Full Judgment Text
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
st
Date of decision: 01 JUNE, 2026
IN THE MATTER OF:
+ CS(COMM) 474/2019 &I.A. 11701/2020, I.A. 9050/2023, I.A.
15936/2026
SAINIK INDUSTRIES PVT. LTD. .....Plaintiff
Through: Ms. Preeti Gupta, Ms. Urvashi Tyagi,
Advs. along with Vikram Singh, AR
of the Plaintiff
versus
INDIAN SUGAR MANUFACTURING COMPANY LIMITED
.....Defendant
Through:
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT (ORAL)
I.A. 15936/2026
1. The instant application has been filed on behalf of the Plaintiff for
withdrawal of the present Suit and for refund of the court fees.
2. The present Suit has been filed by the Plaintiff for recovery of
Rs.19,55,30,723/- along with pendete lite and future interest @ 15% per
annum.
3. It is the case of the Plaintiff that an Agreement dated 28.07.2016 was
entered into between the parties for supply of 5200 MT sugar for a total
consideration of Rs.16,71,80,000/- and the Defendant issued a confirmation
letter for supply of the same.
Signature Not Verified
Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 1 of 11
4. It is stated that the Plaintiff made an advance payment of
Rs.10,00,000/- to the Defendant. It is stated that the Defendant supplied
1942.9 MT of sugar which was undisputedly priced at Rs.6,24,64,235/-.
5. It is stated that in respect of the balance advance amount of
Rs.3,75,35,765/-, which was retained, no sugar was supplied by the
Defendant within the stipulated period as agreed upon between the parties.
6. It is stated the since the Defendant failed to comply with the terms
and conditions of the agreement despite receipt of substantial advance
payments, the Plaintiff has filed the present Suit for recovery of
Rs.19,55,30,723/- along with interest.
7. On 18.05.2026, it was stated by the learned Counsel for the Plaintiff
that the Plaintiff would like to withdraw the Suit on the ground that the
proceedings under the Insolvency & Bankruptcy Code, 2016 (“ IBC ”) have
been initiated against the Defendant and that the Plaintiff has submitted their
claims before the Insolvency Resolution Professional (IRP). The IRP had
placed the Resolution Plan before the NCLT and in the Plan which was
submitted, the Plaintiff had accepted the amount that was conferred under
the same. The matter was then adjourned to 19.05.2026.
8. On 19.05.2026, this Court wanted to consider the issue as to whether
the court fee could be refunded to the Plaintiff or not and reserved orders.
9. At the time of hearing the arguments, learned Counsel for the Plaintiff
had placed reliance on Judgment passed by a Coordinate Bench in Proud
Securities and Credits Private Limited v. Urrshila Kerkar & Anr., 2023 SSC
OnLine Del 2270, which had in turn placed reliance on the Judgment of the
Apex Court in High Court of Judicature at Madras through its Registrar
General v. M. C. Subramaniam, 2021 (3) SCC 560 .
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 2 of 11
10. While considering this aspect, this Court found that a formal
application for withdrawal of the Suit had not been filed and therefore the
case was put for directions today, i.e., 01.06.2026.
11. I.A. 15936/2026 has been filed by the Plaintiff under Order XXIII
Rule 1 of the CPC for withdrawal of the Suit and for refund of the court
fees. Paragraph 3 of the said application reads as under:-
“3. That the Resolution Professional, appointed for the
Defendant, filed an application before the NCLT for
seeking approval of the resolution plan of Consortium
of M/s Shri Dutt India Private Limited and M/s Shri
Dutt Biofuels Private Limited. The said plan was
resolution plan was approved by the NCLT vide order
dated 06.02.2024. It is further submitted that Plaintiff
has been categorized as "Operation Creditor other
than workmen and employee" and has filed its claim
with the resolution professional and has accepted the
amount granted under the said order and has not
challenged the same. ”
12. Section 16 of the Court Fee Act permits refund of court fee in case the
parties to a Suit settle their disputes. Section 16 of the Court Fees Act reads
as under:-
“ 16. Refund of fee.- Where the Court refers the
parties to the suit to anyone of the mode of settlement
of dispute referred to in section 89 of the Code of Civil
Procedure, 1908 (5 of 1908), the plaintiff shall be
entitled to a certificate from the Court authorising him
to receive back from the collector, the full amount of
paid in respect of such plaint.”
13. A Division Bench of this Court in Nutan Batra v. M/s Buniyaad
Associates, 2018 SCC OnLine Del 12916 , was of the opinion that court fee
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 3 of 11
can be refunded even if the Plaintiff withdraws the Suit on the ground that
the parties have entered into a settlement.
14. It is also pertinent to mention that a Notification has been issued by
the GNCTD permitting refund of court fee even in cases wherein the
Plaintiff withdraws the Suit on the basis of settlement, a scenario covered
under Order XXIII Rule 1(4) of the CPC.
15. The question which arises for consideration before this Court is as to
whether the facts of the present case indicate that the parties have settled
their lis or not. In this case, strictly speaking, there is no settlement arrived at
between the parties. However, the proceedings under the IBC were initiated
against the Defendant and the Plaintiff submitted its claims before the
Resolution Professional and has agreed to the amount that has been decided
to be paid under the settlement process in the Resolution Plan to the Plaintiff
herein. The net effect is that the Plaintiff has settled for an amount in order
to bring a quietus to its claims and since the Plaintiff has agreed to accept
the said amount, the ingredients of settlement are attracted to the facts of this
case.
16. In the opinion of this Court following observations of the Apex Court
in High Court of Judicature at Madra through its Registrar General v. M.C.
Subramaniam & Ors., 2021 (3) SCC 560, would apply squarely to the facts
of this case. The relevant portion of the said Judgment reads as under:-
“ 12. Having heard the petitioner and thoroughly
considered the arguments advanced, we find ourselves
unimpressed by the petitioner's contentions, for
reasons outlined below.
13. The provisions of Section 89 CPC must be
understood in the backdrop of the longstanding
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 4 of 11
proliferation of litigation in the civil courts, which has
placed undue burden on the judicial system, forcing
speedy justice to become a casualty. As the Law
Commission has observed in its 238th Report on
Amendment of Section 89 of the Code of Civil
Procedure, 1908 and Allied Provisions, Section 89 has
now made it incumbent on civil courts to strive towards
diverting civil disputes towards alternative dispute
resolution processes, and encourage their settlement
outside of court (Para 2.3). These observations make
the object and purpose of Section 89 crystal clear —
to facilitate private settlements, and enable lightening
of the overcrowded docket of the Indian judiciary.
This purpose, being sacrosanct and imperative for the
effecting of timely justice in Indian courts, also
informs Section 69-A of the 1955 Act, which further
encourages settlements by providing for refund of
court fee. This overarching and beneficent object and
purpose of the two provisions must, therefore, inform
this Court's interpretation thereof.
14. Before expounding further on our interpretation of
the aforesaid provisions, regard must be had to the
following postulation of this Court's interpretive role
in Directorate of Enforcement v. Deepak
Mahajan [Directorate of Enforcement v. Deepak
Mahajan, (1994) 3 SCC 440 : 1994 SCC (Cri) 785] :
(SCC pp. 453-54, paras 24-25)
“24. … Though the function of the courts is only to
expound the law and not to legislate, nonetheless
the legislature cannot be asked to sit to resolve the
difficulties in the implementation of its intention
and the spirit of the law. In such circumstances, it
is the duty of the court to mould or creatively
interpret the legislation by liberally interpreting the
statute.
25. In Maxwell on Interpretation of Statutes, Tenth
Edn. at p. 229, the following passage is found:
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
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CS(COMM) 474/2019 Page 5 of 11
„Where the language of a statute, in its ordinary
meaning and grammatical construction, leads to a
manifest contradiction of the apparent purpose of
the enactment, or to some inconvenience or
absurdity, hardship or injustice, presumably not
intended, a construction may be put upon it which
modifies the meaning of the words, and even the
structure of the sentence. … Where the main object
and intention of a statute are clear, it must not be
reduced to a nullity by the draftsman's
unskilfulness or ignorance of the law, except in a
case of necessity, or the absolute intractability of
the language used. ‟ ”
15. Therefore, it is well settled that the courts may, in
order to avoid any difficulty or injustice resulting
from inadvertent ambiguity in the language of a
statute, mould the interpretation of the same so as to
achieve the true purpose of the enactment. This may
include expanding the scope of the relevant
provisions to cover situations which are not strictly
encapsulated in the language used therein.
16. This principle of statutory interpretation has been
affirmed more recently in the decision in Shailesh
Dhairyawan v. Mohan Balkrishna Lulla [Shailesh
Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC
619 : (2016) 2 SCC (Civ) 426] : (SCC p. 642, para 33)
“33. … Though the literal rule of interpretation, till
some time ago, was treated as the “golden rule”, it
is now the doctrine of purposive interpretation
which is predominant, particularly in those cases
where literal interpretation may not serve the
purpose or may lead to absurdity. If it brings about
an end which is at variance with the purpose of
statute, that cannot be countenanced.”
(emphasis supplied)
This was followed in the subsequent decision of this
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 6 of 11
Court in Anurag Mittal v. Shaily Mishra
Mittal [Anurag Mittal v. Shaily Mishra Mittal, (2018) 9
SCC 691 : (2018) 4 SCC (Civ) 550] .
17. In light of these established principles of statutory
interpretation, we shall now proceed to advert to the
specific provisions that are the subject of the present
controversy. The narrow interpretation of Section 89
CPC and Section 69-A of the 1955 Act sought to be
imposed by the petitioner would lead to an outcome
wherein the parties who are referred to a mediation
centre or other centres by the Court will be entitled to
a full refund of their court fee; whilst the parties who
similarly save the Court's time and resources by
privately settling their dispute themselves will be
deprived of the same benefit, simply because they did
not require the Court's interference to seek a
settlement. Such an interpretation, in our opinion,
clearly leads to an absurd and unjust outcome, where
two classes of parties who are equally facilitating the
object and purpose of the aforesaid provisions are
treated differentially, with one class being deprived of
the benefit of Section 69-A of the 1955 Act. A literal
or technical interpretation, in this background, would
only lead to injustice and render the purpose of the
provisions nugatory — and thus, needs to be departed
from, in favour of a purposive interpretation of the
provisions.
18. It is pertinent to note that the view taken by the
High Court in the impugned judgment [M.C.
Subramaniam v. Sakthi Finance Ltd. Civil Misc.
Petition No. 26742 of 2019, decided on 8-1-2020
(Mad)] has been affirmed by the High Courts in other
States as well. Reference may be had to the decision of
the Karnataka High Court in Kamalamma v. Honnali
Taluk Agricultural Produce Coop. Mktg. Society
Ltd. [Kamalamma v. Honnali Taluk Agricultural
Signature Not Verified
Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 7 of 11
Produce Coop. Mktg. Society Ltd., 2009 SCC OnLine
Kar 744 : (2010) 1 AIR Kant R 279] , wherein it was
held as follows : (SCC OnLine Kar para 6)
“6. Whether the parties to a suit or appeal or any
other proceeding get their dispute settled amicably
through arbitration, or meditation or conciliation
in the Lok Adalat, by invoking provisions of
Section 89 CPC or they get the same settled
between themselves without the intervention of any
Arbitrator/Mediator/Conciliators in Lok Adalat,
etc., and without invoking the provision of Section
89 CPC, the fact remains that they get their dispute
settled without the intervention of the Court. If they
get their dispute settled by invoking Section 89
CPC, in that event the State may have to incur
some expenditure but, if they get their dispute
settled between themselves without the intervention
of the Court or anyone else, such as
arbitrator/mediator, etc., the State would not be
incurring any expenditure. This being so, I am of
the considered opinion that whether the parties to a
litigation get their dispute settled by invoking
Section 89 CPC or they get the same settled
between themselves without invoking Section 89
CPC, the party paying court fees in respect thereof
should be entitled to the refund of full court fees as
provided under Section 16 of the Court Fees Act,
1870.”
19. Section 16 of the Court Fees Act, 1870 is in pari
materia with Section 69-A of the 1955 Act, and hence
the abovestated principles are equally applicable to the
present case.
20. The holding
in Kamalamma [Kamalamma v. Honnali Taluk
Agricultural Produce Coop. Mktg. Society Ltd., 2009
SCC OnLine Kar 744 : (2010) 1 AIR Kant R 279] has
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 8 of 11
been followed by the Punjab and Haryana High Court
in Pradeep Sonawat v. Satish Prakash [Pradeep
Sonawat v. Satish Prakash, 2015 SCC OnLine P&H
2235] and Pritam Singh v. Ashok Kumar [Pritam
Singh v. Ashok Kumar, (2019) 1 Law Herald 721
(P&H)] , which in turn were further affirmed in Raj
Kumar v. Gainda Devi [Raj Kumar v. Gainda Devi,
2019 SCC OnLine P&H 658] .
21. The Delhi High Court has also taken a similar view
in J.K. Forgings v. Essar Construction (India)
Ltd. [J.K. Forgings v. Essar Construction (India) Ltd.,
2009 SCC OnLine Del 3134 : (2009) 113 DRJ 612] :
(SCC OnLine Del paras 11-12, 14 & 17-19)
“11. The laudable object sought to be achieved by
inserting and amending these sections seems to be
speedy disposal. The policy behind the statute is to
reduce the number of cases by settlement. Section 89
CPC and Section 16 of the Court Fees Act are
welcome step in that direction, as the number of
cases has increased, it is the duty of court to
encourage settlement. In present scenario of huge
pendency of cases in the courts a purposive and
progressive interpretation is the requirement of
present hour. The intention of the Legislature is
primarily to be gathered from the object and the
words used in the material provisions. The statute
must be interpreted in their plain grammatical
meaning.
12. It is very clear that the legislative intent of
Section 16 of the Court Fees Act was made broad
enough to take cognizance of all situations in
which parties arrive at a settlement irrespective of
the stage of the proceedings. It is also obvious that
the purpose of making this provision was in order
to provide some sort of incentive to the party who
has approached the court to resolve the dispute
amicably and obtain a full refund of the court fees.
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Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 9 of 11
Having regard to this position, the present
application will have to be allowed.
*
14. This is not a case where parties to the suit after
long drawn trial have come to the court for
settlement. Had it been the case of long drawn trial
non-refund of court fees could have been justified
but in such like cases courts' endeavour should be to
encourage the parties and court fees attached with
the plaint should be refunded as an incentive to
them.
*
17. Settlement of dispute only through any of the
mode prescribed under Section 89 CPC is not sine
qua non of Section 89 CPC rather it prescribes few
methods through which settlement can be
reached, sine qua non for applicability of Section 89
is settlement between the parties outside the court
without the intervention of the courts.
18. It is also not the requirement of the section that
court must always refer the parties to Dispute
Resolution Forum. If parties have arrived at out-of-
court settlement it should be welcomed subject to
principles of equity.
19. The Court Fees Act is a taxing statute and has to
be construed strictly and benefit of any ambiguity if
any has to go in favour of the party and not to the
State.”
(emphasis supplied)
17. The Apex Court is of the opinion that any kind of settlement by
which the Plaintiff agrees to bring quietus to the dispute comes within the
four corners of Section 16 of the Court Fees Act and that one cannot
distinguish cases on the mode of settlement.
18. In view of the aforesaid judgment, this Court is therefore inclined to
Signature Not Verified
Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 10 of 11
accede to the request made by the Plaintiff in I.A. 15936/2026 for
withdrawal of the present Suit and for refund of court fees.
19. The Authorized Representative of the Plaintiff is present in Court
today. He states that the Plaintiff has accepted the amount under the CIRP
process towards full and final settlement of claims under the Suit and that
the Plaintiff would not initiate any other proceedings on the basis of the
cause of action on which the present Suit is premised. The statement is
accepted and taken on record.
20. Resultantly, the Suit is disposed of as withdrawn under Order XXIII
Rule 1(4) of the CPC along with pending application(s), if any.
21. Let the entire court fee be refunded to the Plaintiff in terms of Section
16 of the Court Fees Act.
SUBRAMONIUM PRASAD, J
JUNE 01, 2026
Hsk/JR
Signature Not Verified
Signed By:HARIOM
SINGH KIRMOLIYA
Signing Date:01.06.2026
17:49:21
CS(COMM) 474/2019 Page 11 of 11