Plaintiffs are entitled to a full refund of court fees under Section 16 of the Court Fees Act, 1870, even if a settlement is reached out-of-court without formally invoking the procedures under Section 89 of the CPC, to encourage amicable dispute resolution.

ORDER

1. The instant writ petition, filed under Article 227 of the Constitution of India, challenges the order dated 27.07.2015 passed by the Third Additional District Judge, Gwalior, in Civil Suit No.106-A/2014, only to the extent, that the prayer made by the petitioners seeking a refund of court fees has been declined.

2. Leaned counsel appearing for the petitioners submits that a suit for specific performance of a contract in respect of certain land was filed by the petitioners before the learned trial Court which was registered as Civil Suit No.106-A/2014. During the pendency of the civil suit, an out-of-court settlement was arrived at between the petitioners and the respondent. Accordingly, an application under Order 23 Rule 3 C.P.C. was filed by the parties before the learned trial Court, seeking disposal of the suit on the basis of the compromise entered into between them. He submits that learned trial Court, vide impugned order dated 27.07.2015, allowed the said application preferred by the parties and has passed the compromise decree (Annexure P/1) but the prayer made by the petitioners seeking a refund of court fees was rejected by the learned trial Court on the ground that since the suit was not being disposed in a Lok Adalat or under Section 89 C.P.C., the petitioners are not entitled for refund of court fees.

3. Learned counsel appearing for the petitioners submits that the issue is now well settled in a catena of cases by this Court as well as the Apex Court that even when out of court settlement is arrived at between the parties and the matter is disposed of by the Court on the basis of out of court settlement, then the plaintiff is entitled for refund of court fees but learned trial Court has erred in rejecting the said prayer made by the petitioners.

4. Since the issue of refund of court fees is involved, learned counsel appearing for the State present in court is also heard. Leaned counsel for the State submits that the order passed by the learned trial Court is just and proper and does not call for any interference.

5. Heard the learned counsel for the petitioners as well as the counsel for the State.

6. The Coordinate Bench of this Court, in the case Hariram Jat Vs. Rakesh Arya and Others , Miscellaneous Petition No.313/2025, vide order dated 29.01.2025 has held as under:

"This Court in Dayram vs. Smt. Laxmi Agrawal I.L.R. 2023 M.P.263 in which it has been categorically held that even if the matter is settled by the parties outside the Court without invoking the provisions of Section 89 of the CPC, the plaintiff while withdrawing the appeal is entitled to refund of full Court fees as provided under Section 16 of the Court Fees Act. Though the said decision is in respect of withdrawal of an appeal but the principle as laid down therein would be squarely applicable even in case where a plaint before the trial Court is withdrawn on the basis of a compromise having been arrived at between the parties out of Court. The relevant part of the said judgment is as under:

"3. Now the question arises as to whether this Court, in the aforesaid circumstances, can pass order for refund of court fees as provided under Section 16 of the Court Fees Act, 1870. Section 16 of the Court Fees Act, 1870 states as under:—

“16. Refund of fee - Where the court refers the parties to the suit to any one of the mode of settlement of dispute referred to in Section 89 of the Civil Procedure Code, 1908 the plaintiff shall be entitled to a certificate from the court authorising him to receive back