Case at a Glance
Two plaintiffs who settled their suits out of court after trial had begun asked the Madras High Court for a full refund of court fee, relying on High Court of Judicature at Madras v. M.C. Subramaniam. Justice P.B. Balaji held that Section 69 of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 allows a refund on an out-of-court settlement only before evidence is recorded, and that once evidence begins a party is not entitled to any refund. Both revisions were dismissed. The Court also sent its order to the Tamil Nadu State Law Commission to consider restoring the pre-2017 version of Section 69-A.
In C.R.P. No. 4064 of 2026, a specific performance suit (O.S. No. 3 of 2019) before the IV Additional District and Sessions Judge, Thiruvallur at Ponneri was withdrawn after an out-of-court settlement, by which time issues had been framed and the plaintiff’s first witness had filed a proof affidavit. The trial court ordered refund of half the court fee after a 5% deduction; the plaintiff wanted the full fee back. In C.R.P. No. 4106 of 2026, the parties to O.S. No. 133 of 2007 filed a joint compromise memo on 9 October 2025 after witnesses on both sides and a court witness had been examined and many exhibits marked. The trial court refused any refund of the ₹2,54,326 paid.
The petitioners argued that, after M.C. Subramaniam, a plaintiff who settles privately is entitled to a 100% refund under Section 69-A. The Advocate General and the amicus curiae argued that Section 69-A covers settlements on reference under Section 89 CPC, while Section 69 governs out-of-court settlements and bars a refund once evidence has begun, relying on Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 07 SC CK 0143
The Key Question Before the Court
Is a plaintiff who settles a suit out of court after evidence has been recorded entitled to a refund of court fee?
Section 69 Draws the Line at the Start of Evidence
The Court explained that Section 69 of the 1955 Act originally allowed a refund of half the fee where a suit was settled before any evidence on the merits; Act 6 of 2017 changed “half” to “full” but left the “before any evidence” condition intact. Section 69-A deals with refunds where the court refers the dispute under Section 89 CPC. “As long as Section 69 remains in the statute book, the provision cannot be rendered otiose,” the Court said, noting that “The object of Section 89 of the Code is that settlement should be attempted” at the early stage explained in Afcons.
The Court held that M.C. Subramaniam did not examine the stage of settlement or Section 69, and that, under State of Bihar v. Kalika Kuer, (2003) 04 SC CK 0041 and Union Territory of Ladakh v. Jammu and Kashmir National Conference, (2023) 09 SC CK 3133, a binding ratio must be followed or referred, not ignored. Once evidence begins, the State must be compensated for judicial time spent: “there is no doubt in my mind that a party is not entitled to any refund once evidence is recorded”. In the Ponneri suit the plaintiff “was actually not entitled to any refund”, but since the State had not challenged the partial refund, the Court left it undisturbed.
What the Court Actually Held
- Under Section 69 of the Tamil Nadu Court Fees and Suits Valuation Act, 1955, a refund on an out-of-court settlement is available only if the suit is settled before evidence is recorded.
- Section 69-A applies to settlements on reference under Section 89 CPC and does not override the evidence-stage limit in Section 69.
- High Court of Judicature at Madras v. M.C. Subramaniam did not consider Section 69 and the stage of settlement, so it did not support a full refund here.
- Both revisions were dismissed; the partial refund already ordered in one suit was not disturbed because the State had not challenged it, and the order was sent to the Tamil Nadu State Law Commission.
Why This Judgment Matters
- It affects thousands of litigants in Tamil Nadu who settle suits midway and expect their court fee back.
- It gives a strong incentive to settle early, before evidence starts.
- Its reference to the State Law Commission could lead to a change in the refund law.
What Should Advocates Take Away From the Judgment?
For Litigants
- If you are likely to settle, try to do so before evidence begins; afterwards, this ruling says no refund is due.
- A court-referred settlement under Section 89 CPC is treated differently from a private one.
- Factor the court fee into settlement talks once trial is under way.
For Counsel
- Advise clients early about the refund consequences of the stage of settlement.
- Where settlement looks possible, consider asking the court to refer the matter under Section 89 CPC.
- Do not rely on M.C. Subramaniam alone where evidence has already been recorded.
Key Takeaways
- No court fee refund once evidence is recorded, under Section 69.
- Section 69-A is tied to Section 89 CPC references.
- M.C. Subramaniam was distinguished as not considering Section 69.
- The order was sent to the Tamil Nadu State Law Commission.
Frequently Asked Questions
Does this apply outside Tamil Nadu?
The ruling interprets the Tamil Nadu Court Fees and Suits Valuation Act, 1955. Other States have their own court fee laws with different refund provisions.
What if the court refers the dispute to mediation and it settles?
Section 69-A deals with refunds where the court refers the dispute under Section 89 CPC. The Court noted the stage of such a referral matters, as explained in Afcons.
Why did one plaintiff keep a partial refund?
Because the State did not challenge the trial court’s order granting half the fee less 5%. The High Court said she was not entitled to it but declined to interfere.
Conclusion
The Madras High Court has read the court fee law as rewarding early settlement: once the court has invested time in recording evidence, the plaintiff cannot recover the fee by settling privately. It has also asked the Law Commission to consider a more practical refund scheme.
Practical takeaway: In Tamil Nadu, explore settlement before trial evidence begins, or seek a Section 89 CPC reference, if recovering court fee matters to your client.
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