S.

16 Suits to be instituted where subject matter situate

Subject to pecuniary and other limitations prescribed by any law, suits for:

1) Recovery of immoveable property with or without rents and profits,

2) Partition of immoveable property,

3) Foreclosure, sale, redemption in cases of mortgage or charge upon immoveable property,

4) Determination of any other right or interest in immoveable property,

5) Compensation of wrong to immoveable property,

6) Recovery of moveable property actually under attachment,

Shall be instituted in Court, within the local limits of whose jurisdiction the property is situate. It is
also provided that

- When suit is filed t obtain relief respecting or compensating any wrong to any immoveable
property,

- And relief can be entirely obtained through personal obedience.

In above case, the suit can be instituted either at

· Court within whose local limit the property is situated.

· Court within whose local jurisdiction the defendant voluntarily resides or conducts business or
trade.

Anand Bazaar Patrika V Biswanath Prasad

Held a suit for Specific performance for, contract of sale with possession, it has to be instituted
in the Court in whose jurisdiction the property is situated and can not be filed where cause of action
arises.

Seetha Rama Chetty V Kamala Amma

In a suit filed in Bangalore for a property located in Tamilnadu, to determine right and interest
in the immoveable property, Court held that as long as the defendant is residing within the
jurisdiction of Bangalore Court, where the suit is instituted, the suit was maintainable under S.16(d)
read with the proviso.
S.17 Suits for immovable property situate within jurisdiction of different Courts

Where the subject matter of the suit, immoveable property, is situated within the local
jurisdiction of two or more different Courts, the suits may be instituted in any Court, within whose
local jurisdiction, a portion of the property is situated, and Court is competent to adjudicate over
entire suit property, not just portion situated in its jurisdiction.

S.18 Place of institution of suit where local limits of jurisdiction of Courts are
uncertain

When it is uncertain as regards under which of the two or more Courts, the territorial
jurisdiction falls into, and one of such Courts has also ascertained such uncertainty, then it may
proceed to entertain and dispose the suit related to the property; after recording the existence of
such uncertainty.

Where no such statement has been recorded and objection is raised in appeal or revision, the
Higher Court will not allow such objection unless

=> At time of institution of suit, no reasonable ground for uncertainty as to Court was
there, and,

=> It has resulted in consequent failure of justice.

In these cases, apart from the uncertain territorial jurisdiction, the Court should be competent as
regards
-> nature of suit -> pecuniary jurisdiction.

S.19 Suits for compensation for wrongs to person or movables

In case of wrong to person or moveables :-

=> In place where Cause of Action arose

=> In place where the defendant ordinarily resides or carries business or personally
works for gain.

Eg

Defendant Hits Plaintiff

A --------------------------> B
Madras Delhi Delhi <= Place of Residence/Occurrence

Cause of action lies in Delhi, so can sue in Delhi. The defendant resides in Madras, so can sue in
Madras.
S.20 Other suits to be instituted where defendants reside or cause of action arises

Subject to afore said limitations, i.e Ss 15 to 19,every suit shall be instituted in Court within whose
local limits of jurisdiction:-

- Defendant(s) at time of commencement of suit actually or voluntarily resides carries business or

trade or personally works for gain.

- any of the defendant ( if more than one) at time of commencement of suit actually or voluntarily
resides carries business or trade or personally works for gain, provided (a) Court gives leave to do so
(b) Defendants who don’t reside there accept.

- Where cause of action arises.

For the purpose of S. 20, it is deemed that a Corporation carries on its business at its

- Sole/ Principal office.

- Sub-Ordinate Office, if cause of action arose at such location.

Eg

A resides in Shimla, B resides in Calcutta , C resides in Delhi. A B and C together in Benaras , and B
and C together execute a joint promissory note payable on demand and delivered it to A in Benaras.

A may sue B and C at (A) Benaras where Cause of Action.

(B) Calcutta or Delhi where A/B resides provided other defendant accepts or
Court grants leave.

Patel Roadways V Parsad Trading Company 1992

Where defendant has Principal Office at one place and Sub Ordinate office at another, and Cause
of Action arose, in place where the subordinate office is located, then the place of subordinate office
where cause of action arose is the relevant place for filing the suit and not the place where principal
office is located. Held, that, the explanation to S.20 provides an alternative locus for corporation’s
place of business and not an additional one.

ABC Lamnart Private Ltd V AP Agencies

Held, the jurisdiction of Court in matter of contract will depend on the situs of contract and
Cause of Action arising through connecting factors. Further held, the parties may agree to vest
jurisdiction in one of the many competent Court and such Ouster Clause is valid if

- the clause is explicit , precise and unambiguous.

- not hit by Ss. 23 and 28 of Indian Contract Act.

S.21 Objections to jurisdiction

No objection as to place of suing is allowed in any Appellate or Revisionary Court , unless

- such objection was taken in the Court of first instance at the earliest possible opportunity.

- in cases where settlement is arrived, at or before, such settlement and

- there has been a consequent failure of justice.

No objection as to competence of Court as to pecuniary jurisdiction will be allowed at any appellate

or revisionary Court unless, conditions mentioned above are satisfied.

No objection as to competence of executing Court will be allowed unless

- such objection was taken in the Court of first instance at the earliest possible opportunity and,

- there has been a consequent failure of justice.

RSDV Finance Company Ltd V Shree Vallabh Glass Works 1993

Where in respect of a suit the two conditions namely

1)such objection was taken in the Court of first instance at the earliest possible
opportunity.

2) in cases where settlement is arrived, at or before, such settlement , are satisfied and
the third condition namely

3) there has been a consequent failure of justice, has not been satisfied, it was HELD
that Court would not be justified in allowing objection to jurisdiction of Court in appeal.
The defendant or plaintiff has liberty to transfer a suit or appeal from one Court to the another Court
of the similar rank and if Court satisfied with the contents of the application for the transfer of suit or
appeal then Court can transfer the same in the interest of Justice. Section 22 to Section 25 of the
Civil Procedure Code 1908 deal with the provisions of transfer of suit or appeal.

Provision as to Transfer of suits:

Section 22 to Section 25 deal with the provisions of transfer of suit or appeal which are as under:

1. Power to transfer suits which may be instituted in more than one Court:
According to Section 22 of the Civil Procedure Code 1908, Where a suit may be instituted in
any one of two or more Courts and is instituted in one of such Courts, any defendant, after
notice to the other parties, may, at the earliest possible opportunity and in all cases where
issues are settled at or before such settlement, apply to have the suit transferred to another
Court, and the Court to which such application is made, after considering the objections of
the other parties (if any), shall determine in which of the several Courts having jurisdiction
the suit shall proceed.

2. To what Court application lies (Section 23):

i. Where the several Courts having jurisdiction are subordinate to the same Appellate
Court, an application under section 22 shall be made to the Appellate Court.

ii. Where such Courts are subordinate to different Appellate Courts but to the same
High Court, the application shall be made to the said High Court.

iii. Where such Courts are subordinate to different High Courts, the application shall be
made the High Court within the local limits of whose jurisdiction the Court in which
the suit is brought is situate.

3. General power of transfer and withdrawal Section 24:1.On the application of any of the
parties and after notice to the parties and after hearing such of them as desired to be heard,
or of its own motion without such notice, the High Court or the District Court may at any
stage:

a. Transfer any suit, appeal or other proceeding pending before it for trial or disposal to any Court
subordinate to it and competent to try or dispose of the same, or

b. Withdraw any suit, appeal or other proceeding pending in any Court subordinate to it, and:

i. Try or dispose of the same; or

ii. Transfer the same for trial or disposal to any Court subordinate to it and competent
to try or dispose of the same; or

iii. Retransfer the same for trial or disposal to the Court from which it was withdrawn.

2.Where any suit or proceeding has been transferred or withdrawn under sub-section (1), the Court
which is thereafter to try or dispose of such suit or proceeding] may, subject to any special directions
in the case of any order of transfer, either retry it or proceed from the point at which it was
transferred or withdrawn.

4. Power of Supreme Court to transfer suits, etc (Section 25):

1. On the application of a party, and after notice to the parties, and after hearing such
of them as desire to be heard, the Supreme Court may, at any stage, if satisfied that
an order under this section is expedient for the ends of justice, direct that any suit,
appeal or other proceeding be transferred from a High Court or other Civil Court in
one State to a High Court or other Civil Court in any other State.

2. Every application under this section shall be made by a motion which shall be
supported by an affidavit.

3. The Court to which such suit, appeal or other proceeding is transferred shall, subject
to any special directions in the order of transfer, either retry it or proceed from the
stage at which it was transferred to it.

4. In dismissing any application under this section, the Supreme Court may, if it is of
opinion that the application was frivolous or vexatious, order the applicant to pay by
way of compensation to any person who has opposed the application such sum, not
exceeding two thousand rupees, as it considers appropriate in the circumstances of
the case.

5. The law applicable to any suit, appeal or other proceeding transferred under this
section shall be the law which the Court in which the suit, appeal or other
proceeding was originally instituted ought to have applied to such suit, appeal or
proceeding.

Grounds for Transfer

Sufficient Grounds:

1. Reasonable Apprehension of Bias:

 Raghunandan v. G.H. Chawla – Ensures impartiality in trials
by avoiding potential prejudice.
2. Avoiding Multiplicity of Proceedings:
 Rajulu v. Govindan – Prevents conflicting judgments by
consolidating cases with similar causes of action.
3. Balance of Convenience:
 Indian Overseas Bank v. Chemical Construction Co. –
Weighs the convenience of parties and accessibility of
evidence to ensure fairness.

Insufficient Grounds:
 1. Personal inconvenience or distance from residence (Arvee
Industries v. Rata Lal).
2. Unsubstantiated allegations of bias.

Key Case Laws and Their Relevance

1. Ms. Basanti Devi v. Mst. Sahodra:

Clarified that transfer decisions must balance fairness and

convenience, considering all circumstances.

2. Raghunandan v. G.H. Chawla:

Highlighted the importance of avoiding bias to ensure impartial

trials.

3. Indian Overseas Bank v. Chemical Construction Co.:

Defined “balance of convenience” as an essential factor in transfer

decisions.

4. Guda Vijayalakshmi v. Guda Ramchandra Sekhara Sastry:

Emphasized consolidating related cases under Section 25 for

efficiency.

5. Rajulu v. Govindan:

Prevented conflicting rulings by transferring cases with overlapping

causes of action.
Institution of Suit

Sections 26 to 35-B and Orders 1 to 20 of the First Schedule deal with the procedure relating to

suits.

Orders 1, 2 and 4 provide for parties to suit, frame of suit and institution of suit.

Sec.26 – Institution of suits - Every suit shall be instituted by the presentation of a plaint or in

such other manner as may be prescribed.

Order 4, Rule 1. Suit to be commenced by plaint –

(1) Every suit shall be instituted by presenting plaint in duplicate to the Court or such officer as

it appoints in this behalf.

(2) Every plaint shall comply with the rules contained in Orders VI and VII, so far as they are

applicable.

(3) The plaint shall not be deemed to be duly instituted unless it complies with the requirements

specified in sub-rules (1) and (2).

Suit – A proceeding started on an application made under the UP Agriculturists’ Relief Act was

treated as a suit – AIR 1949 All 100.

The word suit ordinarily means and apart from context, must be taken to mean a civil proceeding
instituted by Plaint – AIR 1933 PC 63.

The essential provisions as to procedure in suits are incorporated in Secs.28 to 35A.

There is a conflict of authorities on the question whether a pauper suit is instituted when the

application to sue as pauper is presented or after permission is granted by the Court. The weight

of authority is in favour of the former view, and that it is submitted, is the better opinion – AIR

1955 Nag 259.

A proceeding under the Hindu Marriage Act is a suit, though initiated by a petition –(1967) Jub LJ
712. And so is an application under Sec.20 of the Arbitration Act, 1940 – AIR 1966 Cal 259. A
proceeding under the Land Acquisition Act is not a suit – AIR 1970 Ker 30.

Summons (Sec.26, Or.4 and Sec.27, 28, 31 and Or.5)

A summons is a document issued from an office of a Court of a justice, calling upon the person to
whom it is directed to attend before a Judge or an officer of the Court for a certain purpose. It is a
written order that legally obligates someone to attend a Court of law at a specified date

Object of Issuing Summons

When a suit is filed by the Plaintiff against the Defendant and a relief is claimed, the Defendant must
be given an opportunity as to what he has to say against the prayer made by the Plaintiff. This is in
consonance with the principle of natural justice as no one can be condemned unheard (audi alteram
partem). If the Defendant is not served with the summons, a decree passed against him will not bind
him.

27. Summons to defendants. - Where a suit has been duly instituted, a summons may be issued to
the defendant to appear and answer the claim and may be served in manner prescribed on such day
not beyond thirty days from date of the institution of the suit.

28. Service of summons where defendant resides in another State.—

(1) A summons may be sent for service in another State to such Court and in such manner as may be
prescribed by rules in force in that State.

(2) The Court to which such summons is sent shall, upon receipt thereof, proceed as if it had been
issued by such Court and shall then return the summons to the Court of issue together with the
record (if any) of its proceedings with regard thereto.

(3) Where the language of the summons sent for service in another State is different from the
language of the record referred to in sub-section (2), a translation of the record,—

(a) in Hindi, where the language of the Court issuing the summons is Hindi, or

(b) in Hindi or English where the language of such record is other than Hindi or English, shall also be
sent together with the record sent under that sub-section.

29. Service of foreign summonses – Summonses and other processes issued by

(a) any Civil or Revenue Court established in any part of India to which the provisions of this Code do
not extend, or

(b) any Civil or Revenue Court established or continued by the authority of the Central Government
outside India, or
 (c) any other Civil or Revenue Court outside India to which the Central Government has, by
notification in the Official Gazette, declared the provisions of this section to apply, may be sent to the
Courts in the territories to which this Code extends, and served as if they were summonses issued by
such Courts.

Summons to Defendant:

Sec.27; Or.5 R.1 Order 5 deals with summons to a Defendant while Order 16 deals with summons to
witnesses. When a suit has been duly filed by presentation of a plaint, the Court must issue
summons to the Defendant calling upon him to appear and answer the claim of the Plaintiff by filing
a Written Statement within thirty days from the date of service of summons – S.27, Or.5 R.1(1).

No summons, however, will be issued by the Court if, at the time of presentation of a plaint, the
Defendant is present and admits the Plaintiff’s claim – First Proviso to R.1(1)

Appearance in person: Rule 3 A Defendant to whom a summons has been issued, may appear

i) in person; or ii) by a pleader duly instructed and able to answer all material
questions relating to the suit;
ii) or iii) by a pleader accompanied by some person able to answer all such
questions – R.1(2).

The Court however may order the Defendant or Plaintiff to appear in person – R.3

Mode of Service of Summons: Rules 9-30 The service of summons is of primary importance as it is
fundamental rule of the law of procedure that a party must have a fair and reasonable notice of the
legal proceedings initiated against him so that he can defend himself.

The problem of service of summons is one of the major causes of delay in the progress of the suit. It
is common knowledge that Defendants try to avoid service of summons.

The Code prescribes five principal modes of serving a summons to a Defendant:

1) Personal or Direct Service – Rules 10-16, 18 Rules 10 to 16 and 18 deal with personal or direct
service of summons upon the Defendant. This is an ordinary mode of service of summons. Here
the following principles must be remembered:
2) i) Wherever practicable, the summons must be served to the Defendant in person or to his
authorized agent – Rule 12
3) Where the Defendant is absent from his residence at the time of service of summons and there
is no likelihood of him being found at his residence within a reasonable time and he has no
authorized agent, the summons may be served on any adult male or female member of the
Defendant’s family residing with him – Rule 15 –
4) A servant, however, cannot be said to be a family member – Explanation to R.15
5) In a suit relating to any business or work against a person, not residing within the territorial
jurisdiction of the Court issuing the summons, it may be served to the manager or agent carrying
on such business or work – Rule 13
6) In a suit for immovable property, if the service of summons cannot be made on the Defendant
personally and the Defendant has no authorized agent, the service may be made on any agent of
the Defendant in charge of the property – Rule 14
7) Where there are two or more Defendants, service of summons should be made on each of
Defendant – Rule 11
2) Service by Court – Rule 9 Summons to Defendant residing within the jurisdiction of the Court shall
be served through Court office or approved courier service – Rule 9(1), (2)

3) Service by Plaintiff – Rule 9-A Page 45 of 3 The Court may also permit service of summons by the
Plaintiff in addition to service of summons by the Court.

4) Substituted service – Rules 17, 19-20 Substituted service means the service of summons by a
mode which is substituted for the ordinary mode of service of summons. There are two modes of
substituted service.

They are: a) i) Where the Defendant or his agent refuses to sign the acknowledgement; or

Ii] where the service officer, after due and reasonable diligence, cannot be find the Defendant who is
absent from his residence at the time of service of summons and there is no likelihood of him being
found at his residence within a reasonable time and there is no authorized agent nor any other
person on whom service can be made, the service of summons can be made by affixing a copy on the
outer door or some other conspicuous part of the house in which the Defendant ordinarily resides or
carries on his business or personally works for gain.

The serving officer shall then return the original to the Court from which it was issued with a report
endorsed thereon stating the fact about affixing the copy, the circumstances under which he did so,
and the name and address of the person, if any, by whom the house was identified and in whose
presence the copy was affixed – Rule 17.

b) Where the Court is satisfied that there is reason to believe that the Defendant avoids service or
for any other reason the summons cannot be served in the ordinary way, the service may be effected
in the following manner:

i) By affixing a copy of the summons in some conspicuous place in the Court house; and also upon
some conspicuous part of the house in which the Defendant is known to have last resided, carried on
business or personally worked for gain; or

ii) In such manner as the Court thinks fit – Rule 20(1)

5) Service by post

When an acknowledgement purporting to be signed by the Defendant or his agent is received by the
Court, or the Defendant or his agent refused to take delivery of summons when tendered to him, the
Court issuing the summons shall declare that the summons had been duly served on the Defendant –
AIR 1976 SC 869.

The same principle applies in a case where the summons was properly addressed, prepaid and duly
sent by registered post, acknowledgement due; and the acknowledgement is lost or not received by
the Court within 30 days from the date of issue of the summons.

Where the summons sent by registered post is returned with an endorsement ‘refused’, the burden
is on the Defendant to prove that the endorsement is false – AIR 1959 Ker 297.
There are two stages of summoning:

1. Issuance of Summon – Issuance of Summons means the issuance of

summons by the court. (O.V Rule 1 to 8)
2. Service of Summons -Service of Summons means delivery of summon to
the defendant. (O.V Rule 9 to 30)
Order V must be read with Section 27-32 of CPC, 1908

Section 27 Order V Rule 1

Section 27 stipulates that after the institution of the suit, the first duty of the court is to
the issuance of summons calling on the defendant to appear and answer the claim but
not beyond 30 days from the date of the institution of the suit and as per the manner
prescribed in the rules mentioned in Order V of the first schedule.

If a defendant appears at the presentation of the plaint and admits the plaintiff’s claim,
no summons shall be issued. Further, if the defendant does not file the written statement
within thirty days, it may be permitted for him to file the same on such other day as the
Court specifies, with reasons to be recorded in writing, but not later than ninety days
after the date of service of the summons.

Essentials of Summons:
1. Every summon shall be signed by the judge or
2. Any other officer appointed by him
3. Summon must be sealed with the seal of the court
4. A copy of the plaint is required to be enclosed with every summons.

The appearance of the Parties

The court may order the plaintiff or Defendant to appear –

1. In person or,
2. By a Pleader having been properly instructed and being able to answer all
material questions regarding the case, or
3. By a Pleader along with someone who can answer all such questions
4. When the court requires the personal appearance of the defendant and the
plaintiff, the court shall make an order for such an appearance.
But, According to Rule 4, No party shall be ordered to appear in person as per Rule 3
unless-

1. A) He resides within the local limits of the competent court’s jurisdiction.

2. b) Or outside such local limits but within (i) 50 miles and (ii) 200 miles,
distance from the courthouse.
Contents of Summon
The summons should contain the course whether the summon is given for the settlement
of issues or Final disposal of the suit (Rule 5). In case of Final disposal of the suit, the
defendant shall be directed to produce his witnesses on the day of appearance.(Rule8)
The summons also orders the defendant to produce all the documents in his possession
which he plans to use as evidence to bolster his argument. (Rule 7). The court while
fixing the date of appearance must look into these factors:

1. The current business of the court,

2. The place of residence of the defendant,
3. Time necessary for service of summons,
4. Sufficient time to enable the defendant to prepare his defense.
Modes of Service of summons
1. Delivery of summoning by the court [Rule 9].
2. Service by plaintiff [Rule 9A]
3. Personal or Direct Service [Rule 10-16, 18]
4. Substituted Service [Rule 17, 19-20]
5. Service by Post.
Rule 9 – Service of summoning by the Court
Defendants or their agents residing within the jurisdiction of the court shall be served
with the summons either by a proper officer of the court or by a courier service as
approved by the court. Sub-rule 3 explains how the summons may be served by delivery
or by permissible means of transmission:

The acknowledgment must be sent by Registered Post; The High Court or District Court
may approve Speed Post or courier services or, Some other methods for transmission like
fax, message or electronic mail administration, and so on.

Where the defendant resides outside the jurisdiction of the court then such summon shall
serve to be by the officer of the court within whose jurisdiction the defendant resides
except by registered post acknowledgment due and provisions of rule 21 do not apply.

In the accompanying cases, the court might announce valid service of summons-

(a) The refusal or disapproval by the respondent,

(b) Where the summons was appropriately addressed, ready, and properly sent by
enlisted post or affirmation due and having been lost or misplaced and wasn’t gotten by
the court in 30 days from the date of issue of summons.

Rule 9A – Service by plaintiff In addition to the service of summons by the court as per
rule 9, the court may also permit the service of summoning by the plaintiff on the
application made. The summon must be sealed and signed by the court. If such summon
is refused by the defendant hen the summon will be re-issued by the court in the normal
manner.

Rule 10 to 16, 18 – Personal or Direct service of summon

This is an ordinary mode of service of summon:

Service of the summons will be made by conveying or offering a duplicate thereof

endorsed by the appointed authority or such official appointed along with the seal of the
court. (Rule 10)

When there is more than one defendant then service of summon should be made on
each of them separately. (Rule 11)

The summon should be served to the defendant in person or to the agent authorized by
him. (Rule12)

When the suit is against a person non-resident in the jurisdiction and relates to his
business or work then the summons may be served upon any manager or agent who
personally carries on such business or work and resides within the local limits of the
court. (Rule13)

Ina suit of movable property summons can be served to the agent who is in charge of
such property. (Rule 14)

When the defendant is not available or missing during the service of summon then
summon may be served to any adult member of his family, whether male or female.
(Rule 15)

Rules 17, 19 and 20- Substituted mode of serving the summons

Substituted mode of summons came into the picture when the court is satisfied that the
defendant is avoiding the summons and the ordinary mode of summon is unable to serve
the purpose.

There are two modes of Substituted Service:

1. Where the defendant /agent refuses to sign the acknowledgment or

2 .where the serving officer is unable to serve the summon or does not find the
defendant at his residence or neither his authorized agent available in that case the
service of summon can be made by affixing the copy of summon on the conspicuous
place of the house, Following the affixation of such a copy as stated above, the serving
officer will return the original to the court issuing the summons with a report that is
endorsed thereon.
(a) The fact that the copy has been affixed;

(b) The circumstances under which he did so;

(c) The name and address of the person identified by the house and in whose presence
the copy was affixed.

Where a summons is returned under Rule 17, because the summon has not been verified
on affidavit by the serving officer or it has been verified as per rule 19 it is at the
discretion of the court to examine the serving officer or either declare

As per order 5 of rule 20, if the court is satisfied that there is reason to believe that the
defendant avoids service or that the summons cannot be served in the usual manner, the
summons may be served in the following ways:

a)By affixing a copy of the summons in some conspicuous place in the courthouse, and in
the house in which the defendant is known to have last resided, carried on a business, or
personally worked for gain, or

1. b) In such other manner as it thinks fit.

The court may direct that summons be served through an advertisement in a daily
newspaper circulating in the area where the defendant is known to have resided or
carried on a business, or personally appeared.

Service of summon by post

When a summons is properly addressed, prepaid, and sent by registered post, and the
acknowledgment is lost or not received by the court within 30 days of the date of issue,
the court declares that the summons has been duly served. As a result, the court may
use any of these methods to serve the summons on the defendant to ensure a fair trial
and a timely resolution of the case.

Conclusion
Order 5 of the civil procedure code deals with Summons. Order 5 and its rules provide
the procedure to be followed while serving the summons. Summons provides an
opportunity for the defendant to defend himself. The mode of serving the summon,
procedure after refusal to summon, contents of summon all this has been provided under
Order V.
Interests

Meaning: the term ‘interest’ is not defined in the Code. It may mean “a charge that is paid to borrow
for use of money”. It is thus a compensation allowed by law to the person who has been prevented
to use the amount to which he was entitled – Concise Oxford English Dictionary Award of interest –

Where the decree is for payment of money, the Court may award interest at such rate as it thinks
reasonable on the ‘principal sum adjudged’ Divisions of interest – Interest awarded by the Court may
conveniently be divided under three heads

i.Interest prior to filing of the suit;

Sec.34 has no application to interest prior to the institution of the suit since it is a matter of
substantive law. It can be awarded only when there is an agreement, express or implied, between
the parties; or mercantile usage; or under a statutory provision; or by way of damages – Union of
India Vs. Watkins Mayor & Co., AIR 1966 SC 275

ii. Interest pendente lite

The award of interest from the date of the suit to the date of the decree is at the discretion of the
Court – Mahabir Prasad Vs. Jage Ram & Ors., AIR 1971 SC 742.

The discretion, however must be exercised on sound judicial principles. As a general rule, the Court
should award interest at the contractual rate except where it would be inequitable to do so –
Rangalal Vs. Utkal Rashtrabhasa Prachar, AIR 1975 Ori 137.

iii. Interest from the date of decree

The award of interest from the date of decree to the date of payment is also at the discretion of the
Court – Amar Chand Vs. Union of India, AIR 1964 SC 1658. The proviso as added by the amendment
act of 1976 empowers the Court to grant further interest at a rate exceeding six per cent per annum
but not exceeding the contractual rate of interest, and in the absence of a contract to that effect, at
the rate at which moneys are lent or advanced by nationalized banks in relation to commercial
transactions, provided that the liability arises out of a commercial transaction.
Rate of interest – Rate of interest is also at the discretion of the Court. If there is an agreement
between the parties, normally, the Court will adhere to it and will award interest as agreed unless
there are reasons to depart therefrom – Mahesh Chandra Vs. Krishna Swaroop, (1997) 10 SCC 681.

Recording of Reasons – Where the Court grants interest at the agreed rate, it need not record
reasons. But where it awards interest at a lesser rate than the agreed rate between the parties, it
should record reasons so that it can be considered whether the discretion has been exercised
judicially or not – Vijaya Bank Vs. Art Trend Exports, AIR 1992 Cal 12.

Commercial transactions – Where the transaction in question is commercial transaction i.e.,

transaction connected with industry, trade or business, the rate of interest would be that on which
moneys are lent or advanced by nationalized banks in relation to commercial transactions – Proviso
to Sec.34(1).

Compound interest – Compound interest means interest on interest. Normally, compound interest is
not allowed by a Court under Sec.34 of the code. But if there is an agreement to that effect or it has
been charged during the course of transaction, such interest can be awarded – Panna Lal Vs. Nihai
Chand, AIR 1922 PC 46. Inflation – In some cases, judicial notice of infl

Costs – Secs.35, 35-A, 35-B; Order 20-

A Meaning & Definition - “cost is a pecuniary allowance made to the successful party for his expenses
in prosecuting or defending a suit or a distinct proceeding with a suit” – Black’s Law Dictionary

‘Costs’ are statutory allowance to a party to an action for his expenses incurred in the action. They
are in the nature of incidental damages allowed to the successful party to indemnify him against the
expenses of asserting his rights in Court, when the necessity for so doing is caused by the other's
breach of legal duty.

Otherwise defined, costs are the sums prescribed by law as charges for the services enumerated in
the fee bill. They have reference only to the parties and the amounts paid them, and only those
expenditures which are by statute taxable and to be included in the judgement fall within the term
'costs' - American Jurisprudence, Second Edition, Volume XX, page 5

Object - The primary object of levying costs under sections 35 and 35A 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 – Mahindra Vs. Aswini (1920) 48 Cal 42.

The principle which the Court awarding the costs should always bear in mind is that it should order
the payment of a sum commensurate with the costs, which in the opinion of the Court the party
ready to proceed will have to incur owing to the adjournment. The amount to be awarded should not
be one of the nature of penalty or of punishment. - Gajendra Shah v. Ram Charan, AIR 1930 Oudh
171.

“I have found in my experience, that there is one panacea which heals every sore in litigation and
that is costs” – Bowen LJ, in Cropper Vs. Smith, (1884) 26 CD 700

The object of awarding costs to a litigant is to secure to him the expenses incurred by him in the
litigation – Nandlal Tanti Vs. Jagdeo Singh, AIR 1962 Pat 36. Costs are not to enable a litigant to make
anything in the way of gain or profit, over and above the expenses for maintaining or defending the
action, not to give exemplary damages or smart money, by way of penalty or punishment on the
opposite party – AIR 1954 SC 26.
The provisions for costs are intended to achieve the following goals:

a) Costs should act as a deterrent to vexatious, frivolous and speculative litigations or defences. The
spectre of being made liable to pay actual costs should be such, as to make every litigant think twice
before putting forth a vexatious, frivolous or speculative claim or defence.

b) Costs should ensure that the provisions of the Code, Evidence Act and other laws governing
procedure are scrupulously and strictly complied with and that parties do not adopt delaying tactics
or mislead the Court.

c) Costs should provide adequate indemnity to the successful litigant for expenditure incurred by
him for the litigation. This necessitates the award of actual costs of litigation as contrasted from
nominal or fixed or unrealistic costs.

d) Costs should not be a deterrent to a citizen with genuine or bona fide claim or to any person
belonging to the weaker Sections of the society – Vinod Seth Vs. Devinder Bajaj, 2010, AIR SCW 4860.

Other objects: To encourage early settlement of disputes To enable judges to do justice in the cases
before them Costs shall follow the event… This means that the successful party is entitled to costs
unless he is guilty of misconduct or there is some other good cause for not awarding costs to him –
Ghansham Vs. Moroba, (1894) 18 Bom 474. T

he House of Lords has held that the expression ‘the costs shall follow the event’ means that the party
who on the whole succeeds in the action gets the general costs of the action but where the action
involves separate issues, whether arising under different causes of action or under one cause of
action, the word ‘event’ should be read distributively and the costs of any particular issue should go
to the party who succeeds upon it. Kinds of Costs – the Code provides for the following kinds of
costs.

i. General Costs – Sec.35 ii. iii. iv. Miscellaneous Costs – Order 20-A Compensatory Costs for false and
vexatious claims or defences – Sec.35-A; and Costs for causing delay – Sec.35-B

i. General Costs – Sec.35 provides for awarding of general costs. The object of awarding costs to a
litigant is to secure to him the expenses incurred by him in the litigation – Nandlal Tanti Vs. Jagdeo
Singh, AIR 1962 Pat 36. It neither enables the successful party to make any profit out of it nor
punishes the opposite party – N.Peddanna Ogeti Vs. Katta V. Srinivasayya Setti Sons, AIR 1954 SC 26.

ii. Miscellaneous Costs – Order 20-A makes specific provision with regard to the power of the Court
to award costs in respect of certain expenses incurred in giving notices, typing charges, inspection of
records, obtaining copies and producing witnesses.

iii. Compensatory Costs – Sec.35-A provides for compensatory costs. This Section is an exception to
the general Rule on which Sec.35 is based viz., that the ‘costs are only an indemnity, and never more
than an indemnity – Gundry Vs. Sainsbury, (1910) 1 KB 645.

5 This Section is intended to deal with those cases in which Sec.35 does not afford sufficient
compensation in the opinion of the Court. Under this provision, if the Court is satisfied that the
litigation was inspired by vexatious motive and was altogether groundless, it can take deterrent
action – T.Arivandanam Vs. T.V.Satyapal, AIR 1977 SC 2421. This Section applies only to suits and not
to appeals or revisions.
 iv. Costs for causing delay – Sec.35-B was added by the amendment act of 1976. It is inserted to put
a check upon the delaying tactics of litigants. It empowers the Court to impose compensatory costs
on parties who are responsible for causing delay at any stage of the litigation. Such costs would be
irrespective of the ultimate outcome of the litigation.