Home > Code of Civil Procedure, 1908 > Sections 34, 35, 35A and 35B

Sections 34, 35, 35A and 35B of the Code of Civil Procedure, 1908

These provisions govern interest on money decrees, ordinary costs, compensatory costs for false or vexatious claims or defences, and costs imposed for causing delay in civil proceedings.

Legal text reviewed: September 6, 2026. The central CPC text below is presented together with the special commercial-dispute costs regime and important State or Union Territory adaptations appearing in the current India Code text.
Section 34 CPC

Interest

(1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit.

Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or, where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.

Explanation I. In this sub-section, "nationalised bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).

Explanation II. For the purposes of this section, a transaction is a commercial transaction if it is connected with the industry, trade or business of the party incurring the liability.

(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie.

In brief: Section 34 governs pendente lite and post-decree interest on money decrees. The post-decree ceiling of six per cent can be exceeded in qualifying commercial transactions within the statutory limits.
Section 35 CPC

Costs

(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and 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, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.

(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.

Section 35 for commercial disputes of specified value

For commercial disputes of a specified value, the Commercial Courts legislation substitutes a special costs regime. The Court has discretion to determine whether costs are payable, their quantum and when they are to be paid. "Costs" include reasonable witness fees and expenses, legal fees and expenses, and other expenses incurred in connection with the proceedings.

The general rule under that regime is that the unsuccessful party pays the successful party's costs, but the Court may depart from the rule for reasons recorded in writing.

The Court must have regard to circumstances including:

  1. the conduct of the parties;
  2. whether a party succeeded on part of its case even if not wholly successful;
  3. whether a party made a frivolous counterclaim causing delay;
  4. whether a reasonable settlement offer was made and unreasonably refused; and
  5. whether a party made a frivolous claim or instituted vexatious proceedings wasting the Court's time.

Orders may include proportionate costs, a stated amount, costs from or until a specified date, pre-proceeding costs, costs relating to particular steps or distinct parts of the proceeding, and interest on costs.

In brief: Ordinary civil suits remain governed by the general Section 35 discretion, while commercial disputes of specified value are subject to the special statutory costs framework introduced through the Commercial Courts legislation.
Section 35A CPC

Compensatory costs in respect of false or vexatious claims or defences

(1) If in any suit or other proceeding, including an execution proceeding but excluding an appeal or a revision, any party objects to the claim or defence on the ground that the claim or defence or any part of it is, as against the objector, false or vexatious to the knowledge of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court, if it so thinks fit, may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for payment to the objector by the party by whom such claim or defence has been put forward, of costs by way of compensation.

(2) No Court shall make any such order for payment of an amount exceeding three thousand rupees or exceeding the limits of its pecuniary jurisdiction, whichever amount is less.

First proviso. Where the pecuniary limits of the jurisdiction of a Court exercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887, or under a corresponding law in force in any part of India to which that Act does not extend, and not being a Court constituted under such Act or law, are less than two hundred and fifty rupees, the High Court may empower such Court to award as costs under this section any amount not exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred rupees.

Second proviso. The High Court may limit the amount which any Court or class of Courts is empowered to award as costs under this section.

(3) No person against whom an order has been made under this section shall, by reason thereof, be exempted from any criminal liability in respect of any claim or defence made by him.

(4) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence.

In brief: Section 35A permits limited compensatory costs where a claim or defence is knowingly false or vexatious and is later disallowed, abandoned or withdrawn, subject to the statutory conditions and monetary ceiling in the central text.
Section 35B CPC

Costs for causing delay

(1) If, on any date fixed for the hearing of a suit or for taking any step therein, a party to the suit -

  1. fails to take the step which he was required by or under this Code to take on that date; or
  2. obtains an adjournment for taking such step or for producing evidence or on any other ground,

the Court may, for reasons to be recorded, make an order requiring such party to pay to the other party such costs as would, in the opinion of the Court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the Court on that date, and payment of such costs, on the date next following the date of such order, shall be a condition precedent to the further prosecution of -

  1. the suit by the plaintiff, where the plaintiff was ordered to pay such costs; or
  2. the defence by the defendant, where the defendant was ordered to pay such costs.

Explanation. Where separate defences have been raised by the defendant or groups of defendants, payment of such costs shall be a condition precedent to the further prosecution of the defence by such defendants or groups of defendants as have been ordered by the Court to pay such costs.

(2) The costs ordered to be paid under sub-section (1) shall not, if paid, be included in the costs awarded in the decree passed in the suit; but, if such costs are not paid, a separate order shall be drawn up indicating the amount of such costs and the names and addresses of the persons by whom such costs are payable, and the order so drawn up shall be executable against such persons.

In brief: Section 35B allows the Court to impose realistic attendance-related costs where a party causes delay by failing to take a required step or by obtaining an adjournment, with payment operating as a condition precedent to further prosecution in the circumstances stated by the section.

Important State and Union Territory amendments

Jammu & Kashmir and Ladakh

The current India Code text records that, under the 2020 Adaptation Orders, in Section 35(1) the word "Commercial" is omitted for Jammu & Kashmir and Ladakh. It also records that Section 35A(2) is omitted for these Union Territories.

Uttar Pradesh - Section 35A

India Code records Uttar Pradesh amendments to Section 35A. These include a substituted sub-section (1) dealing with false or vexatious claims or defences and an additional sub-section (1-A) applying the compensatory-cost principle, mutatis mutandis, at the appellate stage where the appellate Court confirms the trial Court and compensatory costs were not awarded or were insufficient.

Important amendment notes

Official references: Code of Civil Procedure, 1908 - India Code; Commercial Courts legislative amendments - Legislative Department. For litigation or professional use, also verify applicable State amendments, High Court rules and current judicial interpretation.