Supreme Court on Refund of Court Fees

 

 

Introduction

 

Today we will discuss another latest judicial pronouncement by the Hon’ble Supreme Court of India in the case of High Court of Judicature at Madras Rep. by its Registrar General v. M.C. Subramaniam and Others, 2021 SCC OnLine SC 109, wherein a question relating to refund of Court Fees on account of settlement between the litigating parties came up before the Court.

 

Important Legal Provisions

 

Section 69-A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955

 

“69-A. 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.”

 

Section 89 of the Code of Civil Procedure, 1908

 

“89. Settlement of disputes outside the Court.—(1) Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for:—

(a) arbitration;

(b) conciliation;

(c) judicial settlement including settlement through Lok Adalat : or

(d) mediation.

…..”

 

According to the Court, S. 89 of CPC “must be understood in the backdrop of the longstanding proliferation of litigation in the civil courts, which has placed undue burden on the judicial system, forcing speedy justice to become a casualty.” Similar is the purport of S.69A of the Tamil Nadu Court Fees Act that further encourages settlements by providing for refund of court fee.

 

Important Case Laws

 

Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440 - “24…Though the function of the Courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law. In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statute.”

 

Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619 - “33.…Though the literal rule of interpretation, till some time ago, was treated as the “golden rule”, it is now the doctrine of purposive interpretation which is predominant, particularly in those cases where literal interpretation may not serve the purpose or may lead to absurdity. If it brings about an end which is at variance with the purpose of statute, that cannot be countenanced.”

 

Considering the above, the Court was of the view that it may, “in order to avoid any difficulty or injustice resulting from inadvertent ambiguity in the language of a statute, mould the interpretation of the same so as to achieve the true purpose of the enactment. This may include expanding the scope of the relevant provisions to cover situations which are not strictly encapsulated in the language used therein.”

 

Important Observations by the Court

 

According to the Court, such an interpretation denying the party that is taking the lead in settling a dispute amicably and expeditiously, leads to an absurd and unjust outcome and a literal or technical or strict interpretation, in this background, would only lead to injustice and render the purpose of the provisions nugatory.

 

The Court also cited judgments by various high courts that have also taken the view that the provisions relating to refund of Court Fees in various state legislations read with S.89 of CPC encourages speedy resolution of disputes and keeping in view the huge pendency of cases, there is a need to adopt purposive and progressive interpretation of such legal provisions.

 

It was further observed by the Court that refund of Court Fees on account of settlement, whether it is through any of the modes including understanding arrived at privately by the parties having stamp of approval by the Court, is a sort of incentive to the party who has approached the Court to resolve the dispute amicably and obtain a full refund. The modes of settlement provided in S.89 of CPC are not exhaustive and such settlements can be done through myriad methods and would include the settlements that have taken place out of the Court.

 

It was also the view of the Court that Court Fees Acts are taxing statutes that are be construed strictly and benefit of any ambiguity in any provision has to go in favour of the parties and not to the states. Provisions like Section 69A are like reward to the parties who wish to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms, saving the time of the Court. In such cases, though the Registry/State Government loses one-time court fee in the short term, but they are saved the expense and opportunity cost of managing an endless cycle of litigation in the long term.

 

Thus, the Court concluded by holding that S.89 of CPC and S.69A of the Court Fees Act are to be interpreted liberally and constructed purposively extending their mandate to “all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at.” The Respondent was held to be entitled for refund of Court Fee.

 

Concluding Remarks

 

The interpretative exercise conducted by the Supreme Court is in line with the need of the hour that is speedy disposal and resolution of the disputes. The State and the Courts end up expending more money on the litigations than the entire worth and value of those litigations. Such situations must be avoided at all costs as it is nothing but a wasteful expenditure. Encouraging parties to go for out of court settlement is a nice strategy and incentivizing the same in the form of refund of Court Fee would go a long in reducing the pendency of cases in the Indian Courts.