Court distinguishes between Sections 69 and 69-A of Tamil Nadu Court Fees Act, ruling no refund of court fees once evidence recording begins, and calls for Law Commission review
In a significant judgment delivered on October 30, 2026, the Madras High Court addressed the contentious issue of refund of court fees to plaintiffs following out-of-court settlements, particularly after the commencement of trial and recording of evidence. The division bench, presided over by Justice P.B. Balaji, resolved conflicting interpretations concerning Sections 69 and 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955.
The Court examined two civil revision petitions where plaintiffs sought refunds of court fees paid on plaints after the trial had begun. The petitioners relied heavily on the Supreme Court's decision in High Court of Judicature at Madras vs. M.C. Subramaniam (2021), which allowed full refund of court fees on out-of-court settlements even if they were private settlements not referred under Section 89 CPC (which mandates Alternative Dispute Resolution or ADR processes).
However, the Madras High Court, after extensive analysis, distinguished the scope and applicability of Sections 69 and 69-A of the Court Fees Act. The Court held that:
- Section 69 applies to suits dismissed as settled out of court before any evidence is recorded on the merits. It entitles the party to a refund of the court fees paid, which was originally half the amount but amended in 2017 to full refund, provided no evidence has been recorded.
- Section 69-A applies specifically to cases referred to ADR under Section 89 of the Code of Civil Procedure (CPC). It allows refund of court fees once the dispute is referred for settlement by ADR, even before settlement is reached.
The Court emphasized that the Supreme Court's decision in Afcons Infrastructure Ltd. vs. Cherian Varkey Construction Pvt Ltd (2010), which was not considered in M.C. Subramaniam, is the binding precedent on the stage at which ADR can be invoked and on entitlement to refunds. Afcons clarified that ADR referral under Section 89 CPC should ideally happen before framing issues and commencement of trial to avoid trial prolongation.
Since both cases before the Madras High Court had progressed beyond the framing of issues, with evidence recorded on both sides, the Court ruled that the parties were not entitled to refunds under Section 69-A. Instead, their claims had to be governed by Section 69. As evidence had already been recorded, no refund was legally due. The Court upheld the Trial Court's rejection of the refund claim in one case and the partial refund (50% less 5% administrative charges) in the other, noting the latter order was not challenged by the State.
The Court also underscored the legislative intent behind requiring court fees - to cover State expenditure on court infrastructure and judicial administration - and the necessity to prevent unwarranted refunds once substantial judicial work has been done.
Finally, the Court observed a legislative lacuna regarding Section 69-A, which currently grants refunds upon mere reference to ADR without clarity on what happens if ADR fails and the case returns to trial. The Court directed the Tamil Nadu Law Commission to consider restoring the earlier position where only a certificate for refund was issued, and the actual refund occurred only upon settlement, to safeguard the State exchequer.
The judgment also reiterated the binding nature of earlier Supreme Court precedents and stressed that conflicting coordinate bench decisions should be resolved by following the earlier binding ruling unless referred to a larger bench.
This ruling provides clarity on the refund of court fees in civil suits settled out of court after trial commencement, ensuring that parties cannot claim refunds once evidence recording begins unless settled through ADR before trial stages.
Bottom Line:
Tamil Nadu Court Fees and Suits Valuation Act, 1955 - Refund of court fee - Distinction between Sections 69 and 69-A - Where parties settle suit out of court after issues are framed and evidence/trial has commenced, plaintiff is not entitled to refund of court fee under Section 69-A - Such cases are governed by Section 69, and once evidence has been recorded on merits, no refund is permissible - Earlier Supreme Court decision in Afcons Infrastructure Ltd. to be followed on stage of reference under Section 89 CPC.
Statutory provision(s):
Tamil Nadu Court Fees and Suits Valuation Act, 1955 Sections 69, 69-A; Code of Civil Procedure, 1908 Section 89
Susheela Kawar v. M. Pettu Lakshmi, (Madras) : Law Finder Doc Id # 3007284
