Proportionate Cost Only Can Be Awarded On Decreed Amount, Not On Total Plaint Valuation: Kerala High Court

"The cost can only be on the sum of ₹6,00,000/- which had been decreed and not on the plaint valuation in the present case." Kerala High Court, in a significant ruling dated August 11, 2026, held that a successful plaintiff in a suit for specific performance who is granted an alternative decree for the refund of advance money is entitled only to proportionate costs calculated on the decreed sum, and not on the inflated total valuation of the plaint.

A bench of Justice T.R. Ravi observed that judicial discretion to award costs must be exercised in a realistic and practical manner based on sound legal principles rather than mechanically awarding costs on the entire plaint valuation.

The suit was originally instituted in January 2012 seeking specific performance of an agreement for sale dated July 29, 2011, or alternatively for the refund of an advance amount of ₹6 lakhs. The trial court declined specific performance due to the involvement of a minor's right in the property, but directed the defendant to refund the advance amount of ₹6 lakhs with interest and awarded the entire costs based on the total plaint valuation of ₹14.35 lakhs. The defendant challenged the judgment solely on the legality of awarding excessive costs, including court fees and advocate fees calculated on the higher valuation.

The primary question before the court was whether costs, including court fees and advocate fees, should be calculated on the entire plaint valuation or proportionate to the specific amount decreed by the court. The court was also called upon to determine whether amended rules regarding advocate fees would apply to a suit pending on the date of the amendment.

Amended Advocate Fee Rules Apply To Pending Suits

Addressing the applicability of the amended advocate fee rules, the court noted that the rules specifically mandate that they come into force upon publication and apply to all matters pending on or filed on or after that date. The court rejected the appellant's contention that advocate fees should be calculated as per the unamended rules prevailing at the time of initiating the suit.

"The Rule specifically says that it will apply to pending cases. As such, the appellant is not entitled to contend that the Advocate fee which would have been payable at the time of initiating the suit should alone be applied for the purpose of calculating fee."

Costs Must Reflect Extent of Success in the Suit

The high court analyzed previous precedents, including Precious Blood Missionaries v. Nishanth Luize and George P.D. v. S.P. Joy, wherein it was firmly established that when a court grants a lesser amount than what is claimed in the plaint, cost must be restricted proportionately to the sum actually decreed. The bench emphasized that discretion under Section 35 of the CPC must be exercised logically.

"Discretion has to be exercised in a realistic and practical manner based on sound judicial principles and reasoning and one such reasoning is proportionate cost depending on the success and failure."

Absence of Reasons in Trial Court Judgment

The court observed that while Section 35 of the Code of Civil Procedure vests courts with wide discretion regarding costs, such discretion cannot be arbitrary and must be supported by reasons if costs are awarded independently of success or failure. The trial court's judgment completely lacked any reasoning for awarding costs on the entire valuation.

"The judgment of the court below does not reveal any such reasoning with regard to the exercise of discretion. As a matter of fact, no reason at all is stated in the judgment."

Allowing the appeal, the Kerala High Court modified the trial court decree. The court directed the defendant to pay the principal sum of ₹6,00,000 with 6% interest from the date of the agreement till realization, coupled strictly with proportionate costs calculated exclusively on the decreed sum of ₹6,00,000 rather than the total plaint valuation.

Date of Decision: 11 August 2026