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The High Court of Judicature at Madras Rep. by its Registrar General Vs. M.C. Subramaniam and Ors. - (Supreme Court) (17 Feb 2021)

Parties who privately agree to settle their dispute outside the modes contemplated under Section 89 of the CPC are also entitled to refund of Court fees



Present special leave petitions arise out of judgment of the High Court. By the impugned judgment, the High Court allowed Petitions filed by the Respondent No. 1 praying for refund of the Court fees deposited by him in Appeal Suits filed by him before the High Court.

The gravamen of the Petitioner's contentions is that, Section 69-A of Tamil Nadu Court-fees And Suits Valuation Act, 1955 (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 Code of Civil Procedure, 1908 (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 CPC.

The purpose of Section 69-A of 1955 Act is to reward parties who have chosen to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms, thus saving the time and resources of the Court, by enabling them to claim refund of the Court fees deposited by them. Such refund of Court fee, though it may not be connected to the substance of the dispute between the parties, is certainly an ancillary economic incentive for pushing them towards exploring alternative methods of dispute settlement.

As the Karnataka High Court has rightly observed in Kamalamma and Ors. v. Honnali Taluk Agricultural Produce Co-operative Marketing Society Ltd., parties who have agreed to settle their disputes without requiring judicial intervention Under Section 89 of CPC are even more deserving of this benefit. This is because by choosing to resolve their claims themselves, they have saved the State of the logistical hassle of arranging for a third-party institution to settle the dispute. Though arbitration and mediation are certainly salutary dispute resolution mechanisms, but the importance of private amicable negotiation between the parties cannot be understated.

Thus, even though a strict construction of the terms of Section 89 of CPC and 69-A of the 1955 Act may not encompass such private negotiations and settlements between the parties, the participants in such settlements will be entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods under Section 8 of CPC.

Thus, the High Court was correct in holding that, Section 89 of the CPC and Section 69-A of the 1955 Act be interpreted liberally. Section 89 of CPC shall cover, and the benefit of Section 69-A of the 1955 Act shall also extend to, all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at. Petitions dismissed.

Relevant : Kamalamma and Ors. v. Honnali Taluk Agricultural Produce Co-operative Marketing Society Ltd. MANU/KA/0620/2009


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