Refund court fee in cases of compromise, rules HC

Saurabh Malik

Tribune News Service

Chandigarh, February 9

In a judgment that will save the litigants a substantial amount of money, the Punjab and Haryana High Court has made it clear that the court fee will have to be refunded in all cases ending in a compromise.

The ruling by Justice Dr Bharat Bhushan Parsoon is applicable in all cases, where the suit is decided by the court on the basis of a compromise; and not necessarily settled in a lok adalat or through the process of mediation. The ruling is significant as the court fee can run into several lakhs in legal matters, such as cases hovering around sale agreements and defamation. The court fee in such cases is calculated on the basis of the percentage of the suit amount.

What the law says

Section 89 of the Code of Civil Procedure, dealing with the settlement of disputes outside the court, says the matter can be referred for arbitration, conciliation, judicial settlement, including settlement through lok adalat, and mediation, where elements of a settlement are in existence.

Section 16 of the Court Fee Act, 1870, dealing with refund of fee, says that a plaintiff shall be entitled to a certificate from the court authorising him to receive back from the collector the full amount of the fee, where the court refers the parties to one of the modes of settlement referred to in Section 89.

The dispute

In the case before Justice Parsoon, Pradeep Sonawat claimed the fee was not refunded on the ground that the matter was not resolved before the lok adalat. In his petition against Satish Prakash, he challenged the dismissal of an application for return of court fee affixed on the plaint after the litigation ended in a mutual compromise.

He initiated the suit based on an agreement to sell in January 2012. In nine months, a compromise was reached and the suit was decided in terms of the mutually agreed settlement.

The judgment

Justice Parsoon ruled: “It is felt that whether the compromise is with the persuasion of the court or amongst the parties by themselves in terms of Section 89 of the CPC or otherwise, invocation of provision of Section 16 of the Act should be made in all cases so that settlements by way of alternative dispute resolution mechanism are encouraged….

“Merely because the matter has not been settled in lok adalat, invocation to Section 16 of the Act should not have been refused…. The petitioner-plaintiff is entitled to a certificate from the court below authorising him to receive back the full amount of the court fee paid in respect of the plaint, from the Collector”.