w w w . L a w y e r S e r v i c e s . i n



Sebgal Industrial Works v/s Tru-Temp Industries

    Regular First Appeal No. 427 of 1985

    Decided On, 20 February 1986

    At, High Court of Delhi

    By, THE HONOURABLE CHIEF JUSTICE MR. D.K. KAPUR & THE HONOURABLE MR. JUSTICE G.R. LUTHRA

    For the Appearing Parties: H.L. Sehgal, Mina Sud, R.S. Kela, Advocates.



Judgment Text

D. K. KAPUR C. J.


(1) THIS appeal has had an interesting history. It was filed as a Civil Revision on 7th July, 1973. It came before a learned Single Judge for admission. The learned Single Judge noted that as the plaint had been rejected, a Revision was not maintainable, so the petitioner may move an application.


(2) THE petitioner then filed C. M. No. 1428/73, praying that the Revision be treated as an F. A. O. This application was allowed by the learned Single Judge, who directed the office to take the necessary steps. Civil Revision No. 464/73 was then converted into F. A. O. No. 1/74, which was admitted by a Division Bench on 15th January, 1974, and it was noted that the maintainability of the appeal would be considered at the hearing.


(3) F. A. O. 1/74 was listed for hearing before another learned Single Judge, who directed the same to be listed on 19th August, 1985. Then CM No. 2492/85 was moved by the appellant-applicant to convert the F. AO. into an R. F A. An order passed by the learned Single Judge on 26th August, 1985. shows that the contention of the counsel for the respondent was that the appeal was competent only as an R. F. A. , and full court-fees has to be affixed on the appeal.


(4) IN any event, it was directed that the appeal should be listed before a Division Bench. The Division Bench then directed that the appeal should be listed as a Regular First Appeal, but as the order was an extremely short one, no paper-book need be prepared. This is how the appeal came to be listed before us.


(5) NOW, it is necessary to reproduce the order which is under appeal. It is as follows: - "present Sh. H. L. Sehgal in person. Deficiency in court fee has


not been made up. Sh. H. L. Sehgal states that he wishes to move for transfer of this suit but that is no ground for granting him further time. Since court fee has not been paid, I reject the plaint under Order 7 Rule II, Civil Procedure Code. Announced sd/- P. L. Singia, 16-2-1973. Addl. District Judge, Delhi". Thus, the plaint was rejected on failure to make up the deficiency in the court-fees.


(6) HOWEVER, it is necessary to note some other facts in connection with the Suit before the Additional District Judge. The Suit was filed along with an application under Section 151 of the Code of Civil Procedure praying for time in paying the deficit court-fees. The plaint was written on a stamp paper bearing a stamp of Rs. 25. 00. It was stated in paragraph No. 13 of the plaint that court-fee amount of Rs. 2,246. 40 would be made up. The claim in the Suit was for Rs. 28,000. 00. Thus, the court-fee was short by Rs. 2,221. 40, but this amount was not deposited. The application under Section 151 of the Code stated that the limitation for the Suit for Rs. 28,000. 00 was expiring tomorrow, but the applicant had already filed some suits relating to previous periods which were still undecided on which the applicant had spent over Rs. 15. 000. 00 It was stated that one appeal was already pending for 109 months, the applicant was unable to pay the court-fees immediately in the present suit.


(7) IT was stated as follows:-


"since this litigation has made me pauper, the limitation expires tomorrow and I am unable to pay Court Fee at present. Therefore it is most respectfully prayed that your honour be very kindly pleased to allow me to file the deficit Court Fee of Rs. 2221 40 to; 30-6-1973, under such hard circumstances, and because this suit will otherwise also remain stayed till the decision of my Appeal referred at No. (i) under Section 10 CPC. "

This application was moved on 8th December, 1972, and simply required that a period of about six months be granted to the applicant to pay the necessary court-fee.


(8) THE Court was not willing to grant this long period and merely passed an order on 12th December, 1972. allowing time to make up the deficiency by 15th January, 1973. This deficiency was not made up. On 15th January, 1973, further time was prayed for and the Court stated that time was extended up to 16th February, 1973 and no further time would be granted. On 16th February, 1973 the order was passed rejecting the plaint on the ground that the deficiency had not been made up.


(9) THE grievance of the appellant is only this. He had requested for six months time, but was granted only two months time in which he could not make up the deficiency.


(10) AT the hearing of this appeal several questions regarding court fees have been raised. Firstly, it is contended that the present appeal has to be rejected because the order under appeal is under-stamped. To understand this question it is necessary to note that the court-fee stamp affixed on the order under appeal is Rs. 1. 25, but no office objection was raised regarding the correctness of the stamp. This case has been before several different Single Judges, but no one had objected to the amount of the court * fee affixed on the order in question. However, there is no doubt that it is under stamped. The question of the court fee to be affixed on a copy of a judgment of or order is dealt with by Articles 6 and 7 of Schedule I of the Court Fees Act, 1870 as amended in its application to Delhi. The amended provision is that on copies of judgments or orders not having the force of a ' decree, the court fee required is Rsl. 25, However, Article 7 requires that a copy of an order having the force of a decree is to be stamped, when it is an order by any civil court other than the High Court, with a court-fee of Two rupees and sixty five P. But, if it is a decree or order is of a High Court, then the stamp is Five rupees and twenty five P. This being an order rejecting a plaint passed by an Additional District Judge, the correct fees would be Rs. 1. 25 if it does not have the force of a decree and Rs. 2. 65 if it does have the force of a decree. The provisions of Section 2 (2) of the Code of Civil Procedure can now be referred. There a decree is defined and it states at present as follows:


"it shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include. . . . . . . . . . Therefore, by definition an order rejecting a plaint is deemed to be a decree and therefore, the order now under challenge has the force of a, decree and is required to be stamped with court fee amounting to Rs. 2. 65.


(11) THE question we have now to consider is whether the deficiency should be allowed to be made up. On a consideration of this question, we have in fact allowed this deficiency to be made up but the reasons have now to be given.


(12) LEARNED counsel for the respondent contends that the revision was filed in 1973 and it is now 1985 so we will be extending the limitation period by as much as 12 years if we allow the deficiency to be made up and this is not in the interest of justice. However, we find that the interest of justice will be better served by allowing the deficiency to be made up. This deficiency in the court fee was not pointed out by any one since the date the case was filed. The appellant thought that this order did not have the force of a decree, so he filed a revision against the same. He then thought that it should be treated as an appeal against an order and the same was converted into an F. A. O. i. e First Appeal from Order. On a further objection, the appeal was allowed to be treated as a Regular First Appeal, but this order was passed in October, 1985.


(13) THE interests of justice would have been served if an objection had been raised at the earliest in which case the Court could have granted time or refused time to the appellant to make up the deficiency. At this stage, not to make up the deficiency has several fatal effects qua the claim in the suit. An order rejecting a plaint does not bar the filing of a fresh plaint. It is provided in Order 7, Rule 13 that whenever a plaint is rejected, the plaintiff can institute another suit by filing a freih plaint. If the order extending the time for making up the deficiency had been refused in 1973 the plaintiff could easily have filed a fresh suit, which would mean that the limitation period regarding the suit would be maintained. If now, we refuse to allow the deficiency to be made up, the effect would be that the initial claim would be hopelessly barred by time because of the 12 years or so when this case has been pending in this court. We do not think the delay in hearing this appeal is because of the fault of the appellant, but the refusal to make up the deficiency would completely bar his remedy which is too great a penalty to be imposed on a party who is appealing in person. Furthermore, undoubtedly the appellant was labouring under some wrong belief as to the nature of the order. If he had studied Section 2 (2) of the Code, he would have discovered that the order in fact has the effect of a decree. But this is a technicality which only a careful study of the Code would have revealed to the appellant. It is apparently a genuine and bonafide error. This bona fide nature of the error has become even more apparent from the fact that the Registry and various Benches before which the revision, the F. A. O. or the R. F. A. , have been listed for hearing have not noticed the short-coming in the court-fee. In these circumstances, we think the time should be extended even if it is as much as 12 years or more. This power to extend the time is granted to us by Section 149 of the Code. So, we have extended the time for making up of the deficiency of the Court fee stamp on the order under appeal.


(14) THIS brings us to the most formidable question which arises in this case, i. e. whether the appeal requires any further court fees stamp.


(15) IN this connection, it may be noted that the court-fee actually affixed is Rs. 5,25, and we have to ascertain whether this court-fee is short of the requisite amount.


(16) ACCORDING to learned counsel for the respondent, it is hopelessly short. The appeal is to be filed against the order rejecting the plaint as if it is a decree. It is contended that the proper court-fee in this case in the full court-fee required in the suit, i. e. Rs 2,226. 40. Reliance for this proposition is placed on the judgment of the Madhya Pradesh High Court, MG. Tipnis. The Secretary, Ministry of Commerce, Union of India, New Delhi and others, A IR. 1970 Madbya Pradesh 5 In that case it was held, following some other judgment that ad valorem, court-fee had to be paid and in that particular case, the full court fees had to be affixed. Reference was made to the Full Bench judgment of the Nagpur High Court Apparao Sheshrao Deshmukh v Mt Bhagubai w/o Yeshwantrao Deshmukh and others A IR. 1949, Nagpur 1.


(17) IN the Full Bench judgment of the Nagpur High Court, the court held that the court fees payable was advalorem on the amount in dispute in the appeal. It was held that the dispure was about the extra court-fees, so the stamp was payable on the extra amount of the court fees. The same view was taken in Navneethalal P. Lalan son of Popat Lal Mooljl v. Manilal Damji son of Lakkabai (deceased) purshothama Gela Building New Road Cochin and others, A I. R. 1968 Kerala 58 following the same Nagpur Full Bench


(18) IN an earlier Madras case Kalliappa Goundan v. Kandaswami Goundan, A. IR. 1938 Madras 498 the view taken was that in a case of deficit court fees, the court fee to be affixed was on the amount which was being disputed by the appellant. So, ad valorem court fee was payable on the disputed amount of court fee and not on the main claim in the suit.


(19) A full bench of the Andhra Pradesh High Court, which will be referred to later, has held that no court fee is payable in an appeal of this type. The question may well be asked why there is a difference in these judgments. The answer seems to depend on the circumstances in which the plaint is rejected. Here, Order 7, Rule 11 of the Code has to be referred to which reads :-


"order 7, Rule 11. Rejection of plaint. The plaint shall be rejected in the following cases : (a) where it does not disclose a cause of action : (b) where the relief claimed is under-valued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so : (c) where the relief claimed is properly valued, but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp paper within a time to be fixed by the Court, fails to do so : (d) where the suit appears from the statement in the plaint to be barred by any law : Provided that the time fixed by the Court for correction of the valuation or supplying of the requisite stamp-papers shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp-papers, as the case may be, within the time fixed by the Court and that the refusal to extend such time would cause grave injustice to the plaintiff. "

It will be seen that there are several grounds o:i which a plaint can be rejected. If we take up (a), it shows that the plaint can be rejected if it does not show a cause of action. If this happens, the valuation of the appeal may depend on the nature of the claim. Similarly, if we take up (d), which is that the suit is barred by some law, then again the appeal may involve the same question as the question in the suit and may have to hear ad-valorem court-fee However, in cases (b) and (c). the dispute is regarding the amount. of court-fee. So, in cases covered by (b) and (c), the court-fee required on the appeal against the order rejecting the plaint will depend on the nature of the dispute regarding value and/or court-fee. If the dispute is regarding a particular amount of court-fee, then the stamp will be calculated ad-valorem on the amount of the court-fee indilpute. In cases covered by (b) and (c) the stamp will not have to be calculated on the claim in the suit.


(20) IN the present case, the claim in suit was Rs. 28,000. 00 on which a court-fee stamp of Rs. 2,226. 40 had to be affixed. The actual court-fee stamp affixed was only Rs. 25. 00 which was admittedly short. The present appeal does not involve any dispute about the sum of Rs. 28,000. 00. As it only turns on the extension of time for fixing the court-fee. This sum of Rs. 28,000. 00 is not in dispute in the present appeal. Similarly, the deficiency in the court-fee amounting to Rs. 2,221. 40 is not in dispute in this appeal because this is the admitted amount which is actually due on the plaint. The dispute is about the extension of time for filing the court-fee stamp. This dispute can certainly not require the entire amount of court-fee payable on the suit as a pre-requisite for hearing the appeal which is restricted only to the question of extention of time.


(21) INFACT, the real point of court-fee in this case depends on the application of Article I, Schedule I of the Court Fees Act, 1870. Admittedly, ad valorem court-fee is payable on the value of the subjet-matter in dispute. If we know the value, ad valorem court-fee is payable. If not, the matter has to be dealt with differently. If the subject-matter of the appeal was the claim in suit, then ad valorem court-fee amounting to Rs. 2,246. 40 would be payable. If the amount being disputed in the appeal or the subject-matter of the appeal is the deficiency in court-fee, then the court-fee would be calculated as payable on Rs. 2,221. 40, which is the under-stamp amount on the initial plaint.


(22) WE are of the view that actually this amount is not in dispute in this appeal. What is in dispute is not the quantum of the stamp, but the time to be granted for paying the same. The plaintiff-appellant never claimed that he should have to pay less court-fee or that he should be treated as a pauper. He only requested that a period of about six months should be given to him to pay the court-fee and he gave some reason for the same.


(23) THE trial Court, i. e. the Additional District Judge could have said that the plaintiff-appellant has no grounds at all for seeking extension of time. He could have said that he granted no time and given some reasons. The Court never said any such thing. The Court granted a short period and then stated that the deficiency had not been made up.


(24) IT need hardly be said that the purpose of court-fee is to ensure that the State recoups part of the expenses of litigation and partly bars friolous litigation by ensuring that the person in litigation had to pay for the same. The Court Fees Act was not intended to be an impediment to the filing of genuine suits A simple prayer asking for time to pay court-fee on certain grounds should have been realistically dealt with by the Additional District Judge. After all, it did not make much difference to the Court if this time was granted under Section 149 of the Code. In a genuine case the Court Fees Act should not have been used to bar the institution of the suit and the realisation of the amount. Some sympathy for a person claiming to be impoverished and unable to pay the court-fee should have been shown by the Court. It is not true that every person is in a financial position to pay the court-fee necessary for instituting a suit. If this had been realised the Court could easily have granted the period without any difficulty.



(25) THE question we have to deal with now is whether this period can be granted to the appellant, i. e. , the six months period claimed by him and whether the Court was wrong in granting only two months time and thus preventing the appellant from filing the suit and getting proper relief.


(26) THE subject-matter of the present appeal is, therefore, restricted to whether the time for paying the court-fee should have been extended for a period of six months or not. What is the value of this subject-matter? Obviously, this value cannot be determined. It is not the claim in the suit, it is not the amount of the court-fee, and there is no reasonable method of calculating the amount. In such a case, it is not possible to determine the valuation of the appeal.


(27) ONE of the judgements we have examined is a Full Bench of the Andhra Pradesh High Court, Sri Maharaj Kumar Subarna Rekha Mani Devi and others v. Sri Ramakrishna Deo and others, A. I. R 1968 Andhra Pradesh 239. In that case, it was held that an order rejecting plaint under Order 7, Rule II required no court-fee, but if the suit was rejected in circumstances in which the value of the appeal could be determined, then ad valorem court-fee was payable.


(28) WE find on an examination of this case that the Court has given very strong reasons under Order, 7 Rule ll, (a) and (d) to hold that for one case no court-fee was payable and in the other ad valorem Court-fee was payable. But, we have also to examine the facts of our case which is not a case under Order 7, Rule II (a) or (d) on the merits.


(29) THE present case is one under Order 7, Rule 11 (c), but there is no dispute regarding the deficiency, but a dispute regarding the time to be granted to make up the deficiency. The value of this cannot be fixed under Article I, Schedule 1. If this Article does not apply, then which Article applies. There are no provisions in the 1st Schedule of the Court Fees Act dealing with this question.


(30) TURNING now to the Second Schedule of the Court Fees Act, 1870, it is to be seen that a fixed fee is payable in the case of and memorandum of appeal when the appeal is not from a decree or order having the force of a decree. This is covered by Article 11 and the fee is Rs. 5. 25. The present appeal would be properly stamped if it was directed against an order not having the force of a decree. But, this appeal is against an order having the force of a decree. So. this provision does not apply. The next possible Article which applies is Anicle 17, which is the plaint or memorandum of appeal in certain types of suits. Clause (vi) deals with the following:


" (vi). every other suit where it is not possible to estimate at a money value the subject-matter in dispute, and which is not otherwise not provided for by this Act. "

The provision in this case requires a stamp of Rs. 19. 50. However, the opening words of this Article state, Plaint or memorandum of appeal in each of the following suits.


(31) SO, this Article applies if the suit is one in which it is not possible to fix the value. Here, the suit value is known, but the value of the appeal is not known. So, there is no provision of the Court Fees Act which can apply to the present appeal and we are back to the position found in the Andhra Pradesh case


(32) IT has now to be examined whether there are any provisions in the Court Fees Act, 1870, contained in the main sections dealing with a situation like the present. But, an examination of the same reveals nothing.


(33) AS no particular provision is applicable, it would appear that the appeal has to be treated as one covered by Article I, Schedule II, which deals with applications or petitions. This Article has various entries dealing with various types of applications or petitions. The final entry is


"when presented to the High Court :- (i) Under the Companies Act, 1956, Two hundred and sixty for winding up a company rupees. (ii) Under the same Act for taking Thirteen rupees some other judicial action (iii) In all other cases Two rupees and sixty five Paise. As no other Article seems to cover, the appropriate Article seems that the appeal has to be stamped with the same fee as an ordinary application or petition, i. e. , the stamp has to be Rs. 2. 65. The actual stamp is Rs. 5. 25 which is adequate. So, the appeal cannot be treated as being under-stamped even though it is classified as a Regular First Appeal.


(34) ANOTHER view point can now be examined. As noted earlier, orders passed by a Court rejecting a plaint or an order passed under Section 144 of the Code are deemed to be decrees. Formerly before the amendment of 1976, even orders passed under Section 47 of the Code were deemed to be decrees by reason of the definition of decree in Section 2 (2) of the Code of Civil Procedure. It would thus be of some interest to see what is the court-fees required on an appeal against an order passed under Section 47 of the Code before the amendment. It is interesting to find that it has been found practically impossible to cover this type of an appeal by any provision contained in the Schedules to the Court-fees Act, so the various State Governments had issued notifications under Section 35 of the Court Fees Act requiring that the court-fees paid in such appeals should be covered by Schedule II, Article I, i. e. such appeals were to be treated as appeals against orders not amounting to decrees. So, the requisite court-fees for such an appeal was Rs. 5. 25. On the other hand, regarding orders passed under Section 144 of the Code, there was a conflict of opinion. Some High Courts had held that ad valorem court-feel was payable, but according to the view of the Lahore High Court, an order under Section 144 was to be treated the same way as an order passed under Section 47, and thus bad to bear the fixed court-fees as specified in Schedule II, Art. II of the Court Fees Act, i c. , it had to be stamped the same way as an appeal or order not having the force of a decree. Unfortunately, no similar provision has been made regarding an order rejecting plaint of which the value cannot be determined under Schedule I, Article 1.


(35) THERE is another interesting Full Bench decision of the Lahore High Court in Official Liquidator, Universal Bank Ltd. (In liquidation) v. M. U. Querishi. A. I. R. 1945 Lahore 146. In this case, the appeal in question was under the Companies Act, 1913, and the question was how should the appeal be stamped. According to one view it had to be stamped under Article II, Schedule II, i. e. , as an order not having the force of a decree. On the other hand, the Full Bench found that some of the orders passed under the Companies Act were to be executed just as a decree. This was provided by Section 199 of the Companies Act, 1913, as all orders made by the Court, according to this Section, had to be executed just like decrees. The Full Bench then noted that if the order was executable as a decree, then the appeal had to be stamped with an ad-valorem stamp, but if the order was not executable as a decree, then it was only a shadow of a decree and not a real decree and in such a case the appeal had to be stamped under Article II, Schedule II. This difficulty was later overcome by the amendment to the Court Fees Act, which now requires that an appeal under the Companies Act has to be stamped with a fixed fee which is now Rs. 260. 00. It may be noticed that this fee is payable because the original petition for winding up bears the same stamp of Rs. 260. 00.


(36) ON the question of the application of Article 2, Schedule II, to orders under Section 144 of the Code, reference may be made to Moti Singh v. Harbhajan Singh and others, A. I. R. 1927 Lahore 635, wherein the following observations were made :-


"a preliminary objection has been taken that the stamp for this appeal should be ad valorem because Government notification under Section 35 relates only to applications under Section 47 and not to applications under Section 144.

It is conceded on both sides that the practice of this Court so far has been to have such appeals on a Court-fee stamp of Rs. 4. In the matter of a fiscal enactment, where the question is in doubt, it seems to me that the rule of stare decisis should apply and I hold, therefore, that the appeal is properly stamped. However, another Single Judge in Gul Muhammad v. Sabz Ah Khan and others, A. I. R. 1930, Lahore 24, took the view that ad-valorem court-fees was payable on the value of the appeal. The Court then gave time to the appellant to make up the deficiency which was made good and then the appeal was heard.


(37) WE have no doubt that there is no notification concerning appeals against orders rejecting plaints, but we have to determine the value under Article I, Schedule 1. If it is not determined, then the appeal has to be stamped under any other relevant Article. There is no other Article applicable, to the memorandum of appeal has to be samped as if it was a petition. The relevant court-fees is Rs. 2. 65 and the appear is therefore, properly stamped for the reasons examined above.


(38) NOW coming to the merits of the cas

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e, the only question that has been agitated in the appeal is. the extension of time for filing the court fees. We do not know what might have been the decision in this case if it had been heard immediately after it was instituted. Some other considerations might have governed. We are now met with a situation when a period of twelve years had elapsed, and now the claim of the appellant would be barred by time for the entire amount of Rs. 28. 000. 00. We are, therefore, of the view that the learned Court was wrong in rejecting the application for no particular reason by merely granting a short period when the appellant was obviously in difficulties regarding the payment of the court-fees amount. Learned counsel for the respondent argued that in fact the appellant had substantial funds at his disposal and he could have filed the court-fees. We do not think this could be so judging from the circumstances of the case. The appellant would not have had to wait for 12 long years if he bad adequate fund sat his disposal to file a suit. He would not have gone to the extent of having his plaint rejected, merely for the sake of delaying the payment of the court-fees. The facts speak for themselves it seems that the appellant was short of funds which made it not possible for him to pay the court-fees immediately. He wasn?t a pauper, so he could not sue as a pauper, but at the same time his money was blocked. So he wanted time. It was, therefore, a case where the Court could have granted him an extension of time and should have carefully examined the circumstances of the case. (39) IT appears to us that the trial court did net find the claim of the appellant to be unjustified. The learned Additional District Judge granted a period of one month and then a further period. Beuti hewas reluctant to grant any further time, so he rejected the plaint It seerns to us that the Additional Diltrict Judge should have granted the full period of six months as claimed by the plaintiff-appellant He was not making this claim for any other reason but to raise the funds necessar. y for affixing on the plaint. We cannot sec any gain which would have resuite i to the plaintiff by merely delaying the payment of relatively a small sum. in the circums ances, we would accept the appeal and hold that the Additional District Judge was wrong in refusing to grant further time to the appellant to make up the defi ciency in the court-fee (40) HAVING decided that the appeal has to be accepted, we have now to pass suitable orders to enable the appellant to comply with the same. We grant a period of one month from to-day to make up the deficiency in the court-fee. The stamp should be furnished to the trial court. The case will be listed on 17th March. l986. before the add national District Judge for enabling the appellant to file the necessary court fee and then the Suit will proceed from the stage it was when the plaim was- rejected The plaintiff is appearing in person, we decline to pass any order as to costs.
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