Chief Commissioner, Delhi & ANR Vs.
Delhi Cloth and General Mills Co. Ltd. & Ors [1978] INSC 80 (7 April 1978)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
SINGH, JASWANT
CITATION: 1978 AIR 1181 1978 SCR (3) 657 1978
SCC (2) 367
CITATOR INFO:
C 1980 SC1008 (21)
ACT:
Fee-Conditions to be satisfied to be a legal
fee, within the meaning of the Constitution.
HEADNOTE:
The Respondent Company floated debenture loan
of Rs. 2.50 crores and to -secure the repayment of the said loan executed
debenture trust deed dated 10th April, 1962 mortgaging certain properties of
the Company for a consideration of Rs. 2.50 crores in favour of the trustees
who were petitioners before the High Court. Stamps to the extent of Rs.
2,50,00/- were paid under the Indian Stamp Act and apart from that when the
document was presented for registration, a registration fee of Rs. 1,25,157.50
np. were demanded as registration fee by the Sub-Registrar under a notification
issued by the appellant, the Chief ,Commissioner of Delhi on 15th December,
1952. The registration fee was paid by the Respondents under compulsion, but
the trustees filed a petition in the High Court challenging the validity of the
notification and the exorbitant amount realised as registration fee as illegal
levy not fulfilling the essential conditions of a fee within the meaning of the
Constitution. The plea of the trustees found favour with the High Court which
held that the fee charged by the Registration Department under the notification
was an illegal impost and could not be levied.
The High Court accordingly quashed the
notification.
Dismissing the appeal by certificate, the
Court
HELD : A fee in order to be a legal fee must
satisfy two conditions (a) There must be an element of quid pro quo, i.e. the
authority levying the fee must render some service for the fee levied however
remote the service may be; and (b) That the fee realised must be spent for the
purpose of the imposition and should not form part of the general revenues of
the State. [658 F-G] In the instant case, in view of the fact that it was not
disputed that the fee realised by the Registration Department under the
impugned notification dated 15-2-1952 was to form part of the general revenues
of the State, the second element of a fee was wholly wanting and the High Court
was, therefore, right in striking down this notification. [658 G-H] Mahant Sri
Jagannath Ramanuj Das and Anr. v. The State of Orissa and Anr. [1954] SCR 1046,
Ratilal Panachand Gandhi v. The State of Bombay and Ors. [1954] SCR at D. 1055
and State of Maharashtra & Ors. v. The Salvation Army, Western India
Territory [1975] 3 SCR 475 applied.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1959 of 1968.
From the Judgment and Order dated the 7th
May, 1964 of the, Punjab High Court, Circuit Bench at Delhi, in Civil Writ No. 227-D
,of 1962.
R.P. Bhatt and Girish Chandra for the
Appellant.
Hardaval Hardv, D.R. Thadani and A.N. Goyal
for Respondents.
Sobhagmal Jain for the Intervener (The State
of Rajasthan).
O. P. Rana for the Intervener (State of
U.P.).
658 The Judgment of the Court was delivered
by FAZAL, J. This appeal by certificate is directed against the judgment and
order of the Circuit Bench of the Punjab High Court at Delhi dated the 7th May,
1964 and arises in the following circumstances The respondent Company floated
debenture loan of Rs. 2.50 crores and to secure the repayment of the said loan,
executed debenture trust deed dated 10th April, 1962 mortgaging certain
properties of the Company for a consideration of Rs. 2.50 crores in favour of
the trustees, who were petitioners before the High Court. Further details have
been given in the judgment of the High Court and it is not necessary to repeat
them here. It appears that stamps to the extent of Rs. 2,50,300/were paid under
the Indian Stamp Act and apart from that when the document was presented for
registration, a registration fee of Rs. 1,25, 157.50 np were demanded as
registration fee by the Sub- Registrar under a notification issued by the Chief
Commissioner of Delhi, which is the impugned notification in this case. The
registration fee was paid by the respondents under compulsion but the trustees
filed a petition in the High Court challenging the validity of the notification
and the exorbitant amount realised as registration fee.
The short point taken before the High Court
by the Respondents, was that the, registration fee levied under the
notification dated 15th December, 1952 was an illegal levy as, it did not
fulfil the essential conditions of a fee within the meaning of the
Constitution. The plea of the trustees found favour with the High Court which
held that the fee charged by the Registration Department under the notification
was an illegal impost and could not be levied.
The High Court accordingly quashed the notification
and directed refund of the fee.
The main point which arises for consideration
in this case is as to whether or not the fee charged under the notification
issued by the, Chief Commissioner was a legal impost justified by the
provisions of the Constitution. It is well settled that a fee in order to be a
legal fee,. must satisfy two conditions :- (i) there must be an element of quid
pro quo that is to say, the authority levying the fee must render some service
for the fee levied however remote the service may be;
(ii) that the fee realised must be spent for
the purposes of the imposition and should not form part of the general revenues
of the State.
In the instant case, it was not disputed
before the High Court that the fee realised by the Registration Department
under the notification above-mentioned was to form part of the general revenues
of the State. It is, therefore, manifest that the second element of a fee was
wholly wanting in this case and the High Court was, therefore, right in
striking down the notification., Mr. Bhatt appearing in support of the appeal,
submitted that by virtue of the fact that the document was registered, the
respondents obtained initial advantage in using the document as an 659
authentic piece of evidence as proof of title and this was, therefore. a
sufficient service rendered for the imposition of the fee. Even assuming that
this was so, the second essential ingredient of a valid fee, viz. that the fee
realised must be correlated with expenditure incurred on registration so as to
be spent on maintenance of registration Organisation, was not satisfied in this
case and on this ground alone the fee could not be imposed. In Mahant Sri
Jagannath Ramanuj Das and Anr. v. The State of Orissa and Anr.(1), this Court
observed as follows :- "Two elements are thus 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. But this by itself is not enough to make, the
imposition a fee, if the payments demanded for rendering of such services are
not set apart or specifically appropriated for that purpose but are merged in
the general revenue of the State to be spent for general public purposes".
The same view was reiterated in Ratilal
Panachand Gandhi v. The State of Bombay and Ors. (2) in a recent decision of
this Court in the case of State of Maharashtra and Ors. v. The Salvation Army,
Western India Territory(3), this Court observed 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 accept 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 purpose".
In view of the long course of decisions of
this Court, the view taken by the High Court was absolutely correct and we are
unable to, find any error of law. We understand that the notification has not
been amended and a maximum fee of Rs. 100/- has been fixed. Thus the point
becomes more or less academic except for cases arising during a particular
period.
For these reasons, therefore, we find no
merit in this, appeal which fails and is accordingly, dismissed without any
order as to costs.
S. R. Appeal dismissed.
(1) [1954] S.C.R. P. 1046.
(2) [1954] S.C.R.P. 1055.
(3) [1975] 3 S.C. R. 475.
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