Report No. 127
Tapping Additional Resources
5.1. Under the genus 'Administration of Justice', there are two broad divisions or species. Courts for rendering civil justice is one broad division and the other is criminal justice system. Undoubtedly, administration of tax laws, labour laws, land laws and administrative law are so styled that, broadly speaking, they form part of civil justice system. The distinguishing feature between the civil justice system and criminal justice system lies in the fact that civil justice system provides fora for resolution of disputes between individuals, between individuals and the State, and even between the State and the State where a party complains of wrong being done to it and seeks redress.
Administration of criminal justice system partakes the character of a regulatory mechanism of the society whereby the State enforces discipline in the society by providing fora for investigation of crime and punishment. It is the duty of the State to set up courts for administration of criminal justice. A society governed by rule of law envisages numerous laws of regulatory character for an orderly development of society. A breach, infraction or violation of law is made punishable. To set up courts for trial of offenders who, if found guilty, may be punished is an obligatory function of the State. The State must pay the entire costs of administration of criminal justice.
5.2. In the matter of civil justice, the State provides fora where citizens aggrieved of having suffered wrong at the hands of other citizens or State may seek redressal either in the form of specific performance or compensation or damages. Parties to a dispute can choose its own forum by appointing an arbitrator and conferring on the arbitrator the power to resolve the dispute and to make the decision binding. Parties who can get their disputes resolved by a forum of their choice need not go to the court. But parties are not usually so well behaved as to seek out the services of an arbitrator being the forum of their own choice. The State, therefore, sets up courts conferring on them the power to render justice, being the power of the State. Parties to a dispute can invoke the jurisdiction of such courts.
In this sense, the courts render service. Viewed from this angle, the levy of court fee has been styled as, 'fee' and not as 'tax' because the dictum is fee must be commensurate with the service rendered. Therefore, those who avail of the services of fora must be ready to pay fee for the services obtained. If parties go to an arbitrator, being a forum of their choice, it is implicit therein that they pay for the services of the arbitrator. A Judge presiding over a court set up by the State is none-the-less an adjudicator and renders service by adjudication of the dispute. Therefore, the State providing for such service has been enabled to recover court fees. That is the genesis of court fees.
5.3. Therefore, the levy of court fees when questioned, 'it must be shown that the levy has reasonable correlation with the services rendered by the Government. In other words, the levy must be proved to be a quid pro quo for the services rendered'.1 The question again figured before the Supreme Court and the Constitution Bench observed that the State has no power to 'tax litigation and thereby to augment revenues and make litigants pay, say, for road-building or education or other beneficial schemes that the State may have'.2 It is thus unquestionably established that as far as administration of civil justice is concerned, the State renders service and for the services so rendered, collects fees and there must be quid pro quo between the quantum of service rendered and the fee collected.
To some extent, this view was departed from when, after reviewing the earlier decisions, the Supreme Court held that 'there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of tax¬payers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hallmark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere causal relation may be enough.
Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in public interest. Nor is the court to assume the role of a cost accountant'. It is neither necessary nor expeditious to weigh too meticulously the cost of services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad co-relationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee: nor is it necessarily absent in a tax.3
1. The Indian Mica and Mercantile Industries Ltd. v. State of Bihar, AIR 1971 SC 1182.
2. Government of Madras v. Zenith Lamp & Electrical Ltd., AIR 1973 SC 724.
3. Municipal Corporation of Delhi v. Mohd. Yasin, (1983) 3 SCC 229 (235).
5.4. Even though the demarcating line, between fee and tax is getting blurred and is likely to evaporate in near future, keeping in view the traditional approach to the problem of fee and tax, it may be stated with confidence that court fee is levied by the State for the service rendered by the courts set up by the State to the litigants in search of fora for resolution of disputes whose decisions have a binding character and are enforceable by execution.
5.5. A debate was going on whether in a country like India, levy of court fees creates an impediment in access to justice. The Conference of Law Ministers of States and Union territories in June 1982 set up a Committee on the question of rationalisation of court fees. This exercise was undertaken pursuant to a recommendation of the Consultative Committee of the Members of Parliament attached to the Ministry of Law, Justice and Company Affairs for abolition of court fee. The view expressed was that there was general agreement at the Conference that though the objective, namely, abolition of court fee was commendable in principle, keeping in view the financial constraints, the approach should be to go in for rationalisation of court fee rather than its abolition. The consensus emerged on two points:-
(i) the really needy person should be helped and exempted from paying court fee; and
(ii) particular types of cases should be identified for which there should be either no court fee or a very nominal court fee.
5.6. It is in this background that the Law Commission, while making extensive recommendations in this report read with its report on Manpower Planning in Judiciary,1 will have to indicate available resources for larger lay out on administration of justice.
1. LCI, 120th Report on Manpower Planning in Judiciary: A Blueprint.
5.7. At the outset it must be stated without fear of contradiction that the administration of justice in a constitutional democracy operating under written Constitution and founded on rule of law in a developing country is a social overhead and must be provided for irrespective of any resources the service itself may generate. However, in a country like India cursed with extensive poverty, allocation of resources on priority basis may itself compel necessity for additional resources where larger lay out is recommended on administration of justice which may not find high placement in the national priorities.
Accordingly, even though administration of justice is a service which the State is bound to render to its citizens and that court fees is looked upon with disfavour, one should not lose sight of a situation that stares into face that ours is a poor developing country with scarce resources and its equitable distribution must answer some priorities.
To assert that it is the duty of the State to provide for resources for administration of justice even at the cost of other competing claims on account of our attaching very high value to justice and it being a necessary component of development, though laudatory and may be an ideal to be pursued but when one comes down to earth it sounds as a mere rhetoric because there are not just enough funds and the State, even if willing, may not be able to provide for all the funds essential for efficient and quick administration of justice. Therefore, this report seeks to tap additional resources within the system itself. To do this, four stops will have to be taken:-
(a) A review of the existing resource position and whether anything necessary to be tapped has escaped;
(b) A policy decision whether all users of the system should be charged at a uniform rate;
(c) Whether any one is taking an unfair advantage of the system and, though in a position to pay more, is not contributing anything; and
(d) Any other source.
5.8. Before an exhaustive inquiry is made with regard to all the four steps, it is necessary to point out convincingly that the State spends next to nothing on administration of justice.
5.9. Before we assume the responsibility for indicating areas where additional resources may be generated from the service itself, namely, administration of justice, it is imperative to point out that the State today spends precious little or, to say the least, practically nothing on the administration of justice. While more often a very tall claim is made that administration of justice has become a white elephant and that in return for service rendered by it, the cost of maintaining service is exceedingly high and the cost benefit ratio works in reverse gear, there is nothing more misleading than this statement, and this would become self-evident from the information discussed here.
While recommending for upward revision of the Judge population ratio in the Report on Manpower Planning in Judiciary,1 the Law Commission utilised the information collected by the Ministry of Law and Justice on the question of court fees, rationalisation and relationships.2 That statement is being reproduced here with a view to indicate percentage-wise co-relation between the expenditure on Judiciary to the total State tax receipts for the years 1981-82. Barring Manipur and Tripura, most of the States spend between 0.15% (A.P.) to 3.53% (H.P.) and the rest of the States are hovering around between 1% to 2.25%. Convincingly, this will show that administration of justice has received negligible funds for its upkeep as well as its growth.3
In this report as the Law Commission is concerned with more specific enquiry about expenditure on proposed expansion of Judiciary, the information supplied by the Planning Commission when taken into consideration reveals almost the same state of affairs.4 In our effort to be more precise and accurate, the Law Commission made its own enquiry and collected information from the States directly. Whatever has been made available has been tabulated in Appendix 5(iii) and one can confidently say that the situation has not improved at all. Therefore, the emerging scenario is that small States like Manipur and Tripura spend much more than the bigger States and more especially like the Maharashtra State where the receipts are very high and the expenses marginally the lowest.
One can confidently say that the Judiciary has received a niggardly treatment at the hands of the States. Let it be recalled that the finding of the First Law Commission was that the receipt under the head 'court fee' was far in excess of the cost needed for administration of civil as well as criminal justice. The finding was that the surplus was ploughed in the general revenues of the State.5 On gleaning the information collected by the Law Commission, it appears that the receipt from the administration of justice, made up of court fees and fines, only partially covers the expenses on the courts. There has been a progressive decrease in the percentage of expenses covered by the receipts of the courts.
For example, the figures supplied by the Bombay High Court show that in the year 1978, the receipts of the Court covered about 94% of the expenses but in the year 1985, they covered only about 48% of the expenses. Similarly, in Andhra Pradesh, the receipts covered about 78% of the expenses but in 1986-87, they covered only 54% of the expenses. In Punjab, the figure has come down from 35% to 20%.6 At this rate, of progressive decline it is apprehended that after a few years, the situation will so materially alter that the court fees as it present structured, coupled with the exemptions granted, will cover only a very small percentage of the expenses.
1. LCI, 120th Report on Manpower Planning in Judiciary: A Blueprint.
2. Id., Appendix I(3).
3. See Appendix V(i).
4. See Appendix V(ii).
5. LCI, 14th Report on Reform of Judicial Administration.
6. See Appendix II.
5.10. Since the 14th Report of the Law Commission and for years thereafter, it was generally believed that the court fees and fines recovered are enough to meet the cost of administration of justice. To further clarify the position, the Law Commission requested the Planning Commission1 to supply the same information which the Planning Commission readily agreed. However, that made the task of the Law Commission all the more difficult because there was a wide gap between the information supplied by some of the States and the information supplied by the Planning Commission. The figures supplied by the Planning Commission show a much larger percentage of expenses which are made from the income from the courts.
The explanation for this lies in the fact that perhaps the States project lower figures to Planning Commission in order to wrangle more funds. Be that as it may, from the information sent by the States and the Planning Commission, the Law Commission may not be in a position to come to any definitive conclusion. The purpose for which this information was called for cannot be served by the information supplied by some of the States, though the Planning Commission supplied full information from its records. One inference is, however, inescapable from both the sources of information that it is not possible to cover the expenses for administration of justice exclusively from the income generated by the administration of justice generally made up of court fees and fines.
1. See Appendix III.