The Kerala High Court has established that when a dispute in an ongoing civil case is referred to Lok Adalat and subsequently settled, the full court costs already paid by the party are liable to be refunded.
Judge VG Arun found that the 7% reduction in court fees already paid was unsustainable since these cases were governed by the Legal Services Authority Act and the Court Fees Act, not the Kerala Rules on court costs and assessment of lawsuits (Board of Revenue).
“Where a dispute in a pending civil case is referred to Lok Adalat and settled, the full court costs paid are liable to be refunded. The settlement of the dispute, the adoption of the award and the subsequent reimbursement of court costs are governed by the provisions of the Legal Services Authority Act and Court Fees Act respectively, the deduction of 7% of court fees paid on the basis of the Court Fees Rules 1960 and the Assessment of Prosecutions (Board of Revenue) of Kerala is clearly unsustainable.”
The petitioner brought an action to recover the sums owed by the respondents before a civil court. The dispute was settled out of court after being referred to Lok Adalat and an award incorporating the terms of the settlement was passed by the District Legal Services Authority. Pursuant to clause 4.6 of the award, the legal fees paid in the lawsuit were to be returned to the claimant and the other plaintiffs.
Accordingly, the Claimant submitted claims for reimbursement of Rs.5,042/- paid in addition to court fees and Rs.44,98,400/- paid for court fees. An amount of Rs.41,83,512 was ordered to be refunded to the petitioner after deduction of Rs.3,14,888/-.
Aggrieved by this inference, the petitioner appealed to the High Court claiming that it was without authority and therefore unlawful.
Shyam Padman’s Lawyers, Joseph Abraham and Harish Abraham appearing for the petitioner argued that Section 21 of the Legal Services Authorities Act, read together with Section 16 of the Court Fees Act, mandates reimbursement of the full amount of court fees paid.
However, Government Litigator S. Unnikrishnan argued that the practice followed is to deduct 7% of court costs, even in cases settled in Adalat.
The Court requested a report from the Deputy Judge to determine the reason for the 7% deduction of court costs. The report states that the deduction was made in accordance with the provision of Rule 14 of the Court and Prosecution Costs Assessment Rules of Kerala (Board of Revenue).
He also stated that the printed Civil Registry Form 69 (Rule 373) which deals with reimbursement of court costs contains a column for the 7% deduction. Moreover, the usual practice followed in civil courts in Kottayam is to deduct 7% of the court costs, even if the dispute is settled in Lok Adalat, the report reveals.
Judge Arun noted that from a joint reading of Section 21 of the Legal Services Authority Act and Section 16 of the Central Court Fees Act, it was evident that the entire legal costs was recoverable and that this legal position was set out in Vasudevan V. A c. State of Kerala and Ors [AIR 2004 Kerala 43].
Further, regarding the rationales for the report, the Single Judge clarified that Rule 14 of the Kerala Court Fees and Prosecutions Assessment Rules has nothing to do with the reimbursement of court fees paid in part of a trial settled before the Lok Adalat. Further, it was asserted that the mere fact that a prescribed form contains a column for the deduction of a portion of the legal costs to be reimbursed does not imply that, irrespective of the requirement of the applicable provision, the costs of justice must be deducted.
As such, the writ petition was allowed and the deduction of Rs.3,14,888/- from the court fees paid was declared illegal. Kottayam Supplementary Sub-Court II was instructed to issue the certificate required to release the balance of the court fees paid to the petitioner.
Read also : Parties who privately agree to settle disputes without court intervention U/s 89 CPC are also entitled to reimbursement of court costs: Supreme Court
Case title: Mithun T. Abraham c. Sub Court of Judicature & Ors.
Quote: 2022 LiveLaw (Ker) 203
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