Report No. 127

5.11. The Law Commission was taken by surprise on receipt of the information that the funds generated by the administration of justice are not sufficient to meet its expenses even though there has been a very large increase in the institution of cases. Consequently, the receipts of the courts must have also increased but still they have not kept pace with the rising expenses of the courts.

5.12. There can be several reasons for this state of affairs. One reason may be that there has been no pro-rata increase in the court fee and fines according to the cost of living index while the administration expenses, including salaries of Judges and staff, dearness allowance and other incidentals, including expenses one additional courts have increased manifold. On the income side, ordinarily there is reluctance to pay the fines and in an increasing area, exemption from court fees is granted. Further, the increase in judicial work is under the heading 'writ petition' where the court fees have remained static.

With the index rising at regular interval with corresponding increases in the shape of salaries of the staff and the Judges, the income under the known two heads gradually dwindles. Some years back, the Minister of Law and Justice, Government of India, expressed an opinion that court fees should be totally abolished. But as 'court fees' is in the State List, the States did not agree with this suggestion. If the court fee is totally abolished, the gap between the income and expenditure on service is likely to further widen.1

1. Report of the Committee of Law Ministers on Rationalisation of Court Fees, October 1984.

5.13. On the other hand, the receipt under the head 'fines' has its own story to tell. With the modern notions on the theory of punishment, more often depending upon the age, maturity and other aspects of the case of the accused, he is given the benefit of the Probation which relives him from the obligation of paying fine. This is one reason why the income under the head 'Fine' it depleting. Moreover, the main penal statute is the Indian Penal Code of 1860 vintage. The value of rupee in 1860 and 1988 if compared, the outcome may be a shocking one. Yet the fines as prescribed in the Penal Code are over 125 years old have remained static as they are.

It is not for a moment suggested that the fines must be levied keeping in view the establishment expenditure of the courts. Fine is a kind of punishment and must be commensurate with the gravity of the offence.1 Having said all that, a fine of Rs. 100 or Rs. 500 or Rs. 1,000 today has really no significance. The punitive purpose is lost when the fines are still imposed at those stagnant rates which now come to very nominal amount. Therefore, there should be a realistic revaluation and the fines to be imposed should be increased in relation to reduction of the value of the rupee over all these years. Once this is done, there should be periodic revaluation to eliminate the effect of inflation. Similar exercise may have to be taken in respect of rates of court fees with certain exceptions.

1. Section 360, The Code of Criminal Procedure, 1973.

5.14. As pointed out earlier, there is a very nominal court fees in respect of writ petitions and the maximum increase in the litigation is under this head. This is one of the additional reasons for receipts of the court not keeping pace with expenses1

1. LCI, 124th Report on The High Court Arrears - A Fresh Look.

5.15. While conferring writ jurisdiction on the High Courts and Supreme Court of India, the expectation was that the disputes by these higher Courts would be solved quickly. However, writs have piled up so much with the result that cases coming under other jurisdictions of the High Court, such as second appeal, first appeal, revision, criminal revisions, criminal appeals and original side matters, are pushed back and have to wait in queue for a long time for their turn to come. The writ jurisdiction is largely availed by tax-payers commercial magnates industrialists, zamindars and princes - in short, the haves of the society. And they enjoy the benefit of this jurisdiction by either paying nominal or practically no court fees at all. And they appropriate entirely the court's time, leaving the havenots - the agricultural tenants, the industrial workers, the urban property tenants, seekers of maintenance and others - without any time for the redressal of their grievance.

5.16. Is it proper to treat litigants in one class only for the purpose of availing courts' services? Why should a tax-payer complaining of levy of tax be able to invoke court's jurisdiction by paying nominal court fee? Why should an industrial magnate utilise court's time for redressal of his supposed injustice without adequately paying for the court's services? Why should an industrial magnate and an industrial worker, a tenant and a landlord, a zamindar and his tiller, a maharaja and his subject, a commercial magnate and the user of his product be put on par in the matter of availing the service of courts? They do not form a class.

They may be litigants. But amongst litigants, they are haves and if they want to utilise the service of the court, they must be made to pay for the entire service. The question which stares into the face is whether the court's service (what is meant is civil justice system) should be provided to everyone at the same rate irrespective of the nature of the case and the time spent by the court.

5.17. In Escorts case, 1 Justice Chinnappa Reddy decried the fact that corporate battles were being fought in the courts. He said:

"Problems of high finance and broad fiscal policy which truly are not and cannot be the province of the court for the very simple reason that we lack the necessary expertise and, which, in any case, are none of our business are sought to be transformed into questions involving broad legal principles in order to make them, the concern of the courts. Similarly what may be called the 'political' processes of 'corporate democracy' are sought to be subjected to investigation by us by invoking the principle of the Rule of Law, with emphasis on the rule against arbitrary State action.

An expose of the facts of the present case will reveal how much legal ingenuity may achieve by way of persuading courts, ingenuously, to treat the variegated problems of the world of finance, as litigable public right questions. Courts of Justice are well-tuned to distress signals against arbitrary action. So corporate giants do not hesitate to rush to us with cries for justice. The court room becomes their battle ground and corporate battles are fought under the attractive banners of justice, fair play and the public interest.

We do not deny the right of corporate giants to seek our aid as well as any Lilliputian farm labourer or pavement dweller though we certainly would prefer to devote more of our time and attention to the latter. We recognise that out of the dust of the battles of giants occasionally emerge some new principles, worth the while. That is how the law has been progressing until recently. But not so now. Public interest litigation and public assisted litigation are today taking over many unexplored fields and the dumb are finding their voice."2

He was constrained to observe that such cases block the "more worthy cases of lesser men who have been long waiting in the queue and the queue has consequently lengthened"

1. LIC v. Escort Ltd., (1986) 1 SCC 264.,

2. Id., p. 274.

5.18. In this case, oral arguments were heard in the Supreme Court for 28 working days by a Bench of 5 Judges.1 In effect, this implies that this case occupied over 2 months of the Court's working time which itself is very short inasmuch as the Supreme Court Judges work 5 days a week and only 182 days a year. Ordinarily only 3 days are available for final hearing matter because the rest of the days are utilised for tackling admission and miscellaneous matters. Having regard to the time available for final hearing, 5 Judges heard this case for over 2 months, at the end of which the Court awarded cost to the Union of India, the Reserve Bank of India and the Life Insurance Corporation of India and, departing from the old rule, directed not the company in the name of which the litigation was brought but the persons in charge of the company were made liable to pay a portion of the costs. Accordingly, the Court directed as under:

"3/5th of the taxed costs in each case will be payable by Hari Prasad Nanda, 1/5th by Swaraj Paul and 1/5th by the Punjab-National Bank".2

To them this was a flea bite because Swaraj Paul was fighting for salvaging his investment of roughly Rs. 6 crores and Nanda was trying to retain control of the company. And both of them used the Court for an unduly long time. It is, therefore, time now to realise that fairness demands that such people who use the Court for vindicating some of their supposed rights relevant only to both of them alone and not to society should pay fully for the entire service of the Court. They cannot just use the Court by paying a nominal court fees in the name of vindicating their supposed fundamental rights. And it is these people who use the Court the maximum.

To illustrate this point, one may lock at the length of time spent by the Supreme Court of India in hearing cases hereinbefore referred to3 Bank Nationalisation case was heard for 37 days, that is, more than 3 months, before a Bench of 11 Judges, which was then almost the whole court as the sanctioned Judge strength including Chief Justice was 12. Fundamental Rights case (Kesavananda Bharati) was heard for 68 working days, that is, almost half the year or one term of the Supreme Court, by a Bench of 13 Judges. The case involving challenge to National Security Act was heard by a Bench of 5 Judges from 9th December, 1980 to 30th April, 1981.

And Judges case (SP. Gupta) was heard by a Bench of 7 Judges from 4th August, 1981 to November 16, 1981. Given the limited number of working days in the Court, it is very clear that a major chunk of the Court's time was taken up by cases herein mentioned. And amongst those litigants who were prominent? And what claims they were trying to vindicate through the use of the Court? A bank magnate, a zamindar, a mathadhipati and a maharaja, all of whom used the Court seeking to perpetuate status quo and protecting private property to the detriment of the common men of India. It is in this context that a perceptive viewer of the Indian court scene has observed that haves come cut better in court proceedings.4

And in all this litigation, the complaint was violation of supposed fundamental right to property for which a writ petition was filed on nominal court fees. It is a travesty of truth to put on par a litigant coming from the economically depressed class complaining of violation of fundamental rights in the matter of use of the service of the court with those who complain of an erroneous tax demand, who complain of deprivation of property without compensation and who complain of deprivation of privileges and concessions, in the matter of payment for services of the court. They do not form a single class. To group them together is to bring unequal on a footing of equality which is violative of the established doctrine of classification.

In the matter of payment for services of the court, those who can afford and have cushion and who complain of supposed violation of some fundamental right and seek redressal of grievance must pay for the entire court service. By entire court service it is meant that not only what expenses the State incurs on a Judge per day but also on court establishment which of necessity must include expenses on staff even depreciation of building and such other inputs. In every court, it would be easy to work out what the State spends on a Judge for his one full day working in court which must take account of his pay, perquisites, establishment costs of court, court furniture, Library expenses on court staff and every little thing on which State spends for maintaining that court.

The fees to be levied must be the multiplier of the number of Judges by mandyas spent in hearing the case plus a 10% surcharge for giving total relief to the havenots whose access to court must be without incurring any liability of paying court fees. This can generate sources to an extent where the concept of court fee is fully vindicated because the fee must be commensurate with the service rendered. Principle of quid pro-quo which must inform fee will thus be fully vindicated.

1. Ibid.

2. LIC v. Escorts Ltd., (1986) 1 SCC 349.

3. R.C. Cooper v. Union of India, AIR 1970 SC 564; Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225.

4. Mark Gallanter Why the 'Haves' Come Out Ahead?: Speculation on the Limits of Legal Change, Law and Society, 95, (1974).

5.19. It would be appropriate to recall the view already expressed in this context on an earlier occasion. Law Commission recommended restructuring of courts at grass-root level. The court was to be a participatory model, bearing the name Gram Nyayalaya. Its jurisdiction covered most of the disputes arising in rural areas. The question of adequate fees on petitions coming before such nyayalayas engaged the attention of the Law Commission. While recommending a higher rate of court fees for the corporate and elite sector who aggrandize the court time on non-issues, the Commission felt that in respect of proceedings before the Gram Nyayalaya, no court fee should be levies as the court service would be catering to the needs of the rural poor.1 In reaching this conclusion, the Commission has observed as under:-

"In fact, the elite and the corporate sector, who use courts for a shadow boxing in respect of issues which are unreal, heavy court fees should be levies and it must be so high as to make them pay the entire cost of the court establishment. There is nothing new or startling in this suggestion. Beginning has already been made in California (U.S.A.) in this behalf".2

1. LCI, 114th Report on Gram Nyayalaya.

2. Id., para. 6.15.

5.20. The higher judiciary is also increasingly being used against the Government with decisive effect in the form of interim relief. Litigation is initiated only for snatching interim relief. The effect of interim relief is to freeze an issue until it is finally disposed of and that may happen years later. This is especially done in tax cases. A large number of writs are filed or references are got made questioning the correctness of the orders of tax authorities. If the matter is entertained, a stay of further proceedings is allowed as a matter of course and the hearing is held up for decades.1 There have been several cases where collection of public revenue has been seriously jeopardised and budgets of Government and local authorities affirmatively prejudiced to the point of precariousness consequent upon interim orders made by the courts.2

The Supreme Court, while deprecating this practice,3 has not helped in retrieving the situation. There are numerous cases in which at the final hearing years after the stay is granted, the contention has been found to be either frivolous or utterly unsustainable and, in the process, for years the tax recovery is held up without any further liability to make good the loss.4 By the interim stay, the litigant not only avoid is paying court fees by invoking the writ jurisdiction conferred on the courts but wins an undeserved respite from revenue laws.5 To avoid such misuse of court service in all such cases also, a method should be devisal to collect higher rate of court fees which must including of necessity establishment costs of the court.

The Law Commission is happy to recall here that no originality is claimed for their view inasmuch as it has the advantage of adopting the view expressed by the Supreme Court, namely, that the levy of court fees should have a broad relationship with the cost of administration of justice, that is, there should be a relationship between the services rendered and the court fees levied.6 This was decided in a case where the court fee was found to be excessive but this very position would no doubt hold cost conversely also that is, when the court fee levied is not proportionate to the services obtained.

1. LCI, 115th Report on Tax Courts.

2. Assistant Collector of Excise, Chander Nagar, West Bengal v. Dunlop India Ltd., AIR 1985 SC 330 (333).

3. Siliguri Municipality v. Amalendu Das, (1984) 2 SCC 436; Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433; Union of India v. Oswal Woollen Mills Ltd., (1984) 2 SCC 646; Amarnath v. State of Punjab, AIR 1985 SC 218.

4. Lohia Machines Ltd. v. Union of India, (1985) 2 SCC 197.

5. ICI, 115th Report on Tax Courts.

6. Government of Madras v. Zenith Lamp and Electrical Ltd., AIR 1973 SC 1924. Various High Courts have also expressed the same view (See Lady Tanumati v. Special Land Acquisition Officer, Ahmedabad, 14 CLR 537). Recently Bombay High Court has held that prescription of an upper limit of court fees for civil cases but none for probate and letters of administration cases, where the service rendered is minimal and there is far less strain upon the resources of the State in terms of the time spent or persons engaged in the performance of the task, is violative of Article 14 of the Constitution. The Court fixed the same upper limit for probate cases till the rules were revised accordingly; Iyoti v. State, AIR 1988 Born 123.

5.21. Some lesson can be learnt or advantage drawn from a parallel. The parties to a dispute instead of approaching a court may chance to refer the dispute to an arbitrator chosen by them. Arbitrator acquires jurisdiction by consent of the parties. Arbitrator is thus a substitute for a court and would discharge functions of a court namely resolution of disputes. Costs of arbitrations is borne by the parties to the dispute or a party whom the arbitrator holds responsible for costs.