On Tuesday, the Delhi Legislative Assembly passed an amendment to the Court Fees Act, 1870, under which litigants will now get full refund of court fees for disputes settled outside the court.
Matters which are settled out of court are dealt with under Section 89 of the Code of Civil Procedure. “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 arbitration, conciliation, judicial settlement including settlement through Lok Adalat or mediation,” the section reads.
Under the new amendment, a full refund of court fees would be provided in all cases where the court has referred the parties to Alternative Dispute Resolution (ADR) mechanisms mentioned under Section 89. Along with this, cases of private settlement that are not covered under Section 89 would also be eligible for a full refund.
What was the fee structure prior to the amendment?
Prior to the amendment, two distinct regimes of refund of court fees operated in Delhi. Where settlement occurred following a court-referred alternative dispute resolution process under Section 89, the litigant was entitled to a full refund of the court fee. However, when parties settled the dispute by mutual agreement outside such court-referred mechanisms, the refund was limited to 50 per cent.
Prior to the amendment, Section 16, titled “refund of fee” of the Court Fees Act, 1870, read: “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 (5 of 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.”
In 2010, Section 16A was inserted to extend the benefit of a 50 per cent refund of court fees in cases where parties settle disputes amicably outside formal ADR mechanisms.
Under the new amendment, Section 16A has been omitted. On the other hand, Section 16 has been amended to read: “Where the parties to a suit or appeal, at any stage of such suit or appeal, settle their dispute amicably, with or without the intervention of the Court and with or without invoking any of the modes of settlement of dispute, referred to in section 89 of the Code of Civil Procedure, 1908 (5 of 1908) and the said suit or appeal is disposed of as settled by the court, 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.”
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What are the fees that applicants have to pay?
The Court Fees Act in Delhi lists out the fee schedule. For instance, petitions filed under Article 226 of the Constitution (Power of High Courts to issue certain writs) at the Delhi High Court have a court fee of Rs 100, and petitions seeking execution or enforcement of any judgment or decree by any court before the Delhi High Court attract a court fee of Rs 1,000.
On the other hand, election petitions and pleas related to Intellectual Property Rights have a court fee of Rs 5,000. These are fixed fees.
Ad valorem court fees are levied for filing certain cases in court. For instance, for filing a suit of Rs 4 lakh in Delhi, a court fee of Rs 6,200 is levied (or close to 1.5%). For disputed amounts of over Rs 4 lakh, an additional Rs 48 will be charged per Rs 5,000. In Delhi, the ad valorem fees comes down to roughly 1 per cent.
How the amendment benefits litigants
According to lawyers, the move has gotten rid of a financial disincentive that discouraged parties from resolving disputes outside the courtroom. “Eliminating the old 50 per cent refund discount on ‘private settlement’, encourages litigants to resolve disputes amicably in all forms, not just through formal ADR,” said advocate Atul Jain.
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“At present, several cases are referred to mediation purely to obtain a court fee refund, despite the disputes having already been settled between the parties…the proposed amendment will curb such artificial referrals, enabling mediation centres to devote their time and resources to genuine disputes that truly require facilitated resolution,” he added.
Suppose a suit of Rs 50 lakh is filed in court. A court fee of approximately Rs 50,000 will be charged. Now, at the stage of evidence, if the parties decide to settle the matter outside the court, they can either take the ADR route or the route of private settlement.
Prior to the amendment, under the first route, they would get Rs 50,000 back. But under the second route, they would get only Rs 25,000 back. Post the amendment, they will now get a full refund through both routes.
“Encouraging out-of-court settlements will not only reduce the burden on already overburdened courts but will also promote harmony between litigating parties,” Jain added.
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How many cases are settled out of court in Delhi annually?
In 2024, National Lok Adalats in Delhi received 8.52 lakh cases and disposed of 6.65 lakh. In India, the number of cases settled by National Lok Adalats in 2024 stood at 10.45 crore.
According to data by the National Legal Services Authority (NLSA) – constituted under the Legal Services Authorities Act, 1987, to provide free legal services to weaker sections of society – from April 2024 to March 2025, 680 cases were settled in Delhi through mediation. In India, this figure was just over 98,000.
On the other hand, data on private settlements that lie outside ADR mechanisms is not collected centrally.
