Parties who Privately Agree to Settle their Dispute Outside the Modes u/s 89 CPC are Entitled to Refund of Court Fees – SC

In High Court of Judicature at Madras vs. M.C. Subramaniam [SLP (CIVIL) NOS. 3063­3064 OF 2021], SC 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.

A double bench comprises of Justice Mohan M. Shantanagoudar and Vineet Saran in the special leave petition which was arise out of common order and judgment of the Madras HC dated 8/01/20. HC allowed civil miscellaneous petitions filed by Respondent no 1 and prayed for refund of the court fees deposited by him in the appeal suit before the HC.

In this case, one of the respondent is principal debtor and two of them are sureties for the same. Another respondent filed a original suit against the principal debtor as well as sureties for the non payment of the money in local courts of Coimbatore.

The original suits were partly decreed by the lower courts that is munsif and session court of Coimbatore.Principal debtor filed an appeal against the judgment of lower court in HC. While the appeal were still pending consideration before HC, the parties entered into a private out of court settlement and resolved the controversy between them.

In view of this principal debtor filed a memo before the HC seeking permission to withdraw appeal suit along with a direct on to refund the court fees which was deposited by him. Registry of HC orally refused the respondent for the refund of the court fees.Principal debtor had filed Civil Miscellaneous Petition u/s 151 of CPC, praying for refund of the court fees paid by him in appeal suit.

HC has allowed the aforementioned Civil Miscellaneous Petitions and directed the Registry to refund the full court fee to principal debtor.In addressing the questions of whether the refund of court fees was permissible under the relevant rules, HC considered sec 69 A of the Tamil Nadu Fees and Suit Valuation Act 1955 and the court also considered the sec 89 of CPC and ordered 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.Petitioner was not satisfied by the judgment of HC and challenged it before SC contending that sec 69A of 1955 act only contemplates refund of court fees in those cases where the court itself refers the parties to any of the method listed in sec 89 of CPC and hence it does not apply to the present case where the parties without any reference by the court privately agreed to settle their dispute outside the modes contemplated u/s 89 of CPC.

If 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 then it would be an absurd outcome if the bench accepts this contention of the petitioner.

The court added that purpose of Section 69­A is to reward parties who have chosen to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms, thus saving the time and resources of the Court, by enabling them to claim refund of the court fees deposited by them.

While dismissing the SLP, the court said that it finds it puzzling that the High Court is so vehemently opposed to granting such benefit.

“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.”

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