CPC Section 35 — Costs

Civil

Summary

The court has the power to decide who pays the costs of a lawsuit, how much they pay, and from which property the costs come. This power exists even if the court does not have the authority to hear the case itself. If the court decides that costs should not be paid by the losing party, it must write down its reasons.

For commercial disputes, the court can decide whether one party must pay the other party’s costs, how much those costs are, and when they must be paid. Costs here include witness fees, legal fees, and other expenses related to the case. The general rule is that the losing party pays the winning party’s costs, but the court can change this rule if it gives written reasons.

When deciding on costs, the court will consider things like how the parties behaved, whether a party won only part of the case, whether a party made a frivolous counterclaim, whether a reasonable settlement offer was rejected, and whether a party wasted the court’s time with a frivolous claim. The court can order costs in many ways, such as a portion of costs, a fixed amount, costs from a specific date, or interest on costs.

Official Text

(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. . 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).