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CPC 1908 — Section 35: Costs

CPC 1908 • Part I • Judgment & Decree

Section 35 — Costs

Who pays the legal bill? After the suit is decided, the Court decides who bears the costs — and that power is wide, discretionary, and (since the 2002 reform) must be reasoned when it departs from the normal rule.

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How to read Section 35
1

What it is about

It governs costs of litigation — court fees, advocate’s fees and incidental expenses — and tells the Court who must pay, out of what, and how much.

2

The rule — a discretion

Costs are in the discretion of the Court. There is no automatic right to costs; but the discretion is judicial, guided by the principle that costs follow the event (the loser usually pays the winner).

3

The 2002 check

Sub-section (2) adds a duty to give written reasons whenever the Court decides that costs shall not follow the event — discretion, but accountable discretion.

The bare Act — verbatim

⚖ Section 35. Costs.

(1)

Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.

(2)

Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.

Dissecting Section 35 — sub-section by sub-section


⚖ What §35(1) lets the Court decide

👤

BY WHOM

Which party (or non-party, e.g. a guardian or pleader) must bear the costs.

🏦

OUT OF WHAT PROPERTY

The fund or property from which costs are to be paid — e.g. the estate in a representative suit.

📊

TO WHAT EXTENT

The amount — full, part, or proportionate costs, taxed under the rules.

📝

ALL NECESSARY DIRECTIONS

Any ancillary order to give effect to the costs decision.

⚠️ Even if the Court had no jurisdiction to try the suit, it may still award the costs of that suit.
LimitSubject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in forceThe discretion is not unfettered. It is bound by the Rules (Order XXA, taxation rules) and by any other statute in force (court-fee laws, special Acts).
Scopethe costs of and incident to all suitsCovers both the costs of the suit and costs merely incidental to it, in all suits — the reach is general.
Core ruleshall be in the discretion of the CourtThe heart of §35 — there is no automatic right to costs; the Court decides. But it is a judicial discretion, exercised on sound principle, not whim.
Powersfull power to determine by whom or out of what property and to what extent such costs are to be paidThree express determinations — who pays, out of what fund, and how much.
Ancillaryand to give all necessary directions for the purposes aforesaidA clean-up power to make whatever further orders are needed to carry the costs decision into effect.
SpecialThe fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powersStriking rule: a Court that returns or dismisses a plaint for want of jurisdiction can still award the costs of the proceeding before it.

⚙️ Elements (working parts)

  • Costs are discretionary, not a right
  • Court fixes who / from what / how much
  • Power to give all necessary directions
  • Want of jurisdiction is no bar

⏱️ Conditions (limits)

  • Subject to prescribed conditions (the Rules)
  • Subject to any law in force
  • Discretion must be judicial — on principle
  • Guided by “costs follow the event”

⚖ The default — and the duty to explain a departure

⚖

Suit decided

There is a winner (the “event”).

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✅

Costs follow the event

Normal rule — the losing party pays the winner’s costs. No special reasons needed.

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✍️

Departs from it

Court orders costs not to follow the event — then it must state its reasons in writing.

“Costs follow the event” is the guiding principle; §35(2) makes any departure from it accountable.
ConditionWhere the Court directs that any costs shall not follow the eventThe trigger — the Court chooses to depart from the normal rule and not make the loser pay the winner (e.g. the winner’s conduct was blameworthy).
Mandatethe Court shall state its reasons in writingA mandatory duty to record written reasons. Inserted by the 1999/2002 amendment to curb arbitrary refusal of costs and make the discretion reviewable.

⚙️ Element

  • Default: costs follow the event
  • Court may order otherwise
  • If so — written reasons required

💡 Why it was added

  • Makes discretion transparent
  • Loser-pays should be the norm
  • Refusal of costs must be justified
How sub-sections (1) and (2) connect

🔗 A wide discretion, made accountable

SUB-SECTION (1) — THE DISCRETION

Costs are in the Court’s discretion

The Court decides who pays, out of what, and how much — a very wide, full power, guided by “costs follow the event”.

COSTS FOLLOW THE EVENT

↔
the normal rule
SUB-SECTION (2) — THE CHECK

Reasons if it doesn’t

When the Court departs from that rule (costs not following the event), it must record written reasons.

The two are power and restraint: (1) hands the Court a broad discretion over costs; (2) keeps it judicial — any departure from the loser-pays norm has to be explained on paper. (2) does not shrink (1); it makes (1) transparent and reviewable.
The amendment — §35 for commercial disputes
Commercial Courts Act, 2015 · Schedule

⚖️ Section 35 — as SUBSTITUTED for Commercial Disputes

For a commercial dispute of a Specified Value tried by a Commercial Court / Commercial Division of a High Court, the Commercial Courts Act, 2015 (Schedule) replaces the whole of §35 with this far more detailed costs code — a true “costs follow the event” regime. For every other suit, the general §35 above still governs.

🧾 General §35 (above)

Applies to all ordinary suits. Costs are discretionary; loser-pays is a guiding principle; reasons needed to depart.

🏢 Commercial §35 (this block)

Applies only to commercial disputes of a Specified Value (Commercial Courts Act, 2015). Codifies the discretion, the loser-pays rule, the factors, and the forms of cost orders.

⚖️ Section 35 (Commercial Courts Act, 2015, Schedule) — verbatim

(1)

In relation to any Commercial dispute, the Court, notwithstanding anything contained in any other law for the time being in force or Rule, has the discretion to determine:

(a) whether costs are payable by one party to another;

(b) the quantum of those costs; and

(c) when they are to be paid.

Explanation.—For the purpose of clause (a), the expression “costs” shall mean reasonable costs relating to— (i) the fees and expenses of the witnesses incurred; (ii) legal fees and expenses incurred; (iii) any other expenses incurred in connection with the proceedings.

(2)

If the Court decides to make an order for payment of costs, the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party:

Provided that the Court may make an order deviating from the general rule for reasons to be recorded in writing.

Illustration. The Plaintiff, in his suit, seeks a money decree for breach of contract, and damages. The Court holds that the Plaintiff is entitled to the money decree. However, it returns a finding that the claim for damages is frivolous and vexatious. In such circumstances the Court may impose costs on the Plaintiff, despite the Plaintiff being the successful party, for having raised frivolous claims for damages.

(3)

In making an order for the payment of costs, the Court shall have regard to the following circumstances, including—

(a) the conduct of the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful;

(c) whether the party had made a frivolous counter-claim leading to delay in the disposal of the case;

(d) whether any reasonable offer to settle is made by a party and unreasonably refused by the other party; and

(e) whether the party had made a frivolous claim and instituted a vexatious proceeding wasting the time of the Court.

(4)

The orders which the Court may make under this provision include an order that a party must pay—

(a) a proportion of another party’s costs;

(b) a stated amount in respect of another party’s costs;

(c) costs from or until a certain date;

(d) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings;

(f) costs relating to a distinct part of the proceedings; and

(g) interest on costs from or until a certain date.

Dissecting the commercial §35 — sub-section by sub-section










🧮 Three things the Court decides — overriding any other law

❓

(a) WHETHER

whether costs are payable by one party to another at all.

💵

(b) QUANTUM

how much — the amount of those costs.

📅

(c) WHEN

the time by which they are to be paid.

“costs” = reasonable costs relating to:
(i) Witnessesfees and expenses of the witnesses incurred
(ii) Legallegal fees and expenses incurred
(iii) Otherany other expenses connected with the proceedings
Discretionthe Court, notwithstanding anything contained in any other law for the time being in force or Rule, has the discretion to determineAn overriding discretion — it operates notwithstanding any other law or Rule, so the older general §35 / court-fee rules do not cut it down for commercial disputes.
(a) Whetherwhether costs are payable by one party to anotherFirst question — are costs to be shifted between the parties at all.
(b) Quantumthe quantum of those costsSecond — the amount. Unlike §35A there is no fixed money cap; the test is reasonableness.
(c) Whenwhen they are to be paidThird — the timing of payment.
Explanation“costs” shall mean reasonable costs relating to— (i) the fees and expenses of the witnesses incurred; (ii) legal fees and expenses incurred; (iii) any other expenses incurred in connection with the proceedingsA statutory definition of “costs” (the general §35 has none): witness costs, legal fees, and any other proceeding-related expense — all on a reasonableness standard.

⚖️ The default rule — and how to depart from it

✅

General rule

The unsuccessful party pays the costs of the successful party. Loser-pays is the express default.

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✍️

Deviation

The Court may depart from loser-pays — but only for reasons recorded in writing.

💡 Illustration (in the section)

A plaintiff wins a money decree for breach of contract but his damages claim is held frivolous and vexatious — the Court may impose costs on the winning plaintiff for that frivolous claim. Winning is not a guarantee against a costs order.

General ruleIf the Court decides to make an order for payment of costs, the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful partyCodifies “costs follow the event” as an express rule — the loser ordinarily pays the winner (stronger than the general §35, where it is only a guiding principle).
ProvisoProvided that the Court may make an order deviating from the general rule for reasons to be recorded in writingThe escape valve — departure is allowed, but only on written reasons (mirrors general §35(2)).
Illustrationthe Court may impose costs on the Plaintiff, despite the Plaintiff being the successful party, for having raised frivolous claims for damagesShows the deviation in action: a successful party can still be penalised in costs for the frivolous/vexatious parts of its case (links to factor (3)(e)).

⚖️ Five circumstances the Court must weigh (“including” — not a closed list)

a

Conduct of the parties — how each side behaved in the litigation.

b

Partial success — whether a party won part of its case, even if not wholly successful.

c

Frivolous counter-claim that delayed disposal of the case.

d

Reasonable settlement offer made by one party and unreasonably refused by the other.

e

Frivolous claim / vexatious proceeding that wasted the Court’s time.

Duty + open listIn making an order for the payment of costs, the Court shall have regard to the following circumstances, including—“shall have regard” makes consideration of these factors mandatory; “including” makes the list illustrative, not exhaustive — the Court may weigh other relevant matters too.
The theme(a) conduct … (b) … succeeded on part … (c) frivolous counter-claim leading to delay … (d) reasonable offer to settle … unreasonably refused … (e) frivolous claim … vexatious proceeding wasting the time of the CourtAll five pull one way: reward good conduct and reasonableness (settle, succeed on merits) and penalise abuse (frivolous claims/counter-claims, delay, unreasonable refusal to settle). This is how a winner can still lose costs — or a loser pay less.

🧾 The menu of cost orders (“include” — illustrative)

a

a proportion of another party’s costs

b

a stated amount in respect of another party’s costs

c

costs from or until a certain date

d

costs incurred before proceedings have begun

e

costs relating to particular steps taken

f

costs relating to a distinct part of the proceedings

g

interest on costs from or until a certain date

Inclusive menuThe orders which the Court may make under this provision include an order that a party must pay—“include” again signals a non-exhaustive toolkit — the Court can fashion a precise, tailored costs order rather than an all-or-nothing one.
Notable powers(a) a proportion … (d) costs incurred before proceedings have begun … (f) … a distinct part … (g) interest on costsPowers the general §35 lacks expressly: proportionate / issue-based costs (a)(e)(f), pre-litigation costs (d), and interest on costs (g) — granular tools to match costs to who caused what.

📄 Explanation — what counts as “costs”

(i) Witnessesfees and expenses of the witnesses incurred
(ii) Legallegal fees and expenses incurred
(iii) Otherany other expenses connected with the proceedings
All on a “reasonable costs” standard — and the general §35 has no such definition.
ExplanationFor the purpose of clause (a), the expression “costs” shall mean reasonable costs relating to— (i) the fees and expenses of the witnesses incurred; (ii) legal fees and expenses incurred; (iii) any other expenses incurred in connection with the proceedingsA statutory definition of “costs” attached to clause (a) of sub-section (1). It tells the Court exactly what it may shift — witness costs, legal fees, and any other proceeding-related expense — all measured by reasonableness. This precision is unique to the commercial regime.

💡 Illustration — even a winner can be made to pay

✅

Wins the money decree

The plaintiff succeeds on the breach-of-contract money claim.

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⚠️

…but frivolous damages

The damages claim is held frivolous and vexatious.

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💰

Costs on the winner

The Court may impose costs on the successful plaintiff for the frivolous claim.

Illustrationthe Court may impose costs on the Plaintiff, despite the Plaintiff being the successful party, for having raised frivolous claims for damagesThe illustration to sub-section (2): a plaintiff wins his money decree but his damages claim is found frivolous/vexatious. It shows the loser-pays rule is not mechanical — a successful party can still be penalised in costs for the abusive parts of its case (ties to factor (3)(e)).
How the commercial sub-sections (1)–(4) connect

🔗 A complete costs-decision pipeline

(1) WHAT

Power + definition

An overriding discretion over whether/quantum/when, and a definition of “costs”.

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(2) DEFAULT

The rule

Loser pays the winner — unless the Court deviates for written reasons.

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(3) FACTORS

How to decide

Five circumstances (conduct, partial success, frivolity, refused settlement…) guide the discretion.

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(4) FORMS

The tools

A menu of order types (proportionate, pre-litigation, interest on costs…) to express the decision.

The four sub-sections are one pipeline: (1) grants & defines the power, (2) sets the default outcome, (3) tells the Court how to reason to it, and (4) supplies the tools to shape the final order — power → rule → reasoning → order.
General §35 vs Commercial §35 — side by side
Dimension
General §35 (gold)
Commercial §35 (indigo)
Applies to
All ordinary suits
Commercial disputes of a Specified Value only
Source
CPC §35 (1976 / 2002 amendments)
Commercial Courts Act, 2015 (Schedule)
Default rule
“Costs follow the event” — guiding principle
EXPRESS: unsuccessful party pays successful party
Deviation
Allowed; reasons in writing (s.35(2))
Allowed; reasons in writing (proviso to (2))
“Costs” defined?
No definition
YES — witness + legal + other expenses
Factors listed?
No express list
YES — (a)–(e): conduct, partial success, frivolous counter-claim, refused settlement, vexatious claim
Forms of order
General (who / from what / how much)
EXPRESS menu (a)–(g): proportionate, pre-litigation, interest on costs…
Money cap?
No cap (distinct from §35A’s ₹3,000)
No cap — test is reasonableness
Connected provisions
§35A — Compensatory costs (false/vexatious)
§35B — Costs for causing delay
§34 — Interest
Order XXA — Costs (matters & amounts)
Order XX r.6 — Decree to state costs
“Costs follow the event” — guiding principle

⏲ What changed over time — a timeline

Section 35 carries three distinct layers of change — an old sub-section dropped, the modern commercial-courts rewrite, and a recent territorial adaptation:

1957
Act 66 of 1956, s. 3 — old sub-section (3) omitted
Change the former sub-section (3) of § 35 was omitted (w.e.f. 1 January 1957) — it is shown in the bare Act as the gap “1* * * * *”.
Why it cleared out a spent provision, leaving the general costs-discretion in (1) and the duty to record reasons for departing from “costs follow the event” in (2).
2015
Act 4 of 2016, s. 16 & the Schedule — the commercial rewrite
Change a substituted § 35 was made applicable to commercial disputes of a Specified Value (w.e.f. 23 October 2015) by the Commercial Courts Act, 2015 — the (1)(a)–(c)+Explanation, (2)+proviso+Illustration, (3)(a)–(e), (4)(a)–(g) version set out above.
Why to give commercial courts a modern “loser-pays” costs regime — reasonable costs, conduct-based departures, and a menu of cost orders — sharper than the open-ended discretion of the general § 35.
2020
J&K and Ladakh adaptation — “Commercial” omitted
Change on reorganisation, sub-section (1) of the substituted § 35 was adapted for the Union Territories of Jammu & Kashmir and Ladakh by omitting the word “Commercial”.
Why see the State-amendment panel below for exactly what this does and its effect in those territories.

🏛 State amendment — Jammu & Kashmir and Ladakh (UTs)

State Amendment · J&K and Ladakh (UTs)

In Section 35, in sub-section (1) omit “Commercial”.

[Vide the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, Notification No. S.O. 3774(E), dated (23-10-2020).]

What it does

In the substituted § 35(1) the opening words are “In relation to any commercial dispute, the Court…”. For these UTs the adaptation deletes “Commercial” from that sub-section, so it reads “In relation to any dispute…”.

Its effect in J&K / Ladakh

Dropping the qualifier means the modern costs regime of the substituted § 35 is no longer confined to commercial disputes in these territories — it reads more broadly, matching the way the Commercial Courts framework was carried into the reorganised UTs in 2020.

What kind of amendment

A purely adaptational change, made by Adaptation of Central Laws Orders following the 2019 reorganisation of the erstwhile State — it alters the provision’s scope (which disputes it reaches) without touching the costs machinery itself.

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