Litigants who settle disputes without court intervention under Section 89 CPC entitled to refund of court fees: Supreme Court

Litigants who settle their disputes privately outside courts without court intervention under Section 89 of the Code of Civil Procedure (CPC) are also entitled to refund of their court fess, the Supreme Court ruled (The High Court of Judicature at Madras Rep. by its Registrar General v. M.C. Subramaniam & ors). .In this regard, Section 89 should be interpreted liberally in a manner that would serve its object and purpose, a Bench of Justices Mohan M Shantanagoudar and Vineet Saran held. .“The narrow interpretation of Section 89 of CPC would lead to an outcome wherein parties who are referred to a mediation centre or other centres by the Court will be entitled to a full refund of their court fee; whilst parties who similarly save the Court’s time and resources by privately settling their dispute themselves will be deprived of the same benefit, simply because they did not require the Court’s interference to seek a settlement,” the Court explained.The Court, therefore, turned down an appeal filed by Madras High Court against its own decision directing refund of court fees to litigants..The case arose out of a dispute between the two parties with respect to a hire purchase agreement. After going through Munsif and District courts, the case reached the High Court where it was pending when the parties entered into a private out-of-court settlement without any intervention from court, thus resolving the controversy between them.The respondent no 1. who had filed the appeal before the High Court applied to withdraw the same, which was allowed..However, the Registry orally refused the respondent's request for refund of court fees.The respondent moved the Madras High Court challenging the same. The High Court by a judgment dated January 8, 2020 ruled against its own registry and allowed the plea..The High Court then came in appeal to the Supreme Court..In addressing the question of whether the refund of court fee was permissible under the relevant rules, the Madras High Court had considered Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955. The said provision provides for refund of court fees on settlement of disputes under Section 89 of Code of Civil Procedure..Section 89 of CPC provides that when the court feels that there exists scope for settlement, then it can formulate the terms of settlement and refer the parties to arbitration, conciliation or mediation..The gravamen of the petitioner’s contentions was that Section 69A of the 1955 Act only contemplates refund of court fees in those cases where the Court itself refers the parties to any of the alternative dispute settlement mechanisms listed in Section 89 of the CPC. Hence, it does not apply to circumstances such as in the present case, where the parties, without any reference by the Court, privately agreed to settle their dispute outside the modes contemplated under Section 89 of the CPC..The Supreme Court examined the intent and scope behind Section 89 of CPC.“The purpose of Section 89 crystal clear – to facilitate private settlements, and enable lightening of the overcrowded docket of the Indian judiciary. This purpose, being sacrosanct and imperative for the effecting of timely justice in Indian courts, also informs Section 69A of the 1955 Act, which further encourages settlements by providing for refund of court fee,” the Court opined..A narrow interpretation of Section 89 of CPC and Section 69A of the 1955 Act sought to be imposed by the petitioner would lead to an outcome wherein parties who are referred to a mediation or arbitration by the Court will be entitled to a full refund of their court fee while those parties who save the Court’s time and resources by privately settling their dispute themselves will be deprived of the same benefit, simply because they did not require the Court’s interference to seek a settlement.“Such an interpretation, in our opinion, clearly leads to an absurd and unjust outcome, where two classes of parties who are equally facilitating the object and purpose of the aforesaid provisions are treated differentially, with one class being deprived of the benefit of Section 69A of the 1955 Act,” the Court said..A literal or technical interpretation, in this background, would only lead to injustice and render the purpose of the provisions nugatory – and thus, needs to be departed from, in favour of a purposive interpretation of the provisions, the Court added.The Court, therefore, upheld the judgment of the High Court and dismissed the appeal.[Read Judgment]