costs on a party that fails to take necessary procedural steps, or seeks unnecessary adjournments. The objective is to ensure that litigation is conducted efficiently and without unnecessary delays.

Relevant Case Law:

• In Mohammad S. Laiquiddin v. Kamala Devi Misra, the Supreme Court condemned dilatory tactics used by litigants to prolong cases. The court reinforced the importance of Section 35B in ensuring timely justice and highlighted its role in penalizing parties responsible for delays.

Analysis of the Costs Provisions

The provisions under the CPC governing the award of costs play a critical role in promoting fairness and efficiency in civil litigation. However, there are significant challenges in the implementation of these provisions:

• Nominal Costs: Despite the availability of compensatory and miscellaneous costs, the nominal amounts often awarded by courts fail to reflect the actual expenses incurred by litigants. For example, the ₹3,000 cap under Section 35A is grossly inadequate in today’s legal landscape, where litigation costs have significantly increased.

• Underutilization of Provisions: Courts often hesitate to impose realistic costs, even in cases where the opposing party has acted maliciously or caused unnecessary delays. This undermines the deterrent effect that these provisions are meant to serve.

Relevant Case Law:

• In Salem Advocate Bar Association T.N. v. Union of India, the Supreme Court recognized that cost awards in Indian courts are often nominal and do not compensate parties adequately. The judgment called for reforms to align the costs provisions with the realities of modern litigation.

Conclusion

The award of costs in civil cases, as governed by the CPC, is crucial to ensuring fairness and promoting efficiency in the judicial process. General, miscellaneous, compensatory costs, and costs for delay serve different but complementary purposes ranging from compensating the successful party to penalizing litigants who engage in frivolous or dilatory practices. However, the nominal nature of cost awards, especially under Sections 35A and 35B, highlights the need for reforms to ensure that costs reflect the true expenses incurred by parties. Strengthening these provisions will not only deter abuse of the legal system but also reduce the burden on courts and promote more just litigation practices. Reforms aimed at revising the caps and encouraging courts to award realistic costs would enhance the overall effectiveness of the CPC’s costs framework.