Allahabad High Court Stresses Importance of Cost Imposition in Frivolous Litigation

In a recent ruling by the Allahabad High Court in the case of State & Ors v Raj Veer Singh, Justice Shekhar B Saraf emphasized the significance of imposing costs in cases of frivolous litigation. A Bench of Justice Shekhar B Saraf observed frivolous litigation clogs the courts with baseless claims and delays the resolution of legitimate disputes.

"Frivolous litigation not only inundates the courts with baseless claims but also disrupts the resolution of genuine disputes. Individuals with valid claims may be forced to endure prolonged legal battles, often at great personal and financial cost, simply because the system is overwhelmed by frivolous cases. Imposition of costs in cases of frivolous litigation is not intended to discourage legitimate claims but rather to deter abuse of the legal system. Courts have discretion to differentiate between cases where parties genuinely believe in the merit of their claims and those where litigation is pursued for ulterior motives or without any reasonable basis." - the Court explained.

By imposing costs in frivolous or vexatious cases, courts strike a balance between deterring abuse and ensuring access to justice for legitimate claimants. Justice Shekhar B Saraf proceeded to opine that the imposition of costs for frivolous litigation is essential to maintain the integrity, efficiency, and fairness of the judicial system.

"By deterring abuse of the legal process, promoting judicial efficiency, and upholding the principles of fairness and justice, cost imposition serves to safeguard the rights of individuals, protect the integrity of the legal system, and bolster public confidence in the administration of justice," the April 16 judgment stated.

The Court made the observation while imposing ₹5 lakhs as costs on the Uttar Pradesh government. The Court found that the State had needlessly burdened courts with repetitive and meritless objections to prolong the enforcement of an arbitral award at the stage of its execution.

"Execution proceedings, far from being a battleground for a rematch on the merits of the arbitral award, serve as the denouement of the legal drama ... To raise objections under Section 47 of the CPC, 1908 in the execution proceedings would be akin to attempting to rewrite the script of a play after the final curtain call – a futile endeavor that serves only to prolong the agony of litigation and delay the inevitable conclusion," Justice Saraf remarked.

The case concerned the enforcement of an arbitral award passed in 2013. At the stage of executing this award, the Uttar Pradesh government had raised objections under Section 47 (execution of court decrees etc.) of the Code of Civil Procedure Code, 1908 (CPC).

After a commercial court rejected the said application under Section 47 of the CPC, the State moved the High Court with the present plea. The High Court dismissed this plea on finding that objections under Section 47, CPC cannot be raised at the stage of executing or enforcing an arbitral award under Section 36 of the Arbitration Act.

"An arbitral award is not a decree as defined under Section 2(2) of the CPC, 1908. Therefore, objections under Section 47 of the CPC, 1908 which are specifically applicable to execution of decrees, are not maintainable against arbitral awards … objections available under Section 47 of the Code of Civil Procedure, 1908 will not be available under Section 36 of the Act since an arbitral award is not in reality a decree of the court but is merely treated as one for the limited purpose of enforcement," the Court explained.

The Court observed that allowing the raising of objections under Section 47, CPC at the stage of an arbitral award's enforcement would undermine its finality and binding nature.

"It would subject arbitral awards to same procedural complexities and delays associated with court proceedings, defeating the purpose of choosing arbitration as an alternative dispute resolution mechanism," the Court added.

Therefore, the Court upheld the commercial court's decision to dismiss the State's objections under Section 47, CPC, on grounds of maintainability.

Additional Advocate General Manish Goyal along with Additional Chief Standing Counsel Ashok Kumar Goyal appeared for the State of Uttar Pradesh. Senior Advocate Anurag Khanna along with Advocate Punit Kumar Gupta appeared for the sole respondent, Raj Veer Singh.