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The costs now stand at Rs 50,000, a ninth of what was originally imposed.
Justice Patel had, in an order on February 27, lambasted the laxity shown by a petitioner trust in adhering to court orders requiring it to file affidavits. In this light, he imposed costs amounting to Rs 1,000 for every day that the suit remained pending.
Justices Naresh Patil and GS Kulkarni, however, took a different view. The Bench relied on Section 35-B of the Code of Civil Procedure (CPC), whilst partially allowing an appeal by the aggrieved party.
The Bench held that as per this provision, costs are not meant to be punitive, but compensatory instead. It held that the legislative wisdom was based on a principle in common law, that sought to ensure that parties with a bad case could not stall proceedings indefinitely.
“The principle is that costs are awarded not as a punishment to the defeated party, or as a bonus to the party which receives them, but as a recompense to the successful party in order to indemnify him, though not completely, for legal expenses to which he has been subjected in prosecuting his suit or his defence.”
The Bench was of the view that the rationale behind the legislation was to ensure a provision whereby the payment of compensatory costs would be a condition precedent to further prosecution or defence.
Justice Patel, in his order, had noted that the case had been held up by 450 days, owing to non-compliance. Therefore, the costs of Rs. 1000 per day would be imposed. His order also made it clear that such costs were not unreasonable in a city such as Mumbai.
The Division Bench, however, differed. It held that costs imposed must be commensurate with the costs suffered by the defendants in ensuring representation on the days on which the matter came up for hearing.
“(A) plain reading of section 35-B indicates the legislative intent that when a party fails to take steps on the date fixed for hearing, or obtains an adjournment, the Court for reasons to be recorded may make an order “reasonably sufficient to re-imburse the other party, in respect of the expenses incurred by him in attending the Court on that date”.”
The Court recorded the submissions of the appellant’s counsel Prasad Chenoy who was briefed by the law firm Crawford Bayley and Co. He argued that his clients had been ordered to file their affidavits in October 2016, but the matter was only heard next on February 27 of this year. The matter had been listed several times in the interim, but too low on the board to have been heard, Chenoy argued.
The Bench also took into consideration the fact that the plaintiff, whose affidavit was to be filed, is a senior citizen of the age of 79 years. It was further noted,
“The learned counsel for the appellants submits that at 3:00 p.m. on 27/2/2018 plaintiffs made request to learned single Judge that they were ready to produce the affidavit of the plaintiffs and in fact made request for accepting the affidavit.”
The order also stated that all this notwithstanding, nothing prevented or barred the appellants from filing the requisite affidavits.
It, however, held that costs imposed by Justice Patel were not reasonable, given the legislative clarity on the basis for imposition of costs.
“…we find that the cost awarded by the learned Single Judge need to be reduced to a reasonable extent taking into consideration the plea advanced by the plaintiffs and in the facts and attending circumstances of the present case.”
Thus, the Division Bench set aside Justice Patel’s order and imposed costs of Rs. 50,000 on the appellant trust, to be paid within one week. The respondents were represented by Gargi Bhagwat, of Bhagwat and Co.
Read the order