Case Name: SANJEEV KUMAR HARAKCHAND KANKARIYA V. UNION OF INDIA & ORS
Case Number: Civil Appeal@ SLP (C) No. 1904 of 2015
Date: 19th December,2024
Quorum: Hon’ble Mr. Justice C.T. Ravikumar, Hon’ble Mr. Justice Sanjay Karol
FACTS OF THE CASE
The appellant, Sanjeev Kumar Harakchand Kankariya, filed a civil suit before the Aurangabad Civil Court seeking specific performance of a contract for the sale of property. The matter was referred to mediation under Section 89 of the Code of Civil Procedure (CPC) resulting in an amicable settlement. The suit was disposed of by means of a consent order. Instead of a full refund of the court fees as sought by the appellant, only 50% was refunded.
Aggrieved by the decision of the refund, he appealed, claiming under Section 16 of the CFA, 1870 that full refund should follow when the disputes are settled by methods ADR. The High Court held that in the state, on a plain reading of the Maharashtra Court Fees Act, 1959, that Act does not permit refund of 100%, but rather allows for 50% refund with a limited application.
ISSUE OF THE CASE
Whether the appellant is entitled to a full refund of court fees under the CFA, 1870, whereas the Maharashtra Court Fees Act, 1959 limits refunds to 50%. That is whether it is against the provisions of the Central legislation?
LEGAL PROVISIONS
- Section 16, CFA, 1870: If a matter is settled by way of mediation, conciliation, or arbitration under the provisions of Section 89 of the CPC, a complete refund of the court fees is to be ordered. This provision encourages the litigants to resort to ADR mechanisms by providing financial relief.
- Section 43, MCFA, 1959: Governs the refund of court fees- limitation on 50% refund on certain conditions specified, unless by the recent amendment, from Maharashtra. It also provides the State with discretion in the matter.
- Section 89, CPC: Promotes the ADR mechanisms of mediation, conciliation, and arbitration for dispute resolution. It is intended to lessen the burden on the courts to deal with cases and to expedite dispute resolution.
- Article 254, Constitution of India: It resolves the conflict when Central and State laws on Concurrent List subjects clash with one another-providing for Central laws to have preference, unless State law receives Presidential assent.
- Legal Services Authorities Act, 1987 (LSA Act): Advocates for free legal aid, thereby ordering complete refund of court fees for cases settled by Lok Adalats, thereby reinforcing equal access to justice.
ARGUMENTS
Arguments of the Appellant:
The appellant contended that the CFA, 1870 being Central legislation prevails over the MCFA, 1959 as mandated by Article 254 of the Constitution. It is argued that Section 16 provides a clear right to the litigants for a complete refund of court fees, whenever matters were resolved through ADR mechanisms regardless of the stage of litigation. As far as the refund process goes, it has rendered the MCFA contrived against the very purpose of formulations under Section 89 of the CPC and thus tends to act contrary to public policy as a disincentive for adoption of ADR. The appellant also contended that in case of any inconsistency between the Central and the State laws, it is the CFA which should be put to consideration in favour of it in order to accomplish an achievement of uniformity and justice.
Arguments of the Respondent:
It was contended by the respondents that the MCFA, 1959, repealed the CFA, 1870, in Maharashtra-pursuant to the legislative competence of the State. Entry 3 of the State List explicitly empowers Maharashtra to apply regulations regarding court fees. The provisions under the MCFA, Section 43 inclusive, align with the Constitution, thus providing a reasonable framework for refunds. The respondents friendily indicated that the MCFA was amended in 2018 to bring it in conformity with the CFA and provide for full refund in ADR-settled cases, but this does not have retroactive effect. Court fees are a state subject, and the refunds as provided under the MCFA represent a legitimate policy judgment.
ANALYSIS
In this case, the Supreme Court highlighted the need for a delicate balance between legislative competence and objectives of ADR promotion. It observed that the MCFA, 1959, is substantially within the State’s competence under Entry 3 of the State List dealing with court fees while the CFA, 1870, remains a valid Central law as per Article 254, and does not, however, extinguish the power of the State Legislature in the areas falling in the exclusive competence of the State.
In interpreting the provisions of the CFA and MCFA in the light of harmonious construction doctrine, the Court did not find any direct conflict and observed that the provisions regarding refunds controlling the Central Act cannot apply universally to States. The opinion further provides a distinction between Lok Adalats and mediation under Section 89 of the CPC by placing equal emphasis on the fact that the two ADR mechanisms have different scopes and intents when governed by a legislative framework.
The Court accepted the concerns raised by the appellant about uniformity and general principles of promoting ADR but clarified that these refund provisions resort to the objectives of dispute resolution which are ancillary to such objectives. In upholding the amendment to the MCFA in 2018 by the Maharashtra Government, the judgment also hailed the initiative as a step taken in favour of bringing in harmony with the CFA and encouraged other State Governments to follow suit for furthering the objectives of ADR.
JUDGMENT
The Supreme Court turned down the appeal and held that the MCFA, 1959, legally governs the court fees in Maharashtra. However, in the peculiar facts of the case, and exercising extraordinary jurisdiction under Article 142 of the Constitution, the Court directed that the appellant be given a full refund of the court fees. This, the Court made clear, is not to be regarded as a precedent.
CONCLUSION
The judgment reaffirms the balance between legislative competence and the promotion of ADR mechanisms, whereby, through the upholding of the MCFA, the Court respected the State’s legislative power, the uniform court fee refund across ADRs being a matter of concern. The refund ordered in favor of the appellant was a special resolution, modeled on judicial prudence in dealing with unique circumstances.
The ruling is a testament of the state’s spirit to do justice and fairness within the confines of constitutional principles, further enhancing faith in both ADR processes and the court system.
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WRITTEN BY MADHAV SAXENA
