DSK Legal represented Proud Securities before the Delhi High Court
The Delhi High Court in a significant development passed an order extending the scope of Section 16 of Court Fees Act, 1870
DSK Legal represented Proud Securities before the Delhi High Court
The Delhi High Court in a significant development passed an order extending the scope of Section 16 of Court Fees Act, 1870 even to cases where the suit is stayed on account of imposition of moratorium.
DSK Legal advised, assisted, and represented Proud Securities and Credits Pvt. Ltd. (now InCred Capital Financial Services Pvt. Ltd.) before the Delhi High Court and contributed to a significant development in law regarding the refund of court fees.
Brief Background:
Proud Securities and Credits Pvt. Ltd. (now InCred Capital Financial Services Pvt. Ltd.) (Plaintiffs) filed a commercial suit against Ms. Urrshila Kerkar and Mr. Ajay Kerkar, promoters of an Indian travel company by the name of Cox & Kings Ltd. for recovery of Rs. 15,85,00,000/- (Rupees Fifteen Crore and Eighty-Five Lakhs) arising from a Master Facility Agreement for providing Revolving Bill Discounting Facility for Cox and Kings Ltd. During the pendency of the said suit, NCLT, Mumbai imposed an interim moratorium on the Defendants, thus, staying the suit in terms of Sections 96 and 238 of the Insolvency and Bankruptcy Code, 2016.
Unable to proceed forward the Plaintiffs sought withdrawal along with refund of entire court fee. While the Court Fees Act, provide for complete refund in Section 16 i.e. only in the case 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 Civil Procedure Code, 1908 (CPC). Since, there exists no provision in either the Court Fees Act, or the CPC, w.r.t. the refund of court in lieu of a moratorium, detailed and extensive arguments were made before Justice Yashwant Verma to do purposive interpretation of the existing provisions and import of the Court Fees Act.
Appearing on behalf of the Plaintiffs, the team from DSK Legal apprised the Court that the purpose of Court Fee is for facilitating the adjudication of disputes between the parties. However, in the present case since no adjudication is possible for reasons beyond the control of the Plaintiff, the Hon’ble Court should exercise its inherent discretionary powers to grant complete refund of court fees.
Reliance was placed upon High Court of Madras v. M.C. Subramaniam, (2021) 3 SCC 560 and AX Vs. Google LLC [CS (OS) No. 750/2022] wherein it has been held that in order to achieve the true purpose of an enactment, the Courts are empowered to expand the scope of provisions of a statute to cover situations that are not strictly encapsulated in the language used therein. The High Court eventually convinced with the submission made by DSK, felt that there is a need to expand the scope of the provisions of the Court Fee Act and directed for refund of the entire amount paid by the Plaintiff as court fee.
Accordingly, while passing the said Order, the Delhi High Court observed that upon the commencement of an interim moratorium, the Plaintiff would have the solitary remedy of filing a claim before the RP and to participate in the collective statutory settlement process. As the statutory settlement process relates to the settlement of claims, the rigors of Section 16 of the Court Fee Act would stand satisfied warranting a refund of court fee.
Significance:
The order passed by the Delhi High Court is a significant development and comes as an immense relief to all such as the Plaintiff who end up losing the court fees on account of a technicality. The said Order thereby lays down judicial precedence wherein the party will be entitled to a complete refund of the court fees in case a moratorium is imposed during the pendency of the suit, which is an exception to the general rule and existing provisions wherein court fee is refunded only in specific scenarios provided under Section 14, 15, 16, 16A of the Court Fee Act or the CPC.
DSK Legal Team:
The DSK Legal team comprised of Mr. Samir Malik (Partner), Mr. Mahip Singh Sikarwar (Principal Associate), Mr. Lakshay Mehta (Senior Associate) and Mr. Krishan Kumar (Associate).
The matter was argued before the Delhi High Court by Mr. Mahip Singh Sikarwar (Principal Associate).