2021 INSC 0258
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL) NOS. 3063­3064 OF 2021
  (DIARY NO. 3869­2021)
The High Court of Judicature at Madras 
Rep. by its Registrar General  ...Petitioner 
Versus
M.C. Subramaniam & ors. ...Respondents
J U D G M E N T
MOHAN M. SHANTANAGOUDAR, J. 
These special leave petitions arise out of common order and
judgement of the High Court of Madras (hereinafter, ‘High Court’)
dated   8.01.2020.   By   the   impugned   judgement,   the   High   Court
allowed   Civil   Miscellaneous   Petitions   Nos.   26742   &   26743   of
2019   filed   by   the   Respondent   No.1   herein   praying   for   refund   of
the   court   fees   deposited   by   him   in   Appeal   Suits   Nos.   876/2012
and 566/2013 filed by him before the High Court.
2. The facts leading to these petitions are as follows: Respondent
No.1   purchased   two   vehicles   from   Respondent   No.   2   vide   two

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separate   hire   purchase   agreements   (hereinafter,   ‘Agreement­I’
and   ‘Agreement­II’;   collectively,   ‘the   Agreements’)   dated
10.06.1996,   under   which   Respondent   No.1   was   the   principal
debtor/hirer, and Respondents Nos. 3 and 4 were the sureties to
the Agreements. As per the terms of the Agreements, Respondent
No.1   was   to   pay   a   sum   of   Rs.10,08,000/­   in   stipulated
instalments to Respondent No. 2 for each of the two vehicles.
3.   It   suffices   to   note   for   our   purposes   that   Respondent   No.   2
brought   Original   Suits   Nos.   66/2003   and   76/2003   against
Respondents   Nos.   1,   3   and   4   before   the   Additional   District
Munsif   Court,   Coimbatore   (hereinafter,   ‘Munsif   Court’)   and   the
Additional   District   and   Sessions   Court,   Coimbatore   (hereinafter,
‘District   Court’)   respectively.   In   the   two   suits,   Respondent   No.2
alleged   non­payment   of   Rs.6,64,000/­   and   Rs.5,97,200/­
towards   the   instalments   stipulated   in   Agreement­I   and
Agreement­II   respectively,   and   sought   recovery   of   the   balance
amounts   along   with   interest   thereon.   Both   the   Original   Suits
Nos.66/2003   and   76/2003   were   partly   decreed   by   the   Munsif
Court   and   District   Court,   by   judgments   dated   13.02.2004   and
31.01.2005 respectively.

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4.   Aggrieved,   Respondent   No.1   preferred   Appeal   Suits   Nos.
876/2012   and   566/2013   before   the   High   Court,   against   the
judgments   in   O.S.   No.   66/2003   and   O.S.   No.76/2013,
respectively.   While   the   appeals   were   still   pending   consideration
before   the   High   Court,   the   parties   entered   into   a   private   out­of­
court settlement, thus resolving the controversy between them. In
view   of   this,   Respondent   No.   1   filed   a   memo   before   the   High
Court,   seeking   permission   to   withdraw   Appeal   Suits   Nos.
876/2012   and   566/2013.   Such   permission,   along   with   a
direction   to   refund   the   court   fee   deposited   by   Respondent   No.1,
was granted by orders dated 16.09.2019 and 18.09.2019 in A.S.
Nos.566/2013 and A.S. Nos. 876/2012 respectively.  
5. Despite the above stated orders of the High Court, the Registry
orally refused Respondent No.1’s request for refund of court fees,
on the ground that such refund is not authorised by the relevant
rules.   Left   without   recourse,   on   25.12.2019,   Respondent   No.1
filed   Civil   Miscellaneous   Petitions   Nos.   26742/2019   and
26743/2019   under   Section   151,   Code   of   Civil   Procedure,   1908
(hereinafter,   ‘CPC’),   praying   for   refund   of   the   court   fees   paid   by
him  in A.S. Nos. 876/2012 and 566/2013 respectively, in terms
of the orders dated 18.09.2019 and 16.09.2019 therein. 

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6.   By   the   impugned   common   judgment   and   order   dated
8.01.2020,   the   High   Court   has   allowed   the   aforementioned   Civil
Miscellaneous   Petitions,   and   directed   the   Registry   to   refund   the
full court fee to Respondent No. 1 herein. 
7.  In   addressing   the   question   of   whether   the   refund   of   court  fee
was   permissible   under   the   relevant   rules,   the   High   Court
considered   Section  69­A   of   the  Tamil   Nadu  Court   Fees   and  Suit
Valuation   Act,   1955   (hereinafter,   ‘1955   Act’),   which   reads   as
follows: 
“ 69­A .   Refund   on   settlement   of   disputes   under
section   89   of   Code   of   Civil   Procedure .—Where   the
Court refers the parties to the suit to any of the modes
of settlement of dispute referred to in  section 89 of the
Code of Civil Procedure, 1908   (Central Act V of 1908),
the   fee   paid   shall   be   refunded   upon   such   reference.
Such   refund   need   not   await   for   settlement   of   the
dispute.” (emphasis supplied)
Considering, appeal suits to be continuation of original suits, and
therefore falling within the ambit of ‘suits’ as provided in Section
69­A, the Court went on to take notice of Section 89, CPC which
reads as follows: 
“ 89.   Settlement   of   disputes   outside   the   Court .—(1)
Where it appears to the Court that there existelements
of a settlement which may be acceptable to the parties,
the   Court  shall   formulate  the  terms  of  settlement  and
give them to the parties for their observations and after

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receiving   the   observations   of   the   parties,   the   Court
may reformulate the terms of a possible settlement and
refer the same for :—
(a) arbitration;
(b) conciliation;
(c)   judicial   settlement   including   settlement   through
Lok Adalat: or
(d) mediation.
(2) Were a dispute has been referred—
(a)  for  arbitration  or  conciliation,  the  provisions of  the
Arbitration   and   Conciliation   Act,1996   (26   of   1996)
shall   apply   as   if   the   proceedings   for   arbitration   or
conciliation   were   referred   for   settlement   under   the
provisions of that Act;
(b) to Lok Adalat, the Court shall refer the same to the
Lok   Adalat   in   accordance   with   the   provisionsof   sub­
section (1) of section 20 of the Legal Services Authority
Act, 1987 (39 of 1987) and all other provisions of that
Act shall apply in respect of the dispute so referred to
the Lok Adalat;
(c)   for   judicial   settlement,   the   Court   shall   refer   the
same   to   a   suitable   institution   or   person   and   such
institution   or   person   shall   be   deemed   to   be   a   Lok
Adalat   and   all   the   provisions   of   the   Legal   Services
Authority   Act,   1987   (39   of   1987)   shall   apply   as   if   the
dispute   were   referred   to   a   Lok   Adalat   under   the
provisions of that Act;
(d)   for   mediation,   the   Court   shall   effect   a   compromise
between the parties and shall follow such procedure as
may be prescribed.”

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8.   After   giving   due   consideration   to   the   above   provisions,   the
High  Court  held that, given their   beneficial  intent,  they  must be
interpreted   liberally,   in   a   manner   that   would   serve   their   object
and purpose. Construing them narrowly would lead to a situation
wherein   parties   who   settle   their   dispute   through   a   Mediation
Centre   or   other   centres   of   alternative   judicial   settlement   under
Section 89, CPC  would be entitled  to  claim  refund of their  court
fee, whilst parties who settle the disputes privately by themselves
will be left without any means to seek a refund. Accordingly, the
High   Court   opined   that   such   differential   treatment   between   two
similarly situated persons, would constitute a violation of Article
14   of   the   Constitution.   Therefore,   in   the   High   Court’s   view,   a
constitutional   interpretation   of   Section   89   of   the   CPC,   and
resultantly   Section   69­A   of   the   1955   Act,   would   require   that
these   provisions   cover   all   methods   of   out­of­court   dispute
settlement   between   parties   that   the   Court   subsequently   finds   to
have been legally arrived at. 
9.   Dissatisfied,   the   Petitioner   herein   has   challenged   the
impugned judgment of the High Court.

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10.   The   gravamen   of   the   Petitioner’s   contentions   is   that   Section
69­A   of   the   1955   Act   only   contemplates   refund   of   court   fees   in
those cases where the Court itself refers the parties to any of the
alternative dispute settlement mechanisms listed in Section 89 of
the CPC. That hence it does not apply to circumstances such as
in   the  present  case, where  the  parties, without   any   reference  by
the   Court,   privately   agreed   to   settle   their   dispute   outside   the
modes contemplated under Section 89 of the CPC. 
This Court’s Analysis
11.   Having   heard   the   petitioner   and   thoroughly   considered   the
arguments   advanced,   we   find   ourselves   unimpressed   by   the
Petitioner’s contentions, for reasons outlined below. 
12.   The   provisions   of   Section   89   of   CPC   must   be   understood   in
the backdrop of the longstanding proliferation of litigation in the
civil   courts,   which   has   placed   undue   burden   on   the   judicial
system, forcing  speedy  justice  to become a  casualty.  As the  Law
Commission   has   observed   in   its   238 th
  Report   on   Amendment   of
Section   89   of   the   Code   of   Civil   Procedure   1908   and   Allied

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Provisions ,  Section 89 has now made it incumbent on civil courts
to   strive   towards   diverting   civil   disputes   towards   alternative
dispute   resolution   processes,   and   encourage   their   settlement
outside   of   court   ( Para   2.3).   These   observations   make   the   object
and   purpose   of   Section   89   crystal   clear   –   to   facilitate   private
settlements,   and   enable   lightening   of   the   overcrowded   docket   of
the   Indian   judiciary.   This   purpose,   being   sacrosanct   and
imperative for the effecting of timely justice in Indian courts, also
informs  Section   69­A  of  the  1955  Act,  which  further   encourages
settlements by providing for refund of court fee. This overarching
and   beneficent   object   and   purpose   of   the   two   provisions   must,
therefore, inform this Court’s interpretation thereof. 
13.   Before   expounding   further   on   our   interpretation   of   the
aforesaid   provisions,   regard   must   be   had   to   the   following
postulation   of   this   Court’s   interpretive   role   in   Directorate   of
Enforcement  v.  Deepak Mahajan,  1994 3 SCC 440 – 
“ 24 …Though   the   function   of   the   Courts   is   only   to
expound   the   law   and   not   to   legislate,   nonetheless   the
legislature   cannot   be   asked   to   sit   to   resolve   the
difficulties   in   the   implementation   of   its   intention   and
the   spirit   of   the   law.   In   such   circumstances,   it   is   the

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duty   of   the   court   to   mould   or   creatively   interpret   the
legislation by liberally interpreting the statute .
25.   In   Maxwell   on   Interpretation   of   Statutes,   Tenth
Edn. at page 229, the following passage is found:
“ Where   the   language   of   a   statute,   in   its   ordinary
meaning   and   grammatical   construction,   leads   to   a
manifest   contradiction   of   the   apparent   purpose   of   the
enactment,   or   to   some   inconvenience   or   absurdity,
hardship   or   injustice,   presumably   not   intended,   a
construction   may   be   put   upon   it   which   modifies   the
meaning   of   the   words ,   and   even   the   structure   of   the
sentence. … Where the main object and intention of a
statute are clear, it must not be reduced to a nullity by
the  draftsman's unskilfulness or  ignorance of the law,
except   in   a   case   of   necessity,   or   the   absolute
intractability   of   the   language   used.”   (emphasis
supplied)
Therefore, it is well­settled that the Courts may, in order to
avoid   any   difficulty   or   injustice   resulting   from   inadvertent
ambiguity   in the language of  a  statute, mould  the interpretation
of the same so as to achieve the true purpose of the enactment.
This may  include expanding  the scope of the relevant provisions
to   cover   situations   which   are   not   strictly   encapsulated   in   the
language used therein. 

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14.   This   principle   of   statutory   interpretation   has   been   affirmed
more   recently   in   the   decision   in   Shailesh   Dhairyawan   v.
Mohan Balkrishna Lulla,  (2016) 3 SCC 619 – 
“33 .…Though   the   literal   rule   of   interpretation,   till
some   time   ago,   was   treated   as   the   “golden   rule”,   it   is
now   the   doctrine   of   purposive   interpretation   which   is
predominant,   particularly   in   those   cases   where   literal
interpretation   may   not   serve   the   purpose   or   may   lead
to   absurdity .   If   it   brings   about   an   end   which   is   at
variance   with   the   purpose   of   statute,   that   cannot   be
countenanced.” (emphasis supplied)
This   was   followed   in   the   subsequent   decision   of   this   Court   in
Anurag Mittal  v.  Shaily Mishra Mittal,  (2018) 9 SCC 691 . 
15.   In   light   of   these   established   principles   of   statutory
interpretation,   we   shall   now   proceed   to   advert   to   the   specific
provisions   that   are   the   subject   of   the   present   controversy.   The
narrow   interpretation   of   Section   89   of   CPC   and   Section   69­A   of
the   1955   Act  sought   to   be  imposed   by  the  Petitioner   would   lead
to   an   outcome   wherein   parties   who   are   referred   to   a   Mediation
Centre   or   other   centres   by   the   Court   will   be   entitled   to   a   full
refund   of   their   court   fee;   whilst   parties   who   similarly   save   the
Court’s   time   and   resources   by   privately   settling   their   dispute

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themselves   will   be   deprived   of   the   same   benefit,   simply   because
they did not require the Court’s interference to seek a settlement.
Such an interpretation, in our opinion, clearly leads to an absurd
and unjust outcome, where two classes of parties who are equally
facilitating the object and purpose of the aforesaid provisions are
treated differentially, with one class being deprived of the benefit
of   Section   69­A   of   the   1955   Act.   A   literal   or   technical
interpretation,   in   this   background,   would   only   lead   to   injustice
and   render   the   purpose   of   the   provisions   nugatory   –   and   thus,
needs to be departed from, in favour of a purposive interpretation
of the provisions. 
16.   It is pertinent to note that the view taken by the High Court
in the impugned judgement has been affirmed by the High Courts
in   other   states   as   well.   Reference   may   be   had   to   the   decision   of
the   Karnataka   High   Court   in   Kamalamma   &   ors.   v.   Honnali
Taluk   Agricultural   Produce   Co­operative   Marketing   Society
Ltd.,  (2010) 1 AIR Kar. R 279, wherein it was held as follows:
“6. Whether the parties to a suit or appeal or any other
proceeding   get   their   dispute   settled   amicably   through
Arbitration,   or   meditation   or   conciliation   in   the   Lok

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Adalath,   by   invoking   provisions   of   Section   89,   C.P.   C.
or   they   get   the   same   settled   between   themselves
without   the   intervention   of   any
Arbitrator/Mediator/Conciliators   in   Lokadalath   etc.,
and   without   invoking   the   provision   of   Section   89,
C.P.C.,   the   fact   remains   that   they   get   their   dispute
settled without the intervention of the Court. If they get
their dispute settled by invoking Section 89, C.P.C., in
that   event   the   State   may   have   to   incur   some
expenditure   but,   if   they   get   their   dispute   settled
between   themselves   without   the   intervention   of   the
Court or anyone else, such as arbitrator/mediator etc.,
the State would not be incurring any expenditure. This
being   so,  I  am   of  the  considered  opinion   that  whether
the   parties   to   a   litigation   get   their   dispute   settled   by
invoking   Section   89,   C.P.C.   or   they   get   the   same
settled   between   themselves   without   invoking   Section
89,   C.P.C.,   the   party   paying   Court­Fees   in   respect
thereof   should   be   entitled   to   the   refund   of   full   Court­
Fees   as   provided   under   Section   16   of   the   Court­Fees
Act, 1870.”
(emphasis supplied)
Section   16   of   the   Court­Fees   Act,   1870   is   in   parimateria
with   Section   69­A   of   the   1955   Act,   and   hence   the   above   stated
principles are equally applicable to the present case.
17. The   holding   in   Kamalamma   (supra)   has   been   followed   by
the   Punjab   &   Haryana   High   Court   in   Pradeep   Sonawat   v.
Satish   Prakash,   2015   (1)   RCR   Civil   955   and   Pritam   Singh   v.
Ashok   Kumar,   2019   (1)   Law   Herald   (P&H)   721,   which   in   turn

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were   further   affirmed   in   Raj   Kumar   v.   Gainda   Devi   through
LRs & ors.,  2019 SCC OnLine P&H 658. 
18.  The Delhi High Court has also taken a similar view in   J.K.
Forgings v. Essar Construction India Ltd. & Ors. , (2009) 113
DRJ 612:
“11.   The   laudable   object   sought   to   be   achieved   by
inserting   and   amending   these   sections   seems   to   be
speedy   disposal.   The   policy   behind   the   statute   is   to
reduce   the   No.   of   cases   by   settlement.   Section   89   of
C.P.C. and Section 16 Court Fee Act are welcome step
in  that  direction,  as the  No.  of cases has  increased, it
is the duty of court to encourage settlement . In present
scenario   of   huge   pendency   of   cases   in   the   courts   a
purposive   and   progressive   interpretation   is   the
requirement   of   present   hour.   The   intention   of   the
Legislature is primarily  to  be gathered from  the object
and   the   words   used   in   the   material   provisions.   The
statute must be interpreted in their plain grammatical
meaning.
12.   It is very clear that the Legislative intent of Section
16   of   Court   Fees   Act   was   made   broad  enough   to   take
cognizance of all situations in which parties arrive at a
settlement irrespective of the stage of the proceedings.
It   is   also   obvious   that   the   purpose   of   making   this
provision was in order to provide some sort of incentive
to   the   party   who   has   approached   the   court   to   resolve
the   dispute   amicably   and   obtain   a   full   refund   of   the
court   fees .   Having   regard   to   this   position,   the   present
application will have to be allowed.
14.   This   is   not   a   case   where   parties   to   the   suit   after
long drawn trial have come to the court for settlement.

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Had it been the case of long drawn trial non­refund of
court   fees   could   have   been   justified   but   in   such   like
cases   courts   endeavor   should   be   to   encourage   the
parties and court fees attached with the plaint should
be refunded as an incentive to them.
xxx
17.   Settlement of dispute only through any of the mode
prescribed   under   section   89   of   C.P.C   is   not   sine   qua
non   of   section   89   C.P.C.   rather   it   prescribes   few
methods   through   which   settlement   can   be   reached,
sine   qua   non   for   applicability   of   section   89   is
settlement   between   the   parties   outside   the   court
without the intervention of the courts .
18.   It   is   also   not   the   requirement   of   the   section   that
court   must   always   refer   the   parties   to   Dispute
Resolution   Forum.   If   parties   have   arrived   at   out   of
court   settlement   it   should   be   welcomed   subject   to
principles of equity .
19.   Court   Fees   Act   is   a   taxing   statute   and   has   to   be
construed   strictly   and   benefit   of   any   ambiguity   if   any
has   to   go  in   favour  of   the   party  and   not  to  the   state.”
(emphasis supplied)
The   view   taken   in   both   Kamalamma   (supra)   and   J.K.
Forgings  (supra) has been subsequently relied upon by the Delhi
High Court in  Inderjeet Kaur Raina v. Harvinder Kaur Anand ,
2018 SCC OnLine Del 6557. 

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19. We find ourselves in agreement with the approach taken by
the   High   Courts   in   the   decisions   stated   supra.   The   purpose   of
Section   69­A   is   to   reward   parties   who   have   chosen   to   withdraw
their litigations in favour of more conciliatory dispute settlement
mechanisms, thus saving the time and resources of the Court, by
enabling   them   to   claim   refund   of   the   court   fees   deposited   by
them. Such refund of court fee, though it may not be connected
to   the   substance   of   the   dispute   between   the   parties,   is   certainly
an   ancillary   economic   incentive   for   pushing   them   towards
exploring   alternative   methods   of   dispute   settlement.   As   the
Karnataka   High   Court   has   rightly   observed   in   Kamalamma
(supra),  parties  who   have  agreed to   settle  their  disputes  without
requiring   judicial   intervention   under   Section   89,   CPC   are   even
more   deserving   of   this   benefit.   This   is   because   by   choosing   to
resolve their claims themselves, they have saved the State of the
logistical hassle of arranging for a third­party institution to settle
the   dispute.   Though   arbitration   and   mediation   are   certainly
salutary   dispute   resolution   mechanisms,   we   also   find   that   the
importance   of   private   amicable   negotiation   between   the   parties
cannot be understated. In our view, there is no justifiable reason
why   Section  69­A should only  incentivize  the  methods of  out­of­

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court   settlement   stated   in   Section   89,   CPC   and   afford   step­
brotherly treatment to other methods availed of by the parties. 
Admittedly,   there   may   be   situations   wherein   the   parties
have  after   the   course   of   a   long­drawn   trial,   or  multiple   frivolous
litigations, approached  the Court  seeking  refund of court fees in
the   guise   of   having   settled   their   disputes.   In   such   cases,   the
Court  may, having   regard  to  the previous conduct  of  the  parties
and   the   principles   of   equity,   refuse   to   grant   relief   under   the
relevant   rules   pertaining   to   court   fees.   However,   we   do   not   find
the present case as being of such nature. 
20. Thus,   even   though   a   strict   construction   of   the   terms   of
Section   89,   CPC   and   69­A   of   the   1955   Act   may   not   encompass
such   private   negotiations   and   settlements   between   the   parties,
we   emphasize   that   the   participants   in   such   settlements   will   be
entitled to the same benefits as those who have been referred to
explore   alternate   dispute   settlement   methods   under   Section   89,
CPC. Indeed, we find it puzzling that the Petitioner should be so
vehemently   opposed   to   granting   such   benefit.   Though   the
Registry/State Government will be losing a one­time court fee in

17
the   short   term,   they   will   be   saved   the   expense   and   opportunity
cost of managing an endless cycle of litigation in the long term. It
is therefore in their own interest to allow the Respondent No. 1’s
claim. 
21. Thus,   in   our   view,   the   High   Court   was   correct   in   holding
that Section 89 of the CPC  and Section 69­A of the 1955 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   69­A   of   the   1955
Act   shall   also   extend   to,   all   methods   of   out­of­court   dispute
settlement   between   parties   that   the   Court   subsequently   finds   to
have been legally  arrived at. This would, thus, cover the present
controversy,   wherein   a   private   settlement   was   arrived   at,   and   a
memo to withdraw the appeal was filed before the High Court. In
such a case as well, the appellant, i.e., Respondent No. 1 herein
would be entitled to refund of court fee. 
Conclusions and Directions

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22. These petitions are accordingly dismissed, and the impugned
judgment of the High Court dated 8.01.2020 is upheld. 
23. The petitioners are directed to refund the court fee deposited
by Respondent No. 1 for Appeal Suits Nos. 876 of 2012 and 566
of 2013, within a period of six weeks. 
................................................J.
(MOHAN M. SHANTANAGOUDAR) 
...............................................J.
(VINEET SARAN)
NEW DELHI
FEBRUARY 17, 2021