Cpc 35b = make her pay you ...

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7554-7555 OF 2009

[Arising out of SLP [C] Nos.2203-2204 of 2008]

Manohar Singh ... Appellant Vs.

D. S. Sharma & Anr. ... Respondents JUDGMENT

R.V.RAVEENDRAN, J.

Leave granted. Heard learned counsel.

2. The appellant filed a suit for damages against his erstwhile employer - National Thermal Power Corporation Ltd. (`NTPC' for short, second respondent herein) and its then General Manager in the District Court, Delhi. After conclusion of Plaintiff's evidence, the defendants' evidence was commenced. On 6.1.2004 the suit was listed for further evidence of defendants. One S. Joseph, (DW 2), whose affidavit had been filed by way of an examination-in-chief, was present in court for being cross-examined by the plaintiff. The plaintiff requested for an  2

adjournment on the ground that his counsel was busy elsewhere. The case was therefore adjourned to the next day (7.1.2004). Again, plaintiff sought time on the ground that his counsel was otherwise busy. When the court asked the plaintiff to cross-examine the said witness, as he had earlier cross-examined DW-1 without the assistance of a counsel, plaintiff refused to do so. The witness had come all the way from Durgapur for giving evidence. The court therefore adjourned the matter to 9.2.2004, subject to payment of costs of Rs.5000 by the plaintiff. On 9.2.2004 also, S. Joseph (DW-2) was present, but the plaintiff sought an adjournment on the ground that he wanted to move an application for transfer of the suit. The request for adjournment was opposed on the ground that the witness had come from Durgapur by air. The suit was however adjourned to 9.3.2004. On 9.3.2004, plaintiff submitted that he had already moved an application for transfer (alleging that he had lost faith in the Presiding Officer). The suit was adjourned to 7.4.2004. The suit was thereafter adjourned to 20.7.2004, 31.8.2004, 5.10.2004, 10.11.2004, 17.1.2005, 23.2.2005, and 7.4.2005 on the ground that the transfer application filed by the plaintiff was pending before the District Judge.  3

 

3. On 24.3.2005, the transfer petition filed by the plaintiff was allowed and his suit was withdrawn from the file of Shri O.P. Gupta, Addl. District Judge and assigned to the file of another Additional District Judge, with a direction to the parties to appear on 1.4.2005. On that day, the new trial Judge directed the plaintiff to deposit Rs.5,000 towards the travel expenses of DW-2 before he could cross-examine DW2. The matter was adjourned to 27.4.2005. On 27.4.2005, the plaintiff filed an application for waiver of costs. That application was dismissed and the case was posted to 27.7.2005 for further evidence. On 27.7.2005, the plaintiff failed to deposit the costs. The court recorded that costs were not paid in spite of repeated opportunities. Relying upon Section 35B of the Code of Civil Procedure (for short `the CPC'), the trial court dismissed the suit for failure to pay the costs in spite of several opportunities. The said dismissal order dated 27.7.2005 was challenged by way of a revision before the Delhi High Court. The High Court dismissed the appeal by order dated 21.5.2007. It upheld the decision of the trial court holding that the provisions of section 35B were mandatory and if the costs levied were not paid "the only course open to the court is to disallow the prosecution of the suit" and, that meant the dismissal of the suit. Appellant's petition for review was dismissed on 7.9.2007. The  4

orders dated 21.5.2007 and 7.9.2007 are challenged in these appeals by special leave.

 

4. The appellants contended that having regard to the provisions of section 35B of CPC, if costs levied on plaintiff are not paid, the court can only stop further prosecution of the suit by the plaintiff. It is submitted that section 35B does not confer power to dismiss the suit for non- payment of costs. Learned counsel for the second respondent, on the other hand, supported the judgment of the trial court, as affirmed by the High Court.

 

5. Section 35B of CPC deals with costs for causing delay. Relevant portion of the said section extracted below :

"35B. Costs for causing delay. - (1) If, on any date fixed for the hearing of a suit or for taking any step therein, a party to the suit-- (a) fails to take the step which he was required by or under this Code to take on that date, or

(b) obtains an adjournment for taking such step or for producing evidence or on any other ground,

the Court may, for reasons to be recorded, make an order requiring such party to pay to the other party such costs as would, in the opinion of the Court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the Court on that date, and payment of such costs, on the date next following the date of such order, shall be a condition precedent to the further prosecution of--  5

(a) the suit by the plaintiff, where the plaintiff was ordered to pay such costs,

(b) the defence by the defendant, where the defendant was ordered to pay such costs.

xxxxxxx xxxxxxx"

Section 35B provides that if costs are levied on the plaintiff for causing delay, payment of such costs on the next hearing date, shall be a condition precedent to the further prosecution of the suit by the plaintiff. Similarly, if costs are levied on the defendant for causing delay, payment of such costs on the next date of hearing, shall be a condition precedent to the further prosecution of the defence of the suit by the defendant. This takes us to the meaning of the words "further prosecution of the suit" and "further prosecution of the defence". If the Legislature intended that the suit should be dismissed in the event of non-payment of costs by plaintiff, or that the defence should be struck off and suit should be decreed in the event of non-payment of costs by the defendant, the Legislature would have said so. On the other hand, Legislature stated in the rule that payment of costs on the next date shall be a condition precedent to the further prosecution of the suit by plaintiff (where the plaintiff was ordered to pay such costs), and a condition precedent to the further prosecution of the defence by the defendant (where the defendant was  6

ordered to pay such costs). This would mean that if the costs levied were not paid by the party on whom it is levied, such defaulting party is prohibited from any further participation in the suit. In other words, he ceases to have any further right to participate in the suit and he will not be permitted to let in any further evidence or address arguments. The other party will of course be permitted to place his evidence and address arguments, and the court will then decide the matter in accordance with law. We therefore reject the contention of the respondents that section 35B contemplates or requires dismissal of the suit as an automatic consequence of non-payment of costs by plaintiff.

6. We may also refer to an incidental issue. When section 35B states that payment of such costs on the date next following the date of the order shall be a condition precedent for further prosecution, it clearly indicates that when the costs are levied, it should be paid on the next date of hearing and if it is not paid, the consequences mentioned therein shall follow. But the said provision will not come in the way of the court, in its discretion extending the time for such payment, in exercise of its general power to extend time under section 148 of CPC. Having regard to the scheme and object of section 35B, it is needless to say that such extension  7

can be only in exceptional circumstances and by subjecting the defaulting party to further terms. No party can routinely be given extension of time for payment of costs, having regard to the fact that such costs under section 35B were itself levied for causing delay.

7. We may also refer to the provisions of Rule 1 of Order XVII of CPC which deals with grant of time and adjournments. The said provision is extracted below :

"1. Court may grant time and adjourn hearing.--(1) The Court may, if sufficient cause is shown, at any stage of the suit, grant time to the parties or to any of them, and may from time to time adjourn the hearing of the suit for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the suits.

(2) Costs of adjournment.--In every such case the Court shall fix a day for the further hearing of the suit, and shall make such orders as to costs occasioned by the adjournment of such higher costs as the Corut deems fit:

Provided that, --

(a) when the hearing of the suit has commenced, it shall be continued from day to-day until all the witnesses in attendance have been examined, unless the Court finds that, for the exceptional reasons to be recorded by it, the adjournment of the hearing beyond the following day is necessary,

(b) no adjournment shall be granted at the request of a party, except where the circumstances are beyond the control of that party, (c) the fact that the pleader of a party is engaged in another Court, shall not be a ground for adjournment,

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(d) where the illness of a pleader or his inability to conduct the case for any reason, other than his being engaged in another Court, is put forward as a ground for a adjournment, the Court shall not grant the adjournment unless it is satisfied that the party applying for adjournment could not have engaged another pleader in time, (e) where a witness is present in Court but a party or his pleader is not present or the party or his pleader, though present in Court, is not ready to examine or cross-examine the witness, the Court may, if it thinks fit, record the statement of the witness and pass such orders as it thinks fit dispensing with the examination-in-chief or cross-examination of the witness, as the case may be, by the party or his pleader not present or not ready as aforesaid.

(emphasis supplied)

It is evident from Rule 1(2) proviso (e) of Order 17 that where a witness is present in court but the other side is not ready to cross-examine the witness, the court can dispense with his cross-examination. But where a genuine and bona fide request is made for adjourment, instead of resorting to forfeiture of the right to cross-examine, the court may grant time by levying costs.

 

8. A conspectus of the above provisions clearly demonstrates that under the scheme of CPC, a suit cannot be dismissed for non-payment of costs. Non-payment of costs results in forfeiture of the right to further prosecute the suit or defence as the case may be. Award of costs, is an alternative available to the court, instead of dispensing with the cross-  9

examination and closing the evidence of the witness. If the costs levied for seeking an adjournment to cross-examine a witness are not paid, the appropriate course is to close the cross-examination of the witness and prohibit the further prosecution of the suit or the defence, as the case may be by the defaulting party.

 

9. In this case, the plaintiff has harassed the defendants and its witness by seeking repeated adjournments. In view of it, plaintiff's right to cross-examine DW2 stands forfeited. However, as costs were levied, but were not paid, the court should have closed the evidence of DW2, permitted the defendants to produce any further evidence (without any right to plaintiff to cross-examine such witnesses) and then ought to have proceeded to dispose of the suit on merits by considering the material available and hearing the arguments of defendant. The court could not have dismissed the suit.

 

10. In view of the above, we allow these appeals, set aside the judgments of the High Court and the trial court, restore the suit to its file, subject to the following :

 10

(i) The right of the plaintiff to cross-examine DW2 stands forfeited and he is barred from prosecuting the suit further. (ii) The trial court shall however permit the defendants to let in any further evidence, hear arguments and then dispose of the suit. (iii) However, if plaintiff-appellant tenders the costs with an appropriate application under section 148 CPC, the trial court may consider his request in accordance with law. Even if the court extends the time for deposit, permits the plaintiff to pay the costs and prosecute the suit further, that will not entitle the plaintiff to cross-examine DW2.

....................................J.

(R V Raveendran)

 

New Delhi; ...................................J. November 13, 2009. (G S Singhvi) 1

now;

 

is there any parallel provision in CrPC for avoiding delay in criminal cases ?

KJ 1/19 NMS381.14 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ADMIRALTY & VICE ADMIRALTY JURISDICTION NOTICE OF MOTION NO.381 OF 2014

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IN

ADMIRALTY SUIT NO.14 OF 2008

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m.t. CHEM LILY ) Maltese Flag together presently at Port ) C

at Manglor )...Applicant/Defendant IN THE MATTER BETWEEN :

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Alpha Oil International ) Royal bld, suite 813, Dangjoo-dong 5, ) ig

Jongro-Ku, Seoul, Korea )...Plaintiff V/s.

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m.t. CHEM LILY ) (and her owners and all other persons ) concerned and/or interested in her) ) y

a Maltese flag together with her hull, ) tackle, engines, machinery, boats, ) ba

bunkers, equipment, paraphernalia and ) all other appurtenances presently in the ) port and harbour of Mangalore within ) om

the territorial waters of India and within ) the Admiralty & Vice Admiralty ) Jurisdiction of this Hon'ble Court )...Defendants ----

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Mr.Bimal Rajasekhar along with Ashwin Shankar for plaintiff. Mr.Prashant Pratap, Sr.Advocate along with Ashwini Sinha for Defendant.

----

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 2/19 NMS381.14 CORAM: K.R.SHRIRAM, J.

DATED : 8th APRIL, 2014.

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ORAL JUDGMENT :

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1 This Notice of Motion is taken out on behalf of the defendant praying for (a) an order and direction to the plaintiff to C

deposit sum of Rs.24 lakhs as security for costs incurred and likely to be incurred by the defendant or such other amount as this Hon'ble Court deems fit and proper and (b) dismiss the suit in the event the h

plaintiff fails to furnish security should the Court decide to allow the prayer for security for costs.

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2 Mr.Pratap Senior Counsel for the defendant submitted that this Notice of Motion should be heard and disposed before the matter proceeds further.

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3 Pursuant to an order dated 19.3.2008 the applicant as the owner of the defendant-vessel furnished security in the sum of USD om

460,000 + interest at 6% p.a. as security for release of the defendant vessel. This was despite the fact that the original order of arrest required the defendant to furnish security in the sum of USD 12,24,976.12 which was shown to be incorrect at the time of B

applying for release of the vessel. The defendant had furnished security without prejudice to their rights and contentions in the matter. The defendant is disputing their liability in respect of bunkers alleged to have been supplied to the defendant vessel. ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 3/19 NMS381.14 4 The plaintiff then filed an affidavit of one Kim in lieu of examination in chief in which the witness has stated that the plaintiff rt

had received a sum of US$ 2,60,000/- from the erstwhile demise charterers SH Marine, who is not a party to the suit and out of this ou

the plaintiff appropriated a sum of US$ 1,88,408.20 to the credit of its claim in the suit but has not disclosed when this amount was C

received. The defendant has alleged in the affidavit in support that as a result of this the defendant has been renewing the bank guarantee for US$ 4,60,000/- from time to time and the guarantee is in force h

till March, 2015 and had the plaintiff disclosed this receipt of money ig

the defendant would have provided bank guarantee for a lesser sum and that would mean saving in bank guarantee charges. The plaintiff H

subsequently took out a Chamber Summons to amend the plaint to bring down its claim by a sum of US$ 1,88,408.20 which according to the plaintiff they have received. This Chamber summons has been y

allowed. The revised claim in the suit now stood at US$ 2,71,197.75. ba

5 It is the defendant's case that the applicant, viz. owner of om

the defendant vessel is based in Norway and the plaintiff is also a foreign company incorporated under the laws of Korea. The plaintiff has no place of business in India and has no asset or immovable property in India and therefore, it is only just, fair and proper that B

the plaintiff be directed to provide security for cost. Mr.Pratap counsel for the defendant submitted that under order XXV of the Code of Civil Procedure 1908 (CPC) which deals with the situation when the security for cost may be required from plaintiff, it is ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 4/19 NMS381.14 mandatory for the court to direct the plaintiff, where the plaintiff is based outside India and has no asset or immovable property within rt

India, to furnish security for cost.

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6 The plaintiff has filed an affidavit of one Ravindra Kumbhar dated 27.3.2014 in reply opposing the Notice of Motion. In C

reply to the specific averment in paragraph-4 to the affidavit in support stating that the plaintiff do not have any place of business in India or assets in the form of immovable property or otherwise h

within India, the plaintiff has not denied the same. In fact, during the ig

course of argument, the Counsel for the plaintiff confirmed that the plaintiff do not possess any asset or immovable property within India. H

7 Order XXV of the Code of Civil Procedure reads as under :- y

"1. When security for costs may be required from ba

plaintiff- (1) At any stage of a suit, the Court may, either of its own motion or on the application of any defendant, order the plaintiff, for reasons to be recorded, to give within the time fixed by it security om

for the payment of all costs incurred and likely to be incurred by any defendant :

Provided that such an order shall be made in all cases in which it appears to the Court that a sole B

plaintiff is, or (when there are more plaintiffs than one) that all the plaintiffs are residing out of India and that such plaintiff does not possess or that no one of such plaintiffs possesses any sufficient immovable property within India other than the property in suit. (2) Whoever leaves India under such circumstances as to afford reasonable probability that he will not be ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 5/19 NMS381.14 forthcoming whenever he may be called upon to pay costs shall be deemed to be residing out of India within the meaning of the proviso to sub-rule (1)." rt

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8 Sub Rule-1 in Rule 2 of order XXV provides for the effect of failure to furnish security in terms of the court's order. Order XXV rule 2(1) of CPC provides as under :-

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"2. Effect of failure to furnish security- (1) In the event of such security not being furnished within the h

time fixed, the Court shall make an order dismissing the suit unless the plaintiff or plaintiffs are permitted ig

to withdraw therefrom."

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9 The defendant's counsel submits that the facts of the present case clearly come within the scope of the proviso to order y

XXV rule 1 sub-rule 1 of the CPC and the provisions are mandatory as will be evident from the word "shall" and "in all cases" contained ba

therein. Therefore, the Court should pass an order for security as prayed in this notice of motion. Mr.Pratap submits that if the plaintiff om

is residing out of India, it is mandatory that security for cost should be awarded though the amount to be awarded should be at the discretion of this court. However, he submits that this provision also B

confers a discretion on the court to order the plaintiff to furnish security either on its own motion or at the instance of the defendant. If the plaintiff is within India then the court may have the discretion to decide whether any cost at all should be awarded, but when the ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 6/19 NMS381.14 plaintiff is a resident out side India then the court has to provide for security for cost from the plaintiff in all cases. Counsel relied on the rt

judgment of the Calcutta High Court in the case of 1Revlon Inc. V/s. Kemco Chemicals and Ors., where the court has confirmed that it is ou

mandatory in cases where the plaintiff is residing out side India, security for cost should be provided under Order XXV rule-1 C

sub-rule 1. The Calcutta High Court has held as under :- "7............ I am unable to accept the contention of Mr. Chakraborty. The real purpose and object of the h

Proviso to Order 25, Rule 1, Sub-rule (1) of C.P.C. is to protect the defendant in case the decision goes against ig

the plaintiff who resides outside India and does not have any immovable property within India. In that case H

the defendant will not be able to recover his costs. Hence the proviso has been made mandatory. Rule 1, Sub-rule (1) gives the discretionary power to Court to order for security for costs considering the facts and y

circumstances of the case and after recording the reasons therefor in all cases excepting the case covered ba

by the proviso. In (1985) 1 SCC 591 para-43, the Supreme Court has shown, how a proviso can be construed. It can qualify or except certain provisions from the main enactment. A proviso can also entirely om

change the very concept of the intendment by introducing a mandatory provision in order to make the enactment workable as will be evident from the manner of construction shown in (1) and (2) of para 43 of (1985) 1 SCC 591 Craies on Statute Law, 17th B

Edn. page 219 stated as follows : -

"But sections, though framed as provisos upon preceding section, may exceptionally contain matter which is in substance a fresh enactment, adding to and 1 AIR 1987 CALCUTTA 285

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 7/19 NMS381.14 not merely qualifying what goes before." This observation applies in full force to the proviso rt

under consideration. This proviso is not an extension of the provisions contained in Rule 1, Sub-rule (1) of ou

Order 25 and has not been enacted for keeping Court's discretion unfettered. If that was the intention of the legislature, then there was no necessity of introducing this proviso at all. This proviso has been enacted for C

excluding the situation contemplated therein from the main enactment by making it mandatory in order to fulfil the very concept of the intendment of the main enactment and to make it workable. As a matter of fact h

this proviso should be construed in the manner as if in substance it is a fresh enactment making it mandatory ig

for the Court to direct the plaintiff to furnish security in all cases where the requirements of the proviso are fulfilled with the view to make the enactment effective. H

This proviso can also be construed as an exception to the preceding portion of the enactment. In this connection the 1st and 2nd method of construction as given in (1985) 1 SCC 591 is worth noticing. I have y

carefully gone through the proviso and has given my anxious thought before coming to this conclusion that ba

this proviso is a mandatory provision. Considering that all the plaintiffs are foreign companies having their respective registered office outside India and that they om

have no immoveable property in India, the facts of this case fulfil all the requirements of the proviso to Order 25, Rule 1, Sub-rule (1) and as such the plaintiffs must furnish security for costs. (emphasis supplied) B

Mr. Pratap also relied upon the judgment of the Apex Court in the matter of 1Salem Advocate Bar Association T.N. Vs. Union of India and in the matter of 2Vinod Seth Vs. Devinder Bajaj. 1 (2005) 6 SCC 344

2 (2010) 8 SCC 1

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 8/19 NMS381.14 10 Per contra, the stand of the plaintiff is that in the affidavit in support, the defendant has not voiced an apprehension that the rt

plaintiff will not honour an order for cost and therefore, the defendant has not made out a case for the court to exercise its ou

discretion and hence the court should not direct the plaintiff to provide security for cost. The notice of motion taken out by the C

defendant is precisely for this reason. They are asking for security for costs because they apprehend the plaintiff will not honour an order for cost. There is no reason to take out this notice of motion h

otherwise. Moreover, the Order 25 Rule 1(i) provides that "the Court ig

may either of its own motion or on the application of any defendant". Therefore, there is no need to express any such apprehension. In the H

affidavit in support it is also alleged that the claim in the suit is false, the plaintiff had suppressed material facts, the receipt of substantial payments were not disclosed, the suit is bound to fail etc. This y

submission of the plaintiff's counsel, therefore, is unacceptable. ba

11 The plaintiff has also contested (a) the accuracy of break om

up of cost in the affidavit in support and (b) also submitted that the defendant has not explained as to why it needs 3 witnesses and has not explained the role of each of the witness to be played in the trial. I shall deal with these two points later. B

12 Mr.Ashwin Shankar also submitted that the party who decides to apply for security for cost must do it promptly. He submitted that the suit was filed in 2008, security was furnished in ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 9/19 NMS381.14 2008 and today after almost six years the defendant has taken out this Motion for security for cost. He relied upon the judgment of the rt

High Court of Calcutta in the matter of 1Sachindra Nath Dutt Vs. Secretary of State for India and Ors. in support of his submission. ou

I am unable to accept this proposition particularly in the facts and circumstances of this matter. Only now has the matter started and no C

sooner the preliminary issues were framed, the defendant has taken out an application for security for cost. Moreover, in the Sachindra Nath Dutt judgment (supra) it is not even clear whether the h

application was under order XXV of CPC or not. The parties therein ig

also are Indian parties and nobody had even appeared for the respondents. Moreover, order XXV rule 1 provides "at any stage of a H

suit, the Court may, either of its own motion or on the application of any defendant.............". Since the CPC itself provides that such an order for security for cost could be made at any stage, either by the y

court on its own motion or on the application of any defendant, I am ba

not inclined to accept the submission of the plaintiff's counsel that there has been a delay on the part of the defendant in taking out this om

application.

13 Mr.Ashwin Shankar further submitted that the order of security for cost is not mandatory but discretionary. He relied upon B

the judgment of the Delhi High Court in the matter of 1Intertoll Ics Cecons.O & M Co.Pvt. Ltd., Vs. National Highways Authority of India. 1 AIR 1930 CAL 520

1 (2013) ILR 2 Delhi 1018

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 10/19 NMS381.14 He submitted that the Delhi High Court has observed in paragraph- 36 as under :-

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".................It is clear from the said provision that it ou

is not a mandatory provision that in every case of such a nature the court must direct the plaintiff to furnish security for costs........."

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The said judgment is not applicable in this case in as much as there both the parties were Indian parties. The plaintiff was an h

Indian company whereas in the present case the plaintiff is not an ig

Indian company. By Reading Order XXV, it is quite clear that in all cases, in case of the plaintiff residing out of India, the court shall H

direct the plaintiff to furnish security for cost where the plaintiff also does not have any assets, immovable property within India. As held in Revlon Inc. (supra) with which I am in total agreement, the y

proviso in Order XXV Rule (1) sub-rule (1), should be construed in ba

the manner as if in substance it is a fresh enactment making it mandatory for the court to direct the plaintiff to furnish security in all cases where the requirements are fulfilled with the view to make om

the enactment effective. The proviso is a mandatory provision. Reading order XXV itself shows that in cases where the plaintiff is a company in India then it is not a mandatory provision that in every B

case of such a nature the Court must direct the plaintiff to furnish security for cost.

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 11/19 NMS381.14 14 Mr.Ashwin Shankar also submitted that assuming for the sake of argument, the court is inclined to accept the submissions of rt

the defendant that it is mandatory in every case where the plaintiff is residing out of India and there are no assets or immovable property ou

within India security for cost is required to be furnished, then the cost that would be provided should strictly be in confirmity with the C

rules in this regard framed by the Bombay High Court (O.S) Rules. He relied upon the judgment of the Apex Court in the matter of 1

Sanjeev Kumar Jain Vs.Raghubir Saran Charitable Trust & Ors., h

where the Apex Court while agreeing that the cost awarded should ig

be realistic and practical also held that the cost to be awarded should be in accordance with the rules. The Apex Court has also appreciated H

the fact that the cost prescribed under the High Court Rules are not realistic in the present scenario but unless the rules are modified, the cost cannot be awarded in excess of what the rules prescribed. y

According to Mr.Ashwin Shankar Rule 606 of the Bombay High Court ba

(O.S) rules prescribed a maximum of Rs.25,000/- and the security for cost should not exceed this amount.

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15 Mr.Shankar also submitted that rule 183 of the Bombay High Court (O.S) Rules provides for traveling allowance and other allowance to be given to a witness. He submitted that under the said B

rule, for person who falls under class-I itself, the witness is entitled to only Rs.20 for travel by rail or steamer fare and for local conveyance or actual taxi or horse carriage fare each way from the place where 1 (2012) 1 SCC 455

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 12/19 NMS381.14 he is put up to the place where he is required to go to give evidence. Though he agreed that the amount of Rs.2 lakhs per witness is rt

reasonable, he submitted that rules only provide for these sums and the court should consider these sums while determining the security ou

for cost to be provided.

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16 It is true that rule 183 prescribes the allowance to be given. The allowance prescribed, in present circumstances, is totally unrealistic. Therefore, while framing the rules, further change in h

circumstances was taken into account and that is why note 8 of rule ig

183 was included. Note 8 reads as under :- H

Note 8 - In cases not fully or clearly covered by this scale or in cases where the Judge thinks special considerations should prevail the Judge shall award such amount for travelling allowance, allowance and y

local conveyance allowance as he deems proper." ba

In this case the plaintiff is based in Korea. The defendant is based in Norway. The cause of action arose outside India. This court exercised om

jurisdiction because defendant no.1-vessel was within the territorial jurisdiction of this court. Certainly witnesses have to travel from outside India to Bombay to give evidence in the matter. Mr. Pratap B

says the witnesses will have to travel from Norway to Mumbai. The witnesses will also have to be lodged somewhere. Boarding expenses will have to be incurred. These would entail substantial costs and certainly these are special considerations. ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 13/19 NMS381.14 17 In response to Mr.Shankar's submission, Mr.Pratap submitted that Rs.25,000/- as provided under Section 606 is only rt

relating to Advocates' fees. Rule 606 reads as under :- ou

"606. Computation of Advocate's fee- Where costs are awarded to a party in any proceeding in the High Court the amount of the Advocate's fee to be taxed in C

the bill of costs recoverable by such party, if represented by an Advocate from his adversary, shall be computed in accordance with the rules herein below :-

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(1) In the following matters, viz.:-

(a) Suits which are decided on merits. ig

......................subject to a maximum of Rs.25,000/-" H

18 When a party seeks cost it does not refer to only Advocates' fees. The cost will include (a) the court fees paid; (b) process fees y

spent; (c) expenses of witnesses (d) Advocates' fees and (e) such other amount as may be allowable under the rules as may be directed ba

by the court as cost. The cost should provide adequate indemnity to the successful litigants for the expenditure incurred by him for the om

litigation. The Court should award realistic actual cost for litigation as contrasted from nominal, or fixed or unrealistic cost because this would persuade the litigants to settle many of the cases before it B

comes up for trial. At the same time the cost should not come in the way to obstruct the courts and justice but at the same time it should not be so low and unrealistic that litigants end up gambling. In Salem Advocate Bar Association Judgment (Supra), in paragraphs 36 & 37 ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 14/19 NMS381.14 the Court has held as under :-

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"36. Section 35 of the Code deals with the award of cost and Section 35A with the award of compensatory costs ou

in respect of false or vexatious claims or defences. Section 95 deals with grant of compensation for obtaining arrest, attachment or injunction on insufficient grounds. These three sections deal with three different C

aspects of the award of costs and compensation. Under Section 95 cost can be awarded upto Rs.50,000/- and under Section 35A, the costs awardable are upto Rs.3,000/-. Section 35B provides for the award of cost h

for causing delay where a party fails to take the step which he was required by or under the Code to take or ig

obtains an adjournment for taking such step or for producing evidence or on any other ground. In circumstances mentioned in Section 35-B an order may H

be made requiring the defaulting party to pay to other party such costs as would, in the opinion of the court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the y

court on that date, and payment of such costs, on the date next following the date of such order, shall be a ba

condition precedent to the further prosecution of the suit or the defence. Section 35 postulates that the cost shall follow the event and if not, reasons thereof shall be om

stated. The award of the cost of the suit is in the discretion of the Court. In Sections 35 and 35B, there is no upper limit of amount of cost awardable.

37. Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that B

either the costs are not awarded or nominal costs are awarded against the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In a large number of cases, such an order is passed despite Section 35(2) of the Code. Such a practice also encourages the filing of frivolous suits. It ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 15/19 NMS381.14 also leads to taking up of frivolous defences. Further wherever costs are awarded, ordinarily the same are not realistic and are nominal. When Section 35(2) provides rt

for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a ou

successful party except in those cases where the Court in its discretion may direct otherwise by recording reasons thereof. The costs have to be actual reasonable costs including the cost of the time spent by the successful C

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 h

aspects and wherever necessary make requisite rules, regulations or practice direction so as to provide ig

appropriate guidelines for the subordinate courts to follow."

H

19 The Law Commission of India in its Report No.240 of May-2012, relied upon by Mr. Pratap, has observed that even after y

the observation made by the Apex Court in the Salem Advocate Bar ba

Association matter, at para-37, not much progress has been made in the revision of relevant rules and regulations. The Law Commission, after considering the same judgments that have been relied upon in om

this matter, has also observed that so far as the High Court Rules governing taxation of cost and Advocates' fees are concerned : B

"..........(i) some or most of the rules are outdated; (ii) they are couched in vague and complex language, lacking in clarity ; and (iii) the scales of advocate's fee as well as other elements of costs are quite low judged by the present day standards. There is every need to undertake thorough revision of the rules by the High ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 16/19 NMS381.14 Courts. We have merely indicated certain aspects broadly for drawing the attention of Hon'ble High Courts as it is not proper to suggest uniform rules rt

applicable to the entire country."

ou

20 Having considered order XXV, Rule 1 of CPC and the judgment in the matter of Revlon Inc. (Supra), I have come to the C

conclusion that the proviso in Rule 1 is a mandatory provision. Considering that the plaintiff is a foreign company, having its registered office outside India and that they have no immovable h

property in India or any other assets in India, the facts of this case ig

fulfills the requirement of proviso of Order XXV sub-rule 1 and as such the plaintiff must furnish security for cost. H

21 The cost to be awarded are in the nature of incidental damages allowed to indemnify a party against the expense of y

successfully vindicating its rights in court and consequently the party ba

to blame pays costs to the party without fault. There are other provisions in the CPC other than order XXV where cost could be om

provided. Section 35 of the Code deals with award of costs and incident to all suits shall be in the discretion of the Court and only where costs are not awarded then the Court shall state its reasons in writing. In fact Section 35 also provides that the fact that the court B

has no jurisdiction to try the suit shall be no bar to the exercise of such powers. Then section 35(A) provides for award of compensatory cost in respect of false or vexatious claim or defences. Section 35(B) provides for the award of cost for causing delay where the party fail ::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 17/19 NMS381.14 to take steps which he was required by or under the Code to take or obtains an adjournment for taking such steps or for producing rt

evidence or on any other ground and then section 95 which provides for grant of compensation for obtaining arrest, attachment or ou

injunction on insufficient grounds. Though under section 95 there is a cap of Rs.50,000 and under Section 35(A) the cost awardable is C

upto Rs.3000/-, under Section 35 and section 35(B) there is no upper limit of amount of cost awardable and the amount of cost to be awarded is at the discretion of the court. h

22

ig

Now comes the next stage of what is the quantum for which the plaintiff must furnish security for cost. In paragraph-7 of H

the affidavit in reply, the defendant has given the break up as under :-

y

Sr.No. Particulars Cost ba

 

1. Legal costs incurred till date for Rs.4 lakhs defending the suit claim including counsel fees and disbursements (for om

release of the vessel and reduction of security and filing written statement)

2. Legal costs likely to be incurred Rs.13 lakhs including counsel fees and

disbursements for the trial ; (including B

framing of preliminary issues discovery and inspection ; marking of documents; witness evidence and cross

examination; final hearing)

::: Downloaded on - 15/04/2014 22:30:33 ::: KJ 18/19 NMS381.14

3. Expenses likely to be incurred for the Rs.6 lakhs Defendant's witness (3 witnesses) including air travel, boarding & lodging rt

and miscellaneous

4. Defendant's share of Commissioner's Rs.1 lakh ou

fees for recording of evidence

TOTAL Rs.24 lakhs C

23 (a) As regards items 1 & 2, in view of the Apex Court Judgments in the matters of Sanjeev Kumar Jain (supra) and vinod h

Seth (supra) I am inclined to follow the provisions of Rule 606 of ig

Bombay High Court (O.S.) Rules. Since the rules provides only for Rs.25,000/- towards Advocates' fees, the plaintiffs have to provide H

security only in the sum of Rs.25,000/-. (b) As regards item 3, the Counsel for the plaintiff submitted that the defendant has not explained as to why he required 3 y

witnesses to depose in the matter though he agreed that Rs.2 lakhs ba

per witness is a reasonable amount. In my view, it is not the business of any party to decide how many witnesses the other side should produce. They may have their own strategy. In my view, there is no om

necessity for any party to explain why each of the witness is required unless the witness being called after the party closes its case or as a rebuttal witness. Therefore, I am inclined to direct the plaintiff to B

provide security in the sum of Rs.6 lakhs for the 3 witnesses since Mr.Shankar also agreed that Rs.2 lakhs per witness is reasonable. Certainly if the defendant does not lead evidence of 3 witnesses and leads evidence of only 1 or 2 witness, it will be open for the plaintiff ::: Downloaded on - 15/04/2014 22:30:34 ::: KJ 19/19 NMS381.14 to apply for release of proportionate security. Of course, that will be decided when an application is taken out and on the circumstances rt

then prevailing.

(c) As regards item-4, in my view, it is a reasonable amount taking ou

into account that expenses to be incurred towards fees of the Commissioner, hiring of venue and secretarial assistance. C

24 In the circumstances, the plaintiff is directed to furnish security in the sum of Rs.7,25,000/- within three weeks from today. h

The security should be either by way of cash deposit to be made with ig

the Prothonotary & Senior Master, High Court, Bombay or by way of a bank guarantee issued by the Nationalized bank based in Mumbai H

in favour of the Prothonotary & Senior Master, High Court, Bombay. 25 Mr.Pratap prayed for prayer clause-(b) also to be granted. y

The effect of failure to furnish security is provided in order XXV rule ba

2 of CPC. The effect automatically follows. Should the plaintiff fail to furnish the security within the time fixed above, the suit shall stand om

dismissed.

The Notice of Motion is accordingly disposed of. Suit to be listed on 2nd May 2014 "for directions." Liberty to apply.

B

(K.R.SHRIRAM, J.)

 

::: Downloaded on - 15/04/2014 22:30:34 :::

What is that you would like to inform by furnishing the above citations?, ofcourse appreciably a painstaking job.  But sorry that there are no such provisions in the criminal law except for imposing cost on unnecessary Cr.M.P.