Ashok Kumar Mittal Vs.
Ram Kumar Gupta & ANR.  INSC 28 (9 January 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION SPECIAL LEAVE PETITION [CIVIL]
O R D E R R.
Raveendran J., Mrs. Amita Gupta, learned counsel, appears for respondents and
petitioner filed a suit for specific performance of an alleged agreement of
sale dated 15.7.2003. The trial court dismissed the suit by judgment and decree
dated 19.5.2008. The High Court dismissed the petitioner's appeal on 29.9.2008.
Both courts held that petitioner had not approached the court with clean hands
and that he had failed to prove any concluded contract for sale. High Court found
that the defendants in the suit were also not above 2 board in their conduct.
It found that both sides were guilty of having lied on oath and deserved to be
prosecuted. On the ground that courts were over-burdened with litigation, the
High Court decided that instead of directing prosecution, heavy costs should be
levied on both petitioner and respondents "to be paid to the state which
spends money on providing the judicial infrastructure." It then proceeded
to impose exemplary costs of Rs.1,00,000/- on the petitioner and Rs.1,00,000/-
on the respondents, and directed that the costs should be deposited with the
Delhi High Court Legal Services Committee.
aggrieved by the dismissal of his appeal, the petitioner is before this Court.
On merits, we find that the concurrent findings of the trial court and the High
Court do not warrant interference and therefore this is not a fit case for
grant of leave.
learned counsel for the petitioner submitted that levying costs of Rupees one
lakh against the petitioner was not warranted. He submitted that as the appeal
before the High Court arose out of a civil suit, costs were governed by section
35 and 35A of the Code of Civil Procedure 3 (`Code' for short) and cannot
exceed what is leviable under those provisions.
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 35A, compensatory costs for vexatious
claims and defences may not exceed to Rs.3,000/-. Further the primary object of
levying costs under sections 35 and 35A 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.
view has been that the provisions of sections 35 and 35A CPC do not in any way
affect the wide discretion vested in by High Court in exercise of its inherent
power to award costs in the interests of justice in appropriate 4 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 35A
of the Code, there is no question of exercising inherent power contrary to the
specific provisions of the Code. Further, the provisions of section 35A seems
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 Rs.
Fifty thousand or Rs.One lakh, are normally awarded only in writ proceedings
and public interest litigations, and not in civil litigation to which sections
35 and 35A 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.
present system of levying meagre costs in civil matters (or no costs in some
matters), no doubt, is wholly unsatisfactory and does not act as a deterrent to
vexatious or luxury litigation borne out of ego or greed, or resorted 5 to as
a `buying-time' tactic. More realistic approach relating to costs may be the
need of the hour. Whether we should adopt suitably, the western models of
awarding actual and more realistic costs is a matter that requires to be
debated and should engage the urgent attention of the Law Commission of India.
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. In so far 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.
would however like to refer to two aspects of the order of the High Court
relating to costs. The first is, whether a court, having reached a conclusion
that a party deserves to be prosecuted for perjury, should let him off 6 with
what it considers to be a stiff penalty by way of costs, on the ground that
courts are overburdened with work. We propose to leave open for the present,
this question involving moral and ethical issues.
second aspect relates to the recipient of the costs. In para 38 of the impugned
judgment, the High Court specifically stated that it had decided to saddle the
parties with heavy costs to be paid to the state which spends money on judicial
infrastructure. Having said so, in para 39, the High Court directed that the
costs should be paid to the Delhi High Court Legal Services Committee. The High
Court Legal Services Committee, a statutory authority under the Legal Services
Authorities Act, 1987, is not the `state' that spends money on providing
judicial infrastructure, referred in the earlier para. Once the Court held that
costs had to be paid to the state, it should have directed payment of the costs
to the state and not the High Court Legal Services Committee. No litigant should
be made to feel that heavy costs are being levied in some cases by Judges to
create a corpus or expense fund for the High Court Legal Services Committee or
the State Legal Services Authority. While levy of an uniform token sum, as
costs payable to the Legal Service Authority/Committee by 7 way of a deterrent
fine, in regard to non-compliance with procedural requirements, delays in
re-presentation of papers etc. may not be objectionable, levy of huge amounts
as costs in selected cases, made payable to the Legal Service Authorities, may
invite adverse comments and evoke hostility to legal services in general. We
have also come across cases of costs being levied and made payable to some
non-party charitable organizations. Levy of such costs should be avoided.
Delhi High Court Legal Services Committee when it receives the sum of Rs. Two
Lakhs as costs from the parties, shall make over the same to the state
government as directed in para 38 of the impugned judgment. Let a copy of this
order be sent to the Delhi Legal Services Committee, for compliance.
the above said observations regarding costs, the special leave petitions are
(R V Raveendran)