2023 (5) TMI 18 - HC - Insolvency and Bankruptcy

Refund of Court Fee in Summary Suit Due to Insolvency Proceedings: Impact on Alternative Dispute Resolution

PROUD SECURITIES AND CREDITS PRIVATE LIMITED Versus URRSHILA KERKAR AND ANR.

The Court allowed the refund of court fee in a summary suit that could not proceed due to the initiation of insolvency proceedings under the Insolvency ... Refund of the court fee which had been filed in connection with the instant suit - ambit of a settlement which is alluded to in Section 16 of Court-Fees Act, 1870 - solitary remedy of participating in proceedings to be instituted under the IBC - collective settlement of claims - HELD THAT:- The Court notes that once personal insolvency has commenced in terms of Section 95, the interim moratorium would come into play immediately upon the institution of those proceedings. In terms of the commencement of proceedings under the IBC, the plaintiff would now have the solitary remedy of filing a claim and participate in the collective statutory settlement process that would ensue against the defendants. Since the same would also relate to a settlement of claims, it would appear to fall within the scope of Section 16. The prayer as made in the present application is allowed. The Registry to take appropriate steps for refund of the court fee which stands deposited accordingly. Issues involved: Refund of court fee in a summary suit due to initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.The judgment dealt with an application for the refund of court fee in connection with a summary suit that could not proceed further due to the initiation of insolvency proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. The learned counsel argued that although the situation did not strictly fall within the settlement ambit of Section 16 of the Court-Fees Act, 1870, the plaintiff would now participate in the collective settlement of claims under the IBC. Citing the Supreme Court judgment in High Court of Madras vs. M.C. Subramaniam, it was emphasized that Section 89 CPC aims to divert civil disputes towards alternative dispute resolution processes for speedy justice and settlement outside of court. The Court considered extending the benefits of Section 16 in this unique case.The Supreme Court judgment highlighted the importance of Section 89 CPC in diverting civil disputes towards alternative dispute resolution processes for speedy justice and settlement outside of court. It was noted that Section 16 of the Court Fees Act, 1870 is in pari materia with Section 69-A of the 1955 Act, and the principles regarding the refund of court fees for settlements were equally applicable. The Court affirmed that Section 89 CPC should be interpreted liberally, and the benefit of Section 69-A of the 1955 Act should extend to all methods of out-of-court dispute settlement legally arrived at, including private settlements that lead to the withdrawal of appeals.The Court observed that once personal insolvency proceedings begin under Section 95 of the IBC, the interim moratorium takes effect immediately. With the initiation of proceedings under the IBC, the plaintiff's only remedy would be to file a claim and participate in the collective statutory settlement process against the defendants. Since this process involves a settlement of claims, it falls within the scope of Section 16. Consequently, the Court allowed the prayer for the refund of the court fee deposited and directed the Registry to take necessary steps for the refund.