In short. In a commercial suit, "costs" means what the case reasonably cost you: lawyers' fees, court fee, witness expenses and the like. The general rule under the Commercial Courts Act is simple. The loser pays the winner's costs. The court can depart from that, but it has to give written reasons, and it'll look at conduct, partial success and settlement offers that were turned down. Costs get decided with the judgment, and on plenty of applications along the way. So keep every fee receipt and invoice from the first day. Costs you can't prove are rarely awarded.
Is this your situation?
- You're about to file, or defend, a commercial suit and the first thing you want to know is whether the legal spend comes back.
- The other side has taken its fourth adjournment this year. Every date costs you a day off work and another appearance fee.
- You won. The decree gave you a few thousand rupees as costs, which doesn't cover even the court fee.
- Your written statement went in late, and now there's an order telling you to pay costs before it's taken on record.
- A settlement offer is sitting in your inbox and you're wondering what saying no could cost you later.
- You've been sued on a debt you never owed. You want something back for the trouble of defending it.
In short, the loser usually pays the winner's real costs
In a commercial suit, the court decides who pays the costs of the case, how much, and when. The starting point is Section 35 of the Code of Civil Procedure, 1908 (CPC), as substituted for commercial disputes by the Commercial Courts Act, 2015. The unsuccessful party pays the successful party's costs. The court can order something different. But it has to write down its reasons.
People say "actual costs". The law says reasonable costs. Either way, it's the money you genuinely spent on the case: advocates' fees, court fee, process fees, witness expenses and the other expenses of the proceedings. That's a long way from the old civil court habit of awarding a few thousand rupees as notional costs and moving on. In Uflex Ltd. v. Government of Tamil Nadu (2021), the Supreme Court said that in commercial matters the successful party should get its costs, partly to discourage mindless appeals.
Two warnings, though. Costs are discretionary. Nothing's automatic, and you may get less than you spent. And the court awards what's reasonable and proved, so a counsel's invoice that looks out of all proportion to the claim may be trimmed. Below we cover what's included, how courts decide, how costs come up at interim stages, how to claim and recover them, and what you can do now to protect yourself. For the bigger picture of how a commercial court case moves from notice to decree, see our service overview.
What the law says about costs in commercial cases
Section 35(1), CPC (as substituted for commercial disputes)
The court has discretion over whether one party pays the other's costs, how much, and when. "Costs" means reasonable costs relating to witnesses' fees and expenses, legal fees and expenses, and any other expenses incurred in connection with the proceedings. The section applies notwithstanding anything in any other law or rule.
Section 35(2) and (3), CPC
When costs are ordered, the general rule is that the unsuccessful party pays the successful party's costs. The court can make a different order, for reasons recorded in writing. In deciding, it looks at how the parties behaved, whether a party won only part of its case, and whether a frivolous counterclaim held things up. It also asks whether someone made a reasonable settlement offer that the other side unreasonably turned down, and whether a party brought a frivolous claim or vexatious proceedings that wasted the court's time.
Section 35(4), CPC
The court can order a party to pay a proportion of another party's costs, or a stated amount. It can order costs from or until a certain date, costs incurred before the proceedings began, the costs of particular steps or a distinct part of the case, and interest on costs from or until a date.
Sections 35A and 35B, CPC
Section 35A allows compensatory costs where a claim or defence is false or vexatious to the knowledge of the party raising it. In ordinary suits there's a cap of Rs 3,000, but for commercial disputes the Commercial Courts Act takes it away. Section 35B allows costs for causing delay, like not taking a step on the date fixed. Paying them becomes a condition for prosecuting or defending further.
Orders VIII, XI, XIIIA and XV-A, CPC (as amended for commercial suits)
A number of procedural rules come with their own cost consequences. A written statement filed after thirty days, within the 120-day outer limit, is taken only on payment of costs (Order VIII Rule 1). A party that unduly refuses to admit a document can face costs, including exemplary costs (Order XI Rule 4). Costs on a summary judgment application follow Sections 35 and 35A (Order XIIIA). And there are costs for adjourning, or not complying with, case management orders (Order XV-A Rules 7 and 8).
What counts as actual costs?
It's the reasonable expense the litigation caused you. Section 35 names three heads: witness fees and expenses, legal fees and expenses, and other expenses connected with the proceedings. In real terms that covers your advocates' and counsel's fees and the court fee on the plaint or counterclaim. Add process fees, certified copies, typing and paper books, travel for witnesses, an expert witness's fee, translation charges, and a local commissioner's fee where the court made you pay it.
Under Section 35(4) you can also claim costs incurred before the proceedings. That lets you ask for the Section 12A pre-institution mediation fee and the cost of your legal notice. Courts do look hard at whether pre-suit work was really part of the case. What you usually won't get back is your own management time, the salary of the accounts person who spent a week on the ledger, or general overheads. Those are hard to separate from the ordinary cost of running a business.
"Reasonable" carries a lot of weight here. The court asks whether the spend was proportionate to the value and complexity of the dispute, and whether it was needed. You're free to brief three senior counsel for a Rs 40 lakh invoice dispute at Saket. Don't expect the other side to pay for all three. Budgeting is covered in our guide on how much a commercial court case costs in Delhi. This page is about getting the money back.
How does the court decide who pays under Section 35?
It begins with the rule that costs follow the event. Winner gets costs. Then it asks whether anything justifies going a different way. Section 35 CPC sets out the main factors. In our experience, two of them count most in Delhi NCR commercial courts: conduct, and partial success.
Conduct means the whole life of the case, from the first date in the registry to the last day of final arguments, and judges do go back through the order sheets to see it. Did a party keep asking for adjournments? File applications that went nowhere? Deny documents it knew perfectly well were genuine, or ignore case management directions? A plaintiff that wins after spending a year stalling over its own documents may find its costs cut. A defendant that loses but ran its case efficiently may be told to pay costs for certain stages only.
Partial success comes up all the time in recovery suits. Suppose you claimed Rs 1 crore, Rs 30 lakh of it damages the court thought exaggerated, and got a decree for Rs 70 lakh. The court may give you a proportion of your costs. Or your costs, minus what the defendant spent fighting the damages claim. The illustration to Section 35(2) makes exactly this point. A plaintiff who wins the main claim but tacks on a frivolous damages claim can be ordered to pay the defendant's costs of that part.
The third factor is the one businesses forget. The refused offer. If one side made a reasonable written offer to settle, the other turned it down unreasonably, and the party that refused ends up no better off, the court can take that into account. It's a real reason to put sensible offers in writing, and early.
Costs along the way: written statement, adjournments, documents
You don't have to wait for the judgment to see costs in a commercial suit. They come up at many steps. Usually they're payable before the next date.
The commonest one? A late written statement. Order VIII Rule 1, as amended for commercial suits, gives the defendant thirty days. The court can stretch that up to 120 days from service of summons, but only on payment of costs. After 120 days, the right's gone for good. Our guide on the 120-day written statement deadline explains how strictly courts treat it now.
Next comes admission and denial of documents. Under Order XI Rule 4, each side has to admit or deny the other's documents and give reasons. Refuse to admit a document without good cause, so the other side has to formally prove something nobody really disputed, and you can be hit with costs, exemplary costs included. Our page on document disclosure and inspection deals with this stage in more detail.
Then the case management hearing under Order XV-A. Adjournment there comes only on costs. And if you don't keep to the timetable it fixes, the default may be condoned on payment of costs to the court, among other consequences. What gets fixed at that hearing is in our guide on the case management hearing under Order XV-A. On top of all this, Section 35B gives a general power to impose costs for any delay. Leave a Section 35B cost unpaid and you can be stopped from going any further until you pay.
Can you get compensation for a false or vexatious case?
Yes. Section 35A of the CPC allows compensatory costs where a claim or defence is false or vexatious to the knowledge of the party that raised it, and the other side objected. In ordinary civil suits it's capped at Rs 3,000. Close to useless. For commercial disputes, the Commercial Courts Act removed the cap, so the court can award a figure that means something.
Defendants gain most. A business sued on a debt someone made up, or a plaintiff hit with a counterclaim that's only there to delay, can ask the court to note its objection early and award compensatory costs at the end. The request carries more weight if you raised it in your pleadings and in your admission and denial of documents. Bringing it up for the first time in final arguments is weaker.
When Advocate B.K. Singh defends a commercial suit that looks manufactured, the pleadings say in plain words that the claim is false to the plaintiff's knowledge, and why. One sentence. Leave it out, and a court may later hold that the Section 35A objection was never properly taken. The wider defence approach is on our page about defending a commercial suit.
Claiming your costs, step by step
Plaintiffs and defendants follow the same steps, in district commercial courts and in the Delhi High Court.
Ask for costs in your pleading
Put a prayer for costs of the suit in the plaint. In the written statement, ask for the suit to be dismissed with costs. If the claim or defence is false or vexatious, say so in terms, so Section 35A is live.
Keep proof of every rupee
Hold on to advocates' fee invoices or receipts, court fee and process fee receipts, mediation fee receipts, bills from experts and witnesses, and travel and copying expenses. Keep them in one folder, stage by stage, dated. A bank payment is far easier to prove than cash.
Ask for costs every time you win an application
When the other side's application is dismissed, or it wants an adjournment, ask the court for costs right there. Small cost orders add up over a case. They also change how the other side behaves.
File the bill of costs when it's due
In the Delhi High Court, the Original Side Rules, 2018 require bills of costs with documents at fixed stages, and a composite bill after judgment. District commercial courts may ask for a statement or affidavit of costs with supporting papers. Have it ready before final arguments.
Argue costs at the end of the hearing
Before judgment is reserved, spend a few minutes on costs. The general rule, what you spent, how the other side behaved, and any offer it refused. Hand up a one-page costs chart backed by documents.
Check the decree
The decree should state the costs awarded and any interest on them. If it's silent or wrong, apply quickly for correction.
Recover costs with the decree amount
Costs awarded are part of the decree and are executed the same way, under Order XXI CPC. Unpaid interim cost orders can be pressed before the trial court or added in at the final reckoning.
When costs come up in a commercial suit: timing and amounts
| Stage | When it usually happens | What may be ordered (general terms) |
|---|---|---|
| Section 12A mediation | Before filing; up to three months, which can be extended by two | Rs 1,000 application fee and a one-time mediation fee by claim slab, split with the other side; can be claimed as pre-suit costs; check the current schedule |
| Filing the suit | The day you file | Ad valorem court fee on the claim under state law, which you can recover as costs if you win; check the current schedule |
| Written statement filed late | Anywhere from day 31 to day 120 after service | Costs fixed by the court as the price of taking the written statement on record |
| Admitting and denying documents | Shortly after pleadings close | Costs, exemplary costs included, for unduly refusing to admit documents |
| Case management hearing and timetable | Usually a few weeks to a few months after pleadings close | Costs for adjournments or non-compliance, sometimes paid to the court |
| Interlocutory applications | Any time during the case | Costs when frivolous applications are dismissed, or for adjournments |
| Judgment | Often one to three years or more after filing in Delhi NCR commercial courts, depending on the court and the case | Costs of the suit, whole or proportionate, with or without interest |
| Bill of costs in the Delhi High Court | When issues are framed, when evidence closes, and within fifteen days of judgment | Assessed by the court or the Taxing Officer on the documents filed |
| Appeal | Within sixty days of the decree, under Section 13 | Costs of the appeal, which usually follow how it turns out |
Bills of costs: the Delhi High Court and the district courts
The Delhi High Court has the most detailed rules. Chapter XXIII of the Delhi High Court (Original Side) Rules, 2018 deals with costs and taxation of costs. Parties have to file bills of costs, with documentary proof where they have it, at fixed points: when issues are framed, when a defendant is proceeded against ex parte, when evidence closes, and when judgment is delivered. The composite bill goes in no later than fifteen days from judgment, unless the Taxing Officer allows more time. The rules let the court award actual costs. Suits above Rs 2 crore in Delhi are heard on that original side. Which cases end up there is explained on our page on the Delhi High Court Commercial Division.
In recent years the Delhi High Court has awarded actual costs running into lakhs of rupees in commercial cases, sometimes to defendants who won, where the party produced a costs chart backed by documents. Each decision turns on its own facts, and you shouldn't read any one of them as a promise of what you'll get, but the approach running through them is clear enough. Costs are proved like any other claim.
District commercial courts in Delhi apply the same Section 35. So does Ghaziabad. So do Gautam Buddh Nagar, Gurugram and Faridabad. But practice on bills of costs is looser there, and it varies from court to court. Some judges want an affidavit of costs before final arguments. Others decide on whatever material is placed during arguments. Wherever you are, the safe approach doesn't change. Keep proof from day one, and get it before the court before judgment is reserved.
Which court decides costs?
The court hearing the suit, and that depends on the claim's value and territory. In Delhi, commercial suits up to Rs 2 crore go to the District Judge (Commercial Court) at the district complexes, Tis Hazari, Saket, Karkardooma and the rest, and suits above Rs 2 crore go to the Commercial Division of the High Court. Check the current pecuniary limit before you file. In UP and Haryana, whichever court is designated as the Commercial Court for the district hears the suit and decides costs.
Appeals are different. The appellate court decides those costs, and under Section 13 of the Commercial Courts Act that's the Commercial Appellate Court or the Commercial Appellate Division of the High Court. If the appellate court changes the result, it can change the trial court's costs order too. Costs of execution are decided by the executing court and added to what's recoverable.
How settlement offers change who pays
Section 35(3) tells the court to consider whether a party made a reasonable offer to settle and the other side unreasonably refused it. Use it. Make a fair offer early, in writing. If the other side refuses and then does no better at trial, you can ask the court to make it bear costs from the date of refusal, even if it technically wins on some points.
The offer has to be real. A specific amount or specific terms, a reasonable time to accept, and something you can put before the court at the costs stage. Some lawyers mark these letters "without prejudice save as to costs", so the judge doesn't see them on merits but they can be shown when costs are decided. Whether a given court will look at a particular letter depends on how it's worded and the circumstances. Take advice before you send one.
Offers count in mediation and during the suit as well. If the court sends the case to mediation and the other side walks away from terms close to what the court later awards, raise that at the costs stage. How to structure terms like these is covered in our guide on settling a commercial suit without losing your rights.
Records to keep if you want your costs back
What you paid, and the proof
- Fee invoices or receipts from your advocates and counsel, stage by stage
- Bank statements that show those payments going out
- Court fee and process fee receipts
- Receipts for the Section 12A application and mediation fee
- Fees paid to experts, local commissioners and translators
How the case was run
- Order sheets showing each adjournment the other side asked for
- Orders imposing costs, and proof of who paid and who didn't
- Your admission and denial statement, and theirs
- Copies of written settlement offers, and the replies
- Notes of the time lost when directions weren't followed
Everything else
- Travel and stay expenses for witnesses
- Certified copies, paper books and printing
- What the pre-suit legal notice cost you
- Charges for data extraction, or for certificates for electronic records
How costs work out for different businesses
For an MSME supplier chasing Rs 10 to 50 lakh, costs can eat a big share of the recovery. So whether you'll get them back really matters. A summary suit, where the defendant often fails to get leave to defend, or an early summary judgment under Order XIIIA, shortens both the case and the bill. Both routes are explained in our guide on winning a commercial suit without a full trial.
Larger companies with in-house legal teams often spend more on outside counsel than a court will call reasonable. Expect a cut. Keep a note of why each counsel was needed. For startups and service firms suing big clients, the costs rule gives you some weight to throw around. A large defendant looking at a realistic costs order is more likely to settle a clear claim than one expecting to pay a few thousand rupees.
Defendants sued on weak claims should think about costs from the very first day. Raise a clear Section 35A objection. Keep to every timetable. And if some amount genuinely is due, make a written offer for it. Do all of that and, if the claim fails, you're in the strongest position to get your own spend back.
The rules don't change between Delhi, UP and Haryana, because Section 35 is part of the CPC as amended for every commercial court. Practice does. The Delhi High Court has its detailed bill of costs procedure. District commercial courts across the NCR differ in how much paperwork they expect.
An invented example: the electronics distributor and the damages claim
This one is made up, to show how the factors interact. A Karol Bagh distributor of mobile accessories sues a Noida brand owner for Rs 1.4 crore. That's Rs 95 lakh of unpaid credit notes, plus Rs 45 lakh as damages for lost business after the brand stopped supplies. It goes to the Delhi district commercial court. Along the way, the brand owner takes four adjournments and refuses to admit the distributor's signed credit note confirmations, so they have to be formally proved.
Before trial, the brand owner offers Rs 80 lakh in writing, in full settlement. The distributor says no. At judgment, the court decrees Rs 95 lakh on the credit notes. The damages claim fails as unproved.
On costs, the court treats the distributor as the party that substantially won. It gets its costs of the credit note claim: the court fee on that part, a proportion of its advocates' fees backed by invoices, and the cost of proving credit notes that should simply have been admitted. The court deducts what the defendant spent meeting the damages claim. And since Rs 95 lakh beats the Rs 80 lakh offer, turning that offer down doesn't count against the distributor.
It's invented, all of it. In a real case the result depends on the court, the record and how well the costs are proved.
Mistakes that cost you your costs
- No paper trail. You paid fees in cash, or without an invoice, and now you can't prove them. Pay through the bank and keep the receipts.
- Never asking. Lots of parties don't ask for costs when the other side takes an adjournment or loses an application. Courts often give what's asked for. Ask for nothing, and that's usually what you get.
- Claiming too much. Pad a bill of costs with inflated or unrelated expenses and the whole claim loses credibility.
- Sitting on interim cost orders. Under Section 35B, an unpaid cost order can stop you defending or prosecuting any further. Pay on time, and push the other side to do the same.
- Wishy-washy settlement offers. "We're open to discussion" means nothing at the costs stage. Put a specific offer in writing.
- A decree that's silent on costs. If it doesn't mention costs or interest on costs, apply for correction straight away. Don't find out during execution.
What to do this week
Start a costs folder for the case. Paper or digital, doesn't matter. Every receipt and fee invoice goes in, marked with the date and the stage. If the case is already under way, go back through the order sheets and list each adjournment the other side took and each cost order made. Is some amount genuinely due? Then think about a written settlement offer now, not after evidence.
To see how costs fit into the strategy for your dispute, look at our page on commercial court services, which goes through the work at each stage. Costs awarded are recovered through execution of the decree, along with the main amount.
When a file comes to Advocate B.K. Singh halfway through a case, the costs record is often the thinnest part of it. It's also the easiest part to fix, if you start early. If you'd like your papers or a costs claim reviewed, or want to hear how courts are awarding costs, contact Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Can I recover my lawyer's fees from the other side in a commercial suit?
Yes, if you win. The court can award your reasonable legal fees as part of costs under Section 35 CPC as amended for commercial disputes. You'll have to prove them with invoices or receipts, and the court can trim anything it finds excessive.
Is it compulsory for the losing party to pay costs?
It's the general rule, not an absolute one. The court can depart from it, for reasons recorded in writing, say where the winner behaved badly or only won part of its case.
Does the court fee I paid come back if I win?
Court fee is part of the costs the court can award, so a winning party usually gets it back from the loser through the decree. The court itself doesn't refund it, except in situations like a settlement where the law allows a refund.
What is a bill of costs?
It's a statement of what a party spent on the case, with supporting documents. The Delhi High Court's Original Side Rules require one at fixed stages and after judgment. District courts may ask for something similar.
Can costs be awarded against a party that wins?
Yes. If the winner behaved unreasonably, made a frivolous claim on part of its case, or refused a reasonable settlement offer and did no better, the court can make it bear some costs.
Are costs ordered on adjournments payable immediately?
Usually they have to be paid before or on the next date, whatever the order says. Under Section 35B, if the defaulting party doesn't pay, it can be stopped from prosecuting or defending further until it does.
Is there any limit on compensatory costs for a false claim in a commercial suit?
The Rs 3,000 cap in Section 35A(2) doesn't apply to commercial disputes, so the court can award a realistic figure. Raise the objection early, in your pleadings.
Do costs carry interest?
They can. Section 35(4) as amended lets the court award interest on costs from or until a date. Ask for it specifically, and check the decree records it.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.