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Smart Summary

Factual and Procedural Background

The plaintiff entered into a supply contract with the Union of India which failed. The defendant invoked a risk-purchase clause and sought recovery of Rs. 5,24,790/-, which the plaintiff seeks to avoid by filing a suit for declarations and injunctions. The plaint's valuation clause (para 37) stated the declaration value as "above rupees one lakh" and the injunction value as Rs. 1,000/-. The plaint bore Court fee stamps of Rs. 190/-. The court considered whether the correct ad valorem court fee under Section 7(iv)(c) of the Court Fees Act, 1870 had been paid and directed compliance or rejection under Order 7 Rule 11 CPC.

Legal Issues Presented

  1. Whether the suit seeking declarations and an injunction to avoid a specified monetary liability (Rs. 5,24,790/-) is governed by Section 7(iv)(c) of the Court Fees Act, 1870 and therefore requires payment of ad valorem court fee on that sum.
  2. Whether the plaintiff's stated valuation in the plaint (para 37) and the Court fee stamps of Rs. 190/- suffice, or whether the court may require payment of the correct deficit fee and reject the plaint under Order 7 Rule 11 CPC if not paid.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shamsher Singh v. Rajinder Prashad & Ors., AIR 1973 SC 2384 The Court should look to the substance of the relief asked for and not be misled by artful drafting. Used to support examining the true nature/value of the relief claimed in the plaint.
Mahant Purushottam Dass & Ors. v. Har Narain & Ors., AIR 1978 Delhi 114 Affirmation of the principle that substance of relief governs court's view on fee/jurisdiction. Relied upon as a supportive authority for substance-over-form approach.
Moti Ram & Ors. v. Daulat, AIR 1939 Nagpur 50 Under Section 7(iv)(c) plaintiff's valuation is not binding; court may refuse arbitrary/unreasonable valuations and exercise Order 7 Rule 11 CPC powers. Applied to hold the court can reject or require corrected valuation/fee where plaintiff's valuation is unreasonable or unspecified.
Hajrabi W/o. Abdul Jalil & Ors. v. Md. Ibrahim S/o. Md. Sharif, AIR 1948 Nagpur 219 Consistent with Full Bench view that court may scrutinize valuation under Section 7(iv)(c). Cited to show no divergence of opinion from Moti Ram (Full Bench) position.
Sureshkumar v. The State of Madhya Pradesh, AIR 1975 Madhya Pradesh 30 Authority consistent with view that court may scrutinize plaintiff's valuation under relevant provisions. Used as additional supporting precedent for the court's approach to valuation and fee.
Idol Shri ‘Shriji’ and Ors. v. Chaturbhai Mangalbhai Patel & Anr., AIR 1965 Madhya Pradesh 4 Consistent authority endorsing court's power to examine valuation. Cited to reinforce the proposition of judicial scrutiny of plaint valuation.
Nathuram Kashiram v. State Government of Madhya Pradesh, AIR 1962 Madhya Pradesh 367 Where declaration affects a pecuniary relationship and challenges liability for a specified amount, the suit is governed by Section 7(iv)(c) and ad valorem fee on the specified sum is payable. Applied directly to conclude that the plaintiff seeking avoidance of Rs. 5,24,790/- must pay ad valorem court fee on that amount.
Badrilal Bholaram v. State of Madhya Pradesh & Anr., AIR 1964 MP 9 Division Bench approval of Nathuram's view regarding fee on specified monetary declarations. Noted as approval of Nathuram and relied upon to support the court's conclusion on payable ad valorem fee.

Court's Reasoning and Analysis

The court examined the plaint and the reliefs claimed (declarations that the running contract is void or rendered void, declaration that demand for risk-purchase damages of Rs. 5,24,790/- is illegal, and an injunction restraining enforcement). Para 37 did not state the amount of court fee paid; the plaint bore stamps of Rs. 190/-. The court recited that where a suit seeks to avoid a specified monetary liability it falls under Section 7(iv)(c) of the Court Fees Act, 1870 and the plaintiff must state the valuation and pay ad valorem fee on that sum. Citing authorities (including Moti Ram and Nathuram Kashiram), the court held that a plaintiff's discretionary valuation is subject to judicial scrutiny and the court may refuse arbitrary valuations and act under Order 7 Rule 11 CPC. Applying these principles to the present facts, because the injunction seeks avoidance of a specified liability of Rs. 5,24,790/-, the plaintiff is liable to pay ad valorem court fee on that amount. The court therefore ordered payment of the deficit fee within one month, failing which the plaint would be liable to rejection under Order 7 Rule 11 CPC.

Holding and Implications

Holding: The plaintiff is directed to pay the deficit court fee within one month from the date of the order; failing which the plaint shall be liable to be rejected under Order 7 Rule 11 CPC.

Implications: The direct effect is that the plaintiff must pay the correct ad valorem court fee on the specified liability of Rs. 5,24,790/-. No broader novel precedent was announced; the court applied existing authorities and procedural law to require correct valuation and fee compliance.

    Rampur Distillery & Chemicals Co. Ltd. v. Union Of India

    R.C Lahoti, J.— The Court in deciding the question of Court fee should look into the allegations in the plaint to see what is the substantive relief that is asked for; mere astuteness in drafting the plaint will not be allowed to stand in the way of the Court looking at the substance of the relief asked for—observed their Lordship in Shamsher Singh v. Rajinder Prashad & Ors., AIR 1973 SC 2384. So is the view taken by Full Bench of Delhi High Court in Mahant Purushottam Dass & Ors. v. Har Narain & Ors., AIR 1978 Delhi 114.

    2. The plaintiff has filed this suit for declaration and injunction seeking the following reliefs:—

    i) to grant a declaration to the effect that running contract No. J/13018/3/27/79/PUR.II dated 6.2.1979 is non-est and void;

    ii) and in the alternative, for the grant of declaration that the contract, if any, was rendered void and the plaintiff was not obliged to make any supplies under supply order No. J/13018/3/27.NINE/79.PUR.II dated 29.10.1979 since the defendant committed breach of contract;

    (iii) further for grant of a declaration that the demand for risk purchase damages in the sum of Rs. 5,24,790/- made by the defendant Union of India is illegal, ultra vires, unwarranted, ineffective and inoperative;

    (iv) and for grant of an injunction against the defendant Union of India restraining it from inforcing its aforesaid illegal demand and/or acting to the prejudice of the plaintiff ompany in any manner whatsoever in pursuance of the aforesaid demand.

    3. The valuation clause for the purpose of Court Fee and jurisdiction is couched in the following terms:

    “37. That the value of the suit for the relief of declaration is above rupees one lakh and the requisite Court fee has been paid. The value of the suit for the relief of injunction is Rs. 1,000/- on which ad valorem Court fee has been paid.”

    4. In para 37 the amount of court fee paid is not stated. However, the plaint is affixed with Court fee stamps worth Rs. 190/-.

    5. In every suit the plaintiff must clearly state valuation for each of the reliefs separately, further stating the amount of Court fee which was being paid by the plaintiff. The Court should not be left to stumbling through the file and finding out the exact amount of the court fee paid.

    6. The facts stated in the plaint show the plaintiff having entered into a contract with the Union of India for supplying certain commodity. The contract has failed. The defendant has exercised its right under the risk purchase clause, consquent to which a recovery in an amount of Rs. 5,24,790/- is outstanding against the plaintiff. By filing of the suit the plaintiff seeks to get rid of the contract and also avoid payment of Rs. 5,24,790/- to the defendant. Ad valorem court fee has not been paid by the plaintiff.

    7. The suit filed by the plaintiff is governed by Sections 7(iv)(c) of the Court Fees Act, 1870. In such suits, the amount of court fee payable has to be concluded on the amount at which the relief sought is valued in the plaint or memorandum of appeal. The plaintiff has to state the amount at which he values the relief sought.

    8. Though descretion is given to the plaintiff to make the valuation but that discretion has to be exercised reasonably and not in an arbitrary fanciful or whimsicle manner. In Moti Ram & Ors. v. Daulat, AIR 1939 Nagpur 50, the Full Bench of Nagpur High High Court has held:—

    “It is true that under Section 7 (iv)(c), the plaintiff may put any valuation on the relief but such value is not binding on Court and it can refuse to accept that figure. There is nothing in the Court fees Act which shows that in cases coming under Section 7 (iv)(c) the power which the Court is given by Order 7, Rule 11, Civil Procedure Code, is taken away. If the valuation put by the plaintiff is arbitrary and unreasonable, in other words if the disparity is so great as to show that the plaintiff has not endeavoured to fix a fair value at all but has simply set down a figure which is unreasonable and bears no relation to the value of the right litigated the Court can interfere and exercise its powers under Order 7 Rule 11 CPC”

    9. There is no divergence of judicial opinion in so far as the view taken by the Full Bench of Nagpur High Court is concerned. Reference may be made to Hajrabi W/o. Abdul Jalil & Ors. v. Md. Ibrahim S/o. Md. Sharif, AIR 1948 Nagpur 219, Sureshkumar v. The State of Madhya Pradesh, AIR 1975 Madhya Pradesh 30 and Idol Shri ‘Shriji’ and Ors. v. Chaturbhai Mangalbhai Patel & Anr., AIR 1965 Madhya Pradesh 4.

    10. If the relief sought for by the plaintiff is capable of specified valuation then that will be the valuation for payment of Court fee ad valorem. In Nathuram Kashiram v. State Government of Madhya Pradesh, AIR 1962 Madhya Pradesh 367 it has been held:—

    “A declaration which affects only the pecuniary relationship between the plaintiff and a defendant does not come within the purview of Section 42 of the Specific Relief Act and a suit for such a declaration is not maintainable. The plaintiff has, therefore, got to specify in the suit that he is challenging his liability for a certain amount and if he were to do so it would mean that he is avoiding the liability to that extent, necessarily requiring an adjudication whether that amount is or is not due. Thus, it is not a case where the claim is incapable of any valuation or liable to be arbitratrily valued. The claim in such a suit being capable of definite valuation it cannot be argued that to the plaintiff it has got a different value which he can put down in the plaint either for purposes of court fee or for purposes of jurisdiction. When he seeks to avoid that liability for a definite amount, value to him must be the same which he seeks to avoid. Hence, when a plaintiff files a suit against the State Government challenging the right of the State Government to recover the specified amount from him as a surety for the performance of a contract, the claim in suit is governed by Section 7 (iv) (c) of the Court Fees Act, and an ad valorem Court fee on the specified sum is liable to be paid.”

    Nathuram's case (supra) is a Single Bench decision but the view taken therein has been approved by a Division Bench in Badrilal Bholaram v. State of Madhya Pradesh & Anr., AIR 1964 MP 9. I find myself in respectful agreement with the view so taken.

    11. The injunction sought for by the plaintiff seeks avoidance of a specified money liability to the tune of Rs. 5,24,790/-. The plaintiff is liable to pay ad valorem court fee on this amount.

    12. The plaintiff is directed to pay the deficit court fee within a period of one month from today failing which the plaint shall be liable to be rejected under Order 7 Rule 11 CPC.

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    Comments

    Rampur Distillery & Chemicals Co. Ltd. v. Union Of India
    (Jan 3, 1995)