The objective of alternative dispute resolution is to reduce the huge pending
case at a different level. In litigation, parties wait for a long time which
leads the parties to get frustrated as they await justice for a long period of
time. To meet the challenges faced Law Commission in its 129th Report (1987)
came up with the idea to introduce the process of the conciliation court system
and resolution of disputes through ADR. Later in the year, 1990 Malimath
Committee also suggested the resolution of disputes through ADR.
It was by Amendment of 1999 that Section 89 was introduced in CPC and which came
into effect from July 2002 the purpose was to help the litigant to settle their
dispute outside the court so as to reduce the already pending matter. ADR cannot
be a substitute method to reach justice but it is only a supplemental process to
reach the remedy in a faster way. The best quality which can be offered is
that ADR can be resorted to "At any stage of the proceeding
The decision made
by the ADR forum has a similar binding effect as if it is made by the civil
court. ADR provides parties flexibility to adapt the procedure to ensure speedy
and inexpensive conduct of the proceeding. and whenever the matter is
resolved through ADR the entire fee which is paid on the plaint is refunded to
the plaintiff where the court issues the certificate to the plaintiff to receive
the full amount of the court fee from the collector.
The bench comprising MM Shantanagoudar and Vineet Saran, JJ in the case of The
High Court of Judicature at Madras Rep. by its Registrar General v. M.C.
Subramaniam & Ors has held that under the ambit of Section 89 of CPC and Section
69-A of Tamil Nadu Court Fees and Suit Valuation Act, 1955 there will be a
refund of the court fees in a matter which are solved outside court settlement
by the parties which must in the eyes of the court deems fit to have legally
arrived and not those cases where court have to intervene to refer the parties
to go for any of the processes of alternative dispute settlement mechanisms
listed in Section 89 of the CPC.
In this case Respondent No. 1/C. Subramaniam agreed to purchase two vehicles
from Respondent No. 2 M/S. Sakthi Finance Limited under 2 separate agreements on
June 10, 1996, and as stated in the agreement Respondent No 1 was required to
pay an amount worth Rs 10,08,000, and this amount is to be paid in installments
to Respondent No 2 for the two-vehicle which was purchased. Here Respondent No
3/ C. Subramaniam and Respondent No 4/Sadasivam are the sureties in the
And aggrieved by this Respondent No.2 has filed civil suit Nos. 66 of 2003 and
76 of 2003 (Original Suits) before the Additional District Munsif Court,
Coimbatore (Munsif Court) and Additional District and Sessions Court, Coimbatore
(District Court) respectively, against Respondent Nos. 1, 3, and 4 for
non-payment of INR 6,64,00 and INR 5,97,200 towards the installments stipulated
under the Agreements.
After the parties contending the original suit was partly
decreed judgment dated February 13, 2004, passed by Munsif Court and judgment
dated January 31, 2005, passed by the District Court and aggrieved from the
judgment delivered by the District Court, Respondent No 1 has gone for appeal
before the High Court of Madras (High Court).
However, when the appeal was still pending before the Madras High Court the
parties decided to enter into an agreement that can provide a remedy to them by
opting for out of court settlement and out of which Respondent No.1 in December
2019 secured an order for withdrawing his appeal stating settlement between both
the parties and with that requesting for refund of court fees which was
deposited when the appeal was filed.
And when the respondent No. 1 has approached the registry of the High Court
regarding the refund of the court fees, the registry directly refused to state
it is not authorized as per rules laid down in the 1995 Act, and aggrieved by
the decision now the respondent no 1 has filed a petition under Section 151 of
CPC wherein the prayer is made before the court regarding the refund of court
fees as it had been directed by the court.
Upon Respondent No. 1 approaching the Registry of the High Court seeking a
refund of its court fees, the Registry refused the same citing it to be not
authorized under the relevant rules, namely the 1955 Act. Aggrieved by the
decision of the Registry, Respondent No. 1 filed Petitions under Section 151 of
the CPC praying for a refund of the court fees as had been directed by the High
The Madras High Court, in this case, has an emphasis on beneficial intent by
giving a co-joint reading of Section 89 of CPC and Section 69-A of Tamil Nadu
Court Fees and Suit Valuation Act, 1955 where it held that the statute needs to
be interpreted liberally to serve the needs. The Court had highlighted
interpreting them narrowly would lead to a situation wherein parties who are
ready to settle their dispute through any means given in alternative dispute
resolution under Section 89, CPC so in this case, the party would be entitled to
claim a refund of their court fees while on the other hand party who settle
their dispute privately will have no means to get a refund of their court fees.
The Madras High Court held differential treatment of two-person would result in
violation of article 14 of the Constitution of India and on interpreting
Section 89 of the CPC, simultaneously with Section 69-A of the 1955 Act, and
hence this provision should be covered to solve the dispute between the parties
which can be solved outside court which court has legally arrived at.
Now after the decision of the Madras High Court the said decision has been
challenged by the Madras High Court's Registry where now the matter is
challenged before the Hon'ble Supreme Court contending that refunding the court
fees will be only at the instance where the court has referred the parties to
alternative dispute resolution under Section 89 of CPC. However, in the present
case, the context is different as the parties without the reference from this
Court have agreed privately between themselves to settle their dispute outside
The legislature's intent while drafting Section 89 into the Civil Procedure Code
was to give the chance to the private parties to facilitate the settlement and
decrease the already existing workload of the judiciary. The idea of introducing
Section 69 of the 1995 Act is to provide the parties refund of court fees when
the matter is settled between them.
On the other hand, the idea of the legislature behind having Section 69-A of the
1955 Act is rewarding the parties who intent to withdraw their ongoing
litigation and setting the matter outside court with help of a dispute
resolution mechanism which can save the time of the court and even for this
court will refund the fees which are deposited for dealing the matter. This
refund of the court fee, nevertheless might not be connected with the dispute of
the parties but somehow it is an effective way to drive the parties to opt for a
dispute resolution mechanism.
A narrow interpretation would turn out to be absurd
The judiciary has given a narrower interpretation while interpreting Section 89
of CPC and Section 69-A of the 1955 Act which has sought from the side of the
petitioner to refer the parties to go for the Mediation process from the side of
the Court after which the parties will be entitled to a full refund of the court
fees which can also save the time of the court to settle the matter privately
between the parties which can also help Court in saving its time and resource as
in this matter the parties did not require Court's assistance for developing
However, this interpretation would lead to the absurd situation
where there is two outcomes that can result for the parties considering the
object and purpose of the provision as one class is here being deprived of the
benefit of Section 69-A of the 1955 Act. A literal interpretation would lead to
injustice and the purpose would not be served thus a purposive interpretation of
the provision is needed.
It becomes important to take into consideration the parties who have agreed to
solve their dispute outside court under Section 89, of CPC by choosing the means
of dispute resolution the parties have saved the time of the Court in arranging
the third party (neutral part) who can facilitate the discussion between the
parties to solve their dispute amicably.
The situation may also arise when the matter between the parties takes a very
long time when referred the matter for litigation and then the parties
approached the court to a refund the court fees in lieu to settle the dispute
and getting their court fees refunded then in such a case the court may after
having the previous conduct of the parties and relying on the principle of
equity may refuse to grant relief of refunding the court fees.
How the Registry and State Government would benefit in the long run as the High
Court's Registry should be so vehemently opposed to granting such benefit, the
Court said that in the above case the registry or state government would be
losing their one-time court fee for a shorter term, but they will be saved from
the cost of managing the litigation in the long term.
The Supreme Court held that in a situation where parties have long drawn trial
or are involved in various litigation have approached the court seeking refund
of court fees on the fact that matter was settled outside court, the court may
on the conduct of the parties and considering the principle of equity, justice,
and good conscience can refuse to grant relief to parties under the relevant
court fees rules but as far as in the present dispute is falling under such
scenario and thus the Supreme Court upheld the Impugned Order and has given
direction the Petitioner to refund the court fees to Respondent No. 1. In the
- 2021 SCC OnLine SC 109.
- Law Commission of India, Urban Litigation Mediation as Alternative to
Adjudication, Report No. 129th, available at https://lawcommissionofindia.nic.in/101-169/Report129.pdf (last visited on April
- Section 89, CPC, 1908, available at https://districts.ecourts.gov.in/sites/default/files/Section%2089%20CPC.pdf(last
visited on April 12, 2022).
- Section 19, Arbitration and Conciliation Act 1996
- Section 16, Court Fees Act, 1870.
- Section 69-A of Tamil Nadu Court Fees.
- Bhatikar Gautam, Sambasivan Sanjeev, and Doshi Madhav, Supreme Court On
Refund Of Court Fees In Out-of-court Settlements,(09/03/2021), available
at https://www.mondaq.com/india/civil-law/1044686/supreme-court-on-refund-of-court-fees-in-out-of-court-settlements (last
visited on April 12, 2022).
- Orders dated September 16, 2019, and September 18, 2019.
- Section 151, CPC, 1908.
- The Constitution of India, 1950, Art. 14.