2011 Supreme(SC) 989

2011 (8) Supreme 523
SUPREME COURT OF INDIA
R.V. Raveendran and A. K. Patnaik, JJ.
Sanjeev Kumar Jain — Appellant
versus
Raghubir Saran Charitable Trust & Ors. — Respondents
Civil Appeal No.8610 of 2011
[Arising out of SLP(C) No.6285 of 2010]
Decided on : 12-10-2011

IMPORTANT POINT
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.

Headnote:Code of Civil Procedure, 1908- Section 35 - Award of costs -Whether a sum of 45,28,000/- could be awarded as costs in an appeal against a vacating temporary injunction in an injunction suit- Though, Section 35 does not impose a ceiling on the costs that could be levied and gives discretion to the Court in the matter, Section 35 starts with the words “subject to such conditions and limitations as may be prescribed, and to the provisions of law for the time being in force”- Therefore, if there are any conditions or limitations prescribed in the Code or in any rules, the Court, obviously, cannot ignore them in awarding costs- Chapter 11 Part C of the Delhi High Court Rules deals with award of costs in civil suits- Chapter XXIII of the said Rules deals with taxation of costs- Rule 1 relates to appointment of Taxing Officer. Rule 6 provides that advocate’s fee should be taxed on the basis of a certificate filed under Rule 2 Chapter 5 but not exceeding the scale prescribed in the schedule to Chapter XXIII- Therefore, the Court could not have awarded costs exceeding the scale that was prescribed in the schedule to the Rules- Doing so would be contrary to the Rules- If it was contrary to Rules, it was also contrary to Section 35 also which makes it subject to conditions and limitations as may be prescribed and the provisions of law for the time being in force- Hence held that merely by seeking a consent of parties to award litigation expenses as costs, High Court could not have adopted the procedure of awarding what it assumed to be the `actual costs’ nor could it proceed to award a sum of Rs.45,28,000/- as costs in an appeal relating to an interim order in a civil suit- If the law does not permit award of actual costs, obviously courts cannot award actual costs- As the law presently stands, there is no provision for award of `actual costs’ and the award of costs would have to be within limitation prescribed by section 35- Impugned order of High Court, to the extent it levied costs of ` 45,28,000/- on the appellant set aside - Direction given that the appellant shall pay the costs of the appeal before High Court as per Rules plus ` 3000/- as exemplary costs to the respondents (Paras 9, 10)

        Code of Civil Procedure, 1908- Section 35 –Award of costs-Whether a sum of 45,28,000/- could be awarded as costs in an appeal against a vacating temporary injunction in an injunction suit- 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- If the logic adopted by the High Court is to be accepted, then the losing party should pay the costs, not with reference to the subject matter of the suit, but with reference to the fee paying capacity of the other side- 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- Mechanically ordering the losing party to pay costs of ` 45,28,000/- in an appeal against grant of a temporary injunction in a pending suit for permanent injunction was unwarranted and contrary to law (Para 11)

       Facts of the Case :

        Appellant herein in the instant case was a tenant under the respondents in regard to first floor and a mezzanine floor of suit building . The respondents initiated proceedings for eviction of the appellant in regard to mezzanine floor unit and obtained vacant possession thereof.

        B. Even after vacating the mezzanine floor unit, appellant claimed a right to use the staircase which had been constructed in the mezzanine floor unit to reach the first floor unit. Interim protection was given in favour of appellant on 30.12.2003. The said interim order was vacated on 8.11.2004. Feeling aggrieved, the appellant filed an appeal. The appeal was pending for nearly six years.

        C. During the final hearing of the appeal, the Division Bench suggested that as the dispute was purely a commercial dispute, the party succeeding in the appeal should be entitled to the litigation expenses from the party who did not succeed. Both counsel, agreed to the said proposal in principle .In pursuance of it, the parties filed memos indicating the respective expenses incurred in the appeal. The appellant filed a memo stating that ‘25,50,000/- was incurred as advocates’ fees in the appeal. The respondents filed an affidavit stating that ‘45,28,000/- was spent as advocates’ fees in regard to the appeal.

        D. By the impugned judgment Division Bench of the High Court, dismissed the appeal by the appellant. Taking note of the said memos regarding fees, the High Court awarded to the respondents ‘45,28,000/- as costs in respect of the appeal to be paid by the appellant within six months. The appellant has challenged the said order both on merits and costs.

        E. The only question for consideration is the legality and validity of the order of the High Court directing the appellant to pay costs of ‘45,28,000/- to the respondents. Appellant’s case that award of such costs by High Court was erroneous and contrary to law. On the contrary respondents contended that the award of actual costs incurred in the appeal was by consent of parties; and the same being a consent order, there was no question of the matter being challenged by the appellant.

       Findings of the Court :

        A. On a careful consideration, it was found that the impugned order, including the portion regarding costs, was not a consent order. During hearing on merits, the division bench indicated that the losing party should pay the ‘litigation expenses’ relating to the appeal. This was nothing but a reiteration of what is stated in law, namely section 35 of the Code of Civil Procedure. The counsel naturally agreed for the suggestion. But there was no consent for ‘45,28,000/- being determined or being awarded as costs. There was no assessment of the costs by the Taxing Officer of the High Court.

        B. Though, Section 35 does not impose a ceiling on the costs that could be levied and gives discretion to the Court in the matter, it should be noted that Section 35 starts with the words “subject to such conditions and limitations as may be prescribed, and to the provisions of law for the time being in force”. Therefore, if there are any conditions or limitations prescribed in the Code or in any rules, the Court, obviously, cannot ignore them in awarding costs. Chapter 11 Part C of the Delhi High Court Rules deals with award of costs in civil suits- Chapter XXIII of the said Rules deals with taxation of costs. Rule 1 relates to appointment of Taxing Officer. Rule 6 provides that advocate’s fee should be taxed on the basis of a certificate filed under Rule 2 Chapter 5 but not exceeding the scale prescribed in the schedule to Chapter XXIII. Therefore, the Court could not have awarded costs exceeding the scale that was prescribed in the schedule to the Rules. Doing so would be contrary to the Rules. If it was contrary to Rules, it was also contrary to Section 35 also which makes it subject to conditions and limitations as may be prescribed and the provisions of law for the time being in force- Hence held that merely by seeking a consent of parties to award litigation expenses as costs, High Court could not have adopted the procedure of awarding what it assumed to be the `actual costs’ nor could it proceed to award a sum of Rs.45,28,000/- as costs in an appeal relating to an interim order in a civil suit. If the law does not permit award of actual costs, obviously courts cannot award actual costs. As the law presently stands, there is no provision for award of `actual costs’ and the award of costs would have to be within limitation prescribed by section 35.

        C. 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. If the logic adopted by the High Court is to be accepted, then the losing party should pay the costs, not with reference to the subject matter of the suit, but with reference to the fee paying capacity of the other side. 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. Mechanically ordering the losing party to pay costs of ` 45,28,000/- in an appeal against grant of a temporary injunction in a pending suit for permanent injunction was unwarranted and contrary to law.

        D. Impugned order of High Court, to the extent it levied costs of ‘ 45,28,000/- on the appellant was set aside. Direction was given that the appellant shall pay the costs of the appeal before High Court as per Rules plus ‘ 3000/- as exemplary costs to the respondents.