The Hon’ble Delhi High Court recently in a judgement relating to a Trademark dispute refunded the entire court fees, where the parties mutually and privately settled the matter outside of the Court.
The Hon’ble Court relied upon the decision of the Hon’ble Supreme Court to pass this judgement in “The High Court of Judicature at Madras rep. by its Registrar General vs M.C. Subramanium & Ors”.
An understanding of the scheme of the Code of Civil Procedure, 1908 (“Code”) and Court Fees Act, 1870 (“Act 1870”) will be helpful.
Section 89 of the Code stipulates Settlement of disputes outside the Court:
- 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.
- 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 provisions of sub-section (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.]
Section 16 of the Court Fees Act, 1870
16. Refund of fee- Where the court refers the parties to the suit to any one of the mode of settlement of dispute referred to in Section 89 of the Code of Civil Procedure, 1908 the plaintiff shall be entitled to a certificate from the court authorising him to receive back from the collector, the full amount of the fee paid in respect of such plaint.
The Hon’ble Supreme Court of India was of the opinion that the purpose of refund of court fees is to reward the parties who have chosen to put an end to their litigation by resorting to a conciliatory dispute settlement mechanism, thus saving the time and resources of the Court.
Furthermore, the parties who have agreed to settle their disputes without requiring judicial intervention under Section 89 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 their dispute.
Though arbitration and mediation are certainly salutary dispute resolution mechanisms, the importance of private amicable negotiation between the parties cannot be underestimated. Thus, the participants in private settlements should be entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods under Section 89 CPC.
