G. Dharma Rao vs Commission of Excise and Others

Kodandaramayya, J.—This appeal and cross-objections arise out of judgment and decree in O.S. No. 1117/84 on the file of II. Additional judge city Civil Court Hyderabad. Plaintiff is the appellant. Suit is laid seeking a direction against, defendants 1 and 2 to transfer licence No. 21/83-84 in Form F.L. 17 for conducting the business of selling alcohol and running bar and restaurant in the name and style M/s. Chandra Wines, Bar and Restaurant in premises No. 11/298, Gudivada, Krishna district from the name of L.V. Subbayya in the name of the plaintiff and also to direct the 2nd defendant to receive Rs. 27,000/ - towards the renewal of licence free from the plaintiff for the period from 1.10.84 to 30.9.85 for the purpose of continuance of business of the plaintiff in the said premises without any interruption and for costs.

The plaint case is that he entered into a contract on 7.4.83 with the 3rd defendant who is the holder of as licence in Form F.L.17 relating to M/s. Chandra Wines, Bar and Restaurant by paying Rs. 10,000/ - and the plaintiff''s sister purchased and immovable property bearing Municipal Survey No. 11/298 for a total consideration of Rs. 28,000/ - and she is in possession of the property in part performance of an agreement to sell dated 7.4.83 and defendants 1 and 2 who are the authorities to transfer the licence are not doing so inspite of requests made by the plaintiff and even after seeking directions from the High Court in W.P. No. 1804/84 and hence the suit.

In the first instance defendants 1 and 2 alone were added as parties. The 1st defendant is the Commissioner of Excise and the 2nd defendant is the Excise Superintendent, Krishna district. They are the statutory authorities under the A.P. excise Act. They mainly contended that the transfer of licence is forbidden under law and the suit for mandatory injunction is not maintainable and they also raised the plea that the owner of the premises where the Bar and Restaurant was being carried on filed a suit O.S. No. 249/84 on the file of Subordinate Judge''s Court, Gudivada for cancellation of contract of sale. It is also contended that the 3rd defendant issued notice to them not to transfer his licence and under those circumstances no relief can be granted to the plaintiff.

The 3rd defendant also contested the suit stating that the agreement is void and unenforceable.

The-court below framed two issues about the maintainability of the suit also the right to seek the mandatory injunction against defendants 1 and 2 held both the issues against the plaintiff and dismissed the suit. However it awarded cost against the 3rd defendant directing him to pay costs payable to the plaintiff and also to defendants 1 and 2. Against the said judgment and decree the plaintiff filed the Appeal and the defendants the cross-objections.

So far the appeal is concerned it is seen that no effective relief can be granted to the plaintiff for two reasons. Firstly the original period of licence has expired and secondly the suit is not the appropriate remedy to seek enforcement of the statutory duties and the relief of mandatory injunction cannot be granted against the statutory authorities as no dereliction of duty on their part is established. Though the learned council tried to argue that the civil court can grant relief he could not pursue this line of argument further as in fact a direction was sought by the plaintiff by filing writ petition No. 1804/84 and the defendants passed orders on merits after the judgment in the above writ petition. If the grievance of the plaintiff is that the judgment of this Court in the above writ petition dated 7.5.85 is not properly implemented he must seek an appropriate relief under Article 226 of Constitution of India and the civil court is not the proper forum when in particular the period of licence has already expired on 30.9.84. Further the period in respect of which the plaintiff sought renewal is 1.10.84 to 30.9.85 i.e. the period subsequent to the expiry of the original licence and hence the civil court rightly held that it cannot go into these questions and it has no jurisdiction to order renewal of licence which stood in the name of the 3rd defendant which has already expired and in particular when he is opposing it. Hence I see no substance in this appeal and the same is dismissed. I make no order as to costs.

However in the Cross-objections the Learned Counsel raised an interesting question saying that the 3rd defendant is wholly successful and the direction to ask him to pay costs of the plaintiff is clearly unsustainable. It is true the normal rule is costs should follow the event but it is not the invariable rule that the successful party cannot be directed to pay costs if circumstances exist in favour of the party though unsuccessful. Further the rule is differently applied considering the fact that the successful party is the plaintiff or the defendant.

A successful plaintiff may be directed to pay costs to the unsuccessful defendant where the action is unnecessary as in the case of Fane v. Fane (1879) 13 Ch.D. 228. Similarly when the plaintiff recovers far lesser amount than was tendered by the defendant the plaintiff is ordered to pay costs to the defendant though the decree is passed in his favour. (Vide Childs v. Blacker 1954 (2) All.E.R. 243. There are instances where in order to adjudicate the right of the plaintiff court took assistance from the party inviting opposition and such assistance is necessary for the court. In order to adjudicate the claim the court may direct the successful party-plaintiff to pay costs to the opposite side. But I find a different rule so far the defendant is concerned. A distinction is drawn between a successful plaintiff who has invited the aid of the court and a successful defendant who has been dragged to the court against his will. It is considered to be not a proper exercise of judicial discretion to direct a successful defendant to pay costs of the plaintiff unless the defendant is guilty of disobeying the orders of the court or commits contempt of court. However this rule has no application to deprive a successful party of his costs partly or even altogether.

The earliest judgment in Re Foster v. Great Western Railway Company (1882) 8 Q.B.D. 515 is a case where the Court of Appeal reversed the judgment-of Queen''s Bench Division which directed the successful defendant to pay costs of the unsuccessful defendant. In Gray v. Ashburton 1917 AC 26 this case was distinguished by House of Lords as they are concerned with the case where successful plaintiff was asked to pay costs to the defendant. Coming, nearer in Olway v. Jones 1955(2) All. E. 8584 a successful defendant was asked to pay costs to the plaintiff but that was considered to be not an ordinary case but arising under a special Act called Rent and Mortgage Interest Restrictions (Amendment) Act, 1933 where the plaintiff failed to obtain order of possession because the Country Court judge considered that to be too harsh to order eviction as he was given such discretion not to order eviction under the Act. Finally these cases were considered by Court of Appeal in k Night v. Clifton 1971 (2) All E.R. 378 wherein the learned judges affirmed the rule that a successful defendant should not be asked to pay costs and accordingly the order of the trial court directing the defendant to pay costs was reversed as the trial judge did not record any finding that the defendant was guilty of contempt of court and the cross-appeal filed by the plaintiff also was rejected as he could not earn a finding that the defendant is guilty of contempt of court even before the appellate court. This case pointed out clearly that the question of awarding costs against successful defendant does not involve any question of jurisdiction in view of the clear language of Section 50(1) of the Supreme Court of judicature (Consolidation) Act, 1925 which states that the awarding of costs "shall be in the discretion of the court or judge shall have full power to determine by whom and whatever extent such costs are to be paid". This case criticised severely the Foster''s case in 8 QBD 515 and it was pointed out that Foster''s case and other cases decided prior to the enactment of Section 5 of the Supreme Court of judicature Act of 1890 which was on the same lines with the Supreme Court of judicature (Consolidation) Act, 1925 can no longer be considered as authority for the proposition that the court has no jurisdiction to award costs against a successful defendant. Hence it was held that it was a matter of judicial discretion in view of the wide language of the Consolidation Act of 1925 but not a question of jurisdiction.

It is seen the language of Section 35 of CPC is also wide as in the case of the Consolidation Act 1925 of U.K. stating that "the court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid". No doubt Sub-section (2) of Section 3 enjoins on the court a duty to record reasons when the court directs that the costs shall not follow the event.

Sri Venugopala Reddy relied upon a judgment of this Court in Kovuri Naramma Vs. Kovuri Kotamma and Another, where the principle of awarding costs against persons who were not parties was discussed. I do not find much relevancy in that case. But I find in the judgment of parthasarathi, J., in S. Rojalinga Bottar v. S.A. Rqhem Saheb 1970(1) ALT 320 the learned Judge pointed out when a direction for payment of costs to unsuccessful party can be awarded. He observed that "The court should act with great circumspection and it is necessary that the view of the court as to misconduct of the party charged with the liability as to costs, should be based upon incontrovertible facts or date or on inferences to which no exception can possibly be taken". The learned Judge had no occasion to consider the distinction between a successful plaintiff and a successful defendant in directing to pay the costs of the unsuccessful opponent.

Further in this connection it is necessary to remember that the appellate Court will not interfere with the awarding of costs by the trial court unless an error of principle is involved.

The result of this discussion is

(1) The awarding of costs in within the discretion of the court and the court of Appeal will not interfere unless the discretion is vitiated by error of law.

(2) The awarding of costs may be either as a reward or as a punishment.

(3) A successful plaintiff or defendant may be deprived of his costs in part or in whole.

(4) A successful plaintiff may be ordered to pay costs of the defendant.

(5) If a defendant is wholly successful he should not be ordered to pay costs of the plaintiff unless he is guilty of misconduct in the course of trial.

Applying these principles to the facts of this case the 3rd defendant was not added as a party in this section the first instance and the relief sought was only against the statutory authorities who are defendants 1 and 2. The court categorically found that the remedy of the plaintiff against the 3rd defendant is only to file a separate suit for damages and any such relief in this suit would cause injury to the defendant as he will not have an opportunity to answer the claim of the plaintiff. It is also noticed that the suit itself is not maintainable both in its frame and in respect of relief sought against the statutory authorities. Thus it is seen the plaintiff lost completely. The mere conduct of the defendants in resiling from the contract originally made with him which is not even made the subject matter of an issue in the suit cannot furnish a ground for ordering costs against the 3rd defendant. Hence I allow the cross-objections and set aside the direction of the court below that the 3rd defendant should be directed to bear the costs of the plaintiff in the suit and also costs of defendants 1 and 2. The cross-objections are allowed accordingly. I make no order as to costs in the Cross-objections.