Party Entitled To Court Fee Refund When Settlement Happens At Appellate Stage: Rajasthan High Court Orders Issuance Of Refund Certificate

Rajasthan High Court set aside an order of the Trial Court that rejected petitioner's application seeking refund of Court Fees in light of settlement on the ground that the settlement was reached at the appellate stage after decree was passed by the trial court.

The bench of Justice Arun Monga observed that the district judge seemed to have committed a grave error in interpreting the provision of Section 65-B of the Rajasthan Court Fees & Suit Valuation Act, 1961(“the Act”) opining that the interpretation went against the intent and spirit of Section 89, CPC.

Section 65-B of the Act provides that where the court referred the parties to any mode of settlement referred in Section 89, CPC, and the matter was settled, the plaintiff shall be entitled to get back complete court fee paid in respect of such plaint.

Section 89, CPC, laid down the procedure for settlement of disputes outside the Court, and includes the following methods for the same: arbitration, conciliation, judicial settlement (including through Lok Adalat), mediation

The plaintiff has filed a suit in 2023 for recovery of money which was decreed in his favour by the trial court. Post this, execution petition was filed by the petitioner in which notices were issued to the respondent.

However, when the execution petition was pending, the Parties entered into a compromise and executed a settlement agreement, which was listed in Lok Adalat and the execution petition was disposed off. Post this, petitioner had filed application under Section 65-B to get refund of the court fees. This application was rejected by the district court, ruling,

“No determination has been made by the Hon'ble Supreme Court or Hon'ble High Courts to the effect that, after a decree has been passed, the court fee attached to the earlier claim can be refunded to the plaintiff. Therefore, in the present matter the clear position is that the court fee which the plaintiff now seeks to recover was the very basis on which the judgment and decree dated 05-02-2024 had already been passed.”

The High Court set aside the decision of the district court, and held that while reading Section 89, CPC with Section 65-B, following things had to be ascertained, in relation to the settlement,

a) It was acceptable to both the parties;

b) settlement was brought forth by way of alternative dispute resolution as given in Section 89, CPC.

In this light, the Court held that since during the execution proceeding, settlement took place outside the Court by way of mutual conciliation/mediation, petitioner was entitled to refund.

“A perusal of the above, clearly leaves no manner of doubt that, as long as the matter is settled between the parties qua their dispute, as envisaged under Section 89 CPC, the plaintiff is entitled to refund of full amount of the fee paid in respect of the court fees affixed on the plaint...If the view taken by the learned trial court is sustained that would result in a fallacious & erroneous approach, inasmuch as, settlement arrived between the parties at appellate stage would disentitled them any refund of court fees, which goes against very intent and the spirit of geniality envisaged under Section 89 CPC.”

Accordingly, high court set aside the trial court order directing it to  issue a certificate of refund to the petitioner.

Title: Harish Madhan v Kshema Power and Infrastructure co. pvt. ltd.

Citation: 2025 LiveLaw (Raj) 249

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