INDIAN ORGANIC CHEMICALS LTD Vs. CHEMTEX FIBRES INC

JUDGEMENT

(1.) This is an unusual chamber summons taken out by the plaintiff in Suit No. 199 of 1976 filed on the Original Side of the High Court of Judicature at Bombay. The chamber summons has been referred for disposal to a division bench under Rule 59 of the Original Side Rules.

(2.) In the chamber summons Messrs. Indian Organic Chemicals Ltd, (hereinafter referred to as the "plaintiff") has sought a declaration that the Bombay Court Fees (Second Amendment) Act, 1974 be declared as ultra vires the powers of the State Legislature and, therefore, null, void and of no effect whatsoever. In addition to the three defendants to the suit the Advocate General State of Maharashtra, and the State of Maharashtra have been joined as party respondents 1 and 2 to the chamber summons and the plaintiff has in the chamber summons also sought an injunction against the Second respondent viz. the State of Maharashtra, that it should be restrained from recovering Court fees in excess of Its. 15000 from the plaintiff. It would appear that the amount of Court-fees payable on the plaintiff's claim in suit on ad valorem basis after the enactment of the impugned legislation came to Rs. 5,60,000 and the plaintiff was required before the plaint was accepted and allowed to be numbered to deposit the alleged excess amount of Rs. 5,45,000 with the Prothonotary and Senior Master and hence by the third prayer to the chamber summons the plaintiff seeks a refund of this amount of Rs. 5,45,000 which has been ordered to be deposited with the Prothonotary and Senior Master. The other prayers are for costs and incidental reliefs.

(3.) Several affidavits have been filed on behalf of the plaintiff and on behalf of the State of Maharashtra in this proceeding. Before dealing with the same in detail and depth, however, it may be mentioned that the plaintiff's challenge to the Bombay Court Fees (Second Amendment) Act, 1974, hereinafter referred to as the "impugned Act" is on a double, if not a triple footing. 1m the first instance it has been averred in the affidavits and urged at the bar strenuously, particularly at the final stages of arguments that the impugned Act constitutes a mala fide piece of legislation and that the Legislature was "inveigled" into passing this enactment for collateral purpose and out of motives which cannot be accepted as bona fide. The principal challenge, however, proceeds on the footing that Court-fees in excess of Rs. 15,000 attempted to be exacted under the impugned Act would alter the character of the levy and would convert it from a fee into a tax. As stated earlier, on the subject-matter of its suit which is Rs, 5,56,30,731.87 P. the Court-fees payable by the plaintiff prior to the impugned Act was Rs. 15,000 which was the statutory ceiling of Court fees in the State of Bombay (as also in successor State of Maharashtra). The ceiling having been removed by the impugned Act the plaintiff would on ad valorem basis be liable to Court-fees of Rs. 5,60,000. The plaintiff has also alleged that although in the statement of objects and reasons it has been stated that the amendment is occasioned by the increase in the cost of the administration of justice and the unreasonable and grossly exorbitant amounts sought to be collected from the plaintiff and similar litigants after the impugned Act. According to the plaintiff, even prior to the said Act the State of Maharashtra was making a profit out of the administration of justice and the result of the impugned Act would be to enhance the said profit. Thus, in other words, the amendment has been attacked as a colourable and fraudulent exercise of legislative power seeking to augment public revenue by imposing a tax in the guise of levying a "fee". According to the plaintiff further, whenever an increase in Court fees is contemplated by legislation, such contemplated increase must be justified by facts and figures in order to show that the actual expenditure at the time of the increase exceeds the income from Court-fees. In the affidavit in support the plaintiff has also contended that the amounts collected by way of Court-fees must be specifically earmarked to meet the expenses of rendering the services relating to the administration of justice. According to the plaintiff in the State of Maharashtra the collections are merged in the general revenue and are not set apart or appropriated for rendering these services. The collections then would, according to the plaintiff's submission amount to compulsory exactions of money and would cease to constitute payment for any specific service rendered.