REFUND OF COURT FEE

[Mr. M. GOVINDARAJAN]

Court fee

Court fee means such a fee as is chargeable and collected by a court along with a plaint, complaint or appeal and with a petition for review or revision as specified in this Act.  It is a fee that is levied on individuals or parties that seek services of the Court for judicial remedies. Thus, a Court fees is inflicted on the litigant to contest a case in the Court of law.

Refund of Court fee

Section 16 of the Court Fees Act, 1870 (‘Act’ for short)  provides that when court refers the parties to the suit to any one mode of dispute referred to in section 89 of Code of Civil Procedure, 1908, the plaintiff shall be entitled to receive back the full amount of the fee paid in respect of such plaint.  Section 16 of the Act (Court Fees Act, 1870) is applicable in all circumstances in which parties have arrived at settlement irrespective of state of proceeding.   Full amount of court fee is to be refunded if case falls within the requirement of Section 16 of Court Fees Act, 1870.  Section 16 of Court Fee Act, 1870 has been made applicable to even a private settlement arrived at between the parties by this Supreme Court decision.  In case a private settlement was arrived at, and a memo to withdraw the appeal was filed before the High Court the appellant would be entitled to refund of Court fee.    The court-fees paid in a case placed before the Lok Adalat shall be refunded in the manner provided under the Court-fees Act, 1870 .

Section 89 (1) of the Civil Procedure Code, 1908 provides that where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for -

1. Arbitration
2. Conciliation
3. Judicial settlement including settlement through Lok Adalat
4. Mediation.

If the court refers dispute to any of the mode provided by Section 89 of the Code of civil Procedure, 1908, (‘CPC’ for short) full court fee/fees paid is to be refunded to the person who paid such court fee / fee.   Section 89 of CPC shall cover, and 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.

In KAMALAMMA AND ORS. VERSUS HONNALI TALUK AGRICULTURAL PRODUCE COOPERATIVE MARKETING SOCIETY LTD. AND ORS. - 2009 (7) TMI 1382 - KARNATAKA HIGH COURT the Karnataka High Court held that whether the parties to a suit or appeal or any other proceeding get their dispute settled amicably through arbitration, or meditation or conciliation in the Lok Adalat, by invoking provisions of Section 89 CPC or they get the same settled between themselves without the intervention of any Arbitrator/Mediator/Conciliators in Lok Adalat, etc., and without invoking the provision of Section 89 CPC, the fact remains that they get their dispute settled without the intervention of the Court. If they get their dispute settled by invoking Section 89 CPC, in that event the State may have to incur some expenditure but, if they get their dispute settled between themselves without the intervention of the Court or anyone else, such as arbitrator/mediator, etc., the State would not be incurring any expenditure. This being so, I am of the considered opinion that whether the parties to a litigation get their dispute settled by invoking Section 89 CPC or they get the same settled between themselves without invoking Section 89 CPC, the party paying court fees in respect thereof should be entitled to the refund of full court fees as provided under Section 16 of the Court Fees Act, 1870.

In PROUD SECURITIES AND CREDITS PRIVATE LIMITED VERSUS URRSHILA KERKAR AND ANR. - 2023 (5) TMI 18 - DELHI HIGH COURT, the present application has been moved for the refund of Court fees in the suit which cannot be continued further because of the initiation of insolvency case under Section 95 of the Insolvency and Bankruptcy Code, 2016.  while the aforesaid developments may not strictly fall within the ambit of a settlement which is alluded to in Section 16 of Court-Fees Act, 1870 since the plaintiff would now have the solitary remedy of participating in proceedings to be instituted under the IBC and take part in a collective settlement of claims, the Court may consider extending the benefits thereof in the peculiar facts of the present case.

The High Court observed that Section 16 of the Court Fees Act, 1870 is in pari materia with Section 69-A of the 1955 Act.  The High Court was correct in holding that Section 89 CPC and Section 69-A of the 1955 Act be interpreted liberally.  The High Court held that Section 89 CPC shall cover, and the benefit of Section 69-A of the 1955 Act 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 1 herein would be entitled to refund of court fee.

The High Court observed that once personal insolvency has commenced in terms of Section 95, the interim moratorium would come into play immediately upon the institution of those proceedings. Therefore the plaintiff would now have the solitary remedy of filing a claim and participate in the collective statutory settlement process that would ensue against the defendants.  Since the same would also relate to a settlement of claims, it would appear to fall within the scope of Section 16.

The High Court allowed the prayer made in the present application.  The Supreme Court directed the registry to take appropriate steps to refund the Court fee.