Hon’ble Supreme court has come up with a landmark judgment in Feb, 2021 allowing refund of court fee even in case of private settlement.
When a person institute a suit or appeal, he has to pay court fee or other fees.
However, there has been a law that when parties make settlement as per the provisions of section 16 of the Court Fee Act, 1870 and section 89 of Code of Civil Procedure, 1908, the person paying the court fee is entitled to full refund.
Section 16 of the Court Fee Act, 1870 provides that when a dispute is referred for settlement by the court, the person paying the court fee is entitled to full refund of fees / court fee.
Section 16, however provides that such reference of dispute to be any one of the mode referred to in section 89 of Code of Civil Procedure, 1908.
Section 89 of Code of Civil Procedure, 1908 prescribes settlement through arbitration, conciliation, judicial settlement including settlement through Lok Adalat, and mediation.
So, earlier the precondition was court must refer the dispute for settlement, and that such dispute must be referred to be settled through on one of the modes prescribed in section 89 of Code of Civil Procedure, 1908
High Court of Judicature at Madras vs. M.C. Subramaniam & ors.
The Hon’ble Supreme Court on 17 Feb, 2021 through Mr. Justice Mohan M. Shantanagoudar passed this landmark judgement [“High Court of Judicature at Madras vs. M.C. Subramaniam & ors” (Special Leave Petition (Civil) Nos. 3063-3064 of 2021 (Diary No. 3869-2021)] holding that section 89 of Code of Civil Procedure, 1908 shall cover all method of out of court settlement between the parties. Meaning, in all modes of settlement the claimant can claim refund of court fees.
Views High Court of Judicature of Madras
In this case High Court of Judicature of Madras was of view that:
1. Given their beneficial intent, the related provisions must be interpreted liberally, in a manner that would serve their object and purpose.
2. Construing them narrowly would lead to a situation wherein parties who settle their dispute through a Mediation Centre or other centres of alternative judicial settlement under section 89, CPC would be entitled to claim refund of their court fee, whilst parties who settle the disputes privately by themselves will be left without any means to seek a refund.
3. Such differential treatment between two similarly situated persons, would constitute a violation of Article 14 of the Constitution.
4. A constitutional interpretation of section 89 of the CPC, and resultantly section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955, would require that these provisions cover all methods of out of court dispute settlement between parties that the Court subsequently finds to have been legally arrived at.
Dissatisfied with High court’s view Petitioner challenged the impugned judgment.
Supreme Court’s View
Hon’ble Supreme court has come with the following observations:
1. The provisions of section 89 of CPC must be understood in the backdrop of the longstanding proliferation of litigation in the civil courts, which has placed undue burden on the judicial system, forcing speedy justice to become a casualty.
2. Law Commission in its 238th Report has observed that section 89 has now made it incumbent on civil courts to strive towards diverting civil disputes towards alternative dispute resolution processes, and encourage their settlement outside of court.
3. Law Commission’s observations make the object and purpose of section 89 crystal clear – to facilitate private settlements, and enable lightening of the overcrowded docket of the Indian judiciary.
4. This purpose, being sacrosanct and imperative for the effecting of timely justice in Indian courts, which further encourages settlements by providing for refund of court fee.
5. This overarching and beneficent object and purpose of the two provisions must, therefore, inform this Court’s interpretation.
6. It is well-settled that the Courts may, in order to avoid any difficulty or injustice resulting from inadvertent ambiguity in the language of a statute, mould the interpretation of the same so as to achieve the true purpose of the enactment. This may include expanding the scope of the relevant provisions to cover situations which are not strictly encapsulated in the language used therein.
7. We emphasize that the participants in private negotiations and settlements will be entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods under section 89, CPC.
Supreme Court held
“Section 89 of CPC shall cover, and the benefit of section 69A of the 1955 Act (Tamil Nadu Court Fees and Suit Valuation Act, 1955) shall also extend to, all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at.
This would, thus, cover the present controversy, wherein a private settlement was arrived at, and a memo to withdraw the appeal was filed before the High Court. In such a case as well, the appellant, i.e., Respondent No. 1 herein would be entitled to refund of court fee”.
A much awaited and must needed judgment from Hon’ble Supreme Court. This shall give relief to persons who pay hefty court fee / fee for instituting a suit or appeal.
This will also encourage private settlement and save time of the court.