No Court Fee at a Lok Adalat, and Your Original Court Fee Is Refunded If the Case Settles

The Statutory Question

Two lines in a 1987 statute quietly rewrite the arithmetic of every small money dispute in India. Section 21(1) of the Legal Services Authorities Act, 1987 says that "every award of the Lok Adalat shall be deemed to be a decree of a Civil Court" and that "where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of section 20, the Court-fee paid in such case shall be refunded in the manner provided under the Court-Fee Act, 1870 (7 of 1870)." Section 21(2) adds that the award "shall be final and binding on all the parties to the dispute, and no appeal shall lie to any Court against the award."

The practical question this article answers is narrow but valuable: what does it cost a borrower, lender, consumer or NRI to resolve a money claim through a Lok Adalat, and what happens to the court fee already spent? The National Legal Services Authority (NALSA), the statutory body created under the same 1987 Act, states the position plainly on its own FAQ page: "There is no fees to be paid in the Lok Adalat," and "Even the Court Fees paid by the parties would be returned, if the case is amicably settled." That combination - zero fee to refer, full refund on settlement - is a specific financial incentive written into law since 1987, not a courtesy.

This matters because court fees in India are largely ad valorem, meaning they rise with the amount claimed. On a recovery suit of Rs 10,00,000, the fee paid at filing can run into tens of thousands of rupees under the relevant State Court Fees Act. Section 21(1) turns that sunk cost into a recoverable one the moment the dispute settles before a Lok Adalat, and it does so without creating any appellate risk, because Section 21(2) shuts the door on appeals entirely.

What the Court Held

The clearest judicial confirmation of how Section 21(1) operates comes from the Madras High Court in Ranganathan v. Court of District Judge (11 October 2007), which reproduces the section verbatim and reads it alongside the refund machinery of the Court Fees Act, 1870. The judgement records the two-limbed structure exactly as the statute frames it: the award is deemed a civil-court decree, and the court fee "shall be refunded" where a pending case referred under Section 20(1) is settled.

The court also connected Section 21(1) to Section 16 of the Court Fees Act, 1870, a provision inserted with effect from 1 July 2002. That section says: "Where the Court refers the parties to the suit to any one of the modes of settlement of dispute referred to in Section 89 of the Code of Civil Procedure, 1908, the plaintiff shall be entitled to a certificate from the Court authorising him to receive back from the Collector, the full amount of the fee paid in respect of such plaint." Since Section 89 of the Code of Civil Procedure, 1908 lists settlement through a Lok Adalat as one of the recognised modes, the refund flows automatically once the referral and settlement are recorded.

Two features of the holding deserve emphasis. First, the word used is "shall," not "may" - the refund is mandatory, not discretionary, once the statutory conditions in Section 20(1) and Section 21(1) are met. Second, the refund is of "the full amount of the fee paid," per Section 16 of the 1870 Act, not a partial or capped sum. There is no ceiling written into either provision. The mechanism operates through a certificate issued by the referring court, which the litigant presents to the Collector to receive the money back.

Reasoning

Why the referral route under Section 20 is the trigger

The refund in Section 21(1) is not switched on by any Lok Adalat settlement; it is switched on specifically by a case "referred to it under sub-section (1) of section 20." Section 20 of the 1987 Act governs how a matter already pending before a court reaches a Lok Adalat - either on the parties' agreement, on one party's application, or on the court's own view that the dispute is fit for settlement. The refund language is deliberately tied to this referral because the court fee being returned is the fee originally paid on that pending plaint or petition. A fresh dispute filed directly before a Lok Adalat, where no court fee was ever paid, has nothing to refund - which is why NALSA describes the Lok Adalat filing itself as carrying "no fees to be paid."

The logic is internally consistent. The 1987 Act does not want to reward litigation; it wants to remove the financial friction that keeps a settleable case stuck on a court docket. By promising back every rupee of ad valorem fee the moment the parties compromise, Section 21(1) makes the decision to settle cheaper than the decision to fight on. That design was reinforced in 2002, when Section 89 of the Code of Civil Procedure, 1908 and Section 16 of the Court Fees Act, 1870 came into force together on 1 July 2002 to give courts an express statutory duty to explore Lok Adalat and other settlement modes.

Why finality does the heavy lifting

Section 21(2) is what converts the fee saving into a genuine bargain rather than a trap. A cheap forum that produced a weak, appealable outcome would simply move the cost downstream. Instead, the statute says the award is "final and binding on all the parties" and that "no appeal shall lie to any Court against the award." An award that is deemed a decree of a civil court under Section 21(1) is directly executable, and because it rests on the parties' own compromise, there is nothing to appeal - a party cannot appeal its own consent. NALSA frames the same point operationally: "An award passed by the Lok Adalat is deemed to be a decree of a civil Court... No appeal would lie to any Court against the award."

This is the doctrinal spine Oquilia examined in its companion explainer on why a Lok Adalat award is deemed a civil-court decree with no appeal anywhere. The finality is not a drafting accident; it is the feature that lets a Rs 30,000 court-fee refund on a Rs 10,00,000 claim stay in the litigant's pocket instead of being spent again on an appeal.

Why relationships and speed are part of the financial calculus

The 1987 scheme repeatedly stresses two non-monetary values that carry monetary consequences. NALSA states that "the cases are determined with utmost expedition, thus saving the valuable time of the parties" and that because the award "is prepared on the basis of compromise between the parties, they would maintain their friendly relationships." For a lender, a settled account that preserves a banking relationship is worth more than a decree that ends one; for a small supplier or an NRI landlord, a same-day resolution avoids years of carrying cost. Speed and goodwill are, in effect, additional line items in the refund calculation the statute sets up.

Practical Takeaways

The refund architecture of Section 21(1) changes the cost-benefit maths for several groups. Read the following against your own numbers.

For borrowers settling a bank or loan dispute:

• If a recovery suit is already pending against you, ask the court to refer it to a Lok Adalat under Section 20(1); on settlement, the plaintiff's court fee is refunded under Section 21(1), which strengthens your negotiating position on the settlement figure.
• A Lok Adalat award is executable as a civil-court decree under Section 21(1), so a written settlement there is enforceable without a fresh suit. Model your revised repayment on the home loan EMI calculator before you agree to numbers.
• Understand the alternative you are avoiding: secured lenders can otherwise proceed under the SARFAESI route or before a Debt Recovery Tribunal, neither of which refunds anything.

For lenders and businesses:

• The court fee originally paid on the plaint - often tens of thousands of rupees on a large claim - returns in full under Section 16 of the Court Fees Act, 1870, improving the net recovery on a settled account.
• Section 21(2) makes the outcome appeal-proof, removing the litigation tail-risk that a contested decree carries.

For NRIs pursuing claims in India:

• A Lok Adalat can resolve a rent, property or contractual money claim "with utmost expedition," per NALSA, avoiding repeated travel for hearings.
• Once you receive a settled sum, plan the movement of funds abroad using the NRI repatriation calculator and check your Indian tax exposure on the recovered amount with the NRI tax calculator.

The refund figure is not trivial on larger claims. The table below is illustrative only - the exact court fee is fixed by the Court Fees Act, 1870 as adopted and amended by each State, so rates differ across States. It shows why the incentive scales with the claim size.

Figures assume an illustrative 3% ad valorem rate purely to show the mechanism; your State's Court Fees Act sets the actual rate and any slabs.

The single most important compliance step is procedural: make sure the settlement is recorded as a case "referred to it under sub-section (1) of section 20," because that is the exact phrase in Section 21(1) that triggers the refund and the Section 16 certificate. A settlement reached outside that referral route does not carry the statutory refund.

FAQ

Is there any fee to take a matter to a Lok Adalat?

No. NALSA states on its FAQ page that "There is no fees to be paid in the Lok Adalat" and that "the parties are not required to engage any Advocate." The Legal Services Authorities Act, 1987 does not levy a filing fee for referring or placing a matter before a Lok Adalat. This is distinct from the separate refund of court fee already paid on a pending suit, which is governed by Section 21(1) of the 1987 Act.

When exactly is my original court fee refunded?

Under Section 21(1) of the Legal Services Authorities Act, 1987, the court fee is refunded where a case "referred to it under sub-section (1) of section 20" is settled or compromised at the Lok Adalat. The mechanism runs through Section 16 of the Court Fees Act, 1870, in force from 1 July 2002, under which the court issues a certificate letting you recover "the full amount of the fee paid" from the Collector. The refund is mandatory once these conditions are met.

Is the refund partial or full?

Full. Section 16 of the Court Fees Act, 1870 authorises a certificate to "receive back from the Collector, the full amount of the fee paid in respect of such plaint." There is no cap or percentage deduction written into Section 21(1) of the Legal Services Authorities Act, 1987 or into Section 16 of the 1870 Act. On a Rs 10,00,000 claim, whatever ad valorem fee was paid at filing is recoverable in full once the matter settles through the Section 20(1) referral route.

Can the other side appeal a Lok Adalat award later?

No. Section 21(2) of the Legal Services Authorities Act, 1987 states the award "shall be final and binding on all the parties to the dispute, and no appeal shall lie to any Court against the award." Because the award records the parties' own compromise and is deemed a decree of a civil court under Section 21(1), there is nothing for a consenting party to appeal. NALSA confirms that "No appeal would lie to any Court against the award."

Do I need a lawyer to appear before a Lok Adalat?

Not as a legal requirement. NALSA's FAQ states that at a Lok Adalat "the parties are not required to engage any Advocate." The process is conciliatory rather than adversarial, and the award under Section 21(1) of the 1987 Act rests on a compromise the parties themselves accept. Many litigants still take advice before agreeing to figures, particularly on a large recovery claim, but the forum itself imposes no mandatory representation cost.

How is a Lok Adalat award enforced if the other side does not pay?

It is enforced like any civil-court decree. Section 21(1) of the Legal Services Authorities Act, 1987 provides that "every award of the Lok Adalat shall be deemed to be a decree of a Civil Court." That means you can proceed straight to execution before the competent court without filing a fresh suit, and without the delay of a trial. This executability, combined with the no-appeal rule in Section 21(2), is what makes the award both cheap and final.

Does the refund apply if I file directly at the Lok Adalat rather than transferring a pending case?

The Section 21(1) refund is tied to a case "referred to it under sub-section (1) of section 20" - that is, a matter already pending in a court on which court fee was paid. If you approach the Lok Adalat directly at the pre-litigation stage, NALSA notes there is "no fees to be paid" in the first place, so there is simply no court fee to refund. Either way, you pay nothing to use the forum.