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Power to Impose Exemplary Costs in Indian Courts

In litigation, courts have long used costs as a tool to compensate successful parties and deter misuse of judicial processes. But when does a court gain the power to impose exemplary costs? Exemplary or punitive costs go beyond mere reimbursement—they punish frivolous, vexatious, or delaying tactics. This blog examines this judicial power, drawing from Supreme Court and High Court precedents. While costs vary by context, they typically aim to uphold justice without becoming oppressive. Note: This is general information, not legal advice. Consult a lawyer for your case.

What Are Exemplary Costs?

Exemplary costs (also called punitive or compensatory costs) are higher-than-normal awards to discourage abuse of court processes. Unlike standard costs under CPC Section 35, which cover litigation expenses, exemplary costs address misconduct like false claims, perjury, or delaying trials.

• Purpose: Deter frivolous suits, compensate victims of harassment, and promote efficient justice. (Such petition deserved to be discarded and discouraged... Costs of Rs.1,00,000/- ordered to be paid State of Uttaranchal VS Balwant Singh Chaufal - 2010 1 Supreme 227)


• Distinction: Compensatory costs reimburse; exemplary punish. Courts impose them sparingly, based on conduct. (Exemplary costs... must be reasonable, based on actual gains and misconduct, and not arbitrary figures Pawan Advertising VS State of Maharashtra)

Statutory Basis for Imposing Costs

Indian laws empower courts/tribunals to award costs:

Code of Civil Procedure (CPC), 1908

• Section 35: General costs follow the event; courts may award realistic costs including lawyer fees, travel.


• Section 35A: Compensatory costs for false/vexatious claims (up to ₹3,000, but higher in practice via inherent powers).


• Order XXXIX Rule 2A: For injunction breaches or ex-parte misuse. (While granting ad interim ex-parte injunction... plaintiff... will have to pay mesne profits at the market rate and costs Ramrameshwari Devi VS Nirmala Devi - 2011 4 Supreme 625)

Commercial Courts Act, 2015 & Other Laws

• Section 16: Enhanced costs in commercial disputes.


• EPF Act Section 14B: Penal damages for defaults (imposition is something in the nature of a penalty Regional Provident Fund Commissioner v. Bharath Plywood And Timber Products (P) Ltd. - 1979 Supreme(Online)(Ker) 16).


• Consumer Protection Act: Punitive damages for harassment (exemplary damages are required to be awarded V. P. Aggarwal VS Chief Engineer, Electricity Deptt. U. T. Chandigarh).

Tribunals like DRT (RDDBFI Act Section 19) also impose costs, considering hardships. (Tribunal... empowered to impose costs on parties... hardships of the parties has to be taken into consideration Narayan Avachitrao Deshmukh VS State Bank of India)

Judicial Guidelines: When Courts Impose Exemplary Costs

Supreme Court has clarified via precedents:

1. Frivolous/Vexatious Litigation

• Abuse of PIL or writs triggers costs. (Public interest litigation – Abuse of –Should be discouraged... Costs of Rs.1,00,000/- ordered to be paid State of Uttaranchal VS Balwant Singh Chaufal - 2010 1 Supreme 227)


• In State of Uttaranchal v. Balwant Singh Chaufal, SC imposed ₹1 lakh for reopening settled law, demeaning constitutional offices.

2. Delay Tactics & Perjury

• CPC Order XVII: Limits adjournments; costs mandatory for delays. (If any of the parties have unreasonably protracted the proceedings, the Judge s.... Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236)


• Perjury unchecked: Perjury has become a way of life... parties have hardly any apprehension of being prosecuted Ramrameshwari Devi VS Nirmala Devi - 2011 4 Supreme 625.

3. Trademark/IP Disputes

• Courts award punitive damages for blatant infringement. (awarded punitive/exemplary damages of Rs.25 lacs against the defendants Inter Ikea Systems BV VS Imtiaz Ahamed - 2016 Supreme(Del) 4544; Rs.60 lakhs in frivolous suit Jayant Industries VS Indian Tobacco Company - 2022 Supreme(Bom) 342).

4. Writ & Criminal Petitions

• CrPC Section 482: High Courts impose for delaying trials. (High Court has jurisdiction to impose exemplary cost... under Section 482 Cr.P.C. KESHRI VANASPATI PRODUCTS LTD and ORS vs JUA TRADING COMPANY and ANR)


• Contempt/Arbitration: Compliance purges contempt, but costs may stand. (petitioner is liable to be pay/deposit an exemplary cost of Rs. 50,000/- Habib Miya VS Waqf Vilayati Begum - 2016 Supreme(All) 3472)

Key Factors for Quantum (from precedents):
- Actual expenses (fees, travel).
- Party's gains from misconduct.
- Hardship/conduct.
- Deterrence value. (imposition of exemplary costs of Rs.25,00,000/-... unwarranted Pawan Advertising VS State of Maharashtra; settled at ₹5 lakhs.)

| Context | Typical Quantum | Example Citation |
|---------|----------------|------------------|
| PIL Abuse | ₹1-5 lakhs | State of Uttaranchal VS Balwant Singh Chaufal - 2010 1 Supreme 227 |
| Frivolous Suit | ₹25k-₹60 lakhs | Jayant Industries VS Indian Tobacco Company - 2022 Supreme(Bom) 342 |
| IP Infringement | ₹25 lakhs+ | Inter Ikea Systems BV VS Imtiaz Ahamed - 2016 Supreme(Del) 4544 |
| Delay/Perjury | Realistic + punitive | Ramrameshwari Devi VS Nirmala Devi - 2011 4 Supreme 625 |

Landmark Supreme Court Rulings

Salem Advocate Bar Assn. v. Union of India (Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236)

• CPC Amendments (1999/2002): Emphasized costs for adjournments/delays. Limit to 3 adjournments; higher realistic costs mandatory. (The provision for costs and higher costs has been made because of practice... award only a nominal cost)

Maria Margarida Sequeira Fernandes v. Erasmo Jack de Sequeira (Ramrameshwari Devi VS Nirmala Devi - 2011 4 Supreme 625)

• Suggested reforms: Undertakings for ex-parte injunctions; restitution/mesne profits on dismissal. (pay full restitution, actual or realistic costs and mesne profits)

Indore Development Authority v. Manoharlal (Indore Development Authority VS Manoharlal & Ors. Etc. - 2020 5 Supreme 194)

• Land Acquisition Act: No lapse if possession taken; higher compensation/interest for delays, not divestment.

Other Contexts

• EPF Defaults: Damages up to 25% mechanical, penal (Damages under S.14B... penal and not compensatory Regional Provident Fund Commissioner v. Bharath Plywood And Timber Products (P) Ltd. - 1979 Supreme(Online)(Ker) 16).


• Consumer Forums: Harassment by authorities warrants exemplary damages (enhanced from ₹5k to ₹50k V. P. Aggarwal VS Chief Engineer, Electricity Deptt. U. T. Chandigarh).

Practical Tips to Avoid Exemplary Costs

• File bona fide claims: Research res integra issues.


• Avoid delays: Seek adjournments sparingly; pay costs promptly.


• Truthful pleadings: Perjury invites prosecution + costs.


• Injunctions: Give undertakings for mesne profits.


• PILs: Show public interest, not personal gain.

Courts exercise discretion judiciously: power to levy exemplary costs... should be used sparingly to advance justice. It should not be threatening and oppressive Pawan Advertising VS State of Maharashtra.

Key Takeaways

• Power exists under CPC, specific statutes, inherent powers—but sparingly.


• Triggers: Frivolous suits, delays, perjury, abuse (PILs, injunctions).


• Quantum: Realistic + punitive; evidence-based, not arbitrary.


• Reforms needed: SC urges guidelines, perjury prosecution, realistic awards. (Judicial notice... unscrupulous parties take advantage... costs are not awarded or nominal Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236)

Exemplary costs balance access to justice with efficiency. In most cases, they deter misuse without barring genuine claims. For tailored advice, consult a legal professional.

Disclaimer: This post summarizes precedents for informational purposes. Laws evolve; outcomes depend on facts. Seek expert counsel.