Code
CPC(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.1******[35.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.IllustrationThe 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.]
Here’s a properly structured SEO-optimized article for the CPC Section on Costs (Order 20 / Section 35 CPC) using your required format with <h2> headings:
Section 35 CPC: Costs in Civil Proceedings
Code
Section 35 CPC
(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.
35A – Costs in Commercial Disputes
(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 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 deviate from the general rule for reasons to be recorded in writing.
Illustration:
The Plaintiff seeks a money decree for breach of contract and damages. The Court holds that the Plaintiff is entitled to the money decree. However, it finds the claim for damages frivolous and vexatious. In such circumstances, the Court may impose costs on the Plaintiff, despite the Plaintiff being the successful party, for raising frivolous claims for damages.
(3) In making an order for the payment of costs, the Court shall have regard to the following circumstances:
(a) the conduct of the parties;
(b) whether a party has succeeded on part of its case, even if not wholly successful;
(c) whether a frivolous counterclaim was made leading to delay;
(d) whether any reasonable offer to settle was made and unreasonably refused;
(e) whether a frivolous claim was raised wasting the Court’s time.
(4) The orders which the Court may make under this provision include:
(a) a proportion of another party’s costs;
(b) a stated amount in respect of another party’s 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.
Explanation of Section 35 CPC
Section 35 CPC empowers courts to decide on the allocation of litigation costs in civil suits. The principle is that costs generally follow the event, meaning the losing party pays the winning party’s costs. However, courts have full discretion to modify this rule depending on circumstances such as frivolous claims, bad faith, or misconduct during litigation.
Key Points:
- Discretion of Court: The court has wide discretion to decide by whom and to what extent costs are payable.
- Reasons Required: If the court deviates from the normal rule (costs follow the event), it must record reasons in writing.
- Commercial Disputes (Section 35A): Introduces specific provisions for awarding realistic and reasonable costs in commercial litigation.
- Factors Considered: Conduct of parties, frivolous claims, settlement offers, and delay tactics.
Illustrations
Example 1: Costs Imposed on Losing Party
A tenant loses an eviction suit filed by the landlord. The Court orders the tenant to bear the costs of the landlord, including legal expenses.
Example 2: Costs on Successful Party for Frivolous Claim
A plaintiff succeeds in obtaining a decree for recovery of ₹5 lakhs but had also claimed an exaggerated ₹50 lakhs in damages without evidence. The court may still impose costs on the plaintiff for raising a frivolous damages claim.
Example 3: Settlement Refusal
A defendant offers a reasonable out-of-court settlement before trial, but the plaintiff unreasonably refuses. If the plaintiff later wins only partial relief, the court may direct the plaintiff to bear costs despite partial success.
Common Questions and Answers on Section 35 CPC
1. What does “costs follow the event” mean?
It means the losing party generally has to pay the litigation costs of the winning party.
2. Can the successful party also be made to pay costs?
Yes. If the successful party raised frivolous or vexatious claims, the Court can impose costs on them.
3. What factors does the Court consider while awarding costs?
Conduct of the parties, frivolous claims, counterclaims, refusal of reasonable settlement offers, and delay tactics.
4. Are costs mandatory in commercial disputes?
Yes, in commercial disputes under Section 35A CPC, the court is expected to award realistic costs to discourage frivolous litigation.
5. Can costs include lawyer’s fees and witness expenses?
Yes. The definition of costs includes witness expenses, legal fees, and other litigation-related expenses.
Conclusion
Section 35 CPC establishes the framework for awarding costs in civil suits, reinforcing that litigation expenses must be borne by the party at fault. By empowering courts to impose realistic costs—especially in commercial disputes—the provision aims to discourage frivolous claims, promote efficiency, and ensure fairness in judicial proceedings.
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