top of page

Parties entitled for refund of court fee for private out-of-court settlement: SC

In view of this broad purposive construction, we affirm the High Court’s conclusion, and hold that Section 89 of CPC shall cover, and the benefit of Section 69A 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 No. 1 herein would be entitled to refund of court fee. [Para 21]



THE HIGH COURT OF JUDICATURE AT MADRAS REP. BY ITS REGISTRAR GENERAL VS. M.C. SUBRAMANIAM & ORS

SPECIAL LEAVE PETITION (CIVIL) NOS. 3063­3064 OF 2021 (DIARY NO. 3869­2021)

Decided on February 17th, 2021

The present case was decided by a division bench of the Supreme Court consisting of Justice Mohan M. Shantanagoudar and Justice Vineet Saran.

The facts leading to these petitions are as follows: Respondent No.1 purchased two vehicles from Respondent No. 2 vide two separate hire purchase agreements (hereinafter, ‘Agreement-I’ and ‘Agreement-II’; collectively, ‘the Agreements’) dated 10.06.1996, under which Respondent No.1 was the principal debtor/hirer, and Respondents Nos. 3 and 4 were the sureties to the Agreements. As per the terms of the Agreements, Respondent No.1 was to pay a sum of Rs.10,08,000/in stipulated instalments to Respondent No. 2 for each of the two vehicles.

In view of this, Respondent No. 1 filed a memo before the High Court, seeking permission to withdraw Appeal Suits Nos. 876/2012 and 566/2013. Such permission, along with a direction to refund the court fee deposited by Respondent No.1, was granted by orders dated 16.09.2019 and 18.09.2019 in A.S. Nos.566/2013 and A.S. Nos. 876/2012 respectively. Despite the above stated orders of the High Court, the Registry orally refused Respondent No.1’s request for refund of court fees, on the ground that such refund is not authorized by the relevant rules. Left without recourse, on 25.12.2019, Respondent No.1 filed Civil Miscellaneous Petitions Nos. 26742/2019 and 26743/2019 under Section 151, Code of Civil Procedure, 1908 (hereinafter, ‘CPC’), praying for refund of the court fees paid by him in A.S. Nos. 876/2012 and 566/2013 respectively, in terms of the orders dated 18.09.2019 and 16.09.2019 therein.

In addressing the question of whether the refund of court fee was permissible under the relevant rules, the High Court considered Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955 (hereinafter, ‘1955 Act’), which reads as follows:

“69A. Refund on settlement of disputes under section 89 of Code of Civil Procedure.—Where the Court refers the parties to the suit to any of the modes of settlement of dispute referred to in section 89 of the Code of Civil Procedure, 1908 (Central Act V of 1908), the fee paid shall be refunded upon such reference. Such refund need not await for settlement of the dispute.”

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 and purpose. Construing them narrowly would lead to a situation wherein parties who settle their dispute through a Mediation Centre or other centres of alternative judicial settlement under Section 89, CPC would be entitled to claim refund of their court fee, whilst parties who settle the disputes privately by themselves will be left without any means to seek a refund. Accordingly, the High Court opined that such differential treatment between two similarly situated persons, would constitute a violation of Article 14 of the Constitution.

The gravamen of the Petitioner’s contentions is that Section 69­A 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. That 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. [Para 10]

The Supreme Court was unimpressed by the Petitioner’s contentions and observed that the purpose of Section 89 is to facilitate private settlements, enable lightening of overcrowded docket of the Indian Judiciary. This purpose, being sacrosanct and imperative for the effecting of timely justice in Indian courts, also informs Section 69­A of the 1955 Act, which further encourages settlements by providing for refund of court fee.

The Court also relied on the case of Directorate of Enforcement v. Deepak Mahajan, 1994 3 SCC 440 and held that it is well-settled that any ambiguity arising from the language of a statute must be interpreted in such a manner that the true purpose of the enactment is upheld. This may include expanding the scope of the relevant provisions to cover situations which are not strictly encapsulated in the language used therein. This was also highlighted in the case of Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619.


Thus, even though a strict construction of the terms of Section 89, CPC and 69­A of the 1955 Act may not encompass such private negotiations and settlements between the parties, we emphasize that the participants in such settlements will be entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods under Section 89, CPC. Indeed, we find it puzzling that the Petitioner should be 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 Respondent No. 1’s claim. (Para20)


Supreme Court also discussed that The narrow interpretation of Section 89 of CPC and Section 69­A of the 1955 Act sought to be imposed by the Petitioner would lead to an outcome wherein parties who are referred to a Mediation Centre or other centres by the Court will be entitled to a full refund of their court fee; whilst parties who similarly save the Court’s time and resources by privately settling their dispute themselves will be deprived of the same benefit, simply because they did not require the Court’s interference to seek a settlement. Such an interpretation, in our opinion, clearly leads 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. This was reiterated in the case of J.K. Forgings v. Essar Construction India Ltd. & Ors., (2009) 113 DRJ 612 and in Pradeep Sonawat v. Satish Prakash, 2015 (1) RCR Civil 955.


Thus, in our view, the High Court was correct in holding that Section 89 of the CPC and Section 69A of the 1955 Act be Section 69 interpreted liberally. In view of this broad purposive construction, we affirm the High Court’s conclusion, and hold that Section 89 of CPC shall cover, and the benefit of Section 69A 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 No. 1 herein would be entitled to refund of court fee. [Para 21]



Keerthana R

Commenti


Articles

bottom of page