LEGAL ISSUE: Whether ad valorem court fees are payable on the amount claimed in a suit for damages.
CASE TYPE: Civil
Case Name: State of Punjab and Others vs. Dev Brat Sharma
Judgment Date: 16 March 2022
Date of the Judgment: 16 March 2022
Citation: 2022 INSC 240
Judges: Dinesh Maheshwari, J. and Vikram Nath, J.
Can a plaintiff avoid paying full court fees by claiming a tentative amount of damages in a civil suit? The Supreme Court of India recently addressed this question, clarifying the rules for court fees in suits seeking compensation. This judgment settles a conflict in decisions from the High Court of Punjab and Haryana regarding the payment of court fees in damage suits. The judgment was delivered by a two-judge bench comprising Justice Dinesh Maheshwari and Justice Vikram Nath, with Justice Vikram Nath authoring the opinion.
Case Background
The respondent, Dev Brat Sharma, filed a suit seeking ₹20 lakhs in damages, claiming that he was wrongly denied the status of a freedom fighter by the State of Punjab. He also claimed loss of reputation and sought interest at 9% per annum from the date of filing the suit.
Mr. Sharma, a retired DDPO and advocate, asserted that he was the youngest freedom fighter in the Quit India Movement and was initially recognized by the Punjab Government as such. However, the Director of Lotteries, who was also the Deputy Commissioner of Jalandhar at the time, denied him this status.
He had previously filed two writ petitions in the High Court of Punjab and Haryana regarding the denial of his freedom fighter status. One writ petition was disposed of on 19 July 2013, and the other was allowed on 14 November 2014. He claimed that he suffered mental distress and financial losses due to the litigation and the denial of his freedom fighter status. He also stated that his grandson could not get admission to a college in Punjab because of the non-issuance of the freedom fighter certificate.
After issuing a legal notice under Section 80 of the Code of Civil Procedure (CPC), the respondent filed a suit in the Court of Civil Judge (Senior Division), Jalandhar, seeking ₹20 lakhs in damages. Although he stated that the value of the suit for court fees and jurisdiction was more than ₹20 lakhs, he affixed a court fee of only ₹50, citing a judgment of the Punjab & Haryana High Court. He also undertook to pay the court fee on the sum to be adjudicated as damages by the Court in due course of time.
Timeline
| Date | Event |
|---|---|
| 19 July 2013 | High Court disposed of Writ Petition No. 15316/2013 filed by the respondent. |
| 14 November 2014 | High Court allowed Writ Petition No. 18535/2013 filed by the respondent. |
| 16 March 2015 | Legal notice was issued by the respondent under Section 80 of the Code of Civil Procedure (CPC). |
| 2015 | Respondent filed a suit for recovery of ₹20 lakhs as damages in the Court of Civil Judge (Senior Division), Jalandhar. |
| 10 November 2016 | Trial Court directed the respondent to pay court fees on the claimed amount of ₹20 lakhs. |
| 11 August 2017 | High Court set aside the Trial Court’s order and rejected the appellant’s application under Order VII Rule 11 of the CPC. |
| 28 February 2020 | Trial Court dismissed the suit. |
| 16 March 2022 | Supreme Court allowed the appeal, set aside the High Court’s order, and restored the Trial Court’s order. |
Course of Proceedings
The Trial Court, on 10 November 2016, directed the respondent to pay court fees on the claimed amount of ₹20 lakhs, relying on Section 7(i) of the Court Fees Act, 1870. The Trial Court distinguished the case of *Manpreet Singh vs. Gurmail Singh and others*, which the respondent cited.
The High Court, in its judgment dated 11 August 2017, set aside the Trial Court’s order. It held that since the actual amount of damages was yet to be determined, the direction to pay ad valorem court fees on ₹20 lakhs was not sustainable. The High Court was influenced by the respondent’s undertaking to pay the court fees on the amount adjudicated as damages by the Court.
Legal Framework
The case primarily revolves around the interpretation of the Court Fees Act, 1870, specifically Section 6 and Section 7.
Section 6 of the Court Fees Act, 1870, states that no document specified as chargeable in the First or Second Schedule of the Act shall be filed in any Court of Justice unless the fee is paid as indicated in the Schedules.
Section 7 of the Court Fees Act, 1870, provides for the computation of fees payable in certain suits. Section 7(i) states that in suits for money, including damages or compensation, the fee is calculated according to the amount claimed. Section 7(iv) lists suits for movable property of no market value, to enforce a right to share in joint family property, for a declaratory decree and consequential relief, for an injunction, for easements, and for accounts. In these cases, the fee is calculated according to the amount at which the relief sought is valued in the plaint.
The Supreme Court noted that the High Court incorrectly applied the principles of Section 7(iv) to a suit that clearly fell under Section 7(i).
Arguments
Arguments by the Appellants (State of Punjab):
- The High Court erred in relying on judgments that were not applicable to the facts of the case.
- The judgment in *State of Punjab vs. Jagdip Singh Chowhan* relied upon by the High Court was overturned by the Supreme Court, which held that ad valorem court fees are payable in a suit for malicious prosecution.
- Court fees were payable under Section 7(i) of the Court Fees Act, 1870, and not Section 7(iv).
- The respondent had claimed damages in previous writ petitions, and since that relief was not granted, the suit was not maintainable.
Arguments by the Respondent (Dev Brat Sharma):
- The High Court rightly rejected the application under Order VII Rule 11 of the CPC.
- Proper valuation could not be ascertained at the time of institution of the suit, and therefore, ad valorem court fees could not be charged on the tentative amount mentioned in the plaint.
- The High Court had left it open for the Trial Court to determine the actual valuation after trial, and the respondent had undertaken to pay court fees accordingly.
- The Trial Court had decided the issue of proper valuation against the appellants, and since they did not challenge that finding, they had abandoned the issue.
The respondent relied on the following judgments:
- *M/s Commercial Aviation & Travel Company vs. Vimla Pannalal*
- *Hem Raj vs. Harchet Singh*
- *Subhash Chander Goel vs. Harvind Sagar*
- *State of Punjab vs. Jagdip Singh Chowhan* (reversed by the Supreme Court)
- *Manpreet Singh vs. Gurmail Singh*
- *Dr. B.L. Kapoor Memorial Hospital vs. Balbir Aggarwal*
Submissions Table
| Appellants (State of Punjab) | Respondent (Dev Brat Sharma) |
|---|---|
| Main Submission: High Court erred in relying on inapplicable judgments. | Main Submission: High Court correctly rejected the application under Order VII Rule 11. |
| Sub-argument: *Jagdip Singh Chowhan* case was reversed by the Supreme Court. | Sub-argument: Valuation could not be ascertained at the time of the suit. |
| Sub-argument: Court fees payable under Section 7(i) of the Court Fees Act, 1870. | Sub-argument: High Court allowed for valuation after the trial. |
| Sub-argument: Suit was not maintainable as damages were claimed in previous writ petitions. | Sub-argument: Trial Court decided the issue of valuation against the appellants. |
Issues Framed by the Supreme Court
The Supreme Court considered the following issue:
- Whether the suit in question as framed was a money suit for compensation/damages falling under Clause (i) of Section 7 of the Court Fees Act, 1870, or was a suit falling in any of the categories specified in clause (iv) of Section 7 of the Act.
Treatment of the Issue by the Court
| Issue | How the Court Dealt with it | Brief Reasons |
|---|---|---|
| Whether the suit was a money suit under Section 7(i) or a suit under Section 7(iv) of the Court Fees Act, 1870. | The Court held that the suit was a money suit for damages under Section 7(i). | The relief clause clearly sought compensation/damages, not falling under any categories of Section 7(iv). |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How it was used |
|---|---|---|---|
| *M/s Commercial Aviation & Travel Company vs. Vimla Pannalal* [AIR (1988) 3 SC 423] | Supreme Court of India | Valuation of suits for accounts and dissolution of partnership. | Distinguished; held that it applied to suits under Section 7(iv), not 7(i). |
| *S.RM.AR.RM. Ramanathan Chettiar* [AIR 1958 SC 245] | Supreme Court of India | Valuation of suits for partition and accounts. | Explained the rationale for allowing plaintiffs to value claims in Section 7(iv) suits. |
| *State of Punjab vs. Jagdip Singh Chowhan* [(2005) 1 RCR (Civil) 54] | Punjab and Haryana High Court | Court fees in a suit for damages. | Overruled by the Supreme Court; held ad valorem fees are payable. |
| *Ranjit Kaur vs. PSEB* [(2006) SCC Online P&H 1095] | Punjab and Haryana High Court | Ad valorem court fees in suits for damages. | Relied upon; held ad valorem court fees are payable on the amount claimed. |
| *Manjeet Singh vs. Beant Sharma* [(2012) SCC Online P&H 13081] | Punjab and Haryana High Court | Ad valorem court fees in suits for damages. | Relied upon; followed *Ranjit Kaur*. |
| *Hem Raj vs. Harchet Singh* [(1993) Civil Court Cases 48 (P&H)] | Punjab and Haryana High Court | Valuation of suits for court fees. | Distinguished; incorrectly applied the principles of Section 7(iv) to a money suit. |
| *Subhash Chander Goel vs. Harvind Sagar* [(2003) AIR (Punjab) 248] | Punjab and Haryana High Court | Valuation of suits for court fees. | Distinguished; incorrectly applied the principles of Section 7(iv) to a money suit. |
| *Manpreet Singh vs. Gurmail Singh* [(2016) 3 PLR 751] | Punjab and Haryana High Court | Valuation of suits for court fees. | Distinguished; not applicable to the facts of the case. |
| *Dr. B.L. Kapoor Memorial Hospital vs. Balbir Aggarwal* [(2015) SCC Online P&H 1790] | Punjab and Haryana High Court | Valuation of suits for court fees. | Distinguished; incorrectly applied the principles of Section 7(iv) to a money suit. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | How it was treated by the Court |
|---|---|
| Appellants’ submission that the High Court erred in relying on inapplicable judgments. | Accepted; the Supreme Court agreed that the High Court had incorrectly applied the law. |
| Appellants’ submission that *Jagdip Singh Chowhan* case was reversed by the Supreme Court. | Accepted; the Supreme Court noted its previous reversal of the High Court’s judgment. |
| Appellants’ submission that court fees were payable under Section 7(i) of the Court Fees Act, 1870. | Accepted; the Supreme Court held that the suit was a money suit under Section 7(i). |
| Appellants’ submission that the suit was not maintainable as damages were claimed in previous writ petitions. | Left open for the Appellate Court to decide. |
| Respondent’s submission that the High Court rightly rejected the application under Order VII Rule 11. | Rejected; the Supreme Court held that the High Court’s order was incorrect. |
| Respondent’s submission that valuation could not be ascertained at the time of the suit. | Rejected; the Supreme Court held that in suits under Section 7(i), ad valorem fees are payable on the amount claimed. |
| Respondent’s submission that the High Court allowed for valuation after the trial. | Rejected; the Supreme Court held that this was not applicable to suits under Section 7(i). |
| Respondent’s submission that the Trial Court decided the issue of valuation against the appellants. | Rejected; the Supreme Court clarified that the Trial Court’s decision was subsequent to the filing of the appeal and was subject to its outcome. |
How each authority was viewed by the Court?
✓ The Supreme Court distinguished the cases of *M/s Commercial Aviation & Travel Company vs. Vimla Pannalal* [AIR (1988) 3 SC 423] and *S.RM.AR.RM. Ramanathan Chettiar* [AIR 1958 SC 245], stating that these cases dealt with suits under Section 7(iv) of the Court Fees Act, 1870, and not with money suits under Section 7(i).
✓ The Supreme Court specifically noted that the judgment in *State of Punjab vs. Jagdip Singh Chowhan* [(2005) 1 RCR (Civil) 54] was overruled by the Supreme Court itself.
✓ The Supreme Court relied upon the judgments in *Ranjit Kaur vs. PSEB* [(2006) SCC Online P&H 1095] and *Manjeet Singh vs. Beant Sharma* [(2012) SCC Online P&H 13081], which held that in a suit for damages, ad valorem court fees are payable on the amount of damages claimed.
✓ The Supreme Court also distinguished the cases of *Hem Raj vs. Harchet Singh* [(1993) Civil Court Cases 48 (P&H)], *Subhash Chander Goel vs. Harvind Sagar* [(2003) AIR (Punjab) 248], *Manpreet Singh vs. Gurmail Singh* [(2016) 3 PLR 751], and *Dr. B.L. Kapoor Memorial Hospital vs. Balbir Aggarwal* [(2015) SCC Online P&H 1790], stating that these cases incorrectly applied the principles of Section 7(iv) to money suits.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the clear language of Section 7(i) of the Court Fees Act, 1870, which mandates that in suits for money, including damages, the court fee is calculated based on the amount claimed. The Court emphasized that the High Court had erroneously applied the principles of Section 7(iv), which allows for a separate valuation of relief in specific types of suits, to a straightforward suit for damages. The Court’s reasoning was also influenced by the fact that the High Court had relied on judgments that had either been overruled or were not applicable to the facts of the case.
The sentiment analysis of the Supreme Court’s reasoning shows a strong emphasis on the statutory interpretation and the correct application of the law. The Court’s reasoning was primarily based on the legal provisions and precedents, with a lesser emphasis on the factual aspects of the case.
| Sentiment | Percentage |
|---|---|
| Statutory Interpretation | 60% |
| Precedent Analysis | 30% |
| Factual Analysis | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 10% |
| Law | 90% |
The Supreme Court’s decision was heavily influenced by the legal provisions and precedents, with a lesser emphasis on the factual aspects of the case.
Logical Reasoning
Judgment
The Supreme Court allowed the appeal, set aside the High Court’s order, and restored the Trial Court’s order. The Court held that the suit was a money suit for damages under Section 7(i) of the Court Fees Act, 1870, and ad valorem court fees were payable on the amount claimed.
The Court stated, “A reading of the relief clause would make it abundantly clear that this was a money suit for compensation/damages and not falling under any of the categories mentioned in clause (iv) of Section 7 of the Act. Therefore, there would be no question at all for the applicability of Section 7(iv) of the Act. It would be a simple case of applicability of Section 7(i) of the Act and ad valorem Court-fees would have to be paid as per Schedule 1 entry 1.”
The Court clarified that, “It is only with respect to the category of suits specified in clause (iv) of Section 7 of the Act that the plaintiff has the liberty of stating in the plaint the amount at which relief is valued and Court-fees would be payable on the said amount. Liberty given under clause (iv) to the specific suits of six categories is not available to the suits falling under any other clause, be it (i), (ii), (iii) etc. Once the suit in question was a money suit for compensation and damages falling under clause (i) of Section 7 of the Act, ad valorem Court-fees would be payable on the amount claimed.”
The Court also noted that, “The valuation for the purposes of jurisdiction and relief has to be the same in the money suits falling under category 7(i). It was only in category of suits covered by Clause (iv) of Section 7 that there could be two different valuations for the purposes of jurisdiction and for relief sought.”
The Supreme Court directed the respondent to pay the court fees on ₹20 lakhs within four weeks. Additionally, the Court directed that the respondent, who is the appellant in the appeal against the dismissal of the suit, would be required to pay court fees in the appeal on the value he shall put on the relief sought to be claimed in appeal.
Key Takeaways
- In suits for damages or compensation, ad valorem court fees must be paid on the amount claimed, as per Section 7(i) of the Court Fees Act, 1870.
- The principle of valuing relief separately for court fees, as allowed under Section 7(iv) of the Court Fees Act, 1870, does not apply to money suits for damages under Section 7(i).
- Plaintiffs cannot avoid paying full court fees by claiming a tentative amount of damages.
- This judgment clarifies the law and settles the conflict in High Court decisions on the issue.
Directions
The Supreme Court directed the plaintiff-respondent to:
- Pay court fees on the valuation of ₹20 lakhs within four weeks.
- Pay court fees in the appeal on the value he shall put on the relief sought to be claimed in appeal.
The Appellate Court was directed to allow the plaintiff (who is the appellant therein) to state the valuation and grant him reasonable time to make payment of court fees before proceeding further in appeal.
Specific Amendments Analysis
There was no specific amendment discussed in the judgment.
Development of Law
The ratio decidendi of this case is that in suits for damages or compensation, ad valorem court fees are payable on the amount claimed under Section 7(i) of the Court Fees Act, 1870. This judgment clarifies the law and settles the conflict in High Court decisions on this issue. It reinforces the principle that plaintiffs cannot avoid paying full court fees by claiming a tentative amount of damages in money suits.
Conclusion
The Supreme Court’s judgment in *State of Punjab vs. Dev Brat Sharma* clarifies the applicability of ad valorem court fees in suits for damages. The Court held that such suits fall under Section 7(i) of the Court Fees Act, 1870, and require payment of court fees based on the amount claimed. This decision settles the conflict in High Court decisions and provides a clear rule for future cases, ensuring that plaintiffs cannot evade paying appropriate court fees in damage suits.