1. Historic Background
  2. What is “Code for Compulsory Costs”?
  3. Why do we need Code for compulsory costs?
  4. Anti-arguments

Historic Background

  • SAHARA opened two companies and issued OFCD (optionally fully convertible debentures) to public without permission from SEBI
  • (2011) SEBI ordered them to refund money with 15% interest to public and show receipts of refund to SEBI
  • SAHARA did not comply, went to SAT and then SC. Even after SAT and SC ruled in favor of SEBI, the SAHARA company did not refund all the money. Hence Subrato arrested.
  • 2014: case is not yet sorted out. only taarikh pe taarikh while the investors’ money not refunded.

Supreme court observed:

  1. For every order passed by the SEBI, Sahara has filed petition to securities appellate tribunal (SAT) and then to Supreme Court.
  2. Sahara even filled petitions to get stay orders from Allahabad High court. Even though High Courts have no jurisdiction on SEBI!!
  3. In last two years, 81 days of Supreme court wasted only on hearing SAHARA case.
  4. Now SAHARA lawyers even accuse SC judges of Bias against Subrato!
  5. To put an end to such frivolous litigations, tomfoolery and badass thuggary, Supreme court requested parliament to frame a “Code for Compulsory Costs”.

What is “Code for Compulsory Costs”?

  • Under this system, IF a compulsive litigant (like Sahara) gets defeated,
  • it will have to pay money to the winner (in this case SEBI),
  • to compensate for wasting time and peace of mind.
  • as deterrence against frivolous litigations in future

Why do we need Code for compulsory costs?

#because process is abused

  • Both government and rich people file petition to higher court whenever they’re defeated. They also file new petition in the same court or in other courts to get stay order against the verdict.
  • These people have nothing to lose and deep pockets to hire lawyers. They derive their strength from abuse of the legal process.
  • This practice and pattern is so rampant that in most cases, disputes which ought to have been settled in no time at all before the first court of incidence, are prolonged endlessly, for years and years, from court to court, up to the Supreme Court.
  • Whenever Court time lost, it’s is a direct loss to the nation.

#because Victim deserves to be paid

  • In frivolous litigations, innocent person suffer from long drawn battle, whilst the case is pending, without any fault on his part.
  • Victim pays for the litigation, from out of his savings (or borrowings), worrying that the other side may trick him into defeat.
  • Victim spends invaluable time briefing his lawyer, gathering evidences. He could have spent that time at office or with family, had the other party had not filed such frivolous cases.
  • Therefore, victim deserves to be compensated.

#Govt is compulsive litigant

  • Government bodies litigate endlessly all the way to Supreme Court, just because of the lack of responsibility to take decisions.
  • Sometimes it’d seem that all administrative and executive decision-making are being left to the courts.
  • Prime example UPSC : whenever CIC passes any order against UPSC, they goto Delhi High court and then to Supreme court. Matter goes on for years, petitioner cannot sustain the cost while UPSC hires best lawyers on public money.


We don’t need any “Code of compulsory cost” because:

  1. Judge can throwout such frivolous cases and put heavy fine on the litigant. (it has been many times, even in PILs.)
  2. Under India’s civil procedure code (CPC) high courts can impose “compensatory” costs for frivolous civil suits. But maximum penalty is Rs.3000. Parliament needs to enhance this penalty via CPC amendment. Hence there is no need for a separate “Code of compulsory cost”?
  3. Constitution allows the SC to issue any order necessary for “doing complete justice”. So even without any separate laws or “codes”, SC is free to impose heavy fines on idiots.
  4. District and sessions court judges also need to be proactive in nipping the frivilous litigations in bud. This requires reform in entire judicial process, not just one new “code”.

Mock Questions

Sample MCQ: In 2014, during Sahara verdict, SC judges requested parliament to draft a “Code for compulsory costs”. What is the purpose of this code?

  1. Corporate giants will be required to pay higher court fees.
  2. In addition to court fees, the corporate giants will have to pay for utilizing judge-hours.
  3. If defeated in a civil matter, a corporate giant will have to pay higher penalty than ordinary citizen.
  4. If defeated, the compulsive litigant will have to pay compensation to the other party.

Sample MCQ: If parliament passes a “code for compulsory costs” for the judiciary, what will be its implication?

  1. Courts will have additional funds available to undertake recruitment and infrastructure upgrades
  2. Government departments & Corporates will have to pay additional fees every time they go in appeal.
  3. Poor people will be exempted from paying any court fees or lawyer fees.
  4. None of above

Correct Answers:

  1. D- if compulsive litigant defeated
  2. D-none of above

Mains Exam: Examine the need & benefits of implementing a “Code of compulsory costs” in legal process. 200 words.