Full Judgment Text
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PETITIONER:
THE SECRETARY TO GOVERNMENT OFMADRAS & ANR.
Vs.
RESPONDENT:
P.R. SRIRAMULU & ANR.
DATE OF JUDGMENT22/11/1995
BENCH:
FAIZAN UDDIN (J)
BENCH:
FAIZAN UDDIN (J)
BHARUCHA S.P. (J)
MAJMUDAR S.B. (J)
CITATION:
1996 AIR 767 1996 SCC (1) 345
JT 1995 (8) 305 1995 SCALE (6)589
ACT:
HEADNOTE:
JUDGMENT:
WITH
WRIT PETITION NO. 1390 OF 1987
------------------------------
Central Bank of India
V.
The Secretary to Government of
Tamilnadu & Ors.
J U D G M E N T
Court has been directed against the judgment dated
March 3, 1975 delivered by the High Court of Madras in Writ
Petition No. 749/1966 P.R. Sriramulu & Anr. Vs. The
Secretary to the Government of Madras. Home Department
alongwith a group of other Writ Petitions and Civil Appeals,
declaring Article (1) in Schedule (1) to the Tamilnadu Court
Fees and Suits Valuation Act, 1955 and Sub-rule (1) of Rule
(1) of Order II of the High Court Fees Rules, 1956 based on
Article (1) of Schedule (1) of Madras Act No. XIV of 1955,
to be invalid in so-far-as they relate to the levy of Court
Fees on ad-valorem scale.
2. The facts in brief leading to the aforesaid appeal are
that certain lands belonging to the respondents No. 1 and 2
herein situated in Tondiarpet were acquired at the instance
of Public Works Department in respect of which award No. 6
and 8 both of 1962 were made on 5.3.1962 and 10.3.1962. On a
reference made under Section 18 of the Land Requisition Act,
at the instance of respondents No. 1 and 2, IVth Assistant
City Civil Judge, Madras enhanced the compensation. The
respondents being dis-satisfied preferred appeals to the
High Court for further enhancement of the compensation. The
Court Fee payable according to Madras Court Fees and Suits
Valuation Act, 1955 on such appeals was an ad-valorem Court
Fee at the rate of 7 1/2 per cent of the total claim without
any upper limit for such levy irrespective of the amount.
The respondents No. 1 and 2 challenged the validity of the
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aforesaid provisions of levy of Court Fees and Suits
Valuation Act of 1955 with reference to levy of Court Fees
ad-valorem working out at the rate of 7 1/2 per cent without
upper limit by contending that the levy is not only
exorbitant but wholly arbitrary, unreasonable and
unjustified bearing no relationship to the cost of
administration of justice and that in fact it was not a levy
of Court Fee but really a levy of tax though purporting to
be a levy of fee. The respondents took the stand that the
Court Fees must be related to the cost of administration of
justice and cannot be used as a means of taxation for the
purpose of raising the revenue to the Government for its
general administration. Respondents further took the stand
that the pattern of levy of Court Fees prior to 1955 was
only to levy an ad-valorem fee up to a certain limit and
thereafter the fee was on a reduced scale and that the scale
of fees in other States of the country are also on different
basis and not on the basis of ad-valorem fee without limit.
The said provisions therefore were sought to be declared
invalid.
3. One Mr. Kelu Eradi, Joint Secretary to the Government
of Tamilnadu had filed the counter afidavit on behalf of the
State supporting the levy of ad-valorem Court Fees and
opposing the writ petitions However, at the arguments stage
one Mr. J. Shiva Kumar, Deputy Secretary to the Government
also filed a supplementary counter affidavit dated
11.10.1966 on behalf of the Government but the High Court
did not take into account the said supplementary counter
affidavit and decided writ petitions. Relying on the
principles laid down in Corporation of Madras Vs. Spencer &
Co. the High Court allowed the group of writ petitions and
appeal and struck down the aforementioned provisions by
taking the view that the levy of ad-valorem flat rate of 7
1/2 per cent without any upper limit would be unreasonable,
because where the cost of service had to be distributed
between several persons, it would not be equitable and
reasonable if the fees were so fixed that the whole cost or
a grossly disproportionate part of it was imposed on a
particular section of litigants. The said judgment was
challenged before this Court in appeal. This Court allowed
the appeal and set aside the judgment of the High Court and
remitted the matter back to the High Court with the
following observations :
"It seems to us that we cannot dispose of this
appeal without giving opportunity to the
respondents to file and affidavit or affidavits in
reply to the supplemental counter affidavit dated
October 11, 1966 because if we take the figures as
given and explained by the Advocate-General we
cannot say that the State is making a profit out
of the administration of civil justice. Various
items both on the receipt side and the expenditure
side have to be carefully analyzed to see what
items or portion of items should be credited or
debited to the administration of civil justice:
It is true, as held by the High Court, that it is
for the State to establish that what has been
levied is court fee properly so called and if
there is any enhancement the State must justify
the enhancement:
We are accordingly constrained to allow the appeal
and set aside the judgment passed by the High
Court and remit the case to it:
We direct that the High Court should give an
opportunity to the writ petitioners to file an
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affidavit or affidavits in reply to the affidavit
dated October 11, 1966. The High Court shall then
decide whether the impugned fees are the court
fees or taxes on litigants or litigation."
4. After remand by this Court the respondents filed
further affidavits traversing the supplemental counter
affidavit dated October 11, 1966 filed by Mr. Shiv Kumar on
behalf of the Government. After considering the affidavits
filed on behalf of the parties and the material on record
the High Court took the view in the impugned judgment that
there is no idea of quid pro quo in the levy at the rate of
7 1/2 per cent flat rate without limit as there is no
necessity to raise the Court fees as compensation for the
cost of service rendered and to meet any increased cost in
the administration of civil justice and that there was no
principle of rationalization justifying demand at a flat
rate. The High Court further held that considering the
circumstances the impost inherently bears within more the
concept of tax than fee and the levy imposing, as it does,
on a particular section of litigants is grossly
disproportionate part of the burden and the same is
unreasonable and arbitrary. The expenditure incurred by the
Government as shown in some of the items, in the opinion of
the High Court could not be debited to the cost of
administration of justice which the litigant can be required
to compensate and that the expenditure in the administration
of criminal justice is also not debitable to the cost of
administration of civil justice in Courts. The High Court
further held that the record indicated that for the year
1955-56 the State was making a profit varying between 9 to
21 lakhs. On the basis of these conclusions the High Court
struck down Article 1 in Schedule 1 to the Tamilnadu Court
Fees and Suits Valuation Act and sub-rule 1 of Rule 1 of the
High Court Rules, 1956 based on Article 1 of Schedule 1 to
the Madras Act No. 14 of 1955 as invalid against which the
aforementioned appeal has been directed.
5. The petitioner in writ petition No. 139/1987 is a Bank.
The said Bank had filed a civil suit for recovery of Rs.
6,50,40,605.12 against M/s. Mettur Textile Industries Ltd.
and Others on which it had to pay Court Fee amounting to Rs.
48,78,054.25 on ad-valorem basis at the rate of 7 1/2 per
cent under Article 1 of Schedule 1 of the said Madras Act
No. XIV of 1955. Certain other money suits were also
contemplated by the Bank and having learnt that the Civil
Appeal No. 736/1975 has been filed in this Court against the
Madras judgment, the Bank has also filed the aforesaid writ
petition under Article 32 of the Constitution of India
challenging the said levy of Court Fees on the flat rate of
7 1/2 percent ad-valorem, relying on the same grounds as are
set out in the aforesaid appeal.
6. Before we embark upon the points in controversy and
respective contentions relating thereto we may briefly trace
the history with regard to the levy of Courts Fee in this
country on the litigating parties. Before the advent of
British rule in India the administration of justice was
considered to be the basic function of the State as guardian
of the people without the levy of any charge on the party
approaching the Court for redress of its grievance. As far
as the memory goes during the Moghul rule and the period
prior to that, there was no fee payable even on
administration of civil justice and the administration of
justice was totally free. It was only after the British rule
that regulations imposing Court Fees were brought into
existence. In the beginning the imposition of the fee was
nominal but in the course of time it was enhanced gradually
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under the impression that it would prevent the institution
of frivolous and groundless litigation and as an effective
deterrent to the abuse of process of the Court without
causing any impeciment in the institution of just claims.
However insignificant this view may be that the levy of fees
would have a tendency to put a restraint on frivolous
litigation, that view at any rate had the merit of seeking
to achieve a purpose which was believed to have some
relevance to the administration of justice. Since about past
two decades the levy of Court Fees on higher scales would
seem to find its justification, not in any purpose related
to the sound administration of justice, but in the need of
the State Government for revenue as a means for recompense.
It may be seen that the Central Court Fees Act of 1870
fixed, what may be described in view of subsequent
happenings, a moderate scale of Court Fees. But the fact may
not be lost sight of that after the enactment of the Court
Fees Act. 1870 the financial needs of the State Governments
have multiplied to a much larger extent. Consequently most
of the States have enacted their own Court Fees Acts or have
amended the original Acts themself beyond recognition and
thereby have increased the scale of fees to a level which
has given rise to the feeling that it is no longer a fee but
a heavy tax on the litigants.
7. It cannot be disouted that the administration of
justice is one of the main functions of the State. It is
also a fact that the functions of the State in the modern
times have become too extensive encompassing a large area of
activity. Now the State has not only to maintain system of
administration of justice for the maintenance of law and
order, but it has also to provide a system to enable its
citizens to convass their rights against wrongs done to them
as well as to the State itself, statutory parties and
Government Corporations, they deing now the largest
litigants by reason of the growing tendency of all the
States to project themselves into various social, economic
and industrial spheres of the society, which during pre-
independence days, was a rare phenomena. It is for all these
reasons that the States came forward to levy fee by
legislative amendments in order to cover up the expenses
towards the pay, allowances and pensions of Judicial
Officers and establishment staff, their residential
accommodations. Court buildings repairs and maintenance
thereof as well as provision for transport, libraries and
stationery, besides other expenses under various heads and
machinery engaged and employed for the administration of
justice.
8. In the present appeal and writ petition before us, it
may be noted that the questions that arise out of the
arguments adoressed to us by the learned counsel for the
parties, may be formulated as under:-
1) What is the nature of the Fees taken in Court within the
meaning of Entry 3, List II, in 7th Schedule of the
Constitution. Whether the fee so charged is a tax or a fee?
2) Whether it is a colourable exercise of legislative power,
in as much as the State in fact is raising tax under the
guise of levying a fee because the levy is excessive to such
an extent as to be a pretence of a fee but it is not a fee
in reality ?
3) Whether the levy of Court Fees on ad-valorem basis,
without an upper limit renders the impost a tax in as-much-
as, having regard to the very nature of services, which
consist of adjudication of disputes, a stage is inevitably
reached wherein after and above an ad-valorem levy, the
proportionate increase in the value of the subject matter
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ceases to be a fee and becomes a tax ?
4) Whether the impugned impositions are fees - there being
no correlation between the services and the levy and because
State makes a profit out of the administration of civil
justice as it does not spend the entire money an
administration of civil justice but also in administration
of criminal justice and a large surplus is left out even
after meeting the expenses of the administration of justice
?
9. We may state here that the aforementioned questions
raised before us are not new but were raised and agitated
earlier also and decided by this Court. In this connection a
reference to some of the decisions may be made. In I.M.& M
Industries Vs. State of Bihar [AIR 1971 SC 1182] this Court
expressed the view that before any levy can be upheld as a
fee, it must be shown that the levy has reasonable
correlation with the services rendered by the Government. In
other words the levy must be proved to have a quid pro quo
for the services rendered. But in such matters it will be
impossible to have an exact correlationship and that the cor
relationship expected to exist is one of a general character
and not of arithmetical exactitude. It has been further
observed that the correlationship between the services
rendered and the levy of fee is essentially a question of
fact.
10. A Constitution Bench of this Court while enterpreting
Entry 3, List II in Schedule 7 of the Constitution of India,
in the case of Government of Madras Vs. Zenith Lamos [AIR
1973 SC 724] took the view that the fees taken in Courts
cannot be equated with taxes and in paragraph 31 of the
report held as under:
‘"In this case we are concerned with the
administration of civil justice in a
State. The fees must have relation to
the administration of civil justice.
While levying fees the appropriate
legislature is competent to take into
account all relevant factors, the value
of the subject matter of the dispute,
the various steps necessary in the
prosecution of a suit or matter, the
entire cost of the upkeep of courts and
officers administering civil justice,
the vexatious nature of a certain type
of litigation and other relevant
matters. It is free to levy a small fee
in some cases, a large fee in others,
subject of course to the provisions of
Art, 14. But one thing the Legislature
is not competent to do, and that is to
make litigants contribute to the
increase of general public revenue. In
other words, it cannot tax litigation,
and make litigations pay, say for road
building or education or other
beneficial schemes that a State may
have. There must be a broad
correlationship with the fees collected
and the cost of administration of civil
justice."
Further in the said report this Court also agreed with the
following observations made in [ILR (1968) (1) Madras 247 at
pp. 340-341:
"When a levy is impugned as a colourable
exercise of legislative power, the State
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being charged with raising a tax under
the guise of levying a fee, courts have
to scrutinize the scheme of the levy
carefully, and determine whether, in
fact there is correlation between the
services and the levy, or whether the
levy is excessive to such an extent as
to be a pretence of a fee and not a fee
in reality. If, in substance, the levy
is not to raise revenues also for the
general purposes of the State the mere
absence of uniformity or the fact that
it has no direct relation to the actual
services rendered by the authority to
each individual who obtains the benefit
of the service, or that some of the
contributories do not obtain the same
degree of service as others may, will
not change the essential character of
the levy."
11. Again in Om Prakash Vs. Giri Raj Kishori [AIR 1986 SC
726] this Court observed in para 10 of the report that in
determining a levy as fee the true test must be whether its
primary and essential purpose is the rendering of specific
services to a specified area or class, it being of no
consequence that the State may ultimately and indirectly be
benefited by it.
12. Apart from the aforementioned decisions the points in
controversy and questions raised before us, as referred to
above, are squarely covered by a decision of this Court in
P.M. Ashwanatha Narayana Setty Vs. State of Karnataka [1989
Supple. (1) SCC 696. While dealing with the distinction
between a "fee" and a "tax" and after reviewing all the
earlier pronouncements of this Court on the conceptual
distinction between a fee and a tax, it has been observed in
para 35 (page 712) of the report as under :
"What emerges from these pronouncements
is that if the essential character of
the impost is that some special service
is intended or envisaged as a quid pro
quo to the class of citizens which is
intended to be benefited by the service
and there is a broad and general
correlation between the amount so raised
and the expenses involved in providing
the services, the impost would partake
the character of a "fee" notwithstanding
the circumstance that the identity of
the amount so raised is not always kept
distinguished but is merged in the
general revenues of the State and
notwithstanding the fact that such
special services, for which the amount
is raised, are, as they very often do,
incidentally or indirectly benefit the
general public also. The test is the
primary object of the levy and the
essential purpose it is intended to
achieve. The correlationship between the
amount raised through the ’fee’ and the
expenses involved in providing the
services need not be examined with a
view to ascertaining any accurate,
arithmetical equivalence or precision in
the correlation; but it would be
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sufficient that there is a broad and
general correlation."
In para 66 of the said report while repelling the arguments
with regard to the alleged arbitrariness and inequities in
the imposition of the ad-valorem impost without an upper
limit this Court in paragraph 67 (page 720) of the report
observed as follows :
"The anomalies that the policy behind
the impugned provisions can produce in
onceivable cases could, indeed, be
inquitable or even quite startling. But
the argument in the last analysis
becomes indistinguishable from the
contention that the correlation of the
services to the fee would have to be
decided on the basis of how the
correlation operate in each individual
case. It would be an insistence on
testing the conceptual nature of the fee
on the basis of the degree of the quid
pro quo in the case of each individual
payer of the fee. That is the peccant
part of the argument. Once a broad
correlation between the totality of the
expenses on the services, conceived as a
whole, on the one hand and the totality
of the funds raised by way of the fee,
on the other, is established, it would
be no part of the legitimate exercise in
the examination of the constitutionality
of the concept of the impost to embark
upon its effect in individual cases.
Such a grievance would be one of
disproportionate nature of the
distribution of the fees amongst those
liable to contribute and not one
touching the conceptual nature of the
fee."
It has been further observed in para 72 (page 721) of the
said report as under:
"What emerges from the foregoing
discussion is that when a broad and
general correlation between the totality
of the fee on the one hand and the
totality of the expenses of the services
on the other is established, the levy
will not fail in its essential character
of a fee on the ground alone that the
measure of its distribution on the
persons or incidence is disproportionate
to the actual services obtainable by
them. The argument that where the levy,
in an individual case, far exceeds the
maximum value, in terms of money, of the
services that could at all be possible,
then, qua, that contributor, the
correlation breaks down is a subtle and
attractive argument. However, on a
proper comprehension of the true concept
of a fee the argument seems to us to be
more subtle than accurate. The test of
the correlation is not in the context of
individual contributors. The test is on
the comprehensive level of the value of
the totality of the services, set off
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against the totality of the receipts. If
the character of the ’fee’ is thus
established, the vagaries in its
distribution amongst the class, do not
detract from the concept of a ’fee’ as
such, though a wholly arbitrary
distribution of the burden might violate
other constitutional limitation."
In this connection it will also be appropriate to have a
look at the observations made in para 79 (at page 723) of
the said report which are as follows:
"The problem is, indeed, a complex one
not free from its own peculiar
difficulties. Though other legislative
measures dealing with economic
regulation are not outside Article 14,
it is well recognised that the State
enjoys the widest latitude where
measures of economic regulation are
concerned. These measures for fiscal and
economic regulation involve an
evaluation of diverse and quite often
conflicting economic criteria and
adjustment and balancing of various
conflicting social and economic values
and interests. It is for the State to
decide what economic and social policy
it should pursue and what
discriminations advance those social and
economic policies. In view of the
inherent complexity of these fiscal
adjustments, courts give a larger
discretion to the legislature in the
matter of its preferences of economic
and social policies and affectuate the
chosen system in all possible and
neasonable ways. If two or more methods
of adjustments of an economic measure
are available, the legislative
preference in favour of one of them
cannot be questioned on the ground of
lack of legislative wisdom or that the
method adopted is not the best or that
there were better ways of adjusting the
competing interests and claims. The
legislasture possesses the greatest
freedom in such areas. The analogy of
principles of the burden of tax may not
also be inapposite in dealing with the
validity of the distribution of the
burden of a ’fee’ as well."
13. Now adverting to the facts of the present case it may
be stated that the High Court after comparing the scale of
Court Fees and noticing the difference in the incidence of
Court Fees between 1922 Act and 1955 Act recorded the
findings that the levy at 7 1/2 per cent under Article 1 of
Schedule 1 of the Madras Act of 1955 on an ad-valorem flat
rate basis without any limit does not satisfy the pre-
requisites of a valid levy of Court Fees as according to the
High Court it has in itself more the element of tax rather
than the idea of quid pro quo. In other words there is no
correlation between the levy of the Court Fees and the
services rendered to the litigants in administration of
civil justice. The High Court also took the view that the
levy at the aforesaid rate imposing on a particular section
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of litigants is grossly disproportionate part of the burden
and, therefore, deserves to be struck down being
unreasonable and arbitrary. Further, the High Court, after
considering the affidavit filed by Mr. Kelu Eradi on behalf
of the Government and also the statements appended to the
supplemental counter affidavit for the years 1955 to 1965
found that except for the year 1954-55 the State was making
yearly profit varying between 9 to 21 lacs. With regard to
the year 1954-55 the High Court found that the total actual
receipts for 1954-55 were Rs. 122.12 lacs as against the
expenditure of Rs. 124.94 lacs for the said period.
According to the High Court the aforementioned figures of
expenditure included Rs. 36.70 lacs relating to the criminal
courts, Rs. 3.57 lacs to Presidency Magistrate Courts, Rs.
6.26 lacs to Law Officers to the Government and Rs. 58.31
lacs pertaining to the Civil & Sessions Courts and took the
view that the expenditure incurred by the Government in
payment to their Law Officers cannot be debited to the cost
of administration of justice which the litigant can be
required to compensate for. The High Court also took the
view that the criminal Courts do not render any service to
the litigants and the expenditure in the administration of
criminal justice is not debitable to the cost of
administration of civil justice in Courts. On these
reasonings the High Court in support of its aforementioned
conclusions took the view that if the aforementioned total
sum of Rs. 46.53 lacs and part of Rs. 58.31 lacs under the
head "Civil and Sessions Courts" are deducted the total net
balance would be less than Rs. 78.41 lacs and the State thus
had earned a profit of Rs. 43.71 lacs over the expenditure
of about Rs. 78.41 lacs in the year 1954-55.
14. Having regard to the decisions and various
pronouncements cited above it is difficult to accept the
reasoning and the view taken by the High Court in the
impugned judgment. As discussed above if the essential
character of the levy is that some special service is
intended as quid pro quo to the class of citizens which is
intended to be benefited by the service and a broad and
general correlation between the amount so collected and the
expenses incurred in providing the services is found to
exist, then such levy would partake the character of a
"fee", irrespective of the fact that such special services
for which the amount by levy of fee is collected
incidentally and indirectly benefit the general public also.
In order to establish the correlation between the amount
recovered by way of "fee" and the excenses incurred in
providing the services they should not be examined so
minutely or be whipped in golden scale to discern any
difference between the two. It is not necessary to ascertain
the same with any mathematical exactitude for finding the
correlation out the test would be satisfied if a broad and
general correlation is found to exist and once such a broad
correlation between the totality of the expenses on the
services rendered as a whole, on the one hand and the
totality of the amount so raised by way of the fee, on the
other is established, it would be no part of the legitimate
exercise in the examination of the constitutionality of the
concept of the amongst to embark upon its effect in the
individual cases. If the aforesaid relation is found to
exist in the levy of the fee, the levy cannot be said to be
wanting in its essential character of a fee on the ground
that the measure of its distribution on the persons or
incidence is disproportionate to the actual services made
available to them. In view of this position of law the view
expressed by the High Court that ad-valorem levy of Court
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Fee in an individual case far exceeds the maximum value, in
terms of money, dua that contributor and hence the concept
of correlation fails and renders the levy invalid and
illegal cannot be acceded for the simple reason that the
correlation is not in the context of individual
contributors, the test being its ascertainment on a
comprehensive basis keeping in view the value of the
totality of the service, qua, the totality of receipts.
According to D.O. Marco, the author of the "First Principles
of Public Finance" page 33, "the fee must be equal in the
aggregate to the cost of production of the services. That is
the aggregate amount of the fees which the State collects
from individual customers must equal the aggregate expenses
of production." Thus the test of the correlation is to be
reckoned at the aggregate level and not at the individual
level as is also the view taken in Asnwanatha Narayana Setty
s case (supra).
15. As pointed out earlier with reference to the decisions
of this Court the State enjoys the widest latitude where
measure of economic regulations are concerned. These
measures for fiscal and economic regulation involve an
evaluation of diverse and quite often conflicting economic
criteria, adjustment and balancing of various conflicting
special and economic values and interests. It is for the
State to decide what economic and social policy it should
pursue. It is settled law that in view of the inherent
complexity of the fiscal adjustments, the Courts give a
large discretion to the legislature in the matter of its
preferences of economic and social policies and effectuate
the chosen system in all possible and reasonable ways. If
two or more methods of adjustment of an economic measure are
available, the legislative preference in favour of one of
them cannot be questioned on the ground of lack of
legislative wisdom or that the method adopted is not the
best or there are better ways of adjusting the competing
interests and the claims as the legislature possesses the
greatest freedom in such areas. It is also well settled that
lack of perfection in a legislative measure does not
necessarily imply its constitutionality as no economic
measure has so far been discovered which is free from all
discriminatory impact and that in such a complex area in
which no fool proof device exists, the Court should be slow
in imposing strict and rigorous standard of scrutiny by
reason of which all local fiscal schemes may be subjected to
criticism under the Equal Protection clause. Having regard
to these settled principals the impugned Judgment of the
High Court could not be sustained.
16. It may be noticed that the observation of the High
Court that the State Government had earned a profit of Rs.
43.71 lacs out of the total receipts for the year 1954-55
and that the State had made yearly profit varying between 9
to 21 lacs during the period from 1955 to 1965, cannot be
accepted to be correct as the said observations have been
made ignoring the facts stated in the supplementary
affidavit filed by Mr. J. Shiva Kumar, Deputy Secretary to
the Government and other material on record. It may be noted
that factually it is neither possible nor practicable to
give the exact break up of figures in regard to the expenses
incurred under different heads and other departments of the
Government in relation to the administration of civil
justice, Shri Shiva Kumar in his supplementary affidavit has
also stated in para 6 that it is difficult to estimate
accurately to the last rupee the expenditure incurred on a
number of items relating to the administration of civil
justice. He has, however, given various heads under which
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the levy of fees is made as also various heads of
expenditure relating to the administration of justice of
which details were not given by Shri Kelu Eradi in his
affidavit which alone has been taken into account by the
High Court while recording its conclusions which resulted
into the error. Apart from the facts stated above it may
also be taken note of that there could not be any scientific
method by which the levy of fee may be made exactly
corresponding to the expenditure in a particular year
relating to the administration of civil justice. Some
fluctuations are bound to occur in respect of the recoveries
by levy of fee and the expenditure on administration of
civil justice. In any case it is also not the requirement of
law that the collection raised through the levy should
exactly tally or correspond to the expenditure in the
administration of civil justice. It has already been ruled
by this Court that the co-relation between the amount raised
through the fee and the expenses incurred in providing the
services should not be examined with exactitude with a view
to ascertain any accurate and arithmetical equivalence but
the test would be satisfied if a broad and general
correlation is found to exist. That being so, even if it is
accepted that the recoveries during the period from 1955-65
were in excess to the tune of about Rs. 9 to 21 lacs per
year, the levy would not fail on that account because once
it is established that the primary and essential purpose is
the rendering of specific services to a specified class, it
becomes immaterial that the State has earned certain
benefits out of it indirectly.
17. The High Court also took the view that the criminal
courts do not render any service to the litigants and,
therefore, the expenditure made in administration of
criminal justice cannot be debited to the cost of
administration of civil justice in Courts. While so
observing the High Court lost sight of the fact that a
Munsif who deals with the civil administration of justice is
also invested with the magisterial powers and deals with
criminal matters also. So is the case with the members of
the higher judicial service. In such circumstances it is
difficult to find any proper basis or formula to separate
the charges of civil and criminal administration of justice
when civil and criminal courts are generally not distinct
but both functions are discharged by the same Judicial
Officer. It appears to be not only difficult rather
impossible to ascertain as to how much public time was spent
by a Judicial Officer while dealing with criminal matters
and how much time was spent while dealing with civil matters
so as to come to a definite conclusion that any surplus much
less sizeable surplus is left out of the receipts derived
from Court Fees after meeting the actual expenditure in
administration of civil justice. It is for these reasons
that the Deputy Secretary, Shiv Kumar in his affidavit also
stated that it is difficult to estimate accurately to the
last rupee the expenditure incurred on a number of items
mentioned by him in his affidavit. It is expressed by this
Court also, "that it is difficult to estimate accurately the
expenditure actually made by the Courts in administration of
civil justice but it does not men that there does not exist
a broad correlation between the expenses and the amount
raised by way of levy."
18. While considering the reasonableness of the levy the
High Court also took into account the vast difference in the
rites of fee between the years 1922 to 1955. In this
connection it may be pointed out that having regard to the
changing social and economic conditions of the country and
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the threats of frequent inflationary trends hovering around,
the levy of court fees cannot remain static and has to be
amended according to the requirements of the times. The
increase in the Court Fees has to be appreciated having
regard to the increased need of the revenue by reason of the
increased cost of the administration of justice. That being
so, it would be a futile exercise to compare the rates of
Court fee under the Court Fee Act, 1922 with those of 1955.
There is bound to be a world of difference in the rates due
to large span of time having elapsed between 1922 and 1955.
19. The High Court also took the view that the expenditure
incurred by the Government in payment to their Law Officers
cannot be debited to the cost of administration of justice
which the litigant can be required to compensate for. In our
opinion this view of the High Court also can not be accepted
for the simple reason that these Law Officers are also part
of the machinery of the administration of justice. Apart
from what has been stated above in the aforegoing paragraphs
it may be noticed that the view expressed by the High Court
cannot be sustained in view of the subsequent judgment of
this Court in the case of All India Judges association Vs.
Union of India [1992 (1) SCC 119] whereby this Court had
given various directions to the Government involving
considerable amount of funds most of which will fall under
the head of administration of civil justice. The Government
is, therefore, bound to raise funds through the medium of
fee.
20. Learned counsel for the respondents, however, submitted
that this Court in the case of Asnwanatha Narayana Setty
(supra) ultimately did not approve the scheme of ad-valorem
levy of Court Fees without upper limit and urged that the
said decision cannot be taken as an aid in support of the
contention of the appellant that the ad-valorem of Court Fee
without upper limit is justified and legal. It is true that
in the last sentence of para 88 in the said report this
Court observed as under:
"though the scheme cannot be upheld. at the same time.
it cannot be struck down either."
While laying emphasis on the aforesaid observation. learned
counsel for the respondents ignored the view expressed in
paras just preceding the said observation, wherein it has
been emphatically stated that it is difficult to say that
the ad-valorem principle which may not be an ideal basis for
distribution of a fee can be said to incur any
unconstitutional infirmity. Formity. From the entire
discussion of the said decision it is clear that this Court
did not strike down the ad-valorem levy of Court Fees
without upper limit and at the same time has expressed
displeasure with regard to the scheme and it is for this
reason that certain successions were in para 95 of the said
report in record to the rationalization of the Court Fees
under the "Rajasthan Act and the Karnataka Act" where the
rate of Court Fees was 10 per cent ad-valorem which is not
the case here before us.
21. It may be appropriate here to mention that ultimately
the the State of Madras amended its Court Fees rules with
effect form 11.9.1968 whereby the uniform levy of 7 1/2 der
cent ad-valorem Court Fees has been given up and the slab
system with a tapering scale has been adopted. This fact is
clear from the affidavit dated 1.11.1973 filed before the
high Court by one S.P.Ambrose, Special Secretary to the
Government of Tamilnadu, Home Department.
22. Before parting with these matters, we me may point out
that it could not be disouted that the administration of
justice is a service which the State is under an obligation
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to render to its subject. There can be no two opinions that
the amount raised from the suitors by way of way of fee
should not normally exceed the cost of the administration of
justice because. possibly there could be no justification
with the State to enrich itself from high court fees of to
secure revenue for general administration. The total
receipts from the Court fees should be such as by and large
can cover the cost of administration of justice. There
should also be some measure of uniformity in the scales of
Court fees through out the country as there appears to be a
vast difference in the scales of court fees in various
States of the country. The feasibility of a fixed maximum
chargeable fee also deserves serious consideration.
23. In the facts and circumstances discussed above the
impugned judgment of the High Court con not be sustained and
has to be set aside.
24. In the result the appeal succeeds and is hereby
allowed. The impugned judgment of the High Court is set
aside. The writ petition No.1390/1987 is dismissed. The
parties are left to bear their respective costs in both the
matters.