Nemi Chand & ANR Vs. The Edward
Mills Co. Ltd.& ANR  INSC 58 (10 November 1952)
MAHAJAN, MEHR CHAND DAS, SUDHI RANJAN BOSE,
VIVIAN HASAN, GHULAM
CITATION: 1953 AIR 28 1953 SCR 197
Court-Fees Act (VII of 1870), s. 12-Civil
Procedure Code, 1908, s. 2(ii), 0. VII, r. 11-Decision as to court-feeFinality-Scope
of s. 12-Dismi ssal for non-payment of courtfee-Power of appellate Court to
consider whether decision about court-fee was right-Declaratory suit with prayer
for consequential relief-Appeal giving up prayer for Consequential
In a plaint the following reliefs were asked
for, viz., (i) that it be declared that the appointment of' defendant No. 2 as
chairman of the board of directors of a company is illegal, invalid and ultra
vires and that he has no, right to act as chairman, managing director etc., and
(ii) that a receiver be appointed to take charge of the management of the
company. The 'plaint bore a court-fee stamp of Rs. 10 only but, the objection
of the defendants, ad valorem fee was paid Rs. 51,000 which was the valuation
of the suit.
The suit was dismissed and the plaintiff
preferred an appeal giving up the second relief and paying a court-fee of Rs.
10 only. The appellate Court ordered payment of ad valorem court-fee and
non-compliance rejected the memorandum of appeal, 0n further appeal:' 198 Held,
(i) that it was o pen to the appellant to give up the second relief in appeal
and, as the subject-matter of the appeal was of & purely declaratory
nature, the memorandum of appeal was properly stamped;
(ii)that the first relief was of a purely
declaratory nature and did not involve any consequential relief ;
(iii)that s. 12 of the Court-Fees Act did not
preclude the Court from considering the correctness of the order of the low er
appellate court rejecting the appeal the ground that the memorandum of appeal
was not properly stamped.
The finality imposed by s. 12 of the
Court-Fees Act decisions relating to court-fee attaches only to decisions
concerning valuation simplicities; it does not attach to decisions relating to
the category under which a suit or appeal falls for purposed of court-fees.
Section 12 of the Court-Fees Act when it says
that such a decision shall be final between the parties only makes the decision
of the court a question of court-fee non appealable and places it the same
footing as other interlocutory non-appealable orders under the Code and does no
more than that. If a decision under s. 12 is reached by assuming jurisdiction
which the court does not possess or without observing the formalities which are
prescribed for reaching such a decision, the order obviously would be revisable
by the High Court in the exercise of revisional powers. Similarly, when a party
thinking that a decision under s. 12 is palpably wrong takes the risk of his
plaint being rejected or suit dismissed and then appeals from the order
rejecting the plaint or from the decree dismissing the suit but not from the
decision the question of court-fee, then it is open to him to challenge the
interlocutory order even the question of court-fee in the suit or appeal. The
word " finality " construed in the limited sense in which it is often
used in statutes means that no appeal lies from an order of this character as
such and it means no more than that.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 105 of 1950.
Appeal from the Judgment and Order dated
March 22, 1945, of the Court of the Judicial Commissioner, Ajmer-Merwara, Ajmer
(Davies J. C.) in Civil First Appeal No. 16 of 1944, arising out of the
Judgment and Decree dated March 13, 1944, of the Court of the Judge, Small
Causes, Ajmer, and Additional District Judge, Ajmer, in Civil Suit No. 28 of
S. S. Deedwania for the appellant.
M. C. Setalvad, Attorney-General for India,
(J. N, Sharma, with him) for the respondents, 199 1952. November 10. The
Judgment of the Court was delivered by MAHAJAN'J.-This is an appeal by special
leave granted by the Privy Council and limited to the question of court-fee,
viz., whether the memorandum of appeal presented to the High Court court-fee
was payable under section 7 (iv) (e) or article 17 of Schedule II of the
The question whether the memorandum of appeal
was properly stamped arose in the following circumstances: Edward-Mills Co.
Ltd. is a joint stock company situate in Beawar, AjmerMerwara. In accordance
with the provisions of the articles of the company one Seth Gadh Mal Lodha and
Rai Sahib Moti Lal (respondent No. 2) were its chairman and managing director
respectively since 1916. Seth Gadh Mal Lodha represented his family 'firm of
Kanwal Nain Hamir Singh, while Rai Sahib Moti Lal represented the joint family
firm of Champa Lal Ram Swaroop, 1st July, 1938, Rai Sahib Moti Lal and his firm
were adjudged insolvents by the Bombay High Court. The result was that
respondent No. 2 had to vacate the office of managing director and -the members
of his firm also became ineligible forit. By a resolution of the board of directors
passed 18th July, 1938, Gadh Mal Lodha was appointed to take the place of Rai
Sahib Moti Lal as managing director. Gadh Mal Lodha died 11th January, 1942,
and the board of directors then appointed Seth -Sobhagmal Lodha to act as
chairman as well as managing director till the, appointment was made by the
company. An extraordinary meeting of the company was called for the 8th
February, 1945, for the election of the chairman. At this meeting conflict
&rose between the two groups represented by Sobhagmal Lodha and Moti Lal.
The chairman therefore dissolved the meeting but the supporters of Moti Lal
continued to hold it and passed a resolution appointing him as the sole agent
and chairman for a period of twenty years a remuneration equal to ten per cent
of the profits of the company It-is this 200 resolution of the 8th February,
1942, which has led to the present dispute.
Seth Sobhagmal in the situation that arose
approached the District Judge of Ajmer with the prayer that a general meeting
of the company may be held under the supervision of the court. This request was
allowed 11th February, 1942, and the court ordered that the meeting be held
12th February, 1942, under the chairmanship of Seth Sobhagmal.
Respondent No. 2 being aggrieved by this
order, filed an application in revision in the Court of the 'judicial
Commissioner impugning the order. The learned Judicial Commissioner allowed the
revision and directed that the resolution of the 8th February, 1942, should be
Having failed to get redress in the summary
proceedings, the appellant then filed the suit out of which this appeal arises
for quashing the resolution of the 8th February, 1942. In the plaint he asked
for the following relies:
1. That it be declared that the appointment
of defendant No. 2 is illegal, invalid and ultra vires and that he has no right
to act as chairman, managing director etc.
of defendant No. 1;
2. That a receiver be appointed to take
charge of the management of the company, until a properly qualified chairman
managing director etc. are duly appointed as required by the memorandum and
articles of the company.
The plaint bore a court-fee stamp of Rs. 10
only, but the objection of the respondents that court-fee was payable relief
No. 2 the appellants paid ad valorem fee Rs. 51,000 which was the valuation of
the suit for purposes of jurisdiction.
The Additional District Judge dismissed the
suit the preliminary ground that it was not maintainable as it related to the
internal management of the company and that the, appellants had no right to
bring it without impleading the directors who were necessary parties to it.
201 Aggrieved by this decision of the trials
Judge, the appellants preferred an appeal to the Court of the Judicial
Commissioner, Ajmer-Merwara, at Ajmer. The memorandum of appeal was Stamped
with a courtfee stamp of Rs. 1 0 and it was expressly stated therein that
relief No. 2 of the plaint was given up. An objection was raised regarding the
amount of courtfee paid the memorandum of appeal. The Judicial Commissioner
ordered that proper court-fees be paid thereon in a month. In this order no
reasons were given for this decision. The additional fee demanded was not paid,
and the Judicial Commissioner dismissed the appeal with costs 22nd March, 1945.
An application was made for leave to appeal to the Privy Council against this
order but, it was refused.
In the order refusing leave it was said as
follows:" appeal to this court, the memorandum was again stamped with a
ten rupee stamp only and the respondents therefore objected. It having been
conceded by plaintiffs earlier that the relief for the receivership was
consequential to the relief for the declaration, the appellants were directed
to pay the same stamp as had been -paid in the trial Court.
They objected stating that they had expunged
from their memorandum of appeal the request that the court should appoint a
receiver and that they were not, therefore, liable to pay the same amount this
a notice was issued and counsel were beard.
It being clearly set out in section 42 of the
Specific Relief Act that no court shall guaranty a declaration only where the
plaintiff being able to seek further relief than a mere declaration of title
omits to do so, the appellants were directed to pay as earlier ordered the same
amount as bad ultimately been paid the plaint. They had earlier sought a
consequential relief and the court 'was, therefore, entirely unable to hold
that the plaintiffs were unable to seek a further relief, they having sought
the relief in the lower court and it having been refused to them. The amount
of-the stamp was not paid and the appeal was therefore dismissed with
costs." 202 The reasons for demanding additional court-fee, though not
mentioned in the original order, are stated in this order.
The question for determination in this appeal
is whether the order of the Judicial Commissioner demanding additional
court-fee can be sustained in law. A memorandum of appeal, as provided in
article 1 of Schedule I of the Court-Fees Act, has to be stamped according to
the value of the subject-matter in dispute in appeal; in other words, the
relief claimed in the memorandum of appeal determines the value of the appeal
for purposes of court-fee. The only relief claimed in the memorandum of appeal
was the first one mentioned in the plaint. This relief being purely of a
declaratory character, the memorandum of appeal was properly stamped under
article 17 of Schedule II It is always open to the appellant in appeal to give
up a portion of his claim and to restrict it. It is further open to him; unless
the relief is of such a nature that it cannot be split up, to relinquish a part
of the claim and to bring it within the amount of court-fee already paid:
Brahnmnandam v. Secretary of State for India(1); Ram Prasad v. Bhiman(2);
Karam Chand v. Jullundur Bank Ltd(1);
Neelachalam v. Narasingha Das(4); Sah Bamehand v. Pannalal(5); Chuni Lal v. Sheo
Charanlat Lalman(1). The plaintiffs in express terms relinquished the second
relief,they had claimed in the plaint, in their memorandum of appeal. For the
purpose of deciding whether the memorandum of appeal was properly stamped
according to the subjectmatter of the appeal, it was not open to the Judicial
Commissioner to canvass the question whether the suit with the second prayer eliminated
from it fell within the mischief of the proviso to section 42 of the Specific
Relief Act. That was a question which related to the merits of the appeal and
did not concern its proper institution this ground, therefore, the Judicial
Commissioner had no jurisdiction to demand (I) (1930) I.L.R. 53 Mad. 48 (2)
(1905) I.L.R. 27 All. 151.
(3) A.I.R. 1927 Leh. 543.
(4) A.R. 1931 Mad 716.
(5) A.I.R. 1929 All. 308.
(6) (1925) I.L.R. 47 All. 756.
203 additional fee from the plaintiffs and
the appeal could not be dismissed for failure to meet it. We are thus of the
opinion that the order demanding additional court-fee the memorandum of appeal
as it stood,' that is, minus the second prayer, was erroneous and we hold that
the memorandum of appeal was properly stamped, as the subject-matter of the
appeal was purely of a declaratory character.
Mr. Setalvad for the respondents contended
that the first relief claimed in the plaint, and which was the subject matter
of the appeal included within it consequential relief and was not purely
declaratory in nature and therefore the Judicial Commissioner was right in
demanding additional court-fee the value of the consequential relief. It was
said that the words that respondent No. 2 "had no right to act as chairman
and managing director" amounted to a claim for consequential relief. We
are unable to agree. The claim contained in the first relief of the plaint is
to the effect that it be declared that defendant No. 2 has no right to act as
chairman an managing director because of his appointment being illegal,
invalid, and ultra vires. The declaration claimed is in negative form that
defendant No. 2 has no right to act as chairman and managing director. No claim
for a consequential relief can be read within this prayer. The words "that
defendant 2 has no right to act as chairman.......'' are mere repetition and
reiteration of what is contained in the opening sentence of the paragraph.
This contention of Mr. Setalvad, therefore,
cannot be sustained.
It was next contended that in view of the
provisions of section 12 of the Court-Fees Act it should be held that the
decision of the Judicial Commissioner' was final, and could not be challenged
in appeal. Section 12 of the Court-Fees Act enacts as follows:
"Every question relating to Situation
for the purpose of determining the amount of any fee chargeable under this
chapter a plaint or memorandumu 204 of appeal shall be decided by the court in
which such plaint or memorandum, as the case may be, is filed, and such
decision shall be final as between the parties 'to the suit." The
provisions of this section have to be read and construed keeping in view the
provisions of the Code of Civil Procedure. Order VII, Rule 11, Civil Procedure
Code, provides as follows:"The plaint shall be rejected(b) where the
relief claimed is undervalued and the plaintiff, being required by the court to
correct the valuation within a timeto be fixed by the court, fails to do
(d) where the relief claimed is properly
valued, but the plaint is written upon paper insufficiently stamped, and the
plaintiff, being required by the court to supply the requisite stamp paper
within a time to be fixed by the court, fails to do so." An order
rejecting a plaint is a decree as defined in section 2; sub-section (ii), and
is appealable as such.
There is an apparent conflict between the
provisions of the Code of Civil Procedure and the provisions of section 12
which make the order relating to valuation final and efforts to reconcile the
provisions of the Court-Fees Act and the Code have resulted in some divergence
of judicial opinion the construction of the section. In a number of decisions
the Calcutta High Court took the view that the finality declared by section 12
of the Court-Fees Act had been taken away by the relevant provisions of the
Code, as the order rejecting a plaint was appealable as a decree, no matter
whether the dispute related to the category under which the same falls for
purposes of court-fee or only to valuation pure and simple under a particular
category: Vide In re Omrao Mirza v. Mary Jones(,) and Tara Prasanna Chongdar v.
Nrisingha Moorari Pal(1). This extreme view has not been maintained in later
decisions and it has been held that the finality declared by section 12 is
limited only to the question (1883) 12 C.L.R. 148.
(2) (1924) I.L..R. 51 Cal. 216.
205 of valuation pure and simple and does not
relate to the category under which a certain suit falls: Tariman Khatun v.
Secretary o State for India in Council(1).
The Allahabad High Court in its earlier decisions took the extreme view:
Vide Muhammad Sadik v. Muhammad Jan(2). Later
that -court veered round to the view that the finality declared by section 12
only related to matters of, appraisement. The High Court of Lahore has placed a
similar construction the meaning of the expression "valuation" in
section 12 and has held that the finality attaches only to a decision which
concerns valuation simpliciter and no finality attaches when a court decides a
question whether a case falls within one or other category of the cases
mentioned in the different sections and schedule of the Court Fees Act: Vide
Mahna Singh v. Bahadur Singh(1); Mst. Parmeshri v. PannaLal(1).
The Madras High Court took the same view in Lakshmi Amma v. Janamajayam
Nambiar(5); Annamalai Chetty V. Cloete(6); and Narasimhalu Chetty v. Bamayya
Naidu(7). Mr. Setalvad drew our attention to the recent Full Bench decision of
that court in Madana Mohana Naiko v. Krupasindhu Naiko(1). That case, however,
concerned the second part of section 12 and was not concerned directly with the
construction to be placed the first part of the section. It, however, contains
certain observations indicating that in the opinion of the judges there was no
ground for this restricted construction of the word " valuation " in
section 12 and that the finality declared bysection 12 attached not only to
valuation pure and simple but also attached to decisions relating to category
under which a suit or appeal falls for purposes of court-fee. These obiter
observations, however, cannot be said to ,,overrule the earlier Full Beach
decision of that court in Lakshmi Amma v. Janamajayam Nambiar(5). In a (1)
I.I.R.(1940) 2 Cal. 166.
(2) (1889) I.L.R. II All. 91, F.B.
(3) 1919 Punjab Record 16.
(4) A I.R. 1931 Lah. 378.
27 (5) (1894) 4 M.L.J. 183, F.B.
(6) (1882) I.L.R. 4 Mad. 204.
(7) A.I.R. 1942 Mad. 502.
(8) A.I.R. 1937 Mad. 81.
206 later decision in Narasimhalu Chetty v.
Bamayya Naidu(1), the decision of the Full Bench was explained as not in any
way overruling the decision in Lakshmi Amma v. Janamajayam Nambiar(2). All
recent decisions of the Bombay High Court have taken the same view: Vide Dada
v. Nagesh(3); Krishnaji Bari Dhandhere v. Gopal Narain Dhandhere(4). Mr.
Setalvad drew our attention to an earlier decision of the Bombay High Court in
Vithal Krishna v. Balakrishna Janardan(5). In that case the court undoubtedly
held that no appeal lay and the finality declared by section 12 was
comprehensive enough to include all questions whether relating to category or
valuation pure and simple. It was, however, held that the High Court could
correct an erroneous decision in the exercise of its revisional powers. Thus
the finality declared by section 12 was destroyed by the exercise of powers of
appeal under the guise of exercising revisional jurisdiction. In Patna and Oudh
the game view has been taken as in Lahore. Vide Chandramoni Koer v. Basdeo
Narain Singh (6); Gumani v. Banwari(7). It thus appears that the consensus of
judicial opinion is against the construction suggested by Mr. Setalvad. We
think that the construction given to the language in section 12 in these
decisions is right, and our reasons for saying so are these:
The difference in the phraseology employed in
sections 5 and 12 of the Court-Fees Act indicates that the scope of section 12
is narrower than that of section 5. Section 5 which declares decisions
questions of court-fee whenever they arise in the chartered High Courts as
final makes a decision as to the necessity of paying a fee or the amount
thereof final. Whereas section 12 makes a decision every question relating to
valuation for the purpose of determining the amount of any fee payable under
chapter 3 a plaint or memorandum of appeal final. Had section 12 been drafted
somewhat as follows (i) A.I.R. 1942 Mad. 502.(5) (1886) I.L.R. lo Bom. 610,
F.B, (2) (1894) 4 M.L.J. 183 F.B.(6) (1921) 4 P.L.J. 57.
(3) (1899) I.L.R. 23 Bom. 486.(7) (1920) 54
(4) A.I.R. 1936 Bom. 166.
207 "If any dispute arises as to the
amount of any fee chargeable under this chapter a plaint or memorandum of
appeal, it shall be decided by the court in which such plaint or memorandum is
filed and such decision shall be final as between the parties$), then the construction
contended for by Mr. Setalvad might have been upheld. When the two sections in
the same Act relating to the same subject matter have been drafted in different
language, it is not unreasonable to infer that they were enacted with a
different intention and that in one case the intention was to give finality to
all decisions of the taxing officer or the taxing judge, as the case may be,
while in the other case it was only intended to give finality to questions of
fact that are decided by a court but not to questions of law. Whether a case
falls under one particular section of the Act or another is a pure question of
law and does not directly determine the valuation of the suit for 'purposes of
court-fee. The question of determination of valuation or appraisement only
arises after it is settled in what class or category it falls.
It has been argued in some decisions that it
is absolutely necessary to decide the category in which a case falls before
assessing its value and therefore the determination of the question of category
is necessarily involved in the determination of the valuation of the suit for
purposes of courtfee. This argument, though plausible, does not seem sound. The
actual assessment of the value depends either arithmetical calculations or upon
a valuation by an expert and the evidence led in the case, while the decision
of the question of category is one of law and may well be said to be an
independent question antecedent but not relating to valuation. The expression
" valuation" interpreted in its ordinary meaning Of
"appraisement", cannot be said to necessarily include within its
ambit the question of category which is a matter of law. The construction
placed this section by a long course of decisions is one which 208 reconciles
the provisions of the Court-Fees Act with that of the Code of Civil Procedure
and does not make those provisions nugatory and is therefore more acceptable
than the other constructions which would make the provisions of either one or
the other of these statutes nugatory. Perhaps it may be possible to reconcile
the provisions of the two statutes by holding that the finality declared by
section 12 of the Court-Fees Act means that the parties cannot impugn such a
decision by preferring an appeal but that it does not confer such decisions a
complete immunity from examination in a higher court. In other words section 12
when it says that such a decision shall be final between the parties only makes
the decision of the court a question of court-fee non appealable and places it
the same footing as other interlocutory nod-appealable orders under the Code
and it does no more than that. If a decision under section 12 is reached by
assuming jurisdiction which the court does not possess or without observing the
formalities which are prescribed for reaching such a) decision, the order
obviously would be revisable by the High Court in the exercise of revisional
powers. Similarly, when a party thinking that a decision under section 12 is
palpably wrong takes the risk of his plaint being rejected or suit dismissed
and then appeals from the order rejecting the plaint or from the decree
dismissing the suit but not from the decision the question of court-fee, then
it is open to him to challenge the interlocutory order even the question of court-fee
made in the suit or apppal. The word "finality" construed in the
limited sense in which it is often used in statutes means that no appeal lies
from an order of this character as such and it means no more than that.
Conceding for the sake of argument but not
admitting-that Mr. Setalvad is right in his contention that section 12 is
comprehensive enough to include within its ambit all questions relating to
court-fee whether they involve a decision as to question of category or as to
valuation simpliciter, in the present 209 case the Judicial Commissioner
decided none of these questions and: his decision cannot be said to be one
falling within the ambit of section 12. All that the Judicial Commissioner
decided was that as the suit could not be maintained without asking for relief
No. 2, the same fee was payable the memorandum of appeal as the plaint. In
substance the court decided an issue regarding the maintainability of the
appeal without first deciding whether the appeal had been properly instituted
in that court. No finality can attach to such a decision by the provisions of
section 12, as in reality it decides no question within, the ambit of section
12 of the Court-Fees Act.
For the reasons given above the second
objection raised by Mr. Setalvad that no appeal lies from the order of the
Judicial Commissioner by special leave is without force and is overruled.
The result, is, that the appeal is allowed,
the decision of the Judicial 'Commissioner dismissing the appeal is set aside
and the case remanded to him for decision in accordance with law the basis that
the memorandum of appeal presented to him was properly stamped. The appellants'
costs of this appeal will be costs in the appeal in the Court of the Judicial
Agent for the appellant: Rajinder Narain.
Agent for the respondents: S P. Varma.