Write short notes on Compensatory costs.

Question: Write short notes on Compensatory costs.

Find the answer to the mains question only on Legal Bites. [Write short notes on Compensatory costs.]

Answer

“Compensatory costs” Section 35-A provides for compensatory costs. This section is an exception to the general rule on which Section 35 is based, that is “costs are only an indemnity and never more than indemnity”. This section is intended to deal with those cases in which section 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 a vexatious motive and was altogether groundless, it can take deterrent action. This section applied only to suits and not to appeals or to revision.

The following conditions must exist before this section can be applied

1) The claim or defense must be false or vexatious;

2)Objections must have been taken by the other party that the claim or defense was false or vexatious to the knowledge of the party raising it; and

3) Such claim must have been disallowed withdrawn or abandoned in whole or in part.

The maximum amount that can be awarded by the court is Rs 3000/-. But a person against whom an order has been passed is not exempt from any criminal liability. In a subsequent suit for damages or compensation for a false, vexatious, or frivolous claim or defense, the court will take into account the amount of compensation awarded to the plaintiff under this section.

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