Civil Litigation in India is often criticized for being time-consuming and costly. In this backdrop, legislative measures that encourage dispute resolution outside the traditional adjudicatory process assume great importance. The recent amendment introduced through the Court Fees (Delhi Amendment) Act, 2026, marks a significant policy shift in this direction by allowing litigants to claim a full refund of Court fees when disputes are settled amicably, at any stage of the proceedings, irrespective of whether such a settlement takes place with or without the intervention of the Court.
By substituting Section 16 of the Court Fees Act, 1870, the amendment seeks to encourage settlement between parties while simultaneously reducing the burden on Courts.

Earlier Legal Position

Prior to this amendment, the framework governing the refund of court fees in Delhi created a dual regime.
Under Section 16 of the Court Fees Act, 1870, a litigant was entitled to a full refund of court fees when disputes were resolved through Alternative Dispute Resolution (ADR) mechanisms, like mediation or arbitration.
However, the position was different when parties settled disputes privately without the Court referring the matter to ADR. In such cases, Section 16A permitted only a 50% refund of the court fees, provided the Settlement occurred before recording of evidence.

2026 Amendment

The Court Fees (Delhi Amendment) Act, 2026, removes this inconsistency by introducing a Uniform rule of full refund for amicable settlements.
The refund is available irrespective of whether the settlement occurs through ADR or through a private agreement/understanding between the parties. Once the matter is disposed of as settled or compromised, the litigant may seek refund from the competent authority as per the applicable procedure.
This reform therefore creates a single consistent rule governing refund of Court Fees.

Significance of the Amendment

The amendment is a significant step towards promoting amicable dispute resolution in civil litigation. By allowing a full refund of Court fees upon settlement, it resolves the financial distinctive that often discourages parties from resolving disputes after filing a suit. Moreover, the reform is also likely to reduce the burden on Courts by encouraging the autonomy of parties to resolve disputes independently.

Conclusion

The Court Fees (Delhi Amendment) Act, 2026 introduces a uniform rule of full refund for amicable settlements. By removing the financial burden associated with Court Fees in settled matters, the amendment encourages parties to prioritize resolution over prolonged litigation.
If implemented efficiently, the reform has the potential to foster a more settlement-oriented litigation culture, reduce unnecessary judicial burden, and align civil procedure with contemporary approaches to dispute resolution.

Credits: Ekta Kapil (Partner) & Shaira Katoch (Associate)