Once DRT permits court fee refund, Registrar cannot insist on a joint application for the same: Bombay High Court

The Bombay High Court recently read down Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules, 2013 to mean that once the Debt Recovery Tribunal (DRT) permits a refund of court fees on an original application, the Registrar of the DRT cannot insist that a joint application must be presented for the same. [Yes Bank Ltd vs Union of India and Ors.].Justices GS Kulkarni and Rajesh S Patil observed that Rule 5(1) of the 2013 Rules, 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 explained that merely because the defendant or the opposing party was not giving consent for a joint application to be filed for a refund, the legal right of the applicant to receive the refund cannot be defeated.."We are of the clear opinion that 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 as noted above. Merely because the defendant is not coming forward or is not available or he does not intend or is not agreeable for giving his consent for a joint application to be presented for refund of court fees, cannot defeat the legal rights of the applicant like the Petitioner to receive the Court fees," the Court's order stated..The Court was hearing a writ petition by Yes Bank Ltd., which had sought the deletion of the words “and Defendant shall file joint Application” from Rule 5 of the Debts and Recovery Tribunal (Refund of Court fees) Rules. The bank also urged the High Court to direct the concerned DRT Registrar to immediately release an amount due as a refund to the bank, which had been quantified in a DRT order, without insisting on a joint application..By way of background, a borrower had defaulted in the repayment of a bank loan, prompting the bank to file recovery proceedings before a DRT in Mumbai.However, since the parties arrived at 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.The bank then filed an application for a refund of court fees. The DRT, on June 18, 2022, passed an order on this application, observing that the applicant and the defendant should file a joint application for the refund of court fees as per the rules..Aggrieved by this move, the bank approached the High Court. It told the Court that when the recovery proceedings were filed, it had paid full court fees of ₹1,50,000.The bank highlighted that there were several recovery cases where borrowers agree to pay the outstanding amounts or opt for out-of-court settlements. It is difficult for the bank to obtain their consent on a joint application for a court refund in all such cases, the bank contended.Thus, it argued that the requirement of filing a joint application causes immense prejudice to the bank. Therefore, the bank 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 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 is a settlement between the borrower and the bank, all dues, including legal expenses and court fees incurred by the bank, can be part of such 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) of the Rules requires the filing of a joint application by the applicant and the defendant in order to obtain a court fee refund. Resultantly, they contended that the provision protects the interests of both the bank and the borrower. They further claimed that refunding court fees to the petitioner-bank may lead to unjust enrichment..The Court noted that in many recovery matters, financial institutions settle for an amount that is lesser than the outstanding dues. Further, it observed that in many cases, immediately after the filing of recovery proceedings, borrowers may settle the disputes but not contact the bank thereafter for a number of reasons. It also highlighted that even in suits before a civil court, on settlement, the court fees are refunded only to the plaintiff..The Court observed that it is fully and completely within the domain of the applicant whether it should pursue recovery proceedings or to withdraw the same in view of any settlement reached with the defendant.Even the tribunal would not have a second thought if the applicant withdrew the proceedings, the Court remarked, going on to hold that, as a natural consequence, the applicant would be entitled to a refund of court fees. .The Court opined that the insistence 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 an order of refund..Hence, it read down 2013 Rules to mean that once the DRT itself allows a refund of court fees to the applicant, and when the entitlement to a refund of the fees has been fixed by a judicial order, it would not be permissible for the Registrar of the DRT to insist that a joint application ought to be presented for the refund of such court fee.However, the Court clarified that if the Registrar has any doubts or if there are materials to indicate that the applicant is not entitled to a refund, or if the judicial order does not clearly grant a refund, a joint application may be required in such situations..Advocate Vishal Tambat appeared for the petitioner. Advocate Savita S Ganoo, instructed by advocate Smita Thakur, appeared for the respondents..[Read Order]