The Supreme Court held that the parties who privately agree to settle their dispute outside the modes contemplated under Section 89 of the Code of Civil Procedure are also entitled to refund of Court fees.
In this regard, Section 89 should be interpreted liberally in a manner that would serve its object and purpose, a Bench of Justices Mohan M Shantanagoudar and Vineet Saran held.
The Court, therefore, turned down an appeal filed by Madras High Court against its own decision directing refund of court fees to litigants.
In this case, the Madras High Court (administrative side) approached the Apex Court challenging the High Court judgment which held that Section 89 of the CPC, and Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955, would cover all methods of out of court dispute settlement between parties that the Court subsequently finds to have been legally arrived at. Section 69A of the 1955 Act deals with refund on settlement of disputes under section 89 CPC. It provides that, where the Court refers the parties to the suit to any of the modes of settlement of dispute referred to in section 89 CPC, the fee paid shall be refunded upon such reference and such refund need not await for settlement of the dispute. Under Section 89 CPC, four modes of settlement are contemplated: (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat: or (d) mediation.
[In the present case, while the appeals were still pending consideration before the High Court, the parties entered into a private out of court settlement, thus resolving the controversy between them. The High Court Registry refused the request for refund of court fees, on the ground that such refund is not authorised by the relevant rules.]
In addressing the question of whether the refund of court fee was permissible under the relevant rules, the Madras High Court had considered Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955. 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 bench observed that this contention, if accepted, would lead to an absurd and unjust outcome, where two classes of parties who are equally facilitating the object and purpose of the aforesaid provisions are treated differentially, with one class being deprived of the benefit of Section 69A of the 1955 Act.
"In such cases, the Court may, having regard to the previous conduct of the parties and the principles of equity, refuse to grant relief under the relevant rules pertaining to court fees. However, we do not find the present case as being of such nature", it said.
"Though the Registry/State Government will be losing a onetime court fee in the short term, they will be saved the expense and opportunity cost of managing an endless cycle of litigation in the long term. It is therefore in their own interest to allow the claim.", the bench added.
The Court, therefore, upheld the judgment of the High Court and dismissed the appeal.