Monday, May 27, 2024





High Court of Judicature at Madras vs. M.C. Subramaniam

FACTS – Respondent No.1 purchased two vehicles from Respondent No. 2 vide two separate hire purchase agreements (hereinafter, ‘Agreement­I’ and ‘Agreement­II’; collectively, ‘the Agreements’) dated 10.06.1996, under which Respondent No.1 was the principal debtor/hirer, and Respondents Nos. 3 and 4 were the sureties to the Agreements. As per the terms of the Agreements, Respondent No.1 was to pay a sum of Rs.10,08,000/­ in stipulated instalments to Respondent No. 2 for each of the two vehicles. It suffices to note for our purposes that Respondent No. 2 brought Original Suits Nos. 66/2003 and 76/2003 against Respondents Nos. 1, 3 and 4 before the Additional District Munsif Court, Coimbatore (hereinafter, ‘Munsif Court’) and the Additional District and Sessions Court, Coimbatore (hereinafter, ‘District Court’) respectively. In the two suits, Respondent No.2 alleged non­payment of Rs.6,64,000/­ and Rs.5,97,200/­ towards the instalments stipulated in Agreement­I and Agreement­II respectively, and sought recovery of the balance amounts along with interest thereon.

Both the Original Suits Nos.66/2003 and 76/2003 were partly decreed by the Munsif Court and District Court, by judgements dated 13.02.2004 and 31.01.2005 respectively.

Aggrieved, Respondent No.1 preferred Appeal Suits Nos. 876/2012 and 566/2013 before the High Court, against the judgements in O.S. No. 66/2003 and O.S. No.76/2013, respectively. While the appeals were still pending consideration before the High Court, the parties entered into a private out­of- court settlement, thus resolving the controversy between them. In view of this, Respondent No. 1 filed a memo before the High Court, seeking permission to withdraw Appeal Suits Nos. 876/2012 and 566/2013. Such permission, along with a direction to refund the court fee deposited by Respondent No.1, was granted by orders.

Despite the above stated orders of the High Court, the Registry orally refused Respondent No.1’s request for refund of court fees, on the ground that such refund is not authorised by the relevant rules. Left without recourse, on 25.12.2019, Respondent under Section 151, Code of Civil Procedure, 1908 praying for refund of the court fees paid by him.

In addressing the question of whether the refund of court fee was permissible under the relevant rules, the High Court considered Section 69­A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955 Considering, appeal suits to be continuation of original suits, and therefore falling within the ambit of ‘suits’ as provided in Section 69­A, the Court went on to take notice of Section 89, CPC After giving due consideration to the above provisions, the High Court held that, given their beneficial intent, they must be interpreted liberally, in a manner that would serve their object and purpose. Construing them narrowly would lead to a situation wherein parties who settle their dispute through a Mediation Centre or other centres of alternative judicial settlement under Section 89, CPC would be entitled to claim refund of their court fee, whilst parties who settle the disputes privately by themselves will be left without any means to seek a refund. Accordingly, the High Court opined that such differential treatment between two similarly situated persons, would constitute a violation of Article 14 of the Constitution. Therefore, in the High Court’s view, a constitutional interpretation of Section 89 of the CPC, and resultantly Section 69­A of the 1955 Act, would require that these provisions cover all methods of out­ of­ court dispute settlement between parties that the Court subsequently finds to have been legally arrived at.

CAUSEDissatisfied with impugned judgment of the High Court the Petitioner had challenged it.

ARGUMENTSPetitioner’s contentions is 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. That 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.

ISSUE – Whether the refund of court fee was permissible under the relevant rules?

DECISIONSection 89 has now made it incumbent on civil courts to strive towards diverting civil disputes towards alternative dispute resolution processes, and encourage their settlement outside of court. These observations make the object and 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. This overarching and beneficent object and purpose of the two provisions must,therefore, inform this Court’s interpretation thereof.

The purpose of Section 69­A 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. Admittedly, there may be situations wherein the parties have after the course of a long­drawn trial, or multiple frivolous litigations, approached the Court seeking refund of court fees in the guise of having settled their disputes. In such cases, the Court may, having regard to the previous conduct of the parties and the principles of equity, refuse to grant relief under the relevant rules pertaining to court fees. However, we do not find the present case as being of such nature.Thus, even though a strict construction of the terms of Section 89, CPC and 69­A of the 1955 Act may not encompass such private negotiations and settlements between the parties,we emphasize that 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 89,CPC. Indeed, we find it puzzling that the Petitioner should be so vehemently opposed to granting such benefit. Though the Registry/State Government will be losing a one­time court fee in the short term, they will be saved the expense and opportunity cost of managing an endless cycle of litigation in the long term. It is therefore in their own interest to allow the Respondent No. 1’s claim.

Thus, in our view, the High Court was correct in holding that Section 89 of the CPC and Section 69­A of the 1955 Act be interpreted liberally. In view of this broad purposive construction, we affirm the High Court’s conclusion, and hold that Section 89 of CPC shall cover, and the benefit of Section 69­A of the 1955 Act shall also extend to, all methods of out­of­court dispute settlement between parties that the Court subsequently finds to have been legally arrived at. This would, thus, cover the present controversy, wherein a private settlement was arrived at, and a memo to withdraw the appeal was filed before the High Court. In such a case as well, the appellant, i.e., Respondent No. 1 herein would be entitled to refund of court fee.

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