Delhi High Court Allows Court Fee Refund Application In Commercial Suit After NCLT Imposes Interim Moratorium On Defendants

The Delhi High Court has ordered to refund court fee to a plaintiff in a commercial suit after interim moratorium was imposed on the defendants by National Company Law Tribunal in Mumbai under Insolvency and Bankruptcy Code, 2016.

Expanding the scope of section 16 of Court Fees Act, 1870, Justice Yashwant Varma said:

“The Court notes that once personal insolvency has commenced in terms of Section 95, the interim moratorium would come into play immediately upon the institution of those proceedings. In terms of the commencement of proceedings under the IBC, the plaintiff would now have the solitary remedy of filing a claim and participate in the collective statutory settlement process that would ensue against the defendants. Since the same would also relate to a settlement of claims, it would appear to fall within the scope of Section 16.”

Section 16 states that where the court refers the parties to a suit to any one of the mode of settlement of dispute i.e. arbitration, conciliation, judicial settlement or mediation, the plaintiff shall be entitled to a certificate from the court authorising him to receive back the full amount of the fee paid in respect of the plaint from the collector.

The court was hearing an application filed in a commercial suit filed by Proud Securities and Credits Private Limited against two promoters of an Indian travel company, Cox & Kings Limited, for recovery of over Rs. 15 crores arising from a master facility agreement. 

During the pendency of the matter, NCLT Mumbai imposed an interim moratorium on the promoters and stayed the suit in terms of sections 96 and 238 of IBC.

The application was then moved by the plaintiff before the High Court for refund of court fee filed in the commercial suit.

It was submitted on behalf of the plaintiff that while the developments related to IBC may not strictly fall within the ambit of a settlement under section 16 of the Court Fees Act, the court may consider extending the benefit looking at the peculiar facts of the matter.

It was submitted that the plaintiff would now have the solitary remedy of participating in proceedings to be instituted under IBC and take part in a collective settlement of claims.

Allowing the application, the court directed its Registry to take appropriate steps for refund of court fee to the plaintiff.

Plaintiff was represented by DSK Legal: Samir Malik (Partner); Mahip Singh (Principal Associate); Lakshay Mehta (Senior Associate) and Krishna Kumar (Associate).

Title: PROUD SECURITIES AND CREDITS PRIVATE LIMITED v. URRSHILA KERKAR & ANR.

Citation: 2023 LiveLaw (Del) 343

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