When DRT allows Court Fee Refund, Registrar Cannot Insist on Joint Application: Bombay High Court

When DRT allows Court Fee Refund, Registrar Cannot Insist on Joint Application: Bombay High Court

The legal right of the applicant cannot be abandoned if the opposing party does not consent

The Bombay High Court has explained Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013, stating that once the Debt Recovery Tribunal (DRT) allows a refund of court fees on an original application, the registrar cannot insist that a joint application must be presented for it.

In the Yes Bank Ltd vs Union of India and Ors case, Justice GS Kulkarni and Justice Rajesh S Patil observed that DRT’s Rule 5(1), which provided for the refund of court fees, could not be interpreted to defeat any entitlement of the applicant for refund permitted under Rule 4.

The Court clarified that merely because the opposing party was not consenting for a joint application to be filed for a refund, the legal right of the applicant to receive the refund cannot be abandoned.

The bench stated, "Rule 5(1) providing for refund of court fees cannot be read so as to defeat and/or frustrate any entitlement of the applicant for refund of court fees as may be permissible under the provisions of Rule 4. Merely because the defendant is not coming forward, is unavailable, does not intend, or is not agreeable to give his consent for a joint application to be presented for refund, it cannot defeat the legal rights of the applicant (like the petitioner) to receive the court fees.”

The Court was hearing a writ petition by Yes Bank Ltd., seeking the deletion of the words “the defendant shall file a joint application” from Rule 5 of the DRT Rules. The bank also urged the court to direct the DRT registrar to immediately release the amount due as a refund to the bank, which had been quantified in a DRT order, without insisting on a joint application.

The case was about a borrower, who defaulted in the repayment of a bank loan. It prompted the bank to file recovery proceedings before a Mumbai Bench of DRT.

However, since the parties arrived an out-of-court settlement, the bank withdrew the proceedings. It was then directed to follow the procedure for refund of court fees, as per the relevant rules.

Yes Bank filed an application for a refund of court fees. But in June 2022, the DRT passed an order stating that the applicant and the defendant must file a joint application for the refund.

Aggrieved by the move, the bank approached the High Court. It informed that when the recovery proceedings were filed, it paid the full court fees of Rs. 1,50,000. The bank highlighted that in several recovery cases, the borrowers agreed to pay the outstanding amounts or opted for out-of-court settlements. It contended that it was difficult for the bank to obtain consent on a joint application for a court refund in all such cases.

The bank further argued that the requirement of filing a joint application caused immense prejudice to the bank. Therefore, it prayed for a direction to the DRT to issue the refund of court fees without insisting on a joint refund application.

The respondents, which included the Central Government authorities and the DRT-II at Mumbai, countered that the bank's plea should be dismissed because it had not demonstrated any injustice done to it. They added that if there was a settlement between the borrower and the bank, all dues, including legal expenses and court fees incurred by the bank, could be part of such a settlement.

They further argued that in order to prevent the bank from receiving dual benefits from both the borrower and the tribunal, Rule 5(1) required the filing of a joint application by the applicant and the defendant in order to obtain a court fee refund.

The authorities also contended that the provision protected the interests of both the bank and the borrower and claimed that refunding the court fees to the petitioner-bank would lead to unjust enrichment.

The Court noted that in several such recovery matters, financial institutions settled for an amount that was lesser than the outstanding dues. It further observed that in many cases, immediately after the filing of recovery proceedings, the borrowers may settle the disputes, but not apprise the bank, thereafter, for a number of reasons. It also highlighted that even in cases before a civil court, the court fees are refunded only to the plaintiff on settlement.

The bench held that it was completely within the domain of the applicant whether he should pursue the recovery proceedings or withdraw the same in view of any settlement reached with the defendant.

The Court remarked that even the tribunal would not have a second thought if the applicant withdrew the proceedings. It highlighted that the applicant would be entitled to a refund of court fees as a natural consequence.

Justice Kulkarni and Justice Patil stated that the insistence of the registrar on a joint application in such a case would be contrary to the order passed by the DRT, permitting the withdrawal of the recovery application and granting a refund order.

Thus, while reading the DRT Rules, it said that once the tribunal allows a refund of court fees to the applicant, and the entitlement to a refund of the fees has been fixed by a judicial order, the registrar would not be permitted to insist that a joint application had to be presented for the refund of such a court fee.

The Court, however, clarified that if the registrar had any doubts or if there were materials to indicate that the applicant was not entitled to a refund, or if the judicial order did not clearly grant a refund, in such situations, a joint application may be required.

While advocate Vishal Tambat appeared for the petitioner, advocate Savita S Ganoo, instructed by advocate Smita Thakur, appeared for the respondents.