Mr. Sunil Gupta vs M/S Polar Industries Ltd. And Anr.
2009 Latest Caselaw 4555 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                 RESERVED ON: 28.10.2009
                                               PRONOUNCED ON: 10.11.2009
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                                       CS (OS) 2402/2008

MR. SUNIL GUPTA                                                    ..... Plaintiff

                      Through: Mr. Vinod Tyagi, Advocate.

                              versus

M/S POLAR INDUSTRIES LTD. AND ANR.                                     .... Defendants

                      Through: None.

CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1.

     Whether the Reporters of local papers                 Yes
       may be allowed to see the judgment?

2.     To be referred to Reporter or not?                    Yes

3.     Whether the judgment should be                        Yes
       reported in the Digest?

HON'BLE MR. JUSTICE S.RAVINDRA BHAT

%

1. The present order is necessitated by an office objection, noting that the plaintiff has not filed adequate court fee, and until he does so, the decree cannot be drawn, in accordance with the order of the court.

2. The facts, necessary for this order are briefly noted as follows. The plaintiff sought for a decree of Rs. 1,38,79,026/- (Rupees one crore, thirty eight lakhs, seventy nine thousand and twenty six only); the suit was filed under Order 37, Code of Civil Procedure (CPC). The suit was valued for the amount claimed, and it is an undisputed fact that the plaintiff paid the requisite court fee on the said amount.

3. During pendency of the suit, by an order, Shri Anil Aggarwal, the Chairman and Managing Director of the first defendant was impleaded as a party. It was contended before the Court, that the parties entered into a fresh agreement, ending their disputes. The

CS(OS) 2402/2008 Page 1 application (IA 2033/2009) was pending before the Court; eventually, on 1-6-2009, it was allowed, in the presence of counsel for the first defendant. On the same day, the Court took up two applications (IA 707/09 and 7794/2009) requesting that a compromise be recorded, and decree should be drawn up in its terms. The Court allowed the applications, in the following terms:

"1. The parties have entered into a compromise agreement dated 13 th January, 2009 which has been filed along with IA 707/2009. The agreement is signed by both the parties. The agreement was not recorded earlier as the permission of AAFIR had not been received. The learned counsel for the plaintiff submits that the permission from AAIFR has now been received. Order of the AAIFR has been passed on 27th May, 2009 and, therefore, the compromise dated 13th January, 2009 be recorded.

2. In agreement dated 13th January, 2009, the defendant No.1 agreed to pay a sum of Rs.14.75 crores to the plaintiff along with future interest @14% per annum in the mode and manner mentioned therein. The learned counsel for the defendant submits that the payments and other obligations mentioned in Clause 1(i) to (iv) have already been complied with by the defendant. With respect to the schedule of payment of Rs. 4.5 crores mentioned in Clause 1(v), the first instalment has already been paid and with respect to the remaining payments, the instalments shall start form 1st July, 2009 onwards instead of 1st March, 2009. The learned counsel for the plaintiff agrees to the modification of the schedule of payment mentioned in Clause 1(v) to the aforesaid extent.

3. The agreement dated 13th January, 2009 is signed by all the parties. The application for recording of the compromise shall be supported by the affidavit of all the parties.

4. I am satisfied that the agreement is lawful. The agreement dated 13 th January 2009 is, therefore, recorded and the suit is decreed in terms of the compromise. The agreement dated 13th January, 2009 shall form part of the decree. All parties shall remain bound by their respective obligations made under the said agreement.

5. All applications stand disposed of.

6. Copy of this order be given 'Dasti' to learned counsel for the parties under signature of the court master.

                                                                                (J.R. MIDHA)

       JUNE 1, 2009                                                       VACATION JUDGE"




CS(OS) 2402/2008                                                                      Page 2

4. After the above order was made, the office, by a noting of the decree branch, sought clarifications about whether the plaintiff could be required to pay additional court fee of Rs.

13,03,944/- since the decretal amount was larger than what had been sought when the suit was filed. At the stage of filing the suit, the relief sought was for a decree of Rs. 1,38,79,061/-; the decree directed to be drawn was for Rs. 14.75 crores with interest. The plaintiff had deposited court fee, payable for the amount claimed, at the time of institution of the suit. The differential (or additional) court fee demanded works out to Rs. 13,03,944/-. A note was prepared, and when the plaintiff insisted that court fee was not payable, the matter was listed before court, for appropriate directions.

5. The plaintiff contends that the Court cannot, after disposing of a suit, (either by allowing it or dismissing it), exercise any jurisdiction, in regard to payment of court fee, or directions to be made in that regard. It is submitted that fairness, justice, general policy or equitable considerations cannot outweigh interpretation of a a taxing statute like the Court Fees Act. Learned counsel urged that on a proper interpretation of Section 7 of the Court Fees Act, read with Order 23, Rule 3, CPC, there is no question of a plaintiff -who enters into compromise, which is sanctioned and decreed by the court, entitling him to an amount larger than what is claimed- having to pay any additional, or so-called deficient court fees.

6. Learned counsel relied on the decisions reported as Ravinder Kumar Rishi V. Sushma Rishi 102 (2003) DLT 219; Laj Khosla v. Randhir Khosla and Another 76 (1998) DLT 953, in support of his arguments. He also relied on the decision reported as Phipson & Company Ltd. v. Gayce Private Limited, AIR 1977 Del 88, to say that the court does not possess any jurisdiction after rendering judgment in the suit, since the act of drawing a decree is merely ministerial. The plaintiff argues that so long as the cause or suit, is on the file of the court, and is not disposed of, there could be jurisdiction to require a party to pay, or make good, deficient fees. Once the cause is decided or decreed, the court becomes functus officio.

7. Before a discussion on the merits of the arguments, made by the plaintiff, it is necessary to notice the provision in Order 23, Rule 3.

"ORDER 23, RULE 3 COMPROMISE OF SUIT.

Where it is proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement of compromise, in writing and signed by

CS(OS) 2402/2008 Page 3 the parties or where the defendant satisfied the plaintiff in respect of the whole or any part of the subject-matter of the suit, the Court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject- matter of the agreement, compromise or satisfaction is the same as the subject- matter of the suit:

Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction had been arrived at, the court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the court, for reasons to be recorded, thinks fit to grant such adjournment.

Explanation : An agreement or compromise which is void or voidable under the Indian Contract Act, 1872, shall not be deemed to be lawful within the meaning of this rule."

The relevant provisions of the Court Fees Act read as follows:

"7. Computation of fees payable in certain suits - The amount of fee payable under this Act in the suits next hereinafter mentioned shall be computed as follows :-

For money:- In suits for money (including suits for damages or compensation, or arrears of maintenance, of annuities, or of other sums payable periodically) - according to the amount claimed ;...."

.............. ............. .............

11. Procedure in suits for mesne profits or account when amount decreed exceeds amount claimed. -- In suits for mesna profits or for immovable property and mesne profits, or for an account, if the profits or amount decreed are or is in excess of the profits claimed or the amount at which the plaintiff valued the relief sought, the decree shall not be executed until the difference between the fee actually paid and the fee which would have been payable had the suit comprised the whole of the profits or amount so decreed shall have been paid to the proper officer.

Where the amount of mesne profits is left to be ascertained in the course of the execution of the decree, if the profits so ascertained exceed the profits claimed, the further execution of the decree shall be stayed until the difference between the fee actually paid and the fee which would have been payable had the suit comprised the whole of the profits so ascertained is paid. If the additional fee is not paid within such time as the Court shall fix, the suit shall be dismissed."

8. In Laj Khosla, this court held that:

"4. A meaningful reading of the plaint would show that plaintiff is seeking a declaration that she is the owner of the property. She claims a right of residence on the basis of the Will of her husband irrespective of the title. Plaintiff is also,

CS(OS) 2402/2008 Page 4 admittedly, in possession of the suit property. Accordingly, the relief of injunction sought or a restraint from being dispossessed would flow irrespective of the declaration or title of the plaintiff. Likewise, the relief of mandatory injunction, directing the first defendant to deliver the title deeds to the defendant is founded on the plea that title deeds were in her possession but had been forcibly removed and taken away. This would fall within Section 7(iv)(a) of The Court Fees Act. Reference in this connection may be made to a Full Bench decision of this Court in Mahant Puroshottam Dass and Others v. Har Narain & Others, AIR 1978 Delhi (FB) 114.

5. The suit has already been disposed of on the basis of an application under Order XXIII, Rule 3 of the Code of Civil Procedure, moved by the parties. Learned Counsel for the defendant has drawn my attention to the judgment of a Single Judge of this Court in Phipson & Company Ltd. v. Gayce Private Limited, 1976 PLR 77. While interpreting Section 28 of the Court Fee Act, it has been held that the Court has no power after the judgment has been delivered to call upon a party or a litigant to pay the deficient court fee even if when initially a document or a plaint was entertained by mistake or inadvertence. In this case, I have reached the conclusion that the office objection is not sustainable. Even if it was otherwise, a direction for making up the deficiency in court fee could not have been given at this stage in view of the decision in Phipson & Company Ltd, v. Gayce Private Limited (supra)..."

The issue was dealt with more directly, in Ravinder Kumar Rishi, where the court observed that:

"20. At this outset it may be appropriate to consider the contention of the plaintiff/applicant, at a simple and practical level. Court-fee, simply put, would be a fee for entertaining the adjudication of the plaint (or the counter claim where the same has been filed and registered as such). Court-fee is required to be affixed on the plaint, and therefore the obvious corollary would be that it is only the averments and claim made in the plaint which can form the basis of working out the court-fee to be paid, and not anything else. Likewise if there is a counter claim which is treated as such, and which independently requires to be adjudicated, there is a provision for charging court-fee also on the amount of the counter claim as well.

21. The matter may be looked at from another angle also. If a plaint is filed for recovery of one crore, but decreed only to the extent of Rs. 10 lacs, can it then be that at the time of preparation of the decree, the Registry would direct refund of the court-fee originally paid on the ground that only the amount finally mentioned in the decree will govern the payment of Court-fee.

22. It would be absurd for anyone to contend on these lines. Equally it will follow that if the subject matter of the decree is at variance with the subject matter of the plaint, then no additional court-fee can be demanded simply on that basis. In fact, except for

CS(OS) 2402/2008 Page 5 suits in the nature of rendition of accounts of mesne profits, where it is so prescribed, there is no provision in the Court Fees Act requiring the payment of Court-fee on the basis of what is finally decreed by the Court."

....................... ..............................

30. This Court in a Single Bench decision reported as 76 (1998) DLT 953; Laj Khosla v. Randhir Khosla and Another, while dealing with a similar office objection by the Registry of this Court, apart from holding on merits that the relief of injunction claimed was independent of the relief of the declaration, and therefore exigible to payment of separate Court-fee viz. what stood affixed as court-fee, further held by relying on the judgment of this Court in Phipson and Co. Ltd. v. Gayce Pvt. Ltd., 1976 PLR page 77, that after the judgment had been delivered, the Court has no power to call upon a party or a litigant to pay the deficient Court-fee, even where it is found that the plaintiff was entertained on a deficient court-fee by mistake or inadvertence. Thus this judgment clearly supports the additional submission of the learned Counsel for the plaintiff that even if it were to be held that the written statement is exigible to Court-fee, still one the case stood finally disposed of, this Court had no power to call for the alleged deficiency of court-fee to be made good. That brings us to the decision of the Karnataka High Court reported at AIR 1988 Karnataka page 318.

It may however, be noted that the judgment of the Karnataka High Court reported at AIR 1988 Karnataka page 318, was a case of direction by the Court, and not a case of Registry making a demand after conclusion of the case. Furthermore it must be noted that the ratio of the case is not the final decision, but the principle or the reasoning.

On a conspectus of the above decisions, I have no hesitation in holding that the settled legal position is as under:

(i) No Court-fee needs be affixed on a written statement of the kind as was filed in the present suit.

(ii) No ad-valorem Court-fee needs to be affixed on an application under Order XXIII Rule 3, CPC;

(iii) The Court Fees Act is a taxing statute provisions whereof have to be strictly construed and the benefit of any ambiguity has to go in favour of the party and not the State.

(iv) Considerations of fairness, justice etc or equitable considerations or general policy perspective of not allowing individuals to avoid the incidence of full court fee by adopting the device of suit initially filed with limited averments and token fee and then followed up by all-encompassing compromise application and decree providing

CS(OS) 2402/2008 Page 6 for crores to change hands, has no applicability to the interpretation and enforcement of a taxing statute like the Court Fees Act; and

(v) In any case, and in alternative, no demand to make up the deficiency can be raised once the suit has attained finality of disposal."

In Phipson, it was held that:

"(10) Normally, what is included in a decree is the result of trial and adjudication and what has not been adjudicated upon is not to be given effect to in the decree. The decision as to payment of court-fees, apart from the liability of the party to pay, is also a matter of adjudication, and that also after hearing the defendant, as it may affect the costs of the suit, and which the defendant or the plaintiff may be burdened with, and if long after the adjudication has taken place by way of a judgment of the Court, I am unable to see how effect can be given to it by inserting anything in respect to it in the decree which represents only the result of an antecedent adjudication. Again, "the Court Fees Act does not provide separately any machinery for recovery of additional court-fees and the only penalties for failure to supply deficiency in court fees are those which are contained in Order Vii rule 11 sub-clauses (b) and (c). Nor. is there any rule of law which would vitiate or annul a judgment or decree obtained by a party, who, subsequent to such judgment, having been ordered to pay additional court-fee under S. 28 of the Act. fails to do so. The only interpretation, therefore, that I can put upon that section is that the powers thereby conferred are to , exercised only before the final decision of the case, to which the .question of payment of court-fees relates, and the provision as to' retrospective effect of the validity of such documents and every proceedings relative thereto, relates only to those documents which, being defectively stamped, have been wrongly received and used in the course of the trial of the case, which has not yet been finally adjudicated upon. There is nothing in Section 28 which initially invalidates either the judgment or the proceedings based on a document which was not properly stamped. It merely states that on such document being stamped, as directed by the Court, the same and every proceeding relative thereto shall be valid. This does not mean that whatever proceedings were held relative to that deficiently stamped plaint are automatically deemed to be invalid. It is only after the mistake or inadvertence of the court or of the office is noticed that the 'Court or the office or the judge has to pass an order that such document be stamped properly, as he may direct. But this mistake or inadvertence has to be noticed while the suit is still pending."

8. The reasoning in all the above cited cases is premised upon finality of the Court's order, which ends a suit, even while recognizing that the statute, i.e the Court fees Act, is a taxing one. From Phipson onwards, the reasons that persuaded the Court to hold what it did, was the Court's inability to act, after it pronounces judgment.

CS(OS) 2402/2008 Page 7

9. There are two very important reasons, which seem to have escaped the notice of the Court, which have a crucial bearing on the question of payment of proper court fees. The first is that the provision compelling payment is Section 7 (of the Court Fees Act); it mandates that court fees "shall" be payable according to the calculation required under its provisions. The internal indications in the Act, by way of Section 11 are categorical about the nature of the obligation (to pay court fees); the court has no choice in the matter; even at the stage of execution, an insufficiently stamped decree cannot be proceeded with further, or not entertained. The second important aspect, in the case of compromise decrees is, that Order 23, Rule 3, in substantial particulars, was amended in 1976. The crucial amendment enables a court to direct a decree not only as regards matters and claims before it, but also in relation to other matters. Thus for example, if a person sues for Rs. 20 lakhs, and during the proceeding, is beneficiary of an overall settlement, which enables him to payment of 10 times that amount, the fact that such larger claims are not part of the suit, does not constrain the court from making a decree to effectuate the overall settlement. This provision did not exist earlier. It has been conceived in public interest, to avoid multifariousness, and promote overall resolution of disputes. However, by this, it is possible that the plaintiff's original claim, upon which a much smaller amount is paid as court fee, can be enlarged, to entitle him to a decree for a greater amount, which was not thought of by him, and for which court fees was not paid. Had the plaintiff, in such cases not received the benefit of the amended Order 23, he would have well been compelled to file a separate suit, to recover the larger amount, and naturally, have paid the court fees. The amendment procedurally enables parties to give effect to an overall settlement. This aspect did not engage the attention and notice of the Court when it delivered judgments, in the three cases, cited by the plaintiff.

10. The power of a court to interfere with an arbitrary valuation to avoid payment of the proper court fee, was emphasized by the Supreme Court, in Kamaleshwar Kishore Singh v. Paras Nath Singh,(2002) 1 SCC 304, when it was held that:

"It is well settled that the court fee has to be paid on the plaint as framed and not on the plaint as it ought to have been framed unless by astuteness employed in drafting the plaint the plaintiff has attempted at evading payment of court fee or unless there be a provision of law requiring the plaintiff to value the suit and pay the court fee in a manner other than the one adopted by the plaintiff. The court shall begin with an assumption, for

CS(OS) 2402/2008 Page 8 the purpose of determining the court fees payable on plaint, that the averments made therein by the plaintiff are correct. Yet, an arbitrary valuation of the suit property having no basis at all for such valuation and made so as to evade payment of court fees and fixed for the purpose of conferring jurisdiction on some court which it does not have, or depriving the court of jurisdiction which it would otherwise have, can also be interfered with by the court.

11. This court is of the opinion that the objections as to payment of proper court fees, by the plaintiff, in this case are well founded. Having approached the court for a decree of less than Rs. 1.5 crores, the plaintiff was able to secure a decree for over Rs. 14 crores. This could have been possible only with the aid of provisions under Order 23, Rule 3, CPC. Otherwise, the plaintiff could have recovered the amount, by filing a separate suit. In these circumstances, the court is of the opinion that the previous judgments, cannot be followed; they did not reflect upon the true meaning and purport of Order 23, Rule 3, after the 1976 amendment.

12. For the above reasons, it is held that the plaintiff has to pay Rs.13,03,944/-. Subject to depositing the said amount, the decree shall be drawn.

DATED:      10th November, 2009                                S. RAVINDRA BHAT, J




CS(OS) 2402/2008                                                                            Page 9