North Delhi Municipal Corporation & Anr. v. Natraj Construction Company

1. The learned counsel for the appellants submits that the imposition of cost of Rs.l lac on the appellants after the disposal of the suit is without jurisdiction. He submits that section 35 and section 35A of Code of Civil Procedure, 1908, are two distinct judicial exercises in the adjudicatory process. If an exemplary cost is to be imposed, then it has to be considered under section 35A, for which an issue ought to have been framed. The parties would have to be heard and then a decision could be made. In the present case, it has not been so done. Instead, exemplary cost has been imposed after the decree was passed. Reliance is placed upon the dicta of the Supreme Court in Ashok Kumar Mittal vs. Ram Kumar Gupta and Anr. (2009) 2 SCC 656, which has held inter-alia as under: “…

6. Under Section 35 of the Code, award of costs is discretionary but subject to the conditions and limitations as may be prescribed and the provisions of any law for the time being in force. Under Section 35- A, compensatory costs for vexatious claims and defences may not exceed Rs 3000. Further, the primary object of levying costs under Sections 35 and 35-A CPC, is to recompense a litigant for the expense incurred by him in litigation to vindicate or defend his right. It is therefore payable by a losing litigant to his successful opponent. When an appellant or a plaintiff has already paid the prescribed court fee in regard to the appeal or suit, to the State at the time of institution, it is debatable whether any costs can be awarded to the State by way of penalty, in a litigation between two private parties. Courts will have to act with care while opening new frontiers.

7. One view has been that the provisions of Sections 35 and 35-A CPC do not in any way affect the wide discretion vested in the High Court in exercise of its inherent power to award costs in the interests of justice in appropriate civil cases. The more sound view however is that though award of costs is within the discretion of the Court, it is subject to such conditions and limitations as may be prescribed and subject to the provisions of any law for the time being in force; and where the issue is governed and regulated by Sections 35 and 35-A of the Code, there is no question of exercising inherent power contrary to the specific provisions of the Code.

8. Further, the provisions of Section 35-A seem to suggest that even where a suit or litigation is vexatious, the outer limit of exemplary costs that can be awarded, in addition to regular costs, shall not exceed Rs 3000. It is also to be noted that huge costs of the order of rupees fifty thousand or rupees one lakh, are normally awarded only in writ proceedings and public interest litigations, and not in civil litigation to which Sections 35 and 35-A are applicable. The principles and practices relating to levy of costs in administrative law matters cannot be imported mechanically in relation to civil litigation governed by the Code....

10. We do not however propose to examine or decide the above issues here, except to observe that courts should not exceed or overlook the limitations placed by the Code with reference to costs in civil litigation. Insofar this case is concerned, even though the order relating to costs may not strictly be correct, we do not propose to interfere with the same, in exercise of our jurisdiction under Article 136, as the order has not resulted in any injustice. It is stated that the respondents have already deposited the costs. The time for deposit of costs by the petitioner is extended at his request by a month from today....”

2. Referring to the abovementioned case, learned counsel for the appellant submits that the costs was imposed therein when the suit was pending, whereas in the present case the suit had already been disposed-off and the decree sheet had been drawn.

3. The practice as noted in para 8 of Ashok Kumar Mittal (supra) is to be kept in mind. Like in the said case the correctness of the quantum is not commented upon. The court is persuaded by the aforesaid arguments because after the decree sheet is drawn up, nothing remains for the civil court to pass any orders apropos exemplary costs. It would have been another matter though, if the issue had been considered in the judgment itself.

4. For the aforesaid reason, costs of Rs.[1] lac is set-aside.

5. The appeal, along with pending application, is disposed-off in terms of the above.

NAJMI WAZIRI, J SUDHIR KUMAR JAIN, J APRIL 10, 2023