Parties Not Entitled To Return Of Court Fee When Matter Is Settled After Recording Of Evidence: Madras High Court

“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,” the court observed.

Justice PB Balaji also noted that Section 69A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 needs to be relooked.

The court noted that the provision, as it stands now, entitled a party to refund the court fee the moment a matter is referred to alternate dispute resolution. However, the provision is silent on what happens to the court fee when the matter remains unsolved and the parties come back to court for trial.

“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. There is total silence with regard to whether the court fee which has already been refunded by then, would have to be repaid by the party, before proceeding with the trial of the case,” the court said.

The court thus suggested that the provision could be restored to how it was before an amendment in 2017 by which the party would only be entitled to a certificate for refund, with the refund actually taking place only if the dispute is settled and not otherwise.

The court was hearing two civil revision petitions with respect to refund of court fee. In one plea, the trial court had refused to refund the court fee after settlement. In the second case, the trial court had ordered 50% of the refund of the court fee, but deducted 5% towards administrative charges.

The parties had argued that as per the decision of the Supreme Court in High Court of Judicature at Madras vs. M.C. Subramaniam and others, the parties are entitled to 100% refund even in cases where out of court settlement is negotiated. The petitioners thus held that the benefit under Section 69A of the Act should be extended to such private settlements.

The Advocate General, however, informed the court that in all the previous decisions, the High Courts and the Supreme Court had not taken note of the decision in Afcons Infrastructure Ltd. and another vs. Cherian Varkey Construction Private Ltd, which discussed the stage at which the parties could be referred to an out of court settlement.

The court noted that Section 69 of the Court Fees Act entitled a party to refund of half of the fee paid in the suit, provided the suit was dismissed as settled out of court before any evidence was recorded on the merits of the claim. The court further noted that this provision was amended in 2017, replacing “half amount” with “full amount” and entitling a party to refund of full court fee. The court noted that the legislature, even while amending the provision, had deliberately not touched the part where the refund was restricted to suits where the settlement was before any evidence had been recorded.

The court noted that Section 69A of the Act entitles the parties to a certificate, authorising the parties to receive back the full amount of the court fee, when the dispute referred by the court is settled. The court also noted that Section 69A of the Act was amended in 2017 entitling parties to refund of fee, upon the dispute being referred under Section 89 of CPC, without awaiting a settlement of dispute.

The court added that the parties were required to pay court fee for a reason, to facilitate meeting of all necessary and incidental expenses. The court added that the legislature was conscious of this fact, which placed an embargo on return of court fee on cases where evidence had been recorded.

“In this context, it is to be kept in mind that parties are required to pay court fee for a reason. 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,” the court said.

The court noted that in the present cases, the parties had settled the matter after the evidence had already begun and the same had been recorded by the trial court. Thus, the court concluded that parties would not be entitled to refund of court fee where the evidence has already commenced. Thus, the court was not inclined to interfere with the order of the trial court.

Counsel for Petitioner: Ms.M.Meenarukmani, Mr.K.Sukumaran, Mr.Suresh Sampath, Amicus Curiae