Parties settling disputes entitled for refund of court fees: Supreme Court of India

dated 8.01.2020. By the impugned judgement the High Court allowed Civil Miscellaneous Petitions Nos. 26742 & 26743 of No.1 purchased two vehicles from Respondent No. 2 vide two separate hire purchase agreements dated 10.06.1996 under which Respondent No.1 was the principal No.1 was to pay a sum of Rs.10 08 000 ­ in stipulated 3. It suffices to note for our purposes that Respondent No. 2 brought Original Suits Nos. 66 2003 and 76 2003 against Respondents Nos. 1 3 and 4 before the Additional District Munsif Court Coimbatore and the Additional District and Sessions Court Coimbatorepraying for refund of the court fees paid by 6. By the impugned common judgment and order dated was permissible under the relevant rules the High Court Valuation Act 1955 which reads as “69­A. Refund on settlement of disputes under section 89 of Code of Civil Procedure.—Where the Code of Civil Procedure 1908the fee paid shall be refunded upon such reference Such refund need not await for settlement of the Considering appeal suits to be continuation of original suits and 69­A the Court went on to take notice of Section 89 CPC which receiving the observations of the parties the Court c) judicial settlement including settlement through Arbitration and Conciliation Act 1996 for judicial settlement the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services dispute were referred to a Lok Adalat under the 8. After giving due consideration to the above provisions the High Court held that given their beneficial intent they must be interpreted liberally in a manner that would serve their object wherein parties who settle their dispute through a Mediation 14 of the Constitution. Therefore in the High Court’s view a constitutional interpretation of Section 89 of the CPC and resultantly Section 69­A of the 1955 Act would require that these provisions cover all methods of out­of­court dispute 9. Dissatisfied the Petitioner herein has challenged the in the present case where the parties without any reference by the Court privately agreed to settle their dispute outside the 11. Having heard the petitioner and thoroughly considered the arguments advanced we find ourselves unimpressed by the civil courts which has placed undue burden on the judicial Commission has observed in its 238th Report on Amendment of Section 89 of the Code of Civil Procedure 1908 and Allied to strive towards diverting civil disputes towards alternative dispute resolution processes and encourage their settlement and purpose of Section 89 crystal clear to facilitate private the Indian judiciary. This purpose being sacrosanct and and beneficent object and purpose of the two provisions must 13. Before expounding further on our interpretation of the aforesaid provisions regard must be had to the following postulation of this Court’s interpretive role in Directorate of “24…Though the function of the Courts is only to legislature cannot be asked to sit to resolve the the spirit of the law. In such circumstances it is the 25. In Maxwell on Interpretation of Statutes Tenth “Where the language of a statute in its ordinary meaning and grammatical construction leads to a enactment or to some inconvenience or absurdity hardship or injustice presumably not intended a construction may be put upon it which modifies the the draftsman s unskilfulness or ignorance of the law except in a case of necessity or the absolute intractability of the language used.” 1 AIR Kar. R 279 wherein it was held as follows Arbitration or meditation or conciliation in the Lok Adalath by invoking provisions of Section 89 C.P. C or they get the same settled between themselves Arbitrator Mediator Conciliators in Lokadalath etc. and without invoking the provision of Section 89 C.P.C. the fact remains that they get their dispute their dispute settled by invoking Section 89 C.P.C. 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. invoking Section 89 C.P.C. or they get the same settled between themselves without invoking Section 89 C.P.C. the party paying Court­Fees in respect Section 16 of the Court­Fees Act 1870 is in parimateria 17. The holding in Kamalamma has been followed by the Punjab & Haryana High Court in Pradeep Sonawat v Satish Prakash 2015RCR Civil 955 and Pritam Singh v Ashok Kumar 2019Law Herald721 which in turn were further affirmed in Raj Kumar v. Gainda Devi through “11. The laudable object sought to be achieved by inserting and amending these sections seems to be speedy disposal. The policy behind the statute is to reduce the No. of cases by settlement. Section 89 of in that direction as the No. of cases has increased it scenario of huge pendency of cases in the courts a purposive and progressive interpretation is the requirement of present hour. The intention of the and the words used in the material provisions. The It is also obvious that the purpose of making this the dispute amicably and obtain a full refund of the cases courts endeavor should be to encourage the non of section 89 C.P.C. rather it prescribes few methods through which settlement can be reached sine qua non for applicability of section 89 is settlement between the parties outside the court 18. It is also not the requirement of the section that court must always refer the parties to Dispute Resolution Forum. If parties have arrived at out of court settlement it should be welcomed subject to The view taken in both Kamalamma and J.K the High Courts in the decisions stated supra. The purpose of mechanisms thus saving the time and resources of the Court by enabling them to claim refund of the court fees deposited by an ancillary economic incentive for pushing them towards exploring alternative methods of dispute settlement. As the Karnataka High Court has rightly observed in Kamalamma requiring judicial intervention under Section 89 CPC are even more deserving of this benefit. This is because by choosing to the dispute. Though arbitration and mediation are certainly salutary dispute resolution mechanisms we also find that the importance of private amicable negotiation between the parties court settlement stated in Section 89 CPC and afford step­ Admittedly there may be situations wherein the parties the guise of having settled their disputes. In such cases the and the principles of equity refuse to grant relief under the 20. Thus even though a strict construction of the terms of such private negotiations and settlements between the parties vehemently opposed to granting such benefit. Though the 21. Thus in our view the High Court was correct in holding Act shall also extend to all methods of out­of­court dispute have been legally arrived at. This would thus cover the present controversy wherein a private settlement was arrived at and a such a case as well the appellant i.e. Respondent No. 1 herein

Summary: Parties who choose to withdraw their litigations in favor of more conciliatory dispute settlement mechanisms; saving them time and resources of the Court will be entitled to a full refund of the court fees deposited by them. Supreme Court of India took the decision in the case of The High Court of Judicature at Madras vs.M.C. Subramaniam &amp; ors.[Special Leave Petition no. 3063-3064 of 2021] presided over by the bench of Hon’ble Justice Mohan M Shantanagoudar. In the instant case, the dispute had arisen between the respondents with respect to hire purchase agreement of two vehicles. When the matter was pending in the High Court, parties decided to enter into a private out-of-court settlement without any intervention thus resulting in solving the controversies between themselves. In the High Court, a judgment dated January 8, 2020 ruled against its own registry and allowed the plea. Despite the orders from the High Court, Registry refused to pay back the court fee to the appellants. High Court had considered section 69­A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955 which allows to pay back the court fees to the litigants. The said provision provides for refund of court fees on settlement of disputes under Section 89 of Code of Civil Procedure. Section 89 of CPC provides that when the court feels that there exists scope for settlement, then it can formulate the terms of settlement and refer the parties to arbitration, conciliation or mediation. The gravamen of the Petitioner’s contentions was that Section 69 -A of the 1955 Act only contemplates refund of court fees in those cases where the Court itself refers the parties to any of the alternative dispute settlement mechanisms listed in Section 89 of the CPC. However when the matter reached to the Supreme Court, the bench opined that “The provisions of Section 89 of the CPC must be understood in the backdrop of the longstanding proliferation of litigations in the civil courts, which has placed undue burden on the judicial system.” “Hence, it does not apply to circumstances such as in the present case, where the parties, without any reference by the Court, privately agreed to settle their dispute outside the modes contemplated under Section 89 of the CPC.”