Modification of Commercial Decree through Settlement Agreement Contingent on Timely Payment and Refund of Court Fees

The Appellants (LRs of Murari Lal Jain) filed a regular first appeal against a judgment and decree dated January 3, 2025, passed by the District Judge (Commercial Court-02), North District, Rohini, Delhi

During the pendency of the appeal, the parties explored the possibility of an amicable settlement

A Settlement Agreement was subsequently executed on May 13, 2026, wherein the Appellants agreed to pay a total sum of ₹33,00,000/- to the Respondent within six months

Additionally, Appellant No. 3 gave an undertaking not to alienate a specific property (Shop No. 100, Ballabhgarh) until the satisfaction of the decree

1. Whether the appeal can be disposed of and the Trial Court’s decree modified based on a private settlement agreement reached between the parties during appellate proceedings?

2. Whether the Appellants are entitled to a refund of court fees following a settlement under the amended Court Fees Act?

The Court applied the principle of party autonomy in settling commercial disputes through mediation/settlement, as reflected in the modification of decrees under the Code of Civil Procedure.

It specifically relied on Section 16 of the Court Fees Act, 1870, as amended by the Court Fees (Delhi Amendment) Act, 2026 (Notification dated 06.03.2026), which provides for the refund of court fees where parties settle their disputes

Furthermore, the court applied the law of undertakings and contempt under the Contempt of Courts Act, 1971, to ensure compliance with the settlement terms

The Court noted that the parties had voluntarily entered into a Settlement Agreement, the terms of which were reproduced in the judgment

To safeguard the Respondent's interest, the Court integrated the Appellants' undertaking regarding the non-alienation of Shop No. 100 into the judicial record

The Court reasoned that by modifying the Trial Court's decree in terms of this agreement, the dispute reached a finality subject to the payment of ₹33,00,000/- by November 15, 2026

To incentivize the settlement and comply with recent legislative amendments, the Court held that the Appellants are entitled to a refund of court fees, but conditioned this refund upon the actual satisfaction of the decree to ensure the settlement was not used as a dilatory tactic

The Court ordered that: (i) the Appellants shall pay ₹33,00,000/- by November 15, 2026; (ii) if they fail to do so, the original Trial Court decree shall revive and the Respondent may initiate contempt proceedings; (iii) execution proceedings shall remain in abeyance until the deadline; and (iv) court fees shall be refunded to the Appellants only after showing satisfaction of the decree post-November 15, 2026