In a judgment underscoring the importance of alternative dispute resolution (ADR) in alleviating judicial burdens, the Supreme Court, led by Justice C.T. Ravikumar and Justice Sanjay Karol, advocated for legislative reforms ensuring a full refund of court fees in cases resolved through ADR methods. The case, Civil Appeal No. ___ of 2024, arose from an appeal filed by Sanjeevkumar Harakchand Kankariya against the Union of India & Others, challenging the Maharashtra government’s partial refund policy.
Background of the Case
The appellant, Sanjeevkumar Harakchand Kankariya, had sought specific performance of a property agreement in a civil suit. The case, referred to mediation under Section 89 of the Code of Civil Procedure (CPC), 1908, was amicably resolved. However, Kankariya was granted only a 50% refund of the court fees, per Maharashtra’s policy under the Maharashtra Court Fees Act, 1959 (MCFA).
The appellant contested this policy, arguing it was inconsistent with Section 16 of the Court Fees Act, 1870 (CFA), which mandates a full refund when disputes are resolved through ADR. He further contended that the Legal Services Authorities Act, 1987 (LSA Act), a central statute, incorporates CFA provisions and should take precedence over the state legislation.
Legal Issues Addressed
The court examined two pivotal issues:
1. Whether the Maharashtra Court Fees Act, 1959, superseded the Court Fees Act, 1870, within the state.
2. Whether the partial refund policy under the MCFA conflicted with central legislation and undermined the intent of ADR under Section 89 CPC.
Observations and Judgment
Justice Sanjay Karol, writing for the bench, ruled that court fees are a state subject under Entry 3 of List II of the Constitution’s Seventh Schedule. The MCFA, enacted by the Maharashtra Legislature, validly repealed the CFA, 1870, within the state. The court emphasized the principle of legislative competence, noting that the state law was consistent with its constitutional mandate.
However, the bench observed that the policy of partial refunds might disincentivize ADR, contrary to the objective of Section 89 CPC and the Supreme Court’s directives in Salem Advocates Bar Association v. Union of India. The court urged the Maharashtra government to align its refund policy with the CFA, 1870, promoting uniformity and judicial efficiency.
Quoting the judgment, the court remarked, “Encouraging ADR mechanisms requires parity in benefits for litigants, whether resolved through mediation, Lok Adalats, or other prescribed methods. Full refunds of court fees would bolster trust in these processes and reduce the judiciary’s backlog.”
Legislative Developments and Relief
Acknowledging recent amendments to the MCFA, the court noted the introduction of Section 16A in 2018, which aligns with CFA provisions for a full refund of fees for ADR resolutions. However, this amendment was not retroactive, leaving litigants like the appellant ineligible for complete refunds for earlier cases.
In a gesture of judicial discretion under Article 142 of the Constitution, the Supreme Court directed a full refund of the appellant’s court fees of approximately ₹5 lakhs. The court clarified that this decision was case-specific and not a binding precedent.
Advocates representing the parties included Mr. Sandeep Sudhakar Deshmukh for the appellant and Mr. Vikramjit Banerjee, Additional Solicitor General, and Ms. Rukmini Bobde for the respondents.
