Code
(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.]STATE AMENDMENTSJammu and Kashmir and Ladakh (UTs).–In Section 35, in sub-section (1) omit “Commercial”.[Videthe Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020, notification
No. S.O. 1123(E) dated (18-3-2020) andvideUnion Territory of Ladakh Reorganisation (Adaptation of
Central Laws) Order, 2020, Notification No. S.O. 3774(E), dated (23-10-2020).]
