Court fees in commercial litigation are substantial — ad valorem fees on a high-value plaint can run into lakhs. Delhi’s amendment to the Court Fees Act, 1870, notified on 6 March 2026, changes the economics of settlement: where parties resolve their dispute amicably and the suit is disposed of as settled, the plaintiff is entitled to a certificate authorising a refund of the full fee paid. A decision of the Delhi High Court shows how the new regime applies, including to matters that were already pending.
The case that tested the transition
A commercial suit before the Delhi High Court was decreed on 23 September 2025 on the parties’ settlement, with the Court directing a 50% refund of court fees — the entitlement then available under Section 16A of the Court Fees Act, 1870 as applicable to Delhi. The plaintiff did not process that refund and kept the question alive. In the interim, the Government of NCT of Delhi enacted the Court Fees (Delhi Amendment) Act, 2026, notified on 6 March 2026, which amended Section 16 and omitted Section 16A.
The plaintiff then applied for a 100% refund. Justice Tushar Rao Gedela allowed the application on 27 April 2026, holding that under the amended Section 16, a plaintiff whose dispute is settled amicably and whose suit is disposed of as settled or compromised is “entitled to a certificate from the Court authorizing him to receive back… the full amount of fee paid,” and that this beneficial legislation applied to pending matters. The earlier 50% direction gave way to a complete refund.
Old regime and new, compared
Before the 2026 Amendment
Full refund confined largely to settlements through Section 89 CPC modes; Section 16A provided a 50% refund for other compromises; partial recovery was the norm for privately negotiated settlements.
After the 2026 Amendment
Amicable settlement plus disposal as settled/compromised earns a certificate for a 100% refund; Section 16A stands omitted; the entitlement is statutory and has been applied to pending cases.
A Division Bench of the Delhi High Court has since reinforced the position in September 2026, describing the full refund on settlement as a substantive statutory entitlement that should follow the settlement disposal without the need for a separate plea. The direction of travel is unmistakable: Delhi wants settlement to be cost-free on the court-fee front.
Why this matters to commercial litigants
| Decision point | Effect of the new regime |
|---|---|
| Whether to sue at all | Fee outlay is recoverable if the dispute later settles — reducing the sunk-cost barrier to filing |
| Whether to settle mid-trial | Settlement now returns the entire fee, removing a perverse incentive to fight on to “recover” fees through costs |
| How to record the settlement | Ensure the disposal order records the suit as settled/compromised and seeks the refund certificate in terms of amended Section 16 |
| Pending suits filed pre-amendment | The beneficial provision has been applied to them — worth raising even where a partial refund was earlier ordered but not processed |
Drafting the disposal correctly
For clients weighing settlement, the court-fee refund is now real money back — often the difference that closes a negotiation. Counsel should raise it in every settlement discussion in Delhi proceedings.
This article is for general information only and is not legal advice. Refund entitlements depend on the terms of disposal in each case; parties should obtain advice on their own matter.
Frequently Asked Questions
What changed under the Court Fees (Delhi Amendment) Act, 2026?
The amendment, notified on 6 March 2026, recast Section 16 and omitted Section 16A for Delhi. When parties settle their dispute amicably and the court disposes of the suit as settled or compromised, the plaintiff is entitled to a certificate authorising receipt of the full court fee paid — not the partial refunds of the earlier regime.
Must the settlement happen through mediation or Section 89 CPC?
The entitlement is tied to amicable settlement and disposal of the case as settled. Delhi High Court decisions applying the amended provision have treated the refund as a statutory entitlement flowing from the settlement disposal itself.
Does the new provision apply to cases filed before the amendment?
In the Raghav Lifestyle case, the Court treated the amendment as beneficial legislation and applied it to a pending matter — granting a full refund even though a 50% refund had been directed under the unamended law when the suit was decreed on compromise earlier.
How is the refund actually obtained?
The court issues a certificate authorising the refund, which is then processed by the collector/treasury. Where any doubt arises, an application in the disposed suit seeking the certificate, as was made in this case, resolves it.