Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4
PETITIONER:
CHIEF COMMISSIONER, DELHI & ANR.
Vs.
RESPONDENT:
DELHI CLOTH AND GENERAL MILLS CO. LTD. & ORS.
DATE OF JUDGMENT07/04/1978
BENCH:
FAZALALI, SYED MURTAZA
BENCH:
FAZALALI, SYED MURTAZA
SINGH, JASWANT
CITATION:
1978 AIR 1181 1978 SCR (3) 657
1978 SCC (2) 367
CITATOR INFO :
C 1980 SC1008 (21)
ACT:
Fee-Conditions to be satisfied to be a legal fee, within the
meaning of the Constitution.
HEADNOTE:
The Respondent Company floated debenture loan of Rs. 2.50
crores and to -secure the repayment of the said loan
executed debenture trust deed dated 10th April, 1962
mortgaging certain properties of the Company for a
consideration of Rs. 2.50 crores in favour of the trustees
who were petitioners before the High Court. Stamps to the
extent of Rs. 2,50,00/- were paid under the Indian Stamp Act
and apart from that when the document was presented for
registration, a registration fee of Rs. 1,25,157.50 np. were
demanded as registration fee by the Sub-Registrar under a
notification issued by the appellant, the Chief
,Commissioner of Delhi on 15th December, 1952. The
registration fee was paid by the Respondents under
compulsion, but the trustees filed a petition in the High
Court challenging the validity of the notification and the
exorbitant amount realised as registration fee as illegal
levy not fulfilling the essential conditions of a fee within
the meaning of the Constitution. The plea of the trustees
found favour with the High Court which held that the fee
charged by the Registration Department under the
notification was an illegal impost and could not be levied.
The High Court accordingly quashed the notification.
Dismissing the appeal by certificate, the Court
HELD : A fee in order to be a legal fee must satisfy two
conditions (a) There must be an element of quid pro quo,
i.e. the authority levying the fee must render some service
for the fee levied however remote the service may be; and
(b) That the fee realised must be spent for the purpose of
the imposition and should not form part of the general
revenues of the State. [658 F-G]
In the instant case, in view of the fact that it was not
disputed that the fee realised by the Registration
Department under the impugned notification dated 15-2-1952
was to form part of the general revenues of the State, the
second element of a fee was wholly wanting and the High
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4
Court was, therefore, right in striking down this
notification. [658 G-H]
Mahant Sri Jagannath Ramanuj Das and Anr. v. The State of
Orissa and Anr. [1954] SCR 1046, Ratilal Panachand Gandhi v.
The State of Bombay and Ors. [1954] SCR at D. 1055 and State
of Maharashtra & Ors. v. The Salvation Army, Western India
Territory [1975] 3 SCR 475 applied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1959 of
1968.
From the Judgment and Order dated the 7th May, 1964 of the,
Punjab High Court, Circuit Bench at Delhi, in Civil Writ No.
227-D ,of 1962.
R.P. Bhatt and Girish Chandra for the Appellant.
Hardaval Hardv, D.R. Thadani and A.N. Goyal for Respondents.
Sobhagmal Jain for the Intervener (The State of Rajasthan).
O. P. Rana for the Intervener (State of U.P.).
658
The Judgment of the Court was delivered by
FAZAL, J. This appeal by certificate is directed against the
judgment and order of the Circuit Bench of the Punjab High
Court at Delhi dated the 7th May, 1964 and arises in the
following circumstances
The respondent Company floated debenture loan of Rs. 2.50
crores and to secure the repayment of the said loan,
executed debenture trust deed dated 10th April, 1962
mortgaging certain properties of the Company for a
consideration of Rs. 2.50 crores in favour of the trustees,
who were petitioners before the High Court. Further details
have been given in the judgment of the High Court and it is
not necessary to repeat them here. It appears that stamps
to the extent of Rs. 2,50,300/were paid under the Indian
Stamp Act and apart from that when the document was
presented for registration, a registration fee of Rs. 1,25,
157.50 np were demanded as registration fee by the Sub-
Registrar under a notification issued by the Chief
Commissioner of Delhi, which is the impugned notification in
this case. The registration fee was paid by the respondents
under compulsion but the trustees filed a petition in the
High Court challenging the validity of the notification and
the exorbitant amount realised as registration fee.
The short point taken before the High Court by the
Respondents, was that the, registration fee levied under the
notification dated 15th December, 1952 was an illegal levy
as, it did not fulfil the essential conditions of a fee
within the meaning of the Constitution. The plea of the
trustees found favour with the High Court which held that
the fee charged by the Registration Department under the
notification was an illegal impost and could not be levied.
The High Court accordingly quashed the notification and
directed refund of the fee.
The main point which arises for consideration in this case
is as to whether or not the fee charged under the
notification issued by the, Chief Commissioner was a legal
impost justified by the provisions of the Constitution. It
is well settled that a fee in order to be a legal fee,. must
satisfy two conditions :-
(i) there must be an element of quid pro quo
that is to say, the authority levying the fee
must render some service for the fee levied
however remote the service may be;
(ii) that the fee realised must be spent for
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4
the purposes of the imposition and should not
form part of the general revenues of the
State.
In the instant case, it was not disputed before the High
Court that the fee realised by the Registration Department
under the notification above-mentioned was to form part of
the general revenues of the State. It is, therefore,
manifest that the second element of a fee was wholly wanting
in this case and the High Court was, therefore, right in
striking down the notification., Mr. Bhatt appearing in
support of the appeal, submitted that by virtue of the fact
that the document was registered, the respondents obtained
initial advantage in using the document as an
659
authentic piece of evidence as proof of title and this was,
therefore. a sufficient service rendered for the imposition
of the fee. Even assuming that this was so, the second
essential ingredient of a valid fee, viz. that the fee
realised must be correlated with expenditure incurred on
registration so as to be spent on maintenance of
registration Organisation, was not satisfied in this case
and on this ground alone the fee could not be imposed. In
Mahant Sri Jagannath Ramanuj Das and Anr. v. The State of
Orissa and Anr.(1), this Court observed as follows :-
"Two elements are thus essential in order that
a payment may be regarded as a fee. In the
first place, it must be levied in
consideration of certain services which the
individuals accepted either willingly or
unwillingly. But this by itself is not enough
to make, the imposition a fee, if the payments
demanded for rendering of such services are
not set apart or specifically appropriated for
that purpose but are merged in the general
revenue of the State to be spent for general
public purposes".
The same view was reiterated in Ratilal Panachand Gandhi v.
The State of Bombay and Ors. (2)
in a recent decision of this Court in the case of State of
Maharashtra and Ors. v. The Salvation Army, Western India
Territory(3), this Court observed as follows :-
"Thus two elements are essential in order that
a payment may be regarded as a fee. In the
first place, it must be levied in
consideration of certain services which the
individuals accept either willingly or
unwillingly and in the second place, the
amount collected must be earmarked to meet the
expenses of rendering these services and must
not go to the general revenue of the State to
be spent for general public purpose".
In view of the long course of decisions of this Court, the
view taken by the High Court was absolutely correct and we
are unable to, find any error of law. We understand that
the notification has not been amended and a maximum fee of
Rs. 100/- has been fixed. Thus the point becomes more or
less academic except for cases arising during a particular
period.
For these reasons, therefore, we find no merit in this,
appeal which fails and is accordingly, dismissed without any
order as to costs.
S. R. Appeal dismissed.
(1) [1954] S.C.R. P. 1046.
(2) [1954] S.C.R.P. 1055.
(3) [1975] 3 S.C. R. 475.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4
660