Party Can't Claim Refund Of Court Fee If Dispute Not Settled After Being Referred To Arbitration: Kerala High Court

The Kerala High Court has recently held that mere reference of a party for settlement under Section 89 of the Code of Civil Procedure would not entitle refund of court fee as provided under Section 69A of the Kerala Court Fees and Suits Valuation Act, unless it has been settled between the parties. 

Justice A. Badharudeen held that although settlement of disputes dealt under Section 89 of CPC includes `arbitration' as well, a party is not entitled to get a refund of the court fee merely because they were referred to arbitration under Section 69 of the Act.

"Section 69A of the Act makes the position without any iota of doubt that refund of court fee is provided only when a court proceeding is settled by recourse to Section 89 of C.P.C and refund is not permissible on the mere reference of parties. Thus it is clear that mere reference of parties by different modes of settlement provided under Section 89 of C.P.C is not sufficient to refund the entire court fee paid as contended, and the statutory mandate is settlement of the dispute by recourse to Section 89 of C.P.C."

The petitioner was the plaintiff in a suit before the Additional Sub Court. He approached the High Court seeking modification of the Sub Judge's order referring the parties for arbitration after closing the suit, without an order for a refund of 1/10th court fee paid by him in the suit.

Advocates Shibu Joseph and Ajith Viswanathan appearing for the petitioner argued that he had paid 1/10 court fee at the time of institution of the suit and that since the parties were referred to arbitration, he is entitled to get a return of the same. It was submitted that there is no direct provision in the Act enabling the return of 1/10 court fee paid but emphasis was laid on Section 69A of the Act to canvass this refund, apart from Section 89 of CPC. The petitioner added that there was no decision on this point. 

The Court noted that a plain reading of Section 69A would make it clear that when a proceeding before any court is settled by recourse to Section 89 of C.P.C, the whole court fee paid shall be refunded except in interlocutory matters. Thus it was clear that Section 69A of the Act would come into play only when the case is settled by recourse to Section 89 of C.P.C.

Further, the proviso to Section 69 states that no refund shall be ordered where only one-tenth of the amount of fee on plaint has been paid by the parties. 

The petitioner had also relied on Manilal Panicker S. v. Titto Abraham to contend that where a compromise or settlement has been arrived at the Lok Adalat in a case referred to it, the entire court fee paid shall be refunded in the manner provided under Central Court Fees Act. However, the Court pointed out that it has been held specifically that the right to refund the court fee, by virtue of Section 21 of Legal Services Authorities Act would accrue only on settlement or compromise.

"Be it so, it cannot be said that mere reference of parties for arbitration or other modes of settlement provided under Section 89 of C.P.C by itself is sufficient to refund the court fee paid by the parties, either in full or 1/10 or 1/3, as the case may be. There shall be a settlement in view of the reference and in such cases alone refund provided under Section 69A of the Kerala Court Fees and Suits Valuation Act can be resorted to."

The Judge noted that the petitioner had not produced any materials to substantiate the fact that on reference to arbitration, the dispute was settled. Therefore, the petition was dismissed, finding no fault with the order of the Munsiff in any manner. 

Case Title: K.K Ibrahim v. Cochin Kaagaz 

Citation: 2022 LiveLaw (Ker) 275

Click Here To Read/Download The Order