On Friday, the Supreme Court in yet another judgement established the importance of private amicable negotiation between parties and held that it cannot be understated.

The Court in an effort to promote private settlement pronounced a judgement and sought to establish that when a case is filed in the court and during the pendency of such litigation, the disputing parties settle their dispute privately using the alternative dispute settlement modes under Section 89 of the Code of Civil Procedure (CPC), then the court fee paid by them at the time of filing the case will be returned.

The parties will be entitled to the same benefits as those who have been referred to explore alternative dispute resolution methods by the court. The point of difference is that the parties who on their own behest try to resolve the dispute through an alternative means should have the benefit of the refund of the court fees similarly to those who use alternative dispute resolution mode when the court directs them to.

The judgement was pronounced by a bench comprising of Justice Mohan M. Shantanagoudar and Vineet Saran. The case was related to Section 89 of CPC and Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955. The administrative side of the Madras High Court had approached Supreme Court and contended that law provided only for refund of court fees when the court itself refer the parties to any alternative settlements method listed under section 89 of CPC. The same will not be applicable when the parties file a case in the court and during its pendency resolve their dispute privately under section 89 of CPC without being directed to do so by the court.

The bench stated that this contention leads to an unjust outcome. The Court fees is refunded to the party when they settle the dispute privately upon direction of the court in the light that the court’s time and resources were not utilised and by settling privately and the court’s resources were saved. The same benefit should also be accorded to the parties who make an attempt to resolve the dispute privately and succeed at it as they did not utilise the resources of the court and saved them instead. There cannot be different treatment for two classes of parties who were equally facilitating the object and purpose of section 89 of CPC.

The Court opted for a liberal interpretation of the the provisions mentioned above instead of the literal interpretation that the the administrative side of the Madras High Court contended.

The Court did throw caution on the fact that in cases where the parties try settling the dispute privately after a long drawn trials or multiple frivolous litigation then such a refund of the court fee will not be applicable. The court stated that “In such cases, the court may, having regard to the previous conduct of the parties and the principles of equity, refused to grant relief under the relevant rules pertaining to court fees.”