IMPORTANT POINT
Alternate Dispute Resolution (ADR) – Refund of court fees – Section 89 CPC nowhere correlates settlement of disputes by alternate mechanisms to amount of money that may be saved by parties in so far as court fee is concerned.

JUDGMENT :

SANJAY KAROL, J.

Leave granted.

THE CHALLENGE

2. This appeal questions the correctness of the judgment and order dated 1st October, 2014 passed by the High Court of Judicature at Bombay (Aurangabad Bench) between the self-same parties, whereby the High Court refused the prayer of the appellant herein seeking -

(a) a writ, order, order or direction to the State of Maharashtra to initiate a complete refund of court fees of all litigants including the appellant whose proceedings before the Civil Courts were disposed of in accordance with Section 89 of the Code of Civil Procedure 1908¹[Hereinafter ‘CPC’];

(b) quashing of notification dated 8th May, 2013 issued by the Law and Judiciary Department, Government of Maharashtra bearing No. HCA.2010/C.R 87/D19²[Hereafter, “the impugned notification”] as contrary to the provisions of the Court Fees Act, 1870³[CFA, 1870] read with certain provisions of the Legal Services Authorities Act, 1987⁴[LSA Act, 1987];

(c) a declaration to the effect that Respondent No.2 i.e. State of Maharashtra had no authority in law to issue a notification contrary to the provisions of the CFA, 1870; and

(d) that all such notifications and rules running contrary thereto be quashed and set aside.

THE FACTUAL AND LEGAL BACKGROUND

3. The factual background which led the appellant to prefer the writ petition before the High Court was that he had entered into an agreement to sell a certain property located at Aurangabad. However, the said Agreement could not be performed and as such, he preferred Special Civil Suit No.274 of 2013 before the Court of the Civil Judge, Senior Division, Aurangabad, praying for a direction of specific performance of the contract. The dispute was referred to mediation under Section 89 CPC and, amicably resolved. The terms of settlement were presented to the Court and the Civil Suit was disposed of in terms of the said compromise. A request for refund of court fees was allowed only to the extent of 50%.

3.1 The appellant contended before the High Court that the learned Civil Court fell in error by allowing refund only to the extent of 50% in view Section 16 of the CFA, 1870. It was further contended that as per Section 21 of the LSA Act,1987 when a matter is referred to Lok Adalat under Section 20(1) of the said Act and a compromise or settlement is arrived at therein, the Court Fee paid in such a matter shall also be refunded in accordance with CFA, 1870. Still further it was argued that the said Act being a Central legislation, would override the State enactment.

3.2 The High Court’s observations can be summarized thus:-

(a) The CFA, 1870 is a pre-constitutional enactment which no longer applies to the State of Maharashtra after the enactment of the Bombay Court Fees Act, 1959⁵[Hereinafter, BCFA, 1959.]. In reaching this conclusion, reliance was placed on a judgment of a co-ordinate bench in Pushpabai Shankerlal Sura v. The Official Liquidator, Sholapur Oil Mills Ltd., 1968 SCC OnLine Bom 62.

(b) The use of CFA, 1870 in LSA, 1987 is a case of “legislation by incorporation”, the same analogy cannot be applied to the orders passed by courts on settlement of disputes. Decrees passed by courts on the basis of settlement cannot be equated to awards passed by Lok Adalat. Since the BCFA, 1959 would be applicable, no error can be found in the State issuing a notification under Section 43(2) thereof.

3.3 Disposing of the writ petition, the Court made the following observations:

“16. While disposing of the writ petition, we deem it appropriate to recommend the State Government to issue necessary notification or to bring out necessary amendment incorporating provision in respect of refund of Court fees to the extent of 100% in respect of the matters which are disposed of by the Courts on adaptation of any of the modes prescribed under section 89 of the Code of Civil Procedure, 1908. Such a step would be in consonance with the directives issued by the Supreme Court in Salem Advocates Bar Association v. U