Holding

Non‑payment of costs under Section 358 CPC results in forfeiture of the right to further prosecute the suit or defence, but does not automatically lead to dismissal of the suit.

Summary

Manohar Singh filed a suit for damages against his former employer NTPC and its General Manager. During the trial he repeatedly sought adjournments, prompting the trial court to levy costs under Section 358 of the Code of Civil Procedure (CPC) for causing delay. The plaintiff failed to pay the costs despite several extensions and the trial court dismissed the suit; the Delhi High Court affirmed the dismissal. On appeal, the Supreme Court held that non‑payment of costs under Section 358 does not automatically dismiss a suit but merely forfeits the defaulting party's right to further prosecute, such as cross‑examining witnesses. Consequently, the suit was restored to the file with the plaintiff’s right to cross‑examine the second witness forfeited, while the defendants were allowed to present further evidence and the matter was to be decided on merits. The appeals were allowed and the lower courts' orders set aside.

Issues considered

Whether non‑payment of costs levied under Section 358 CPC mandates dismissal of the suit or defence.
Whether the defaulting party loses the right to further prosecute the suit, including cross‑examination, upon non‑payment of such costs.

Legislation cited

Code of Civil Procedure, 1908s. 148, s. 358

Subjects

CPCSection 358costs for delayadjournmentnon‑payment of costsforfeiture of rightsuit dismissalcross‑examination

Judgment

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

A MANOHAR SINGH
v.
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
cost levied on it for harassing defendants and its witness by
D 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
E dismissing the suit of the plaintiff for non-payment of cost
levied on the plaintiff for harassing the defendants and its
1
witness by seeking repeated adjournments.
Allowing the appeals, the Court
HELD: 1.1. Section 358 of Code of Civil Procedure, '{
F 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
MANOHAR SINGH v. D.S. SHARMA & ORS. 907

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
...4- defence 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
908 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

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 cross-
examine, 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 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
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 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-
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.
H
MANOHAR SINGH v. D.S. SHARMA & ORS. 909

-'
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
counsel was otherwise busy. When the court asked the plaintiff E
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
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
to 9.3.2004. On 9.3.2004, plaintiff submitted that he had already G
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
910 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

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
waiver of costs. That application was dismissed and the case
c 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
were not paid "the only course open to the court is to disallow
E 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
this Code to take on that date, or
A

(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
prosecution of-
c
(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
of the suit by plai!1tiff (where the plaintiff was ordered to pay such G
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
912 SUPREME COURT REPORTS [2009] 15 (ADDL.} S.C.R. -

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 l~w. We therefore
reject the contention of the respondents that section 358
8
contemplat~s 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 cl~arly 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
regard to the fact that such costs under section 358 were itself
E 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
F Court may, if sufficient cause is shown, at any stage of the r·
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
(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,
(d) where the illness of a pleader or his inability to conduct
c
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 cross-
examination of the witness, as the case may be, by the
party or his pleader not present or not ready as aforesaid.
.4 (emphasis supplied)
It is evident from Rule 1(2) proviso (e) of Order 17 that where F
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.
G
..., 8. A conspectus of the above provisions clearly
:i 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- H
914 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

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 cross-
examination 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.
D 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.
(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
F 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.
G
N.J. Appeals allowed.