Costs under Civil Procedure Code
📘 Costs under the Civil Procedure Code (CPC)
🔹 What are Costs?
Costs refer to the monetary expenses that a court may order one party to pay to the other party as compensation for expenses incurred during litigation.
The purpose of awarding costs is to compensate the successful party for the expenses of the suit and to deter frivolous or vexatious litigation.
Costs do not cover full damages or compensation but are a way to partially reimburse expenses like court fees, lawyer fees, and incidental charges.
🔹 Legal Provisions Regarding Costs in CPC
Section 35A CPC (introduced by the Amendment Act 1999) deals with costs.
Order XX Rule 1 CPC empowers courts to award costs.
Section 35 CPC empowers courts to order security for costs in certain situations.
🔹 Key Provisions and Powers of the Court
Section 35A CPC: Costs of and incident to proceedings before courts
The court may order a party to pay costs to the other party.
The court has wide discretion to impose costs to ensure justice.
Costs may be imposed even on parties who succeed if their conduct was improper or caused unnecessary delay.
It allows courts to impose compensatory costs.
Order XX Rule 1 CPC: Court’s power to order costs
The court may make an order requiring one party to pay costs to the other.
Costs include court fees, charges, and expenses incurred.
Section 35 CPC: Security for Costs
Allows the court to require a plaintiff, who is a foreigner or ordinarily resident out of jurisdiction, to give security for costs.
Protects defendants from the risk of plaintiff absconding or not paying costs.
🔹 Purpose of Awarding Costs
Compensation: To compensate the successful party for litigation expenses.
Deterrence: To discourage frivolous, vexatious, or dilatory litigation.
Control: To help courts manage conduct of parties and litigation efficiency.
Justice: To ensure fairness and prevent abuse of the judicial process.
🔹 Who Can be Ordered to Pay Costs?
The court can impose costs on:
The losing party.
The party who caused unnecessary delay or expense.
Even the successful party if conduct was improper.
Third parties or intervenors in some cases.
🔹 When Can Costs be Awarded?
Costs are usually awarded at the end of the suit, with the final judgment.
They may also be awarded:
During interim applications.
In appeals and revisions.
When a party withdraws a suit or claim.
On dismissal of applications.
For frivolous or vexatious claims or defenses.
⚖️ Important Case Laws on Costs
1. M.C. Chockalingam v. Union of India, AIR 1961 SC 1808
The Supreme Court observed that costs are incidental to justice.
The court has wide discretion to impose costs for improper conduct.
2. Madanlal Verma v. Union of India, AIR 1994 SC 1329
The Court held that awarding costs is a matter of discretion and depends on facts.
Costs may be awarded to compensate a party who suffered due to unnecessary litigation.
3. R.S. Nayak v. A.R. Antulay, AIR 1995 SC 459
The Supreme Court emphasized the importance of imposing costs to curb frivolous litigation.
Costs should be imposed as a punitive measure to deter parties from misusing the process.
4. Delhi Development Authority v. Skipper Construction Co., AIR 1996 SC 1193
The Court stated that the discretion to award costs must be exercised judicially and judiciously.
It should not be used to oppress any party but to ensure fair play.
🔹 Types of Costs
Court Fees: Fees paid for filing or proceeding.
Legal Expenses: Fees paid to advocates (may be partly compensated).
Miscellaneous Expenses: Expenses like witness fees, travel, and document preparation.
Courts usually award only a portion of legal costs, not full attorney fees.
🔹 Amount and Assessment of Costs
The amount of costs is not fixed by law but decided by the court.
Factors influencing the quantum of costs:
Conduct of parties.
Nature and complexity of suit.
Whether the party acted in good faith.
Delays or obstructions caused.
Financial status of parties (sometimes considered).
📝 Summary Table
| Aspect | Explanation |
|---|---|
| Legal Basis | Section 35A, Order XX Rule 1, Section 35 CPC |
| Purpose | Compensate successful party, deter frivolous litigation |
| Who Pays? | Usually losing party; can be successful party for misconduct |
| When Awarded? | At final judgment, during interim orders, appeals |
| Amount | Discretionary, based on facts and conduct |
| Nature | Part compensation, not full damages or attorney fees |
💡 Practical Importance
If you succeed in a suit, you can claim costs to recover litigation expenses.
If you file a frivolous suit, you risk paying costs to the other side.
Courts use costs as a tool to ensure fairness and efficiency in litigation.
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