Full Court Fee To Be Refunded If Case Referred To Mediation By Court Ends In Compromise Decree [Read Order]

Providing more clarity around the interpretation of Sections 16 and 16A of the Court Fees Act in cases which have been referred to mediation by the court at pre-evidence stage and a compromise decree is incorporated, the Delhi High Court on Friday held that an interpretation of the statute inuring to the litigant’s benefit should be preferred and if a plaintiff is able to demonstrate that the case falls within the requirements of Section 16 and a settlement has been arrived at, refund of the full amount of the court-fee ought to be granted.Taking note of a division bench’s 2010 judgment in case titled Sayed Mohammed Rafey vs. Mumtaz Ahmad and Ors, the bench of Justice S Ravindra Bhat and Justice Prateek Jalan said if the elements of the provision are not satisfied, then refund in terms thereof cannot be granted and it may then be examined as to whether the conditions laid down in Section 16A have been fulfilled, so as to grant refund of 50% of the court fees paid.The bench, however, made it clear that Section 16 cannot be given a literal interpretation as per which a plaintiff would be entitled to the refund of the court fees on a mere reference to Alternative Dispute Resolution (ADR) under Section 89 of the Code, regardless of whether the reference ended in a successful settlement or not.“On a proper construction, therefore, this Court is of the considered view that Section 16 can be made applicable only when parties are able to reach a settlement after a reference to ADR under Section 89 of the Code,” it said.Difficulty when cases referred by court to mediation/ conciliationThe bench said the cases of reference to arbitration or “judicial settlement” do not pose any great difficulty, as they do not fall within Section 16A of the Act at all, and are covered only under Section 89 of the CPC read with Section 16 of the Act. Similarly, a compromise entered out of court, whether resulting in a compromise decree, or in the suit being dismissed as settled out of court, is covered only by Section 16A and not by Section 16.“A difficulty arises however, in the case of mediation/conciliation, initiated upon a reference by Court. These cases can potentially fall both within Section 16 and 16A of the Act. On a plain reading, Section 16 would apply as the parties are referred to mediation by an order of Court. However, Section 16A would also apply, as long as the mediation is at a pre-evidence stage of the suit, and the settlement agreement has been incorporated in a compromise decree. This Court has framed Rules under Part X and Section 89 (2)(d) of the CPC, entitled the Mediation and Conciliation Rules, 2004. Rules 24 and 25 of the said Rules require an agreement between the parties to be reduced into writing and signed by them, which would be forwarded to the Court in which the suit or proceeding is pending. On receipt of the settlement agreement, the Court upon its satisfaction is required to pass a decree in terms thereof, that the parties have settled their disputes. In such a case, we are of the view that an interpretation of the statute inuring to the litigant’s benefit should be preferred. If a plaintiff is able to demonstrate that the case falls within the requirements of Section 16, refund of the full amount of the court-fee FAO ought to be granted,” said the court.The court was hearing an appeal for refund of the entire court fees paid in the suit in terms of Section 16 of the Court Fees Act, 1870.The appellant had filed the commercial suit against the respondents claiming infringement of certain intellectual property rights.The suit was valued for purposes of court fees and jurisdiction at Rs. 1,10,00,000 and court fees of Rs. 1,10,000 to be paid thereon.By an order dated 08.09.2017, the suit was referred for mediation before the Delhi High Court Mediation and Conciliation Centre which resulted in settlement of all the disputes and differences and recording of a Settlement Agreement dated 17.11.2017.By an order dated 13.12.2017, the suit was consequently disposed of in terms of the Settlement Agreement, and it was directed that the plaintiff (appellant herein) would be entitled to refund of 50% of the court fee paid.The appellant moved an application for modification of order dated 13.12.2017, contending that he was entitled to the refund of the entire court fees as per Section 16 of the Act read with Section 89 of the Code of Civil Procedure.The single judge dismissed the application, saying: “This application is misconceived and dismissed because the provisions of Section 16 and 16-A of the Courts-fees Act, 1870 (as applicable to Delhi) have to be read together. Section 16-A of the Court-fees Act has been specifically added for Delhi and which provides that only 50% of the Court fee is refundable and that too if the case is compromised before the commencement of evidence in the suit. The compromise which is subject matter of Section 16-A of the Court-fees Act (as applicable to Delhi) will include...

Full Court Fee To Be Refunded If Case Referred To Mediation By Court Ends In Compromise Decree [Read Order]

akanksha jain

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