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PETITIONER: CHIEF COMMISSIONER, DELHI & ANR.

       Vs.

RESPONDENT: DELHI CLOTH AND GENERAL MILLS CO.  LTD. & ORS.

DATE OF JUDGMENT07/04/1978

BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA SINGH, JASWANT

CITATION:  1978 AIR 1181            1978 SCR  (3) 657  1978 SCC  (2) 367  CITATOR INFO :  C          1980 SC1008  (21)

ACT: Fee-Conditions to be satisfied to be a legal fee, within the meaning of the Constitution.

HEADNOTE: The  Respondent Company floated debenture loan of  Rs.  2.50 crores  and  to  -secure  the repayment  of  the  said  loan executed  debenture  trust  deed  dated  10th  April,   1962 mortgaging   certain  properties  of  the  Company   for   a consideration  of Rs. 2.50 crores in favour of the  trustees who  were petitioners before the High Court.  Stamps to  the extent of Rs. 2,50,00/- were paid under the Indian Stamp Act and  apart  from that when the document  was  presented  for registration, a registration fee of Rs. 1,25,157.50 np. were demanded  as registration fee by the Sub-Registrar  under  a notification   issued   by   the   appellant,   the    Chief ,Commissioner   of  Delhi  on  15th  December,  1952.    The registration   fee  was  paid  by  the   Respondents   under compulsion,  but the trustees filed a petition in  the  High Court  challenging the validity of the notification and  the exorbitant  amount realised as registration fee  as  illegal levy not fulfilling the essential conditions of a fee within the  meaning of the Constitution.  The plea of the  trustees found  favour  with the High Court which held that  the  fee charged   by   the   Registration   Department   under   the notification was an illegal impost and could not be  levied. The High Court accordingly quashed the notification. Dismissing the appeal by certificate, the Court HELD  :  A fee in order to be a legal fee must  satisfy  two conditions  (a)  There must be an element of quid  pro  quo, i.e. the authority levying the fee must render some  service for  the fee levied however remote the service may  be;  and (b)  That the fee realised must be spent for the purpose  of the  imposition  and  should not form part  of  the  general revenues of the State. [658 F-G] In  the  instant case, in view of the fact that it  was  not disputed   that  the  fee  realised  by   the   Registration Department  under the impugned notification dated  15-2-1952 was  to form part of the general revenues of the State,  the second  element  of a fee was wholly wanting  and  the  High

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Court   was,   therefore,  right  in  striking   down   this notification. [658 G-H] Mahant  Sri Jagannath Ramanuj Das and Anr. v. The  State  of Orissa and Anr. [1954] SCR 1046, Ratilal Panachand Gandhi v. The State of Bombay and Ors. [1954] SCR at D. 1055 and State of  Maharashtra & Ors. v. The Salvation Army, Western  India Territory [1975] 3 SCR 475 applied.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1959  of 1968. From the Judgment and Order dated the 7th May, 1964 of  the, Punjab High Court, Circuit Bench at Delhi, in Civil Writ No. 227-D ,of 1962. R.P. Bhatt and Girish Chandra for the Appellant. Hardaval Hardv, D.R. Thadani and A.N. Goyal for Respondents. Sobhagmal Jain for the Intervener (The State of Rajasthan). O.   P. Rana for the Intervener (State of U.P.). 658 The Judgment of the Court was delivered by FAZAL, J. This appeal by certificate is directed against the judgment  and order of the Circuit Bench of the Punjab  High Court  at  Delhi dated the 7th May, 1964 and arises  in  the following circumstances The  respondent Company floated debenture loan of  Rs.  2.50 crores  and  to  secure  the repayment  of  the  said  loan, executed  debenture  trust  deed  dated  10th  April,   1962 mortgaging   certain  properties  of  the  Company   for   a consideration of Rs. 2.50 crores in favour of the  trustees, who were petitioners before the High Court.  Further details have been given in the judgment of the High Court and it  is not  necessary to repeat them here.  It appears that  stamps to  the  extent of Rs. 2,50,300/were paid under  the  Indian Stamp  Act  and  apart  from  that  when  the  document  was presented for registration, a registration fee of Rs.  1,25, 157.50  np  were demanded as registration fee  by  the  Sub- Registrar   under  a  notification  issued  by   the   Chief Commissioner of Delhi, which is the impugned notification in this case.  The registration fee was paid by the respondents under  compulsion but the trustees filed a petition  in  the High Court challenging  the validity of the notification and the exorbitant amount realised as registration fee. The  short  point  taken  before  the  High  Court  by   the Respondents, was that the, registration fee levied under the notification  dated 15th December, 1952 was an illegal  levy as,  it  did not fulfil the essential conditions  of  a  fee within  the  meaning of the Constitution.  The plea  of  the trustees  found favour with the High Court which  held  that the  fee  charged by the Registration Department  under  the notification was an illegal impost and could not be  levied. The  High  Court accordingly quashed  the  notification  and directed refund of the fee. The  main point which arises for consideration in this  case is  as  to  whether  or  not  the  fee  charged  under   the notification  issued by the, Chief Commissioner was a  legal impost justified by the provisions of the Constitution.   It is well settled that a fee in order to be a legal fee,. must satisfy two conditions :-               (i)   there must be an element of quid pro quo               that is to say, the authority levying the  fee               must  render some service for the  fee  levied               however remote the service may be;               (ii)  that the fee realised must be spent  for

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             the purposes of the imposition and should  not               form  part  of  the general  revenues  of  the               State. In  the  instant case, it was not disputed before  the  High Court  that the fee realised by the Registration  Department under  the notification above-mentioned was to form part  of the  general  revenues  of  the  State.  It  is,  therefore, manifest that the second element of a fee was wholly wanting in  this  case and the High Court was, therefore,  right  in striking  down  the notification., Mr.  Bhatt  appearing  in support of the appeal, submitted that by virtue of the  fact that  the document was registered, the respondents  obtained initial advantage in using the document as an 659 authentic piece of evidence as proof of title and this  was, therefore. a sufficient service rendered for the  imposition of  the  fee.  Even assuming that this was  so,  the  second essential  ingredient  of  a valid fee, viz.  that  the  fee realised  must  be correlated with expenditure  incurred  on registration   so   as  to  be  spent  on   maintenance   of registration  Organisation, was not satisfied in  this  case and on this ground alone the fee could not   be imposed.  In Mahant Sri Jagannath Ramanuj Das and Anr. v. The  State   of Orissa and Anr.(1), this Court observed as follows :-               "Two elements are thus essential in order that               a  payment may be regarded as a fee.   In  the               first   place,   it   must   be   levied    in               consideration  of certain services  which  the               individuals   accepted  either  willingly   or               unwillingly.  But this by itself is not enough               to make, the imposition a fee, if the payments               demanded  for rendering of such  services  are               not set apart or specifically appropriated for               that  purpose  but are merged in  the  general               revenue  of the State to be spent for  general               public purposes". The same view was reiterated in Ratilal Panachand Gandhi  v. The State of Bombay and Ors. (2) in  a recent decision of this Court in the case of State  of Maharashtra  and Ors. v. The Salvation Army,  Western  India Territory(3), this Court observed as follows :-               "Thus two elements are essential in order that               a  payment may be regarded as a fee.   In  the               first   place,   it   must   be   levied    in               consideration  of certain services  which  the               individuals   accept   either   willingly   or               unwillingly  and  in  the  second  place,  the               amount collected must be earmarked to meet the               expenses of rendering these services and  must               not go to the general revenue of the State  to               be spent for general public purpose". In  view of the long course of decisions of this Court,  the view  taken by the High Court was absolutely correct and  we are  unable to, find any error of law.  We  understand  that the  notification has not been amended and a maximum fee  of Rs.  100/- has been fixed.  Thus the point becomes  more  or less  academic except for cases arising during a  particular period. For  these  reasons, therefore, we find no  merit  in  this, appeal which fails and is accordingly, dismissed without any order as to costs. S. R.                              Appeal dismissed. (1)  [1954] S.C.R. P. 1046. (2)  [1954] S.C.R.P. 1055. (3)  [1975] 3 S.C. R. 475.

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