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PETITIONER: COMMISSIONER AND SECRETARY TO GOVERNMENTCOMMERCIAL TAXES AND

       Vs.

RESPONDENT: SREE MURUGAN FINANCING CORPORATION  COIMBATOREAND ORS.

DATE OF JUDGMENT23/04/1992

BENCH: FATHIMA BEEVI, M. (J) BENCH: FATHIMA BEEVI, M. (J) KULDIP SINGH (J)

CITATION:  1992 AIR 1383            1992 SCR  (2) 735  1992 SCC  (3) 488        JT 1992 (3)   591  1992 SCALE  (1)900

ACT:           Tamil    Nadu    Chit   Fund   Rules,    1964    : Rule 42-Appendix II-Articles 1 and 8-A.          : Chit Fund--Enhancement of fees for registration of  bye-laws--Levy of fees for filing audited and  certified Balance  sheets--Validity  of--Held levy of  fees  has  live nexus with expenditure incurred for benefit of "chit fund"-- Levy held valid.      ’Tax’ and ’fee’--Distinction between--What is.

HEADNOTE:      Under the Tamil Nadu Chit Funds Act, 1961 no person can start  or  conduct  any chit unless he  registers  with  the Registrar the proposed bye-laws of the chit. An  application for  registration of bye-laws is to be accompanied  by  fees set  out in Appendix II of the Tamil Nadu Chit  Fund  Rules, 1967.  Article  1 of Appendix II was amended  and  the  fees payable  for  registration  of  bye-laws  of  the  chit  was enhanced.  Simultaneously Article 8-A was inserted by  which fees  for filing audited and certified balance sheet by  the chartered Accountants was levied.      The   respondents  challenged  the  validity   of   the amendments  on  the ground that the rates of fees  fixed  in Article  1  and  Article 8-A  were  disproportionately  high having  no nexus to the nature of service rendered  and  the levy was in fact not a fee but a tax.      The  High  Court of Madras struck down  the  amendments holding  that (i) the necessary element of quit pro quo  was absent;   (ii)  the  number  of  the  subscribers   or   the installments to the chit has no nexus with the  registration fee,  and  (iii) that since no scrutiny  or  examination  of balance  sheets  was  required to be done  under  the  Rules therefore no expenditure                                                    736 need  be  incurred and as such no fees could be  levied  for that purpose. Against the decision of the High Court appeals were filed in this Court.      Allowing the appeals and setting aside the judgment  of the High Court, this Court,      HELD : 1. The enhanced fee is justified on the legal as well  as the factual anvil of quid pro quo. Apart  from  the

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appointment  of  Registrar,  its  staff  and  various  other functionaries,  the  scheme  of the  Act  in  its  operation involves  huge expenditure which is entirely met out of  the Fee-fund. The fees collected under the Act have,  therefore, live nexus with the expenditure incurred for the benefit  of the "chit fund" business. [746 G-H, 747 A]      2. The scheme of the Act and the Rules shows that there is  effective supervision and control at every stage of  the functioning  of  the "chit fund" business.  The  High  Court grossly erred in holding that the number of the  subscribers or  the instalments has no nexus with the registration  fee. Every  subscriber  has to enter into an agreement  with  the Foreman who conducts the business on behalf of the  proprie- tors.  The object of the Act and Rules obviously is to  pro- tect  the interest of the subscribers. More the  subscribers more burden on the authorities and as a consequence more fee is required to meet the expenditure. [745 G-H, 746 A]      It is no doubt correct that after registration of  bye- laws  fees are payable under Section 53 of the Act  for  the performance of various other functions by the Registrar  and his  staff, but that is justified in view of the  scheme  of the  Act. The expectation of winning a draw or a bid at  the auction and becoming rich over-night lures the  lower-middle class  and  the poor to subscribe to the chit  fund  out  of their  savings  or  even  by  borrowing  money.  In  such  a situation apart from regulatory measures it is necessary  to have  strict  control and supervision over the  "chit  fund" business.  The  Act and the Rules are  operating  with  that objective. [746 A-C]      3. It cannot be said that it was not required under the Rules  to  scrutinise and investigate the  contents  of  the balance  sheets submitted through the chartered  accountants and as such it was not necessary to do so and that since  no scrutiny or examination of balance-sheets was required to be done, no expenditure need be incurred and as such no fee for that  purpose  could be levied. The registrar  is  justified rather  duty-bound to act in furtherance of the  objects  of the Act and the Rules. Even otherwise when                                                   737 the  Rules  provide  for filing  of  balance-sheets  by  the Chartered Accountants, it is necessary in the context of the rules and the Act to provide machinery to examine and verify the  contents of the balance-sheets. No fault can  be  found with the reasons given by the State for bringing in  Article 8-A  in Appendix II to the Rules. The High Court  fell  into error in quashing the impugned amendments. [747 F-H, 748  A, 746 H]      Kewal  Krishan  Puri v. State of Punjab, [1979]  3  SCR 1217; Sreenivasa General Traders and Ors. v. State of Andhra Pradesh  and Ors., [1983] 4 SCC 353; Commissioner  of  Hindu Religious  Endowments, Madras v. Shri  Lakshmindra  Thirthya Swamiyar,  [1954] SCR 1005; H.H Sudhandara  v.  Commissioner for Hindu Religious and Charitable Endowments, [1963] Suppl. 2  SCR 302; Hingir Rampur Coal Co Ltd. and Anr. v. State  of Orissa   and  Anr.,  [1961]  2  SCR  537;   H.H.Swamiji   v. Commissioner,  Hindu  Religious  and  Charitable  Endowments Department   and   Anr.,   [1980]  1   SCR   368;   Southern Pharmaceuticals chemicals Trichur and Ors. etc. v. State  of Kerala and Ors, etc., [1982] 1 SCR 519, referred to.      Municipal Corporation of Delhi and anr. v. Mohd. Yaseen etc., [1983] 2 SCR 999, relied on.

JUDGMENT:

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    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 582 to 625 of 1988.      From  the  Judgment and Order dated  20.3.1985  of  the Madras High Court in W.P. Nos. 9471, 9472, 9615, 9616, 9668, 9669,  9670, 9671, 9809, 10067, 10082, 10083, 10297,  10391, 10397, 10400, 10430, 10461, 10547, of 1982, W-P Nos. 73, 74, 75,  655,  1509, 1510, 1511, 1714, 1802, 1939,  1970,  1971, 2504,  2519,  2520, 3446, 3447, 3448, 3449, 3752,  3764  and 7767 of 1983 and W.P.Nos. 573, 1426, 6093, of 1984.      V.   Krishnamurthy   and  V.R.  Karthikeyan   for   the Appellants.      K.V. Mohan, Smitha Singh and Chari for the Respondents.      The Judgment of the Court was delivered by      FATHIMA BEEVI, J. These appeals arise out of the common judgment  of  the  Madras  High Court in  a  batch  of  writ petitions  in which the respondents challenged the  validity of  the  amendments effected to Article 1 and  insertion  of Article 8-A to Appendix II of the Tamil Nadu Chit Fund                                                  738 Rules,  1964 (for short ’the Rules’). The High Court in  its judgment  dated  20.3.1985 has struck down  as  invalid  the impugned amendments.      The Tamil Nadu Chit Funds Act, 1961 (The Act)  provides for the regulation of chit funds in the State of Tamil Nadu. ’chit’ is a transaction by which its foreman enters into  an agreement  with  a number of subscribers that every  one  of them shall subscribe certain sum by installments for a defi- nite  period and that each subscriber in his turn as  deter- mined  by  lot or by auction, shall be entitled to  a  prize amount. The sum total of the subscription payable by all the subscribers for any installment of a chit without any deduc- tion for discount or otherwise is chit amount.      It is useful to summarise the scheme of the Act and the rules.  The  Registrar  of chit funds is  appointed  by  the Government under section 51. No person can start or  conduct any chit unless he registers with the Registrar the proposed bye-laws of the chit. Section 7 provides that the Registrar, on  being satisfied that the bye-laws have been  registered, the chit agreement has been filed, and the security required under  section 12 has been furnished by the foreman,  grants "certificate of commencement". The auction or drawing of any chit  commences  only  on obtaining  such  certificate.  The security furnished under section 12 can only he released  by Registrar in accordance with the prescribed procedure.      Under section 16 every foreman has to prepare and  file with  the  registrar  a  duly  audited  balance-sheet.   The defaulting non-prized subscriber is liable to be removed and the aggrieved person has a right of appeal to the  Registrar whose  order  in the matter is final.  Any  substitution  in place of a defaulting subscriber has to be recorded and copy filed  with the Registrar. The rights of the prized or  non- prized  subscribers  in the chit cannot  be  transferred  or interfered with without the previous sanction in writing  of the  Registrar. The foreman is required to maintain all  the records  pertaining  to a chit for a specified  period.  The Registrar is empowered under section 37 to inspect the  chit books and all records after giving due notice. If the Regis- trar is of the opinion that the accounts of any chit are not properly maintained and that such account should be audited, it shall be lawful for him under section 51(4) to have  such account  audited by a chit auditor. The foreman has a  right of  appeal  against the order of the Registrar  refusing  to register bye-laws or to grant a certificate of  commencement or refuse to accept the security or refusing to release the                                                      739

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property  charged  by  way of  security  as  provided  under section 54. Penalty for the contravention of the  provisions is provided under section 56.      The  provisions  of  the  Act  impose  duties  on   the Registrar  and are intended to regulate the conduct  of  the business.  The registrar has to take adequate  security  and keep the same intact until the claims of all subscribers are satisfied  and till the termination of the chit, the  Regis- trar is required to discharge several duties.      Section  63 empowers the Government to make  rules  for carrying out all or any of the purposes of the Act.  Section 53 which provides for levy of fees reads:-          "53. (1) There shall be paid to the Registrar  such          fees  as  the  Government may from  time  to  time,          prescribe for-               (a) the registration of the bye-laws of a chit          under section 3;               (b) the grant of a certificate of commencement          under section 7;               (c)  filing  with the Registrar  of  the  chit          agreement and copies of documents under section 11,          20, 21, 29 and 32;               (d) the inspection of documents under  section          52;               (e)  the  certificate, copy of or  extract  of          documents under section 52;               (f)  the audit of accounts of the foreman  and          the issue of an audit certificate;               (g) such other matters as may appear necessary          to give effect to the purposes of this Act.               (2) A table of fees payable under  sub-section          (1)  shall  be  published in the  Fort  St.  George          Gazette." (Now the Tamil Nadu Government Gazette).      The  Rules  have been framed under section 63.  Rule  3 states  that  the  bye-laws shall provide  for  the  matters specified thereunder. If the Registrar refuses to the regis- ter the bye-laws of a chit, he shall record his reasons                                                     740 for  such refusal in writing and communicate a copy  of  the order  to the applicant. Rule 11 prescribes the  particulars to  be contained in the chit agreement, rule  14  prescribes the  form  of minute of the proceedings and rules 15  to  22 regulate the acceptance and release of security. In the case of  cash  deposited in an approved bank and  transferred  in favour  of  Registrar,  intimation has to be  given  by  the Registrar  to the bank. Under rule 22 the  Registrar  before releasing the security may call upon the foreman to  produce register and books of accounts maintained and issue a notice to  the  subscribers. Registrar has to hear  objections,  if any,  and inquire into the same and record the  decision  in writing.  On the application of the foreman,  the  Registrar shall cause the balance-sheet and profit and loss account to be audited by the chit auditor as expeditiously as possible. Rule  42 states that the fees payable to the  Registrar  for the  matters specified under section 53 shall be as set  out in  Appendix II and shall be paid in cash. Appendix II  con- tains the table of fees for the registration of bye-laws  of chit  under  section  3 as Article 1 and for  the  audit  of accounts under sub-section (4) of section 51 as Article 8.      The impugned amendments are to the following effect:-                          AMENDMENT           In the said Rules, in Appendix II, in the Table of           fees  (1) for Article I and the  entries  relating           thereto,  the following Article and entries  shall           be substituted, namely:-

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         1.  For  the Registration of bye-laws  of  a  chit           under section 3.                                        Rates of Fees. (a)for chits for a term of   Re.1 per subscriber or install- less than one year Rs. 1      ment  which ever is  higher (b) for chits for a term of   subject to a minimum of Rs.50     one year and above        per subscriber or instalment     Re.2.50                   whichever is higher subject to                               a minimum of Rs.50 (i) chit amount of value up  per subscriber or  instalemnt     to Rs.5,000    Rs.5      which ever is higher subject to a                              minimum of Rs. 50                                                        741 (ii) for chit amount of  Per subscriber or instalment which-      value between Rs.   ever is higher subject to a minimum      5,001 and Rs.10,000 Rs.50      Rs.5 (iii)for chit amount of  Per subscriber or instalment which-      value between Rs.   ever is higher subject to a minimum      10,000 and Rs20,000 of Rs.50      Rs.5 (iv) for chit amount of  Per subscriber or instalment which-      value between Rs.   ever is higher subject to a minimum      20,000 and Rs30,000 of Rs.50      Rs.10 (v)  for chit amount of  Per subscriber or instalment which-      value between Rs.   ever is higher subject to a minimum      30,001 and Rs40,000 of Rs.50      Rs.12 (vi) for chit amount of  Per subscriber or instalment which-      value between Rs.   ever is higher subject to a minimum      40,001 and Rs50,000 of RS.50      Rs.15 (vii)for chit amount of  Per subscriber or instalment which-      value exceeding Rs. ever is higher subject to a minimum      50,000     Rs.20    of Rs.50      (2).......      (3)  after  Article  8, as so  amended,  the  following Article and entries shall be inserted, namely:-      "8A. For filing Balance-sheets audited and certified by      Charted Accountant.      (a) When the chit amount does not exceed Rs.500-Rs.10.00      (b)  When the chit amount exceeds Rs.500 for the  first      Rs.500 as under sub-clause (a) and for every Rs.500  or      part thereof in excess of Rs.500 subject to the maximum      of Rs.250. The fee leviable under this clause shall not      exceed  Rs.250".      The  challenge was mainly on the ground that the  rates of fees fixed in article 1 and Article 8-A in Appendix II to the  Rules were disproportionately high having no  nexus  to the nature of services rendered and                                                        742 intended to augment revenue and partake character of tax and as  such the levy suffered from the vice  of  arbitrariness, hostile  discrimination  and  unreasonable  restriction   on trade.  The  High  Court came to  the  conclusion  that  the necessary  element  of quid pro quo was absent and  as  such struck down the amendment on the said ground.      The  High  Court declared the amendment  by  which  the registration  fee  was  enhanced, as  ultra  vires,  on  the following reasoning:-          "When  a Foreman starts a chit, under section 3  he          has  to apply for registration of the bye-laws.  It          is only there after, he can approach the subscriber          and  get  the chit agreements as  prescribed  under

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        Section  5 executed and file them under Section  6.          He cannot commence the business till he secures the          certificate under section 7(2). Therefore, when  an          application  is made for registration of  bye-laws,          at  that stage, section 3(3) authorises the  Regis-          trar to find out as to whether the bye-laws are  in          accord with the provisions of the Act or the  rules          made  thereunder.  As to what the  bye-laws  should          provide, Rule 3 enumerates them. An application for          registration  is to be in Form No.1 accompanied  by          fees  set out in Appendix II. Hence, the number  of          the  subscribers or the instalments, has  no  nexus          with  what  are required to be done  under  section          3(3)  by  the Registrar. Whether they are  more  or          less, it was only a question of furnishing particu-          lars  and  recording them and no more. If  for  the          entire  period of the chit except the  registration          fee  no other fee is demanded and the entire  serv-          ices rendered is covered by this demand alone, then          the correlation claimed could be available. Section          53 enables imposition of fees in respect of  almost          each one of the subsequent stages of the conduct of          the  chit  whenever the authorities are to  be  ap-          proached  or they are to exercise their powers.  In          the context of such provisions having been made  in          the  Act, the registration fees claimed has  to  be          restricted  to what are required to be  done  under          section 3(3)."      The  High Court held Article 8-A to be invalid  on  the following reasoning:-                                                        743          "When  rules themselves do not contemplate  produc-          tion  of  registers, books of  accounts  and  other          records, the claim made that pursuant to the filing          of  the balance-sheet, records have to be  verified          and that the whole matter has got to be  thoroughly          examined is unacceptable. In such of those  matters          where irregularities are noticed, the Registrar can          call  for all the records and scrutinise  them  and          thereafter initiate prosecution or take such  other          action. Such instances would arise in both  catego-          ries. Hence, when the rules themselves  contemplate          a  different  type  services to  be  rendered  when          Chartered Accountant’s Certificates are filed,  the          fee impossable under Article 8-A cannot be the same          as in Article 8 which contemplates more  comprehen-          sive services to be rendered. Therefore as  rightly          pleaded  by the petitioners, the necessary  element          of  quid  pro quo is not existing  and  furthermore          this  is  an unreasonable restriction on  right  of          trade  and  the rate fixed is aimed  at  increasing          general revenues."      The  High Court relied upon the judgment of this  Court in Kewal Krishan Puri v. State of Punjab, [1979] 3 SCR  1217 wherein  it was observed that a substantial portion  of  the amount  collected  on account of fees, must  be  shown  with reasonable  certainty as being spent for rendering  services to  justify  the  quid pro quo  which  is  a  distinguishing feature of "fee" from "tax".      This  Court in sreenivasa General Traders &  others  v. State of Andhra Pradesh & others [1983] 4 SCC 353 considered Kewal Krishan Puri’s case and observed as under:-           "The decision in Kewal Krishan Puri case does  not          lay down any legal principle of general applicabil-          ity. The observation made therein seeking to  quan-

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        tify  the extent of correlation between the  amount          of  fee  collected and the cost   of  rendition  of          service,  namely, "At least a good and  substantial          portion of the amount collected on account of fees,          may be in the neighbourhood of two-thirds or three-          fourths, must be shown with reasonable certainty as          being spent for rendering services in the market to          the payer of fee", appears to be an obiter. It  was          not intended to lay down a rule of universal appli-          cation but it                                                 744          was  a decision which must be confined to the  spe-          cial facts of that case."      This  Court  in several judgments over a period  of  40 years has authoritatively crystalised the  contradistinction between  "tax"  and "fee". The judgments of  this  Court  in Commissioner  of Hindu Religious Endowments, Madras v.  Shri Lakshmindra  Thirthya Swaminyar, [1954] SCR 1005; H.H.  sud- handara  v. Commissioner for Hindu Religious and  Charitable Endowments, [1963] Suppl. 2 SCR 302; Hingir Rampur Coal  Co. Ltd.  & another v. State of Orissa & another, [1961]  2  SCR 537;  H.H.  Swamiji  v. Commissioner,  Hindu  Religious  and Charitable Endowment Department & another, [1980] 1 SCR  368 and southern Pharmaceuticals and Chemicals Trichur &  Others etc. v. State of Kerala and Others etc., [1982] SCR 519 were considered  by this Court in Municipal Corporation of  Delhi and  another v. Mohd. Yaseen etc., [1983] 2 SCR  999  wherin the  Court  speaking  through Chinnappa  Reddy,  J  held  as under:-      "   What  do we learn from these precedents?  We  learn          that  there is no generic difference between a  tax          and  a  fee, though broadly a tax is  a  compulsory          exaction as part of a common burden, without  prom-          ise of any special advantages to classes of taxpay-          ers  whereas a fee is a payment for  services  ren-          dered,  benefit  provided or  privilege  conferred.          Compulsion  is not the hallmark of the  distinction          between  a tax and a fee. That the money  collected          does not go into a separate fund but goes into  the          consolidated fund does not also necessarily make  a          levy a tax. Though a fee must have relation to  the          services  rendered,  or the  advantages  conferred,          such  relation  need not be direct: a  mere  causal          relation may be enough. Further, neither the  inci-          dence  of the fee nor the service rendered need  be          uniform. That others besides those paying the  fees          are also benefited does not detract from the  char-          acter  of the fee. In fact the special  benefit  or          advantage  to  the payers of the fees may  even  be          secondary  as compared with the primary  motive  of          regulation in the public interest. Nor is the Court          to  assume  the role of a cost accountants.  It  is          neither  necessary  nor  expedient  to  weight  too          meticulously the cost of the services rendered etc.          against  the  amount  of fees collected  so  as  to          evenly balance the                                                        745          two. A broad correlationship is all that is  neces-          sary.  Quid Pro Quo in the strict sense is not  the          one and only true index of a fee; nor is it  neces-          sarily absent in a tax."      In  Mohd.  Yaseen’s case the Municipal  Corporation  of Delhi enhanced the slaughtering fee is respect of two  cate- gories  of animals by eight fold. Some Butchers of the  city questioned  the  revision of rates on the  ground  that  the

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proposed  enhanced  fee was wholly disproportionate  to  the cost of services and supervision and was in fact not a  fee, but a tax. During the pendency of the writ petitions in  the High Court, by virtue of an interim arrangement, the Munici- pal Corporation of Delhi was permitted to collect  slaughter fee at double the rates (instead of 8 times) and as a result thereof the Corporation realised a sum of Rs. 4,24,494.  The budget  of the Corporation showed a sum of Rs.  2,56,000  as the  expenditure involved in connection with  the  slaughter house.  The High Court came to the conclusion that  even  if the  original fee was doubled the amount realised  would  be more  than sufficient to meet the expenditure involved  and, therefore,  there  was no reason at all for  increasing  fee eight fold and so the proposed fee was not fee but a tax for which  there is no legislative mandate. This  Court  allowed the  appeal and set aside the judgment of the  High   Court. This  Court  clarified the concept of "fee"  which  we  have quoted above. We respectfully agree with the same.      The  Act and the Rules provide complete  mechanism  for the  control, supervision and regulation of the "chit  fund" business in the State of Tamil Nadu. No person can start  or conduct any "chit" unless he registers the proposed bye-laws in  accordance with the procedure prescribed. It  is  common knowledge that there are large number of subscribers to the "chit  fund"  business.  The Act  and  the  Rules  primarily protect  the  subscribers  and  in  the  process  help   the proprietors  to  run  the  "chit  fund"  business  to  their advantage. There are elaborate provisions under the Act  and the  Rules providing investigation into the  functioning  of the  said business. The scheme of the Act and the  Rules  as detailed  in  the earlier part of the  judgment  shows  that there is effective supervision and control at every stage of the functioning of the "chit fund" business. The High  Court grossly erred in holding that the number of the  subscribers or  the instalments has no nexus with the registration  fee. Every  subscriber  has to enter into an agreement  with  the Foreman who conducts the business on behalf of the                                                        746 proprietors.  The  object of the Act/Rules obviously  is  to protect the interest of the subscribers. More the  subscrib- ers  more burden on the authorities under the Act/Rules  and as  a consequence more fee is required to meet the  expendi- ture. It is no doubt correct that after registration of bye- laws  fees are payable under Section 53 of Act for the  per- formance of various other functions by the Registrar and his staff,  but that is justified in view of the scheme  of  the Act.  The  expectation  of winning a draw or a  bid  at  the auction and becoming rich over-night lures the  lower-middle class  and  the poor to subscribe to the chit  fund  out  of their  savings or even by borrowing money. In such a  situa- tion apart from regulatory measures it is necessary to  have strict  control and supervision over the "chit  fund"  busi- ness.  The Act and the Rules are operating with that  objec- tive.  The counter affidavit filed by the State  before  the High Court justified the enhancement of the registration fee inter alia on the following grounds:-          ".....Considering  that  in  respect  of  chits  of          longer  duration and larger number of  instalments,          greater  amount  of service had to be  rendered  in          that, more minutes etc., were filed, it is  equita-          ble  and fair to fix the fees for  registration  of          bye-laws  with regard to number of  instalments  of          duration  of  chits. The fees were  revised  taking          these  facts into consideration. It has also to  be          verified  whether  the  foreman  has  taken  proper

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        security  for future payment of  subscription  from          the prized subscriber, whether proper receipts were          obtained for the payment of prize monies and on due          dates,  if  not whether the prize amount  has  been          deposited  in  a  Bank as required by  the  Act  by          verifying  receipts  of deposit etc.  The  extracts          filed  in  respect  of  removal,  substitution  and          assignment  etc.  have also to be verified  and  in          respect  of higher chit amounts in long term  chits          for longer duration these transactions will be more          and they impose greater responsibility on the  Chit          Registrar.  The  work connected with  watching  the          filing  of various documents by the Foreman on  the          due dates and in proper form also takes  considera-          ble time....."      We are of the view that the High Court fell into  error in  quashing the impugned Amendments. The enhanced  fee,  in this case, is justified on the legal as well as the  factual anvil of quid pro quo. Apart from the                                                        747 appointment  of Registar, its staff and various other  func- tionaries,  the scheme of the Act in its operation  involves huge expenditure which is entirely met out of the Fee-Fund . The fees collected under the Act have therefore, live  nexus with  the expenditure incurred for the benefit of the  "chit fund"business.      To  justify  Article  8-A prescribing  fee  for  filing balance sheets by the chartered accountants it was stated as under:          "......I submit that pursuant to the filing of  the          balance-sheet  records  have to  be  verified.  The          balance-sheet has also got to be examined in detail          to  find out whether it is in conformity with   the          objects  of the chit and also whether  the  figures          tally  with regard to the collections and  payments          of  Prize amount and whether the Prize amount  also          correctly  reflects  the  scope of  each  chit  and          whether  the  commission of the  foreman  has  been          correctly  worked out. In short, the  whole  matter          has  got to be thoroughly examined to  see  whether          that Particular years’ transactions fully  reflects          the scope of each chit and whether the  collections          and disbursements including the commission retained          by  the  foreman have all been done  in  conformity          with  the  Act and the Rules,since it is  the  sub-          scriber’s  interest  which is paramount.  I  submit          that all these involve the services of the staff of          the office of the Registar".      The High Court was wholly unjustified in rejecting  the above  quoted reasoning for levying fee under  Article  8-A. The  High Court reached the conclusion that it was  not  re- quired  under  the rules to scrutinise and  investigate  the contents  of the balance sheets submitted through the  char- tered accountants and as such it was not necessary to do so. The  High  Court  further found that since  no  scrutiny  or examination  of balance-sheets was required to be  done,  no expenditure  need  be incurred and as such no  fee  for  the purpose could be levied. We do not agree with the High Court reasoning.  The Registrar is justified rather duty-bound  to act in furtherance of the objects of the Act and the  Rules. Even  otherwise  when the Rules provide for filling  of  the balance sheets by the Chartered Accountants, it is necessary in the context of the rules and the Act to provide machinery to examine and verify the contents of the balance-sheets. No fault  can be found with the reasons given by the State  for

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bringing in Article 8-A in                                                      748 Appendix II to the Rules.      We,  therefore, allow the civil appeals and  set  aside the judgment of the Madras High Court dated March 20,1985  . The writ Petitions filed by the respondents-Petitioners  are dismissed with costs. We quantify the costs as Rs. 20,000 to be paid jointly by all the respondents-petitioners in  these cases. T.N.A.                                  Appeals allowed.                                                        749