The Madras High Court has clarified that a plaintiff is not entitled to refund of court fees under Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 when an out-of-court settlement is reached after trial has commenced and evidence has been recorded. In such cases, Section 69 applies, which bars refund once evidence is recorded on merits. The Court dismissed two civil revision petitions, holding that the Supreme Court's decision in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Pvt. Ltd. remains binding on the stage of ADR reference under Section 89 CPC, and that High Court of Judicature at Madras v. M.C. Subramaniam did not address Section 69's embargo.
Background & Facts
The Dispute
Two civil revision petitions raised a common question: whether plaintiffs who settle out of court after trial has commenced are entitled to full refund of court fees under Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955, or whether Section 69's bar on refund after evidence recording applies.
Key Facts
CRP No. 4064 of 2026 (Susheela Kawar v. M. Pettu Lakshmi)
- Suit for specific performance (O.S. No. 3 of 2019) filed before IV Additional District and Sessions Judge, Thiruvallur at Ponneri
- Issues framed and trial commenced with filing of proof affidavit by Plaintiff Witness No. 1
- Parties reached out-of-court settlement; compromise memo presented for recording
- Trial Court passed decree withdrawing suit, ordering refund of 50% court fee less 5% administrative charges
- Judgment and decree dated 05.06.2023
CRP No. 4106 of 2026 (S. Ranjani (Died) et al. v. Gopi @ Gopala Krishnan et al.)
- Suit (O.S. No. 133 of 2007) pending before Sessions Judge, Mahila Court, Chengalpattu
- Issues framed; trial advanced with examination of PW-1 (4th plaintiff) and marking of Exhibits A1-A10
- Defendants examined DW-1 and DW-2 with Exhibits B1-B11; Court Witness CW-1 examined with three documents
- Joint compromise memo dated 09.10.2025 recorded; suit dismissed
- Trial Court rejected claim for refund of entire court fee of Rs. 2,54,326/-
Procedural History
- 05.06.2023: Judgment and decree in O.S. No. 3 of 2019 (CRP 4064)
- 09.10.2025: Joint compromise memo recorded in O.S. No. 133 of 2007 (CRP 4106)
- 2026: Both Civil Revision Petitions filed under Section 115 CPC and Article 227 Constitution
- 23.09.2026: Order reserved
- 30.10.2026: Judgment pronounced
Relief Sought
- CRP 4064: Set aside judgment and decree dated 05.06.2023 to the extent it restricted refund to 50% less 5%
- CRP 4106: Direct Trial Court to order refund of entire court fee of Rs. 2,54,326/- paid in plaint
The Legal Issue
Whether a plaintiff who reaches a private out-of-court settlement after trial has commenced and evidence has been recorded is entitled to refund of court fees under Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955, or whether Section 69's prohibition on refund after evidence recording applies.
Arguments Presented
For the Petitioners
Learned counsel Ms. M. Meenarukmani (CRP 4064) and Mr. K. Sukumaran (CRP 4106) relied on High Court of Judicature at Madras v. M.C. Subramaniam (2021) 3 SCC 560, where the Supreme Court upheld this Court's decision that even private out-of-court settlements attract full refund under Section 69-A. They contended that private settlements should not receive step-motherly treatment and that Section 69-A benefits extend to such settlements. Counsel cited ten decisions from various High Courts following M.C. Subramaniam.
For the Respondent/State
The Advocate General Mr. Vijay Narayan, assisted by Mrs. S. Yogalakshmi, contended that M.C. Subramaniam did not consider the earlier binding precedent of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Pvt. Ltd. (2010) 8 SCC 24, which elaborately discussed the stage for Section 89 CPC reference. The learned amicus Mr. S. Suresh Sampath supported this, arguing that Section 69-A applies only to disputes referred under Section 89 CPC, while Section 69 governs out-of-court settlements and bars refund once evidence is recorded. The amicus cited nine decisions including S.V.K.M. Ratnasamy Nadar v. K. Subbuswamy Iyer (78 LW 752) on "before evidence recorded" interpretation.
The Court's Analysis
The Court undertook a detailed statutory interpretation of Sections 69 and 69-A of the Court Fees Act, read with Section 89 CPC and the Afcons precedent.
"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."
The Court traced legislative history: Section 69 (original 1955) allowed half refund if suit dismissed as settled out of court before any evidence recorded on merits. Act 6 of 2017 substituted "half amount" with "full amount" but retained the "before any evidence recorded" condition. Simultaneously, Act 6 of 2017 amended Section 69-A (introduced by Act 44 of 2007) to allow refund upon reference under Section 89 CPC, without awaiting settlement.
The Court held that Afcons is binding precedent on the stage of Section 89 reference: the appropriate stage is after pleadings complete, before framing issues, at preliminary hearing under Order X CPC. Once evidence commences, courts should be reluctant to refer to ADR lest it becomes a tool for protracting trial. M.C. Subramaniam only addressed whether Section 69-A extends to private settlements dehors Section 89 modes, but did not consider Section 69's embargo or the Afcons stage analysis.
Since both revision petitions involved settlements after evidence recording (proof affidavit in CRP 4064; multiple witnesses examined in CRP 4106), Section 69 applied, not Section 69-A. Under Section 69, no refund is permissible once evidence is recorded on merits.
The Court also noted that Sanjeevkumar Harakchand Kankariya v. Union of India (2024 SCC OnLine SC 3811) distinguished mediation from Lok Adalat for refund purposes under the Maharashtra Court Fees Act, reinforcing that Section 69-A benefits are tied to Section 89 processes.
The Verdict
Both Civil Revision Petitions dismissed. In CRP 4064, the plaintiff was not entitled to any refund under Section 69 since evidence (proof affidavit) was recorded, but the Court declined to interfere with the 50% refund less 5% as the State did not appeal. In CRP 4106, the Trial Court correctly rejected the refund claim under Section 69. No order as to costs. The Court directed a copy of the order to the Tamil Nadu State Law Commission to reconsider Section 69-A, recommending restoration of the pre-2017 position where refund certificate issued upon reference but actual refund only upon settlement.
What This Means For Similar Cases
Section 69 Embargo Is Absolute After Evidence Recording
- Practitioners must advise clients that once evidence is recorded on merits (including filing of proof affidavits under Order XVIII Rule 4 CPC), no court fee refund is available under Section 69, regardless of subsequent settlement
- The "before any evidence recorded" condition in Section 69 is a jurisdictional bar, not a discretionary factor
- Trial Courts must apply Section 69, not Section 69-A, for out-of-court settlements post-evidence
Section 69-A Limited to Section 89 CPC Referrals
- Full refund under Section 69-A is available only when the court refers the dispute to ADR under Section 89 CPC (arbitration, mediation, Lok Adalat, judicial settlement)
- Private negotiations outside the four Section 89 modes do not trigger Section 69-A, even if M.C. Subramaniam suggested otherwise - that decision did not consider Section 69 or Afcons
- The optimal stage for Section 89 reference is after pleadings, before framing issues, at Order X preliminary hearing
Binding Precedent Hierarchy Respected
- Afcons (2010), as earlier coordinate bench decision of Supreme Court, binds over M.C. Subramaniam (2021) on the stage of ADR reference
- High Courts must follow earlier Supreme Court coordinate bench decisions when faced with conflicting ratios
- Practitioners should cite Afcons when opposing Section 69-A refund claims for post-evidence settlements
