Report No. 238

6.4.1 Section 16, Court-fees Act, 1870

There is one more provision regarding which the Commission would like to focus the attention of the Government. That is section 16 of the Court-fees Act, 1870, which was inserted by the same CPC Amendment Act by which section 89 was introduced. Section 16 which was thus added to the Court-fees Act reads thus:

"16. Refund of fee.- Where the section refers the parties to the suit to any one 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 authorizing him to receive back from the collector, the full amount of the fee paid in respect of such plaint."

6.4.2 Here again, there is a clear drafting error which gives rise to conflict with section 21 of the Legal Services Authorities Act, 1987. The LSA Act provides that the court-fees paid in a case placed before the Lok Adalat shall be refunded in the manner provided under the Court-fees Act, 1870 only if a compromise or settlement has been arrived at between the parties. However, Section 16 of the Court-fees Act, as the language stands, goes further and says that the court-fee is refundable merely on a reference by court to any ADR process.

This would mean that virtually the court-fee paid in most of the suits will have to be refunded. What will happen if the reference to conciliation, mediation or Lok Adalat does not end in a settlement and the parties come back to the court for adjudication? If the court-fees paid had already been refunded to the plaintiff when the reference was made, adjudication of the suit becomes free, there being no provision for collecting fresh court-fees. Obviously such a situation would not have been intended. This aspect was highlighted by Shri Justice R.V. Raveendran in his lecture at NJA Bhopal1.

The provision obligating the section to refund the entire court-fees paid on a mere reference is also liable to be abused by the plaintiff. In fact, the Chairman of the Commission heard such reports from the District Judges in some parts of the country. It was not intended by the Government (while introducing the Bill) or by the Legislature that the court-fees shall be refunded to the plaintiff once the reference is made to ADR process, irrespective of its outcome or the conduct of the plaintiff or petitioner. We may, in this context, refer to clause 35 of the 'Notes on Clauses' accompanying the CPC (Amendment) Bill, 1997. It reads as follows:

1. Justice R.V. Raveendran, " Section 89 CPC: Need for an Urgent Relook", (2007) 4 SCC J23

"Clause 35.- (Amendment to the Court-fees Act, 1870).

The proposed amendment is consequential to the new section 89 of the Code of Civil Procedure, 1908 proposed to be inserted vide clause 7 of the Bill so as to enable the party to claim refund of court-fee in case the matter in dispute is settled outside the section".

It clearly reflects the intention of the introducer of the Bill. However, the actual wording in the section is quite different. It does not appear that any conscious departure was intended at the time of enactment of the provision. It is clearly a case of draftsman employing the language which does not accord with the intention behind the clause in the Bill. It is, therefore necessary to amend the provision in the Court-fees Act, 1870 so as to bring it in conformity with section 21 of the LSA Act, keeping in view the intendment and rationale of the provision.

It may be mentioned that the Court-fees Act of 1870 (Central enactment) does not have application in all States. Almost all the States have their own court-fee enactments. Section 16 is thus enforceable only in some Union Territories. However, some Judges, without being aware of this factual position, have been following section 16 of the Court-fees Act, though there is no similar provision in the State enactment. Be that as it may, section 16 of the Court-fees Act, 1870, wherever it is applicable, needs to be suitably amended.

6.4.3 In the place of the existing section 16 of the Court-fees Act, 1870, the following needs to be substituted:

"Where the court refers the parties to the suit or other proceeding to any one of the modes of settlement of dispute referred to in section 89 of the Code of Civil Procedure and as a result thereof a compromise or settlement has been arrived at between the parties, the court-fees paid in such a case shall be refunded."