The Delhi High Court has held that a litigant can receive a full refund of court fees even when a dispute is resolved through an insolvency resolution process rather than a direct settlement between parties. The court allowed a commercial recovery suit to be withdrawn after the plaintiff accepted payment under a resolution plan approved under the Insolvency and Bankruptcy Code (IBC).
Background of the Case
Sainik Industries Pvt. Ltd. had filed a commercial suit seeking recovery of over ₹19.55 crore from Indian Sugar Manufacturing Company Limited.
According to the plaintiff, the parties had entered into an agreement in July 2016 for the supply of 5,200 metric tonnes of sugar. The plaintiff claimed that although substantial advance payments were made, the defendant supplied only part of the agreed quantity. Alleging non-supply of the remaining sugar and retention of advance amounts, the company approached the High Court seeking recovery along with interest.
During the pendency of the suit, insolvency proceedings were initiated against the defendant company under the IBC. The plaintiff submitted its claim before the Resolution Professional and later accepted the amount allocated to it under the approved resolution plan.
Justice Subramonium Prasad examined whether the plaintiff was entitled to a refund of court fees after seeking withdrawal of the suit.
The court noted that there was no conventional settlement agreement between the parties. However, the plaintiff had agreed to accept the amount provided under the insolvency resolution plan and chose not to pursue further claims arising from the dispute.
“The net effect is that the Plaintiff has settled for an amount in order to bring a quietus to its claims,” the court observed.
Relying on earlier decisions of the Supreme Court and Delhi High Court, the bench emphasized that the objective of the law is to encourage resolution of disputes and reduce unnecessary litigation. The mode through which the settlement is achieved should not deprive a party of the benefit of court-fee refund.
The court referred to the Supreme Court's ruling in High Court of Judicature at Madras v. M.C. Subramaniam, which recognized that parties resolving disputes outside prolonged court proceedings should be encouraged rather than penalized.
Accepting the plaintiff's application, the Delhi High Court permitted withdrawal of the commercial suit under Order XXIII Rule 1(4) of the Code of Civil Procedure.
The court also recorded the plaintiff's statement that it had accepted the amount received under the Corporate Insolvency Resolution Process as full and final settlement of its claims and would not initiate any further proceedings on the same cause of action.
Accordingly, the suit and all pending applications were disposed of as withdrawn, and the court directed that the entire court fee paid by the plaintiff be refunded under Section 16 of the Court Fees Act.
Case Details:
Case Title: Sainik Industries Pvt. Ltd. v. Indian Sugar Manufacturing Company Limited
Case Number: CS(COMM) 474/2019
Judge: Justice Subramonium Prasad
Decision Date: June 1, 2026
