1967 (3) TMI 121 - HC - Indian Laws

Unconstitutional court fees ruled excessive and invalid, refund ordered, suspension for corrective action.

Zenith Lamps and Electricals Ltd. Versus The Registrar, High Court and Ors.

The court declared the High Court-Fees Rules, 1956, and the Madras Court-Fees and Suits Valuation Act, 1955, unconstitutional and invalid due to the ... - Issues Involved:1. Constitutional validity of the High Court-Fees Rules, 1956.2. Validity of Article I, Schedule I of the Madras Court-Fees and Suits Valuation Act, XIV of 1955.3. Justification for the increase in court fees under the 1955 Act.4. Correlation between fees levied and services rendered.5. Whether the fees levied constitute a tax or a fee.6. Effect of the court's declaration of invalidity of the levy.7. Claim for refund of court fees paid under the new rules.Issue-wise Detailed Analysis:1. Constitutional Validity of the High Court-Fees Rules, 1956:The cases questioned the constitutional validity of the High Court-Fees Rules, 1956, effective from January 1, 1957. These rules incorporated the Madras Court-Fees and Suits Valuation Act, XIV of 1955, which provided for an ad valorem fee without limit at 7.5% on all plaints, written statements, counter-claims, and memoranda of appeal. The challenge was directed against the uniform ad valorem fee as being invalid and ultra vires.2. Validity of Article I, Schedule I of the Madras Court-Fees and Suits Valuation Act, XIV of 1955:The Madras Court-Fees and Suits Valuation Act, 1955, introduced a uniform levy of 7.5% ad valorem on the subject-matter of the claim without limit, replacing the previous slab system. The court found this levy to be highly arbitrary and oppressive, not authorized by law, and essentially a tax rather than a fee.3. Justification for the Increase in Court Fees under the 1955 Act:The court examined whether the increase in court fees in 1955 was justified by any increase in the cost of the administration of justice. The figures provided by the state showed that the revenue from court fees exceeded the cost of administration, indicating no justification for the exorbitant levies imposed by the new Act.4. Correlation Between Fees Levied and Services Rendered:The court emphasized that a fee must bear a reasonable relation to the cost of the services rendered. The uniform ad valorem fee without limit was found to be grossly disproportionate to the services rendered, especially at higher claim values, thus failing the test of correlation required for a fee.5. Whether the Fees Levied Constitute a Tax or a Fee:The court distinguished between a fee and a tax, stating that a fee is a payment for special services rendered to the payer, while a tax is for raising revenue for general purposes. The court concluded that the ad valorem levy under the new Act, being excessive and unrelated to the services rendered, was in substance a tax and not a fee.6. Effect of the Court's Declaration of Invalidity of the Levy:The court declared Article I, Schedule I of the Madras Court-Fees and Suits Valuation Act, 1955, and Rule 1 of Order 2 of the High Court Fees Rules, 1956, as invalid and ultra vires in their application to the High Court in its Original Jurisdiction. The court did not revive the previous Court Fees Act of 1870 but left it to the appropriate authorities to take necessary steps.7. Claim for Refund of Court Fees Paid under the New Rules:The petitioners in Application Nos. 2445 of 1964 and 2486 of 1964 claimed a refund of the excess court fees paid under the new rules over what they would have paid under the previous rules. The court ordered a refund of the difference as the levy under the new Act was held to be invalid.Conclusion:The court held that the levy of court fees under the High Court-Fees Rules, 1956, and the Madras Court-Fees and Suits Valuation Act, 1955, was unconstitutional and invalid. The court emphasized the need for a reasonable correlation between the fees levied and the services rendered, and found the uniform ad valorem fee without limit to be excessive and oppressive, constituting a tax rather than a fee. The court ordered a refund of the excess fees paid and suspended the operation of its orders for two months to allow the authorities to take necessary steps.