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Supreme Court Against Penalty and Cost to Petitioner Litigants , Important Citations...



SR. NO.        CITATION                                                 PARAS     

1. Vinod Seth v Devinder Bajaj and another,                    16 and 23 (e)

    2010 (7) SCR 424=2010 (8) SCC 1.

16. This case reminds us of the adage: "Hard cases make bad law". Black's Law Dictionary defines a `hard case' thus : "A law suit involving equities that tempt a judge to stretch or even disregard a principle of law at issue --- hence the expression "Hard cases make bad law". Justice Holmes explained and extended the adage thus : (See his dissenting opinion in Northern Securities Co. v. United States 193 (1903) US 197) :

"Great cases, like hard cases make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes whatpreviously was clear seem doubtful, and before which even well settled principles of law will bend."
This is certainly a hard case. The High Court should have resisted from laying down a `bad law', which will be treated as a precedent and will result in similar directions by courts, wherever they feel that suits are not likely to succeed. It would encourage, in fact even force, the losing party to file an appeal or further appeal against the final decision in the suit. This is because no plaintiff would like to undertake to pay a large sum as damages, nor would a defendant like to miss a chance to receive a large sum as damages. Such orders would also tempt and instigate both the parties to make attempts to succeed in the suit by hook or crook, by adopting means fair or foul. If litigants are to be subjected to such directions in terrorem, the litigant public will be dissuaded from approaching courts, even in regard to bona fide claims. Such orders may lead to gradual loss of faith in the judiciary and force litigants to think of extra-judicial remedies by seeking the help of underworld elements or police to settle/enforce their claims thereby leading to break-down of rule of law. No order or direction of the High Court, even if it is intended to deter vexatious and frivolous litigation, should lead to obstruction of access to courts.

23 (e) The provisions relating to costs should not however obstruct access to courts and justice. Under no circumstances the costs should be a deterrent, to a citizen with a genuine or bonafide claim, or to any person belonging to the weaker sections whose rights have been affected, from approaching the courts.

2. Ashok Kumar Mittal v Ram Kumar Gupta                              6

    and another, 2009 (2) SCC 656.

6. One 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 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.



(1) If any suit or other proceedings including an execution proceedings but excluding an appeal or a revision any party objects to the claim of defence on the ground that the claim or defence or any part of it is, as against the objector, false or vexatious to the knowledge of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court if it so thinks fit, may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the object or by the party by whom such claim or defence has been put forward, of cost by way of compensation.
(2) No Court shall make any such order for the payment of an amount exceeding three thousand rupees or exceeding the limits of it pecuniary jurisdiction, whichever amount is less:
Provided that where the pecuniary limits of the jurisdiction of any Court exercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887 (9 of 1887) or under a corresponding law in force in any part of India to which the said Act does not extend and not being a Court constituted under such Act or law, are less than two hundred and fifty rupees, the High Court may empower such Court to award as costs under this section any amount not exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred rupees:
Provided further, that the High Court may limit the amount or class of Courts is empowered to award as costs under this Section.
(3) No person against whom an order has been made under this section shall, by reason thereof, be exempted from any criminal liability in respect of any claim or defence made by him.
(4) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence.
Uttar Pradesh:(i) For sub-section (1) of section 35A substitute the following.
(1) If any suit or other proceedings including proceedings in execution, but not being an appeal or revision, the court finds that the claim or defence or any part thereof is false or vaxatious to the knowledge of the party by whom it has been put forward and if such claim or defence or such part is disallowed, abandoned or withdrawn in whole or in part, the court may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the successful party or costs by way of compensation irrespective of the decisions on other issues in the case.
(ii) After sub-section (1) insert the following-
(1-A) The provisions of sub-section (1) shall mutatis mutandis apply to an appeal where the appellate Court confirms the decision of the trial court and the trial court has not awarded or insufficient, compensatory cost under that sub-section.

3. Collector Land Acquisition, Anantnag v Mst. Katiji,              3

    AIR 1987 SC 1353.

4. State of U.P. and another v Nitin Agnihotri and another,        5

    AIR 2009 SC (Supp) 557.

 5. We find that the impugned order of the High Court so far as it relates to the imposition of cost is founded on no basis. There is not even a finding recorded that the police officials were remiss in any way and/or had committed any lapse during investigation. In the absence of any reason having been indicated by the High Court as to why the Court felt necessary for imposing cost, the direction for payment of cost cannot be sustained and is set aside.

*Satyapal Singh Vs. Union of India (UOI) and Anr (Decided on 23.11.2009)* MANU/SC/1946/2009
Exemplary costs are levied where a claim is found to be false or vexatious or where a party is found to be guilty of misrepresentation, fraud or suppression of facts. In the absence of any such finding, it will be improper to punish a litigant with exemplary costs. 
Levy of exemplary costs on ordinary litigants, as punishment for merely for approaching courts and securing an interim order, when there was no fraud, misrepresentation or suppression is unwarranted. In fact, it will be bad precedent Therefore, direction for payment of exemplary costs of Rs. 50,000/- deleted and Special leave petition dismissed.


Ashok Kumar Mittal v Ram Kumar Gupta

and another, 2009 (2) SCC 656, wherein it has been held that in a litigation between two private parties, levy of costs in favour of State by way of penalty, or in favour of non-party charitable organizations, should be avoided,but the said Order dated 5.5.2014 has imposed “costs of Rs. 2,500/- to be deposited with the Prime Minister’s Relief Fund”.           



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