No Court Fee Refund Under Section 69 Or Section 69-A Of Tamil Nadu Court Fees Act If Out-Of-Court Settlement Is Reached After Trial Commences: Madras High Court

 "As long as Section 69 remains in the statute book, the provision cannot be rendered otiose by applying the mandate of Section 69-A universally across the board, to all categories of cases... there is no doubt in my mind that a party is not entitled to any refund once evidence is recorded, if whatever little worth it may be." Madras High Court on October 30, 2026, held that litigants are strictly disentitled from seeking a refund of court fees when a private or out-of-court settlement is arrived at after trial has commenced and evidence has been recorded in the suit. Justice P.B. Balaji clarified that while Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 provides for refund upon settlement, it cannot be read in isolation to override the express statutory bar contained under Section 69 of the Act, which prohibits refund once evidence has been recorded on the merits of the claim.

The background of the matter arose from two civil revision petitions wherein the parties had settled their civil disputes out of court after issues were framed and trial had actively commenced. In one case, the trial court rejected the claim for refund of the entire court fee of Rs. 2,54,326 after extensive evidence had been recorded on both sides, while in the other suit, the trial court restricted the refund to 50 percent less administrative charges after the plaintiff's proof affidavit had been tendered. Aggrieved by the denial of full refund under Section 69-A, the revision petitioners approached the High Court relying upon Supreme Court precedents.

Whether a plaintiff who arrives at an out-of-court settlement after the commencement of trial and recording of evidence is entitled to a refund of full or partial court fees under Section 69 or Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955?

Whether the benefit of 100 percent refund extended to out-of-court settlements under Section 69-A read with Section 89 of the Code of Civil Procedure applies universally even after judicial time has been expended in recording evidence?

Statutory embargo under Section 69 cannot be bypassed through Section 69-A

The High Court observed that while the legislature substituted "half amount" with "full amount" in Section 69 by Act 6 of 2017, it consciously retained the qualifying stipulation that such refund is permissible only if the suit is settled before any evidence has been recorded on the merits of the claim. Justice Balaji emphasized that Section 69-A, introduced to facilitate alternative dispute resolution under Section 89 CPC, cannot be deployed to render Section 69 redundant or otiose.

The Court noted that court fees are exacted towards the State Exchequer to facilitate public expenditure on infrastructure, administration of justice, judicial time, and court operations. When substantial judicial time has already been consumed in recording proof affidavits and examining witnesses, the statutory policy bars the return of court fees to the litigants.

Precedent in Afcons Infrastructure governs stage of ADR reference over subsequent rulings

Addressing the reliance placed on the Apex Court ruling in High Court of Judicature at Madras v. M.C. Subramaniam, the Court underscored that the said judgment had not considered the stage at which the reference or settlement was made, nor did it examine the impact of Section 69 of the Act. Relying on the earlier coordinate bench verdict in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., the Court noted that reference under Section 89 CPC read with Order 10 Rule 1A CPC is envisaged before trial commences.

Underlining established principles of precedent hierarchy, the Court observed that when faced with coordinate bench judgments of the Supreme Court, an earlier binding precedent must be adhered to. The Court held:

"The Hon'ble Supreme Court, in no uncertain terms held that once evidence is commenced, the Court will be reluctant to refer the matter to the ADR processes, lest it becomes a tool for protracting the trial... In such view of the matter, I am emboldened to follow and rely upon the ratio laid down in Afcons case instead of following the ratio laid down in M.C.Subramaniam's case."

Filing of proof affidavit constitutes commencement of trial and recording of evidence

The High Court rejected the contention that merely tendering an examination-in-chief proof affidavit does not amount to recording evidence for the purpose of Section 69. Referring to the procedural scheme under Order 18 Rule 4(1) CPC, the Court reiterated that the trial commences with the performance of the first act essential to proceed with judicial examination, and examination-in-chief on affidavit squarely constitutes evidence.

Consequently, in the revision where proof affidavit was placed on record, the plaintiff was not legally entitled to any refund, though the 50 percent refund already granted by the trial court was left undisturbed solely because the State had not preferred an appeal. In the companion revision where multiple witnesses and documents were marked on both sides, the trial court's complete refusal to refund court fees was upheld as perfectly lawful.

Reference made to State Law Commission to address statutory loopholes in Section 69-A

Justice Balaji also flagged a critical legislative anomaly introduced by the 2017 amendment to Section 69-A, which currently mandates immediate refund of court fees upon the mere reference of a dispute under Section 89 CPC, without waiting for the settlement to actually fructify. The Court expressed concern that if the ADR mechanism ultimately fails, the parties return to trial after having secured an undue windfall of court fees without any statutory mechanism for restitution.

Marking a copy of the judgment to the Tamil Nadu State Law Commission, the Court recommended restoring the pre-2017 statutory mechanism under Act 44 of 2007, where only a certificate for refund was issued, ensuring actual refund occurred solely upon the successful fruition and recording of a settlement.

In conclusion, the High Court held that neither Section 69 nor Section 69-A of the Court Fees Act permits the refund of court fees once trial has commenced and evidence has been recorded, thereby dismissing both civil revision petitions.

Date of Decision: October 30, 2026