¹[35A. Compensatory costs in respect of false or vexatious claims or defences.— (1) If in any suit or other proceedings ²[including an execution proceeding but ³[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it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court, ⁴[if it so thinks fit], may, after recording its reasons for holding such claim or defence to be false or vexatious, make an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 the payment to the object or by the party by whom such claim or defence has been put forward, of cost by way of compensation.
^*[(2) No Court shall make any such order for the payment of an amount exceeding ⁵[three thousand rupees] or exceeding the limits of its pecuniary jurisdiction, whichever amount is less:
Provided that where the pecuniary limits of the jurisdiction of any Court excercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887 (9 of 1887), ⁶[or under a corresponding law in force in ⁷[any part of India to which the said Act does not extend]] and not being a Court constituted ⁸[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 :
Provided, further, that 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.]

STATE AMENDMENTS

Jammu and Kashmir and Ladakh (UTs).—

In Section 35A, omit sub-section (2).
[Vide the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, notification No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, Notification No. S.O. 3774(E), dated (23-10-2020).]

1. Section 35A ins. by Act 9 of 1922, s. 2, which, under section 1(2) thereof may be brought into force in any State by the State Government on any specified date. It has been so brought into force in Bombay, Bengal, U.P., Punjab, Bihar, C.P., Assam, Orissa and Madras.
2. Subs. by Act 66 of 1956, s. 4, "not being an appeal " (w.e.f. 1-2-1957).
3. Subs. by Act 104 of 1976, s. 14, for "excluding an appeal " (w.e.f. 1-2-1977).
4. Subs. by Act 66 of 1956, s. 4, for certain words (w.e.f. 1-2-1957).
5. Subs. by Act 104 of 1976, s. 14, for "one thousand rupees " (w.e.f. 1-2-1977).
6. Ins. by Act 2 of 1951, s. 7.
7. Subs. by the Adaptation of Laws (No. 2) Order, 1956, for "a Part B State ".
8. Subs. by Act 2 of 1951, s. 7, for "under that Act " (w.e.f. 1-4-1951).
*. Shall be applicable to commercial disputes of a specified value by Act 4 of 2016, s. 16 and the Schedule (w.e.f. 23-10-2015).