Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7554-7555 OF 2009 [Arising out of SLP [C] Nos.2203-2204 of 2008]

Manohar Singh … Appellant

Vs.

D. S. Sharma & Anr. … Respondents

J U D G M E N T

R.V.RAVEENDRAN,  J.

Leave granted. Heard learned counsel.

2. The  appellant  filed  a  suit  for  damages  against  his  erstwhile  

employer – National Thermal Power Corporation Ltd. (‘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, (DW 2), whose affidavit had been  

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 counsel was otherwise busy. When the  

court  asked the  plaintiff  to  cross-examine the  said  witness,  as  he  had  

earlier cross-examined 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 matter to 9.2.2004,  

subject to payment of costs of Rs.5000 by 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 witness  

had  come from Durgapur  by  air.  The  suit  was  however  adjourned  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 the ground that the transfer application filed  

by the plaintiff  was pending before the District Judge.  

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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allowed and his suit  was withdrawn from the file of Shri  O.P. Gupta,  

Addl.  District  Judge  and  assigned  to  the  file  of  another  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 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 35B of  

the  Code  of  Civil  Procedure  (for  short  ‘the  CPC’),  the  trial  court  

dismissed  the  suit  for  failure  to  pay  the  costs  in  spite  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 decision of  

the trial court holding that the provisions of section 35B were mandatory  

and if the costs levied 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  

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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 provisions of  

section 35B 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  35B  does  not  confer  power  to  dismiss  the  suit  for  non-

payment  of  costs.  Learned  counsel  for  the  second  respondent,  on  the  

other hand, supported the judgment of the trial court, as affirmed by the  

High Court.  

5. Section 35B of CPC deals with costs for causing delay. Relevant  

portion of the said section extracted below :

“35B. 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 the suit—

(a) fails to take the step which he was required by or under 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 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—

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(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.

xxxxxxx xxxxxxx”

Section 35B 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 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 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  of  the  suit  by  plaintiff  (where  the  plaintiff  was  

ordered  to  pay  such  costs),  and  a  condition  precedent  to  the  further  

prosecution of the defence by the defendant (where the defendant was  

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ordered to pay such costs). This would mean that if the costs levied were  

not  paid  by  the  party  on  whom it  is  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  place  his  evidence  and  address  

arguments, and the court will then decide the matter in accordance with  

law. We therefore reject the contention of the respondents that section  

35B  contemplates  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 35B states  

that  payment of  such costs on the date next  following the date of the  

order  shall  be a  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  

discretion extending the time for such payment, in exercise of its general  

power to extend time under section 148 of CPC. Having regard to the  

scheme and object of section 35B, it is needless to say that such extension  

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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  regard  to  the  fact  that  such costs  under  

section 35B 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 Court may,  if sufficient cause is shown, at any stage of the suit, grant time 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 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 Corut  deems fit:

Provided that, --

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

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(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,

(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 fit dispensing with the examination-in-chief or cross-examination   of  the witness,  as  the case may be,  by the party  or his  pleader not   present or not ready as aforesaid.

(emphasis supplied)

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 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 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 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-

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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 and  

prohibit the further prosecution of the suit or the defence, as the case may  

be by the defaulting 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 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 :  

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

(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 entitle the  plaintiff to cross-examine DW2.

………………………………J. (R V Raveendran)

New Delhi; ……………………………..J. November 13,  2009. (G S Singhvi)

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