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  • S.B.Sen
  • Ram Panjwani
  • R.S.Dabir
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  • P.K Tare, J.
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Citation Codes
Equivalent Citations
citation codes
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Attorney(S)
  • S.B.Sen
  • Ram Panjwani
  • R.S.Dabir
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  • P.K Tare, J.
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The appeal under Order 43, Rule 1(a) of the Civil Procedure Code was filed by the plaintiff against an order dated 17-9-1958 of the Second Additional District Judge, Bhopal, in Civil Appeal No. 47 of 1957, arising out of a judgment and decree dated 30-4-1959 of the Sub-Judge, Bhopal, in Civil Regular Case No. 59 of 1953.

The appellant (an incorporated company) had entered into an agreement dated 24-9-1938 with the then Government of the former State of Bhopal. Relevant terms included: an annual payment of Rs. 3,000 in exchange for concessions in land and municipal taxes (clause summarized in the agreement), a clause (6) purporting to secure up to 500,000 gallons of water per day to the company “without any charge,” and clause 9 dealing with municipal taxes and a capped liability in certain circumstances.

The respondent municipality served notices (24-4-1950 and 15-3-1951) contending clause 6 was inoperative as contravening Section 201 of the Bhopal Municipalities Act and demanding water rates and the Rs. 3,000 payment. On refusal to pay the demanded water rates, the municipality threatened coercive recovery proceedings under the Municipalities Act.

In response, the appellant filed suit for a permanent injunction restraining the respondent from recovering the amounts and from interfering with the appellant’s water supply, asserting exemption from water charges under the 1938 agreement and challenging the legality, retrospective operation, and procedural compliance of the respondent’s demands. Paragraph 20 of the plaint lists specific grounds and the relief clause sought a decree for permanent injunction against coercive recovery for alleged water supply charges for the period 24-4-1950 to 31-3-1953.

At trial the plaintiff's claim was partly decreed restraining coercive recovery for the period up to 31-3-1953 but dismissed for subsequent periods. Both parties appealed to the Additional District Judge (appeals No. 46 and 47 of 1957). The Additional District Judge returned the plaint for presentation to the proper court on the ground that the trial court lacked pecuniary jurisdiction (order under Order 7 Rule 10), prompting the present appeal.

Legal Issues Presented

  1. Under which provision of the Court Fees Act does the present suit fall: Section 7(iv)(c), Section 7(iv)(b), or Article 17(vi) of Schedule II read with Section 7(iv)(b)?
  2. Whether the order of the Additional District Judge was an order under Order 7 Rule 10 of the Civil Procedure Code only, or also under Order 7 Rule 11(b).
  3. How should the valuation of the relief of injunction be determined for the purposes of court-fees and jurisdiction: by the amount of taxes sought to be avoided (Rs. 67,775-5-0) or by the value of the relief to the plaintiff?
  4. If the suit is for declaration and injunction, how should the plaintiff value the relief of declaration and which statute governs that valuation (Court Fees Act or Suits Valuation Act)?

Arguments of the Parties

Appellant's Arguments

  • The appellant claimed exemption from payment of any water charge under the agreement dated 24-9-1938 (clause 6), and therefore that the respondent could not lawfully recover any tax under the Municipalities Act.
  • Paragraph 20 of the plaint set out multiple grounds asserting the municipality's demand and threatened warrant of distress were unlawful, ultra vires, retrospective, procedurally non-compliant, and beyond the municipality's competency.
  • The plaintiff valued the injunction relief at Rs. 1,100 for the purpose of jurisdiction and court-fees.

Respondent's Arguments

  • The respondent contended that clause 6 of the 1938 agreement was inoperative as it contravened Section 201 of the Bhopal Municipalities Act and therefore demanded water rates under applicable Rules.
  • The respondent argued that the Additional District Judge's order was not only under Order 7 Rule 10 but also under Order 7 Rule 11(b) of the Civil Procedure Code (a contention the court rejected).
  • The respondent contended that because the appellant was claiming relief regarding liability in respect of taxes amounting to Rs. 67,775-5-0, the appellant was liable to pay ad valorem court fees on that amount under Section 7(iv)(c) of the Court Fees Act (a contention the court did not accept as controlling the valuation for injunction).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Motiram v. Daulat, ILR (1938) Nag 558 : AIR 1939 Nag 50 Full Bench holding that valuation of an injunction is the value of the relief to the plaintiff, not necessarily the amount of money sought to be avoided; plaintiff's valuation is not absolutely final but the Court can interfere if arbitrary or unreasonable. The court treated this Full Bench decision as settling the law in this High Court's jurisdiction and applied its principle to hold that valuation for injunction should be the value to the plaintiff and that the plaintiff's valuation of Rs. 1,100 was reasonable.
Hajrabi v. Mohmmad Ibrahim, ILR (1947) Nag 902 : AIR 1948 Nag 219 Case referred to with approval in connection with the principle on valuation of injunctive relief. The court noted this case as approving the Full Bench principle and relied on it as supportive authority for valuing injunction by the value of relief to the plaintiff.
Municipal Committee, Sagar v. Rajaram, Civ. Revn. No. 63 of 1954 (D/- 8-2-1955) : 1955 Nag LJ (Notes) 280 Authority discussed with respect to valuation: Hidayatullah C.J.'s observation that the appellant could be permitted to put his own valuation on the relief of injunction, but must also value declaration. The court relied on this decision (and specifically Hidayatullah C.J.'s view) to accept the plaintiff's valuation of the injunction, while directing that the plaintiff must also value the relief of declaration.
Kashinath Oke v. Tukaram Nilkanth Oke, AIR 1956 Nag 195 Case cited by respondent in support of valuation/fee arguments. The court stated that this case did not advance the respondent's contention in the matter of valuation for jurisdiction.

Court's Reasoning and Analysis

The court proceeded through a sequence of determinations, adhering to the facts and authorities cited in the opinion:

  1. Nature of the appellate order: The court held that the impugned order of the Additional District Judge was exclusively an order under Order 7 Rule 10 of the Civil Procedure Code (directing the plaint to be returned for presentation to the proper court for want of pecuniary jurisdiction), and not an order under Order 7 Rule 11(b). Consequently, the appeal was properly brought under Order 43 Rule 1(a).
  2. Classification under the Court Fees Act: On reading paragraph 20 and the relief clause of the plaint, the court concluded the plaintiff was seeking declaration and primarily injunction. Therefore the suit falls under Article 17(vi) of Schedule II read with Section 7(iv)(d) of the Court Fees Act. The court also observed that even if Section 7(iv)(c) were assumed applicable, the outcome as to jurisdiction would be the same.
  3. Valuation principle for injunctions: The court emphasized that the subject matter or the amount of taxes sought to be avoided (here Rs. 67,775-5-0) does not automatically determine valuation for an injunction. Following the Full Bench decision in Motiram v. Daulat (and subsequent approval in Hajrabi v. Mohammad Ibrahim), the value of an injunction is the value of the relief to the plaintiff, not necessarily the monetary amount sought to be avoided. The plaintiff's valuation is not absolute but will be interfered with only if arbitrary or unreasonable.
  4. Application to present facts: Applying the above principles, the court found the plaintiff's valuation of the injunction at Rs. 1,100 to be reasonable and not arbitrary. The court rejected the appellate judge's approach of fixing valuation at Rs. 67,775-5-0 simply because that demand was made by the Municipal Board.
  5. Declaration relief valuation and applicable statute: Because the suit also sought declarations (that the 1938 agreement subsists and that the municipality's taxation was illegal/ultra vires), the court held that each declaration would attract a fixed court fee of Rs. 20 and that the valuation of the relief of declaration is governed by the Suits Valuation Act (not the Court Fees Act). The plaintiff was ordered to value his declaration(s).
  6. Disposition and directions: The court set aside the first appellate court's order returning the plaint under Order 7 Rule 10, and directed that the first appellate judge should order the plaintiff to value his relief on declaration. If, after such valuation, the appellate court finds the trial judge had jurisdiction, it should proceed to decide the appeal on merits; if the valuation exceeds the pecuniary jurisdiction of the trial court, only then may the appellate court act under Order 7 Rule 10.
  7. Costs and ancillary directions: The court allowed the appeal, remitted the case with directions, ordered the respondent to bear the costs of the appeal, fixed counsel's fee at Rs. 50 if certified, and refused leave for filing a letters patent appeal.

Holding and Implications

Holding: The appeal is allowed; the order of the first appellate Court returning the plaint under Order 7 Rule 10 is set aside and the matter is remitted to that Court with directions to require the plaintiff to value the relief of declaration and then determine whether the trial Court had pecuniary jurisdiction; the respondent shall bear the costs of the appeal.

Implications:

  • The direct effect is that the first appellate order returning the plaint for presentation to a different court is vacated; the appellate court must invite the plaintiff to value his declaration relief and then reassess jurisdiction before proceeding further on merits.
  • The plaintiff's valuation of the injunction at Rs. 1,100 was held reasonable and not arbitrary; the valuation should be the value of the relief to the plaintiff rather than the total amount of the tax demand.
  • Declarations sought must be valued under the Suits Valuation Act (and attract the specified fixed court fees), and the plaintiff must place a value on declarations as directed.
  • No broader new precedent is proclaimed beyond application of existing authorities (Full Bench in Motiram v. Daulat and subsequent approvals); the court applied existing principles to the facts and remitted the case for further adjudication in light of those principles.
  • Ancillary orders: respondent to pay appeal costs; counsel's fee Rs. 50 if certified; leave to file letters patent appeal refused.
Show full summary ...

    The Straw Products Limited, Bhopal v. The Municipal Board Bhopal .

    1. This appeal under Order 43, Rule 1(a) of the Civil Procedure Code by the plaintiff is directed against the order, dated 17-9-1958, passed by Shri D. K. Munshi, Second Additional District judge, Bhopal, in Civil Appeal No. 47 of 1957, arising out of the judgment and decree dated 30-4-1959 passed by Shri R. Saxena, Sub-Judge, Bhopal, in Civil Regular. Case No. 59 of L953.

    2. The appellant, an incorporated company, entered into an agreement, dated 24-9-1938, with the then Government of the former State of Bhopal, the material terms of which are as follows :

    "That the company was to pay a sum of Rs. 3,000/- per year to the Government of Bhopal in lieu of which the company was to get certain concessions in respect of land taxes and other taxes payable to the Municipal Committee including the water rate"
    .

    Clause (6) of the agreement provided as follows :

    "The Government of Bhopal undertakes to get from the Municipality for the company during such time as they shall carry on their business such quantity of water not exceeding 5,00,000 gallons a day as shall he required for the business of the Company, including therein all water which may be required for any building operations which may be carried on upon the land without any charge."

    Further Clause 9 of the agreement provided as follows :

    "The Company agrees to pay to the Municipality existing rates if these are continued at the rates now in force. Such taxes would not exceed in the amount in the aggregate to Rs. 100 per annum. Should the rates of these taxes be increased or should other taxes be imposed the said Company agrees to pay such increases if they are of general application but subject to a maximum of Rs. 300 per annum in the aggregate."

    3. The respondent served a notice, dated 24-4-1950, (Ex. P. 16) upon the appellant, intimating that Clause 6 of the agreement dated 24-9-1938, was inoperative, as it contravened Section 201 of the Bhopal Municipalities Act. The respondent called upon the appellant to pay the water rate at the rate of As. 0-12-0 per 1,000 gallons, as was sanctioned by the Government under Rule 5 of the Water Supply Rules applicable to the Municipality. By a further notice dated 15-3-1951 (Ex. P. 17) the respondent called upon the appellant to pay the amount of Rs. 3,000/-which was payable to the former State of Bhopal by Clause 1 of the agreement dated 24-9-1938 (Ex. P, 40), As the appellant refused to pay the water rate as demanded, the respondent started proceedings for recovery of the amount through coercive processes.

    4. In view of the threat of the demand being recovered by coercive processes under the provisions of the Bhopal Municipalities Act, the appellant filed a suit for permanent injunction restraining the respondent from recovering the amount. The appellant, in the plaint, alleged that it was exempted from payment of the water rate in view of the agreement, dated 24-9-1938 (Ex. P. 40), and, as such, the respondent could not recover any tax under the provisions of the Municipalities Act. The only operative agreement was the one referred to, which provided for the extent of the liability and the mode of recovery. The material allegations are contained in para 20 of the plaint, as also the relief clause. Paragraph 20 is as follows :

    "The plaintiff contends and submits that the defendant's alleged demand of Rs. 67.775-5-0 and the alleged threat to levy Warrant of Distress is unlawful, wrongful, and/or ultra vires the Bhopal Municipalities Act and /or beyond jurisdiction, authority and competency of the defendant and are invalid, inoperative and not binding on the plaintiff and/or are a nullity on inter alia the following grounds :

    (a) The plaintiff derives its supply of water from the lake through a pipe-line maintained by the plaintiff and the defendant does not supply any water to the plaintiff nor does the defendant maintain the said pipe-line through which water is drawn to the plaintiff's said factory.

    (b) The alleged fixation of rate by the Government is a nullity.

    (c) The defendant has no power, authority and/ or competency to make any demand as alleged or at all and in no event demand retrospectively.

    (d) The alleged determination of rate by the Government on 27-12-1952 does not have any retrospective effect and in any event the alleged bill dated 18-4-1953 and the alleged bill dated 11-6-1953, and the alleged notice dated 16-6-1953 purport to make retrospective demand beyond and/or in excess of power, jurisdiction, authority, competency of the defendant and in the premises are mill and void.

    (e) The alleged bills as aforesaid in any event are not in compliance with the provisions of the Bhopal Municipalities Act and as such are null and void.

    (f) The defendant Municipality has no power, jurisdiction, authority, competency to demand at the alleged rates or for the alleged quantities on hypothetical basis.

    (g) The plaintiff contends and states that the plaintiff's aforesaid supply of water is exempt from payment of any charge in respect of water.

    (h) In any event save and except payment of Rs. 3,000/- every year which said payment the plaintiff has regularly made and the defendant has accepted the defendant is not entitled to make any demand for supply of water.

    (i) In any event the plaintiff contends and submits that the defendant is not entitled to demand the alleged sum and/or levy any Warrant of Distress under the Bhopal Municipalities Act or at all."

    In the relief clause the following relief was claimed by the plaintiff :

    "The plaintiff therefore prays that a decree for permanent injunction restraining the defendant, his servants and agents from making any distress of the plaintiff's property for the recovery of the amount of Rs. 67,775-5-0 on account of water alleged to have been supplied for the period from 24-4-1950 to 81-3-1953 and interfering with the supply of water to the plaintiff through the pipe-line mentioned in foregoing paragraphs be passed in favour of the plaintiff against the defendant."

    5. The question is under what provision of the Court-fees Act, the present suit falls whether under Section 7(iv)(c) or Section 7(iv)(b) or Article 17(vi) of Schedule II read with Section 7(iv)(b).

    6. The trial Judge, after a full trial of the suit, decreed the plaintiff's claim partly restraining the defendant from enforcing the demand for the amount of Rs. 67,775-5-0 towards the alleged water rate for the period from 24-4-1950 to 31-3-1953 through coercive process. The plaintiff's claim for an injunction regarding the period subsequent to-31-3-1953 was dismissed. Both the parties filed appeals before the Additional District Judge; appeal No. 46 of 1957 being filed by the Municipal Board and appeal No. 47 of 1957 being filed by the plaintiff Company. Both the appeals were disposed of by a single order, which is the subject matter of the present appeal. This appeal, therefore, shall dispose of the questions raised by both the parties before the first appellate Court in their respective-appeals, provided the appellant pays the requisite court fees before the delivery of the order.

    7. This appeal has been filed under Order 43, Rule 1(a) of the Civil Procedure Code on the assumption that the order of the Additional District Judge was under Order 7 Rule 10 of the Civil Procedure Code. It was contended by the learned counsel for the respondent that the order was not only one under Order 7 Rule 10, Civil Procedure Code but also under Order 7 Rule 11 (b) of the Civil Procedure Code. Although the question of court-fees may be intimately connected with the question raised in the present case, the order passed by the learned Additional District Judge could in no way be construed to be one under Order 7 Rule 11 (b) of the Civil Procedure Code.

    It was an order exclusively under Order 7 Rule 10 of the Civil Procedure Code, directing the plaint to be returned to the plaintiff for presentation to the proper Court, on the ground, that the trial Court bad no pecuniary jurisdiction to try the suit. I, therefore, am of opinion that the present case is governed by Order 7 Rule 10 of the Civil Procedure Code read with Order 43 Rule 1 (a) of the Civil Procedure Code.

    8. From a perusal of paragraph 20 and the relief clause of the plaint, it is clear that the appellant claims the agreement dated 24-9-1938 to be the only operative and binding agreement and as such he claims a declaration for declaring the assessment of the taxes and the demands in pursuance of the same to be illegal and ultra vires the powers of the respondent. The primary relief claimed in the plaint is that of injunction. As such in my opinion, the present suit falls under Article 17 (vi) of Schedule II read with Section 7(iv)(d) of the Court Fees Act. Even if it be assumed that the present suit falls under Section 7(iv)(c) of the Court Fees Act the result would be the same and it would not make any difference, so far as the question of jurisdiction is concerned.

    respondent that the appellant was claiming relief regarding his liability in respect of the tax amounting to Rs. 67,775/5/- and, therefore, the appellant was liable to pay ad valorem court fees on the said amount under Section 7(iv)(c) of the Court Fees Act. It is not possible to accept the learned counsel's contention, as the subject matter of the property involved, or subject matter of the interest in respect of which an injunction is claimed does not determine the valuation for the purpose of an injunction. So far as the other. High Courts ore concerned, there may be a conflict of views.

    But so far as this High Court is concerned, the law is settled by the Full Bench case of Motiram v. Daulat, ILR (1938) Nag 558 : (AIR 1939 Nag 50), which has further been referred to with approval in the case of Hajrabi v. Mohmmad Ibrahim, ILR (1947) Nag 902 : (AIR 1948 Nag 219). Even assuming that Section 7(iv)(c) were applicable to the present case, the valuation of the relief of injunction would not be the amount of the taxes sought to be avoided, but the value of the relief to the plaintiff in the particular case. It is true that as laid down by the learned Judges of the Full Bench, the plaintiff's valuation will not be final and in the suitable cases the Court will have the power to interfere with the plaintiffs valuation, if it be found to be arbitrary or unreasonable.

    9. The learned counsel for the respondent invited my attention to the case of Municipal Committee. Sagar v. Rajaram, 1955 Nag LJ (Notes) 280 and Kashinath Oke v. Tukaram Nilkanth Oke, (S) AIR 1956 Nag 195. The said cases do not advance the respondent's contention in any way.

    10. Although the view of the trial Judge on the question of jurisdiction may not be in consonance with the view of the said Full Bench case, tho trial Judge was free to follow the views of other High Courts, as Bhopal then was not a part of Madhya Pradesh. After the re-organisation of states, the rulings of Nagpur High Court have a binding authority on all subordinate courts. As regards the learned appellate Judge, I am unable to accept his view that in any case the valuation of the suit will be Rs. 67,775/5/- the amount of the taxes sought to be avoided by the plaintiff. Either it is a case for injunction only or it is a case for declaration and injunction. In the case of declaration and injunction, the value for the purpose of jurisdiction may be different, although the fixed court fees of Rs. 20/- might be payable on that relief. But so far as the injunction is concerned, the valuation will not change, as under Section 8 of the Suits Valuation Act that would be the valuation for the purposes of court-fees as well.

    11. In the present case, I am of opinion that the valuation of injunction on the amount of Rs. 1100/- made by the appellant appears reasonable under the circumstances or the case. It does not appear to be arbitrary. Therefore, there is no reason for the Court to interfere with the plaintiff's valuation. However, as held by Hidayatullah C, J. in Municipal Committee, Sagar v. Rajaram, Civ. Revn. No. 63 of 1954 D/- 8-2-1955 : (1955 Nag LJ (Notes) 280), the appellant could be permitted to put his own valuation on the relief of injunction. But he was-also required to value the relief of declaration.

    The present case, as is clear, is one of declaration and injunction, declaration to the effect that the agreement dated 24-9-1938 subsists and operative-and that the decision of the Municipal Board to tax the appellant under the Bhopal Municipalities Act is illegal and ultra vires; and an injunction restraining the defendant from recovering the tax through coercive processes. So far as the declarations are concerned, a court fee of Rs. 20/- on each declaration would be enough. But still the appellant would have to put his own value on the relief of declaration, which would be governed not by the provisions of the Court Fees Act, but by the provisions of the Suits Valuation Act.

    It is that valuation which will determine the-jurisdiction of the trial Court. As the learned appellate Judge was influenced by the fact that a demand of Rs. 67,775/5/- was actually made by the Municipal Board, that would be the valuation for all purposes cannot be the correct basis. The order of the first appellate Judge returning the plaint for presentation under Order 7 Rule 10 of the Civil Procedure Code is set aside and the first appellate Judge is directed to order the plaintiff to value his relief on declaration. If after such valuation, the first appellate Court finds that the trial Judge had jurisdiction, he shall proceed to decide the appeal on merits. If he finds that the valuation exceeds the pecuniary jurisdiction of the trial court, then alone he may act under Order 7 Rule 10 of the Civil Procedure Code.

    12. With these observations, the appeal is allowed. The order of the first appellate Court under appeal is set aside and the case is remitted to that Court for a decision in advertence to the above observations. The respondent shall bear the costs of the appeal. Counsel's fee Rs. 50/- if certified. Leave for filing letters patent appeal is refused.

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    Comments

    The Straw Products Limited, Bhopal v. The Municipal Board Bhopal .
    (Jan 8, 1959)