Deciding On Ad Valorem Court Fees Discrepancies By Delhi Trial Court And Further By High Court.

Case title:

B.P. Naagar & Ors. vs. Raj Pal Sharma

Date of Order:

July 28, 2023

Bench:

Hon’ble Justice C.T. Ravikumar

Parties:

Appellant(s)- B.P. Naagar & Ors. 

Respondent(s)- Raj Pal Sharma 

SUBJECT

• This special appeal challenges the final order dated 2nd December 2019 issued by the High Court of Delhi. The said order granted approval for C.M. (M) No.686 of 2019 and C.M. (App.) No.20889 of 2019, and subsequently annulled the orders passed by the Court of Additional District Judge, II, Central Tis Hazari Courts, New Delhi on 1st July 2017 and 2nd March 2019. The appellants in this case are Defendant Nos. 5 to 9, while the plaintiff in the original lawsuit is the respondent in this appeal.
• It is crucial to note that the impugned order was a result of Annexure P-14, which represents a Memorandum of Writ Petition. This writ petition was filed under Article 227 of the Indian Constitution, read in conjunction with Section 115 of the Code of Civil Procedure, 1908 (CPC). The purpose of the writ petition was to challenge the validity of the orders dated 1st July 2017 and 2nd March 2019.
• To properly handle this appeal, it becomes necessary to examine the nature of the orders passed by the Trial Court on 1st July 2017 and 2nd March 2019. This examination is essential for a fair and appropriate disposition of the current appeal.
• In the application submitted to the Trial Court under Order VII Rule 11 of the Civil Procedure Code (CPC), the 5th defendant (the second appellant in this case) argued for the rejection of the plaintiff's claim. Their contention was that the suit had not been correctly valued for the purpose of court fees, and the appropriate court fee had not been paid. The trial court granted the application.
• The questions concerning ad valorem court fees and the jurisdiction of the court where the suit should be proceeded further were not addressed by the High Court, unlike the Trial Court, which had gone into these aspects.

IMPORTANT PROVISIONS

Article 227 of the Constitution of India

OVERVIEW

• The property in question, House No. 173, E. Block, Kamla Nagar, New Delhi (225 Sq. yards), was originally owned by Shri G.D. Mal. In his will dated 18.06.1971, Shri G.D. Mal bequeathed the property to his wife, Pritam Devi. After Shri G.D. Mal's demise, Pritam Devi executed a registered gift deed on 27.04.2010, transferring the property to her grandsons, Shri Balraj Sharma, Shri Hemant Parashar, and Shri Rahul Parashar. Although they were initially parties to the proceeding, they were later removed from the case as per the order dated 03.03.2021.
• These grandsons subsequently sold the property through a sale deed dated 10.01.2011 to the present appellants for a consideration of Rs. 1 Crore. On the other hand, the respondent and Shri Ram Pal Sharma, who was initially named as the second respondent but later removed from the case by the order dated 03.03.2021, are the sons of late Shri G.D. Mal. They previously filed a suit for declaration and permanent injunction before the Trial Court, claiming ownership of the first and second floors of the property. However, they later withdrew that suit.
• The respondent and Shri Ram Pal Sharma then filed the current subject suit, originally designated as C.S. (O.S.) No.809 of 2011, against the appellants, seeking permanent injunction, declaration, and the cancellation of the registered gift deed and sale deed before the High Court. They valued the suit for the purpose of court fee and jurisdiction. 
• In response, the appellants, who were the defendants in that suit, filed an application under Order VII Rule 11 of the CPC, seeking the rejection of the plaint due to the plaintiff's failure to pay the deficient court fee based on the suit's valuation of Rs. 1 Crore as mentioned in the plaint.
• The order dated 1st July 2017, which is presented as Annexure P-7 in the current appeal, was passed by the Trial Court in CS(OS) No.612960/2016. It was related to an application filed under Order VII Rule 11 of the Civil Procedure Code (CPC) on behalf of defendant No. 5, the second appellant in this appeal. 
• The original suit, CS(OS) No.809/2011, was filed by the respondent in this case before the High Court. The purpose of the suit was to seek a declaration and cancellation of a gift deed dated 27th April 2010 and a sale deed dated 10th January 2011, along with claims for mandatory and permanent injunctions.
• Initially, prayers (a) to (e) were sought in the plaint. However, through an order dated 20th May 2015, the plaintiff was allowed to abandon prayers (c) and (d), and the suit was pursued only with regards to prayers (a), (b), and (e). 
• Subsequently, the case was transferred to the Court of Additional District Judge-II, Central, Tis Hazari Court, New Delhi, due to the enhancement of the pecuniary jurisdiction of the Civil Courts.
• The specific prayers (a), (b), and (e) mentioned in the plaint were as follows: (a) To declare and cancel the gift deed dated 27th April 2010 executed by defendant No. 1 in favor of defendants No. 2 to 4 as illegal, void, ineffective, and of no consequence. (b) To declare and cancel the sale deed dated 10th January 2011 executed by defendants No. 2 to 4 in favor of defendants No. 5 to 9 as illegal, void, ineffective, and of no consequence. (e) To grant a permanent and mandatory injunction restraining the defendants, including their heirs, agents, employees, assignees, representatives, successors, etc., from dispossessing the plaintiffs from their respective front and rear portions at the second and third floors of the property No. E 173, Kamla Nagar, Delhi, as shown in red color in the side plan filed with the plaint.
• In the application submitted to the Trial Court under Order VII Rule 11 of the Civil Procedure Code (CPC), the 5th defendant (the second appellant in this case) argued for the rejection of the plaintiff's claim. 
• Their contention was that the suit had not been correctly valued for the purpose of court fees, and the appropriate court fee had not been paid. According to the plaintiff's valuation in the plaint, the suit was valued at Rs. 1 crore, and the defendant argued that the plaintiff should have paid ad valorem court fees based on this amount.
• On the other hand, the plaintiff (the respondent in this case) opposed the plea for rejecting the plaint and presented their arguments against it. After a thorough examination of the arguments presented by both parties, the Trial Court issued an order on 1st July 2017, stating the following:
• As the suit has not been appropriately valued and the correct court fee has not been paid, it is deemed fit for rejection under Order 7 Rule 11 CPC. 12. Therefore, the application under Order 7 Rule 11 CPC is deemed to be allowed. However, the plaintiff is granted time until the next date of hearing to correctly value the suit and make the necessary payment for the deficient court fee.

ISSUES RAISED

Whether ad valorem Court fees are required to be paid would be a question which is a mix question of fact and law, inasmuch as if the plaintiff is a party to the gift deed and sale deed.

ARGUMENTS ADVANCED BY THE APPELLANT

• The argument put forth was that according to Section 2(2) of the Civil Procedure Code (CPC), the definition of "decree" includes the rejection of a plaint. 
• As a result, there is a substantive right to appeal against such an order of rejection under Section 96 of the CPC. Since this substantive right to appeal exists, seeking revision under Section 115 of the CPC or invoking the supervisory jurisdiction of the High Court under Article 227 of the Constitution of India is not permissible in such cases. 
• It was also asserted that upon examining Annexure R-14, the Memorandum of Writ Petition filed under Article 227 of the Constitution, it becomes evident that there was no direct challenge against the separate order dated 02.03.2019, which rejected the plaint. The option to challenge that order was available only by filing a substantive appeal under Section 96 of the CPC.
• The contention further emphasized that without successfully challenging the orders dated 01.07.2017 and 02.03.2019, which rejected the plaint, the question of considering any amendments to the plaint does not arise in accordance with the law. 
• In essence, the argument concluded that the impugned order dated 02.12.2019 passed by the High Court is unsustainable and should be reversed. To support these various contentions against the order of the High Court dated 02.12.2019, the appellants' counsel cited several relevant legal decisions.

ARGUMENTS ADVANCED BY THE RESPONDENT

• The respondent-plaintiff and their co-plaintiff opposed the application, arguing that since they were not parties to the sale deed or transaction, they were not obligated to pay the court fee for seeking a declaration. 
• Subsequently, they filed another application under Order XIII Rule 10, along with Section 151 of the CPC, seeking permission to abandon prayers at clauses "c and d" in the suit. This request was granted according to the order dated 20.05.2015. 
• It was at this stage that the suit, previously known as C.S. (O.S.) No.809 of 2011, was transferred out of the High Court and re-numbered, as previously mentioned.

JUDGEMENT ANALYSIS

• Upon careful examination of the impugned order of the High Court, it becomes evident that the sole reason provided therein is based on the legal requirement of whether a non-party to a sale deed, seeking a declaration related to it, needs to pay ad valorem court fee. Notably, there is no disagreement between the lower courts on this matter. 
• The Trial Court, in fact, acknowledged the settled position of law established by this Court in the case of Suhrid Singh @ Sardool Singh v. Randhir Singh, which states that a plaintiff seeking a declaration concerning a sale deed in which they are not a party does not need to pay ad valorem fee on the consideration amount mentioned in the deed. Instead, they are required to pay only the fixed court fee.
• However, despite considering this legal position, the Trial Court deemed it inapplicable in the present case and applied the principles laid down in the cases of Gobind Gopal & Ors. v. Banwari Lal and Bharat Sanchar Nigam Ltd. v. All India Bharat Sanchar Nigam Executives’ Association (Regd.) & Ors. According to these cases, since the plaintiff (respondent in this case) valued the suit at Rs. 1 Crore under Section 8 of the Suits Valuation Act, 1887, the plaintiff's case would not fall under any of the exceptions provided under Section 7 of the Court Fees Act, 1870.
• The High Court stated that the question of whether ad valorem court fees are required depends on a mix of fact and law. If the plaintiff is a party to the gift deed and sale deed, court fees are applicable; otherwise, no court fees are necessary. 
• Due to the need for factual evidence in this matter, the Trial Court is directed to frame an issue regarding the suit's valuation, to be adjudicated at the final stage. The High Court overturned the previous order's observations and instructed the plaintiff to amend the suit accordingly, allowing the proceedings to continue.

CONCLUSION

• The respondent (petitioner) presented a prayer before the High Court, seeking permission to amend paragraph 33 of the plaint concerning court fee and jurisdiction. The proposed amendment aimed to remove the words 'cancellation' and 'cancelling' from prayer paras 'A' and 'B'. 
• Furthermore, the respondent requested the High Court to dismiss the application filed by the 5th respondent (the 2nd appellant in this case) under Order VII Rule 11 of the CPC. The application, dated 14.08.2017, filed by the respondent (plaintiff) for the amendment under Order VI Rule 17 of the CPC is presented as Annexure P10 and contains the details of the changes sought in paragraph 33 of the plaint.
• In the petition filed before the High Court under Article 227 of the Constitution of India (Annexure P14), the respondent (petitioner therein) relied on the decision of the High Court of Punjab & Haryana in Bawa Bir Singh v. Ali Niwan Khan to argue that if a suit falls under Section 7(iv)(c) of the Court Fees Act and different values are given for court fees and jurisdiction, the value for court fees should be considered for jurisdiction purposes, and the different value mentioned for jurisdiction should be ignored.
• However, in Annexure P10, the respondent sought an amendment to the plaint, and as per that amendment, the values for court fees and jurisdiction were the same. Despite various relevant questions involved, the High Court merely permitted the amendment without considering the implications of the change. 
• As a result, the questions concerning ad valorem court fees and the jurisdiction of the court where the suit should be proceeded further were not addressed by the High Court, unlike the Trial Court, which had gone into these aspects.
• Due to the above circumstances, the court decided not to consider all the questions in this appeal and decided to remand the matter for fresh consideration by the High Court. The impugned order was set aside, allowing both sides to present all legally available contentions before the High Court for a proper decision. 
• The High Court was requested to expedite the proceedings and dispose of the matter within six months. The court made it clear that they had not made any observations on the merits of the case. The appeal was accordingly disposed of, with no order as to costs.