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Case Number

Civil Misc. Writ No. 2605 of 1967

Advocates

M.N. Shukla
K.C. Agarwal

Judges

C.D Parekh, J.

Acts

Secs. 32, 78, 79 and 80 of the Indian Registration Act, 1908 and Articles 19 and 265 and Schedule VII-List-2 Entry No. 66 of the Constitution of India.
Secs. 78 and 79 of the Indian Registration Act
Sec. 78 of the Indian Registration Act
Rule 220 of the Registration Act
Sec. 78 of the Registration Act

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Smart Summary

Judgment Summary — C.D. Parekh, J.

Factual and Procedural Background

This opinion concerns four writ petitions arising from registration fees demanded by the Sub-Registrar, Ghaziabad, and subsequent proceedings before the District Registrar of Meerut. Two writ petitions (Nos. 2605 and 2606 of 1967) were filed by the State of U.P. challenging the District Registrar's order dated 16-11-1966 which had held certain State Government notifications under Section 78 of the Indian Registration Act, 1908 to be ultra vires and ordered substantial refunds to two companies. The companies involved were Modi Spinning & Weaving Company Limited and Modi Industries Limited, each of which presented high-value documents (valued at Rs. 50 lakhs) for registration and were then charged amounts in excess of Rs. 50,000 by the Sub-Registrar.

The companies had initially obtained registration after a direction on 22-2-1966 to realise full fees; they later applied under Rule 220 of the Registration Manual asking for refunds of the excess fees, contending the prescribed fees amounted to a tax and the notifications were ultra vires. The District Registrar, in Misc. Case No. 2 of 1966, held the notifications ultra vires (relying on a Punjab High Court decision), assessed copying charges at Rs. 100, and ordered refunds. The State challenged those orders in writ petitions 2605 and 2606. The companies themselves filed writ petitions Nos. 4026 and 4027 of 1967 directly challenging specified notifications made under Section 78 as invalid and ultra vires.

Legal Issues Presented

Whether the District Registrar (sitting under Rule 220 of the Registration Manual and the Registration Act) had jurisdiction to declare State Government notifications issued under Section 78 of the Indian Registration Act, 1908, to be ultra vires.
Whether the notifications issued under Section 78 (fixing a table of fees for registration) amounted in substance to the imposition of a tax rather than a fee — i.e., whether the levy lacked the requisite quid pro quo and reasonable correlation with services rendered and was therefore unconstitutional or ultra vires.
Whether amounts collected by the Sub-Registrar under those notifications (including amounts paid under protest) were liable to be refunded, and if so, to what extent and subject to what lawful charge.
Whether Rule 220 of the Registration Manual empowers the District Registrar to fix a “reasonable” fee or to order refunds where the State Government's notifications have fixed and earned fees under Section 78.

Arguments of the Parties

State (Respondent to companies' petitions; Petitioner in 2605 & 2606)

The District Registrar lacked jurisdiction to declare notifications issued under Section 78 ultra vires; he does not sit as a Court and cannot decide vires of Government notifications without notice to the State.
Under Rule 220 the District Registrar's powers are limited to matters such as ordering refunds only where registration was refused or similar limited circumstances; he cannot declare a notification invalid or fix fees.
The District Registrar improperly ignored his predecessor's order dated 22-2-1966; having been decided previously against the companies, the later order annulling the earlier one was beyond jurisdiction.
The notifications are legal and within the State Government's power under Sections 78 and 79 and the fees collected—even if merged into general revenue—do not lose their character as fees because consolidation into the public revenue is authorised by constitutional and financial practice (Article 266 and related principles).
There need not be an exact approximation between fees charged and the precise cost of services rendered to each individual; registration provides a continuing, public benefit and the fee can be justified on that basis.

Companies / Petitioners (Modi Spinning & Weaving Co. Ltd. and Modi Industries Ltd.)

The notifications under Section 78 purporting to fix registration fees in fact impose a tax because the amounts collected are merged into general revenue and not kept in a separate fund for registration purposes.
There is no reasonable correlation (quid pro quo) between the fees levied and the cost of maintenance and administration of the Registration Department; the fees are graduated according to value and relate to paying capacity rather than to the nature or cost of services rendered.
Accordingly, the levies are beyond the powers conferred by Sections 78 and 79 and are invalid, unconstitutional and ultra vires; amounts paid under protest should be refunded except for any lawful fee properly fixed by the State.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Delhi Cloth and General Mills Co. Ltd. v. The Chief Commissioner, Delhi (A.I.R. 1964 Punjab at p. 492)	Authority relied upon by the District Registrar in his decision that the impugned notifications were ultra vires.	The District Registrar relied on this decision when holding notifications ultra vires; the High Court noted that the District Registrar had relied upon it, but ultimately the High Court applied its own analysis in the light of higher authority concerning the fee/tax distinction.
The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shrirur Mutt (A.I.R. 1954 S.C. 282)	Authoritative test and principles distinguishing a fee from a tax: fees are payments for special benefit/privilege and should be correlated to expenses or appropriated for the relevant purpose; mere coerciveness is not decisive.	The Court applied the test from this Supreme Court decision to the facts, treating its criteria as settling the legal standard to distinguish fees from taxes, and used it to assess whether the impugned notifications imposed a fee or a tax.
A.I.R. 1954 Supreme Court p. 388	Subsequent authority noted as following the rule distinguishing fee and tax (as stated in the 1954 decision).	The opinion records that the rule in the 1954 decision was followed in subsequent reports at these pages; both parties accepted that the Supreme Court had settled the law. The High Court considered the settled law in applying the fee/tax test.
A.I.R. 1954 Supreme Court p. 400	Another subsequent authority cited to show the 1954 test had been followed.	Same application as above: noted by the Court as confirming the legal test; the High Court applied that settled principle in its analysis.

Court's Reasoning and Analysis

The Court proceeded in two analytical stages: (1) the question of the District Registrar's jurisdiction to declare notifications ultra vires and to order refunds under Rule 220; and (2) the substantive question whether the impugned notifications in fact fixed a fee or imposed a tax.

Jurisdiction of the District Registrar

The Court reviewed the structure of the Indian Registration Act (sections cited in the opinion: 5, 6, 7, 17, 18, 28, 30, 32, 34, 52, 64, 66, 71–80) and Rule 220 of the Registration Manual to determine the scope of the District Registrar's powers.
It concluded that the District Registrar is a creature of the Act with limited, statutory powers; he does not sit as a court and his appellate or supervisory powers over Sub-Registrars are confined to the statutory scheme (for example, directing registration in certain limited circumstances such as under Section 73 or 72).
Rule 220 was interpreted as a limited power permitting refunds in narrowly specified situations (e.g., registration refused, registration not taking place, or fees charged in excess of a clearly chargeable sum), but not enabling the District Registrar to adjudicate on the vires of State Government notifications or to declare a notification void as ultra vires of the Act or the Constitution.
Consequently, the District Registrar had no jurisdiction to hold the notifications issued under Section 78 to be ultra vires and to order refunds on that legal basis; only courts possess power to declare notifications invalid.

Substantive test — fee versus tax

The Court adopted the Supreme Court's tests and principles from the Commissioner, Hindu Religious Endowments case and its follow-ups to distinguish a fee from a tax: primarily, whether the levy is a payment for a special benefit (fee) reasonably correlated to the cost of government services rendered and, where appropriate, whether the money is appropriated or earmarked for performing those services rather than merged into general revenues.
Applying that test, the Court identified four factors indicating the levies under the impugned notifications were taxes rather than fees:
1. The amounts collected were merged into the general revenue (consolidated fund) and not deposited to a separate head devoted solely to maintaining the Registration Department.
2. There was no reasonable correlation between the amount levied and the maintenance and administrative costs of the Registration Department.
3. The table of fees exhibited a relationship to the paying capacity (value of property) rather than to the nature of the service or the cost of providing it; the levy was graduated by value.
4. The levy operated on the value of property and showed a graduated nature, indicating a tax-like character rather than a service-based fee.
On that basis the Court concluded that the State Government, by the impugned notifications, had fixed what in substance was a tax rather than a fee and had exceeded the limits of what Sections 78 and 79 permit for a registration fee table.

Result of the combined analysis

Although the District Registrar lacked jurisdiction to declare the notifications void (and the Court quashed his orders dated 16-11-1966 on jurisdictional grounds), the High Court itself exercised judicial review over the notifications when the companies directly challenged them in writ petitions Nos. 4026 and 4027 and held those notifications (to the extent they prescribe registration fees) ultra vires and inoperative because they imposed a tax rather than a fee.
Consequently, the High Court allowed the companies' writ petitions (4026 and 4027) and ordered that amounts collected as the so-called fees under those notifications (when paid under protest) were liable to be refunded, while also noting that petitioners remain liable to pay such registration fee as may lawfully be prescribed by the State in compliance with the Act.

Holding and Implications

Core Rulings:

The orders dated 16-11-1966 passed by the District Registrar, Meerut (in favour of the companies directing refunds as he had ordered), are quashed for lack of jurisdiction.
The notifications issued under Section 78 of the Indian Registration Act relied upon to fix the table of registration fees are, to the extent that they prescribe the registration fees contained therein, ultra vires of the Act and inoperative (i.e., they impose a tax rather than a fee and are invalid).
The amounts collected by the Sub-Registrar from the petitioners as the so-called fees (when paid under protest) are liable to be refunded; however, the petitioners must pay whatever registration fee the State may lawfully prescribe under the Act.

Implications / Consequences:

Direct effects on the parties: The District Registrar's refund orders are quashed for lack of jurisdiction, but the companies' direct challenges succeeded so that the impugned notifications are declared ultra vires in respect of the registration fee tables; the companies are entitled to refunds of the excess sums realised under those notifications (subject to lawful fees subsequently prescribed).
The decision clarifies the limited jurisdiction of the District Registrar and reinforces that declarations of vires of State notifications are matters for the courts, while also applying settled Supreme Court tests to distinguish fee from tax in the context of registration levies.
The opinion does not purport to create a novel legal principle beyond the application of existing Supreme Court authority; it applies established tests to the facts and orders refunds consistent with that application.
The Court made no order as to costs in view of partial success and partial failure of the several petitions; the petitions were described as partly allowed/partly dismissed and disposed accordingly.

Disposition in the judgment: Petitions partly allowed; no orders as to costs.

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State Of Uttar Pradesh v. District Registrar, Meerut

C.D Parekh, J.:— These are four writ petitions. Writ petitions Nos. 2605 and 2606 of 1967 have been filed with the prayer for quashing the order passed by the District Registrar of Meerut dated 16-11-1966.

2. In writ petition No. 2605 on the application of the Modi Spinning anti Weaving Company Limited, purported to have been moved under Rule 220 of the Registration Manual, the District Registrar Meerut held that certain notifications issued by the State Government under Sec. 78 of Act, No. 16 of 1908 are ultra vires and inoperative. He has directed that the Sub-Registrar Ghaziabad was only entitled to realise the copying charges from Modi Spinning and Weaving Company Limited and not the amount of Rs. 50,011/- (as demanded by the Sub-Registrar) for the Registration of the mortgage deed presented by the Company for registration. He further directed that after deducting a sum of Rs. 100/- the balance of the amount that is Rs. 49,911/- be refunded to the Company.

3. In Writ Petition No. 2606 similar order has been passed on the application of Modi Industries Limited, Modinagar, Meerut who waned to get registration of a supplementary trust deed of Rs. 50 lakhs. The District Registrar held the notifications to be ultra vires and inoperative and directed the Department to realise reasonable copying charges which he assessed to Rs. 100/- and further directed that the balance of the amount that is Rs. 49,959/- be refunded to Modi Industries Limited.

4. The facts of the case may briefly be stated thus:—That Modi Spinning and Weaving Company Limited, Modinagar, Meerut and Modi Industries Limited, Modinagar, Meerut presented two documents separately for registration before he Sub-Registrar, Ghaziabad each one of the document namely the mortgage deed and the supplementary trust deed were valued at Rs. 50/- Lakhs. The Sub-Registrar demanded Rs. 50,011/- as fee for registration from Modi Spinning and Weaving Company Limited for registration of the mortgage deed and demanded a sum of Rs. 50,059/- from Modi Industries Limited as fee for registration of the supplementary trust deed. Against the demands so made the two Companies made representations separately to the District Registrar through the Sub-Registrar, Ghaziabad, purporting to be under Secs. 32, 78, 79 and 80 of the Indian Registration Act, 1908 and Articles 19 and 265 and Schedule VII-List-2 Entry No. 66 of the Constitution of India. They submitted in their representations that the demand made by the Sub-Registrar was illegal and ultra vires and irrecoverable. These companies, however, to secure the registration of the documents requested the District Registrar to record the protest and issue directions to the Sub-Registrar to the effect. The District Registrar Meerut on 22-2-1966 directed the Sub-Registrar Ghaziabad that the document presented by the Companies may be registered after realising the full fees in accordance with the Rules in force. He also observed that it was not possible either for the Sub-Registrar or the District Registrar to remit any portion of the fees realised in accordance with the Rules in force. Thereafter the documents, as it appears were presented before the Sub-Registrar by the Companies aforesaid and the Sub-Registrar, Ghaziabad realised the amount of Rs. 50,011/- for the registration of the mortgage deed from Modi Spinning and Weaving Company Limited and Rs. 50,059/- from Modi Industries Limited. These two companies by another application moved the District Registrar in the matter under Rule 220 of the Registration Manual, for refund of fees alleged to have been charged in excess by the Sub-Registrar, Ghaziabad. The Companies in the application moved before the District Registrar raised the plea that the so called fees prescribed by the State Government for the registration of the documents is in fact not a fee but in its very nature amounts to a tax and the notification issued by the State Government prescribing the said fees is ultra vires and inoperative. They had set out following two reasons for challenging the same.

(1) That the fee is not deposited in a separate head or account, but is merged in the general revenue of the State. It is not solely used for the maintenance of the Registration Department, but goes into a consolidated fund, which is utilized for other various Governmental functions.

(2) That there is no reasonable co-relation between the levied and the maintenance cost and the administration of the Registration Department. The purpose of the Registration Act has no relation to the paying capacity of an individual and as such it does not levy fees on the basis of the capacity of an individual to pay.

5. The companies, therefore, prayed by a separate application that although the documents have been registered on payment of fees on protest as demanded by the Sub-Registrar Ghaziabad but they are entitled to the refund of the amount of fee as it was not a fee but a tax imposed on them. The District Registrar in Misc. Case No. 2 of 1966 relying upon the case Delhi Cloth and General Mills Co. Limited v. The Chief Commissioner, Delhi A.I.R 1964 Punjab at page 492., held that the notifications on the basis of which the Sub-Registrar, Ghaziabad demanded and received payment of the said fees as Registration fees from the Companies was ultra vires and inoperative. He also held that the department was only entitled to realise only the reasonable copying charges in each of these cases and assessed it at Rs. 100/- and ordered the payment of the balance of the amount to the Companies. Against this order of the District Registrar the State of U.P has preferred these two writ petitions.

6. Modi Industries Limited and Modi Spinning and Weaving Company Limited, Modinagar have also preferred two separate writ petitions being Writ Petitions Nos. 4026 and 4027 of 1967. They have challenged the various notifications issued under Sec. 78 of the Indian Registration Act No. XVI of 1908 as being invalid, unconstitutional and ultra vires. They have alleged that the levy of proposed fees under the notifications, amounts to imposition of tax and the same is ultra vires. The elements of Quid pro quo are missing and lacking in the levy of such fees, the levy amounts to levy of tax and hence the notifications are ultra vires. They have further alleged that the fees is not deposited in a separate head or account, but is merged in the general revenue of the State, it is not solely used for the maintenance of the Registration Department but goes into a consolidated fund, which is utilised for other various Governmental functions. Further plea on their behalf is that there is no reasonable co-relation between the fee levied and the maintenance costs and the administration of the Registration Department. The purpose of the Registration Act has no relation to the paying capacity of an individual and as such it does not authorise the levy of fees on the basis of the capacity of an individual to pay.

7. It has been maintained on behalf of the State that the notifications are legal, valid and effective and not ultra vires and the orders of the District Registrar dated 16-11-1970 passed separately on the applications of the two Companies are contrary to law and manifestly erroneous. I would deal with this point-along with the point that has been taken on behalf of the petitioners of writ Petitions Nos. 4026 and 4027 of 1967.

8. It has been contended on behalf of the State that the District Registrar had no jurisdiction to hold that the notifications issued under Sec. 78 of the Registration Act are ultra vires. The argument is that the District Registrar under the Act does not act as a Court and without notice to the State Government, even if he was sitting as a Court he could not decide the vires of any notification issued by the Government. According to the learned counsel for the State the District Registrar is a creation of the Act, and under Rule 220 of the Registration Act he exercises the limited jurisdiction and is not possessed of the power to declare any notification issued under the Act as ultra vires. According to the argument of the learned counsel the District Registrar has limited power under Rule 220 and is competent only to decide the amount of fee chargeable under the Rule, but if the fees so charged by the Sub-Registrar is in excess of the amount provided under the Rule then and then only he can order the refund of the amount otherwise he has no power to do so.

9. It has further been argued on behalf of the State that the District Registrar while passing the impugned orders ignored the orders dated 22-2-1966 passed by his predecessor and when once the point was decided against the Companies subsequently he could not have passed the order annulling the earlier order passed by his predecessor. The learned counsel for the State also contended that the District Registrar under the Act has no power to fix any fee or to determine any reasonable amount of fee. For the grounds aforesaid, the learned State Counsel submit ed that the District Registrar, Meerut exceeded his jurisdiction in passing the impugned order dated 16-11-1966.

10. I would like to decide the two writ petitions filed on behalf of the State on all other grounds except the one for which I have indicated earlier, that I would decide the point along with the writ petitions filed by the Companies.

11. For the purposes of determination of the ground urged before me on behalf of the State it may be necessary to examine the scheme of the Act in relation to the points urged. For the purposes of the Act the State Government has the authority to form districts and sub-districts and it may appoint such persons whether public officers or not as it thinks appropriate, to be Registrar of the Sub-Districts and to be sub-Registrar of the Sub-Districts as it may form. The provisions are contained in Secs. 5 and 6 of the Indian Registration Act. Under Sec. 7 of the Act the State Government shall establish in every district an office to be styled the office of the Registrar and in every sub-district an office or offices to be styled as the office of the Sub-Registrar or the offices of the Joint Registrar.

12. Under Sec. 28 of the Act every document mentioned in Sec. 17, sub-Sec. (1), clauses (a), (b), (c), (d) and (e); Sec. 17, sub-Sec. (2) in so far as such document affects immovable property and Sec. 18, Clauses (a), (b), (c) and (cc), shall be presented for registration in the office of a Sub-Registrar within whose sub-district the whole or some portion of the property to which such document relates is situate. Under Sec. 30 of the Act any Registrar may in his discretion receive and register any document which might be registered by any Sub-Registrar subordinate to him. Under Sec. 32 of the Act, every document to be registered under the Act, whether such registration be compulsory or optional, shall be presented at the proper Registration office,—by some person executing or claiming under the same, or, in the case of a copy of a decree or order, or by his representative or assignee of person, or by the agent of such person, or assignee duly authorised by power of attorney executed and authenticated in manner provided under the Act. Before the registration of any document the Registering office is required to make certain enquiries under Sec. 34 of the Act. The duties of the registering officer on preservation of document for registration is given in Sec. 52 of the Act. When a document is admitted for registration the registering officer is required to make endorsement and to comply the requirements of Sec. 52 of the Act. Under Sec. 80 of the Act all fees for the registration of documents under the Act is payable on the presentation of such document. Various other formalities connected with the registration of document are required to be performed by the Sub-Registrar. Then there are special duties which the Sub-Registrars are required under Sec. 64 and some special duties are required to be performed by the Registrar under Sec. 66 of the Act.

13. Sub-Registrar under Sec. 71 is required to record his reasons, if he refused to register a document and that order is appealable to the Registrar under Sec. 72 of the Act. Under Sec. 73 of the Act when there is a refusal by the Sub-Registrar to register a document on the ground of denial of execution, application may be filed to the Registrar to whom such Sub-Registrar is subordinate in order to establish the right to have the document registered. Sec. 74 prescribes the procedure to be observed by the Registrar on such application. Sec. 75 prescribes the procedure and the mode in which the Registrar is required to exercise his powers and in case of refusal by the Registrar he is required to endorse his reasons therefor and the order of the Registrar is non-appealable. In case of refusal by the Registrar to register a document, a suit is required to be filed by the aggrieved party under Sec. 77 of the Act. Under Sec. 78 of the Act the State Government shall prepare a table of fees (a) for the registration of documents; (b) for searching the registers; (c) for making or granting copies of reasons; entries on documents, before, on or after registration; and of extra, or additional fees payable for every registration under Sec. 30; for the issues of commissions; for filing translations; for attending at private residences; for the safe custody and return of documents; and for such other matters as may appear to the State Government necessary for the purpose of the Act.

14. Under Sec. 79 a table of fees on presentation of documents is required to be published in the Official Gazette, and a copy thereof in English and the Vernacular language of the district shall be exposed to public view in every Registration office. All fees for the registration of documents under the Act is made payable on the presentation of such documents.

15. From the scheme of the Act as enunciated above it is clear that the district Registrar under the Registration Act is a creation of the Act and he exercises only those powers that have been given to him under the Act. It is also clear that he does not exercise the power of a court. Of course he sits in appeal against the orders of the Sub-Registrar under Sec. 72 of the Act, but the powers therein also are limited powers. Under Sec. 72 he can only direct the document to be registered by the Sub-Registrar refusing the registration on the ground, other than denial of execution. He, although exercises powers as an appellate authority under the Act, but he does not sit as a court. The registration fee, as has been observed in the foregoing discussion is payable on the presentation of the document. The amount of fee is required to be fixed by the State Government and not by any other authority. The fee, if not paid on the presentation of document, the Sub-Registrar may not proceed to observe other formalities. The fee having been paid on the presentation of document, the Sub-Registrar is not precluded from proceeding to observe further formalities under the law. In either case the District Registrar is not competent or has not been invested with any power to issue direction to the Sub-Registrar. As I have already mentioned above the District Registrar can direct registration under Sec. 73 of the Act provided the Sub-Registrar has refused registration on account of non-admission of the execution of the document. The District Registrar may on application under conditions of that section, direct the sub-Registrar to register the document. In my opinion, in no case the District Registrar can order the Sub-Registrar to register the document without payment of the registration fee fixed under the Act. The District Registrar even if he considers that the fee fixed by the State Government is ultra vires and illegal or unconstitutional, it is not within his power or competence sitting as a District Registrar to determine the vires of the various notifications issued under the Sec. 78 by the State Government and give directions to the Sub-Registrar.

16. Under Rule 220 of the Registration Manual the District Registrar enjoys a very limited powers. Rule 220 is a rule which invests the District Registrar to order refund of fees in the event of registration being refused or not taking place or for other similar reasons but in no circumstances the District Registrar can order the refund of the fees, where such fees has been earned by the State Government. In my opinion, he had no jurisdiction to hold that the various notifications issued under Sec. 78 of the Act are ultra vires. The power to declare any notification being contrary to the Act, rule or constitution is cast upon the courts.

17. As I have observed earlier the District Registrar under the Act does nor exercise the powers of the court and his powers are very limited and are exercisable within the four corners of the Act. He is not competent to give such declaration as given by the District Registrar Meerut. From the construction of Rule 220 it can be said that the District Registrar can only order the refund of fees, provided it is in excess of the amount that is chargeable under the notification or where the registration has been refused or has not taken place, but he can not direct the refund of fees as excess, where the fee has been charged by the Sub-Registrar and earned by the State Government according to the notifications issued under Sec. 78 of the Act. It is another matter, if the notifications are not legal and valid, it may be for the courts to declare the same being illegal and invalid but assuming that jurisdiction of declaration in himself the District Registrar, in my opinion is not competent to pass an order of refund.

18. Fixation of fees is a matter which relates to the power and this power of levy of fee has been assigned by the Act to the State Government. What is the reasonable amount of fee that may be charged for copying or other work that has also to be fixed by the State Government. Under Sec. 78 of the Act the State Government is required to prepare a table of fees payable for making or granting copies. The District Registrar has not been given the power to fix any fee as ‘reasonable fee’ for any purpose. In my opinion, therefore, the two writ petitions filed on behalf of the State must succeed. I hold that the orders passed by the District Registrar on the application of both the companies is without jurisdiction. He had no jurisdiction to pass the impugned order dated 16-11-1966 copies of which have been filed as Annexure to the writ petitions and both the order are quashed.

19. In the other two petitions Nos. 4026 and 4027 of 1967 filed by the petitioner companies it has been prayed that the Notification finance (M) Department No. M-2847.X-465-47 dated 16-12-1947 and Finance (S) Department No. S-6665.X-497/50 dated 3-1-1961 and Notification No. AST. 2358.X-221/1957, dated 30-7-1957 are invalid, unconstitutional and ultra vires and the proceedings before the Sub-Registrar relating to the levy of charges on the mortgage deed and the supplementary trust deed be quashed.

20. According to the learned counsel for the petitioner the levy of fee as contained in these notifications amounts to imposition of tax and there is no element of quid-pro-quo between the levy and the maintenance costs and the administration of Registration Department. According to the petitioner the purpose of the Registration Act has no relation to the paying capacity of an individual. Sec. 79 of the Act does not authorise the levy of fees on the basis of the capacity of an individual to pay. The fee so realised is not even deposited in a separate head or account, but is merged in the general revenue of the State. It is not solely used for the maintenance of the Registration Department but goes into a consolidated fund, which is utilised for various other Governmental function, besides the Registration Department.

21. The learned counsel for the petitioner Sri Shanti Bhushan during the course of arguments confined the challenge of the said notifications within a narrow campus. The learned counsel stated that the notifications aforesaid are beyond the limits of the powers as contemplated by Secs. 78 and 79 of the Indian Registration Act inasmuch as the element of quid pro quo between the registration fees charged and the services rendered by the Registration Department for the registration of a document are missing and lacking. According to the learned Counsel there is no reasonable co-relation between the fees levied and the maintenance of the administration of the Registration Department. The fees so levied and realised is deposited in a common account namely consolidated fund and is utilized for all Government functions.

22. Sri V.K Mehrotra learned standing counsel in reply stated that the notifications are legal, valid and effective and are not ultra vires. They are not in excess of the powers as contemplated by Secs. 78 and 79 of the Indian Registration Act. His contention is that the object of the Registration Act is to guard against fabrication of false documents of title from time to time by insisting that all documents of the type as contemplated by the various sections of the Act be produced for registration within the limited period or time from the date of their execution so that they may be entered in the public registers. This is done to procure a conclusive guarantee of the genuineness of the instruments and to provide a record from which persons who may desire to enter into and deal with the properties affected by the instruments, may be able to obtain information about them. The Registration Act and the registration of document according to the learned counsel, therefore, gives certainty of the titles of the individuals and prevents the operation of fraudulent and secret transactions. The registration of document not only provides this guarantee but also gives notice to all persons interested in dealing with any particular land to know the exact position of the title concerning that land with which they are to deal. The registration Act thus provides a security to all persons against fraud and against injuries to their rights. The maintenance of registers according to the Act provides a short locker to the title deed for all times to come for their safe custody as the documents are copied out in various books and registers maintained by the department and if the original is even lost by the individual concerned the registration office provides them with the copy of the title deed. For these reasons, the learned counsel stated that the registration of document is done primarily in public interest and the element of special benefit to an individual is the secondary aspect of the matter.

23. It has further been stated by the learned counsel for the State that in every case it is not necessary that the fee collected must be approximate to the expenses incurred by the Government in performing a particular services for the benefit of the individual. In some cases the amount of fees so collected from an individual may appear to be out of proportion to the costs likely to be incurred in rendering services to that individual but if the services rendered is generally taken into consideration the impost so made on the individual would not loose the character of fee. The argument is that it is not possible to co-relate the amount of fee charged from an individual with the amount of services rendered by the registration of document. The fee according to the learned counsel is charged from an individual but the services are rendered not only at the time of the registration of the document and copying the same in the registers maintained by the Department but it is a service which the department renders in perpetuity to the benefit of the individual and to all concerned who may be interested in dealing with the property covered by the registration. It also comes to the notice of the whole world that the document so executed and registered is in existence and thus the public interest is regulated.

24. Sri V.K Mehrotra on the basis of the statement contained in para 3(r) of the counter affidavit dated 7-12-1968 filed by Sri V.B Khare on behalf of the State of U.P stated that the amount of fee realised as a registration fee is merged in the general revenue of the State of U.P The amount so realized and deposited as part from the general revenue of the State is spent not only on the establishment of the registration department but on other accounts as well. He further stated that this is done under the Constitutional provisions as provided in Chapter I part XII, Article 266 and other Articles of the Constitution. The convention is that such inclusion of the amount of revenue received by way of registration fee into the general revenue of the State is fully authorised and the rules as framed under the Constitution justify the same. This revenue forms part of the consolidation fund of the State and decides the maintenance of the registration department of the amount is spent after merger in the consolidation fund, for maintaining the other channels of administration, the fee so realised does not loose its character.

25. According to Sri Mehrotra, it is done under the regulatory power and such realization of fee and the merger of revenue is done in public interest.

26. In my opinion, in this case the petitioner companies have challenged the executive action of the State Government. The preparation of the table of fees for the registration of documents is the executive action and the State Government is, therefore, being questioned. The working and the legality of the notifications aforesaid in respect of the payments of fees contemplated to be paid on the presentation of documents to the authorities for registration of documents is challenged. I am therefore not required to consider various other aspects of the matter which have been tried to be brought out at the bar. The simple question therefore which I propose to decide is whether by the impugned notifications aforesaid the State Government could fix such fees for registration of documents which have been stated in the table contained in the said notifications.

27. Both parties have placed reliance on a case reported in The Commissioner, Hindu Religious Endownments Madras, Appellant v. Sri Lakshmindra Thirtha Swamiar of Sri Shrirur Mutt, Respondent A.I.R 1954 Supreme Court page 282. where the Supreme Court has observed on careful examination that the element of compulsion of coercive-ness is present in all kinds of imposition, though in different degrees and it is not totally absent in fees. According to the Supreme Court the compulsion or coerciveness of the payment of fees cannot be made the sole or even a material criterion for distinguishing a tax from fees. A distinction has been drawn between a tax and a fee and it has been laid down that primarily infact a tax is levied as a part of common burden while a fee is a payment for a special benefit or privilege. Fees confer a capacity, although the special advantage, as for example in the case of registration fees for documents or marriage licences, is secondary to the primary motive of regulation in the public interest. Public interest according to the Supreme Court is at the basis of all impositions, but in a fee it is some special benefit which the individual receives. It is the special benefit to the individual which is the reason for payment in the case of fees; in the case of a tax, the particular advantage if it exists at all is an incidental result of State action, fee is a sort of returns of consideration for services rendered. The Supreme Court has expressed the view that it is absolutely necessary that the levy of fees should, on the face of the legislative provision be co-related to the expenses incurred by Government in rendering the services. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fee and not a tax. It has been pointed out that there is really no generic difference between the tax and fees and the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes.

28. The test, as to words ‘a fee’ and distinguished from the ‘tax’ has been settled by the Supreme Court. The ruling cited above has subsequently been followed in two other cases reported in A.I.R 1954 Supreme Court page 388 and page 400. Both the parties agree that the Supreme Court has settled the law. The difficulty, therefore, is that is felt by both the parties is about the correct application of the law as given by the Supreme Court.

29. According to the learned counsel for the petitioners the test as has been given by the Supreme Court settles the matter in their favour while according to the Standing counsel it does not fully cover the case. On behalf of the petitioners reliance has been placed on a Division Bench case of Punjab High Court at Delhi (Delhi Cloth and General Mills v. The Chief Commissioner, Delhi).

30. Applying the test as laid down in the above decision of the Supreme Court and by the Punjab High Court, I am clearly of the opinion that under the table of fees attached to the impugned notifications the State Government has not fixed for the registration of the documents but it has tried to fix and impose a tax. The very nature of it shows that it has determined the so called fees as graduated tax. My reasons are as under:—

(1) That the alleged fee is not deposited in a separate head or account but is merged in the general revenue of the State. It is not solely used for the maintenance of the registration department but goes into a consolidation fund which is utilised for various other governmental functions. This is an incident of tax and not that of fee.

(2) That there is no reasonable co-relation between the fee levied and the cost of maintenance and administration of the registration department.

(3) That the table of registration fee as fixed has a co-relation with the capacity of an individual to pay but neither the purpose nor the object of the Act discloses any relation to the paying capacity of an individual.

(4) The table of registration fee under the impugned notifications show the graduated nature and is leviable on the value of the property and not on the nature of the document. For the reasons given by me the writ petitions Nos. 4026 and 4027 of 1967 filed by the Companies must succeed. I, therefore, allow the writ petitions Nos. 4026 and 4027 of 1967 and hold that the notifications aforesaid to the extent to which the table of fee contained therein relate for the registration of document is ultra vires of the Act and is inoperative. The documents as stated above have now been registered on payment of fees under protest by the petitioners, the amount of so called fees realised by the Sub-Registrar under protest from the petitioners is liable to be refunded. Of course, the petitioners are liable to pay such amount of registration fee which may be fixed by the State Government according to law. The petitioners would therefore be entitled to the refund of such amount which may be prescribed by the State of U.P as fee for the registration of documents.

31. All the four writ petitions partially succeed and partially fail and are disposed of accordingly. But in view of the partial success of the writ petitions Nos. 4026 and 4027 of 1967 filed by the petitioner's Companies and in view of the partial success of the writ petitions Nos. 2605 and 2606 of 1967 filed by the State of U.P, I make no orders as to costs.

Petitions partly allowed.

State Of Uttar Pradesh v. District Registrar, Meerut

Judgment Summary — C.D. Parekh, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

State (Respondent to companies' petitions; Petitioner in 2605 & 2606)

Companies / Petitioners (Modi Spinning & Weaving Co. Ltd. and Modi Industries Ltd.)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

State Of Uttar Pradesh v. District Registrar, Meerut

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