Entire Court Fee Should Be Refunded When A Pending Civil Case Is Settled Through Lok Adalat: Kerala High Court

The Kerala High Court has laid down that when a dispute in a pending civil case is referred to the Lok Adalat and settled thereafter, the entire court fee already paid by the party is liable to be refunded.

Justice V.G Arun found that the 7% reduction of the court fee already paid was not sustainable since such cases were governed by the Legal Services Authorities Act and the Court Fees Act, and not the Kerala Court Fees and Suits Valuation (Board of Revenue) Rules.

"when a dispute in a pending civil case is referred to the Lok Adalat and settled, the entire court fees paid is liable to be refunded. The settlement of dispute, passing of award and consequential refund of court fees being governed by the provisions of the Legal Services Authorities Act and the Court Fees Act respectively, deduction of 7% of the court fee paid by placing reliance on the Kerala Court Fees and Suits Valuation (Board of Revenue) Rules, 1960 is clearly unsustainable."

The petitioner herein filed a suit for the realisation of amounts due from the respondents before a civil court. The dispute was settled amicably after it was referred to the Lok Adalat and an award incorporating the terms of the settlement was passed by the District Legal Services Authority. As per Clause 4.6 of the award, the court fee paid in the suit was to be returned to the petitioner and the other plaintiffs.

Accordingly, the petitioner submitted applications seeking a refund of Rs.5,042/- paid in excess of the court fee and for Rs.44,98,400/- paid towards the court fee. An amount of Rs.41,83,512 was ordered to be refunded to the petitioner after deducting Rs.3,14,888/-.

Aggrieved by this deduction, the petitioner moved the High Court claiming it to be without authority and hence, illegal.

Advocates Shyam Padman, Joseph Abraham and Harish Abraham appearing for the petitioner contended that Section 21 of the Legal Services Authorities Act read with Section 16 of the Court-Fees Act makes it obligatory to refund the entire amount of court fee paid.

However, Government Pleader S. Unnikrishnan contended that the practice being followed is to deduct 7% of the court fee, even in matters settled before the Adalat.

The Court called for a report from the Sub Judge to ascertain the reason for deducting 7% of the court fee. The report said that the deduction was made in tune with the proviso to Rule 14 of the Kerala Court Fees & Suits Valuation (Board of Revenue) Rules.

It also stated that the printed form in Civil Register 69 (Rule 373) which deals with refund of court fees contains a column for deducting 7%. Moreover, the usual practice followed in the civil courts at Kottayam is to deduct 7% from the court fees, even if the dispute is settled before the Lok Adalat, the report disclosed. 

Justice Arun noted that from a conjoint reading of Section 21 of the Legal Services Authorities Act and Section 16 of the Central Court Fees Act, it was evident that the entire court fee was liable to be refunded and that this legal position was laid down in Vasudevan V. A v. State of Kerala & Ors [AIR 2004 Kerala 43].

Moreover, regarding the justifications in the report, the Single Judge clarified that Rule 14 of the Kerala Court Fees and Suits Valuation Rules has nothing to do with the refund of the court fee paid in a suit settled before the Lok Adalat. Further, it was asserted that merely because a prescribed form contains a column for deduction of a portion of the court fees to be refunded, it does not imply that irrespective of the dictate of the applicable provision, the court fee has to be deducted.  

As such, the writ petition was allowed and the deduction of Rs.3,14,888/- from the court fee paid was declared to be illegal. The Additional Sub Court-II, Kottayam was directed to issue the requisite certificate for releasing the balance amount of court fees paid to the petitioner.  

Also Read: Parties Who Privately Agree To Settle Disputes Without Court Intervention U/s 89 CPC Also Entitled To Refund Of Court Fee: Supreme Court

Case Title: Mithun T. Abraham v. Sub Court of Judicature & Ors.

Citation: 2022 LiveLaw (Ker) 203

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