The court established that litigants have an inherent right to a refund of court fees when their application is disposed of as infructuous, despite the absence of an explicit statutory provision for such refund.

ORDER :

(Hemant Chandangoudar, J.)

The petitioners before this Court are seeking a writ in the nature of Certiorari to quash and set aside the order dated 08.08.2022 passed by the Debt Recovery Tribunal II, Bengaluru, dismissing the I.A. No. 2280/2022, in S.A. No. 277/2022 filed by the petitioners herein, seeking a refund of the court fees as deposited, on account of disposal of the main petition as infructuous. The petitioners seek an order granting a refund of INR 79,225/- (Rupees Seventy-nine Thousand and Two Hundred and Twenty-five Only), and in the alternative, seek to quash the order impugned herein, and remand the matter back to file of the DRT II, Bengaluru, for a time-bound reconsideration of the same.

2. The petitioner No.1 is a Class -1 Contractor (PWD) and had availed loan of an amount of INR 2,50,00,000/- (Rupees Two Crore and Fifty Lacs Only) vide sanction letter dated 30.03.2016, against the mortgage of several properties. The petitioner No.2 (wife of the petitioner No.1) had guaranteed the same as a surety. Thereafter, vide letter dated 23.09.2019 and Amendment Agreement to Rephase Payment dated 30.09.2019, the respondent No. 2 sanctioned another loan of INR 30,00,000/- (Rupees Thirty Lacs Only) and INR 6,50,000/-(Rupees Six Lacs and Fifty Thousand Only), respectively.

3. The petitioner contends that despite not having defaulted in the making of monthly payments for more than a continuous period of ninety (90) days, the Bank had issued a demand notice classifying the accounts of the petitioner No. 1 as a Non-Performing Asset (NPA). The petitioner further contends that despite repeated assurances, the Bank issued a notice dated 17.02.2022 under Section 13(4) of the SARFAESI Act, 2002 to take possession of the secured assets.

4. Thereafter, the Bank issued an E-Auction notice bearing no. OR/E-Auction/061/2022-23, dated 11.05.2022, which was physically served on the petitioner No.1 on 17.05.2022. Consequently, the petitioner No.1 issued a representation dated 27.05.2022 offering to pay an amount of INR 50,00,000/- (Rupees Fifty Lacs Only) in two installments on or before 30.06.2022, subject to the Bank not proceeding with the auction of the secured assets and that the remaining loan amount to be cleared over a period of time.

5. Apprehensive of a precipitative action when the Bank did not respond to the same, the petitioners made an application under Section 17 of the SARFAESI Act, 2002 before the DRT, Bengaluru in S.A. No. 277/2022, dated 08.06.2022, seeking quashing of the same. During the pendency of the said proceedings, the petitioners preferred an I.A. No 2280/2022 seeking disposal of the said proceedings as having become infructuous upon regularisation of the said loans, and thereby refund the entire court fees paid.

6. The DRT II, Bengaluru, vide order dated 08.08.2022 disposed of the main petition as having become infructuous in light of the settlement, evidenced by the no dues certificate issued by the Bank. However, it dismissed the interlocutory application insofar as the prayer for return of court fees was sought, on the grounds that there is no provision under the SARFAESI Act, 2002 for refund of the court fees.

7. Aggrieved by the same, the applicant-borrower has preferred the instant petition.

Submissions

8. Sri Sameer Sharma, representing the petitioners, argued that the impugned order denying a refund of court fees is unreasonable and contradicts decisions of this Court and other High Courts. He stated that litigants have a right to a refund of court fees when no final order is passed, especially when cases are settled before judgment. Court fees, he contended, are not akin to a mandatory tax when no formal adjudication occurs.

8.1. He further pointed out that Courts have previously held that a lack of explicit statutory provision does not bar courts from refunding fees. He cited a ruling of the High Court of Telangana (in the case of M/s. Progressive Aquatech Enterprises v. The Debt Recovery Tribunal II) w