In a significant move aimed at decongesting courts and promoting amicable resolutions, the Delhi Legislative Assembly has passed a crucial amendment to a colonial-era law. The change now ensures that litigants who settle their disputes outside the courtroom, even through private negotiations, are entitled to a full refund of the court fees they paid at the time of filing the case.
What Changed in the Delhi Court Fee Rules?
The amendment, passed on Tuesday, January 10, 2026, modifies the Court Fees Act of 1870. Previously, Delhi operated under a two-tier refund system. If a court formally referred parties to an Alternative Dispute Resolution (ADR) mechanism like mediation, conciliation, or Lok Adalat under Section 89 of the Code of Civil Procedure, the plaintiff received a 100% refund of the court fee.
However, if the parties reached a private settlement on their own, without the court's formal referral to ADR, the refund was capped at only 50% of the fee paid. This distinction created a financial disincentive for parties to resolve matters privately.
The new amendment removes this disparity. It has omitted Section 16A of the Act, which governed the 50% refund for private settlements. Simultaneously, it has broadened the scope of Section 16. The revised section now states that a full refund is granted where parties settle their dispute amicably "with or without the intervention of the Court and with or without invoking any of the modes of settlement of dispute" mentioned in Section 89.
Financial Relief and Reduced Court Burden
Legal experts hail the amendment as a pragmatic step. Advocate Atul Jain explained that the old 50% refund rule acted as a financial penalty for choosing private settlement. "Eliminating the old 50% refund discount on 'private settlement' encourages litigants to resolve disputes amicably in all forms," he said.
The financial impact is substantial. Consider a civil suit involving a claim of Rs 50 lakh. The approximate court fee for such a suit in Delhi would be around Rs 50,000. Before the amendment, a private settlement would see the litigant recover only Rs 25,000, forfeiting the other half. Now, the entire Rs 50,000 is refundable, irrespective of whether the settlement was reached via court-referred mediation or a private agreement.
Jain also pointed out that the change could lead to more efficient use of institutional ADR resources. "At present, several cases are referred to mediation purely to obtain a court fee refund, despite the disputes having already been settled... the proposed amendment will curb such artificial referrals," he noted.
Understanding Court Fees and Settlement Trends in Delhi
Court fees in Delhi vary. Petitions filed under Article 226 of the Constitution in the High Court attract a nominal fee of Rs 100, while execution petitions cost Rs 1,000. Election and Intellectual Property Rights petitions have a fixed fee of Rs 5,000.
For money suits, an ad valorem fee (a percentage of the claim amount) is levied. For a claim of Rs 4 lakh, the fee is approximately Rs 6,200 (~1.5%). For amounts above this, an additional Rs 48 is charged per Rs 5,000, bringing the effective rate down to roughly 1% of the claim value in Delhi.
The push for out-of-court settlements is critical given the volume of litigation. In 2024, National Lok Adalats in Delhi alone saw over 8.52 lakh cases referred, with 6.65 lakh disposed. Nationally, Lok Adalats settled a staggering 10.45 crore cases in the same year. Data from the National Legal Services Authority (NALSA) for April 2024 to March 2025 shows 680 cases were settled through mediation in Delhi, and over 98,000 across India.
The amendment, by making all forms of settlement equally financially attractive, is expected to boost these numbers further, fostering harmony between disputing parties while providing much-needed relief to the overburdened judicial system.
