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  • SECTION 7 COURT FEES ACT
  • Punjab Court Fees (Amendment) Act, 1953,
  • section 7 (iv) (c) of the Court Fees Act
  • section 7 (v) of the Court Fees Act
  • 7 (iv) (c) of the Court Fees Act
  • section 7 (iv) (c) by Madras Act
  • section 7 (iv) (c)
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
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Acts
  • SECTION 7 COURT FEES ACT
  • Punjab Court Fees (Amendment) Act, 1953,
  • section 7 (iv) (c) of the Court Fees Act
  • section 7 (v) of the Court Fees Act
  • 7 (iv) (c) of the Court Fees Act
  • section 7 (iv) (c) by Madras Act
  • section 7 (iv) (c)
Smart Summary

Legal Opinion Summary — S.N. Andley, J.

Factual and Procedural Background

The petitioners (plaintiffs) filed Suit No. 82 of 1962 in the Court of the Senior Subordinate Judge, Delhi, against the respondent. The suit sought (inter alia) a declaration and injunction, payment of a specified amount of dividends alleged to be due (Rs. 3,975.50), interest, and delivery of future dividend warrants, in respect of 186 ordinary shares of the Brihan Maharashtra Sugar Syndicate Ltd. The petitioners alleged that in 1954 the respondent sold those shares to petitioner No. 1 for Rs. 4,650 and undertook to execute all documents necessary to complete the petitioners' title and to deliver dividend warrants until the shares were transferred in the company's books.

The petitioners paid an ad valorem court-fee on Rs. 3,975.50 for the dividend claim, and paid court-fee on a valuation of Rs. 200 in respect of their claim for declaration and injunction. The respondent objected to the valuation for purposes of court-fee and jurisdiction and contended some reliefs were vague.

The trial Court (order dated 8 August 1962) found one relief (interest claim, clause (d)) vague and directed amendment; it also held that the declaration and consequential injunction claims (clauses (a) and (b)) attracted court-fee under section 7(iv)(c) of the Court Fees Act as amended by the Punjab Court Fees (Amendment) Act, 1953, and directed the plaintiffs to amend the plaint, affix the value of the shares and pay proper court-fee in respect of those reliefs. The trial Court also ordered separate court-fee for the mandatory injunction (clause (e)) and for injunctions requiring payment of future dividends (clause (c1)), and ordered Rs. 55 costs.

The present opinion arises on revision of that trial Court order and involves interpretation of the second proviso added by the Punjab Court Fees (Amendment) Act, 1953 (extended to Delhi) to section 7(iv)(c) of the Court Fees Act.

Legal Issues Presented

  1. Whether the second proviso added by the Punjab Court Fees (Amendment) Act, 1953, to section 7(iv)(c) of the Court Fees Act — which requires valuation "not be less than the value of the property calculated in the manner provided for by clause (v) of this section" — applies to suits concerning property other than "land, houses and gardens" (specifically, movable property such as shares).
  2. Whether the proviso must be strictly construed so that it applies only where the value of the property can in fact be calculated in the manner provided by clause (v) of section 7 (which, on its face, deals with valuation methods for land, houses and gardens).
  3. Whether constraining the proviso to apply only where clause (v) valuation is possible would render part of the proviso redundant or require adding words to the statute (i.e., questions of statutory construction).
  4. Whether the proviso, as construed, violates Article 14 of the Constitution by creating differing valuation treatment for suits in respect of different types of property.

Arguments of the Parties

Respondent's Arguments

  • The respondent objected to the valuation of the suit for purposes of court-fee and jurisdiction and maintained that some reliefs were vague (trial Court found relief (d) vague).
  • Counsel for the respondent (Mr. T.P.S. Chawla) relied on the historical background: the Madras proviso (Madras Act V of 1922) used the phrase "immovable property" and required valuation at not less than half the value calculated by para (v). The Punjab legislature used the broader word "property" — the respondent argued this showed an intention that the Punjab proviso should apply to any property, movable or immovable (including shares).
  • The respondent relied upon the decision in Ram Kanwar and others v. Naurang Rai and others (reported 1956 P.L.R. 155) (Bishan Narain J.), where the word "property" was used in the sense of a right in the property, to support a broad meaning of "property" in the proviso.
  • The respondent argued that construing "property" to mean only land, houses and gardens would be tantamount to adding words to the proviso, which the respondent contended was impermissible.
  • The respondent further argued that if the Court adopted the petitioners' construction, the proviso would lead to discriminatory valuation rules and could be violative of Article 14.

The opinion does not contain a detailed, point-by-point account of the petitioners' legal submissions beyond their pleaded valuations (they valued the declaration/injunction claim at Rs. 200 and paid ad valorem fee for dividends) and the fact that they sought to uphold that valuation before the revisional court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ram Kanwar and others v. Naurang Rai and others, 1956 P.L.R. 155 (Bishan Narain J.) The word "property" can be used to denote a right in property (e.g., leasehold rights) and such rights are "property" for valuation purposes. The Court held this decision was of limited assistance: that case assumed clause (v) was applicable and concerned whether valuation should be on leasehold rights or on the factory; it did not address whether clause (v) could be applied to movable property such as shares. Therefore the precedent did not help the respondent's broader contention.
Manyama v. Municipal Commissioner, A.I.R. 1959 A.P. 271 Principle that the quantum (rates) of court-fee is a matter of legislative policy and ordinarily not a matter for the Court to reexamine; the legislature decides rates leviable for various matters. The Court relied on this authority to reject the Article 14 challenge to the differing treatment of suits concerning different types of property, observing that differing fee rates reflect legislative policy and are within the legislature's domain.

Court's Reasoning and Analysis

The Court analyzed the second proviso added by the Punjab Court Fees (Amendment) Act, 1953, to section 7(iv)(c) of the Court Fees Act, which provides:

"Provided further that in suits coming under sub-clause (c), in cases where the relief sought is with reference to any property such valuation shall not be less than the value of the property calculated in the manner provided for by clause (v) of this section."

The Court's step-by-step reasoning was:

  1. Identify the general rule under section 7(iv)(c): suits for a declaratory decree or order where consequential relief is prayed are to be valued and charged court-fee according to the amount at which the relief is valued in the plaint.
  2. Observe that the added proviso is an exception to the general rule and therefore must be strictly construed and applied only where its conditions are satisfied.
  3. Examine clause (v) of section 7, which provides valuation methods for "suits for possession of land, houses and gardens" (valuation by revenue payable, net profits, or market value where appropriate). The Court noted that the manner provided in clause (v) is specific to land, houses and gardens and cannot sensibly be applied to movable property such as shares.
  4. Consider the respondent's historical-drafting argument (that "property" in the Punjab proviso should be read broadly because the Madras model used the phrase "immovable property"). The Court rejected reliance on presumed legislative intention when such reliance would produce an inapplicable or redundant clause. The Court emphasized that if the proviso cannot be sensibly applied (i.e., clause (v) valuation cannot be used), the proviso should be disregarded for that class of cases and the main provision applied.
  5. Hold that the proviso applies only where valuation can actually be calculated in the manner provided by clause (v) (i.e., where the subject matter is land, houses or gardens or otherwise susceptible to clause (v) valuation). It does not apply to suits with reference to property such as shares where clause (v) valuation cannot be performed.
  6. Distinguish the Ram Kanwar decision because that case proceeded on the assumption that clause (v) applied and concerned whether the property in question was the factory or leasehold rights; it did not address the present contention about clause (v)'s applicability to movables like shares.
  7. Address the Article 14 contention by observing that the Court Fees Act is a taxing statute and it is within the legislature's competence to impose different levies for different types of suits; differing valuation classes (e.g., suits concerning land versus suits concerning other property) can constitute an intelligible differentia and are a matter of legislative policy (citing Manyama v. Municipal Commissioner).

Applying this approach to the facts, the Court concluded that the valuation method in clause (v) cannot be applied to the petitioners' claims in clauses (a) and (b) (which concern shares), and therefore the proviso does not govern valuation of those reliefs. Accordingly, the petitioners' valuation for clauses (a) and (b) (originally Rs. 200) was to be upheld.

Holding and Implications

Holding:

The revision is partly allowed. The trial Court's order requiring the plaintiffs to amend the plaint, affix the value of the shares and pay court-fee calculated in accordance with clause (v) (i.e., valuation according to the value of the property as land/houses/gardens) with reference to the prayers in clauses (a) and (b) is set aside.

Direct implications for the parties:

  • The trial Court's direction that the plaintiffs must affix the value of the shares and pay court-fee according to clause (v) valuation as to prayers (a) and (b) has been set aside; the valuation placed by the petitioners in respect of those prayers stands.
  • The remainder of the trial Court's order (including directions relating to the mandatory injunction in clause (e) and payment of separate court-fee for injunctions requiring payment of future dividends in clause (c1)) remains in force.
  • The suit is remanded: the parties are directed to appear before the Senior Subordinate Judge, Delhi, on May 1, 1971, for reassignment to a Subordinate Judge having jurisdiction.
  • There will be no order as to the costs of this revision petition.

Broader legal implications:

The Court's decision clarifies that the second proviso to section 7(iv)(c) (as inserted by the Punjab amendment) is to be strictly construed and applies only where the valuation of the property can be calculated by the method set out in clause (v) (which is tailored to land, houses and gardens). The proviso does not extend the clause (v) valuation method to movable property such as shares where clause (v) valuation is inapplicable. The opinion emphasizes legislative competence to prescribe differing court-fee regimes and rejects the Article 14 challenge to such differential treatment in this context.

The Court did not purport to lay down a novel broad rule beyond this construction and primarily resolved the present dispute between the parties; the order is primarily corrective of the trial Court's valuation direction and remands the suit for further proceedings.

    M/S. Ranchhoddas Shamji Khirani And Another Petitioners v. Mrs. Balwant Kaur Malik

    S.N Andley, J.:— The difficulty is applying the second proviso incorporated by the Punjab Court Fees (Amendment) Act, 1953, which has been extended to Delhi to section 7 (iv) (c) of the Court Fees Act to properties other than land, houses and gardens led one of us (Andley J.) to refer this revision to a larger Bench.

    The petitioners as plaintiffs filed Suit No. 82 of 1962 against the respondent in the Court of the Senior Subordinate Judge, Delhi. The suit was for declaration and injunction; for payment of a specific amount; for payment of amounts that may be due during and after the disposal of the suit; for interest and for delivery of future dividend warrants. The case of the, petitioners was that the respondent had, in 1954, sold 186 ordinary shares of the Brihan Maharashtra Sugar Syndicate Ltd., a public limited company, to petitioner No. 1 in consideration of Rs. 4650 and in exchange for and against delivery by the respondent of the respective share certificates with the relative transfer forms executed by the respondent in blank. The respondent is also alleged to have given an undertaking at the time that all documents of title as may be required will be executed by the respondent to complete the petitioners' title as a shareholder; that all new shares that may be issued to the respondent will be transferred in the name of the petitioners and all documents in connection therewith shall be delivered to the petitioners and all dividend warrants with respect to the shares sold which may be received by the respondent in future will be delivered to the petitioners till the shares are transferred in the books of the company in the name of the petitioners. The petitioners stated that various dividends were declared for various years mentioned in the plaint. The petitioners further stated that they applied to the company for the transfer of the said shares in the name of the second petitioner but the dividend warrants were sent by the company to the respondent as the said company had refused to register the shares in the name of petitioner No. 2. The petitioners averred that they were entitled to Rs. 3,975.50 representing the dividends which had been realised by the respondent and they were further entitled to a declaration that the respondent held the said shares; the property rights therein and the dividends accruing in respect thereof in trust and for the benefit of the petitioners and it was prayed that the respondent be restrained permanently by injunction from exercising any of the property rights annexed to the said shares and to carry out the respondent's undertaking to deliver to the petitioners all future dividend warrants. The petitioners paid ad valorem court-fee on Rs. 3,975.50 in respect of the dividends received by the respondent. On the claim for declaration and injunction etc., the petitioners paid court-fee on a valuation of Rs. 200 having valued their claim in this behalf at that figure. The reliefs claimed by the petitioners, which are relevant to the present controversy, were these: —
    “ (a) that it may be declared that the defendant holds the said shares described in Ex. ‘A’ hereto and the property rights annexed to the said shares and the dividends accruing in respect thereof in trust for the plaintiffs and for the benefit of the plaintiffs;
    (b) that the defendant be permanently restrained by an order and injunction of this Hon'ble Court from exercising any of the property rights annexed to the said shares or from exercising his right to vote as shareholder except in accordance with the directions of the plaintiffs and from recovering or receiving any dividends declared by the said company in respect of the said shares;
    (c) that the defendant be ordered and decreed to pay to the plaintiffs or either of them the said sum of Rs. 3975.50 nP. being the amount of dividends recoverable from the defendant as per particulars Ex ‘D’ to the plaint together with interest thereon at the rate of 4% per annum till payment;
    (c1) that the defendants be ordered and decreed to pay to the plaintiffs or either of them such sum or sums of money received or recovered by the defendants as dividend or dividends in respect of the said shares from the company after the filing and pending the hearing and final disposal of the suit;
    (d) for an order that the defendant be charged with interest prior to the date of suit at such rate on the said sum of Rs. 3975.50 nP. from such date as this Hon'ble Court may think fit and the same be ordered to be paid over to the plaintiffs or either of them;
    (e) that the defendant be ordered by a mandatory injunction of this Hon'ble Court to carry out his undertaking to deliver to the plaintiffs duly endorsed all future dividend warrants in respect of the said shares and to execute such number of further proxies as the plaintiffs may desire and also to exercise a Power of Attonney in respect of the said shares in terms of the draft power of attorney annexed as Ex ‘E’ hereto with or without such modification as this Hon'ble Court may think fit.”
    The respondent objected to the valuation of the suit for purposes of court-fee and jurisdiction and also stated that some of the reliefs claimed were vague. The trial Court by its order dated August 8, 1962, found that relief (d) as to interest was vague and directed the petitioners to apply for necessary amendment. This finding of the trial Court is not challenged in this Court.
    Then the trial Court held that the petitioners had claimed a declaration that they were the owners of the shares in question and the respondent was their trustee and had also claimed a consequential relief by way of injunction that the respondent should not exercise property rights regarding the shares. In the view of the trial Court, the court-fee with regard to these reliefs which are prayed for in clauses (a) and (b) quoted above, was leviable under section 7 (iv) (c) of the Court Fees Act as amended by the aforesaid Punjab Act. It directed that the petitioners, —
    “shall amend their plaint and shall affix the value of the shares given in Schedule ‘A’ and pay the proper court fee qua — the reliefs A and B in the prayer clause in para No. 13 are concerned. In addition the plaintiffs have claimed mandatory injunction for which they shall pay separate court fee. The plaintiffs also claimed by an injunction requiring the defendant to pay future dividends to the plaintiffs, for which a separate court fee shall have to be paid. The issue is decided accordingly.
    As a result of the above discussion, the plaintiffs are ordered to amend the plaint accordingly, for which they shall pay Rs. 55 as costs.”
    The order of the trial Court for payment of court-fee with regard to the claim for mandatory injunction as per clause (e) of the prayer and the order for payment of court-fee with regard to the injunction in respect of future dividends as per clause (CI) of the prayer remains and the only controversy is as to what is the court-fee payable with reference to the prayers in clauses (a) and (b).
    The prayer in clause (a) is for a declaration that the petitioners are the beneficial owners of the shares which are held by the respondent on their account entitling them to all property rights therein including the dividends accruing in respect thereof which may be received by the respondent. The entire clause (a), in our opinion, comprises the relief of declaration and the concluding portion of this clause to the effect that the respondent is holding “the dividends accruing in respect thereof in trust for the plaintiffs and for the benefit of the plaintiffs” is not a consequential relief as contended by the respondent. The consequential relief which will flow from the declaration in clause (a) is recited in clause (b) wherein the petitioners have asked for an injunction to restrain the respondent from exercising any of the property rights annexed to the said shares or from exercising the right to vote as a shareholder except in accordance with the directions of the petitioners and from recovering or receiving any dividends declared by the company in respect of the said shares.
    section 7 (iv) (c) of the Court Fees Act relates to a suit which has been filed to obtain a declaratory decree or order where consequential relief is prayed and in such a suit the court-fee is payable according to the amount at which the relief sought is valued in the plaint. Without anything more, the valuation of reliefs prayed for in clauses (a) and (b) in the plaint at Rs. 200 would be unexceptionable and court-fee would be payable on this amount. But, the Punjab Court Fees (Amendment) Act, 1953, which has been extended to Delhi has added a second proviso to section 7 (iv) (c) [which reads: —
    “Provided further that in suits coming under sub-clause (c), in cases where the relief sought is with reference to any property such valuation shall not be less than the value of the property calculated in the manner provided for by clause (v) of this section.”
    As a result of this proviso even in suits to obtain a declaratory decree or order where consequential relief is prayed and where the suit is with reference to any property, the valuation is to be not less than the value of the property and this value is to be calculated in the manner provided for by clause (v) of section 7. This proviso is in the nature of an exception to the general rule and has, therefore, to be strictly construed and applied. In other words, it is to be applied only where the value of the property can be calculated in the manner provided by section 7 (v). Section 7 (v) relates to computation of court-fee in suits for possession of land, houses and gardens and contains provisions for the assessment of the value of land, houses and gardens for the purpose of the suit on the basis either of the revenue payable or its net profits or the market value of the land where it is not a definite share of an estate and is not separately assessed. Clearly the manner of valuation provided for by section 7 (v) cannot be applied in suits for a declaration and injunction where the property is other than land, houses and gardens. The question, therefore, arises whether the word “property” used in the said proviso was intended to cover property other than land, houses and gardens and moveable property like shares as in this case. Mr. T.P.S Chawla, learned counsel for the respondent, has invited our attention to the historical background to this proviso by bringing to our notice the proviso added to section 7 (iv) (c) by Madras Act V. of 1922 which is in these words: —
    “Provided that in suits coming under sub-clause (c), in cases where the relief sought is with reference to any immovable property such valuation shall not be less than half the value of the immovable property, calculated in the manner provided for by para. (v) of the section.”
    It is contended that the Madras Legislature had used the word “immovable property” while the Punjab Legislature has used the word “property” thereby disclosing a clear intention that suits under section 7 (iv) (c) with reference to any property, whether movable or immovable, are to be valued in the manner provided by clause (v) of section 7. Intention is not always a safe guide to construe a statute. Even assuming that the draftsman of the Punjab proviso had before him the model of the Madras proviso it could equally be a case of omission in not using the word “immovable”. In our view, the correct approach to the question is whether the proviso being in the nature of an execution can be applied at all in the present case. If it cannot be applied at all, effect is to be given to the main provision and the proviso is to be disregarded as being inapplicable. If the argument of the respondent is to be accepted, the words “calculated in the manner provided for by clause (v) of this section” in the proviso would be redundant in the case of suits to obtain a declaratory decree or order with consequential relief with reference to property other than land, houses and gardens. If a provision is to be applied it has to be applied fully because by not applying it fully, the Court would be legislating and that is not the function of a Court.
    The respondent has relied upon a decision of Bishan Narain J. reported in 1956 P.L.R 155 in re: Ram Kanwar and others v. Naurang Rai and others (1) holding that the word “property” in the said proviso is used in the sense of a right in the property involved in the case. The case before the learned Judge was for a declaration for cancellation of a lease deed and as a consequential relief a prayer had been made for an injunction restraining the defendants from interfering with the property under lease. The value for purposes of court-fee and jurisdiction had been fixed at Rs. 550. The trial Court applied section 7 (v) of the Court Fees Act and held that the value should be fixed at the market value of the property for purposes of court-fee and jurisdiction. The question that was determined was whether the court-fee should be paid on the market value of the property indispute or on the value of the lease rights involved in the suit. There was no question raised in the suit challenging the application of the proviso. In fact, the learned Judge decided the matter on the assumption that section 7 (v) was applicable. He was concerned only with the question whether the property with reference to which the suit had been filed was the factory or the lease hold rights and held that the word “property” ordinarily indicates and describes an interest which a person has in some thing; that lease-hold rights were property and the plaint was to be valued on the value of the lease-hold rights and not on the value of the factory to which the lease pertained. This case cannot, therefore, be of any assistance to the respondent.
    Then it was contended that if the word ‘property’ in the said proviso is construed only in the sense of land, houses and gardens, then we shall be adding words in the proviso which is not permissible. We do not think that the argument is a legitimate argument. The proviso requires that the valuation of a suit for declaration and consequential relief with reference to property has to be calculated in the manner provided for by clause (v) of section 7 of the Court Fees Act. The intention is, therefore, clear that the proviso is to apply to only such suits where calculation can be made in accordance with clause (v) of section 7. It is, therefore, a matter of construction and not of adding words to the proviso to say that the word “property” refers only to such property the value of which can be calculated in the manner provided for by clause (v) of section 7 and to no other suits. Upon this construction, no difficulty in applying the proviso to any type of suit would arise. We are, therefore, of the opinion that in suits covered by section 7 (iv) (c) which are with reference to any property, the proviso will apply only if the valuation of such a suit can be made in the manner provided for by clause (v) of section 7. Obviously, the value or the present suit with reference to the prayers made in clauses (a) and (b) cannot be made in such a manner and, therefore, the valuation placed by the petitioners with reference to the prayers in daises (a) and (b) has to be upheld.
    The last argument was that if the construction placed by us on the proviso is adopted, the proviso will be violative of Article 14 of fee constitution as suits with reference to property will be valued differently for purposes of payment of court-fee and there would be no intelligible differentia if this were so. We fail to understand the argument. The Court Fees Act is a taxing statute. It is open to the State to impose different levies of court-fee in respect of different types of suits. According to our construction, suits falling under section 7 (iv) (c) with reference to property other than land, houses and gardens will form one class while similar suits with reference to land, houses and gardens will form another class. We do not see why there cannot be any intelligible differentia on this basis. The decision of the Andhra Pradesh High Court reported in A.I.R 1959 A.P 271 in re: Manyama v. Municipal Commissioner, Hyderabad and another (2) which is relied upon is really destructive of the argument of the respondent because it has been stated that the quantum of court-fee is not a matter for a Court to inquire into because it is a question of legislative policy which cannot be impugned in a Court of law and it is for the Legislature to decide as to the rates leviable in regard to various matters taken to a Court of law.
    The result is that the revision is partly allowed. The order of the trial Court with reference to the prayers in clauses (a) and (b) to amend the plaint; affix the value of the shares and pay proper court-fee according to such value is set aside. The rest of the order remains.
    The case is remanded back. The parties are directed to appear before the Senior Subordinate Judge, Delhi, on May 1, 1971, when the Senior Subordinate Judge, Delhi, will assign the suit to any Subordinate Judge having jurisdiction. There will be no order as to costs of this revision petition.
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    M/S. Ranchhoddas Shamji Khirani And Another Petitioners v. Mrs. Balwant Kaur Malik
    (Apr 12, 1971)