The Juhi Chawla case reminds us of the adage: “Hard cases make bad law”. Black’s Law Dictionary defines a ‘hard case’ as a law suit involving equities that tempt a judge to stretch or even disregard a principle of law at issue.
The costs of Rs 20 lakh imposed by the Delhi High Court is nothing but reflection of this adage.
Actus Curiae Neminem Gravabit is a legal principle which means an act of the court shall prejudice no man. The foundation of any jurisprudence is based on the soundness of process followed by courts. Substantive laws become futile in the absence of free and fair process. This sound procedure is either enacted by Parliament or the power is delegated to the executive/judiciary.
Courts in India, including the constitutional courts, have time and again tried to encroach upon jurisdiction which is not vested in them. An example of this kind of judicial overreach was observed in the suit of Juhi Chawla before the Delhi High Court.
The film actress filed a suit on the original side of the Delhi High Court, under the Code of Civil procedure (CPC), against the rollout of 5G internet services by the Central government. The High Court dismissed the suit at the outset, stating that it was filed for publicity and that mandatory provisions of the CPC were not complied with.
It is well within the jurisdiction of any court to allow or dismiss any suit based on merits or procedural defects. But, while dismissing the suit, the High Court imposed exemplary/punitive costs of Rs. 20 lakh on the plaintiff.
Through this article, the authors (Nishant Khatri and Hari Mudgil) seek to examine the legality of imposition of such costs in a suit filed under the CPC on the original side of the Delhi High Court.
It is pertinent to mention that when a High Court is working under the CPC regime, it cannot take aid of Article 226 of the Constitution. No doubt, if there is a case before the High Court under writ jurisdiction (Article 226), then it has very wide and unfettered powers to impose such exemplary/punitive costs. But in a suit governed by the CPC, the High Court has very limited scope to impose costs.
Costs for suits filed under CPC
There are five provisions in the entire CPC that regulate costs that can be imposed by courts.
1. Section 35: This Section states that the court shall have full power to determine by whom and out of which property and of what extent the costs be given. Prima facie, it may appear that the court has unfettered power impose costs, but this is not the case. Section 35 starts with “subject to such conditions and limitations as may be prescribed,” and these conditions and limitations are provided under Order XX A of the CPC.
2. Order XX A: This provision circumscribes the power of courts to impose costs. There are six heads (a to f) under which costs may be imposed. These include expenses in giving notice; expenses of typing or printing; charges paid by parties in inspection of records; expenses for producing the witness; and expenses for obtaining the copies of decree/judgement in case of appeal or revision. Under this Order, courts may take into account all these expenses incurred by parties while accounting the cost.
This Order also provides that the award of costs shall be in accordance with the rules made by High Courts in that regard. The rules of cost made by the Delhi High Court are in consonance with Sections 35, 35A and 35B of the CPC.
3. Section 35A: The most important and relevant provision for the purpose of this article is Section 35A of CPC, which empowers the courts to impose compensatory costs on a party which has filed false and vexatious claim or defence. The outer limit set for such costs is fixed at Rs. 3,000.
4. Section 35B: This section of CPC also empowers courts to impose cost on parties, but it is meant particularly for those cases where parties use delay tactics like unnecessarily taking adjournment.
5. Section 151: The provision talks about the inherent power of courts to ensure justice and to prevent abuse of process. But it is significant to mention that this provision cannot be used in derogation of expressed statutory provisions and hence the power of Section 151 shall remain subject to Section 35, 35A and 35B.
Judicial pronouncements
The Supreme Court has time and again observed that High Courts do not have jurisdiction in case of suits under the CPC to impose costs on any party beyond the limit prescribed under the CPC.
Ashok Kumar Mittal v. Ram Kumar Gupta & Anr was a case where the High Court imposed exemplary costs of Rs. 1 lakh on the petitioner and Rs. 1 lakh on the respondent, on a finding that both sides were guilty of having lied on oath. The apex court observed that the limit prescribed under Section 35-A should be kept in view by the courts. The Court also adversely commented upon the practice of directing costs to be paid to Legal Services Committee etc. or to some non-party charitable organisation. The Court also made an observation that the principles and practices relating to levy of costs in administrative law matters cannot be imported mechanically into civil litigation governed by the CPC. It was observed:
“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…
…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.”
The ratio of Ashok Kumar Mittal was reiterated in the case of Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust. In that case, the apex court expressed its disagreement with the exemplary costs imposed by High Court ignoring the outer limit of Rs 3,000 in derogation of section 35A. The Court was concerned with the question as to whether a sum of Rs. 45 lakh awarded as costs by the High Court while dismissing an appeal was sustainable. The said suit was related to a contractual dispute. This order of the High Court was set aside by the Supreme Court, which ordered the appellant to pay the costs of the appeal as per the High Court Rules, plus Rs. 3,000/- as exemplary costs to the respondent.
The Court held that the order of the High Court awarding heavy costs was unsustainable in light of the existing provisions of CPC read with the Delhi High Court Rules.
Again, in the case of Vinod Seth v. Devinder Bajaj, the apex court ruled out the discretion of civil courts (including the High Court) under the CPC to award costs without regard to statutory provisions, even in a frivolous litigation.
Suggestions of the Law Commission regarding costs under CPC
In the above mentioned cases, the Supreme Court had called for an amendment to the provision relating to costs under the CPC. To this end, the Law Commission of India, under the Chairmanship of Justice (Retd.) PV Reddy made the following suggestions:
(1) Ceiling limit (under Section 35A) of Rs. 3,000 needs to be enhanced to Rs. 1,00,000.
(2) Out of the costs awarded under Section 35-A (maximum being Rs. 1,00,000), part of the costs should be allowed in favour of the party who has been subjected to frivolous or vexatious litigation, and a part of the amount of costs should be directed to be deposited in the Judicial Infrastructure Fund to be created by each High Court.
(3) The expression ‘exemplary’ should be substituted for the word ‘compensatory’ wherever it occurs in Section 35-A.
(4) Every Court, on its own, even without an application from one of the parties, shall be empowered to award exemplary costs under Section 35-A if the Court is satisfied that the claim or defence is false or vexatious to the knowledge of the party. However, before passing such order, opportunity of hearing shall be given to the party against whom such order is proposed to be passed.
Coming back to the Juhi Chawla case, it seems that the dismissal of the suit with costs of Rs 20 lakh is beyond the jurisdiction of the High Court under CPC. There is neither any statutory provision nor established jurisprudence on the matter of costs under CPC that permits any court to impose such heavy costs on plaintiffs while dismissing frivolous or vexatious suits filed for publicity.
It has been held that the inherent power of courts under Section 151 cannot be exercised in conflict with the general scheme and intent of the Code.
Nevertheless, the authors agree that the amount of costs provided under Section 35A and other related provisions are inappropriately low, and will not serve as a deterrent to filing of false and vexatious suits. Despite recommendations by the Law Commission and the Supreme Court, there has been no legislation to address this lacuna.
There is no doubt that High Courts can innovate with a view to disciplining those who pursue vexatious litigation, but the same has to be done within the four corners of law. With due respect to the Delhi High Court, the authors (Nishant Khatri and Hari Mudgil) feel that in the Juhi Chawla case, the imposition of exemplary costs was not within the four corners of law, and was in utter disregard to judicial precedents and provisions of the CPC.
(This piece originally appeared in barandbench.com. A regular writer in these pages, Veeresh Malik, is Plaintiff No. 2 in this Suit)
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