What is the Difference between Costs and Compensatory Costs?

Difference between Costs and Compensatory Costs are as follows:

Kinds of Costs:

The Code of Civil Procedure provides for three kinds of costs namely:

1. General Costs – Section 35, Order 20-A.

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2. Compensatory Costs for false or vexatious claims or defences – Section 35-A.

3. Costs for causing delay – Section 35-B.

General Costs:

Sec. 35, C.P.C. stipulates the following condition-

Section 35:

(1) (a) the costs of and incident to all suits shall be in the discretion of the Court, and

(b) 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

(c) To give all necessary directions for the purposes of payment of costs,

(d) The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such power.

(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reason in writing.

In Peddanna vs. Srinivasayya, the Supreme Court held that the object in awarding costs to a litigant is to secure to him the expenses incurred by him in the litigation. Order 20-A furnishes the items which are covered as general costs under Section 35, C.P.C.

(a) Expenditure incurred for the giving of any notice to party before institution of suit;

(b) Expenditure incurred on any notice given to other party before institution of suit;

(c) Expenditure incurred towards typing, writing or printing of pleading filed by any party;

(d) Charges paid by a party for inspection of the records of the Court for the purposes of the suit;

(e) Expenditure incurred by party for producing witnesses, even though not summoned through Court; and

(f) In the case of appeals, charges incurred by a party for obtaining any copies of judgements and decrees which are required to be filed along with the memorandum of appeal.

The plaintiff, if the suit is decreed with costs, is entitled in addition to the above, the Court fee and also advocate fee as per rules.

Section 35-A of C.P.C. Compensatory costs or exemplary costs:

Section 35 was amended in 1976 and 35-A was added in order to contain vexatious or false suits. The object of granting compensatory cost to the objector is to set an example to other litigants not to file false or vexatious suits or claims.

Section 35-A stipulates following conditions-

35-A (1):

(a) this section includes suit, execution proceeding or other proceedings but excludes an appeal or revision,

(b) if any party in a suit objects to a claim or defence on the ground that it is false or vexatious to the knowledge of the party by whom it has been put forward in the suit,

(c) if such claim or defence is disallowed against the objector, the party by whom such claim or defence has been put forward shall be directed to pay compensatory costs to the objector.

(2) No Court shall award or order compensatory costs exceeding Rs. 3,000/- or its pecuniary jurisdiction whichever is less.

(3) No person against whom compensatory costs have been ordered, shall, by reason thereof, be exempted from criminal liability in respect of any claim or defence made by him.

(4) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence.