Costs applicable in commercial disputes

 Code of Civil Procedure Section 34. Interest.

35. Costs.

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.

Illustration

The 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 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.]

Note 1: Shall be applicable to commercial disputes of a specified value by Act 4 of 2016, s. 16 and the Schedule (w.e.f. 23-10-2015).

Part in Red is original provisions from CPC reproduced here for reference.

Code of Civil Procedure Section 35A. Compensatory costs in respect of false or vexatious claims or defences.

Please share and follow this blog for more such law related articles.

Section 35: Costs

Code of Civil Procedure Section 34. Interest.

COSTS

35. Costs.—(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 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.

¹* * * * *

Note 1: Sub-section (3) omitted by Act 66 of 1956, s. 3.

Part in Red is original provisions from CPC reproduced here for reference.

Code of Civil Procedure Section 35A. Compensatory costs in respect of false or vexatious claims or defences.

Simplified Explanation:

Section 35 provides Actual realistic costs - meaning.

Provision of costs have been incorporated in section 35, 35-A, 35-B and section 95 of CPC for the purpose of acting as a deterrence against frivolous vexatious claims made. But the working of the provision shows that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded on the unsuccessful party.

Judgments:

(a) In Salem Advocates Bar Association V. Union of India, 2005 (6) SCC 344, the Supreme court held that the costs have to be actual and reasonable, including the cost of the time spent by the successful party, the transportation and lodging, if any, or any other incidental cost besides the payment of the court fee, lawyer's fee, typing and other cost in relation to the litigation. It is for the High Courts to examine these aspects and wherever necessary make requisite rules.

(b) In Sanjeev Kumar Jain V. Raghubir Saran Charitable Trust & Ors., (2012)lSCC455, the Apex Court went into the Interpretation of the words "actual realistic costs". It held that even if actual costs have to be awarded, it should be realistic which means what a "normal" advocate in a "normal" case of such nature would charge normally in such a case, Assuming that costs could be awarded on such basis. The actual realistic cost should have a correlation to costs which are realistic and practical. It cannot obviously refer to fanciful and whimsical expenditure by parties who have the luxury of engaging a battery of high-charging lawyers.

Reference: http://www.nja.nic.in/16%20CPC.pdf

Please share and follow this blog for more such law related articles.

Interest

 

Code of Civil Procedure Section

 

INTEREST

34. Interest.— (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, ¹[with further interest at such rate not exceeding six percent per annum as the Court deems reasonable on such principal sum], from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit :

²[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six percent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.

Explanation I.—In this Sub-section, “nationalised bank” means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).

Explanation II.—For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.]

(2) Where such a decree is silent with respect to the payment of further interest ¹[on such principal sum] from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.

Note 1: Subs. by Act 66 of 1956, s. 2, for certain words.

Note 2: Ins. by Act 104 of 1976, s. 13 (w.e.f. 1-7-1977).

 

 

Code of Civil Procedure Section

Section 33 Judgment and decree

 

Code of Civil Procedure 

 

JUDGMENT AND DECREE

33. Judgment and decree.—The Court, after the case has been heard, shall pronounce judgment, and on such judgment a decree shall follow.

 

Code of Civil Procedure 

Notes:

Decree:

Decree is the formal expression of an adjudication. Decree conclusively determines the rights of parties. Decree is Defined u/s 2(2) of Civil Procedure Code, 1908. 

A decree may be either preliminary or final.  A decree is preliminary when a further procedure has to be taken before the suit can be completely disposed off. When adjudication completely disposes of the suit such decree is final.

It is the formal expression of an adjudication. It conclusively determines the rights of parties. A decree may be either preliminary or final.

A decree is preliminary when a further procedure has to be taken before the suit can be completely disposed off. When adjudication completely disposes of the suit such decree is final.

It may be noted that the term decree doesn’t include the following:

(a) Any adjudication from which an appeal lies as an appeal from an order or

(b) Any order or decision of the dismissal of the suit for default.

A decree must be drawn separately after a judgment.

Deemed Decrees: A deemed decree is one which, though not fulfilling the essential features of a decree as required by the Code has been expressly categorised as a decree by the legislature. The rejection of a plaint and the determination of questions of facts are deemed decrees. 

Judgment:

Judgment is defined u/s 2 (9) of the Civil Procedure Code. Judgment means the statement given by the Judge on the grounds of a Decree or Order.  Thus a judgment sets out the ground and the reason for the Judge to have arrived at the decision. Judgment is the decision of a court of justice upon the respective rights and claims of the parties to an action in a suit submitted to it for determination. Judgment is the statement of the Court on the grounds for having arrived at a decision.

A judgment must contain the following components:

1. A crisp statement of facts of the case;

2. The points or issues for determination;

3. The decision on such issues and finally;

4. The reasons for such a decision.

Section 32: Penalty for default

Code of Civil Procedure Section 31. Summons to witness.

 

32. Penalty for default.—The Court may compel the attendance of any person to whom a summons has been issued under section 30 and for that purpose may—

(a) issue a warrant for his arrest;

(b) attach and sell his property;

(c) impose a fine upon him ¹[not exceeding five thousand rupees];

(d) order him to furnish security for his appearance and in default commit him to the civil prison.

Note 1: Subs. by Act 46 of 1999, s. 4, for certain words (w.e.f. 1-7-2002).

Part in Red is original provisions from CPC reproduced here for reference.

Code of Civil Procedure Section 33. Judgment and decree.

Simplified explanation:

Section 32 requires penalty for default of not appearing in the Court by the witness. Earlier, the Court had a power to impose a fine not exceeding five hundred rupees. By Amendment Act, 1999, the amount had been enhanced to five thousand rupees.

Reference: http://www.nja.nic.in/16%20CPC.pdf

Please share and follow this blog for more such law related articles.

Summons to witness

 

Code of Civil Procedure Section

 

31. Summons to witness.—The provisions in sections 27, 28 and 29 shall apply to summonses to give evidence or to produce documents or other material objects.

 

Code of Civil Procedure Section

Power to order discovery and the like

 

Code of Civil Procedure Section

 

30. Power to order discovery and the like.—Subject to such conditions and limitations as may be prescribed, the Court may, at any time, either of its own motion or on the application of any party,—

(a) make such orders as may be necessary or reasonable in all matters relating to the delivery and answering of interrogatories, the admission of documents and facts, and the discovery, inspection, production, impounding and return of documents or other material objects producible as evidence;

(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid;

(c) order any fact to be proved by affidavit.

 

Code of Civil Procedure Section