Party Isn’t Entitled To Any Refund Of Court Fee In Out-Of-Court Settlement Once Evidence Is Recorded: Madras High Court

The High Court was considering a Civil Revision Petition filed under Article 227 of the Constitution seeking a direction to the Trial Court to order the refund of the entire Court fee of Rs 2,54,326 paid in the plaint a civil suit.

The Single Bench of Justice P.B. Balaji held, “As held by the Hon’ble Supreme Court, no doubt, if there is any doubt with regard to interpretation of the provisions in the Court Fees Act, such interpretation would have to be in favour of the litigant. However, there is no doubt in my mind that a party is not entitled to any refund once evidence is recorded, if whatever little worth it may be.”

“At this juncture, while dismissing the revision petitions for the various reasons and conclusions reached herein above, I have to necessarily place the matter for the consideration of the Tamil Nadu State Law Commission. Section 69-A, as it stood prior to the amendment, by Act 6 of 2017, in my considered opinion requires to be reintroduced, since the position as it stands today, entitles a party to refund of the entire Court fee the moment the matter is referred to alternate dispute resolution, under Section 89 CPC, which benefit has now even been extended to out of court settlement in view of the law laid down in M.C.Subramaniam’s case (referred herein supra) and various other decisions referred herein supra. In such circumstances, in the event of the dispute not being settled post the reference under Section 89 CPC, the party would gain an undue advantage by already getting refund of the entire court fees. There is no clarity or statutory provision or rule with regard to a situation where a reference to alternate dispute resolution fails and the parties are forced to come back to the court for trial”, it stated.

Advocate M. Meenarukmani represented the Petitioner.

Arguments

The petitioners relied upon the dictum of the Supreme Court in High Court of Judicature at Madras vs. M.C. Subramaniam and others (2021), wherein the Apex Court held that even in cases where parties negotiated an out of court settlement, the plaintiff would be entitled to refund of 100% court fees paid on the plaint. It was the petitioner’s case that the Trial Court ought not to have restricted the refund to 50% of the total court fee.

Reasoning

On a perusal of the provisions of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 and the Amendment Act 6 of 2017, the Bench noted that Section 69-A was introduced by Act 44 of 2007, which entitled the parties to the suit to a certificate from the Court, authorising the parties to receive back the full amount of the court fees paid, in the event of the dispute referred by the Court, being settled. “It is noteworthy to be aware and conscious of the fact that, both while introducing Section 69-A in the Court Fees Act, in and by Act 44 of 2007 and as well as while amending and substituting Section 69-A, as it presently stands under Act 6 of 2017, the Legislature did not deem it necessary to either omit or even amend Section 69 of the Court Fees Act”, it added.

The Bench further referred to Section 89 which has been brought under Part V of CPC, under the heading “Special Proceedings” and enables a Court, when it appears to it that an element of settlement exists and may be acceptable to the parties, then, the Court is required to formulate the terms of settlement and after furnishing the same for either parties for their observations, discretion is vested with the Court to reformulate the terms of a possible settlement and refer the same for Arbitration; Conciliation; Judicial Settlement, including Lok Adalat and Mediation.

“The court fees paid by the party, either on a plaint or counter claim is towards the State Exchequer, to facilitate meeting of all necessary and incidental expenses relating to provision of infrastructure for Courts, conduct of trials, payment of salaries and allowances, etc. Therefore, the Legislature was conscious of this fact, while clearly placing an embargo on refund of court fees in cases where evidence has been recorded on the merits of the claim”, it added.

Considering both the petitions, the Bench noted that in one case, the trial had commenced with proof affidavit being filed on the plaintiff’s side and in the other case, witnesses had been examined on both sides, besides also a court witness. The Bench also noticed that substantial judicial time and money had been consumed in the said process. “This, in my considered view is why Section 69 still remains in the statute book, despite the introduction of Section 69-A and also subsequent amendment to the same by Act 6 of 2017”, it added.

The Bench was of the view that a party is not entitled to any refund once evidence is recorded, if whatever little worth it may be. Dismissing the revision petitions, the Bench also highlighted the lack of clarity or statutory provision or rule with regard to a situation where a reference to alternate dispute resolution fails and the parties are forced to come back to the court for trial. “A copy of this order shall be marked to the Tamil Nadu Law Commission to look into this grey area and see whether the provision as it stood prior to the substitution by Act 6 of 2017 would have to be restored, as it safeguarded the State Exchequer, by entitling the party to only a certificate for refund, with the refund actually taking place only if the dispute is settled and not otherwise”, it ordered.

Cause Title: Susheela Kawar v. M.Pettu Lakshmi (Neutral Citation: 2026:MHC:4385)

Appearance

Petitioner: Advocates M. Meenarukmani, K.Sukumaran, Amicus Curiae Suresh Sampath

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