In a recent case of Pawan Advertising v/s State of Maharashtra & Others before the Bombay High Court, the Hon'ble Judges constituting a Division Bench were tasked with resolving a difference of opinion concerning the quantum of exemplary costs to be imposed on a petitioner following the dismissal of its writ petition. The petitioner, in Writ Petition No. 10220 of 2024, had challenged an order passed by the Mumbai Metropolitan Regional Development Authority (MMRDA) rejecting its application for the retention of hoardings it had erected. While the writ petition was dismissed by the Division Bench on the grounds that the hoardings exceeded permissible limits, the Judges disagreed on the quantum of exemplary costs to be levied against the petitioner.
The Dispute and Its Context:
The petitioner's challenge against the MMRDA's decision, dated 11th July 2024, was dismissed by the Division Bench on 24th July 2024. The bench found that the hoardings exceeded statutory limits and that the petitioner had improperly sought permission from the Grampanchayat instead of the MMRDA, which was the competent authority. Additionally, the bench noted that the petitioner had made false statements and suppressed facts in
the writ petition. Both judges concurred that exemplary costs should be imposed; however, they differed significantly in the quantum of such costs.
Hon’ble M. S. Sonak, J. suggested that a cost of Rs. 5,00,000/- would be appropriate, while Hon’ble Kamal Khata, J. advocated for a higher cost of Rs. 25,00,000/-, arguing that the amount should serve as a genuine deterrent. This disagreement over the quantum of exemplary costs ultimately led to the matter being referred to a larger bench for resolution.
Arguments Presented Before the Court:
In the proceedings, the petitioner’s counsel, Ms. Minal Chandnani, contended that the facts of the case did not justify the imposition of such a substantial cost. She argued that the petitioner had not acted with malice, having sought permission from the Grampanchayat in good faith, and that this was the first instance in which the petitioner had approached the Court. The counsel also highlighted that, in a similar case, the court had dismissed a writ petition without imposing any costs, suggesting inconsistency in the application of such penalties.
On the other hand, Ms. Kavita Solunke, representing the MMRDA, supported the imposition of the higher exemplary cost of Rs. 25,00,000/-, arguing that the petitioner’s conduct involved deliberate misstatements and suppression of facts. She emphasized that the petitioner had made commercial gains from the unlawful activity and that imposing a high cost would act as an effective deterrent against such conduct in the future.
Legal Considerations and Principles:
The case ultimately raised an important issue regarding the discretion of courts in imposing exemplary costs under Article 226 of the Constitution. The court referred to the established principle that while the imposition of costs is discretionary, it must be guided by fairness, justice, and reasoned judgment. Courts have recognized that exemplary costs should be levied where a party is found guilty of misconduct such as fraud, misrepresentation, or suppression of facts. In such instances, the purpose of exemplary costs is to serve both as a punishment and a deterrent.
Notably, the Supreme Court in Satyapal Singh Vs. Union of India, 2009, clarified that exemplary costs should only be levied in cases of clear misconduct, such as when a claim is false or vexatious. The Court emphasized that such costs should not be used as a tool for punishing ordinary litigants without evidence of fraud or misrepresentation.
In this context, the Division Bench noted that while the petitioner had made false statements, there was insufficient factual material on record to determine the exact monetary gain the petitioner had derived from the illegal activity. This lack of concrete evidence made it difficult to assess whether the proposed cost of Rs. 25,00,000/- was proportionate to the benefits reaped by the petitioner.
The Court’s Decision:
After considering the arguments and the relevant legal principles, the larger bench concluded that the facts of the case warranted the imposition of exemplary costs, but the quantum of Rs. 5,00,000/- suggested by Hon’ble M. S. Sonak, J. was more appropriate. The absence of specific material detailing the petitioner’s gains meant that it would be unreasonable to impose a larger cost without further evidence.
Thus, the bench resolved the disagreement by agreeing with the lower quantum of exemplary costs and referred the matter back to the Division Bench for further proceedings.
Conclusion:
The resolution of the disagreement over exemplary costs in this case underscores the importance of judicial discretion in matters of cost imposition. It highlights the need for a balanced approach that considers the severity of the party's misconduct while ensuring that the costs levied are not arbitrary or punitive beyond the extent warranted by the facts of the case. Ultimately, the decision serves as a reminder of the role that costs play in upholding the integrity of the judicial process, deterring misconduct, and promoting fairness in legal proceedings.
