December 16, 2018:

The high court was hearing an appeal for refund of the entire court fees paid in the suit in terms of Section 16 of the Court Fees Act, 1870.

On Friday, clarifying the interpretation of Section 16 & Section 16A of the Court Fees Act in cases which have been referred to mediation by the court at pre-evidence stage & a compromise decree is incorporated, the High Court of Delhi held that an interpretation of the statute inuring to the litigant’s benefit should be preferred & if a plaintiff is able to demonstrate that the case falls within the requirements of Section 16 & a settlement has been arrived at, refund of the full amount of the court-fee has to be granted.

Considering 2010 judgment in case titled Sayed Mohammed Rafey v. Mumtaz Ahmad & Ors, the bench of Justices S Ravindra Bhat & Prateek Jalan stated that if the elements of the provision aren't satisfied, then refund in terms thereof can't be granted & it may then be examined if the conditions laid down in Section 16A have been fulfilled, so as to grant refund of 50% of the court fees paid.

However, the division bench made it clear that Section 16 can't be given a literal interpretation as per which a plaintiff would be entitled to the refund of the court fees on a mere reference to Alternative Dispute Resolution (ADR) under Section 89 of the CPC, regardless of whether the reference ended in a successful settlement or not.

“On a proper construction, therefore, this Court is of the considered view that Section 16 can be made applicable only when parties are able to reach a settlement after a reference to ADR under Section 89 of the Code,” HC said.

The bench said that the cases of reference to arbitration or “judicial settlement” don't pose any great difficulty, as they don't fall within Section 16A of the Act at all, & are covered only under Section 89 of the CPC read with Section 16 of the Act.

Similarly, a compromise entered out of Court, whether resulting in a compromise decree, or in the suit being dismissed as settled out of Court, is covered only by Section 16A & not by Section 16.

“Difficulty arises however, in the case of mediation/conciliation, initiated upon a reference by Court. These cases can potentially fall both within Section 16 & 16A of the Act. On a plain reading, Section 16 would apply as the parties are referred to mediation by an order of Court. However, Section 16A would also apply, as long as the mediation is at a pre-evidence stage of the suit, & the settlement agreement has been incorporated in a compromise decree.

This Court has framed Rules under Part X & Section 89 (2)(d) of the CPC, entitled the Mediation and Conciliation Rules, 2004. Rules 24 & 25 of the said Rules require an agreement between the parties to be reduced into writing & signed by them, which would be forwarded to the Court in which the suit or proceeding is pending''.

''On receipt of the settlement agreement, the Court upon its satisfaction is required to pass a decree in terms thereof, that the parties have settled their disputes. In such a case, we're of the view that an interpretation of the statute inuring to the litigant’s benefit should be preferred. If a plaintiff is able to demonstrate that the case falls within the requirements of Section 16, refund of the full amount of the court-fee FAO ought to be granted,” the HC said.

The high court was hearing an appeal for refund of the entire court fees paid in the suit in terms of Section 16 of the Court Fees Act, 1870.

The appellant had filed the commercial suit against the respondents claiming infringement of intellectual property rights.

The suit was valued for purposes of court fees & jurisdiction at ₹1,10,00,000 & court fees of ₹1,10,000 to be paid thereon.

Picture Source :