Analysis of Section 35 CPC

An Exposition on Section 35 of the Code of Civil Procedure, 1908: Principles and Judicial Application of Costs in Indian Civil Litigation

I. Introduction

The imposition and allocation of costs are integral to the administration of civil justice. Costs serve not only as an indemnity to the successful litigant for expenses incurred but also act as a deterrent against frivolous or vexatious litigation. In India, the primary statutory provision governing the award of costs in civil suits is Section 35 of the Code of Civil Procedure, 1908 (CPC). This provision vests considerable discretion in the courts to determine the liability and quantum of costs. Over the decades, the Indian judiciary has extensively interpreted Section 35, striving to balance the principles of compensation, deterrence, and access to justice. This article aims to provide a comprehensive analysis of Section 35 of the CPC, examining its statutory contours, judicial interpretations through landmark pronouncements, and its evolving role in shaping a fair and efficient civil justice system in India.

II. The Statutory Framework: Section 35 of the Code of Civil Procedure, 1908

Section 35 of the Code of Civil Procedure, 1908, is the cornerstone for the award of costs in civil litigation. The provision, as extracted in Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust & Ors.[9], reads:

35. Costs.

(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of law for the time being in force, the costs of and 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.

The core tenets emanating from this section are manifold. Firstly, it grants the court wide discretion in awarding costs, a discretion that must be exercised judicially and not arbitrarily. Secondly, the phrase "costs of and incident to all suits" signifies a broad ambit, encompassing various expenses incurred during litigation. Thirdly, the court possesses full power to decide who bears the costs, the source from which they are to be paid, and their quantum. Notably, this power can be exercised even if the court lacks jurisdiction to try the suit itself. Finally, sub-section (2) codifies the general principle that "costs shall follow the event," meaning the successful party is typically entitled to costs, and any deviation from this rule necessitates recorded reasons.

III. Judicial Interpretation and Key Principles

A. The Discretionary Nature of Awarding Costs

The bedrock of Section 35(1) is the discretion vested in the court. However, this discretion is not unfettered. As observed in Union Territory Of Chandigarh v. Sardara Singh[20], the discretion under Section 35 CPC can be circumscribed by conditions and limitations prescribed by rules. The Madras High Court in Vaithinatha Pillai v. Kuppu Thevar[25] also acknowledged the discretionary nature of awarding costs, while noting that appellate courts can interfere if such discretion is exercised on wrong principles. The historical evolution of this provision is significant. The Allahabad High Court in Mahant Shantanand Gir v. Mahant Basudevanand Gir[16] highlighted that the omission of the words "party to the suit" (which were present in earlier Codes) in Section 35 of the 1908 Code was a deliberate legislative act, thereby widening the scope of persons against whom costs could be awarded. This suggests that costs can, in appropriate circumstances, be ordered against persons other than formal parties to the suit, though this power is exercised cautiously.

B. The Doctrine of "Costs Follow the Event"

Section 35(2) implicitly recognizes the well-established doctrine that "costs follow the event." This means the unsuccessful party is generally liable to pay the costs of the successful party. The Supreme Court, in Sanjeev Kumar Jain[9], reiterated this principle, quoting from Salem Advocates Bar Association, T.N v. Union Of India (2005)[3]: "When Section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the Court in its discretion may direct otherwise by recording reasons thereof." The rationale, as explained in *Manindra Chandra Nandi v. Aswini Kumar Acharjya* (cited in Sanjeev Kumar Jain[9]), is that "the theory on which costs are now awarded to a plaintiff is that default of the defendant made it necessary to sue him, and to a defendant is that the plaintiff sued him without cause; costs are thus in the nature of incidental damages allowed to indemnify a party against the expense of successfully vindicating his rights in court." If a court deviates from this rule, it must record its reasons in writing, ensuring transparency and accountability in the exercise of its discretion.

C. Quantum of Costs: Towards Realistic and Compensatory Awards

A significant strand of judicial discourse surrounding Section 35 has been the quantum of costs. Historically, courts often awarded nominal costs, which proved ineffective in indemnifying successful litigants or deterring frivolous litigation. The Supreme Court has consistently advocated for a shift towards awarding "realistic" or "actual reasonable costs." In Salem Advocate Bar Association (2005)[3], the Court lamented the practice of awarding nominal costs or directing parties to bear their own costs, noting that this "encourages filing of frivolous suits" and "leads to taking up of frivolous defences." This sentiment was strongly echoed in Ramrameshwari Devi And Others v. Nirmala Devi And Others[5], where the Court emphasized the imposition of realistic and substantial costs to curb abuse of judicial process. Similarly, in Ashok Kumar Mittal v. Ram Kumar Gupta[1], the Supreme Court critiqued meager cost awards for their ineffectiveness.

The landmark decision in Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust & Ors.[4] extensively dealt with this issue. The Court stressed that cost awards must adhere to Section 35 and advocated for costs that are both compensatory and serve as a deterrent, without obstructing access to justice. It distinguished between 'actual' costs (literal expenditures) and 'realistic' costs, urging for awards reflecting reasonable and standard litigation expenses. The Court also underscored the necessity for High Courts to frame rules to facilitate fair and justified cost awards.[4] The Delhi High Court in Padmawati & Ors. v. Harijan Sewak Sangh[7] aptly observed that costs imposed should reflect the actual deprivation suffered by the rightful person and that wrongdoers who prolong litigation must ultimately bear these costs.

D. What Constitutes "Costs"?

The phrase "costs of and incident to all suits" in Section 35(1) is capacious. As detailed in Sanjeev Kumar Jain[4], costs can include court fees, advocate's fees, witness expenses, and other related expenditures. A specific point of interpretation arose regarding court fees, particularly in pauper suits. The Madras High Court in Elumalai Naicker v. Kuppammal[18], [24] held that Order 33, Rule 11 (dealing with court fees in suits by indigent persons) should be read with Section 35. It reasoned that although court fees paid to the government are revenue for the state, for the party paying them, they are an expense or cost of the suit. Thus, Section 35, with its wide ambit, is sufficient to cover court fees as part of the costs awardable.

E. By Whom and Out of What Property Costs Are to be Paid

Section 35(1) grants the court "full power to determine by whom or out of what property and to what extent such costs are to be paid." This broad power allows the court to tailor cost orders to the specific circumstances of the case. As discussed earlier, the removal of "party to the suit" from the 1908 Code (Mahant Shantanand Gir[16]) potentially allows costs against non-parties, though this is exceptional. An interesting aspect arose in Ashok Kumar Mittal[1], where the High Court had directed costs (imposed for perjury) to be paid to the Delhi High Court Legal Services Committee. The Supreme Court modified this, directing that such costs should have been paid to the State, indicating judicial oversight on the destination of cost payments in specific circumstances.

F. Costs in Specific Contexts

The application of Section 35 extends to various specialized proceedings, sometimes with modifications or specific considerations:

  • Commercial Disputes: The Commercial Courts Act, 2015, has amended Section 35 CPC for commercial disputes. As noted in Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd.[11], sub-section (3) of the amended Section 35 allows the court, when ordering costs in a commercial dispute, to consider factors such as whether a reasonable offer to settle was made by one party and unreasonably refused by the other.
  • Land Acquisition Proceedings: The Punjab & Haryana High Court in Union Territory Of Chandigarh v. Sardara Singh[20] affirmed that Section 35 CPC is applicable to proceedings before a court under the Land Acquisition Act, as Section 53 of that Act makes the CPC generally applicable.
  • Proceedings under Special Statutes: The applicability of Section 35 CPC to proceedings under special statutes depends on the provisions of the special law itself. In Deonandan v. Ramlakan[17], [22], the Patna High Court deliberated whether Section 35 CPC applies to appeals under Section 476B of the Criminal Procedure Code. The prevailing view was that if the special law (CrPC in this case) is self-contained and does not provide for costs, its special provisions would prevail over the general provision of Section 35 CPC. This contrasts with situations where a special act's cost provision is similar to Section 35 CPC, as seen in the discussion regarding the Industrial Disputes Act in In Re: Jitendra Nath Banerjee[23].
  • Appellate Interference: While the award of costs is discretionary, this discretion must be exercised judicially. An appellate court can interfere if costs are awarded on wrong principles, as indicated in Vaithinatha Pillai v. Kuppu Thevar[25].

IV. Section 35 CPC in Relation to Other Cost Provisions

Section 35 provides the general power to award costs. The CPC also contains other specific provisions relating to costs, such as Section 35A (compensatory costs for false or vexatious claims or defenses) and Section 35B (costs for causing delay). These provisions address particular mischiefs and operate alongside Section 35.

Section 35A, also extracted in Sanjeev Kumar Jain[9], allows the court to award compensatory costs if a claim or defense is found to be false or vexatious to the knowledge of the party advancing it. This is a punitive measure aimed at deterring dishonest litigation.

Section 35B deals with costs for causing delay. Judicial interpretation of Section 35B, as seen in Manohar Singh v. D.S Sharma And Another[14], clarifies that failure to pay costs imposed under Section 35B does not empower the court to dismiss the suit itself; rather, the court can only disallow further prosecution of the suit or defense by the defaulting party. The legislative intent behind Section 35B, as discussed in Surendra Mohan Sangma v. Khetrinath Sangma[15], was to provide courts with discretion to penalize parties responsible for delays. Courts have also exercised inherent powers under Section 151 CPC, read with Section 148 CPC, to recall orders passed under Section 35B and extend time for payment of costs on sufficient cause being shown (Municipal Committee Kharkhoda v. Bhim Singh[21]). The applicability of Section 35B to specific proceedings like those under the Indian Succession Act has also been considered, with the Punjab & Haryana High Court in Smt. Anita Jerath v. Mrs. Pushpawati Jerath[19] holding that an application for a succession certificate could not be dismissed under Section 35B as such.

V. The Imperative for Effective Cost Regimes

An effective cost regime is crucial for the health of the judicial system. As articulated in Padmawati & Ors.[7], costs should reflect the actual deprivation suffered and maintain public faith by ensuring that those on the right side of the law do not find their pursuit of justice futile. The Supreme Court has repeatedly emphasized that realistic costs are essential to discourage frivolous litigation and the abuse of court processes (Vinod Seth v. Devinder Bajaj[2]; Ramrameshwari Devi[5]; Salem Advocates (2005)[3]). The Court in Salem Advocates (2005)[3], highlighted in Sanjeev Kumar Jain[9], took "judicial notice of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded." This necessitates a robust application of Section 35. The judiciary has also called for legislative and procedural reforms to ensure cost provisions are realistic and effective in curbing vexatious litigation (Sanjeev Kumar Jain[4]; Vinod Seth[2]).

VI. Conclusion

Section 35 of the Code of Civil Procedure, 1908, is a vital tool in the hands of the Indian judiciary to regulate civil litigation, ensure fairness, and maintain the efficacy of the justice delivery system. While granting wide discretion, the provision, as interpreted through numerous judicial pronouncements, mandates a principled approach to the award of costs. The consistent emphasis by the Supreme Court on awarding "realistic" and "compensatory" costs marks a significant shift from the earlier practice of granting nominal sums. This evolution reflects a deeper understanding of the role costs play in indemnifying successful litigants and, importantly, in deterring frivolous suits and vexatious defenses that clog the judicial system. The principles of "costs follow the event," the requirement for reasoned deviations, and the expansive definition of what constitutes costs all contribute to a framework designed to be both equitable and pragmatic. The ongoing challenge lies in the consistent and judicious application of these principles across all levels of the judiciary, supported by necessary procedural rules and reforms, to ensure that the cost regime under Section 35 CPC effectively serves its intended purposes of upholding justice and discouraging its abuse.

VII. References