Parties Entitled to Full Court Fee Refund on Private Out-of-Court Settlements Leading to Appeal Withdrawal: Punjab & Haryana High Court Cites SC Precedent (S.16 Court Fees Act & S.89 CPC) - 2025-05-22

Punjab & Haryana High Court Orders Court Fee Refund on Appeal Withdrawn After Private Settlement, Cites Supreme Court Precedent

Chandigarh: The High Court of Punjab and Haryana, in a significant ruling, has reiterated that parties who arrive at an out-of-court settlement and consequently withdraw their appeal are entitled to a full refund of the court fees. Justice Pooja Sharma , presiding over the case of Sonia Goyal vs. Chiman Lal (RSA 1598 / 2023) , allowed an application for the refund, heavily relying on the Supreme Court's liberal interpretation of relevant legal provisions aimed at promoting alternative dispute resolution.

Case Background and Withdrawal of Appeal

The matter before the High Court was a Regular Second Appeal (RSA) filed by Sonia Goyal against Chiman Lal . During the pendency of the appeal, the parties reached a compromise, settling their dispute privately. Consequently, an application was filed for the withdrawal of the appeal, which the Court allowed. Subsequently, the appellant, Sonia Goyal , filed another application seeking a refund of the court fees paid for the appeal.

The Legal Question: Refund of Court Fees on Private Settlements

The central issue was whether a refund of court fees is permissible under Section 16 of the Court Fees Act, 1870, read with Section 89 of the Code of Civil Procedure, 1908 (CPC), when a dispute is settled privately between the parties, rather than through one of the specific Alternative Dispute Resolution Mechanisms (ADRMs) enumerated in Section 89 CPC (like arbitration, conciliation, mediation, or judicial settlement including settlement through Lok Adalat).

High Court Relies on Supreme Court's Liberal Interpretation

Justice Pooja Sharma extensively referred to the Supreme Court's judgment in The High Court of Judicature at Madras Rep. by its Registrar General vs. M.C. Subramaniam (2021 (3) RCR (Civil) 759) . In that case, the Supreme Court had addressed the same issue and advocated for a broad and purposive interpretation of Section 89 CPC and Section 16 of the Court Fees Act.

The High Court quoted the Supreme Court's observations, which emphasized:

> "Parties who have agreed to settle their disputes without requiring judicial intervention under Section 89 CPC or are even more deserving of this benefit. This is because by choosing to resolve their claims by themselves, they have saved the State of the logistical hassle of arranging for a third party institution to settle the dispute."

The Supreme Court, in M.C. Subramaniam , further clarified that the intention behind these provisions is to encourage out-of-court settlements, which save precious judicial time and resources. The apex court held:

> "Thus, in our view, the High Court was correct in holding that Section 89 of the CPC and Section 16 of the Court-fees Act be interpreted liberally. In view of this broad purposive construction, we affirm the High Court’s conclusion, and hold that Section 89 of CPC shall cover, and the benefit of Section 16 of the Court-fees Act shall also extend to, all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at."

The Supreme Court concluded that this liberal interpretation would cover private settlements where a memo to withdraw an appeal is filed, entitling the appellant to a refund of court fees.

Decision and Implications

Following the clear precedent set by the Supreme Court, Justice Pooja Sharma of the Punjab and Haryana High Court, in the order dated October 9, 2023, allowed the application. The Court directed that the court fee affixed on the appeal be refunded to the appellant, Sonia Goyal . The main appeal (RSA 1598 / 2023) was formally dismissed as withdrawn due to the compromise reached between the parties.

This ruling reinforces the judiciary's stance on promoting alternative dispute resolution by providing financial incentives like the refund of court fees. It clarifies that the benefit of such refunds extends even to parties who proactively settle their disputes privately, thereby reducing the burden on the courts.

Counsels in the Case: * Mr. Sanjeev Kumar Arora, Advocate for the Appellant ( Sonia Goyal ) * Mr. Varinder Kumar, Advocate for the Respondent ( Chiman Lal )