Refund of Court Fees – When and How Much? (Part I)

Introduction

In India, the levy of court-fee is sanctioned by Statute. It has to be paid as a condition precedent for seeking the aid of the Court. The amount to be paid is prescribed by law. Until it is paid, the litigant cannot be heard. Neither the levy nor the amount to be paid depends on the result of the proceedings, not even on whether the proceedings are considered on merits or not.

The major question that arises before the court in reference to court fees is under which cases Court fees can be refunded. Since Court fees are one of the modes of revenue for the government and the money goes into the state treasury, an order from a competent court and a certificate of refund is needed before the collector releases the money. This article is an attempt by me to trace out the situations where court fees once paid by the litigant can be refunded to him.

Before I mention the grounds, firstly I need to answer the conflict of jurisdiction that arises between the Central Court Fees Act, 1870 and the Rajasthan Court Fees and Suits Valuation Act of 1961. And for the sake of convenience, the present topic will be dealt with by multiple article series.

Application of Rajasthan Court Fees Act over Central Court Fees Act within the territory of Rajasthan

Since the subject of Court Fees falls under the domain of the State List and if the state has enacted its own law on the subject, then it will apply, and reference to Central Court Fees Act in any statute would be deemed to be a reference to State Act. The Central Court Fees Act, 1870, and all other previous state enactments on the subject were repealed by Section 74 of the Rajasthan Court Fees and Suits Valuation Act, 1961 in its application to the State of Rajasthan.

When the matter is resolved by way of Lok Adalat, whether reference for the purpose of Refund of Court Fees has to be made to Central Court Fees Act or The Rajasthan Court Fees & Suits Valuation Act

The right to refund of the Court fee, in respect of a dispute settled before the Lok Adalat, emanates from Section 21 of the Legal Services Authorities Act, 1987. Section 21 of the Legal Services Authorities Act, 1987 reads as follows:

“21. Award of Lok Adalat

(1) Every award of the Lok Adalat shall be deemed to be a decree of a Civil Court or, as the case may be, an order of any other Court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of section 20, the Court-fee paid in such case shall be refunded in the manner provided under the Court-Fee Act, 1870 (7 of 1870)

(2) Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any Court against the award.”

A plain reading of the above provision shows that a legal fiction is created by treating the award of the Lok Adalat as a decree of the Civil Court. Once a decree is passed on compromise, no Court fee is refundable (under normal circumstances) either under The Court Fees Act, 1870 (Central Act VII of 1870) (before its Amendment by Act 46 of 1999) or under unamended Rajasthan Court Fees and Suits Valuation Act. But in order to encourage amicable settlement of disputes through alternative dispute resolution (ADR) mechanism, in the wake of the increase in the volume of adversarial litigation, Section 21 of the Legal Services Authorities Act provides a bait for the litigants in the form of refund of Court-Fees. But while doing so, Section 21 enables the refund of Court Fees “in the manner provided under the Court Fees Act, 1870″.  Therefore, the words “in the manner provided under the Court Fees Act, 1870″ appearing in Section 21 of the Legal Services Authorities Act, 1987 have no meaning in their application to the State of Rajasthan, on a plain reading of the provision.

Section 2(2) of the Legal Services Authorities Act, 1987, appears to have taken note of the above contingency, namely, that the provisions of the Court Fees Act, 1870 have no application to several States, which have their own enactments relating to Court Fees. 

Section 2(2) reads as follows:-

“(2) Any reference in this Act to any other enactment or any provision thereof shall, in relation to an area in which such enactment or provision is not in force, be construed as a reference to the corresponding law or the relevant provision of the corresponding law, if any, in force in that area.”

Therefore, it is clear that the words “The Court Fees Act, 1870″ appearing in Section 21(1) of the Legal Services Authorities Act, 1987 have to be understood to mean “The Rajasthan Court Fees and Suits Valuation Act, 1961″ in so far as the State of Rajasthan is concerned.

Recommendation by Supreme Court, Necessary Enactment & Complete Refund of Court Fees in cases that gets settled through Lok Adalat

In the case of Salem Advocates Bar Association, Tamil Nadu vs. Union of India[i], the Supreme Court recommended to all the State Governments to make amendments to the local Court Fees Act and bring it in conformity to amended Section 16 of the Central Court Fees Act 1870, which provides for 100% refund of the court fees paid on a suit which is settled by one of the modes of settlement referred in section 89(1) of CPC.   

Alongwith this Section 21 of the Legal Services Authorities Act, 1987, states that when a suit is settled in Lok Adalat, notwithstanding the provisions of section 66(1) of the Said Act of 1958, 100% refund of Court fees will have to be granted.

State of Rajasthan also made the necessary changes by adding Section 65 B- Refund of fees in its act. It states that:

Where the Court refers the parties to a suit to any one of the mode of settlement of dispute referred to in Section 89 of the Code of Civil Procedure, 1908 (Central Act No. 5 of 1908) and the matter is settled by one of the modes provided under section 89 of the Code of Civil Procedure, the plaintiff shall be entitled to a certificate from the Court authorising him to receive back from the Collector, the full amount of the fee paid in respect of such plaint.”

Recently a divisional bench comprising Hon’ble Chief Justice Abhay S. OKA and Justice Mohammad Nawaz in the matter of Mr. K.S. Periyaswamy vs State of Karnataka[ii], dealt with an issue where the petitioner filed a writ Petition in which the prayer was in the nature of a Public Interest litigation, for issuing a writ of Mandamus against the state of Karnataka to Grant 100% court fee to be refunded, where the cases get settled by adopting any of the modes provided in section 89 of Code of Civil Procedure, 1908. After considering all the submissions made, the court passed an order, which states that in case of settlement of suit culminating into an award in the Lok Adalat, Section 16 of the Central Court Fees Act, 1870 would be applied and hence refund of 100% of the court fees will be made available.  

So it means that if the State has not made provisions for Refund of Court Fees in such matters or even if made it doesn’t provide for full refund then the Section 16 of Central Court Fees Act will come into picture.

Settlement outside the Court are also eligible for Refund of Complete Court Fees

Madras HC while dealing with the same issue in its recent case, The HC of Judicature at Madras, Rep. by its Registrar General v. M.C. Subramaniam & Ors.[iii],  held that, Section 69-A of the 1955 Act (which is pari material with Section 65B of Rajasthan Court Fees Act) and Section 89 of the CPC must be interpreted in a liberal manner so as to serve their object and purpose. It was observed that no differentiation can be made between parties who settle their disputes through a mediation centre or other centre of alternative judicial settlement enshrined under Section 89 of the CPC, and between parties who settle the disputes privately by themselves out of court. The High Court held that such differential treatment between two similarly situated persons, would amount to a violation of Article 14 of the Constitution of India, 1950.

Dissatisfied by the Impugned Order of the High Court, the High Court of Judicature at Madras, represented by its Registrar General/ Petitioner filed an appeal before the Supreme Court. The Supreme Court, while relying upon the judgments Directorate of Enforcement v. Deepak Mahajan and Shailesh Dhairyawan v. Mohan Balkrishna Lulla, observed that a purposive interpretation of Section 89 of the CPC must be made in order to solve the deadlock between the parties. It was observed that the interpretation of a statute must be moulded in such a manner so as to achieve the true purpose of the enactment and to ensure that no difficulty or injustice is rendered due to such ambiguity over the interpretation of a statute. Thus, arriving at a conclusion to make a broader and purposive interpretation of Section 89 of the CPC read with Section 69-A of the 1955 Act.

The Supreme Court while relying upon the observations made in the Law Commission’s 238th Report on Amendment of Section 89 of the CPC, held that the object and purpose of Section 89 of the CPC is to facilitate private settlements and enable lightening of the overcrowded docket of the Indian judiciary. It was further observed that Section 69-A of the 1955 Act is a step further to Section 89 of the CPC and opined that it only further encourages the settlement of disputes by providing for refund of court fees.

The Supreme Court taking reference from the decisions passed by various high courts across India, held that the purpose of Section 69-A of the 1955 Act is to provide a reward to parties who have chosen to withdraw their litigations in favour of a more conciliatory dispute settlement mechanisms, thereby saving time and resources of the court. As per the Supreme Court, refund of the court fees also acts as an ancillary economic incentive pushing the parties to settle the disputes amicably through alternative means. It was further observed that, parties who settle disputes amongst themselves, without the need for a court to arrange for a third-party institution, are more deserving of the benefit arising out of Section 69-A of the 1955 Act. So the present situation is that even parties who settle their disputes outside court privately are also entitled to complete refund of court fees in view of Honble Supreme Court’s Judgment that provided a purpose interpretation to Section 69A of Tamil Nadu Court Fees and Suits valuation Act, which is pari materia with Section 65B Rajasthan Court Fees and Suit Valuation Act, 1961.

Discretion with regard to refund of Complete Court Fees can be exercised in certain cases

In the above mentioned case the Supreme Court held that in situations where parties have after a long-drawn trial or after multiple frivolous litigations, approached the court seeking refund of court fees on account of the matter being settled out of court, the courts may on the basis of previous conduct of the parties and on principles of equity, refuse to grant relief under the relevant rules pertaining to court fees.

No Refund merely on the ground that matter has been referred for one of the modes of settlement envisaged under Section 89 of CPC

Section 16 of Central Court Fees Act lays down that, where the Court refers the parties to the suit to any one of the mode of settlement of dispute referred to in section 89 of the Code of Civil Procedure, 1908 (5 of 1908), the plaintiff shall be entitled to a certificate from the Court authorising him to receive back from the collector, the full amount of the fee paid in respect of such plaint. On a literal reading of Section 16, a plaintiff would be entitled to the refund of the court fees on a mere reference to ADR, under Section 89 of the Code, regardless of whether the reference ended in a successful settlement or not. This has come in for criticism from the Law Commission of India. In its 238th Report, submitted in December, 2011, the Commission made the following observations with respect to Section 16:

“6.4.2 Here again, there is a clear drafting error which gives rise to conflict with section 21 of the Legal Services Authorities Act, 1987. The LSA Act provides that the courtfees paid in a case placed before the Lok Adalat shall be refunded in the manner provided under the Courtfees Act, 1870 only if a compromise or settlement has been arrived at between the parties. However, Section 16 of the Courtfees Act, as the language stands, goes further and says that the courtfee is refundable merely on a reference by court to any ADR process. This would mean that virtually the courtfee paid in most of the suits will have to be refunded. What will happen if the reference to conciliation, mediation or Lok Adalat does not end in a settlement and the parties come to the court for adjudication? If the courtfees paid had already been refunded to the plaintiff when the reference was made, adjudication of the suit becomes free, there being no provision for collecting fresh courtfees. It was not intended by the Government (while introducing the Bill) or by the Legislature that the courtfees shall be refunded to the plaintiff once the reference is made to ADR process, irrespective of its outcome or the conduct of the plaintiff or petitioner.

But this lacuna was filled by State of Rajasthan when it added Section 65B in its court fees act, according to which when the matter is referred for settlement through one of the modes mentioned in Section 89 and it actually gets settled through the modes provided therein, then only plaintiff shall be entitled to a certificate from the Court authorising him to receive back from the Collector, the full amount of the fee paid in respect of such plaint. So according to the section the matters needs to be settled, otherwise the court fees wouldn’t be returned.

The Kerala High Court has recently in K.K Ibrahim v. Cochin Kaagaz, held that mere reference of a party for settlement under Section 89 of the Code of Civil Procedure would not entitle refund of court fee as provided under Section 69A of the Kerala Court Fees and Suits Valuation Act (which is pari materia with Section 65B of Rajasthan Court Fees Act), unless it has been settled between the parties.

Justice A. Badharudeen held that although settlement of disputes dealt under Section 89 of CPC includes `arbitration’ as well, a party is not entitled to get a refund of the court fee merely because they were referred to arbitration under Section 69 of the Act.

“Section 69A of the Act makes the position without any iota of doubt that refund of court fee is provided only when a court proceeding is settled by recourse to Section 89 of C.P.C and refund is not permissible on the mere reference of parties. Thus it is clear that mere reference of parties by different modes of settlement provided under Section 89 of C.P.C is not sufficient to refund the entire court fee paid as contended, and the statutory mandate is settlement of the dispute by recourse to Section 89 of C.P.C.”

The rest of the grounds will be dealt with in the second part.

[i] 2005) 6 SCC 344

[ii] (WRIT PETITION NO. 29493 OF 2019(GM-RES-PIL)

[iii] [SLP (Civil) Nos. 3063-3064 of 2021 decided on February 17, 2021]


ABOUT THE AUTHOR

Harshit Sharma

Harshit is a Civil Judge-cum-JMFC at Rajasthan Judicial Services, and a doctoral candidate (Ph.D.) at NLU Jodhpur. He can be reached at harshitsharmanluj@gmail.com.

One response to “Refund of Court Fees – When and How Much? (Part I)”

  1. […] grounds on which parties claim refund of court fees paid (The first two parts can be accessed here and here). The main highlight of this part is the answer to the issue of whether court fees can be […]

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