Court Fees: The concept revisited

A full bench of the Allahabad High Court in a recently reported decision [AIR 2010 All 42] has inter alia explained the meaning of 'court fees' and the rationale for its fixation. Dealing with a challenge to the constitutional validity of the court fees fixed by the Government of Uttar Pradesh, the Full Bench of five judges made these observations to hold as valid the fees fixed by the Government.

The Full Bench inter alia observed as under;

A brief history in regard to the levy of court fee deserves notice. Before arrival of British Rule in India, there was no levy on the party approaching the court for redressal of its grievance. Historian say that during Mughal Rule and prior thereto, there was no fee payable on administration of justice and it was totally free. With the advent of British Rule in this country, regulations were framed imposing court fee and was nominal at the beginning. It was gradually increased to prevent institutions from frivolous and uncalled for litigations on an assumption that it shall act as deterrent to the abuse of the process of the Court. Many do not feel that levy of fee had put restraint on frivolous and groundless litigations. However, in recent times, the scale of fee has been raised to an extent which has given rise to feeling to many that it is no longer a fee but tax on the litigants. Caveators say that in modern times, expenditure on administration of justice has tremendously increased and therefore, in order to meet those expenditures, sharp increase in the court fee is the only answer.

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Article 245 of the Constitution of India confers on the Parliament power to make laws for the whole or any part of the territory of India and the legislature of the State for the whole or any part of the State. Article 246 of the Constitution gives exclusive power to the Parliament to make laws with respect to any of the matters enumerated in List-I (Union List), whereas the legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters in List II (State List) in the VIIth Schedule. Entry III of State List gives the State Legislature power to make laws inter alia in respect of fee taken in all Courts except the Supreme Court. In view of aforesaid, there is no difficulty in holding that the State Legislature has power to make law in respect of fee taken in all Courts except the Supreme Court. As the State Legislature has been conferred with the power to make laws in respect of fees taken in all Courts, it cannot make law providing for charging tax. 

In view of aforesaid, one is required to consider the distinction between fee and tax. Broadly speaking fees and taxes are both for the benefit of the State whereas the levy of fee must have co-relation with the expenditure for which it is collected. However, fee cannot be imposed for increasing the general revenue of the State. Further quid pro quo is not to be established with mathematical accuracy. This point is not res integra and had been the subject matter of decisions of the Supreme Court in a large number of cases and hence does not require much deliberation. In the case of the Secretary, Government of Madras and another vs. Zenith Lamps and Electrical Limited, AIR 1973 SC 724 the Supreme Court held as follows:

But even if the meaning is the same, what is ‘fees’ in a particular case depends on the subject-matter in relation to which fees are imposed. In this case we are concerned with the administration of civil justice in a State. The fees must have relation to the administration of civil justice. While levying fees the appropriate legislature is competent to take into account all relevant factors, the value of the subject matter of the dispute, the various steps necessary in the prosecution of a suit or matter, the entire cost of the upkeep of courts and officers administering civil justice, the vexatious nature of a certain type of litigation and other relevant matters. It is free to levy a small fee in some cases, a large fee in others, subject of course to the provisions of Art. 14. But one thing the Legislature is not competent to do, and that is to make litigants contribute to the increase of general public revenue. In other words, it cannot tax litigation, and make litigations pay, say for road building or education or other beneficial schemes that a State may have. There must be a broad co-relationship with the fees collected and the cost of administration of civil justice.” 

Further while dealing with the issue, the Supreme Court in the case of Secretary to Government of Madras and another vs. P.R. Sriramulu and another, AIR 1996 SC 676 observed as follows:- “15. As pointed out earlier with reference to the decisions of this Court the State enjoys the widest latitude where measure of economic regulations are concerned. These measures for fiscal and economic regulation involve an evaluation of diverse and quite often conflicting economic criteria, adjustment and balancing of various conflicting social and economic values and interests. It is for the State to decide what economic and social policy it should pursue. It is settled law that in view of the inherent complexity of the fiscal adjustments, the Courts give a large discretion to the legislature in the matter of its references of economic and social policies and effectuate the chosen system in all possible and reasonable ways. If two or more methods of adjustment of an economic measure are available, the legislative preference in favour of one of them cannot be questioned on the ground of lack of legislative wisdom or that the method adopted is not the best or there are better ways of adjusting the competing interests and the claims as the legislature possesses the greatest freedom in such areas. It is also well settled that lack of perfection in a legislative measure does not necessarily imply its constitutionality as no economic measure has so far been discovered which is free from all discriminatory impact and that in such a complex area in which no fool-proof device exists, the Court should be slow in imposing strict and rigorous standard of scrutiny by reason of which all local fiscal schemes may be subjected to criticism under the equal protection clause. Having regard to these settled principles the impugned judgment of the High Court could not be sustained.”

“16... it may be noted that factually it is neither possible nor practicable to give the exact break up of figures in regard to the expenses incurred under different heads and other departments of the Government in relation to the administration of civil justice.”

In view of aforesaid enunciation of law in unequivocal terms, it is inexpedient to multiply the authority on this issue. The next question, which requires consideration, is as to whether the State has to satisfy with mathematical precision that the fee collected is spent for the purpose it has been levied. In the present case, therefore, one has to see as to whether court fee levied is spent on administration of justice. One has to bear in mind that there has to be a broad co-relationship with the fee collected with the cost of administration of civil justice and the State cannot enrich itself or to secure revenue for general administration by levy of fee. It is neither possible nor practicable to give exact breakup of the figures in regard to the expenses in relation to the administration of justice. It is not the requirement of law that the collection raised through the fee should exactly tally with the expenditure. The amount raised through the fee and expenses incurred in providing the services is not to be examined with exactitude with a view to ascertain any accurate or arithmetical equivalence. The test that the State cannot enrich itself by levy of fees would be satisfied if there is a broad co-relation between the amount raised from fee and the expenses incurred in administration of justice.

The Supreme Court had occasion to consider this question in the case of B.S.E. Brokers Forum, Bombay & others vs. Securities & Exchange Board of India and others JT 2001(2)SC 242 and on a review of its earlier decisions the law has been laid down in categorical terms as follows: “While examining the reasonableness of the quantum of levy, the same will not be done with a view to find out whether there is a co-relatable quid pro quo to the quantum of levy, because as noticed hereinabove, the quid pro quo is not a condition precedent for the levy of a regulatory fee. Such examination will have to be made in the context of the levy being either excessive or unreasonable for the requirement of the authority for fulfilling its statutory obligations.”

Have a look at the decision.