Supreme Court Resolves Court Fee Refund Dispute, Highlights Importance of ADR Mechanisms

Supreme Court of India ruled on the contentious issue of refunding court fees in cases resolved through alternative dispute resolution (ADR) mechanisms, emphasizing the need to promote ADR as a way to ease the burden on the judiciary. The case, Sanjeevkumar Harakchand Kankariya vs. Union of India & Others, involved a dispute over court fee refunds in Maharashtra and its alignment with national legislation.

The appellant, Sanjeevkumar Kankariya, sought a complete refund of court fees after his case was amicably resolved through mediation under Section 89 of the Code of Civil Procedure (CPC). He challenged the Bombay High Court's 2014 decision, which upheld a state notification limiting refunds to 50% of court fees under the Maharashtra Court Fees Act (MCFA), 1959. The appellant argued this contradicted Section 16 of the Court Fees Act (CFA), 1870, a central legislation allowing 100% refund in similar cases.

The High Court had rejected the plea, stating the CFA, 1870, was repealed in Maharashtra after the enactment of the MCFA, 1959. It also noted that the CFA's application to ADR refunds under the Legal Services Authorities Act (LSA), 1987, pertained only to disputes resolved by Lok Adalats and not mediation or other ADR processes.

In its judgment, the Supreme Court examined key constitutional provisions, including Entries 3 (State jurisdiction over court fees) and 11A (Concurrent jurisdiction over administration of justice) of the Seventh Schedule. It ruled that court fees, as governed under Entry 3 of the State List, fell within the legislative purview of Maharashtra, making its notification valid. The Court rejected the appellant's claim of legislative inconsistency, emphasizing that ADR processes like mediation and Lok Adalats are distinct.

Highlighting the benefits of ADR, the judgment noted that out-of-court settlements reduce judicial backlog and encourage litigants to pursue quicker resolutions. However, it clarified that financial incentives like full refunds of court fees are incidental and not the primary objective of ADR.

The Court acknowledged the appellant’s argument that differentiated refund provisions might discourage ADR adoption but upheld the High Court's interpretation. In its concluding remarks, it praised Maharashtra’s legislative amendment in 2018, which introduced Section 16A in the MCFA, allowing full refunds for ADR-settled cases, harmonizing the law with national standards.

While dismissing the appeal, the Court exercised its extraordinary jurisdiction under Article 142 to grant the appellant a full refund of the disputed court fees of ₹5 lakhs. The judgment sets a precedent in clarifying state and central legislation's interplay in ADR-related court fee refunds, while reiterating the judiciary’s support for alternative dispute mechanisms to enhance efficiency and justice delivery.