A.S. Chandurkar, J
1. This opinion seeks to resolve the difference that has arisen between the Hon’ble Judges constituting the Division Bench that heard Writ Petition
No.10220 of 2024 on the quantum of costs to be imposed on the petitioner. In the said writ petition, an order dated 11th July 2024 passed by the
Mumbai Metropolitan Regional Development Authority- MMRDA rejecting the application made by the petitioner for retention of hoardings installed
by it was under challenge. By its order dated 24th July 2024, the Division Bench proceeded to dismiss the writ petition after recording a finding that
the hoardings installed by the petitioner exceeded the permissible limits as laid down in the statutory guidelines. There was a consensus between the
learned Judges that the writ petition was liable to be dismissed with exemplary costs. However, there was a disagreement between them as regards
the quantum of costs. Hon’ble M. S. Sonak, J was of the view that imposition of costs of Rs.5,00,000/- would be appropriate. However,
Hon’ble Kamal Khata, J was of the view that the costs to be imposed could not be insignificant or trivial. Costs ought to be imposed so as to act
as a genuine deterrent. He was of the view that costs of Rs.25,00,000/- ought to be imposed.
In view of the difference of opinion as regards the quantum of costs to be imposed, the writ petition has been placed before this Court in accordance
with the provisions of Chapter-I Rule 7 of the Bombay High Court Appellate Side Rules, 1960 to resolve this difference.
2. Ms. Minal Chandnani, the learned counsel appearing for the petitioner at the outset submitted that the order dated 24th July 2024 passed in the writ
petition was the subject matter of challenge before the Supreme Court in SLP (C) No.20943/2024.
The said Special Leave Petition however came to be dismissed on 13th September, 2024. It is thus only the difference of opinion with regard to the
quantum of costs that is required to be adjudicated in the present reference. It was submitted that the facts of the present case did not indicate that the
imposition of exemplary costs was warranted. The petitioner had approached the Grampanchayat for seeking permission for erecting the hoardings
and after receiving its permission had errected the said hoardings. It was however found by the Division Bench that the permission of the MMRDA,
which was the Competent Authority, had not been obtained and instead permission from the Grampanchayat had been sought. There were no
malafides in the action of the petitioner and hence imposition of exemplary costs of Rs.25,00,000/- was not at all warranted. The observations made in
paragraphs 19 and 23 of the order dated 24th July 2024 were unwarranted in the facts of the present case inasmuch as no fraud was played by the
petitioner by obtaining permission from the Grampanchayat. It was the first instance when the petitioner had approached this Court and therefore, it
could not be said that the petitioner was a habitual law-breaker so as to invite an order for payment of exemplary costs. Drawing attention to the order
passed by the said Division Bench in Writ Petition No.8657 of 2024 (Yash Raj Multimedia Pvt. Ltd. & Anr. Vs. State of Maharashtra & Ors.)
decided on 21st August 2024, it was submitted that even in the said case, the petitioner had approached the Grampanchayat for grant of permission to
put up an hoarding. The Division Bench dismissed the writ petition but did not impose any costs whatsoever. It was therefore submitted that imposition
of exemplary costs of Rs.25,00,000/- on the petitioner was unwarranted.
To substantiate her contentions in this regard, the learned counsel relied on the decisions in Ashok Kumar Mittal Vs. Ram Kumar Gupta and
Another, (2009) 2 SCC 656, Vinod Seth Vs. Devinder Bajaj and Another, (2010) 8 SCC 1, Sanjeev Kumar Jain Vs. Raghubir Saran Charitable
Trust and Others, (2012) 1 SCC 455 and Maria Margarida Sequeira Fernandes and Others Vs. Erasmo Jack De Sequeira (dead) through
LRS. (2012) 5 SCC 370. Reliance was also placed on the recommendations of the 240th Report of the Law Commission of India on the subject
“Costs in Civil Litigationâ€. On the basis of aforesaid submissions, it was urged that exemplary costs of Rs.25,00,000/- as imposed did not warrant
acceptance.
3. Ms. Kavita Solunke, learned counsel appearing for the MMRDA on the other hand supported the imposition of exemplary costs of Rs. 25,00,000/-.
Referring to the observations made by the Division Bench in its order dated 24th July 2024, it was submitted that firstly, there was no question of
obtaining any permission from the Grampanchayat as it was the MMRDA which was the Competent Authority to grant permission for erection of
hoardings. On the strength of the permission granted by the Grampanchayat, the petitioner proceeded to erect the hoardings which far exceeded the
permissible limits. It was further pointed out that the Division Bench had recorded a finding that the petitioner had made false statements in the writ
petition and that it had also suppressed correct facts. The writ petition was dismissed for suppression and misstatement of correct facts. Since the
petitioner had made commercial gains from such conduct, the Division Bench was of the view that exemplary costs ought to be imposed. It was
submitted that costs of Rs.25,00,000/- had been rightly imposed in view of the seriousness of the situation and with a view that such costs would act as
a genuine deterrent. In the facts of the case, the amount of costs of Rs.5,00,000/- as imposed was on a lower side and the view imposing costs of
Rs.25,00,000/- on the petitioner ought to be upheld.
To substantiate her contentions, the learned counsel placed reliance on the decisions in S.P. Chengalvaraya Naidu (dead) by LRS. Vs. Jagannath
(dead) by LRS. & Others (1994) 1 SCC 1, Dattaraj Nathuji Thaware Vs. State of Maharashtra and Others AIR 2005 SC 540 and Dnyandeo
Sabaji Naik and Anr. Vs. Pradnya Prakash Khadekar and Ors AIR OnLine 2017 SC 515.
4. I have heard the learned counsel for the parties and I have thereafter given thoughtful consideration to the respective submissions. The point of
difference that seeks resolution is restricted only to the quantum of costs to be imposed upon the petitioner upon dismissal of the writ petition preferred
by it.
As stated above, in the writ petition preferred by the petitioner an order passed by the MMRDA dated 11th July 2024 rejecting the petitioner’s
application for retention of hoardings erected by it was under challenge. While finding no merit in the challenge raised by the petitioner, the Division
Bench was of the view that the petitioner erected the said hoardings after obtaining permission of the Grampanchayat which was not the Competent
Authority. Permission of the MMRDA was required to be obtained which was not done. It was found that the hoardings erected by the petitioner
exceeded the permissible limits as indicated in the statutory guidelines. It was noted that false statements had been made by the petitioner in the writ
petition and that correct facts had also been suppressed therein. Thus after finding that there was no merit in the challenge raised by the petitioner, the
Division Bench was of the view that the writ petition was liable to be dismissed for suppression and misstatement of correct facts. By such conduct,
the petitioner had made commercial gains. There was also a consensus on imposition of exemplary costs on the petitioner while dismissing the writ
petition. The order dismissing the writ petition has now attained finality with rejection of the Special Leave Petition preferred by the petitioner.
5. Since both the learned Judges constituting the Division Bench were of the view that the petitioner was liable to pay exemplary costs, it is only the
difference in the quantum of such exemplary costs to be paid that requires resolution. While doing so, it would be necessary to refer to certain relevant
aspects. The writ petition as filed was by invoking Article 226 of the Constitution of India. In this regard, it is necessary to refer to Chapter XVII of
the Rules of 1960. The said Chapter concerns the filing of writ petitions under Articles 226 and 227 of the Constitution of India. Rule 16 of Chapter
XVII confers discretion on the Court in the matter of imposition of costs in a writ petition. It is thus clear that the amount of costs to be imposed on a
party is within the discretion of the Court entertaining the writ petition. It is needless to state that exercise of such discretion has to be guided by a
judicious approach. The manner in which such discretion has been exercised is expected to be reflected in the order imposing costs or same could also
be discerned from the material on record.
6. In the matter of exercise of discretion, useful reference can be made to the observations in paragraphs 9 to 12 of the decision in National
Insurance Co. Ltd Vs. Keshav Bahadur and Others (2004) 2 SCC 370. The said observations read as under:-
9. Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge
critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of
judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and
colourable glosses and pretences, and not to do according to the will and private affections of persons. When it is said that something is to be done within the
discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion; according to law and not
humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man, competent to the
discharge of his office ought to confine himself. (Per Lord Halsbury, L.C., in Sharpe v. Wakefield). Also see S.G. Jaisinghani v. Union of India.
10. The word ""discretion"" standing single and unsupported by circumstances signifies exercise of judgment, skill or wisdom as distinguished from folly,
unthinking or haste; evidently, therefore, a discretion cannot be arbitrary but must be a result of judicial thinking. The word in itself implies vigilant
circumspection and care; therefore where the legislature concedes discretion it also imposes a heavy responsibility.
The discretion of a judge is the law of tyrants; it is always unknown. It is different in different men. It is casual, and depends upon constitution, temper, passion. In
the best it is oftentimes caprice; in the worst it is every vice, folly, and passion to which human nature is liable,"" said Lord Camden, L.C.J., in Hindson and Kersey.
11. If a certain latitude or liberty is accorded by statute or rules to a judge as distinguished from a ministerial or administrative official, in adjudicating on
matters brought before him, it is judicial discretion. It limits and regulates the exercise of the discretion, and prevents it from being wholly absolute, capricious, or
exempt from review.
12. Such discretion is usually given on matters of procedure or punishment, or costs of administration rather than with reference to vested substantive rights. The
matters which should regulate the exercise of discretion have been stated by eminent judges in somewhat different forms of words but with substantial identity.
When a statute gives a judge a discretion, what is meant is a judicial discretion, regulated according to the known rules of law, and not the mere whim or caprice
of the person to whom it is given on the assumption that he is discreet (per Willes, J. in Lee v. Bude Rly. Co. and in Morgan v. Morgan).
7. Another facet that is required to be borne in mind is the nature of remedy that has been availed. Such remedy could either be a public law remedy
when jurisdiction of a constitutional Court is sought to be invoked while another remedy is one before the Civil Court invoking the provisions of the
Code of Civil Procedure, 1908 (for short, ‘the Code’). The mode and manner of imposition of costs when public remedy is availed would be
different from the imposition of costs by invoking the provisions of Section 35 or Section 35A of the Code. The nature of costs could either be
compensatory or punitive in nature or the costs could be one in cause. In the present reference, it is only the quantum of exemplary costs that is
required to be examined.
8. At this stage, it is necessary to make a reference to the observations in Paragraphs 5 and 6 of the judgment of the Supreme Court in Satyapal
Singh Vs. Union of India and Another SLP (C) No.32928/2009 decided on 23rd November 2009.
“5. Exemplary costs are levied where a claim is found to be false or vexatious or where a party is found to be guilty of misrepresentation, fraud or suppression
of facts. In the absence of any such finding, it will be improper to punish a litigant with exemplary costs. When the appellate court did not choose to levy any costs
while dismissing the appeal filed by the petitioner after nine years of pendency with interim stay, the High Court, while dismissing the writ petition at preliminary
hearing, ought not to have levied exemplary costs with reference to the period of pendency before the Appellate Court. We do not find any ground on which the
exemplary costs of Rs. 50,000/- could be sustained. Levy of exemplary costs on ordinary litigants, as punishment for merely for approaching courts and securing
an interim order, when there was no fraud, misrepresentation or suppression is unwarranted. In fact, it will be bad precedent.
Even if any costs are to be levied on a petitioner, for any default or delaying tactics, where the respondents have entered appearance, costs should be ordered to
be paid to the respondents, who were the affected parties on account of the litigation. There is no justification for levying costs of Rs.50,000/- on the petitioner
payable to the High Court Legal Service Committee. There is also no justification for directing the State Government to act as the collecting agent for the costs
payable to the Legal Services Committee. Directing a government servant, an ordinary employee, to pay Rs. 50,000/- as costs within one month and further
directing the use of coercive process for recovery of costs as arrears of land revenue was unwarranted. The levy of such exemplary costs in favour of the High
Court Legal Services Committee, is not a healthy practice.
6. The costs may be justifiably made payable to the High Court Legal Services Committee or other Legal Services Authorities, where before the other side is served
or represented, the court wants to penalise a petitioner for lapses/omissions/delays, as for example, where the petitioner fails to pay the process fee for service of
respondents, or fails to cure defects or comply with office objections, or where there is delay in refiling of petitions. Once the other side is represented, the costs
levied by reason of any attempt by a party to delay the proceedings, should normally be for the benefit of the other party who has suffered due to such conduct.
Only where both the parties are at fault, costs may be ordered to be paid to Legal Services Authority. At all events,the power to levy exemplary costs, it is needless
to say, should be used sparingly to advance justice. It should not be threatening and oppressive.â€
9. In the decisions relied upon by the learned counsel for the petitioner, the imposition of costs was in the context of the provisions of Sections 35 and
35A of the Code. The said decisions would therefore not be very relevant in the present context as exemplary costs have been imposed while
exercising jurisdiction under Article 226 of the Constitution. Similarly, the 240th Report of the Law Commission of India contains recommendations for
legislative amendments in the Code. The ratio of the decisions relied upon by the learned counsel for the MMRDA has been taken into consideration.
10. In the order passed by Hon’ble M.S. Sonak, J, it has been indicated that the petitioner had suppressed correct facts and had made false
statements while invoking the extraordinary and equitable jurisdiction of the Court so as to snatch an interim order. It is on this basis that the amount of
Rs.5,00,000/- was determined as exemplary costs. On the other hand, as per the order passed by the Hon’ble Kamal Khata, J the exemplary costs
to be imposed ought to be a significant fraction of the investment involved thereby impacting the rate of return of investment and rendering any non-
compliance economically prohibitive. It was observed that erecting a 40 feet by 40 feet hoarding would cost not more than Rs. 15,00,000/- while
advertising fees could range from a few thousand to several lakhs per day. It is for this reason and with a view to convey the seriousness of the
situation and to set an example of genuine deterrence, costs of Rs.25,00,000/-were imposed.
11. In my view, if the basis for determining the amount of exemplary costs is the illegal gain or benefit derived by a party, relevant material in the form
of the amount invested, expenses incurred for undertaking such work and the profits earned in the interregnum would be relevant. If such material is
available on record, the task of the Court in determining the amount of exemplary costs would become easier. However, if the aforesaid relevant
material which could form the basis for determining the quantum of exemplary costs is not available on record, it would be necessary to call for such
material from the parties so as to enable the Court to undertake a reasonable determination of the quantum of exemplary costs. This could be done
either by calling upon the parties to place on record relevant material as regards the amount invested in undertaking such activity, expenses incurred
and the probable gains from such activity. This material would facilitate determination of a realistic amount of exemplary costs. Such exercise would
also serve a dual purpose. Firstly, the party on whom such exemplary costs are sought to be imposed would have an opportunity to place before the
Court relevant figures which in turn would enable the Court to determine the amount of exemplary costs to be imposed. This would also satisfy the
requirement of natural justice inasmuch as imposition of exemplary costs definitely visits such party with civil consequences. Secondly, in a challenge
to an order imposing exemplary costs, the Court examining such challenge would be in a better position to gather the basis for imposition of exemplary
costs as well as the manner or the yardstick on the basis of which the quantum of exemplary costs has been determined. Ultimately, the imposition of
exemplary costs is an exercise undertaken in discretion and hence such such exercise ought to satisfy the basic tenets of fair play and justice.
12. In the present case, there was no such material available on record that could indicate the probable amount of investment made by the petitioner in
the erection of the hoardings, the expenses incurred in doing so as well as the advertising fees paid for the same. Paragraph 20 of the order dated 24th
July 2024 indicates that these aspects have been considered not on a factual basis but on the basis of probable figures which the Court considered in
its perspective. There is absence of relevant material to indicate the approximate expenditure undertaken by the petitioner as well as the probable gain
in that regard. With respect, the basis on which the figure of Rs.25,00,000/- as exemplary costs was determined cannot be gathered from the order
dated 24th July 2024. Hence, in my view imposition of exemplary costs of Rs.5,00,000/- on account of suppression of correct facts and false
statements made in the writ petition by Hon’ble M. S. Sonak, J. appears to be reasonable and appropriate.
13. The reference is accordingly answered by opining that the facts of the present case warrant imposition of exemplary costs of Rs.5,00,000/- as per
Hon’ble M. S. Sonak, J. The writ petition be now placed before the Division Bench in accordance with Rule 7 of Chapter-I of the Bombay High
Court Appellate Side Rules, 1960.