Karnataka High Court
Mrs. Sunandamma P vs M/S Gtl Infrastructure Limited on 1 April, 2026
Author: H.T. Narendra Prasad
Bench: H.T. Narendra Prasad
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF APRIL, 2026
BEFORE
THE HON'BLE MR. JUSTICE H.T. NARENDRA PRASAD
WRIT PETITION NO. 9923 OF 2026 (GM-CPC)
BETWEEN:
MRS. SUNANDAMMA P
SINCE DEAD BY HER LR
RATHNAMMA,
DAUGHTER OF MR. PAPAIAHREDDY,
AGED ABOUT 74 YEARS,
RESIDING AT NO.1323-10,
BIDARAHALLI PAPAIAHREDDY BUILDING,
YELLAMMA WATER TANK, ANNASANDRAPALYA,
VIMMANAPURA, BENGALURU NORTH,
BENGALURU - 560017.
...PETITIONER
(BY SRI. BHARGAVA D BHAT, ADVOCATE)
AND:
Digitally signed by
DHANALAKSHMI
MURTHY M/S GTL INFRASTRUCTURE LIMITED
Location: HIGH OFFICE AT NO.3 AND 5, CONNAUGHT ROAD,
COURTOF
KARNATAKA OFF QUEEN ROAD, TASKER TOWN,
BENGALURU-560052.
REP BY ITS DIRECTOR.
...RESPONDENT
THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE
ORDER DATED 22.01.2025 IN COM. O.S. NO.936 OF 2024
PASSED BY THE LXXXV ADDITIONAL CITY CIVIL AND
SESSIONS JUDGE, COMMERCIAL COURT, BENGALURU (CCH-
86) (AS PER ANNEXURE-A) TO THE EXTENT THAT IT REFUSES
THE REQUEST FOR REFUND OF COURT FEES AND ETC.
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THIS WRIT PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE H.T. NARENDRA PRASAD
ORAL ORDER
1. In this writ petition, the petitioner-plaintiff is
challenging the order dated 22.01.2025 passed by the
LXXXV Addl. City Civil & Sessions Judge, Bengaluru (for
short ‘Trial Court’), in Com.O.S.No.936/2024, only to the
extent of refusal of the request of the plaintiff for refund of
court fees.
2. For the sake of convenience, the parties are referred
to as per their ranking before the Trial Court in Original
Suit.
3. The plaintiff filed a suit in Com.O.S.No.936/2024
before the Trial Court for eviction. On appearance, the
defendant filed an application under Section 8 of the
Arbitration and Conciliation Act, 1996 seeking the Court to
refer the matter to Arbitration. The Trial Court by order
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dated 22.01.2025 has allowed the application and referred
the matter to Arbitration. However, the request of the
plaintiff for refund of Court fee has been rejected. Being
aggrieved by the order of the Trial Court refusing to refund
the Court fee, the present writ petition is filed.
4. This Court in W.P.No.9801/2025 disposed of on
19.08.2025 while considering an identical issue, relying
upon decisions of various High Courts and the Hon’ble
Supreme Court has held that the reference of a dispute to
arbitration is one of the modes of settlement contemplated
under Section 89 of the Code of Civil Procedure.
Consequently, a party would be entitled to refund of court
fee upon such reference. The consistent judicial view, as
noticed therein, is that once the matter is relegated to
arbitration, the litigant ought not to be deprived of refund
of the Court fee, as the very object of Section 89 CPC is to
encourage alternative dispute resolution and reduce the
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burden on courts. Relevant paragraphs of the order passed
in W.P.No.9801/2025 is extracted hereinbelow.
“9. The High Court of Madras in the case of TIDEL
PARK LIMITED v. ARKAY ENERGY (RAMESWARM)
LIMITED1 considering the interplay between Section 16
of the Court Fees Act and Section 69A of the Tamil Nadu
Court Fees Act, which is in parimateria with the Court
Fees Act quoted hereinabove, has held as follows:
“2 . Vide separate proceedings in the
main Suit today (26.2.2018) and an order in
Application No. 1101 of 2018 (Amendment
Application), Plaint prayers contained in sub-
paragraphs ‘a’ to ‘c’ have been given up in the
light of a reference to Arbitration made in a
Section 8-Application being Application No.
4804 of 2011 by an Order dated 17.1.2013
made by a learned Single Judge of this Court. I
am informed that the Order of the learned Single
Judge was carried in Appeal by way of an Intra-
Court Appeal in O.S.A. No. 313 of 2013 and by an
Order dated 8.2.2017, the aforesaid Appeal was
dismissed confirming the Order of the learned
Single Judge. In other words, there is a reference
to Arbitration as far as Plaint prayers ‘a’, ‘b’ & ‘c’
are concerned. In such circumstances, refund of
Court-fee paid on the Plaint with regard to sub-
paragraphs ‘a’, ‘b’ & ‘c’ alone are sought for by the
Plaintiff. In sum and substance, this is the prayer in
this Application. In this regard, I deem it
appropriate to extract the Memo of Valuation
Paragraph in the Plaint, which is in Tabular Column
form. The same reads as follows:
Sl. Description of Amount(`) C.F. Paid(`)
No. Claim
1 Prayer (a) & (b) `4,85,32,773 `4,88,853
being claim for
Discount
2 Prayer (d) being `77,79,945 `81,325
1
MANU/TN/2457/2018
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claim for
guaranteed interest
3 ?5Prayer (f) being `1000 `75
declaration by a
Preliminary Decree
4 Prayer (g) being `90,00,000 `93,525
claim for minimum
value of shares
Total `6,53,13,718 `6,63,778
3. To be precise, there is a prayer for refund
of ‘ 4,85,32,773, being the Court-fee paid qua sub-
paragraphs ‘a’ & ‘b’ of Prayer Paragraphs, which
have now been deleted from the Plaint as the same
are in seizin by an Arbitral Tribunal. To be noted,
sub-paragraph ‘c’ of Plaint Prayer Paragraph
pertains to future Interest and therefore, does not
find place in the extracted tabulation supra.
4 . Mr. Anirudh Krishnan, learned Counsel
appearing for the Defendants, while not opposing
the request for refund, submitted that it is
necessary to bring to the notice of this Commercial
Division the obtaining position of law qua recent
amendments to the Tamil Nadu Court Fees and
Suits Valuation Act, 1955 (hereinafter referred to as
‘Court Fees Act‘ for brevity).
5. Learned Counsel drew my attention to
amended Section 69-A of the Court Fees Act, which
reads as follows:
“69-A. Refund on Settlement of disputes
under Section 69 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.”
6 . Mr. Anirudh Krishnan also points out that
this Amendment to the Court Fees Act found its
way into the Statute only on 1.3.2017. It is clear
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from the narrative supra that the reference to the
Arbitration was made by a learned Single Judge on
17.1.2013 and confirmed by a Division Bench on
8.2.2017, both of which are prior to the
Amendment on 1.3.2017. In this view of the matter
learned Counsel for Defendants brought to the
notice of the Court that there may be some doubt
as to whether the Plaintiff is entitled to refund of
Court-fee as prayed for in this Application.
7. For examination of this aspect of the
matter in the light of the language of 69-A of Court
Fees Act, it is necessary to extract Section 89 of the
Code of Civil Procedure, 1908 (‘C.P.C.’ for brevity).
Section 89, C.P.C. reads as follows:
“89. Settlement of disputes outside the
Court.- (1) 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 observation 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) Where a dispute had been referred-
(a) for Arbitration or Conciliation, the
provisions of the Arbitration and
Conciliation Act, 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 and all other
provisions of that Act shall apply in
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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 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.”
8. A bare perusal of Section 89, C.P.C.
reveals that ‘Arbitration’ is one of the modes
of Settlement that has been contemplated in
Section 89, C.P.C. In other words, if a Suit is
referred to Arbitration, the Plaintiff will be
entitled to refund of Court-fee under Section
89, C.P.C.
9. The only difficulty that the facts
scenario in the instant lis presents is that
reference to Arbitration was made prior to
amendment to the Court Fees Act, particularly
introduction of Section 69-A in Court Fees Act.
In search for a answer to this situation, which
this Application presents in the instant case, I
perused Section 69-A of Court Fees Act as it
stood prior to 1.3.2017. Section 69-A of Court
Fees Act as it stood prior to 1.3.2017 is as
follows:
“69-A. Refund on Settlement of
disputes under Section 89 of Code of Civil
Procedure.- (1) Where the Court refers the
parties to the Suit to anyone 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 Plaintiff
shall be entitled to a Certificate from the
Court authorizing him to receive back the
full amount of the fee paid in respect of
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such plaint if the dispute referred by the
Court is settled.”
10. From the narration and reproduction
of relevant provisions supra, it unfurls and
emerges very clearly that a Plaintiff would
certainly be entitled to refund of Court-fee
when a matter is referred to Arbitration even
prior to 1.3.2017, but the caveat or rider is, it
should have culminated in a Settlement. In
the light of the amendment Section 69- A of
Court Fees Act now, a reference to Arbitration
would suffice and it need not actually
culminate in a Settlement. This is the
obtaining position from 1.3.2017.
11. In the light of chronicled dates,
which I have recorded, I now examine if the
Plaintiff would be entitled to refund of Court-
fee as sought for in this Application. In
answer to this, the date on which the instant
Application was filed becomes relevant. I see
from the Suit file placed before me that the
instant Application was filed on 11.1.2018,
which is post 1.3.2017. In other words, on the
date on which the instant application was
filed, Section 69-A of the Court Fees Act, as
amended, was operating. It follows that, on
the date of filing of this Application, the
Plaintiff was entitled to refund of Court-fee on
a mere reference to Arbitration without
waiting for the same to culminate in a
Settlement. As alluded to supra, the Plaintiff
was entitled to refund even prior to the
amendment and I have already recorded that
the Caveat/rider is that the Plaintiff had to
wait for a Settlement. It does not have to do
so now. In fact, in my reading whether it
culminates in a Settlement or not is
immaterial. Owing to all that I have set out
supra, I have no hesitation in coming to the
conclusion that the Plaintiff will be entitled to
refund of Court-fee as sought for. In other
words, prayer in this Application deserves to
be acceded to and I do so.
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This Application is allowed. Registry is
directed to process refund of Court in
accordance with law as expeditiously as
possible and in any event complete the
process within 30 days from the date of
communication of this Order to the Registry.”
(Emphasis supplied)
The High Court of Madras holds that arbitration is one of
the modes of settlement provided under Section 89 of the
CPC and if a suit is referred to arbitration, the plaintiff
would be entitled to refund of Court fee under Section 89
of the CPC.
10. Likewise, the High Court of Delhi in the case of
R.V. SOLUTIONS (P) LIMITED v. AJAY KUMAR
DIXIT2, has held as follows:
“17. At this stage, learned counsel for
the plaintiff submits that as the matter has
been referred to arbitration, this court may
direct refund of the court fees under
Section 89 of the CPC read with Section 16 of
the Court Fees Act, 1870. It is ordered
accordingly. The plaintiff shall be entitled to
refund of the court fees.”
(Emphasis supplied)
The Court directs refund of Court fee under Section 89 of
the CPC r/w Section 16 of the Court Fees Act upon
reference of the dispute to arbitration under Section 8 of
the Act.
11. The High Court of Madras in the case of MMTC
LIMITED v. SHIV SAHAL & SONS3 holds as follows:
“9. A brief and cursory narration of facts has
been set out supra. As far as the trajectory of
the litigation is concerned, Defendants 1 and
2 took out an application under Section 8 of
the Arbitration and Conciliation Act, 19962
2019 SCC OnLine Del 6531
3
2017 SCC OnLine Mad 11203
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(hereinafter referred to as ‘A and C Act‘ for
brevity). This is Application No. 2830 of 2013
and the same, I am informed, was allowed by
a learned single Judge of this Court on
30.06.2014. This was carried by way of an intra-
court appeal, obviously by plaintiff, in O.S.A. No.
244 of 2014 and I am informed that the intra-court
appeal came to be dismissed at the admission
stage itself on 28.10.2014. Not satisfied, the
plaintiff carried the matter to the Supreme Court.
In the Supreme Court, i.e, C.A. No. 11148 of 2018,
the matter ultimately came to be disposed of in and
by an order dated 20.11.2017.
10. The copy of the order of the Supreme
Court is jointly placed before me by all the learned
counsel. A perusal of the order shows that the
parties have agreed for appointment of a sole
arbitrator to constitute an Arbitral Tribunal, further
agreeing that the seat shall be Chennai and the
venue shall be at a place convenient to the Hon’ble
Arbitrator. In the order of the Hon’ble Supreme
Court, there is also a mention about refund of
Court fees to the plaintiff. I am informed that
Arbitral Tribunal, consists of sole arbitrator, (a
Hon’ble retired Judge of the Supreme Court of
India) and he has fixed the first hearing on
14.12.2017.
11. In the light of the narrative supra, this
suit has to be disposed of in terms of the above
said order of the Supreme Court in C.A. No. 11148
of 2017 dated 20.11.2017. Therefore, I deem it
appropriate to extract the order of the Hon’ble
Supreme Court, which reads as follows:
“Heard learned counsel for the parties.
At the joint request of the learned counsel
for the parties, we appoint Hon’ble Mr. Justice
R.V. Raveendran, former Judge of this Court as
Arbitrator to decide all disputes arising out of
Memorandum of Agreement dated 2nd April, 2008
between the parties.
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The parties agree that the plaint in the suit
be treated as claim of the appellants and the
claim petition filed by the respondents before the
Arbitrator be treated as counter claim. The said
documents will be furnished by the appellant to
the learned Arbitrator within a period of two
weeks from today. The venue of the arbitration
can be at place convenient to the Arbitrator.
However, the seat of the Arbitrator will be taken
to be at Chennai. The arbitrator will be at liberty
to take any expert assistance.
In view of section 16 of the Court Fees
Act 1870, the appellant will be entitled to
move the Collector for refund of the Court
fee.
The above order will supersede the
Arbitration Clause 11 in the Memorandum of
Agreement dated 2nd April, 2008.
Parties are at liberty to communicate with
the learned Arbitrator for further proceedings.
The appeal is, accordingly, disposed of.”
12. To be noted, there is a direction for
refund of Court fees as would be evident from
the extract of the order of the Supreme Court
of India, It is open to the parties to the lis to
pursue the same in a manner known to law.
No costs.”
(Emphasis supplied)
In the case before the Madras High Court, the matter was
referred to arbitration on consent of parties. Therefore,
there was a direction to refund the Court fee.
12. Again, the Madras High Court in the case of
GOLDEN FALCON INDUSTRIES LIMITED v. INDIA
INFOLINE INSURANCE BROKERS4 has held as follows:
“7. In view of the fact that the parties
have been relegated to the arbitration
process and even issues have not been4
CS(OS) 96/2021 decided on 13-10-2022
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framed, the request made by Mr. Anand for
refund of the Court fee is agreed to and the
same shall be refunded in accordance with
law.”
(Emphasis supplied)
The Court ordered refund of Court fee on account of
reference to arbitration under Section 8 of the Act.
13. A Division Bench of this Court in the case of
A. SREERAMAIAH v. THE SOUTH INDIAN BANK
LIMITED5 has held as follows:
“2. In the light of settlement of the matter,
learned Counsel appearing for the appellant
submitted that the appellant is entitled for the
refund of full court fees. He referred to Section 16
of the Court Fees Act, 1870 (Central Act) and
submitted that any settlement arrived at, in terms
of Section 89 of the Code of Civil Procedure 1908,
party is entitled for refund of full court fees under
Section 16 of the Court Fees Act 1870.
3. It is in this regard, we heard the learned
Government Advocate and the Counsel appearing
for the appellant and other Counsel appearing in
the similar cases.
4. Section 89 was inserted by the Code of
Civil Procedure (Amendment) Act 1999 inter
alia providing for settlement of dispute outside the
Court. This provision was inserted based on the
acceptance of Justice Malimath Committee report,
wherein the said Committee had emphasized for
providing a legal sanction to such machinery for
resolution of disputes and resort thereto in order to
reduce and control the inflow of commercial
transaction in regular civil courts. Justice Malimath
Committee was also of the view that, the resolution
of dispute be made obligatory on the part of the
court, to resolve for settlement of the disputes and
the Committee agreeing with the Law Commission5
2006 SCC OnLine Kar.563
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recommended to provide for settlement of disputes
outside the court at any stage of the proceedings
by means of judicial settlement, arbitration,
conciliation, mediation or through Lok Adalat and it
is only after the party fails to get the dispute
settled through any one of the alternative dispute
resolution method, the suit shall proceed further in
the court in which it was filed. The object, for
making it obligatory on the part of the Court to
refer the matter to the alternate dispute resolution
methods, is to provide early disposal of the
disputes, avoiding long waiting for justice for years
and further avoiding judicial wrangles and
multiplicity of appeals/revisions and also to reduce
the burden on the judiciary of huge areas of cases
pending at different levels of courts. The result of
this recommendation, Section 89 was inserted in
the Code of Civil Procedure.
5. In consonance with the provisions of
Section 89 of CPC, the Parliament brought an
amendment to the provisions of Court Fees Act
1870 by inserting Section 16, which reads as
under:
“Refund of Court Fee – Where the
Court refers the parties to the suit to any 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 object behind insertion of Section 16 to the
Central Court Fees Act was to encourage the
litigant to adopt the alternate dispute resolution
method for early disposal of the dispute.
6. It is in this context, in matter referred to
any of the methods specified under Section 89 of
the CPC and if the dispute is resolved, the party is
entitled for refund of full court fees as
contemplated under Section 16 of the Court Fees
Act. It is in this regard, the appellant’s Counsel had
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submitted that this dispute having been settled at
the intervention of the Court by way of judicial
settlement, party is entitled for refund of full court
fees. He also submitted that in case of settlement
arrived at Lok Adalat, Section 21 also provides for
refund of full court fees in terms of section 16 of
the Court Fees Act and it is also submitted by the
learned Counsel for the appellant that in all the
settlements arrived before the Lok Adalat, full court
fees has been refunded.
7. Considering the object behind the
Amendment Act 1999 inserting Section 89 of
CPC and also the insertion of Section 16, it is
clear, that the object of providing of refund of
full court fees, is to encourage the settlement
of the disputes in terms of Section 89 of CPC.
In this case, the parties agreed for settlement
in terms suggested by the Court and
accordingly, they have settled their dispute
outside the court. The judicial settlement is
also one of the alternative method of
settlement of the disputes. As such, in our
considered view, in any settlement arrived in
terms of Section 89 of CPC including the
judicial settlements at the intervention and on
term suggested by the Court, the appellant is
entitled for refund of full court fees, as
otherwise, it would be meaningless if the
provisions of Section 16 are not applied for
settlement of dispute by the parties under
Section 89. Section 89 does provide for
settlement of dispute at any stage of the
proceeding, whether it is by way of method
referred to therein or by judicial settlement as
contemplated under Section 89 sub-section
(1). As such, we are of the opinion that if the
parties come forward to settle their dispute
before the court itself, they should not be
denied of refund of full court fees on the
ground that they have not settled the dispute
before any of the four methods provided
under Section 89 of CPC. The object behind
Section 89 is to encourage the parties to
arrive at settlement and if that object is
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sought to be achieved by means of referring
the matter to any of the four methods
mentioned in Section 89, then even the
settlement arrived at the earliest stage before
the Court would also be one of the method
provided under Section 89 sub-section (1).
Hence, we feel it as just and appropriate to
order for full refund of court fees in the case
of parties settling their dispute before the
Court as well as before any of the Forum
mentioned under Section 89 of the CPC. No
party should be discriminated in the matter of
refund of court fees mainly on the ground that
they have settled the dispute at the earliest
stage before the Court without recourse to
any of the methods mentioned under Section
89 of the CPC. Hence, appellant is entitled for
refund of full court fees.
Accordingly, the appeal stands disposed of.”
(Emphasis supplied)
14. The High Court of Himachal Pradesh in the case of
HIMALAYAN SKI VILLAGE PRIVATE LIMITED
COMPANY v. KAKA & ASSOCIATES6 has held as
follows:
“Civil Suit No.4072 of 2013
In view of the order passed in OMP No. 296
of 2014, the suit is not maintainable and the plaint
is ordered to be returned to the plaintiff. It is,
however, made clear that the plaintiff shall be
entitled to the refund of Court fee in accordance
with law. The parties to bear their own costs.
Decree sheet be drawn accordingly.”
The High Court holds that when the matter is referred to
arbitration, the Court fee must be refunded. The case6
OMP 296 of 2024 in C.A.No.4072 of 2013 decided on 06-07-2017
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before the High Court was allowing of an application
under Section 8 of the Act for reference to arbitration.
15. The Apex Court interpreting Section 89 of the CPC
and Tamil Nadu Court Fees and Suits Valuation Act, 1955
and its interplay, in the case of HIGH COURT OF
MADRAS V. M.C.SUBRAMANIAM7 holds that if the
parties are agreeing to settle the dispute outside Court,
refund of Court fee must ensue. The Apex Court has held
as follows:
“7. In addressing the question of whether the
refund of court fee was permissible under the
relevant rules, the High Court considered Section
69-A of the Tamil Nadu Court Fees and Suit
Valuation Act, 1955 (hereinafter “the 1955 Act”),
which reads as follows:
“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.”
(emphasis supplied)
8. Considering the appeal suits to be continuation
of the original suits, and therefore falling within the
ambit of “suits” as provided in Section 69-A, the
Court went on to take notice of Section 89 CPC
which reads as follows:
“89. Settlement of disputes outside the
Court.–(1) 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 after7
(2021)3 SCC 560
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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
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.”
9. 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
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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 CPC, and
resultantly Section 69-A 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.
…. …. ….
12. Having heard the petitioner and thoroughly
considered the arguments advanced, we find
ourselves unimpressed by the petitioner’s
contentions, for reasons outlined below.
13. The provisions of Section 89 CPC must be
understood in the backdrop of the
longstanding proliferation of litigation in the
civil courts, which has placed undue burden
on the judicial system, forcing speedy justice
to become a casualty. As the Law Commission
has observed in its 238th Report on
Amendment of Section 89 of the Code of Civil
Procedure, 1908 and Allied Provisions, Section
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 (Para 2.3). 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
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for the effecting of timely justice in Indian
courts, also informs Section 69-A 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.
…. …. ….
17. In light of these established principles of
statutory interpretation, we shall now proceed
to advert to the specific provisions that are
the subject of the present controversy. The
narrow interpretation of Section 89 CPC and
Section 69-A of the 1955 Act sought to be
imposed by the petitioner would lead to an
outcome wherein the parties who are referred
to a mediation centre or other centres by the
Court will be entitled to a full refund of their
court fee; whilst the parties who similarly
save the Court’s time and resources by
privately settling their dispute themselves will
be deprived of the same benefit, simply
because they did not require the Court’s
interference to seek a settlement. Such an
interpretation, in our opinion, clearly leads to
an absurd and unjust outcome, where two
classes of parties who are equally facilitating
the object and purpose of the aforesaid
provisions are treated differentially, with one
class being deprived of the benefit of Section
69-A of the 1955 Act. A literal or technical
interpretation, in this background, would only
lead to injustice and render the purpose of the
provisions nugatory — and thus, needs to be
departed from, in favour of a purposive
interpretation of the provisions.
18. It is pertinent to note that the view taken
by the High Court in the impugned judgment
[M.C. Subramaniam v. Sakthi Finance Ltd. Civil
Misc. Petition No. 26742 of 2019, decided on
8-1-2020 (Mad)] has been affirmed by the
High Courts in other States as well. Reference
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may be had to the decision of the Karnataka
High Court in Kamalamma v. Honnali Taluk
Agricultural Produce Coop. Mktg. Society Ltd.
[Kamalamma v. Honnali Taluk Agricultural
Produce Coop. Mktg. Society Ltd., 2009 SCC
OnLine Kar 744 : (2010) 1 AIR Kant R 279] ,
wherein it was held as follows : (SCC OnLine
Kar para 6)
“6. Whether the parties to a suit or appeal or
any other proceeding get their dispute
settled amicably through arbitration, or
meditation or conciliation in the Lok Adalat,
by invoking provisions of Section 89 CPC or
they get the same settled between
themselves without the intervention of any
Arbitrator/Mediator/Conciliators in Lok
Adalat, etc., and without invoking the
provision of Section 89 CPC, the fact remains
that they get their dispute settled without
the intervention of the Court. If they get
their dispute settled by invoking Section 89
CPC, in that event the State may have to
incur some expenditure but, if they get their
dispute settled between themselves without
the intervention of the Court or anyone else,
such as arbitrator/mediator, etc., the State
would not be incurring any expenditure. This
being so, I am of the considered opinion that
whether the parties to a litigation get their
dispute settled by invoking Section 89 CPC
or they get the same settled between
themselves without invoking Section 89 CPC,
the party paying court fees in respect
thereof should be entitled to the refund of
full court fees as provided under Section 16
of the Court Fees Act, 1870.”
(emphasis supplied)
19. Section 16 of the Court Fees Act, 1870 is
in pari materia with Section 69-A of the 1955
Act, and hence the abovestated principles are
equally applicable to the present case.
.... .... ....
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22. The view taken in both Kamalamma
[Kamalamma v. Honnali Taluk Agricultural
Produce Coop. Mktg. Society Ltd., 2009 SCC
OnLine Kar 744 : (2010) 1 AIR Kant R 279]
and J.K. Forgings [J.K. Forgings v. Essar
Construction (India) Ltd., 2009 SCC OnLine
Del 3134 : (2009) 113 DRJ 612] has been
subsequently relied upon by the Delhi High
Court in Inderjeet Kaur Raina v. Harvinder
Kaur Anand [Inderjeet Kaur Raina v.
Harvinder Kaur Anand, 2018 SCC OnLine Del
6557] .
23. We find ourselves in agreement with the
approach taken by the High Courts in the
decisions stated supra. The purpose of Section
69-A 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. As
the Karnataka High Court has rightly observed
in Kamalamma [Kamalamma v. Honnali Taluk
Agricultural Produce Coop. Mktg. Society Ltd.,
2009 SCC OnLine Kar 744 : (2010) 1 AIR Kant
R 279] , 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 the dispute. Though
arbitration and mediation are certainly
salutary dispute resolution mechanisms, we
also find that the importance of private
amicable negotiation between the parties
cannot be understated. In our view, there is
no justifiable reason why Section 69-A should
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only incentivise the methods of out-of-court
settlement stated in Section 89 CPC and afford
step-brotherly treatment to other methods
availed of by the parties.
24. Admittedly, there may be situations wherein
the parties have after the course of a long-drawn
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.”
(Emphasis supplied)
The Apex Court affirmed the finding in the case of
KAMALAMMA. The judgment in the case of
KAMALAMMA v. HONNALI TALUK AGRICULTURAL
PRODUCE CO-OPERATIVE MARKETING SOCIETY
LIMITED8 is rendered by a coordinate Bench of this
Court, wherein the coordinate Bench had held that where
parties to a suit or appeal or any other proceeding get
their dispute settled amicably through arbitration,
mediation or conciliation by invoking the provisions of
Section 89 of the CPC or even before the Arbitrator, it
would be that the dispute is settled without the
intervention of the Court. The judgment in KAMALAMMA
is subsequently followed by different High Courts which
are noted by the Apex Court in the afore-quoted
judgment.
16. In the light of the judgments quoted supra, the
parties to the lis have on consensus sought reference of
the matter to the Arbitrator. The Commercial O.S is
withdrawn on that score. The claim for refund of Court
Fee is rejected by the following order:
“Both parties absent.
8
2009 SCC OnLine Kar 744
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Counsel for plaintiff filed application U/O
XXIII Rule 1(3) of CPC and prays to permit the
plaintiff to withdraw the present suit with liberty to
approach the arbitrator so as to resolve their
disputes.
Counsel for defendant No.1 present and
submits no objections.
Other defendants absent.
Heard.
To meet ends of justice the application filed
by the plaintiff U/O XXIII Rule1(3) of CPC is hereby
allowed.
The plaintiff is permitted to withdraw this
suit keeping liberty to approach the arbitrator.
The plaintiff counsel also filed I.A U/Sec. 151
of CPC to direct the Registry to refund Court fees.
However, in my opinion in this case both
parties have not amicably settled their dispute.
Therefore, the plaintiff is not entitled for refund of
the Court fees.
Accordingly, application seeking refund of
Court fee stands rejected.
The suit filed by the plaintiff stands
dismissed as withdrawn.
The plaintiff is at liberty to approach the
arbitrator as per the procedure known to law.
Sd/-
03.09.2024
LXXXIX ACC & SJ, Bengaluru.
(03.09.2024),(CCH-90)”
If the order so passed is considered on the bedrock of the
principles laid down by the Apex Court, what would
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unmistakably emerge is, entitlement of the petitioner for
refund of Court fee.
17. Before parting with the order, I deem it appropriate
to notice that, Section 66 of the Act retains the words
“and the dispute is settled”. The refund though by an
amendment is now at 100%, but is conditional on the
dispute being settled. If Section 16 of the Court Fee Act
and Section 89 of the CPC are noticed, it would become
necessary for the State Government to consider the
deletion of the words “and the dispute is settled”, when
the matter is referred to mediation, arbitration or any
modes of closure as found in Section 89 of the CPC.
18. For the aforesaid reasons, the following:
ORDER
(i) Writ Petition is allowed.
(ii) Order dated 03-09-2024 passed by the
LXXXIX Additional City Civil and Sessions
Judge, Commercial Court, Bengaluru in
Commercial O.S.No.150 of 2024 stands
quashed.
(iii) The Concerned Court is directed to refund the
Court Fee paid by the plaintiff while instituting
the suit, to the plaintiff, without brooking any
further delay.
(iv) The Registry is directed to transmit the copy
of this order to the office of the Advocate
General, to transmit it further to the
Secretary of the concerned department, for
considering the observations and
recommendations so made.”
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5. In view of the above, this Court is of the opinion that
once the dispute is referred to arbitration under Section 8
of the Arbitration and Conciliation Act, the civil court no
longer deals with the matter and the parties have to
resolve their dispute before the arbitrator. Arbitration is
one of the methods of settlement recognized under
Section 89 of the CPC. The purpose of granting refund of
the Court fee is to encourage parties to choose such
alternative methods of dispute resolution and reduce the
burden on courts. Therefore, the Trial Court was not
justified in rejecting the request of the plaintiff for refund
of the Court fee. The refund should be granted once the
matter is referred to arbitration, irrespective of the final
outcome.
6. In that view of the matter, the following order is
passed:
ORDER
a) The writ petition is allowed.
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b) The impugned order dated 22.01.2025 passed
by the LXXXV Addl. City Civil & Sessions Judge,
Bengaluru, in Com.O.S.No.936/2024, only to
the extent of refusal of the request of the
plaintiff for refund of court fee, is hereby set
aside.
c) The concerned court is directed to refund the
court fee to the petitioner-plaintiff, after due
verification.
Sd/-
(H.T. NARENDRA PRASAD)
JUDGE
DM
List No.: 1 Sl No.: 38
