Judgement
SHAMSHER BAHADUR, J. :- This petition for revision raising the question of jurisdiction of the Civil Court to entertain a suit to challenge the order of eviction passed in pursuance of an agreement of the parties has been referred for decision by Gurdev Singh, J. to a larger Bench.
2. The facts which give rise to the petition are not in dispute and may briefly be narrated. The petitioner Shrimati Savitri Ahuja acquired plot described as 29-A in Friends Colony and a house was constructed on it in the year 1958 while she was in England. The building was leased to respondent Harbans Singh Mehta on a monthly rent of Rs. 800/-. The lease was for two years commencing from 1st of June, 1958. Col. Ahuja, the husband of the petitioner, having returned to India in 1960 on retirement from service, the petitioner applied for ejectment of the tenant under Section 14(1)(e) of the Delhi Kent Control Act, 1958 (hereinafter also called the Act) according to which the Controller may make an order for the recovery of the premises on the ground :
"that the premises let for residential purposes are required bona fide by the Landlord for occupation.... and that the landlord or such person has no other reasonably suitable residential accommodation."
3. In the prescribed form, the premises from which ejectment was sought were described under the fourth column as "residential". In column 12 of the form, it was said that the building had been completed in the month of May, 1958, and the tenant had shifted to the house in the first week of that month; the rent, however, accrued from 1st of June, 1950. The ground for ejectment, described in column 18 of the application were two. In the first place, it was stated that both the petitioner and her husband had returned from England on the retirement of Col. Ahuja. Neither the petitioner nor her husband had any other accommodation in Delhi or New Delhi for their own residence and they required the premises bona fide "for their own residence". Secondly it was stated that the respondent had not paid a substantial portion of the rent, a sum of Rs. 2,312/- only having been paid since the inception of the tenancy. The accommodation which was given on lease is detailed in column 8 of the petition and is stated to consist of three bed rooms with attached bath rooms, drawing-cum-dining room, study room, reception hall, two stores, kitchen-cum-pantry, one garage and two servants quarters with lawn."
4. The petition for ejectment which was filed in the first instance on 18th of July, 1960, was later amended by the order of the Court passed on 10th of November, 1960. The case was fixed for 20th of December, 1960, for evidence of the parties. Before the evidence could be recorded the parties compromised the dispute and the respondent tenant made the following statement on 14th of December, 1960 :
"I admit the petition of the petitioner and an order for eviction on the ground of bona fide personal need be passed against me. I will vacate the premises in dispute by 31st of December, 1961. I admit liability for payment of rent upto 31st of December, I960, at the figure of Rs. 9,733/- after taking adjustment all repairs etc., done by me upto date. Two cheques of Rs. 800/- were given to the attorney of the petitioner. She has assured me that these have not been encashed. The figure of Rs. 9,733/- has been arrived on this assumption. I will continue to pay rent at the rate of Rs. 800/-per month in future and will not be entitled to spend any amount on repairs etc........"
.
Mrs. Piki Bidi, who appeared as an attorney of the petitioner, stated :
"I have heard the statement of the respondent. I agree."
The order was passed by the Rent Controller the same day and the relevant passages may be reproduced :
"An application for the eviction of the tenant has been filed by the petitioner on the ground that she bona fide requires the premises in dispute for her residence and for the residence of her husband. The eviction of the tenant was also sought on the ground of non-payment of rent.
The application was contested by the tenant-respondent and the respondent was ordered by my order dated 18th of November, 1960, to deposit Rs., 10,000/- the arrears of rent within one month of that order........
The parties have compromised today and the respondent tenant has stated that an order of eviction be passed against him on the ground of bond fide personal need. I hereby pass an order for the recovery of possession of the premises in dispute in favour of the petitioner against the respondent on the ground of bona fide personal need. As agreed by the parties, the respondent tenant will vacate the premises by 31st December, 1961....". (5) Ten days before he was due to vacate the premises under the order of the Rent Controller, the tenant brought a suit against Shri Mrs. Savitri Abuja for a declaration that the order for ejectment having been obtained by fraud from the Rent Controller should be declared void and inoperative. A temporary injunction under the provisions of R. 2 of Order 39 of the Code of Civil Procedure was also prayed for to prohibit the defendant from making an application under Section 42 of the Delhi Rent Control Act for enforcement of the Order passed by the Rent Controller on 14th of December, 1960. The ex parte injunction which was passed was confirmed by order of the Subordinate Judge passed on 4th of June, 1962. A petition for revision was filed by the petitioner to this Court and this is C. R. 399-D of 1962, Subsequently, the preliminary issues framed in the suit itself were decided in favour of the tenant holding that the civil Court had jurisdiction to try the suit. The petition for revision against this order passed on 31st of October, 1962, is Civil Revision No. 56-D of 1963. Gurdev Singh, J. by his order of 25th of March, 1964 has referred it for decision of a larger Bench.
6. Mr. Hans Raj Sawhney, the learned Counsel for the petitioner, before addressing his argument brought to our notice that the arrears today have mounted tip to Rs. 23,200/-. According to the tenant, the accumulation of arrears is due largely to the failure of the petitioner to accept the amount of rent which had been offered to her. The decision of the case, however, does not really turn on these pleas. It is contended by Mr. Sawhney that the civil Court has no jurisdiction to try the declaratory suit in view of the provisions of the Code of Civil Procedure and the Delhi Rent Control Act. Under Section 9 of the Code, the civil Courts
"shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred."
It is contended that the jurisdiction has been ousted by the provisions of the special law relating to the subject in the
Delhi Rent Control Act, 1958, Section 43 of the Act provides that :
"Save as otherwise expressly provided in this Act, every order made by the Controller or as order passed on appeal under this Act shall be final and shall not be called in question in any original suit, application or execution proceedings,"
Section 42 of the Act again provides for the exercise of powers of Civil Court for execution of orders by the Rent Controller and says that :
"Save as otherwise provided in Section 41, on order made by the Controller or an order passed On appeal under this Act shall be executable by the1 Controller as a decree of a civil Court and for this purpose, the Controller shall have all the powers of a civil Court."
Section 41, to which reference is made in Section 42 deals with a case of fines imposed by the Controller under the Act and their recovery under the provisions of the Code of Criminal Procedure. It 13 necessary also to notice Section 50 of the Act Sub-Section (1) of which is as under" :
".....no civil Court shall entertain any suit or proceedings in so far as it relates to the fixation of standard rent in relation to any premises to which this Act applies or to eviction of any tenant therefrom or to any matter which Controller is empowered by or under this Act to decide and no injunction in respect of any action taken or to be taken by the Controller under this Act shall be granted by any civil Court or other authority."
Sub-Section (4) of Section 50 says that :
"Nothing in Sub-Section (1), shall be construed as preventing a civil Court from entertaining any suit or proceeding for the decision of any question of title to any premises to which this Act applies or any question as to the person or persons who are entitled to receive the rent of such premises."
7. Clause 23 of the Rules framed under the Delhi Rent Control Act says that :
"In deciding any question relating to the procedure not specially provided by the Act and these rules, the Controller and the Rent Control Tribunal shall, as far as possible, be guided by the provisions contained in the Code of Civil Procedure, 1908."
8. It may be observed that the orders passed by the Rent Controller are subject to appeal under Section 38 of the Act which provides for appeal to the "Rent Control Tribunal "from every order of Controller made under this Act". The Rent Control Tribunal is also vested with powers of a Court under the Code of Civil Procedure. Section 39 further vests jurisdiction in the High Court to entertain second appeals involving substantial questions of law.
9. Having set out the relevant statutory provisions, the contention raised by Mr. Hans Rai Sawhney that the civil Court has no jurisdiction to entertain the suit may now be examined. The argument of the learned counsel is that the order of the Rent Controller was passed "under the Act" and in accordance with its provisions. The ejectment of the tenant could have been and was sought under clause (e) of the proviso to Sub-Section (1) of Section 14 of the Act, wherewith the premises let for residential purposes and required bona fide by the landlord for occupation as a residence for himself or for any member of his family, could be ordered to be vacated when the landlord has no other reasonably suitable accommodation. The application was made in the statutory prescribed form and the tenant in the statement which has been reproduced in extenso admitted on 14th of December, 1960, "the petition of the petitioner" and agreed on the passing of an order of eviction on the ground of bona fide personal need." The tenant undertook to vacate the premises by 31st of December, 1961. The statement with regard to arrears of rent need not be referred to as it is not relevant for purposes of this petition. The tenant in admitting the pleas of the landlord in the application for ejectment, in other words, conceded the claim for ejectment on the ground enumerated in clause (e) of the proviso to Sub-Section (i) of Section 14 of the Act. The order passed by the Rent Controller on the same day set out the pleas raised by the parties and directed the tenant to vacate the premises us agreed by him on 31st of December, 1961. The tenant thus was permitted to remain in occupation of the premises for more than a year and gave up his objections to the petition for ejectment. It is not disputed by Mr. Narula that if no further duty devolved on the Rent Controller to satisfy himself about the validity of the order passed by him, finality would attach to it under Sub-Section (i) of Section 50 of the Act which says that no civil Court can entertain any suit or proceeding relating to the fixation of standard rent or to eviction of any tenant therefrom "or to any matter which Controller is empowered by or under this Act" to decide. Mr. Narula suggests that though the tenant had made a statement admitting the plea of ejectment on ground of personal requirement of the landlord, the duty of satisfaction still devolved on the Court to see that the statutory requirements had been met. In Mr. Narulas contention, the Court before passing the order should have put further question to the tenant whether he consented to the order of ejectment being passed on the ground set forth in the proviso to Sub-Section (1) of S. 14 of the Act. In face of the clear statements made by the parties, the order of the Rent Controller, which is sought to be challenged in civil proceedings, could not, in our opinion, be said to have been made in contravention of the statutory requirements. Mr. Sawhney has relied on a recent decision of their Lordships of the Supreme Court in Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh, AIR 1964 SC 322, for the proposition that even a wrong order passed by an authority which is competent to decide the matter which falls for its determination is one "under the Act" and cannot be challenged. The Supreme Court, in this decision, construed the words I. any assessment made under this Act" in Section 18-A of the Madras General Sales Tax Act, 1939. Chief Justice Gajendragadkar, speaking for the Court, observed at p. 324 thus :
"The expression "any assessment made under this Act" is, in our opinion, wide enough to cover all assessments made by the appropriate authorities under this Act whether the said assessments are correct or not. It is the activity of the assessing officer acting as such officer which in intended to be protected and as soon as it is shown that exercising his jurisdiction and authority under this Act, an assessing officer has made an order of assessment that clearly falls within the scope of S. 18-A." Section 18-A of the Madras Act provided that no suit or other proceeding shall, except as expressly provided in this Act, be instituted in any Court to set aside or modify any assessment made under this Act. In examining the applicability of Section 18-A, the only question to be determined, according to the Supreme Court authority, is "Is the assessment sought to be set aside or modified by the suit instituted, an assessment made under this Act or not ?" To reach that conclusion, it would not be necessary to pronounce on the accuracy or correctness of the order which is sought to be challenged. In dealing with the scope of S. 9 of the Code of Civil Procedure, it was observed by the learned Chief Justice that :
"In dealing with the question whether Civil Courts jurisdiction to entertain a suit is barred or not, it is necessary to bear in mind the fact that there is a general presumption that there must be a remedy in the ordinary civil Courts to a citizen claiming that an amount has been recovered from him illegally and that such a remedy can be held to be barred only on very clear and unmistakable indications to the contrary. The exclusion of the jurisdiction of Civil Courts to entertain civil causes will not be assumed unless the relevant statute contains an express provision to that effect, or leads to a necessary and inevitable implication of that nature."
10. In our view, the principles set out in the Supreme Court authority are fully applicable to the facts of the present case. All the orders of the Rent Controller can be appealed against and a second appeal is also envisaged on substantial questions of law. The tenant did not choose to appear against the order which he now says was the result of fraudulent representation made to him. The tenant waited for the period permitted to him under the consent order and filed a suit in the civil Court only when a few days were left for fulfilment of the condition which was imposed on him by agreement. It cannot be said that the Rent Controller failed to apply his mind or that the order was passed in breach of the statutory requirements of the Act. When the tenant himself admitted the ground on which ejectment was sought, the Rent Controller could not have passed any other order but that of ejectment and the consent of the tenant did not substantially make any difference in the result.
11. Mr. Narula has argued that the letting purpose had still to be established before an ejectment order could have been passed. It is worthy of note that the ejectment petition described the premises as residential and the fullest details of the tenancy had been given. When the tenant accepted "the petition of the petitioner" on 14th of December, 1960, it clearly meant that the residential nature of the premises was admitted. The other argument urged by Mr. Narula on this aspect of the case is also lacking in force. It is submitted by him that though the tenant had consented to vacate the premises the order could not be enforced against him. Section 42 empowers the Controller to execute any order passed by it with the powers of a civil Court, and Section 43 attaches finality to any order passed by the Controller. It was the anticipated execution of this order which made the tenant file a suit in the Civil Court.
A Division Bench decision of Bedi and Pandit, JJ. in K.L. Bansal v. Smt Kaushalya Devi, 64 Pun LR 1091, mentioned by Gurdev Singh, J. in his order of reference and relied upon by Mr. Narula, may briefly be adverted to. Bedi, J. observed at p. 1095 that the satisfaction of the Court is essential before a valid decree for ejectment could be passed against a tenant, and if it is based merely on the statements of parties without the Rent Controller satisfying himself on the merits it is contrary to the statutory provisions of the Act and is a nullity. As I have already said, the decree for ejectment in the present case passed by the Rent Controller on 14th of December, 1960, though on the agreed statements of the parties, was one about which the Court had satisfied itself that the requirements t the statute had been met. Pandit J., who delivered a separate judgment, in fact stated clearly that
"if the tenant clearly admits in the compromise that the landlord is entitled to possession on one of the statutory grounds, the Court can pass an order for ejectment if it is satisfied that the compromise was a genuine and a bona fide one."
The ratio decidendi of this authority cannot, therefore, be used In derogation of the proposition and the result contended for by the learned counsel for the petitioner Mr. Sawhney.
12. It is next to be seen whether the order of the Controller can be challenged in a Civil Court on ground of fraud ? The plea of personal necessity was described as false and fraudulent on the ground that the fact of the employment of the landlords husband at Khathmandu in the World Health Organisation was not disclosed to the plaintiff. It may be mentioned in passing that Col. Ahuja, according to the pleas of his wife, had accepted an assignment in Kathmandu because he had failed to obtain accommodation in pursuance of the consent order. On the face of it, the plea of fraud strikes one as weak and insincere. It is, however not the time and place to adjudge the plea on its merits. It has to be rejected on the fundamental principle that an order or decree of a Court can be displaced on ground of fraud only when it is extrinsic or collateral to anything which has been adjudicated upon. What we find in the present case is that the tenant asserts that the statement which he made (sic) accepting the pleas of the "elders of the society" and misrepresentation. A party in a legal proceeding is bound to examine, the pleas raised against him and when he comes to accept these by a solemn statement made in Court, he cannot be heard later to say that it was induced by some misrepresentation. What was accepted by the tenant was the bona fide requirement of the tenant existing at the relevant time and the misrepresentation, if any, or the pressure of the "elders of the society" is neither extrinsic nor collateral to the matter which called for adjudication.
Reference may be made for Chinnayya v. Ramanna, ILR 38 Mad 203 : (AIR 1916 Mad 364), which is a Division Bench judgment of the Madras High Court, where it was held that "in order that fraud may be a ground for vacating a judgment, it must be a fraud that is extrinsic or collateral to everything that has been adjudicated upon but not one that has been or must be deemed to have been dealt with by the Court". In order to succeed, the plaintiff has to show that the order of the Court passed on 14th of December, 1960, was made as a result of fraud which was something extraneous to the question which was decided by the Rent Controller. On the showing of the respondent himself, no fraud was practiced by the landlord in obtaining the order. As stated by Sadasiva Ayyar, J. in the Full Bench authority of Kadirvelu Nainar v. Kuppuswami Naiker, ILR 41 Mad 743 : (AIR 1919 Mad 1044 FB), "the test to be applied is, is the fraud complained of not something that was included in what has already been adjudged by the Court, but extraneous to it ? .. . .where two parties fight at arms length, it is the duty of each to question the allegations made by the other and to adduce all available evidence regarding the truth or falsehood of it. Neither of them can neglect his duty and afterwards claim to show that the allegation of his opponent was false." The contention of Mr. Narula that an allegation of fraud having once been made it was the bounden duty of the Court to investigate into it cannot be accepted in the circumstances of the case. If this view were to prevail, all that need be done to delay the execution of a consent order under the Act would be to file a suit making any allegations of fraud. This would be adding an unwarrantable hazard to the uncertainties of litigation.
13. We are, therefore, of the opinion that the impugned order of the Rent Controller, though consensual in the sense that it did not involve any judicial finding, was based on the satisfaction that the ejectment order was made in accordance with the statutory requirements of Section 14(1)(e) and cannot be regarded as a nullity. We are also of the opinion that the allegation of fraud which is sought to be made a ground for vacating the order of the Rent Controller is not one which can be entertained in a suit of this nature. The Court, therefore, has no jurisdiction and the suit could not have been entertained by the civil Court. In this view of the matter, this petition for revision is allowed and the suit of the plaintiff dismissed with costs. At the request of Mr. Narula, the learned counsel for the tenant-respondent, we allow the respondent time for one month from this date to vacate the premises.
14. INDER DEV DUA, J. :- I agree.
Revision allowed. AIR 1964 PUNJAB 492 (Vol. 51, C. 161) "Delhi Cloth and Gen. Mills v. Chief Commr."
PUNJAB HIGH COURT
(AT DELHI)
Coram : 2 I. D. DUA AND D. K. MAHAJAN, JJ. ( Division Bench )
The Delhi Cloth and General Mills Co. Ltd. and others, Petitioners v. The Chief Commissioner, Delhi and another, Respondents.
Civil Writ No. 227-D of 1962, D/- 7 -5 -1964.
(A) Constitution of India, Art.265 and Sch.VII, List 2, Entry 66 - Registration Act (16 of 1908), S.78 and S.79 - CESS - TRUST DEED - Punjab Notification No. F. 12(20)/52 - G. A. R. D/-15-12-1952 - Registration fee - Debenture trust deed - Properties of value of Rs. 2.5 crores - Registration fee demanded held was not tee but was tax - Notification was ultra vires.
A Company floated debenture loan of Rs. 2.5 crores and to secure the repayment of the said loan executed debenture trust deed mortgaging some of its properties for the consideration of Rs. 2.5 crores in favour of trustees for debenture-holders, under the said debenture trust deed. When the debenture trust deed was presented before the Sub-Registrar for registration, the Sub-Registrar demanded a sum of Rs. 1,25,157.50 nP. as registration fee. This demand was made in pursuance of notification No. F. 12(20)752-GAR dated the 15th December, 1952, issued under Sections 78 and 79 of the Registration Act, 1908. The trustees took back the document and filed a writ petition in which they maintained that they were prepared to pay any reasonable fee for registration of the document, that the fee demanded from them for registration had no correlation with the services to be rendered under the Registration Act and was so excessive that it was merely a pretence for fee, that it was not fee and in reality was a tax and as such its levy was illegal, void and unconstitutional.
Held that the fee in the instant case, was not a fee but in its very nature was a tax and the notification was ultra vires and inoperative for the following reasons, namely :
(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 utilised for various other governmental functions.
(2) that there is no reasonable correlation between the fee levied and the cost of maintenance and administration of the registration department. The Act has no correlation with the capacity of an individual to pay. This is being stated pertinently because certain fees may be justified if their imposition has something to do with the capacity of the individual to pay but all fees cannot be justified on that basis. For that purpose one has to keep in view the purpose and object of the Act. In the present case the purpose and the object of the Act have no relation to the paying capacity of an individual. AIR 1954 SC 282; AIR 1954 SC 388; AIR 1954 SC 400; AIR 1962 Punj 267 (FB), Considered. (Paras 20, 23)
(B) Constitution of India, Art.19 - RIGHT TO PROPERTY - FREEDOM OF TRADE - COMPANY - Company - It is an artificial person - It cannot raise contention under Art.19.
AIR 1963 SC 1811, Foll. (Para 22)
Cases Referred : Courtwise Chronological Paras
(54) AIR 1954 SC 282 (V 41) : 1954 SCR 1005, Commr. H. R. E. Madras v. Sri Lakshmindra Tirtha Swamiar 17, 19
(54) AIR 1954 SC 388 (V 41) : 1954 SCR 1055, Ratilal Panachand Gandhi v. State of Bombay 18, 19
(54) AIR 1954 SC 400 (V 41) : 1954 SCR 1046, Sri Jagannath Ramanuj Das v. State of Orissa 18, 19
(61) AIR 1961 SC 459 (V 48) : (1961) 2 SCR 537, Hingir Rampur Coal Co. Ltd, v. State of Orissa 19
(63) AIR 1963 SC 965 (V 50) : (1963) 2 SCA 340, Sudhindra Thirtha Swamiar v. Commr. for H.R. and C.E. Mysore 19
(63) AIR 1963 SC 1811 (V 50) : (1963) 2 SCJ 605, State Trading Corporation of India, Ltd. v. Commercial Tax Officer 22
(19) AIR 1919 PC 79 (V 6) : 46 Ind App 240, Hemanta Kumari Debi v. Midnapur Zamindary Company 9
(13) 20 Ind Cas 385 : 24 Mad LJ 664, Veerappan Chetty v. Kadiresan Chetty 8, 18
(55) Writ Petn. No. 328 of 1955 (Mad) 19
(62) AIR 1962 Punj 267 (V 49) : 64 Pun L R 179 (FB), State of Punjab v. Model Woollen and Silk Mills, Verka 20
(1933) 1933 AC 168 : 102 LJPC 17, Lower Mainland Dairy v. Crystal Dairy Ltd. 17
60 CLR 263, Matthews v. Chicory Marketing Board 17
N.C. Chatterjee, P.C. Khanna and A.N. Sinha, for Petitioners; S.N. Shanker and Daljit Singh, for Respondents.
Judgement
The short question that arises for determination in this petition under Article 226 of the Constitution is whether the demand of Rs. 1,25,157.50 nP. is registration fee is, in fact, a fee or a tax. The contention of the petitioners is that it is a tax and not a fee.
2. Petitioner No. 1 is the Delhi Cloth and General Mills Company Limited, Bara Hindu Rao, Delhi - herein after referred to as the Company. Petitioners Nos. 2 and 3 are the Directors of the said Company and petitioners Nos. 4 and 5 are the trustees. The respondents are the Chief Commissioner, Delhi, and the Sub-Registrar, Delhi.
3. The Company floated debenture loan of Rs. 2.5 crores and to secure the repayment of the said loan executed debenture trust deed on the 10th April, 1962, mortgaging some of its properties for the consideration of Rs. 2.5 crores in favour of petitioners Nos. 4 and 5 as, trustees for debenture-holders, under the said debenture trust deed. The Collector of stamps, Delhi, assessed the stamp duty on the debenture trust deed at Rs. 2,50,300/- under the Indian Stamp Act. This duty was paid by the Company. When the debenture trust deed was presented before the Such Registrar, Delhi, on the 14th May, 1962, for registration, the Sub-Registrar demanded a sum ct Rs. 1,25,157.50 nP. as registration fee. This demand was made in pursuance of notification No. F. 12(20)752-GAR dated the 15th December, 1952, issued under Sections 78 and 79 of the Indian Registration Act, 1908. The notification is Annexure-A to the petition. In this the table of fees for registration has been set out. The basis of the fee for registration is the value or consideration money specified in the document sought to be registered. The minimum fee chargeable is Rs. 2/8/-. If the value or consideration money is up to Rs. 1,000/-, the maximum fee leviable is Rs. 1278/-. For documents in which the value or consideration money is between Rs. 300/- and Rs. 1,000/- various amounts are specified in the Schedule ranging from Rs. 3/12/- to Rs. 12/8/-. For documents in which the value or consideration money is above Rs. 1,000/-, for every one thousand rupees, a fee of Rs. 5/- is payable in addition to the sum of Rs. 12/8/-, which is the fee for the first one thousand rupees. In this manner, the fee calculated on the sum of Rs. 2.50 crores comes to Rs. 1,25,157.50 nP. The stand taken up by the petitioners was that this fee was not, in fact, a fee but was tax in the guise of fee. Consequently the petitioners took back the document and moved the present petition in this Court. They maintain that they are prepared to pay any reasonable fee for registration of the document, that the fee demanded from them for registration has no correlation with the services to be rendered under the Indian Registration Act and is so excessive that it is merely a pretence for fee, that it is not lee and in reality is a tax and as such its levy is illegal and void and unconstitutional.
4. In paragraph 15 of the petition, it is stated that :
"the petitioners understand that registration fee is mixed with the other revenues of Delhi Administration and the amount so realised is spent by respondent No. 1 not only on the establishment of the office of the respondent No. 2 but also on other accounts not connected in any way with the office of the respondent No. 2. The amount of registration fees is thus used as a part of general revenue of the state."
It, is further maintained that the work involved in the registration of documents is the same irrespective of the value or consideration money, the length or the nature of the document. The levy of fee on the basis of the scale based on the value or consideration money is attacked as being discriminatory and thus violative of Article 14 of the Constitution. The notification is also attacked as being violative of Article 19(1)(f) and (g) of the Constitution as imposing an illegal impost. In the end it is prayed that the notification in question be not given effect to and that the Sub-Registrar be directed to register the debenture trust deed on payment of some reasonable fee which has proportion to the services to be rendered.
5. In the return filed by the State in reply to paragraphs 11 and 15 of the petition, it is stated as follows :
"***** with reference to para 11, I deny that the fee demanded for registration has no correlation with the services rendered, or that it is a mere pretence of fee or that it is in the nature of tax or that its levy is illegal or void or unconstitutional. The fee demanded is absolutely in accordance with valid law. It has direct correlation to the services rendered and the benefit derived by the person seeking registration of document. The document in the present case would, on registration, entitle the petitioner company to secure repayment of a huge sum of Rs. 2.5 crores. It is not necessary that the amount collected as registration fee should in every case be approximate to the expenses incurred by the Government in rendering any particular service. The amount collected remains a fee as long as it is a payment for a special work done for the benefit of the person paying.
I do not dispute the facts stated in para 15 of the petition. I, however, submit that the mere fact that amounts collected on account of registration fee are merged in general revenues would not make it a tax. I submit that whether or not a particular levy is a tax would always be a question of fact to be determined in the circumstances of each case. In the present case I submit that the amount levied as registration fee is a fee and not a tax."
6. It would thus be clear that it is not disputed that the registration fee forms part of the general revenue of the State and is not credited to any distinct or separate account. It is not utilised for the exclusive purposes of the services rendered for which the levy is collected but is utilised as revenue for the-general purposes of the administration.
7. It would also be clear that the scale of fees prescribed in the schedule Annexure A has no correlation to the raising of necessary funds to meet the legitimate expenses in connection with the registration of documents and the maintenance of the Registration Department. The fee has also no connection with the length of the document. A document running into ten or twenty pages of the value of Rs. 500/- is chargeable to Rs. 8/- as fee, while a document of the value of Rs. 2.50 crores is chargeable to a fee of Rs. 1,25,157.50 nP. though it may be just a page. This disparity assumes greater importance if one keeps in mind that the services contemplated by the Registration Act and actually rendered are common to both the cases. On the face of it, it is hard to follow the relationship between the fee and the services rendered or to be rendered.
8. At this stage it will be proper to examine the scheme of the Registration Act and its purpose.
9. As observed in Veerappan Chetty v. Kadiresan Chetty, 20 Ind Cas 385 (Mad),-
"The primary object of registration is to check forger and to provide good evidence of the genuineness of written instruments."
The Privy Council in Hemanta Kumari Debi v. Midnapur Zamindary Co., 46 Ind App 240 : (AIR 1919 PC 79), while dealing with the Indian Registration Act, observed that "the purpose of the statute is to provide a method of public registration of documents." Part II of the Act deals with the Registration Establishment. There is to be an Inspector-General of Registration for each State or an officer who will exercise his powers or duties (Section 3). There have to be Districts and Sub-Districts for the purposes of the Act (Section 5). There has to be a Registrar for a District and a Sub-Registrar for a Sub-District (Section 6). Offices of Registrar and Sub-Registrar have also to be established (Section 7). There can be amalgamation of the two offices. Provision is also made for any vacancy in the office of the Registrar or Sub-Registrar, their absence and for their establishment. The registering officers have to use a seal, books and fireproof boxes.
10. Part III deals with what documents have to be registered and can be registered (Sections 17 and 18) as well as the various registers to be maintained in connection therewith. Parts IV, V, VI, VII, VIII, IX, X, XI and XII deal with the time of presentation, the place of registration, the presentation of documents for registration, The enforcing of appearance of executants and witnesses, presentation of with and authorities to adopt, the deposit of wills, the effects of registration and non-registration, the duties and powers of registering officer, and the refusal to register. Part XIII deal with fees for registration, searches and copies.
11. The fees are to be fixed by the State Government (Section 78). Table of fees has to be published (Section 79). The fees are payable on presentation of document sought to be registered (Section 80).
12. Part XIV deals with various penalties for various lapses and omissions and commissions. In the last part the only provision that may be noticed is Section 89, which makes it incumbent on officers granting a loan under the Land Improvement Loans Act, 1883, or the Agriculturist Loans Act, 1884, to send a copy of the order, and on a civil or a revenue Court to send a copy of the sale certificate to the registering officer to be filed.
13. It can be safely concluded from the entire schema and purpose, of the Act that it does not provide for the collection of taxes. It makes a provision in public interest for record of documents mainly documents of title. A department has to be established and maintained and for that purpose the Act only provides for levy of fees.
14. It is not the States case that the income from fees is merely enough to cover the charges of the entire registration establishment or is slightly higher than that. It is also not its case that the income from registration fees is kept in a separate account or head and is spent on the establishment. On the other hand, the stand taken up is that it does not matter that the income from the registration fees is credited to the general revenues and is used for the various governmental functions.
15. It is in this background that the vexed question whether the fee in question is a tax or a fee has to be settled.
16. The test as to what is a fee ate distinct from a tax has been settled by the Supreme Court and on that both the sides are agreed. The difficulty only arises in its application to the facts of a given case. According to the counsel for the petitioner, the test settles the matter in his favour while according to the State counsel it does not.
17. The earliest case before the Supreme Court was The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar, 1954 SCR 1005 : AIR 1954 SC 282. While dealing with the question, what is a fee and what is a tax, Mukherjea, J. (33 he then Was) observed as follows :
"It seems to us that though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular Legislature to legislate on the imposition of fees in respect of every one of the items dealt with in the list itself. Some idea as to what fees are may be gathered from clause (2) of, Articles 110 and 119 referred to above which speak of fees for licences and for service rendered.
* * * * *
A neat definition of what tax means has been given by Latham, C.J. of the High Court of Australia in Matthews v. Chicory Marketing Board, 60 CLR 263 at p. 276. A Tax, according to the learned Chief Justice, is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. This definition brings out, in our opinion, the essential characteristics of a tax as distinguished from other formal of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the tax-payers consent and the payment is enforced by law. Vide Lower Mainland Dairy v. Crystal Dairy Ltd., 1933 AC 168. The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the taxpayer and the public authority (see Findlay Shirras on Science of Public Finance, Vol. I, p. 203). Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay.
Coming now to fees, a fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many oases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay (vide Lutz on Public Finance. p. 215). These are undoubtedly some of the general characteristics, but as there may be various kinds of fees it is not possible to formulate a definition that would be applicable to all cases.
As regards the distinction between a tax and a fee, it is argued in the first place on behalf of the respondent that a fee is something voluntary which a person has gat to pay if he wants certain service from the Government; but there, is no obligation on his part to seek such services, and if he does not want the services, he can avoid the obligation. The example given is of a licence fee. If a man wants a licence that is entirely his own choice and then only he has to pay the fees, but not otherwise. We think that a careful examination will reveal that the element of compulsion or coerciveness is present in all kinds of imposition though in different degrees and that it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees. It is difficult, we think to conceive of a tax except. It be something like a poll tax, the incidence of which falls on all persons within a State. The house tax has to be paid only by those who own houses, the land tax by those who possess lands, municipal taxes or rates will fall on those who have properties within a municipality. Persons, who do not have houses, lands or properties within municipalities, would not have to pay these taxes, but nevertheless these impositions come within the category of taxes and nobody can say that it is a choice of these people to own lands or houses or specified kinds of properties, so that there is no compulsion on them to pay taxes at all. Compulsion lies in the fact that the payment is enforceable by law against a man in spite of his unwillingness or want of consent and this element is present in taxes as well as in fees. Of course, in some cases whether a man would come within the category of a service receiver may be a matter of his choice, but that by itself would not constitutes a major test which can be taken as the criterion of this species of imposition. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. Fees confer a special 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 (vide Findley Shirras on Science of Public Finance, Vol. 1, p. 202). Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. As Seligman says, it is the special benefit accruing to the individual which is the reason, for payment in the case of fees; in the case if a tax, the particular advantage of it exists at all is an incidental result of State action (vide Seligmans Essays on Taxation, p. 408).
If, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should, on the face of the legislative provision, be correlated to the expenses incurred by Government in rendering the services. As indicated in Article 110 of the Constitution, ordinarily, there are two classes of cases where Government simply grants a permission or privilege to a person to do something, which otherwise that person would not be competent to do and extracts fees either heavy or moderate from that person in return for the privilege that is conferred. A most common illustration of this type of case is furnished by the licence fees for motor vehicles. Here the costs incurred by the Government in maintaining an office or bureau -for the granting of licences may be very small and the amount of imposition that is levied is based really not upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases, according to all the writers on public finance the tax element is predominant, (vide Seligmans Essays on Taxation, p. 409), and if the money paid by licence-holders goes for the upkeep of roads and other matters of general public utility, the licence fee cannot but be regarded as a tax.
In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered. 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 fees and not a tax. There is really no generic difference between the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes (Ibid p. 406).
Our Constitution has, for legislative purposes, made a distinction between a tax and a fee and while there are various entries in the legislative lists with regard to various forms of taxes, there is an entry at the end of each one of the three lists as regards, fees which could be levied in respect of any of the matters that is included in it. The implication seems to be that fees have special reference to governmental action undertaken in respect to any of these matters."
In that case, the so-called fees was held to be a tax because the material fact which negatived the theory of fees in that case was that the money raised by levy of the contribution was not earmarked or specified for defraying the expenses that the Government had to incur in performing the services. All the collections want to the consolidated fund of the State and all the expenses were to be met not out of those collections but out of the general revenue by a proper method of appropriation as was done in cases of other government expenses.
18. This matter was again considered in Ratilal Panachand Gandhi v. State of Bombay, AIR 1954 SC 388 and Sri Jagannath Ramanuj Das v. State of Orissa, AIR 1954 SC 400. In both these cases, the same test was reiterated. It is only necessary to set out the relevant observations in Ratilals case, AIR 1954 SC 388, which are as follows :
"Thus two elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and in the second place, the amount collected must be earmarked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes.
As has been pointed out in the Madras case, 20 Ind Cas 385 (Mad), mentioned above, two much stress should not be laid on the presence or absence of what has been called the coercive element. It is not correct to say that as distinguished from taxation which is compulsory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid. We may cite for example the case of a licence fee for a motor car. It is argued that this would be a fee and not a tax, as it is optional with a person either to own a motor car or not and in case he does not choose to have a motor car, he need not pay any fees at all. But the same argument can be applied in the case of a house tax or land tax.
Such taxes are levied only on those people who own lands or houses and it could be said with equal propriety that a man need not own any house or land and in that event he could avoid the payment of these taxes. In the second place, even if the payment of a motor licence fee is a voluntary payment, it can still be regarded as a tax if the fees that are realised on motor licences have no relation to the expenses that the Government incurs in keeping an office or bureau for the granting of licences and the collections are not appropriated for that purpose but go to the general revenue. Judging by this test, it appears to us that the High Court was perfectly right in holding that the contributions imposed under Section 58 of the Bombay Public Trusts Act are really fees and not taxes.
In the first place, the contributions which are collected under Section 58 are to be credited to the Public Trust Administration Fund as constituted under Section 57. This is a special fund which is to be applied exclusively for payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act. It vests in the Charity Commissioner and the custody and investments of the money belonging to the fund and the disbursement and payment therefrom are to be effected not in the manner in which general revenues are disbursed but in the way prescribed by the rules made under the Act. The collections, therefore, are not merged in the general revenue, but they are earmarked and set apart for this particular purpose."
19. The decision in the Hingir-Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459, illustrates the difficulty that arises in applying these tests to the facts of each individual case. The majority view held the imposition in this case as a fee while Wanchoo, J. held to the contrary. The test as laid down in the cases of Ratilal, AIR 1954 SC 388 and Jagannath Ramanuj Das, AIR 1954 SC 400, already cited, was accepted as the correct test. It will be useful to refer to the decision of the Supreme Court in Sudhindra Thirtha Swamiar v. Commr. for H.R. and C.E. Mysore, AIR 1963 SC 966. This is necessary because the successful petitioner in Sri Lakshmindra Thirtha Swamiar, 1954 SCR 1005 : (AIR 1954 SC 282), again questioned the imposition after the Legislature had made the necessary changes in the law to meet the situation created by the Supreme Court decision already referred to 1954 SCR 1005 : (AIR 1954 SC 282). The imposition was held to be a fee for the reasons which may best be stated in the words of the learned Judges of the Supreme Court :
"It was urged that there was no correlation between the expenses incurred and the amounts collected as contributions, but there is no reliable evidence, on the record in support of this plea. Our attention was invited to Exhibit A referred to in paragraph 2 of the supplemental counter affidavit of the State of Madras in Writ Petition No. 328 of 1955, in which an abstract of the receipts and charges was set out. It was stated in that document :
During the period from 30th September 1951 to 30th June 1952 the total receipts under the bead-XXXVI Miscellaneous - (c) miscellaneous - Administration of Madras Hindu Religious and Charitable Endowments Act, 1951 amounts to Rs. 316013-1-3 and the total receipts under XLVI-Miscellaneous (d) fees for Government Audit by way of contribution recovered from the religious institutions amounted to Rs. 227531-4-10. The total expenditure during the said period towards salary and allowances of the officers and staff contingencies and fees paid to private auditors for auditing the accounts of religious institutions amounted to Rs. 693539-10-3.
Then followed a chart for fasli years 1361, 1352, 1363 and 1364 setting out different heads such as Arrear Demand, Current Demand, Total Demand, Write Off, Net Demand, Collection and Balance. It appears from the Chart that there were large arrears in the collection of contributions and by the end of the fasli year 1364 the arrears exceed 15.50 lakhs. An abstract at the foot of the chart shows that the total actual collections amounted to Rs. 19.74 lakhs and the balance recoverable for the four fasli years was Rs. 15.75 lakhs. The total expenditure for 3½ out of the four years was Rs. 26.4 lakhs. It difficult to draw an inference from this document that the demand of contribution was wholly unrelated to the expenditure incurred out of the accumulations. No attempt was made before the High Court to establish that the levy of contribution at the rate of five per cent was so exorbitant that it could be said to have no true relation to the value of the services rendered to the endowments by the administration. Our attention was also invited to a statement of account showing that the Commissioner received when the Act of 1951 was brought into force a total investment in fixed deposits, Government stock certificates, debentures of co-operative land mortgage bank, national savings certificates and in banks a total amount exceeding Rs. 18 lakhs. But this is the accumulation during a period of nearly 25 years when the Act of 1927 was in operation. There is no evidence on the record as to the sources from which the fund was accumulated. From this statement of account it would not be possible to infer that the contributions under Section 76(1) of the Act of 1951 were wholly disproportionate to the value of the services to be rendered. A levy in the nature of the fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to each individual who obtains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax. It is true that ordinarily a fee is uniform and no account is taken of the varying abilities of different recipients. But absence of uniformity is not a criterion on which alone it can be said that it is of the nature of a tax. A fee being a levy in. consideration of rendering service of a particular type, correlation between the expenditure incurred by the Government and the levy must undoubtedly exist, but a levy will not be regarded as a tax merely because of the absence of uniformity in its incidence or because of compulsion in the collection thereof, nor because some of the contributories do not obtain the same degree of service as others may."
20. So far as our High Court is concerned, reference may be made to the State of Punjab v. The Model Woollen and Silk Mills, Verka, 64 Pun LR 179 : (AIR 1962 Punj 267 FB), wherein a licence fee imposed on engines according to their horse-power was struck down as a tax and not a fee on the ground, to put it in the words of Grover, J. who delivered the judgment of the Full Bench, that :
"It lacks the essential elements of quid pro quo it is excessive and unreasonable qua the licencees like the respondent who happens to put up larger number of engines like smaller horse power which presumably is conducive to more efficient and productive working of the industry, and it has gone merely to augment the general revenues of the District Board."
Applying the tests laid down in the decisions cited above to the facts of the present case, we are clearly of the view that the fee in the instant case is not a fee but in its very nature is a tax. The reasons why we hold so are;
(1) That the fee is not deposited in a separate hear 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 functions;
(2) that there is no reasonable correlation between the fee levied and the cost of maintenance and administration of the registration department. To illustrate, a document running into several pages may be liable to a nominal fee whereas a document running into a single page may be liable to an exorbitant fee. An illustration to this effect has already been set out above in the earlier part of the judgment. Moreover, this may happen in the case of the same individual when he goes to the registration department with two documents; one chargeable to very nominal fee and the other to an exorbitant fee under the prescribed scale. It is also clear that the Act has no correlation with the capacity of an individual to pay. This is being stated pertinently because certain fees may be justified if their imposition has something to do with the capacity of the individual to pay but all fees cannot be justified on that basis. For that purpose one has to keep in view the purpose and object of the Act. In the present case
the purpose and the object of the Act have no relation to the paying capacity of an individual.
21. In view of the fact that the registration fee is credited to the general revenues of the State without distinction, a fact from which there is no escape on the material on the record, it must be held that the fee demand is not a fee but a tax.
22. In view of our decision on the principal question, it is not necessary to decide the other two contentions raised, namely, one under Article 14 and the other under Article 19 of the Constitution. So far as the second contention is concerned, it cannot be raised because the petitioner is not a natural person but an artificial person. See in this connection, the decision of the Supreme Court in State Trading Corporation of India Ltd v. The Commercial Tax Officer. AIR 1963 SC 1811 wherein it was held :
"The word Citizen in Art. 19(1)(f) and (g) has no special meaning and refers to a natural person. The State Trading Corporation cannot be regarded either by itself or by taking it as the aggregate of citizens, as a citizen for the purpose of enforcing rights under
Article 19(1)(f) and (g). The nationality of a Corporation is a different concept not to be confused with citizenship of natural persons The State Trading Corporation is really a department of Government behind the Corporate veil and it is not possible to pierce the veil of incorporation in India to determine the citizenship of the members and then to give the Corporation the benefit of Article 19. The corporation cannot claim to enforce fundamental rights under Part III of the Constitution against the State as defined in Article 12"
23. For the reasons given above, we allow this petition and hold the notification to be ultra-vires and inoperative. The document was registered in view of the interim order passed by Bedi and P.C. Pandit, JJ., on the 31st July, 1962. That order reads thus :
"The parties want time to put in some affidavits. With the consent of the parties, we pass the following interim order :
The petitioners shall pay under protest an amount of Rs. 1,25,157.50 nP demanded by respondent No. 2 as registration fee and thereupon the debenture trust deed shall be registered The respondent undertake that in the event of the writ petition being decided in favour of the petitioners the aforesaid amount shall be refunded to the petitioners except such amount as may be payable as registration fees in accordance with the decision of the High Court".
In accordance with the above order, the amount of Rs. 1,25,157.50 nP has to be refunded excepting such amount as may be payable as registration fee. This amount cannot be determined, at this stage, because there is no alternative scale of fees prescribed. The appropriate order, therefore, would he that the amount be refunded subject to the condition that the petitioners will pay to the Sub Registrar such amount as is prescribed by lawful rules that may be made in this behalf prescribing fees for the registration of such documents. There will be no order as to costs.
Petition allowed.