Bindu Balakrishna Patali Vs Smartowner Services India Private Limited

BINDU BALAKRISHNA PATALI AGED ABOUT 52 YEARS WIFE OF KARLIA BALAKRISHNA PATALI RESIDING AT NO.16-23, HILLVIEW REGENCY 28, BUKIT BATOK EAST AVENUE 2 SINGAPORE - 659 921 REPRESENTED BY HER POWER OF ATTORNEY HOLDER MR. KARLIA BALAKRISHNA PATALI E: [email protected]

¶11

…PETITIONER

¶12

(BY SRI KASHYAP N.NAIK, ADVOCATE)

¶13

AND:

¶14

Digitally signed by NAGAVENI Location: High Court of Karnataka

¶15

SMARTOWNER SERVICES INDIA PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT DELTA BLOCK, 8^TH FLOOR, SIGMA TECH PARK WHITEFIELD ROAD BENGALURU - 560 066 REPRESENTED BY ITS DIRECTOR VINAY E: [email protected] [email protected].

¶16

2 -

¶17

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶18

HC-KAR

¶19

PINEHILL PROPERTIES PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 2013 HAVING ITS REGISTERED OFFICE AT LEVEL 3 AND 4, EMBASSY DIAMANTE NO. 34, VITTAL MALLYA ROAD BENGALURU - 560 001 REPRESENTED BY ITS DIRECTOR ACHYUTA ASHOK IYENGAR E: [email protected] (AS PER MCA RECORDS)

¶20

CANYON PROPERTIES PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 2013 HAVING ITS REGISTERED OFFICE AT DELTA BLOCK, 8^TH FLOOR SIGMA TECH PARK WHITEFIELD ROAD BENGALURU - 560 066 REPRESENTED BY ITS DIRECTOR, VINAY E: [email protected]

¶21

IMPERIAL DWELLINGS PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 2013 HAVING ITS REGISTERED OFFICE AT LEVEL 3 AND 4, EMBASSY DIAMANTE NO. 34, VITTAL MALLYA ROAD BENGALURU - 560 001 REPRESENTED BY ITS DIRECTOR ACHYUTA ASHOK IYENGAR E: [email protected]

¶22

…RESPONDENTS

¶23

THIS WP IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECTION TO PARTLY

¶24

3 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶25

HC-KAR

¶26

SET ASIDE THE ORDER DATED 03.09.2024 PASSED BY LD. LXXXIX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT DIVISION, AT BENGALURU IN COM. O.S. 150/2024 (ANNEXURE -A) AND ALLOW THE INTERLOCUTORY APPLICATION FILED BY THE PETITIONER SEEKING REFUND OF THE COURT FEE DEPOSITED AT THE TIME OF FILING, UNDER SECTION 151 OF CIVIL PROCEDURE CODE, 1908 (ANNEXUREF).

¶27

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

¶28

CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA

¶29

ORAL ORDER

¶30

The petitioner/plaintiff is at the doors of this Court calling in question an order dated 03-09-2024 passed by the LXXXIX Additional City Civil and Sessions Judge, Commercial Court, Bengaluru rejecting an application filed by the plaintiff under Order XXIII Rule 1(3) of the Code of Civil Procedure in Commercial O.S.No.150 of 2024 seeking refund of Court fee deposited at the time of filing the commercial original suit.

¶31

Heard Sri Kashyap N.Naik, learned counsel appearing for the petitioner.

¶32

4 -

¶33

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶34

HC-KAR

¶35

Facts, in brief, germane are as follows:-

¶36

The 1^st respondent approaches the petitioner and her

¶37

husband soliciting investment for their ‘Centure Enessen Hillview’ project with assured return of some amount in two years. An agreement is entered into between the parties. Dispute arose between the two, when the 1^st respondent allegedly stopped making payments to the petitioner. The petitioner then institutes Commercial O.S.No.150 of 2024. After institution of Commercial O.S., the 1^st respondent files an application under Section 8 of the Arbitration and Conciliation Act, 1996 (‘the Act’ for short) for referring the dispute for arbitration. The other respondents in the commercial original suit gave their consent to refer the matter for arbitration. The petitioner then files an application under Order XXIII Rule 1(3) of the CPC seeking to withdraw the commercial suit on the said fact of all the parties seeking to refer the matter for arbitration. The petitioner on the same day, filed an application for refund of Court fee, since the matter was referred to arbitration. The concerned Court refused the claim of the petitioner seeking refund of the Court fee. It is, therefore, the petitioner is before this Court in the subject petition.

¶38

5 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶39

HC-KAR

¶40

The learned counsel appearing for the petitioner

¶41

submits that when all the parties seek reference of the matter to arbitration under Section 8 of the Act, which would be before determination of the suit, the parties are referred to arbitration. Therefore, the Court fee that had been paid while instituting the original suit was to be refunded, as law permits refund. He would submit that the concerned Court misconstruing the provisions of law, rejects the application on the ground that the petitioner/plaintiff is at liberty to approach the Arbitrator seeking refund of the Court fee paid. He would, thus, seek refund of Court fee.

¶42

The afore-narrated facts are not in dispute. The issue lies in a narrow compass. The issue that falls for consideration is:

¶43

“Whether in a commercial original suit when an application filed under Section 8 of the Act is allowed and on consent of parties the matter is referred to arbitration, the Court fee paid while instituting the suit would become refundable or otherwise?

¶44

6 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶45

HC-KAR

¶46

It is necessary to notice the statutory provisions

¶47

concerning refund of Court fee. Refund of Court fee is governed by the Court Fees Act, 1870. Section 16 of the said Act reads as follows:

¶48

“ 16. Refund of fe e .—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 Code of Civil Procedure, 1908 the plaintiff shall be entitled to a certificate from the court authorizing him to receive back from the Collector, the full amount of the fee paid in respect of such plaint.”

¶49

Section 16 mandates where the Court refers the parties to the suit to any of the mode of settlement of dispute referred to in Section 89 of the CPC, the plaintiff would be entitled to a certificate from the Court authorizing him to receive back full amount of fee paid in respect of such plaint. Section 16 does not speak of settlement of dispute. It speaks of reference of parties to any one of the modes of settlement. The said section

¶50

speaks of Section 89 of the CPC. Therefore, it becomes necessary to notice Section 89 of the CPC. It reads as follows:

¶51

“ 89. Settlement of disputes outside the Court .—Where it appears to the Court that the dispute between the parties may be settled and there exists elements of settlement which may be acceptable to the parties, the Court may—

¶52

7 -

¶53

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶54

HC-KAR

¶55

( a ) refer the dispute to arbitration, and thereafter, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration were referred for settlement under the provisions of that Act; or

¶56

( b ) refer the parties to mediation, to the court-annexed mediation centre or any other mediation service provider or any mediator, as per the option of the parties, and thereafter the provisions of the Mediation Act, 2023 shall apply as if the proceedings for mediation were referred for settlement under the provisions of that Act; or

¶57

( c ) refer the dispute to Lok Adalat, in accordance with the provisions of sub-section (1) of Section 20 of the Legal Services Authorities Act, 1987 (39 of 1987) and thereafter, all other provisions of that Act shall apply in respect of the dispute;

¶58

( d ) effect compromise between the parties and shall follow such procedure as deemed fit for judicial settlement.”

¶59

Section 89 deals with settlement of disputes outside the Court. When the Court feels that the dispute between the parties may be settled and there exists an element of settlement, it may refer the dispute to arbitration and thereafter the provisions of the Act would apply; refer the parties to mediation under the Mediation Act, 2023 or refer the matter to Lok Adalat where the provisions of Legal Services Authorities Act, 1987 would apply, all of which to effect compromise between the parties, by following such procedure as deem fit for judicial settlement. Section 89 CPC clearly mandates reference of the dispute to

¶60

8 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶61

HC-KAR

¶62

arbitration. Section 16 of the Court Fees Act supra entitles the plaintiff refund of Court fee, if the matter is referred to any one of the modes of settlement under Section 89 CPC. Therefore, if the two provisions are read in tandem, any person who seeks the suit instituted to be referred to arbitration and arbitration being one of the modes of settlement, he would be entitled to refund of Court fee.

¶63

The subject suit is now referred to arbitration under

¶64

Section 8 of the Act.

¶65

Section 8 reads as follows:

¶66

“ 8. Power to refer parties to arbitration where there is an arbitration agreement .—(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

¶67

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

¶68

Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under subsection (1), and the said agreement or certified copy is

¶69

9 -

¶70

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶71

HC-KAR

¶72

retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.

¶73

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.”

¶74

Section 8 deals with the power to refer parties to arbitration

¶75

where there is an arbitration agreement. It is an admitted fact in the case at hand that there is arbitration clause in the agreement between the parties. Therefore, there is an arbitration agreement. The matter, by consent of parties, is now referred to arbitration. The other provision of law is Karnataka Court Fee and Suits Valuation Act, 1958. Section 66 of the said Act deals with refund of Court fee on certain circumstances. It reads as follows:

¶76

“ 66 . Refund on settlement before hearing .- (1) Where the Court refers the parties to the suit to any one of the modes of settlement of dispute referred to in section 89 of the Code of Civil Procedure, 1908 and the dispute is settled, hundred percent of the amount of Court fee paid in respect of the claim or claims in the suits shall be ordered by the Court to be refunded to the parties by whom the same have been respectively paid.

¶77

(2) In cases not covered by sub-section (1); Whenever by agreement of parties,-

¶78

10 -

¶79

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶80

HC-KAR

¶81

(a) any suit is dismissed as settled out of Court before any evidence has been recorded on the merits of the claim; or

¶82

(b) any suit is compromised ending in a compromise decree before any evidence has been recorded on the merits of the claim; or

¶83

(c) any appeal is disposed of before the commencement of hearing of such appeal;

¶84

[hundred percent] of the amount of court fee paid in respect of the claim or claims in the suit or appeal shall be ordered by the court to be refunded to the parties who have paid such fee.]”

¶85

Section 66 also provides that when the Court refers the parties

¶86

to the suit to any of the modes of settlement of dispute referred to Section 89 of the CPC and the dispute is settled, 100% of the amount will be refunded.

¶87

If all the aforesaid provisions of law quoted hereinabove are juxtaposed and read in tandem, the unmistakable inference would be that the petitioner/plaintiff would be entitled to complete refund of Court fee. On a coalesce of the afore-quoted statutory provision, the issue is, whether the petitioner would be entitled to refund of complete Court fee. It therefore, becomes necessary, to consider the judicial canvass concerning the issue.

¶88

11 -

¶89

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶90

HC-KAR

¶91

The High Court of Madras in the case of TIDEL PARK

¶92

LIMITED v. ARKAY ENERGY (RAMESWARM) LIMITED¹

¶93

considering the interplay between Section 16 of the Court Fees Act and Section 69A of the Tamil Nadu Court Fees Act, which is in parimateria with the Court Fees Act quoted hereinabove, has held as follows:

¶94

“2 . Vide separate proceedings in the main Suit today (26.2.2018) and an order in Application No. 1101 of 2018 (Amendment Application), Plaint prayers contained in sub-paragraphs 'a' to 'c' have been given up in the light of a reference to Arbitration made in a Section 8-Application being Application No. 4804 of 2011 by an Order dated 17.1.2013 made by a learned Single Judge of this Court. I am informed that the Order of the learned Single Judge was carried in Appeal by way of an Intra-Court Appeal in O.S.A. No. 313 of 2013 and by an Order dated 8.2.2017, the aforesaid Appeal was dismissed confirming the Order of the learned Single Judge. In other words, there is a reference to Arbitration as far as Plaint prayers 'a', 'b' & 'c' are concerned. In such circumstances, refund of Court-fee paid on the Plaint with regard to subparagraphs 'a', 'b' & 'c' alone are sought for by the Plaintiff. In sum and substance, this is the prayer in this Application. In this regard, I deem it appropriate to extract the Memo of Valuation Paragraph in the Plaint, which is in Tabular Column form. The same reads as follows:

¶95

Sl. No.	Descrip Claim	tion	of	Amount(`)	C.F. Paid(`)
1	Prayer being Discoun	(a) clai t	& (b) m for	`4,85,32,773	`4,88,853
2	Prayer claim	(d)	being for	`77,79,945	`81,325

¶96

1 MANU/TN/2457/2018

¶97

12 -

¶98

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶99

HC-KAR

¶100

	guaranteed interest
3	?5Prayer (f) being declaration by a Preliminary Decree	`1000	`75
4	Prayer (g) being claim for minimum value of shares	`90,00,000	`93,525
	Total	`6,53,13,718	`6,63,778

¶101

3. To be precise, there is a prayer for refund of ' 4,85,32,773, being the Court-fee paid qua subparagraphs 'a' & 'b' of Prayer Paragraphs, which have now been deleted from the Plaint as the same are in seizin by an Arbitral Tribunal. To be noted, sub-paragraph 'c' of Plaint Prayer Paragraph pertains to future Interest and therefore, does not find place in the extracted tabulation supra.

¶102

4 . Mr. Anirudh Krishnan, learned Counsel appearing for the Defendants, while not opposing the request for refund, submitted that it is necessary to bring to the notice of this Commercial Division the obtaining position of law qua recent amendments to the Tamil Nadu Court Fees and Suits Valuation Act, 1955 (hereinafter referred to as 'Court Fees Act' for brevity).

¶103

5. Learned Counsel drew my attention to amended Section 69-A of the Court Fees Act, which reads as follows:

¶104

"69-A. Refund on Settlement of disputes under Section 69 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."

¶105

6 . Mr. Anirudh Krishnan also points out that this Amendment to the Court Fees Act found its way into the Statute only on 1.3.2017. It is clear from the narrative supra that the reference to the Arbitration was made by a learned Single Judge on 17.1.2013 and confirmed by a Division Bench on 8.2.2017, both of which are prior to the

¶106

13 -

¶107

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶108

HC-KAR

¶109

Amendment on 1.3.2017. In this view of the matter learned Counsel for Defendants brought to the notice of the Court that there may be some doubt as to whether the Plaintiff is entitled to refund of Court-fee as prayed for in this Application.

¶110

7. For examination of this aspect of the matter in the light of the language of 69-A of Court Fees Act, it is necessary to extract Section 89 of the Code of Civil Procedure, 1908 ('C.P.C.' for brevity). Section 89, C.P.C. reads as follows:

¶111

"89. Settlement of disputes outside the Court.(1) Where it appears to the Court that there exist elements 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 receiving the observation of the parties, the Court may reformulate the terms of a possible Settlement and refer the same for-

¶112

(a) Arbitration;

¶113

(b) Conciliation

¶114

(c) Judicial Settlement including settlement through Lok Adalat; or

¶115

(d) Mediation.

¶116

(2) Where a dispute had been referred-

¶117

(a) for Arbitration or Conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for Arbitration or Conciliation were referred for Settlement under the provisions of that Act.

¶118

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of Section 20 of the Legal Services Authority Act, 1987 and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

¶119

(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 shall apply as if

¶120

14 -

¶121

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶122

HC-KAR

¶123

the dispute were referred to a Lok Adalat under the provisions of that Act;

¶124

(d) for mediation, the Court shall effect a Compromise between the parties and shall follow such procedure as may be prescribed."

¶125

8. A bare perusal of Section 89, C.P.C. reveals that 'Arbitration' is one of the modes of Settlement that has been contemplated in Section 89, C.P.C. In other words, if a Suit is referred to Arbitration, the Plaintiff will be entitled to refund of Court-fee under Section 89, C.P.C.

¶126

9. The only difficulty that the facts scenario in the instant lis presents is that reference to Arbitration was made prior to amendment to the Court Fees Act, particularly introduction of Section 69-A in Court Fees Act. In search for a answer to this situation, which this Application presents in the instant case, I perused Section 69-A of Court Fees Act as it stood prior to 1.3.2017. Section 69-A of Court Fees Act as it stood prior to 1.3.2017 is as follows:

¶127

"69-A. Refund on Settlement of disputes under Section 89 of Code of Civil Procedure.- (1) Where the Court refers the parties to the Suit to anyone 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 Plaintiff shall be entitled to a Certificate from the Court authorizing him to receive back the full amount of the fee paid in respect of such plaint if the dispute referred by the Court is settled."

¶128

10. From the narration and reproduction of relevant provisions supra, it unfurls and emerges very clearly that a Plaintiff would certainly be entitled to refund of Court-fee when a matter is referred to Arbitration even prior to 1.3.2017, but the caveat or rider is, it should have culminated in a Settlement. In the light of the amendment Section 69- A of Court Fees Act now, a reference to Arbitration would suffice and it need not actually

¶129

15 -

¶130

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶131

HC-KAR

¶132

culminate in a Settlement. This is the obtaining position from 1.3.2017.

¶133

11. In the light of chronicled dates, which I have recorded, I now examine if the Plaintiff would be entitled to refund of Court-fee as sought for in this Application. In answer to this, the date on which the instant Application was filed becomes relevant. I see from the Suit file placed before me that the instant Application was filed on 11.1.2018, which is post 1.3.2017. In other words, on the date on which the instant application was filed, Section 69-A of the Court Fees Act, as amended, was operating. It follows that, on the date of filing of this Application, the Plaintiff was entitled to refund of Court-fee on a mere reference to Arbitration without waiting for the same to culminate in a Settlement. As alluded to supra, the Plaintiff was entitled to refund even prior to the amendment and I have already recorded that the Caveat/rider is that the Plaintiff had to wait for a Settlement. It does not have to do so now. In fact, in my reading whether it culminates in a Settlement or not is immaterial. Owing to all that I have set out supra, I have no hesitation in coming to the conclusion that the Plaintiff will be entitled to refund of Court-fee as sought for. In other words, prayer in this Application deserves to be acceded to and I do so.

¶134

This Application is allowed. Registry is directed to process refund of Court in accordance with law as expeditiously as possible and in any event complete the process within 30 days from the date of communication of this Order to the Registry.”

¶135

(Emphasis supplied)

¶136

The High Court of Madras holds that arbitration is one of the modes of settlement provided under Section 89 of the CPC and

¶137

16 -

¶138

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶139

HC-KAR

¶140

if a suit is referred to arbitration, the plaintiff would be entitled

¶141

to refund of Court fee under Section 89 of the CPC.

¶142

Likewise, the High Court of Delhi in the case of R.V.

¶143

SOLUTIONS (P) LIMITED v. AJAY KUMAR DIXIT² , has held

¶144

as follows:

¶145

“17. At this stage, learned counsel for the plaintiff submits that as the matter has been referred to arbitration, this court may direct refund of the court fees under Section 89 of the CPC read with Section 16 of the Court Fees Act, 1870. It is ordered accordingly. The plaintiff shall be entitled to refund of the court fees.”

¶146

(Emphasis supplied)

¶147

The Court directs refund of Court fee under Section 89 of the

¶148

CPC r/w Section 16 of the Court Fees Act upon reference of the dispute to arbitration under Section 8 of the Act.

¶149

The High Court of Madras in the case of MMTC

¶150

LIMITED v. SHIV SAHAL & SONS³ holds as follows:

¶151

“ 9. A brief and cursory narration of facts has been set out supra. As far as the trajectory of the litigation is concerned, Defendants 1 and 2 took out an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘A and C Act’ for brevity). This is Application No. 2830

¶152

2 2019 SCC OnLine Del 6531

¶153

3 2017 SCC OnLine Mad 11203

¶154

17 -

¶155

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶156

HC-KAR

¶157

of 2013 and the same, I am informed, was allowed by a learned single Judge of this Court on 30.06.2014. This was carried by way of an intra-court appeal, obviously by plaintiff, in O.S.A. No. 244 of 2014 and I am informed that the intra-court appeal came to be dismissed at the admission stage itself on 28.10.2014. Not satisfied, the plaintiff carried the matter to the Supreme Court. In the Supreme Court, i.e, C.A. No. 11148 of 2018, the matter ultimately came to be disposed of in and by an order dated 20.11.2017.

¶158

10. The copy of the order of the Supreme Court is jointly placed before me by all the learned counsel. A perusal of the order shows that the parties have agreed for appointment of a sole arbitrator to constitute an Arbitral Tribunal, further agreeing that the seat shall be Chennai and the venue shall be at a place convenient to the Hon'ble Arbitrator. In the order of the Hon'ble Supreme Court, there is also a mention about refund of Court fees to the plaintiff. I am informed that Arbitral Tribunal, consists of sole arbitrator, (a Hon'ble retired Judge of the Supreme Court of India) and he has fixed the first hearing on 14.12.2017.

¶159

11. In the light of the narrative supra, this suit has to be disposed of in terms of the above said order of the Supreme Court in C.A. No. 11148 of 2017 dated 20.11.2017. Therefore, I deem it appropriate to extract the order of the Hon'ble Supreme Court, which reads as follows:

¶160

“Heard learned counsel for the parties.

¶161

At the joint request of the learned counsel for the parties, we appoint Hon'ble Mr. Justice R.V. Raveendran, former Judge of this Court as Arbitrator to decide all disputes arising out of Memorandum of Agreement dated 2^nd April, 2008 between the parties.

¶162

The parties agree that the plaint in the suit be treated as claim of the appellants and the claim petition filed by the respondents before the Arbitrator be treated as counter claim. The said documents will be furnished by the appellant to the learned Arbitrator within a period of two weeks from today. The venue of the arbitration can be at place convenient to the Arbitrator. However,

¶163

18 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶164

HC-KAR

¶165

the seat of the Arbitrator will be taken to be at Chennai. The arbitrator will be at liberty to take any expert assistance.

¶166

In view of section 16 of the Court Fees Act 1870, the appellant will be entitled to move the Collector for refund of the Court fee.

¶167

The above order will supersede the Arbitration Clause 11 in the Memorandum of Agreement dated 2^nd April, 2008.

¶168

Parties are at liberty to communicate with the learned Arbitrator for further proceedings.

¶169

The appeal is, accordingly, disposed of.”

¶170

12. To be noted, there is a direction for refund of Court fees as would be evident from the extract of the order of the Supreme Court of India, It is open to the parties to the lis to pursue the same in a manner known to law. No costs.”

¶171

(Emphasis supplied)

¶172

In the case before the Madras High Court, the matter was

¶173

referred to arbitration on consent of parties. Therefore, there was a direction to refund the Court fee.

¶174

Again, the Madras High Court in the case of GOLDEN

¶175

FALCON INDUSTRIES LIMITED v. INDIA INFOLINE

¶176

INSURANCE BROKERS⁴ has held as follows:

¶177

4 CS(OS) 96/2021 decided on 13-10-2022

¶178

19 -

¶179

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶180

HC-KAR

¶181

“7. In view of the fact that the parties have been relegated to the arbitration process and even issues have not been framed, the request made by Mr. Anand for refund of the Court fee is agreed to and the same shall be refunded in accordance with law.”

¶182

(Emphasis supplied)

¶183

The Court ordered refund of Court fee on account of reference

¶184

to arbitration under Section 8 of the Act.

¶185

A Division Bench of this Court in the case of

¶186

A. SREERAMAIAH v. THE SOUTH INDIAN BANK LIMITED⁵

¶187

has held as follows:

¶188

“2. In the light of settlement of the matter, learned Counsel appearing for the appellant submitted that the appellant is entitled for the refund of full court fees. He referred to Section 16 of the Court Fees Act, 1870 (Central Act) and submitted that any settlement arrived at, in terms of Section 89 of the Code of Civil Procedure 1908, party is entitled for refund of full court fees under Section 16 of the Court Fees Act 1870.

¶189

3. It is in this regard, we heard the learned Government Advocate and the Counsel appearing for the appellant and other Counsel appearing in the similar cases.

¶190

4. Section 89 was inserted by the Code of Civil Procedure (Amendment) Act 1999 inter alia providing for settlement of dispute outside the Court. This provision was inserted based on the acceptance of Justice Malimath Committee report, wherein the said Committee had emphasized for providing a legal sanction to such

¶191

5 2006 SCC OnLine Kar.563

¶192

20 -

¶193

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶194

HC-KAR

¶195

machinery for resolution of disputes and resort thereto in order to reduce and control the inflow of commercial transaction in regular civil courts. Justice Malimath Committee was also of the view that, the resolution of dispute be made obligatory on the part of the court, to resolve for settlement of the disputes and the Committee agreeing with the Law Commission recommended to provide for settlement of disputes outside the court at any stage of the proceedings by means of judicial settlement, arbitration, conciliation, mediation or through Lok Adalat and it is only after the party fails to get the dispute settled through any one of the alternative dispute resolution method, the suit shall proceed further in the court in which it was filed. The object, for making it obligatory on the part of the Court to refer the matter to the alternate dispute resolution methods, is to provide early disposal of the disputes, avoiding long waiting for justice for years and further avoiding judicial wrangles and multiplicity of appeals/revisions and also to reduce the burden on the judiciary of huge areas of cases pending at different levels of courts. The result of this recommendation, Section 89 was inserted in the Code of Civil Procedure.

¶196

5. In consonance with the provisions of Section 89 of CPC, the Parliament brought an amendment to the provisions of Court Fees Act 1870 by inserting Section 16, which reads as under:

¶197

“ Refund of Court Fee - Where the Court

¶198

refers the parties to the suit to any of the mode of settlement of dispute referred to in Section 89 of the Code of Civil Procedure, 1908, the plaintiff shall be entitled to a certificate from the Court authorising him to receive back from the collector, the full amount of the fee paid in respect of such plaint .”

¶199

The object behind insertion of Section 16 to the Central Court Fees Act was to encourage the litigant to adopt the alternate dispute resolution method for early disposal of the dispute.

¶200

6. It is in this context, in matter referred to any of the methods specified under Section 89 of the CPC and if the dispute is resolved, the party is entitled for refund of full court fees as contemplated under Section 16 of the

¶201

21 -

¶202

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶203

HC-KAR

¶204

Court Fees Act. It is in this regard, the appellant's Counsel had submitted that this dispute having been settled at the intervention of the Court by way of judicial settlement, party is entitled for refund of full court fees. He also submitted that in case of settlement arrived at Lok Adalat, Section 21 also provides for refund of full court fees in terms of section 16 of the Court Fees Act and it is also submitted by the learned Counsel for the appellant that in all the settlements arrived before the Lok Adalat, full court fees has been refunded.

¶205

7. Considering the object behind the Amendment Act 1999 inserting Section 89 of CPC and also the insertion of Section 16, it is clear, that the object of providing of refund of full court fees, is to encourage the settlement of the disputes in terms of Section 89 of CPC. In this case, the parties agreed for settlement in terms suggested by the Court and accordingly, they have settled their dispute outside the court. The judicial settlement is also one of the alternative method of settlement of the disputes. As such, in our considered view, in any settlement arrived in terms of Section 89 of CPC including the judicial settlements at the intervention and on term suggested by the Court, the appellant is entitled for refund of full court fees, as otherwise, it would be meaningless if the provisions of Section 16 are not applied for settlement of dispute by the parties under Section 89. Section 89 does provide for settlement of dispute at any stage of the proceeding, whether it is by way of method referred to therein or by judicial settlement as contemplated under Section 89 subsection (1). As such, we are of the opinion that if the parties come forward to settle their dispute before the court itself, they should not be denied of refund of full court fees on the ground that they have not settled the dispute before any of the four methods provided under Section 89 of CPC. The object behind Section 89 is to encourage the parties to arrive at settlement and if that object is sought to be achieved by means of referring the matter to any of the four methods mentioned in Section 89, then even the settlement arrived at the earliest stage before the Court would also be one of the

¶206

22 -

¶207

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶208

HC-KAR

¶209

method provided under Section 89 sub-section (1). Hence, we feel it as just and appropriate to order for full refund of court fees in the case of parties settling their dispute before the Court as well as before any of the Forum mentioned under Section 89 of the CPC. No party should be discriminated in the matter of refund of court fees mainly on the ground that they have settled the dispute at the earliest stage before the Court without recourse to any of the methods mentioned under Section 89 of the CPC. Hence, appellant is entitled for refund of full court fees.

¶210

Accordingly, the appeal stands disposed of.”

¶211

(Emphasis supplied)

¶212

The High Court of Himachal Pradesh in the case of

¶213

HIMALAYAN SKI VILLAGE PRIVATE LIMITED COMPANY v.

¶214

KAKA & ASSOCIATES⁶ has held as follows:

¶215

“ Civil Suit No.4072 of 2013

¶216

In view of the order passed in OMP No. 296 of 2014, the suit is not maintainable and the plaint is ordered to be returned to the plaintiff. It is, however, made clear that the plaintiff shall be entitled to the refund of Court fee in accordance with law. The parties to bear their own costs. Decree sheet be drawn accordingly."

¶217

The High Court holds that when the matter is referred to

¶218

arbitration, the Court fee must be refunded. The case before

¶219

6 OMP 296 of 2024 in C.A.No.4072 of 2013 decided on 06-07-2017

¶220

23 -

¶221

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶222

HC-KAR

¶223

the High Court was allowing of an application under Section 8

¶224

of the Act for reference to arbitration.

¶225

The Apex Court interpreting Section 89 of the CPC and Tamil Nadu Court Fees and Suits Valuation Act, 1955 and its interplay, in the case of HIGH COURT OF MADRAS V. M.C.SUBRAMANIAM⁷ holds that if the parties are agreeing to

¶226

settle the dispute outside Court, refund of Court fee must ensue. The Apex Court has held as follows:

¶227

“7. In addressing the question of whether the refund of court fee was permissible under the relevant rules, the High Court considered Section 69-A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955 (hereinafter “the 1955 Act”), which reads as follows:

¶228

“ 69-A. 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.”

¶229

(emphasis supplied)

¶230

8. Considering the appeal suits to be continuation of the original suits, and therefore falling within the ambit of “suits” as provided in Section 69-A, the Court went on to take notice of Section 89 CPC which reads as follows:

¶231

7 (2021)3 SCC 560

¶232

24 -

¶233

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶234

HC-KAR

¶235

“ 89. Settlement of disputes outside the Court .—(1) Where it appears to the court that there exist elements 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 receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for—

¶236

( a ) arbitration;

¶237

( b ) conciliation;

¶238

( c ) judicial settlement including settlement through Lok Adalat : or

¶239

( d ) mediation.

¶240

(2) Were a dispute has been referred—

¶241

( 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;

¶242

( b ) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of subsection (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;

¶243

( 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;

¶244

( d ) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.”

¶245

9. 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

¶246

25 -

¶247

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶248

HC-KAR

¶249

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 CPC, and resultantly Section 69-A of the 1955 Act, would require that these provisions cover all methods of out-of-court dispute settlement between parties that the court subsequently finds to have been legally arrived at.

¶250

12. Having heard the petitioner and thoroughly considered the arguments advanced, we find ourselves unimpressed by the petitioner's contentions, for reasons outlined below.

¶251

13. The provisions of Section 89 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 238th Report on Amendment of Section 89 of the Code of Civil Procedure, 1908 and Allied 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 69-A of the 1955 Act, which further encourages settlements by providing for refund of

¶252

26 -

¶253

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶254

HC-KAR

¶255

court fee. This overarching and beneficent object and purpose of the two provisions must, therefore, inform this Court's interpretation thereof.

¶256

17. 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 CPC and Section 69-A of the 1955 Act sought to be imposed by the petitioner would lead to an outcome wherein the 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 the parties who similarly save the Court's time and resources by privately settling their dispute 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 69-A 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.

¶257

18. It is pertinent to note that the view taken by the High Court in the impugned judgment [ M.C. Subramaniam v. Sakthi Finance Ltd. Civil Misc. Petition No. 26742 of 2019, decided on 8-1-2020 (Mad)] 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 v. Honnali Taluk Agricultural Produce Coop. Mktg. Society Ltd. [ Kamalamma v. Honnali Taluk Agricultural Produce Coop. Mktg. Society Ltd. , 2009 SCC OnLine Kar 744 : (2010) 1 AIR Kant R 279] , wherein it was held as follows : (SCC OnLine Kar para 6)

¶258

27 -

¶259

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶260

HC-KAR

¶261

“ 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 Adalat, by invoking provisions of Section 89 CPC or they get the same settled between themselves without the intervention of any Arbitrator/Mediator/Conciliators in Lok Adalat, etc., and without invoking the provision of Section 89 CPC, 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 CPC, 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 CPC or they get the same settled between themselves without invoking Section 89 CPC, the party paying court fees in respect thereof should be entitled to the refund of full court fees as provided under Section 16 of the Court Fees Act, 1870 .”

¶262

(emphasis supplied)

¶263

19. Section 16 of the Court Fees Act, 1870 is in pari materia with Section 69-A of the 1955 Act, and hence the abovestated principles are equally applicable to the present case.

¶264

22. The view taken in both Kamalamma [ Kamalamma v. Honnali Taluk Agricultural Produce Coop. Mktg. Society Ltd. , 2009 SCC OnLine Kar 744 : (2010) 1 AIR Kant R 279] and J.K. Forgings [ J.K. Forgings v. Essar Construction (India) Ltd. , 2009 SCC OnLine Del 3134 : (2009) 113 DRJ 612] has been subsequently relied upon by the Delhi High Court in Inderjeet Kaur Raina v. Harvinder Kaur Anand [ Inderjeet Kaur Raina v. Harvinder Kaur Anand , 2018 SCC OnLine Del 6557] .

¶265

28 -

¶266

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶267

HC-KAR

¶268

23. We find ourselves in agreement with the approach taken by the High Courts in the decisions stated supra. The purpose of Section 69-A 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 [ Kamalamma v. Honnali Taluk Agricultural Produce Coop. Mktg. Society Ltd. , 2009 SCC OnLine Kar 744 : (2010) 1 AIR Kant R 279] , the 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 third-party 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 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties.

¶269

24. Admittedly, there may be situations wherein the parties have after the course of a long-drawn 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.”

¶270

(Emphasis supplied)

¶271

29 - NC: 2025:KHC:33243 WP No. 9801 of 2025

¶272

HC-KAR

¶273

The Apex Court affirmed the finding in the case of KAMALAMMA. The judgment in the case of KAMALAMMA v. HONNALI TALUK AGRICULTURAL PRODUCE COOPERATIVE MARKETING SOCIETY LIMITED⁸ is rendered by a coordinate Bench of this Court, wherein the coordinate Bench had held that where parties to a suit or appeal or any other proceeding get their dispute settled amicably through arbitration, mediation or conciliation by invoking the provisions of Section 89 of the CPC or even before the Arbitrator, it would be that the dispute is settled without the intervention of the Court. The judgment in KAMALAMMA is subsequently followed by different High Courts which are noted by the Apex Court in the afore-quoted judgment.

¶274

In the light of the judgments quoted supra , the parties to the lis have on consensus sought reference of the matter to the Arbitrator. The Commercial O.S is withdrawn on that score. The claim for refund of Court Fee is rejected by the following order:

¶275

8 2009 SCC OnLine Kar 744

¶276

30 -

¶277

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶278

HC-KAR

¶279

“Both parties absent.

¶280

Counsel for plaintiff filed application U/O XXIII Rule 1(3) of CPC and prays to permit the plaintiff to withdraw the present suit with liberty to approach the arbitrator so as to resolve their disputes.

¶281

Counsel for defendant No.1 present and submits no objections.

¶282

Other defendants absent.

¶283

Heard.

¶284

To meet ends of justice the application filed by the plaintiff U/O XXIII Rule1(3) of CPC is hereby allowed.

¶285

The plaintiff is permitted to withdraw this suit keeping liberty to approach the arbitrator.

¶286

The plaintiff counsel also filed I.A U/Sec. 151 of CPC to direct the Registry to refund Court fees.

¶287

However, in my opinion in this case both parties have not amicably settled their dispute. Therefore, the plaintiff is not entitled for refund of the Court fees.

¶288

Accordingly, application seeking refund of Court fee stands rejected.

¶289

The suit filed by the plaintiff stands dismissed as withdrawn.

¶290

The plaintiff is at liberty to approach the arbitrator as per the procedure known to law.

¶291

Sd/03.09.2024 LXXXIX ACC & SJ, Bengaluru. (03.09.2024),(CCH-90)”

¶292

31 -

¶293

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶294

HC-KAR

¶295

If the order so passed is considered on the bedrock of the principles laid down by the Apex Court, what would unmistakably emerge is, entitlement of the petitioner for refund of Court fee.

¶296

Before parting with the order, I deem it appropriate to notice that, Section 66 of the Act retains the words “and the dispute is settled”. The refund though by an amendment is now at 100%, but is conditional on the dispute being settled. If Section 16 of the Court Fee Act and Section 89 of the CPC are noticed, it would become necessary for the State Government to consider the deletion of the words “and the dispute is settled”, when the matter is referred to mediation, arbitration or any modes of closure as found in Section 89 of the CPC.

¶297

18. For the aforesaid reasons, the following:

¶298

O R D E R

¶299

(i) Writ Petition is allowed.

¶300

(ii) Order dated 03-09-2024 passed by the LXXXIX Additional City Civil and Sessions Judge,

¶301

32 -

¶302

NC: 2025:KHC:33243 WP No. 9801 of 2025

¶303

HC-KAR

¶304

Commercial Court, Bengaluru in Commercial O.S.No.150 of 2024 stands quashed.

¶305

(iii) The Concerned Court is directed to refund the Court Fee paid by the plaintiff while instituting the suit, to the plaintiff, without brooking any further delay.

¶306

(iv) The Registry is directed to transmit the copy of this order to the office of the Advocate General, to transmit it further to the Secretary of the concerned department, for considering the observations and recommendations so made.

¶307

Sd/JUDGE

¶308

(M.NAGAPRASANNA)

¶309

BKP List No.: 2 Sl No.: 22

Bindu Balakrishna Patali v. Smartowner Services India Private Limited

Case brief

What is this about?

What did the court decide?

Bindu Balakrishna Patali v. Smartowner Services India Private Limited

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Shri Yogeesh Vs Shri T P G Rajith Rudra

Smt. Lakshmamma Vs M/S. Inspira Builders LLP

Smt Shobha Vs Sri Nagendra Naik

Mr. S. N. Shiva Kiran Vs Bangalore Development Authority

Mr N R Surendranath Vs Mr R K Surendra Babu

Mr. P N Lokesh Vs Mr.K. Rajendra Prasad Reddy