Report No. 240
13. Summary of Recommendations:
(1) Costs in civil suits/proceedings should be such as to curb false and frivolous litigation and to discourage adjournments on feeble grounds or for ulterior purpose. Further, the costs to be awarded to a successful party should be realistic and reasonable and to this effect the rules in vogue should be revisited by the High Courts.
(2) The principle that costs should follow the event which finds statutory recognition in Section 35 of CPC ought to be given effect to by the Courts with all seriousness and the deviations should be rare. The recent decision of Supreme Court in Sanjeev Kumar Jain (2011, JT (12), 435) has laid stress on this aspect.
However, the award of costs should not cause undue hardship to the parties who by virtue of their socio-economic circumstances may not have paying capacity.
(3) (a) The rules framed by the High Courts in relation to costs especially the advocate's fee should be thoroughly revised so as to accord with the principle of realistic and adequate costs [The aspects on which the Committee of the High Courts should focus their attention while revising the rules in this regard are discussed at various places, especially paras 4.2, 4.3, 5 and 6.
(b) The rules must be updated and language to be made simpler so as to impart clarity. Unnecessary and outdated rules ought to be weeded out.
The format of bill of costs needs to be revised. The procedure for filing fees certificate also needs a change.
(4) Adjournment costs should be sufficiently high and with a view to ensure this, the High Courts may, by virtue of practice directives or circulars, lay down guiding principles. Uniformity in approach on the part of the trial judges in granting costs for adjournments ought to be developed.
(5) The following legislative amendments in CPC are suggested:
(i) Section 35A (Compensatory costs for false or vexatious claim/defence) should be recast as set out in paragraph 8.19 to have a better check against false and frivolous litigation. The thrust of the proposed amendment is to raise the ceiling from Rupees three thousand to Rupees One lakh and creation of Judicial Infrastructure Fund into which part of the costs shall be ordered to be deposited;
(ii) Amendment of Section 95 (compensation for obtaining arrest, attachment etc. on insufficient grounds) in order to raise the ceiling limit of Rupees fifty thousand to Rupees One lakh vide paragraph 9.2.
(iii) Order XXV of CPC (Security for costs) should be so amended as to include the defendant within its purview;
(iii) In order to facilitate easy recovery of costs, Order LXI has to be amended so as to make it obligatory to file proof of payment of costs before the appeal is entertained subject to the discretion vested in the appellate Court to dispense with payment to the extent of half the costs for special reasons.
(v) In Oder XX, Rule 6A(preparation of decree), the words '30 days' may be substituted for the words "15 days" so that sufficient time is given to the parties to claim all the admissible items of costs and the Costs Taxation Officer will be able to ascertain costs more satisfactorily.
Justice P. V. Reddi
Justice Shiv Kumar Sharma