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The refund of the court fees acts as an ancillary economic incentive for settlement of disputes without court intervention: High Court of Delhi

There is no justifiable reason why Section 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties. Even though a strict construction of the terms of Section 89 CPC and Section 69-A of the 1955 Act may not encompass such private negotiations and settlements between the parties, the participants in such settlements is entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods Under Section 89 CPC and the same was upheld by High Court of Delhi through the learned bench led by JUSTICE MUKTA GUPTA in the case of SUN PHARMA LABORATORIES LTD. vs. VHM (VARSHA HEALTH MEDICINE) & ORS. [CS(COMM) 535/2021] on 02.03.2022.

The facts of the case are that the Defendants recognizes the Plaintiff to be the proprietor of the trade mark PANTOCID having the exclusive right to the use of the aforementioned trade mark in respect of medicinal and pharmaceutical products. The Defendants undertake to refrain themselves from directly or indirectly dealing in medicinal preparations under the impugned mark PANTOCIDE or any other trade mark as may be deceptively similar to the Plaintiff’s trade mark PANTOCID amounting to infringement of registered trade mark. The Defendants state that there are no existing stocks of finished products under the impugned mark PANTOCIDE available with them and that they have destroyed all the stationery, packaging, promotional and publicity material and labels under the impugned mark.

The plaintiff’s counsel submitted that since the settlement in the suit was arrived at the initial stage itself, full court fee be returned to the plaintiff. It was stated that the parties have settled the matter and sought some time to place on record the terms of settlement.

The Court held that in strict terms when settlement is arrived at between the parties by not adopting a mode prescribed under Section 89 CPC, the party may not be entitled to full court fee, however, Section 89 CPC has to be given a liberal interpretation and thus in cases where settlement is arrived at out of court, the full court fee be refunded. Therefore, registry was directed to issue a certificate releasing full court fee to the authorized attorney of the plaintiff.

The Court observed that, “there is no justifiable reason why Section 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties. Even though a strict construction of the terms of Section 89 CPC and Section 69-A of the 1955 Act may not encompass such private negotiations and settlements between the parties, the participants in such settlements is entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods Under Section 89 CPC.”

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Judgment reviewed by – Shristi Suman

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