Report No. 128
Court Fee as a Component of Cost of Litigation and Its Rationalisation
3.1. Entry 3 in State List reads:
"Officers and servants of the High Courts-procedure in rent, and revenue courts-fees taken in all courts except the Supreme Court."
'Court fee' thus is a subject within the jurisdiction of the State. Article 145 of the Constitution confers power on the Supreme Court, subject to the provisions of any law made by Parliament in exercise of the powers conferred by entry 77 of the Union List, to make rules for regulating generally the practice and procedure of the Court with the approval of the President. This rule-making power inter alia includes the power to make rules as to the fees to be charged in respect of proceedings therein.1
Armed with this power under entry 3 of the State List, by now 10 States, namely, Andhra Pradesh, Karnataka, Kerala, Maharashtra, Rajasthan, Tamil Nadu and West Bengal, and the Union Territory of Pondicherry have enacted their own laws on court fee. The Commission has come to know that State of Haryana has enacted its own Court Fee Act.2 In other States and Union Territories, the Central Court Fees Act of 1870, as amended from time to time, is in force.
1. Article 115(1)(f), The Constitution of India.
2. The Court Fees (Haryana Amendment) Act, 1974.
3.2. Court fee has always been a very controversial subject. At the one end of the spectrum, there are those who assert that it is a tax on justice and is incongruous in a constitutional democracy. At the other end of the spectrum, there are these who assert that as far as the administration of civil justice is concerned, court fee is a fee levied for service rendered and it may inhere the concept of quid pro quo. As extreme proposition at both ends of spectrum, there is an error in both but when properly analysed, cash proposition has an element of truth in it. Both the points of view may be briefly examined.
3.3. Law Commission to which work of recommending reforms in justice system was assigned by the Government of India undertook a comprehensive examination of justice system in vogue with a view to recommending reforms in judicial administration so as to remove some of its ugly and undesirable features. Mounting cost of litigation was considered an undesirable feature of justice system because it became a barrier in access to justice. The situation in this behalf was analysed. Court fee was considered the most important component of the cost of litigation. The question whether the levy of court fee was justified or not engaged the attention of the first Law Commission.
'India is, so far as we know, the only country under a modern system of Government which deters a person who has been deprived of his property or whose legal rights have been infringed from seeking redress by imposing a tax on the remedy he seeks. Our States provide hospitals which give free treatment to persons who are physically/ mentally afflicted. But if a person is injured in the matter of his fundamental or other legal rights, we bar his approach to the courts except on payment of a heavy fee. The fee which we charge is so excessive that a civil litigant seeking to enforce his legal right pays not only the entire cost of administration of civil justice but also the cost incurred by the State in prosecuting and punishing criminals for crimes with which the civil litigant has no concern'.1 This summed up the approach to court fee in 1958.
1. LCI, 14th Report, Chapter 22, para. 1.
3.4. Till the advent of the British rule in India, levy of court fee was unknown, it was the British rule that brought in its wake the regulations which imposed court fees. Court fees appear to have been levied in the 18th century by Madras Regulation III of 1782, Bengal Regulation XXXVIII of 1795 and Bombay Regulation of 1802. Since then it has become a regular feature of the administration of justice.
3.5. The Preamble to the Bengal Regulation justified the imposition of court fees on the ground that it would prevent the institution of frivolous litigation. It stated that the 'imposition of these fees on the institution and trial of suits and petitions presented to the court is considered as the best mode of putting a stop to its abuse without obstructing the bringing forward of just claims'. Macaulay considered this statement as indefensible and described it, 'the most eminently absurd Preamble that was ever drawn'. In his minute dated 25th June, 1835, Macaulay recorded:
'If what the courts administer be injustice, these taxes are defensible or are objectionable only as being far too low. They ought to be raised the amount to a prohibitory duty or rather the courts ought to be shut up and the whole expense of our judicial establishment saved to the State. But, if what the courts administer be justice, is justice a thing which the Government ought to grudge to the people?1
1. Report of the Committee of Law Ministers on Rationalisation of Court fee, October 1984, pp. 3-4.
3.6. Subject to Macaulay's caveat, court fee was conceived as a restraint on frivolous litigation. However, the States have practically considered it a source of revenue.1 The ever daunting resource crunch has often provoked upward revision of court fees, simultaneously pointing a finger to the ever rising cost of administration of justice as justification for the upward revision. The Law Commission, therefore, was constrained to observe, 'the fee is no longer a fee, it is a heavy tax'.2 In reaching this conclusion, the Commission was impressed by the fact deduced from analysis of certain decrees selected at random that court fees formed the highest component of taxed costs.
The Commission, after observing that 'it is the primary duty of the State to provide the machinery for, the administration of justice and on principle it is not proper for the State to charge fees from suitors in courts', proceeded to recommend that 'even if court fees are charged, the revenue derived from them should not exceed the costs of administration of civil justice because the making of a profit by the State from the administration of justice is not justified.'3
1. To illustrate, in Haryana no court fee was leviable under section 110A of the Motor Vehicles Act, 1939 for payment of compensation till 1979 when an amendment was introduced providing that an application for claims of compensation upto forty thousand rupees shall bear court fee of ten rupees and for any sum above this amount the court fee shall be one-fourth of the amount chargeable as ad valorem fee on the institution of suit under Court Fees Act, 1870 [see rule 22, Punjab Motor Accident Claims Tribunal (Haryana Seventh Amendment) Rules, 1979.]
2. LCI, 14th Report, Chapter 22, para. 6.
3. LCI, 14th Report.
3.7. The Taxation Enquiry Commission, after collecting data for the year 1954, reached a conclusion that expenditure on administration of justice is higher than the receipt from court fees in Part A States and the same was the situation in Part B States too. Therefore, while in 1954-55 receipt from court fees M Part A and Part B States was not sufficient to meet the expenditure on administration of justice1 yet in 1958 the Law Commission found that receipt from the court fees was higher when compared to expenditure on administration of justice and therefore it partakes the character of tax and not fee.
1. Report of the Taxation Enquiry Commission, 1953, Vol. 3, p. 107.
3.8. The Consultative Committee attached to the Ministry of Law and Justice, at its meeting in June 1980, set up a Sub-committee, to go into the question of court fees in trial courts. The Sub-Committee in its report recommended abolition of court fees. The recommendation of the Sub-Committee was forwarded to the State Governments for consideration and necessary action in the matter. Some States opposed abolition of court fees. Some State Governments did not oppose abolition as such, but desired that the Government of India should compensate the State Governments at leas to the extent of 50 per cent. of loss of revenue.1
1. Proceedings of the meeting of Consultative Committee held on Nov. 3, 1987.
3.9. The exercise was again undertaken by a Sub-Committee set up by the Conference of Law Ministers which submitted its Report in October 1984. This Sub-Committee did not recommend abolition of court fees but recommended rationalization in the structure of court fee, broadly through reduction in ad valorem fee, exemption of certain categories of litigants and certain categories of cases from payment/levy of court fee and refund of court fee under certain circumstances. Another important recommendation of the Committee is that the court fee on first as well as second appeals should be 50 per cent. of the fee leviable on the original suit, whether the appeal is by the plaintiff or by the defendant in the original suit.
The Committee further recommended that the litigants having an annual income up to Rs. 6,000 may be exempted from payment of court fee. If a State Government is in a position to exempt litigants having income higher than Rs. 6,000, it may do so keeping in vice the overall impact such an exemption may have. As regards proof of income, an affidavit by the plaintiff may be accepted. It also recommended that if a State Government finds it feasible to exempt members of Scheduled Castes and Scheduled Tribes as a class from payment of court fee, it may do so.
According to the recommendation of the Committee, women may be exempted from payment of court fee in matrimonial cases and children may be exempted from payment of court fees on suits for maintenance. Referring to the rate of court fee on writ petitions under Article 226 of the Constitution, it recommended that on a writ petition complaining of violation of fundamental right of the than abacas corpus, the fee leviable should be Rs. 100 and in tax matters Rs. 500 and in miscellaneous matters Rs. 250. It did not recommend any change in the levy of process fees as such.
3.10. Is the levy of court fee a tax on justice? The question as posed does not admit of a specific straight answer. Administration of justice has two broad wings: (1) civil justices; and (2) criminal justice. The obligations of the State in respect of both materially differ.