Court fee is paid up front, on the optimistic assumption that the suit will run its full course. But litigation frequently ends in ways the litigant never anticipated when he bought the stamp — a wrongly rejected plaint is restored, a review reverses an erroneous decree, or, increasingly, the parties shake hands and walk away through mediation, a Lok Adalat or a private compromise. In each of these situations the State has been spared part of the burden of adjudication, and the Court Fees Act, 1870 responds with a measured machinery of refund housed in Sections 13 to 16. The most consequential of these, Section 16, was inserted in 2002 to dovetail with Section 89 of the Code of Civil Procedure and the national push towards alternative dispute resolution. This chapter maps the four refund provisions, the rich Supreme Court jurisprudence that has grown around Section 16 — from Salem Advocate Bar Association through Afcons and M.C. Subramaniam to the recent retreat in Jage Ram — and the practical questions of how much is refundable, to whom and when.
Why the Act Provides for Refund at All
Court fee is, as the chapter on the introduction to this subject explains, fundamentally a fiscal levy: the litigant pays the State for the service of adjudication, and the levy carries a broad element of quid pro quo for that service. It follows logically that where the full service of adjudication is not in fact rendered — because the suit is restored after wrongful rejection, because a review corrects the court's own mistake, or because the parties resolve the dispute without a trial — the policy underlying the fee is weakened, and a measured return of the money becomes justifiable. Refund is therefore not an act of grace; it is the natural corollary of treating court fee as a fee correlated to service rather than a tax exacted for the general revenues.
The Court Fees Act, 1870 does not, however, refund liberally or automatically. The right to a refund is a creature of statute, confined to the specific situations enumerated in Sections 13 to 16, and a litigant cannot claim a refund merely because, with hindsight, he regrets having paid. The machinery is deliberately narrow: each section identifies a defined triggering event, fixes the quantum (full fee, partial fee or the excess), and requires the court to issue a certificate authorising the litigant to recover the money from the Collector. Understanding refund therefore means understanding four distinct triggers, not one general principle.
The Refund Certificate: How the Money Comes Back
A point common to all four refund provisions, and one that students routinely overlook, is that the court does not itself hand the money back. What the court issues is a certificate — a formal authorisation entitling the litigant to receive the refund from the Collector, or, under the modern electronic-transfer language inserted by amendment, by electronic transfer in the manner prescribed. The court that tried or heard the matter adjudicates the entitlement and quantifies it; the executive (the Collector or the treasury) actually disburses. This bifurcation reflects the Act's revenue architecture, in which fees are collected for and held by the State.
The practical consequence is that a litigant seeking a refund must obtain the certificate from the appropriate court and then present it to the Collector. The court's order granting or refusing the certificate is the operative judicial act, and it is that order which the appellate or revisional jurisprudence — including the leading cases on Section 16 discussed below — is concerned with. Where a court wrongly refuses a certificate to which the litigant is entitled, the remedy lies in challenging that refusal, as the petitioners successfully did in M.C. Subramaniam.
Section 13: Refund on Restoration of a Rejected Plaint or Remand
Section 13 deals with the situation where an appellate court sets right an error of the lower court that had prematurely thrown out a litigant. It provides that if an appeal or plaint which has been rejected by the lower court on any of the grounds mentioned in the Code of Civil Procedure is ordered to be received, or if a suit is remanded in appeal for a second decision by the lower court (the marginal reference is to what is now Order XLI Rule 23 CPC), the appellate court shall grant the appellant a certificate authorising him to receive back from the Collector the full amount of the fee paid on the memorandum of appeal.
The rationale is straightforward. The appellant has had to file and pay for an appeal only because the lower court wrongly rejected his plaint or wrongly disposed of the suit so that it had to be sent back for fresh decision. Since the appeal was, in a sense, made necessary by the lower court's own error, the State returns the full appellate fee. Two features deserve emphasis for the examination. First, the refund is of the fee paid on the memorandum of appeal, not on the original plaint. Second, the refund is full — Section 13 is the most generous of the four provisions because the appeal it compensates was, in substance, forced upon the litigant by judicial error below.
Section 14: Refund of Excess Fee on a Delayed Review Application
Section 14 addresses the fee structure for applications for review of judgment. Under the rate schedules, an application for review presented promptly attracts a lower fee than one presented after a defined period of delay — the Act historically charged a higher fee for review applications presented on or after the thirtieth day from the date of the decree, to discourage tardy reviews. Section 14 provides that where such a delayed review application is presented, the court may, in its discretion and unless the delay was caused by the applicant's own laches, grant the applicant a certificate authorising him to receive back so much of the fee paid on the application as exceeds the fee that would have been payable had the application been presented before that day.
The provision is thus a measured refund of the excess — the difference between the higher delayed-application fee and the lower prompt-application fee. Two conditions gate the relief: the refund is discretionary ("may, in its discretion"), and it is forfeited where the delay was attributable to the applicant's own negligence or laches. The logic is that a litigant should not be penalised by the higher fee where the delay was not his fault, but the State will not reward a litigant whose own slackness caused the delay. Section 14 is narrow and rarely litigated, but it is a favourite of objective papers precisely because of its 'excess only' and 'no-laches' qualifications.
Section 15: Refund Where the Court Reverses Its Own Decision on Review
Section 15 carries the review situation one step further. Where an application for review of judgment is admitted, and where, on the rehearing, the court reverses or modifies its former decision on the ground of mistake in law or fact, the applicant becomes entitled to a certificate authorising him to receive back so much of the fee paid on the review application as exceeds the fee payable on an ordinary application to that court under the Second Schedule.
The unifying idea behind Sections 13 to 15 is that the litigant is compensated when the court system itself has erred. Section 13 compensates an appellant for a wrong rejection or a remand below; Section 15 compensates a review applicant when the court, on rehearing, admits that its earlier decree rested on a mistake of law or fact and corrects it. In both, the fee is returned (in whole or as to the excess) because the litigant's expenditure was occasioned by judicial error rather than by the ordinary risk of losing on the merits. The triggering words in Section 15 — "mistake in law or fact" — track the substantive grounds for review under Order XLVII Rule 1 CPC, and the refund follows only where the review actually succeeds in reversing or modifying the earlier decision on that ground.
Section 16: Full Refund on Reference to a Section 89 CPC Settlement
Section 16 is the modern heart of refund law and the provision around which almost all contemporary litigation revolves. It was inserted into the Court Fees Act by the Code of Civil Procedure (Amendment) Act, 1999, brought into force with the package of reforms in 2002, as a consequential amendment designed to give teeth to the newly enacted Section 89 of the Code of Civil Procedure. Section 16 provides that 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, 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.
The policy is unambiguous: the State uses the carrot of a full refund of court fee to encourage litigants to abandon the courtroom in favour of arbitration, conciliation, judicial settlement, Lok Adalat or mediation. Every dispute that settles through these channels relieves the overburdened civil courts and conserves judicial time, and the full refund is the reward for that public benefit. The reference to Section 89 CPC makes the two provisions interdependent — Section 16 is, in effect, the fiscal incentive attached to the procedural ADR machinery of Section 89, the architecture of which is examined in our companion notes on the computation of court fees and across the Court Fees and Suits Valuation hub.
Section 89 CPC: The Settlement Machinery Section 16 Rewards
To work Section 16 one must understand Section 89 of the Code of Civil Procedure, the provision it serves. Section 89, inserted by the 1999 Amendment and effective from 2002, is headed "Settlement of disputes outside the Court." It provides that 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, give them to the parties for their observations, and after reformulating the terms may refer the dispute for settlement by one of five modes: (a) arbitration, (b) conciliation, (c) judicial settlement including settlement through Lok Adalat, or (d) mediation.
Section 89 was famously marred by a drafting error. In Salem Advocate Bar Association (II) v. Union of India, (2005) 6 SCC 344, the Supreme Court noticed that the statutory definitions of "judicial settlement" and "mediation" in clauses (c) and (d) of Section 89(2) had been transposed, and held that the two definitions must be read as interchanged to give effect to the obvious legislative intent. The Court upheld the constitutional validity of Section 89 (and of the wider 1999 and 2002 CPC amendments) and emphasised the mandatory thrust of the provision: the court must, where elements of settlement exist, make an endeavour to refer the parties to an ADR process before the trial commences. It is a successful reference under this section that triggers the Section 16 refund.
Salem Advocate Bar Association: Validating the ADR-Refund Bargain
The foundational case in this area is the pair of decisions in Salem Advocate Bar Association, Tamil Nadu v. Union of India. The first decision, reported at (2003) 1 SCC 49, upheld the constitutional validity of the Code of Civil Procedure (Amendment) Acts of 1999 and 2002, including the insertion of Section 89, and constituted a committee to frame model rules for its working. The second and more substantive decision, Salem Advocate Bar Association (II) v. Union of India, (2005) 6 SCC 344, considered the committee's report, corrected the draftsman's transposition of "judicial settlement" and "mediation," and laid down the framework within which Section 89 and its consequential provisions — including Section 16 of the Court Fees Act — would operate.
For refund purposes, Salem (II) is significant because it confirmed that the ADR machinery and its fiscal incentive form a coherent whole. The Court treated the full refund of court fee under Section 16 as an integral part of the scheme designed to make ADR attractive to litigants, and it endorsed the policy of rewarding parties who relieve the courts of the burden of trial. The decision is the doctrinal anchor for every later case on the scope of Section 16, and an aspirant should be able to state both the constitutional-validity holding and the drafting-error correction with precision.
Afcons Infrastructure: Refund Across All ADR Modes
The leading exposition of how Section 89 actually operates — and therefore of when a Section 16 refund is earned — is Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24. A sub-contractor, Cherian Varkey, had sued Afcons for sums due on a construction sub-contract that contained no arbitration clause, and the question arose whether and how the trial court could exercise its Section 89 power. The Supreme Court, conscious of the practical difficulties courts had faced in applying the section, comprehensively reinterpreted it.
The Court held that a court cannot refer parties to arbitration under Section 89 without the consent of all parties, because arbitration and conciliation are consensual processes that oust the court's jurisdiction; but it may refer them to the non-adjudicatory modes — Lok Adalat, mediation or judicial settlement — even without mutual consent, once it forms the opinion that there exist elements of a settlement. Crucially for this chapter, Afcons read down the cumbersome "formulate and reformulate the terms of settlement" requirement as directory, holding it sufficient for the court to formulate a summary of the dispute. The decision confirmed that a successful settlement through any of the Section 89 modes attracts the benefit of refund under Section 16, and it directed refund of the court fee accordingly — establishing that the refund incentive runs across the whole menu of ADR processes, not merely arbitration.
Lok Adalat and the Legal Services Authorities Act
Settlement through a Lok Adalat enjoys an additional, independent statutory route to refund. Section 21 of the Legal Services Authorities Act, 1987 provides that every award of a Lok Adalat shall be deemed to be a decree of a civil court, that it is final and binding on all parties with no appeal lying against it, and — by the proviso to the relevant scheme — that where a case is referred to and settled in a Lok Adalat, the court fee paid is to be refunded in the manner provided under the Court Fees Act, 1870. The combined effect of Section 89(c) CPC, Section 16 of the Court Fees Act and Section 21 of the Legal Services Authorities Act is that a litigant who settles in a Lok Adalat is ordinarily entitled to a full refund of court fee.
This makes the Lok Adalat the most fiscally favourable of the settlement routes, because the right to a full refund there rests on two overlapping statutory bases. The award's deemed-decree status under Section 21 also means the settlement is directly executable, sparing the parties a fresh suit. For the aspirant, the point to retain is that Lok Adalat settlements carry a statutory refund entitlement that is both well established and routinely enforced, and that it is the benchmark against which refund claims for other modes — particularly mediation — have been measured.
M.C. Subramaniam: Refund Even for Private, Out-of-Court Settlements
For over a decade the open question was whether Section 16 (and its State analogues) extended only to settlements reached through a Section 89 reference, or also to settlements the parties reached privately, by themselves, without any court referral. The Supreme Court answered the question in favour of the litigant in High Court of Judicature at Madras v. M.C. Subramaniam, 2021 SCC OnLine SC 109. The case arose under Section 69-A of the Tamil Nadu Court Fees and Suits Valuation Act, 1955 — the Madras analogue of Section 16 — where parties had settled their appeal privately, without the court having formally referred them to any Section 89 mode, and then sought a refund.
The Court adopted a frankly purposive and liberal interpretation. It held that the beneficial object of the refund provision — to reward litigants who relieve the courts of the burden of trial — would be defeated by a narrow reading confined to court-referred settlements. A litigant who settles privately, the Court reasoned, saves even more judicial time than one who needs the court's machinery to broker a settlement, and is therefore "even more deserving" of the refund. To deny the private settler what the court-referred settler receives would create an unjust and irrational classification between two equally meritorious classes. The Court accordingly directed refund of the court fee, establishing the liberal principle that private out-of-court settlements also attract the benefit of the refund provision.
Jage Ram: A Narrowing Retreat on Private Settlements
The liberal position in M.C. Subramaniam did not go unqualified. In Jage Ram v. Ved Kumar, the Supreme Court took a markedly narrower view of Section 16 of the central Court Fees Act, 1870. The petitioner there had settled a second appeal by a private compromise and sought refund of the court fee paid across the trial, first appellate and second appellate stages. The High Court had refused, holding that refund under Section 16 is available only where the matter is resolved through a recognised ADR mechanism, and the Supreme Court declined to interfere.
The effect of Jage Ram is to read Section 16 literally: because the section in terms speaks only of a case where "the Court refers the parties" to a Section 89 mode, a purely private settlement reached without any such reference does not, on the strict language, attract the full refund. Commentators have noted the tension between Jage Ram and the purposive approach of M.C. Subramaniam — the former turning on the central 1870 Act and its literal "reference" requirement, the latter on the more liberally worded Tamil Nadu Section 69-A. The safest examination position is to present the two decisions as a live doctrinal divergence: M.C. Subramaniam favouring a beneficial construction that embraces private settlements, Jage Ram insisting that the central Section 16 is triggered only by an actual court reference under Section 89. Candidates should note which statute each case construed, as that distinction does much of the reconciling work.
Mediation Is Not Lok Adalat: The Limits of Full Refund
A further refinement concerns the distinction between the different Section 89 modes for the quantum of refund. In Sanjeevkumar Harakchand Kankariya v. Union of India (2024), the Supreme Court held that Lok Adalat and mediation are two distinct methods of dispute resolution and cannot be equated for the purpose of the full court-fee refund. The full-refund entitlement that the Legal Services Authorities Act, 1987 attaches to Lok Adalat settlements does not, the Court reasoned, automatically carry over to mediation settlements, because the two operate under different statutory frameworks and governance structures.
The practical lesson is that the quantum of refund can turn on the precise mode of settlement and on the governing statute — central or State. While Section 16 of the central Act speaks of a "full amount" refund on reference to any Section 89 mode, the interaction with the Legal Services Authorities Act and with State court-fees legislation can produce different outcomes for mediation as against Lok Adalat. An aspirant should therefore resist the temptation to assume a uniform full refund across every settlement route, and should instead identify (i) the governing statute, (ii) the specific Section 89 mode, and (iii) whether the settlement was court-referred or private, before stating the refund entitlement.
How Much Comes Back, and at Which Stage
Pulling the threads together, the quantum of refund varies sharply by provision. Under Section 13, the appellant recovers the full fee on the memorandum of appeal where his plaint is restored or the suit remanded. Under Section 14, only the excess delayed-application fee is returned, and only in the court's discretion and absent the applicant's laches. Under Section 15, the review applicant recovers the excess over an ordinary application fee where the court reverses or modifies its decision for mistake. Under Section 16, the plaintiff recovers the full fee paid on the plaint where the suit is referred to a Section 89 mode of settlement.
A recurring practical question is whether refund is available when settlement occurs at the appellate stage, after the suit has already been tried. High Courts have generally held that the beneficial object of Section 16 extends to settlements reached at the appellate stage, so that the court fee paid is refundable even though the dispute settles only after a first or second appeal has been filed. This is consistent with the purposive reasoning of M.C. Subramaniam, under which any settlement that relieves the court of the burden of completing the adjudication merits the refund. The certificate is issued by the court before which the settlement is recorded, and the litigant then recovers the fee from the Collector in the usual way. These refund mechanics complement the upfront valuation rules discussed in suits for money: valuation and court fees and suits for specific performance.
Examination Traps and Points to Remember
Several recurring traps deserve flagging. First, do not confuse the provisions: Section 13 gives a full refund of the appeal fee on restoration or remand, whereas Section 16 gives a full refund of the plaint fee on a Section 89 reference; Sections 14 and 15 give only the excess. Second, remember that the court issues a certificate; the Collector pays — a favourite one-mark distinction. Third, the draftsman's error corrected in Salem (II) concerns the interchange of "judicial settlement" and "mediation" in Section 89(2), not the refund provision itself.
Fourth, on the consent question, recall Afcons: arbitration and conciliation under Section 89 require the consent of all parties, but the court may refer parties to Lok Adalat, mediation or judicial settlement even without consent. Fifth, keep the central and State statutes apart — M.C. Subramaniam construed Section 69-A of the Tamil Nadu Act and read it liberally to cover private settlements, while Jage Ram read the central Section 16 literally to require an actual court reference. Finally, do not assume mediation and Lok Adalat are interchangeable for refund quantum; Sanjeevkumar Kankariya warns that they are distinct. A candidate who can state the trigger, the quantum and the governing statute for each of Sections 13 to 16, and can place Salem, Afcons, M.C. Subramaniam and Jage Ram in their proper relationship, has mastered this chapter. Return to the subject hub for the full sequence of chapters.
Frequently asked questions
When is a full refund of court fee available under the Court Fees Act, 1870?
A full refund is available in two situations. Under Section 13, the full fee paid on a memorandum of appeal is refunded where a wrongly rejected plaint is ordered to be received or a suit is remanded for fresh decision. Under Section 16, the full fee paid on the plaint is refunded where the court refers the parties to any of the modes of settlement under Section 89 of the Code of Civil Procedure — arbitration, conciliation, judicial settlement, Lok Adalat or mediation.
What does Section 16 of the Court Fees Act, 1870 provide, and when was it introduced?
Section 16 provides that where the court refers the parties to a suit to any mode of settlement under Section 89 of the Code of Civil Procedure, 1908, the plaintiff is entitled to a certificate authorising him to receive back the full amount of court fee paid on the plaint. It was inserted by the Code of Civil Procedure (Amendment) Act, 1999, brought into force in 2002, as a consequential amendment to give a fiscal incentive to the new ADR machinery of Section 89.
Can court fee be refunded if parties settle privately, without a court reference under Section 89?
The position is divided. In High Court of Judicature at Madras v. M.C. Subramaniam, 2021 SCC OnLine SC 109, the Supreme Court, construing Section 69-A of the Tamil Nadu Act liberally, held that parties who settle privately are "even more deserving" of refund and allowed it. But in Jage Ram v. Ved Kumar, the Court read the central Section 16 literally and held that refund requires an actual court reference to a Section 89 mode, denying it for a purely private settlement.
What is the significance of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. for refund of court fees?
In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24, the Supreme Court held that a court cannot refer parties to arbitration or conciliation under Section 89 without the consent of all parties, but may refer them to Lok Adalat, mediation or judicial settlement even without consent. It confirmed that a successful settlement through any Section 89 mode attracts a refund of court fee under Section 16, and directed refund accordingly.
Is the refund of court fee for a Lok Adalat settlement different from a mediation settlement?
Yes. A Lok Adalat settlement carries a full refund grounded both in Section 16 of the Court Fees Act and in Section 21 of the Legal Services Authorities Act, 1987, under which the award is a deemed decree. In Sanjeevkumar Harakchand Kankariya v. Union of India (2024), the Supreme Court held that Lok Adalat and mediation are distinct methods and that the full-refund entitlement attaching to Lok Adalat does not automatically extend to mediation, as they operate under different statutory frameworks.
Does the court itself refund the money, and how much is refunded under Sections 14 and 15?
The court does not pay the refund; it issues a certificate authorising the litigant to recover the fee from the Collector (or by electronic transfer as prescribed). Under Section 14, only the excess fee on a delayed review application is refundable, in the court's discretion and provided the delay was not caused by the applicant's laches. Under Section 15, where the court reverses or modifies its decision on review for a mistake of law or fact, only the excess over an ordinary application fee is refunded.