IndiaCorpLaw

Delhi High Court on Constitutionality of Court Fee Amendment

[The following
post is contributed by Gunjan Chhabra,
who is an associate with Singhania & Partners, LLP and a graduate of Amity
Law School, GGSIPU]

Background and Facts

Recently, the
Court Fees Act of 1870 (the 1870 Act) was amended by the
Government of NCT of Delhi by the Court Fees (Delhi Amendment) Act, 2012 (the Amendment
Act
), which came into effect from 1 August 2013. By way of this
amendment, the court fee in certain cases were increased at an average of 10
times, and in certain cases, upto 100 times!

It is unclear as
to the kind of thought process that seems to have gone behind the recent
increase in court fee by the Legislative Assembly of the NCT of Delhi, that
aimed at increasing the revenues of Delhi Government from Rs. 30 Crore to Rs. 400
Crores.

The Court Fees
(Delhi Amendment) Act, 2012 was challenged in a series of Writ Petitions filed
before the Hon’ble High Court of Delhi. The Court declared the Amendment Act as
ultra vires the Constitution and
accordingly struck it down through its order dated 9 October, 2013 in Delhi
High Court Bar Association v. Govt. of NCT of Delhi
.

How aptly the
amendment was handled by the Delhi High Court tells a tale of its own. If so
desired, the Court could have easily disposed off the case in some 4 pages
owing to the deficiencies in the amendment. It, however chose to issue a 531-page
reasoned decision that may lead to difficulties in salvaging the legislation.

Issues Discussed

All said and
done, the judgment is a well drafted document highlighting the well established
principles of law over the years. It demolishes each limb of the amendment part
by part.

It begins by
describing the legislative competence of the Government of NCT of Delhi. Delhi
is a Union Territory having a special status by virtue of an amendment in 1991
which inserted Article 239AA in the Constitution of India. Despite powers being
given to the Legislative Assembly of NCT of Delhi, similar to a state, the fact
remains that the Parliament has the supreme power to enact laws in the NCT of
Delhi. So the question arises: is there any respite if the Legislative assembly
of NCT of Delhi wants to enact a law changing a Central law? The answer is yes,
and how? With the help of a Presidential assent.

So, when the
amendment act did have presidential Assent, why was the Amendment Act still
invalid? The answer to this lies in several reasons:-

1.         The Presidential assent
was invalid. It is true that the court cannot go behind the grant or denial of
the assent, but it can go behind the procedure. It can look into the basis of
giving the assent, and in doing so it found that the relevant documents were
never placed before him. Moreover, the fact that it was repugnant to the
Central Law was never brought out

2.         Secondly, even if it
is assumed by some stretch of imagination that the assent was valid, the whole
amendment act was entirely arbitrary and violative of not one but several fundamental
rights enshrined in the Constitution, for instance:-

(a)        A person owning 1/70th
the share of a property would pay a court fee on the entire property in a suit
for partition. Many similarly arbitrary provisions enabled the court to term it
baseless.

(b)       Court fee was now
imposed on several stages of an arbitration proceeding, which was not only
defeating the very objective of encouraging arbitration, but was also an
encroachment on the High Court’s exclusive powers to make rules in this regard
under Section 82 of the Arbitration and Conciliation Act. Thus this was clearly
outside the legislative competence of the Assembly.

(c)        Such exorbitant court
fee was clearly a barrier to justice, opening the gates of the Court only to
the rich and privileged. This was clearly violative of several Articles such as
Article 14, 16, 21, 32, 38, 39A etc. of the Constitution.

3.         Thirdly, the Court
Fee was more in the nature of a Tax, rather than a fee, and the Legislative
Assembly certainly did not have the competence to impose a tax.

The Legislative
Assembly could not brush aside judicial review merely by calling the amendment
a fiscal policy, when such wide ramifications would follow. This was especially
so in the light of the enactment which clearly went against several thousands
of precedents, law commission reports, treatises, newspaper reports, and
international instruments.

According to the
Hon’ble Court, the amendment reflected such utter non-application of mind, that
even the Statement of Objects and reasons of the 1870 Act had not been amended.
This in light of the fact that the 1870 Act was enacted to reduce court fee as
the high court fee was having a regressive
effect on the general litigation of the country.

Result

So, what happens
if a litigant has already submitted the exorbitant court fee? A refund is
possible ofcourse. And as for the amendment of pleadings, nothing of the sort might
be required, as a clarificatory endorsement would be affixed by the respective
courts thereon.

Experiences of the Past

So, is this the
first time that the court fee for a state (read Union Territory in this case),
has been revised, and such a hue and cry has been created? The answer to that
question is a negative. Previously, there had been amendments in the States of
Bombay, Karnataka as well as Rajasthan, that had been challenged in the Supreme
Court of India in the landmark judgement of P
. M . Ashwathanarayana Setty and Ors . vs . State of Karnataka and Ors.
1988(2)
SCALE 844. In that case, the court
fee in the State of Rajasthan, Karnataka and Bombay had been increased to
ad-valorem fee without any upper ceiling. In those cases, the observation of
the Hon’ble Court had been that although the ad-valorem method was not ideal,
it was not so irrational so as to attract unconstitutionality.

Possibility of Appeal

Although the
Government may prefer an appeal, the chance of success on appeal is unclear. This
is because even if shelter of the Supreme Court Judgement was to be taken and
it is contended that although the method of calculation may be arbitrary it
cannot be so irrational so as to be struck down as unconstitutional, the same
would be of no rescue. This is because, the Amendment Act suffers not just from
arbitrariness but also from basic lack of legislative competence.


Gunjan Chhabra