Court Fees Act, 1870 : Ad Valorem Court-Fees Is Payable On Amount Claimed In A Money Suit For Compensation And Damages: Supreme Court

The Supreme Court observed that, under Section 7(i) of the Court Fees Act, 1870, ad valorem Court-fees would be payable on the amount claimed if the suit is a money suit for compensation and damages.

It is only with respect to the category of suits specified in clause (iv) of Section 7 of the Act that the plaintiff has the liberty of stating in the plaint the amount at which relief is valued and Court-fees would be payable on the said amount, the bench comprising Justices Dinesh Maheshwari and Vikram Nath observed.

In this case, the plaintiff filed a suit for recovery of Rs.20 Lakhs as damages allegedly suffered by him on account of denying the status of freedom fighter by the defendants and also for the loss of reputation on account of non-issuance of certificate of freedom fighter. The valuation of the suit both for the purpose of court fees and jurisdiction was fixed at more than Rs.20 lakhs but court fees of Rs.50/- was affixed relying upon a judgment of the Punjab & Haryana High Court. An undertaking to pay the court fees on the sum to be adjudicated as damages by the Court in due course of time was also stated. The defendants preferred an application under Order VII Rule 11 (c)read with Section 151 CPC on the ground of non-payment of requisite Court-fees. The Trial Court disposed of the said application with the direction to the respondent to file the Court-fees on the amount of Rs.20 Lakhs as claimed by him and granted about 10 weeks' time to make good the deficiency. Allowing the Revision Petition filed by the Plaintiffs, the High Court held that as the actual and specified amount of damages was still to be assessed and determined by the Trial Court, as such, the direction of the Trial Court to pay ad valorem Court fees on the amount of Rs.20 lakhs was not sustainable in law. The High Court also noted that the plaintiff has undertaken to make good the court fees on the amount adjudicated as damages by the Court in due course of time.

Section 7 of the Act provides for computation of fees payable in certain suits.

Sub-clause (i) refers to Money Suits which includes suits for damages, compensation, arrears of maintenance, annuities or other sums payable periodically where the fee payable would be according to the amount claimed. Then, there are other sub-clauses which are not relevant for the case in hand.

Sub-clause (iv) which has further six categories, namely, suits (a) for movable property of no market value; (b) to enforce a right to share in joint family property; (c) for a declaratory decree and consequential relief; (d) for an injunction; (e) for easements; and (f) for accounts.

Before the Apex court, the defendants- appellants contended that the Court-fees was payable under Section 7(i) of the Act and that Section 7(iv) of the Act would have no application. On the other hand, the plaintiff- respondent contended that the proper valuation could not be ascertained at the time of institution of the suit, there would not be any justification for charging ad valorem court fees on a tentative amount mentioned in the plaint.

The court therefore considered whether the suit in question as framed was a money suit for compensation/damages falling under Clause (i) of Section 7 or was a suit falling in any of the categories specified in clause (iv) of Section 7 of the Act?

The court noted that a reading of the relief clause would make it abundantly clear that this was a money suit for compensation/damages and not falling under any of the categories mentioned in clause (iv) of Section 7 of the Act.

Therefore, there would be no question at all for the applicability of Section 7(iv) of the Act. It would be a simple case of applicability of Section 7(i) of the Act and ad valorem Court-fees would have to be paid as per Schedule 1 entry 1...It is only with respect to the category of suits specified in clause (iv) of Section 7 of the Act that the plaintiff has the liberty of stating in the plaint the amount at which relief is valued and Court-fees would be payable on the said amount. Liberty given under clause (iv) to the specific suits of six categories is not available to the suits falling under any other clause, be it (i), (ii), (iii) etc. Once the suit in question was a money suit for compensation and damages falling under clause (i) of Section 7 of the Act, ad valorem Court-fees would be payable on the amount claimed.

Referring to M/s Commercial Aviation and Travel Company vs. Vimla Pannala  AIR (1988) 3 SC 423 and other judgments relied by the High Court to hold otherwise, the bench observed: 

"Neither in the case of M/s Commercial Aviation (supra) nor in the case of Chettiar (supra), this Court ever laid down that for the purposes of suits covered by clauses other than Section 7(iv), there could be separate valuation for the purposes of court fees and jurisdiction. On a completely erroneous approach, an erroneous interpretation of the judgments in the case of M/s. Commercial Aviation (supra) and Chettiar (supra), several orders were passed by the Punjab & Haryana High Court, which have been relied upon in the impugned judgment"

The court therefore restored the Trial Court order by setting aside the High Court judgment.

Headnotes

Court Fees Act, 1870 ; Section 7 - Once the suit in question is a money suit for compensation and damages falling under clause (i) of Section 7 of the Act, ad valorem Court-fees would be payable on the amount claimed - It is only with respect to the category of suits specified in clause (iv) of Section 7 of the Act that the plaintiff has the liberty of stating in the plaint the amount at which relief is valued and Court-fees would be payable on the said amount. (Para 21)

Summary : Appeal against High Court judgment which set aside Trial Court order to file the Court-fees on the amount of Rs.20 Lakhs as claimed by him in the Money suit for compensation- Allowed -  A reading of the relief clause would make it abundantly clear that this was a money suit for compensation/damages and not falling under any of the categories mentioned in clause (iv) of Section 7 of the Act. Therefore, there would be no question at all for the applicability of Section 7(iv) of the Act. It would be a simple case of applicability of Section 7(i) of the Act and ad valorem Court-fees would have to be paid as per Schedule 1 entry.

Case details

State of Punjab vs Dev Brat Sharma |  2022 LiveLaw (SC) 292 | CA 2064 OF 2022 | 16 March 2022

Coram: Justices Dinesh Maheshwari and Vikram Nath

Counsel: Adv Babbar for appellant, Adv Abhimanyu Tiwari for the respondent

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