By Vohra & Vohra

The evolution of commercial litigation in India has not been confined to substantive rights alone. Equally significant has been the judiciary’s growing emphasis on ensuring that litigation itself is conducted responsibly and that parties who successfully defend commercial claims are not left bearing substantial legal expenses. The Delhi High Court’s order dated 2 July 2026 in Bata India Ltd. v. Crocs Inc. USA is another important step in this direction.

While the underlying dispute between Bata India and Crocs concerned intellectual property rights, the order itself addressed a different question—the award of realistic litigation costs following the conclusion of commercial proceedings.

Relying upon the Supreme Court’s landmark decision in Uflex Ltd. v. Government of Tamil Nadu, Justice Prathiba M. Singh directed the unsuccessful party to reimburse ₹24.63 lakh towards the actual litigation expenses incurred by the successful defendant. In doing so, the Court reaffirmed that commercial litigation should not become a cost-free exercise where unsuccessful litigants can pursue prolonged disputes without financial consequences.

The order reflects a broader judicial movement towards ensuring that costs awarded in commercial disputes are realistic rather than merely symbolic.

The Traditional Problem of Nominal Costs

Historically, Indian courts often awarded nominal costs irrespective of the actual expenditure incurred by successful litigants. Even where parties engaged senior counsel, conducted extensive evidence, and litigated for several years, the costs awarded frequently bore little resemblance to the true financial burden of litigation.

This approach produced an undesirable consequence.

Commercial entities could pursue speculative or weak claims with minimal financial risk because, even if unsuccessful, they would ordinarily bear only their own legal expenses while the successful party remained uncompensated for substantial litigation costs.

The result was an increase in avoidable commercial litigation, procedural delays, and strategic lawsuits designed to pressure competitors rather than resolve genuine legal disputes.

Recognising these shortcomings, Parliament introduced significant amendments through the Commercial Courts Act, 2015, strengthening the statutory framework governing costs in commercial disputes.

The Supreme Court’s Shift Towards Realistic Costs

The Delhi High Court’s reasoning is firmly rooted in the Supreme Court’s decision in Uflex Ltd. v. Government of Tamil Nadu, where the Supreme Court undertook a comprehensive examination of the philosophy underlying litigation costs.

The Supreme Court identified several objectives that should guide courts while awarding costs:

• successful litigants should receive meaningful indemnification;
• unnecessary commercial litigation should be discouraged;
• settlement of disputes should be encouraged;
• procedural rules should facilitate access to justice; and
• courts should retain flexibility to award costs that reflect the realities of commercial litigation.

Importantly, the Supreme Court observed that commercial entities consciously choose to litigate after evaluating commercial risks. Having made that commercial decision, they must equally bear the commercial consequences of success or failure.

This principle has now been expressly applied by the Delhi High Court.

Actual Litigation Expenses as the Appropriate Benchmark

A particularly noteworthy feature of the order is the Court’s insistence upon actual costs rather than arbitrary estimates.

During the hearing, the Court directed the successful defendant to furnish a detailed statement of litigation expenses. In response, the defendant submitted a comprehensive chart demonstrating expenditure amounting to ₹24,63,400, representing counsel’s fees and associated litigation expenses.

Significantly, the plaintiff did not dispute either the accuracy or reasonableness of these figures.

Instead of awarding a conventional token amount, the Court accepted the actual expenditure as the appropriate measure of costs.

This approach reflects an important shift in judicial thinking.

Rather than treating costs as a discretionary afterthought, the Court recognised them as an integral component of commercial justice designed to restore, at least partially, the financial position of the successful litigant.

Statutory Framework Supporting Realistic Costs

The order draws support from multiple statutory provisions.

Justice Prathiba M. Singh relied upon Sections 35 and 35A of the Code of Civil Procedure, the Commercial Courts Act, 2015, and Chapter XXIII Rule 5 of the Delhi High Court (Original Side) Rules, 2018, while directing payment of the quantified costs.

These provisions collectively recognise that commercial disputes require a more sophisticated approach towards litigation costs than traditional civil proceedings.

Unlike ordinary civil suits, commercial litigation frequently involves substantial documentation, expert evidence, senior legal representation, and prolonged hearings. Consequently, meaningful costs become necessary to prevent successful litigants from suffering financial prejudice despite prevailing in court.

Costs as a Tool for Judicial Efficiency

Beyond compensating successful litigants, the judgment serves a broader institutional purpose.

The Court reiterated the Supreme Court’s observation that commercial parties must carefully evaluate the merits of litigation before commencing or continuing proceedings.

Mindless appeals and unnecessary challenges consume valuable judicial resources while simultaneously increasing costs for all stakeholders.

By awarding realistic costs, courts encourage businesses to undertake proper legal risk assessment before initiating litigation. Weak claims become economically unattractive, while meritorious disputes continue to receive full judicial protection.

The result is a litigation culture that rewards responsible commercial decision-making rather than tactical obstruction.

Changing Litigation Strategy for Businesses

The order carries important practical implications for corporate litigants.

Businesses must now recognise that litigation budgets should include not only their own legal expenses but also the possibility of reimbursing the successful party’s actual costs if their claims ultimately fail.

This changes the economics of commercial disputes.

Before commencing litigation, companies will increasingly need to undertake comprehensive legal due diligence, objectively evaluate the strength of their claims, and seriously consider negotiated settlement wherever appropriate.

Equally, successful litigants should maintain detailed records of legal fees, counsel expenses, expert costs, and other litigation-related expenditure. Such documentation may prove decisive when courts assess realistic costs upon conclusion of proceedings.

Reinforcing the Objectives of the Commercial Courts Act

The Commercial Courts Act was enacted with the objective of making commercial dispute resolution more efficient, predictable, and business-friendly.

Speed alone, however, cannot achieve those objectives.

If commercial parties remain free to pursue speculative litigation without meaningful financial consequences, judicial efficiency continues to suffer.

The Delhi High Court’s order therefore complements the broader legislative objective by ensuring that unsuccessful parties bear appropriate responsibility for the financial consequences of commercial litigation.

The judgment also strengthens confidence among businesses that successful litigation will not merely establish legal rights but may also result in substantial reimbursement of litigation expenses.

Conclusion

The Delhi High Court’s order in Bata India Ltd. v. Crocs Inc. USA marks another important step in the evolution of India’s commercial litigation framework.

By awarding ₹24.63 lakh as actual litigation costs, the Court has reinforced the principle that commercial disputes should not impose uncompensated financial burdens upon successful litigants. Instead, litigation costs must increasingly reflect the commercial realities faced by businesses and align with the objectives of the Commercial Courts Act and the Supreme Court’s jurisprudence in Uflex Ltd.

The decision also sends a clear message to commercial litigants: court proceedings are business decisions with financial consequences. Parties choosing to pursue or prolong litigation must be prepared not only to defend their legal positions but also to bear the economic consequences of unsuccessful claims.

As Indian commercial jurisprudence continues to mature, realistic costs are likely to become an increasingly powerful instrument for promoting efficient dispute resolution, discouraging speculative litigation, and strengthening confidence in the commercial justice system.