High Court of Judicature at Madras v. M.C. Subramaniam- Parties Entitled To Refund of Fee in Private Settlement U/s 89 CPC

DATE: 17^th February, 2021

JUDGES:

• Mohan M. Shantanagoudar
• Vineet Saran

PARTIES:

• High Court of Judicature at Madras Rep. by its Registrar General (PETITIONER)
• C Subramaniam (RESPONDENT)

SUBJECT

This judgement deals with section 89 of Code of Civil Procedure which deals with settlement. The question before the court was whether the parties who privately settle disputes without the intervention of Court are entitled to refund of Court fee or not.

AN OVERVIEW:

1. In this case, the administration of Madras High Court has reached the Supreme Court against an order passed by the Madras High Court itself.
2. The respondents in the present case had an agreement of sale and purchase of two vehicles in two separate agreements. Dispute regarding payment arose and respondent no. 2 filed a suit for recovery of balance amount with interest. The suit was partly decreed by Munsif Court and District Court.
3. An appeal was filed in High Court as filed against the order of the Munsif and District Court. While the appeals were still pending before the Court, the parties resolved the dispute between them by entering into a private out of court settlement, after which withdrawal of appeal was sought.
4. The High Court granted permission for withdrawal of appeal along with refund of Court fee submitted by the respondent, which was refused by the registry stating that such type of refund was not authorised.
5. The respondent then filed a Civil Miscellaneous Petition for refund of court fee. To answer the issue, the High Court looked into section 69-A of Tamil Nadu Court Fee and Suit Valuation Act, which says that court fee hall be refunded when the Court refers the parties the modes of settlement prescribed in section 89 CPC.
6. While CPC only recognises arbitration, reconciliation and judicial settlement including settlement through Lok Adalat, the court observed that a narrow construction of the provisions would leave the parties who settle disputes privately with no means to seek a refund.
7. Thus, the court observed that a constitutional interpretation would require to cover all methods of out of court settlement.
8. The petitioner filed an appeal against the said decision of the High Court contending that according to the statutory provisions the refund of court fee is granted only when the court refers the parties for settlement, which is not the case in the present situation. Thus, refund can’t be granted.

IMPORTANT PROVISIONS:

TAMIL NADU COURT FEE AND SUIT VALUATION ACT

• Section 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.

CIVIL PROCEDRE CODE

• Section 89: Settlement of disputes outside the Court.-

(1) Where it appears to the Court that there existelements 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.

(2) Were a dispute has been referred— (a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act,1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisionsof subsection (1) of section 20 of the Legal Services Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

ISSUES

The key issue that the Supreme Court was dealing with in the present case was whether the High Court’s decision in granting the refund of Court fee was correct or not?

ANALYSIS OF THE JUDGEMENT

• Answering the issue raised by the petitioner, the court observed that section 89 of the Code of Civil Procedure was framed to divert civil disputes to an alternative dispute redressal solution and encourage settlement out of the court. Thus, to facilitate private settlement and reduce burden of the judiciary.
• Referring to Directorate of enforcement v. Deepak Mahajan, the court stated that where there is ambiguity in the language of statute, the court can mould it to achieve the purpose of the provision, which also includes expanding the scope the relevant provisions.
• The court further stated that if the provisions are construed in its narrow sense it would lead to absurdity and would deprive justice to those who do not seek courts interference to seek settlement. On the other hand those who seek settlement through other modes mentioned in section 89 would be entitled to full refund.
• In both the situations, the parties are adding up to the object and purpose of the provision but are treated differently. This will lead to injustice and hampers the object of the said provisions.
• Thus, the court agrees with the approach of the High Court and section 89 of CPC shall cover all the modes of out of court settlement and extend benefit of section 69-A of the Tamil Nadu Court Fee and Suit Valuation Act to the parties.

CONCLUSION

Looking into the purpose and objective of Section 89 of CPC it is very clearly evident that the provision was framed to encourage litigants to settle the civil disputes out of the court. An event of not granting refund in private settlement would leave the object of the provision in ignominy and would lead to discrimination between the parties who seek reference from court and who do not even though they both are serving the purpose. Therefore, the court in the present circumstances was unerring in its approach and was precise in the interpretation of the statute.

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