1. Introduction
Civil litigation in India often involves substantial financial costs, one of which is the payment of court fees at the time of instituting a suit or filing an appeal. These fees are governed primarily by the Court Fees Act, 1870 , which prescribes the manner and amount of fees payable on documents filed before courts.
Historically, court fees were treated as a statutory levy payable to the state, and once paid, they were generally non-refundable, even if the dispute was subsequently resolved by agreement between the parties. This framework created a disincentive for litigants to settle disputes amicably, particularly in cases where substantial court fees had already been paid.
In response to these concerns, Indian courts and legislatures have increasingly emphasized the importance of alternative dispute resolution mechanisms, such as mediation and conciliation. These mechanisms are designed to reduce the burden on courts and promote faster resolution of disputes.
The Court Fees (Delhi Amendment) Act, 2026 represents an important legislative effort to support this policy direction. By providing for a full refund of court fees upon settlement, the amendment removes a financial barrier that previously discouraged parties from resolving disputes outside full judicial adjudication.
2. Legislative Background
The Court Fees Act, 1870 is a central legislation that regulates the payment of court fees on documents filed in civil proceedings. Although originally enacted during the colonial period, the Act continues to apply in India, subject to amendments made by individual states and union territories. Over time, various jurisdictions introduced provisions allowing refund of court fees when disputes were settled through court-referred alternative dispute resolution mechanisms.
In Delhi, the statutory framework previously included Section 16 and Section 16A, which addressed the refund of court fees in certain circumstances. However, the earlier framework created distinctions between settlements achieved through court-referred ADR and those achieved through private negotiation between parties. These distinctions often resulted in procedural complexity and inconsistent application. Consequently, the Delhi legislature introduced the Court Fees (Delhi Amendment) Act, 2026, which simplifies the statutory scheme and ensures equal treatment of all settlements.
3. Substitution of Section 16: Refund of Court Fees
3.1 Revised Legal Framework
The amendment substitutes Section 16 of the Court Fees Act, 1870 (as applicable to Delhi). Under the revised provision, when a dispute is settled through any recognized mode of settlement, the plaintiff or appellant becomes entitled to a certificate from the court authorizing refund of the full amount of court fees paid. The certificate issued by the court enables the litigant to claim a refund from the appropriate government authority.
3.2 Scope of Settlement Mechanisms
The amended provision recognizes a wide range of dispute resolution mechanisms, including:
• Mediation
• Conciliation
• Judicial settlement
• Lok Adalat proceedings
• Private settlement between parties
• Any other mutually agreed dispute resolution mechanism
This inclusive approach reflects the legislature’s intention to promote settlement through diverse mechanisms rather than restricting refunds to formal ADR procedures.
3.3 Full Refund of Court Fees
One of the most notable features of the amendment is the provision for 100 percent refund of court fees. Earlier legal frameworks sometimes permitted only partial refunds or limited refunds to cases involving court-referred ADR. The new provision eliminates these limitations and ensures that litigants receive the entire court fee back when disputes are resolved amicably.
4. Settlement Without Formal Court Reference
4.1 Role of Section 89 CPC
Section 89 of the Code of Civil Procedure, 1908 empowers courts to refer disputes to alternative dispute resolution mechanisms such as mediation, conciliation, arbitration, and Lok Adalat. However, in practice, many disputes are resolved through direct negotiation between parties without a formal court reference.
4.2 Recognition of Private Settlements
The Court Fees (Delhi Amendment) Act, 2026 clarifies that refund of court fees is available even where Parties privately negotiate a settlement, or Settlement occurs outside court proceedings but is subsequently recorded before the court.
5. Omission of Section 16A
5.1 Earlier Position
Prior to the amendment, Section 16A created a statutory distinction between different types of settlement mechanisms. In particular, it differentiated between (i) Settlements achieved through court-referred ADR processes, and (ii) Settlements reached through private agreements between parties.
This distinction was widely regarded as unnecessary and inconsistent with the broader policy objective of encouraging dispute resolution.
5.2 Effect of Deletion
The omission of Section 16A has several important consequences:
• Removal of discriminatory distinctions between settlement mechanisms
• Simplification of the statutory scheme governing refund of court fees
• Equal recognition of all forms of settlement
• Greater clarity for litigants and courts
As a result, the legal framework governing refund of court fees in Delhi is now simpler, more uniform, and more accessible.
6. Stage of Proceedings Covered
The refund of court fees under the amended Section 16 applies when settlement occurs:
1. During the pendency of a civil suit
2. During the pendency of an appeal
3. At any stage prior to final adjudication
This broad applicability ensures that litigants remain incentivized to settle disputes even at advanced stages of litigation.
For instance, disputes may be settled:
• After completion of pleadings
• During trial
• At the appellate stage
• During execution proceedings
In each of these scenarios, the refund mechanism may still apply.
7. Policy Objectives of the Amendment
Encouraging Settlement
Promotion of Alternative Dispute Resolution
Reduction of Judicial Backlog
Uniform Treatment of Litigants
Cost Reduction for Litigants
8. Practical Impact on Litigation in Delhi
Faster Resolution of Commercial Disputes
Increased Use of Mediation
Administrative Simplicity
9. Conclusion
The Court Fees (Delhi Amendment) Act, 2026 represents an important reform in the law governing refund of court fees in Delhi. By substituting Section 16 and removing Section 16A, the amendment introduces a clear and uniform rule that litigants who settle disputes amicably are entitled to a full refund of court fees. The reform strengthens the institutional framework for alternative dispute resolution while reducing the financial burden of litigation.
In a judicial system facing increasing caseloads, such legislative measures are crucial for promoting efficient dispute resolution and encouraging parties to resolve conflicts through negotiation and cooperation rather than prolonged litigation.
Contributed by-
RITHIK DHARIWAL
ADVOCATE
Please log onto our YouTube channel, The Indian Lawyer Legal Tips, to learn about various aspects of the law. Our latest Video, titled “DO HUSBANDS HAVE A RIGHT TO MAINTENANCE UNDER INDIAN LAW?” can be viewed at: https://www.youtube.com/watch?v=XAodOc4AfTk