The Karnataka Court Fees and Suits Valuation (Amendment) Ordinance, 2020 (“Ordinance”), has been promulgated on July 31, 2020 to amend certain provisions of the Karnataka Court Fees and Suits Valuation Act, 1958, (“Act”). The Ordinance primarily aims to:

1. increase the amount of refund of court fees under the Act in certain instances; and
2. provide for payment of court fee and refunds under the Act electronically (i.e. through ‘e-payment’).

The provisions of the Ordinance are as summarized below:

1. Section 66 (Refund on settlement before hearing): As per the earlier provision, parties who have settled their disputes as detailed in Section 89 of the Code of Civil Procedure, 1908 (“Code”), i.e. either through arbitration, conciliation, judicial settlement including settlement through lok adalat and mediation, were entitled to a refund of 75% (seventy five percent) of the court fee paid by them in relation to the suit. The Ordinance has amended Section 66 to increase the refund of court fees from 75% (seventy five percent) to 100% (hundred percent).
2. Section 68A (All refunds and remissions shall also be made by e-payment): A new provision has been included in the Act through the Ordinance to provide for payment of remission and refunds under the Act through electronic means.
3. Section 71 (Collection of fees): The earlier provision provided for only two modes for payment of court fees, namely: (a) by cash in case the court fee is not more than Rs. 500 (Rupees Five Hundred only); (b) to the Government Treasury or demand draft where the court fee exceeds Rs. 500 (Rupees Five Hundred only). The Ordinance amends this provision to allow for payment of court fee (of any amount) through an electronic mode in addition to the methods already provided for under Section 71.

The High Court of Karnataka vide its order dated August 16, 2019  in Mr. Periyaswamy v. State of Karnataka, W.P. No.29493/2019 (GM-RES-PIL), had recommended to the State of Karnataka to consider amending Section 66 of the Act to make way for 100% refund of court fees. The above judgment placed reliance on the judgment of the Apex Court in Salem Advocates Bar Association, Tamil Nadu v. Union of India, (2005) 6 SCC 344 and Section 16 of the Court Fees Act, 1870 (“Act of 1870”).

The Act of 1870 is a central legislation which is being followed by about eight states as per the 189th Report of the Law Commission of India. Section 16 of the Act of 1870 makes way for 100% refund of court fees when matters stand settled as per section 89 of the Code.

Interestingly, refund of court fees under the Act of 1870 has also been discussed by the High Court of Karnataka in A. Sreeramaiah v. South Indian Bank, ILR 2006 Karnataka 4032. In the said judgment the Court has considered the object behind Section 89 of the Code and laid down that parties should be entitled to full refund of court fees even if the dispute is settled before the court i.e. without recourse to any methods referred to in Section 89 of the Code (refer to section 79 of the Act to know when the Act of 1870 is applicable in Karnataka).

Amendment to Section 66 is therefore, a welcome change which would encourage parties to settle disputes and it appears to acknowledge the above judgments of the Apex Court and High Court of Karnataka.

While several High Courts across India, including the High Court of Karnataka, have brought about e-payment of court fees, governments of Karnataka and Tamil Nadu may be the only two state governments which have brought about electronic payment and refund of court fees through the ordinance route i.e. by a legislation. 

The Ordinance is yet another instance of Covid-19 having become a catalyst for digital payments and digitization of the legal system.

This update has been contributed by Maneesha Kogovi, Partner & Shivabhushan S. Hatti, Associate.