Rakesh Kumar Gupta vs Mcd And Anr.
2009 Latest Caselaw 4280 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

                         + RFA No. 488/1999

                                           Date of decision : 28.10.2009
IN THE MATTER OF :

RAKESH KUMAR GUPTA                            ..... Appellant
                         Through: Mr. Sanat Kumar, Advocate


                   versus


MCD AND ANR.                                        ..... Respondents
                         Through: Mr. Mukesh Gupta, Advocate with
                         Mr. S.K. Mogha, Advocate for MCD.

CORAM

* HON'BLE MS.JUSTICE HIMA KOHLI

     1. Whether Reporters of Local papers may
        be allowed to see the Judgment?                     Yes

     2. To be referred to the Reporter or not?              Yes

     3. Whether the judgment should be
        reported in the Digest?                             Yes


HIMA KOHLI, J. (ORAL)

1. The present appeal arises out of a judgment and decree dated

03.07.1999 passed by the trial court, dismissing the suit for permanent

injunction filed by the appellant against the respondents, seeking to restrain

them from dispossessing him or interfering in any manner with his physical

possession over the land and structures in plots No. 13 and 14, measuring

600 sq. yards, part of Khasra No. 40/25 situated in the revenue estate of

village Sameypur, Delhi.

2. The case, as set out by the appellant in his plaint, was that he

had come in possession of the aforesaid land in question in the year 1974,

by way of adverse possession and since the year 1978, he had installed a

petrol pump on the said land. It was averred that on 31.03.1997, the

officials of respondents tried to forcibly dispossess the appellant from the

land in question, thus compelling him to institute the suit for permanent

injunction on 03.04.1997.

3. On the very first day, i.e., on 04.04.1997, while issuing

summons to the respondents (defendants in the trial court), an exparte

injunction order was passed, on the interim application for stay filed by the

appellant, restraining the respondent/MCD from dispossessing the appellant

from the land in question without due process of law. After the respondents

entered appearance, a detailed written statement was filed by respondent

No. 1 stating inter alia that the appellant/plaintiff had suppressed material

facts from the court. It was averred that the appellant/plaintiff was a tenant

of one Smt. Jagwati Devi, vide agreement dated 01.04.1978 and that the

land in question was acquired under the Land Acquisition Act for the purpose

of development of Sanjay Gandhi Transport Nagar. It was further stated

that in the year 1987, the appellant was given an alternative site by the DDA

at Outer Ring Road, near Varun Niketan, Pitampura, Delhi and that he had

taken possession of the said land and ever since has been running a petrol

pump therefrom, under the name and style of "Rakesh Filling Station".

4. The respondent No. 1 stated that as per the terms and

conditions of alternative allotment made in favour of the appellant, he was

under an obligation to shut down the existing petrol pump on the suit land

within six months from the time and date of allotment of alternative site.

Vide letter dated 14.02.1990, the appellant/plaintiff was directed by the oil

company, Indo Burma Petroleum Co. Ltd. to stop the operation of the oil

filling station, which was running on the suit land but instead, the appellant

instituted a suit against the said oil company in the trial court registered as

Suit No. 100/90 and obtained an interim injunction restraining the company

from withholding the supply of petroleum products at the petrol pump, i.e.,

the suit property. Counsel for the appellant states that the said suit was

ultimately dismissed. It was further stated in the written statement that a

large chunk of land, including the suit land, was handed over by the DDA to

the MCD and when the MCD tried to remove the appellant and his landlady,

the latter, in connivance with the appellant, filed a suit for permanent

injunction against the MCD in the trial court in which, initially a stay order

was granted in her favour. Counsel for respondent No. 1 now states that the

said suit was ultimately withdrawn by the landlady. Then, the appellant filed

the suit out of which, the present appeal has arisen, wherein, an interim

order was passed in his favour on 04.04.1997, as noted above.

5. After the pleadings were completed, arguments were addressed

and by the impugned judgment dated 03.07.1999 both, the suit and the

interim application was dismissed by the trial court by holding that the

appellant/plaintiff had concealed material details, which were brought to its

notice by the respondent/MCD. The court took notice of the fact that the

suit was instituted by the appellant in the year 1997 and he continued to run

the petrol pump therefrom after taking possession of an alternative site, on

the strength of an ex-parte injunction order, granted on 04.04.1997. Thus,

he was running two petrol pumps simultaneously, instead of surrendering

the suit land to the respondents. Reference was made to the terms and

conditions of the alternative allotment made in favour of the appellant at

Outer Ring Road, Pitampura, Delhi and it was observed that the appellant,

having been granted alternative allotment and having accepted the same,

ought to have handed over possession of the suit land long back, but

continued to retain possession over the same in a malafide manner by filing

and/or getting file several suits.

6. The trial court ultimately rejected the claim of adverse

possession raised by the appellant and after noticing the fact that the land in

question was required by respondent No. 1 for a project, namely,

development of Sanjay Gandhi Transport Nagar, held that the suit and the

application filed by the plaintiff was devoid of merits. As a result, both, the

suit and the application were dismissed with exemplary costs of

Rs.4,75,000/- imposed on the appellant on account of the same being based

on fraud, misrepresentation and concealment of material facts and the ex-

parte injunction order dated 04.04.1997 was vacated.

7. Aggrieved by the aforesaid judgment and decree, the appellant

filed the present appeal. While issuing notice on the appeal on 28.07.1999,

status quo with regard to the plot in question was directed to be maintained.

The appeal was admitted vide order dated 29.11.1999 and the interim order

dated 28.07.1999 was made absolute for the duration of the appeal.

8. When the appeal came up for hearing on 23.10.2009, it was

recorded in the said order that the appellant confined the present appeal to

the issue with regard to imposition of costs alone. Counsel for the appellant

submits that the costs imposed by the trial court are beyond the scope of

the provisions of Section 35A of the Code of Civil Procedure. As is apparent

from a perusal of the relevant sections pertaining to the provisions in the

Code relating to order of imposition of costs, while Section 35 leaves it to

the discretion of the Court to award costs subject to limitations prescribed

therein, Section 35A empowers the Court to order payment of compensatory

costs caused in respect of false or vexatious claims or defences and under

Section 35B, the Court can order the defaulting party to pay costs to the

other side for causing delay in the suit proceedings.

9. Counsel for the appellant submits that the learned ADJ imposed

costs on account of the fact that the suit was based on fraud,

misrepresentation and concealment of material facts. He, therefore, submits

that the costs were in fact imposed under the provisions of Section 35A of

the CPC and that as per sub-clause (2) of Section 35A, the trial court could

not have imposed costs exceeding a sum of Rs.3,000/-. Hence he urges

that the impugned order imposing exemplary costs of Rs.4,75,000/- on the

appellant, is liable to be set aside. In this regard, he refers to and relies

upon a recent judgment of the Supreme Court in the case of Ashok Kumar

Mittal vs. Ram Kumar Gupta and Anr. reported as (2009) 2 SCC 656.

10. In the aforesaid judgment, while dealing with an appeal

pertaining to imposition of exemplary costs of Rs.1 lac each on both, the

petitioner and the respondent therein, the Supreme Court made the

following observations with regard to the provisions of Section 35 and 35A of

the CPC:-

"6. Under Section 35 of the Code, award of costs is discretionary but subject to the conditions and limitations as may be prescribed and the provisions of any law for the time being in force. Under Section 35-A, compensatory costs for vexatious claims and defences may not exceed Rs.3000. Further, the primary object of levying costs under Sections 35 and 35-A CPC, is to recompense a litigant for the expense incurred by him in litigation to vindicate or defend his right. It is therefore payable by a losing litigant to his successful opponent. When an appellant or a plaintiff has already paid the prescribed court fee in regard to the appeal or suit,

to the State at the time of institution, it is debatable whether any costs can be awarded to the State by way of penalty, in a litigation between two private parties. Courts will have to act with care while opening new frontiers.

7. One view has been that the provisions of Sections 35 and 35-A CPC do not in any way affect the wide discretion vested in the High Court in exercise of its inherent power to award costs in the interests of justice in appropriate civil cases. The more sound view however is that though award of costs is within the discretion of the Court, it is subject to such conditions and limitations as may be prescribed and subject to the provisions of any law for the time being in force; and where the issue is governed and regulated by Sections 35 and 35-A of the Code, there is no question of exercising inherent power contrary to the specific provisions of the Code.

8. Further, the provisions of Section 35-A seem to suggest that even where a suit or litigation is vexatious, the outer limit of exemplary costs that can be awarded, in addition to regular costs, shall not exceed Rs. 3000. It is also to be noted that huge costs of the order of rupees fifty thousand or rupees one lakh, are normally awarded only in writ proceedings and public interest litigations, and not in civil litigation to which Sections 35 and 35-A are applicable. The principles and practices relating to levy of costs in administrative law matters cannot be imported mechanically in relation to civil litigation governed by the Code.

9. The present system of levying meagre costs in civil matters (or no costs in some matters), no doubt, is wholly unsatisfactory and does not act as a deterrent to vexatious or luxury litigation borne out of ego or greed, or resorted to as a "buying-time" tactic. More realistic approach relating to costs may be the need of the hour. Whether we should adopt suitably, the western models of awarding actual and more realistic costs is a matter that requires to be debated and should engage the urgent attention of the Law Commission of India.

10. We do not however propose to examine or decide the above issues here, except to observe that courts should not exceed or overlook the limitations placed by the Code with reference to costs in civil litigation. ......" (emphasis added)

11. In an earlier judgment in the case of Salem Advocates Bar

Association, Tamil Nadu vs. Union of India, reported as AIR 2005 SC 3353,

while discussing the issue of awarding costs and taking judicial notice of the

fact that many unscrupulous parties take advantage of the fact that either

costs are not awarded, or nominal costs are awarded against unsuccessful

parties, which are not realistic or reasonable, the Supreme Court made the

following observations:

"38. Section 35 of the Code deals with the award of cost and Section 35-A with award of compensatory costs 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 aspects of award of cost and compensation. Under Section 95 cost can be awarded upto Rs. 50,000/-and under Section 35- A, the costs awardable are upto Rs. 3,000/-. Section 35-B provides for award of cost for causing delay where a party fails to take the step which he was required by or under the Code to take or 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 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 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 the suit or the defence. Section 35 postulates that the cost shall follow the event and if not, reasons thereof shall be stated. The award of the cost of the suit is in the discretion of the Court. In Sections 35 and 35-B, there is no upper limit of amount of cost awardable.

39. Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs as awarded on the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In large number of cases, such an

order is passed despite Section 35(2) of the Code. Such a practice also encourages filing of frivolous suits. It also leads to taking up of frivolous defences. Further wherever costs as awarded, ordinarily the same are not realistic and are nominal. When Section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a 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 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 aspects and wherever necessary make requisite rules, regulations or practice direction so as to provide appropriate guidelines for the subordinate courts to follow." (emphasis added)

12. Thus, it is apparent that in a case like the present one, where

the appellant approached the Court with unclean hands, withheld material

information in his plaint and wrongfully obtained an ex-parte interim order in

his favour, had an application been filed by the respondent under Section 95

of the Code, not only could the Court have compensated the respondent by

ordering the appellant to pay costs not exceeding a sum of Rs.50,000/-, but

dehors the above provision, it was still in the discretion of the Court to

award costs under Section 35 of the Code, subject to certain limitations and

conditions imposed in that regard, apart from awarding compensatory costs

envisaged under Section 35A and dilatory costs under Section 35B of the

Code. Further, Section 35B of the Code clarifies that the limitation of

Rs.3,000/- for awarding compensatory costs, applies to "any suit or other

proceedings, including an execution proceeding, but excluding an

appeal or revision".

13. Thus, the fetters imposed under Section 35A of the Code do not

apply to the present proceedings being an appeal arising out of suit

proceedings. Further, while disposing of the present appeal, this Court in its

discretion, is empowered to impose costs on the appellant under Section 35

of the Code, which incidentally were not awarded by the trial court.

14. At this stage, counsel for the appellant states that the appellant

volunteers to pay a sum of Rs.1 lac to the contesting respondent No. 1,

irrespective of the limitation on compensatory costs imposed by the statute

under Section 35A of the Code.

15. Having regard to the aforesaid submissions, the stipulation

imposed on the trial court by Section 35A of the Code, as enunciated by the

Supreme Court in the case of Ashok Kumar Mittal (supra) and in view of the

fact that the appellant has on his own offered to pay a sum of Rs.1 lac to the

respondent/MCD as costs, this Court refrains from dilating further on the

issue of award of costs and quantifying them under Sections 35 & 35A in the

present proceedings. The impugned judgment and decree is therefore

modified to the extent that the costs of Rs.4,75,000/- imposed on the

appellant in the impugned judgment, are scaled down to Rs.1,00,000/-.

16. Counsel for respondent No. 1 states that as the appeal has been

confined by the appellant to the issue of costs alone, to obviate any

difficulty, the status quo order passed on 28.7.1999 and made absolute on

29.11.1999, may be specifically vacated to enable the respondent/MCD to

take further steps with regard to the land in question.

17. Counsel for the appellant states that certain underground tanks

and machinery belonging to the appellant are required to be removed from

the land in question for which, he seeks six weeks time. Counsel for the

respondent states that in view of the contentious and long drawn litigation

between the parties, it would be appropriate if a date and time is fixed

immediately after expiry of six weeks, for the appellant to hand over formal

physical and peaceful possession of the suit land to the respondent No.

1/MCD, to which, counsel for the appellant has no objection.

18. Accordingly, it is directed that the parties shall be present at the

site on 11.12.2009 at 11:00 AM for the purpose of formal handing

over/taking over of the suit land. Counsel for the appellant states that on or

before the said date, he shall also pay the costs of Rs.1 lac to the

respondent No. 1/MCD.

19. The appeal is disposed of limited to the aforesaid extent. Trial

court record be released forthwith.

                                                             (HIMA KOHLI)
OCTOBER 28, 2009                                               JUDGE
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