[2009] 15 (ADDL.) S.C.R. 906

MANOHAR SINGH

D.S. SHARMA & ORS. (Civil Appeal Nos. 7554-7555 of 2009)

NOVEMBER 13, 2009 B

[R.V. RAVEENDRAN AND G.5. SINGHVI, JJ.]

Code of Civil Procedure, 1908 - s. 35 B - Costs for causing delay- Non payment - Effect of- Held: Non-payment .. of costs by party on whom it is levied results in forfeiture of the \ c right of the defaulting party to further prosecute the suit or defence - However, other party can place his evidence and address arguments, and then court will decide the matter- Suit cannot be dismissed for non-payment of costs - On facts, courts below erred in dismissing the suit of plaintiff for failure to pay

D cost levied on it for harassing defendants and its witness by seeking repeated adjournments - Thus, order of courts below set aside - Suit restored to the file, forfeiting plaintiff's right to .lo.· cross-examine the defence along with other conditions.

The question which arose for consideration in this

appeal is whether the courts below were justified in dismissing the suit of the plaintiff for non-payment of cost levied on the plaintiff for harassing the defendants and its witness by seeking repeated adjournments. 1

Allowing the appeals, the Court

F HELD: 1.1. Section 358 of Code of Civil Procedure, '{ 1908 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 G 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. Regarding the meaning of the }• words "further prosecution of the suit" and "further ...It

prosecution of the defence", if the Legislature intended

H 906

that the suit should be dismissed in the event of non- A 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. Legislature stated in the rule that payment of costs on the next date shall be a condition B 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

...4defence by the defendant (where the defendant was ml. ~J ordered to pay such costs). This would mean that if the costs levied were not paid by the party on whom it is c 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 D place his evidence and address arguments, and the court _. will then decide the matter in accordance with law. [Para

5] [911-D-H; 92-A-B] 1.2. When s. 358 states that payment of such costs on the date next following the date of the order shall be a E 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 F discretion extending the time for such payment, in exercise of its general power to extend time u/s. 148 CPC. Having regard to the scheme and object of s. 358, such extension 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 G costs, having regard to the fact that such costs u/s. 358

""- were itself levied for causing delay. [Para 6] [912-8-E]

~ 1.3. It is evident from Rule 1(2) proviso (e) of Order 17 CPC that where a witness is present in court but the other H

A 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 crossexamine, the court may grant time by levying costs. [Para

B 7) (913-F] 1.4. A conspectus of Rule 1 of Order 17, CPC clearly demonstrates that a suit cannot be dismissed for nonpayment 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 C alternative available to the court, instead of dispensing with the cross-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 D and prohibit the further prosecution of the suit or the defence, as the case may be by the defaulting party.- [Para

8] [913-G-H; 914-A-B] 1.5. In the instant case, the plaintiff has harassed the defendants and its witness by seeking repeated E adjournments. In view of it, plaintiff's right to crossexamine 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- F 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 submission that section 358 contemplates or requires dismissal of the suit as an automatic consequence of non-payment of costs by plaintiff cannot G be accepted. The court could not have dismissed the suit.

Thus, the judgments of the High Court and the trial court are set aside and the suit is restored to its file subject to cetµin conditions. [Paras 5, 9 and 10] (912-A-B; 914-B-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.

7554-7555 of 2009.

A -' From the Judgment & Order dated 21.05.2007 in CRP No. '

6 of 2006 and dated 07.09.2007 in Review Petition No. 325 of 2007 in C.R.P. No. 6 of the High Court of Delhi at New Delhi.

Manohar Singh Appellant-in-person.

Bharat Sangal for the Respondents.

B The Judgment of the Court was delivered by R.V. RAVEENDRAN, J. 1. Leave granted. Heard learned ....... counsel.

2. The appellant filed a suit for damages against hi$ erstwhile employer- National Thermal Power Corporation Ltd. c ('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, (OW 2), whose affidavit had been, D i4 filed by way of an examination-in-chief, was present in court for being cross-examined by the plaintiff. The plaintiff requested for

~ an 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 E counsel was otherwise busy. When the court asked the plaintiff to cross-examine the said witness, as he had earlier crossexamined 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

A matter to 9.2.2004, subject to payment of costs of Rs.5000 by .F

~ 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 witnesses had come from Durgapur by air. The suit was however adjourned G 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 H

A the ground that the transfer application filed by the plaintiff was

_ pending before the District Judge.

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, Addi. District Judge and assigned to the file of another

8 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 c 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 358 of the Code of Civil Procedure (for short 'the CPC'), the trial court dismissed the suit for failure to pay the costs in spite D 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 dcGision of the triaLcourt holding that the provisions of section 35B were mandatory and if the costs levied

E 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 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 F provisions of section 358 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 358 does not confer power to dismiss the suit for non-payment of costs. Learned counsel for the second respondent, on the other hand, supported G the judgment of the trial court, as affirmed by the High Court.

5. Section 358 of CPC deals with costs for causing delay.

Relevant portion of the said section extracted below :

,~ "358. 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

H the suit-

MANOHAR SINGH v. D.S. SHARMA & ORS. 911

[R.V. RAVEENDRAN, J.] -

(a) fails to take the step which he was required by or under A 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 B 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 c prosecution of-

(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.

D '

)()()()()()()( xxxxxxx'' ..

Section 358 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 E 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 F 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 G of the suit by plai!1tiff (where the plaintiff was ordered to pay such costs), and a condition precedent to the further prosecution of ':l the defence by the defendant (where the defendant was ordered to pay such costs). This would mean that if the costs levied were not paid by the party on whom it is levieu, such defaulting party is prohibited from any further participation in the suit. In other H

A words, he ceases to have a11y 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 lw. We therefore

8 reject the contention of the respondents that section 358

contemplats 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

L__ 358 states that payment of such costs on the date next following the date of the order shall be a condition precedent for further ·- c prosecution, it clarly 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 D power to extend time under section 148 of CPC. Having regard -,

to the scheme and object of section 358, it is needless to say ( that such extension 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

E regard to the fact that such costs under section 358 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 r Court may, if sufficient cause is shown, at any stage of the suit, granUime 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 G 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 Court deems fit: H Provided that. -

MANOHAR SINGH v. D.S. SHARMA & ORS. 913 -

[R.V. RAVEENDRAN, J.]

(a) when the hearing of the suit has commenced, it shall be A 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, B

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, c

(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, D +

(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 E fit dispensing with the examination-in-chief or crossexamination of the witness, as the case may be, by the party or his pleader not present or not ready as aforesaid. .. (emphasis supplied) 4

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 F

cross-examine the witness, the court can dispense with his crossexamination. 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 :i

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- H

A 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 crossexamination of the witness and prohibit the further prosecution of the sui.t or the defence, as the case may be by the defaulting B 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 C 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 :

(i) The right of the plaintiff to cross-examine DW2 stands forfeited and he is barred from prosecuting E the suit further.

N.J.

(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 entitl~ the plaintiff to cross-examine DW2.

Appeals allowed.

, . . .