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PETITIONER: P.M. ASHWATHANARAYANA SETTY & ORS. ETC. ETC.

       Vs.

RESPONDENT: STATE OF KARNATAKA & ORS.

DATE OF JUDGMENT22/09/1988

BENCH: VENKATACHALLIAH, M.N. (J) BENCH: VENKATACHALLIAH, M.N. (J) PATHAK, R.S. (CJ) NATRAJAN, S. (J)

CITATION:  1989 AIR  100            1988 SCR  Supl. (3) 155  1989 SCC  Supl.  (1) 696 JT 1988 (4)   639  1988 SCALE  (2)844  CITATOR INFO :  F          1990 SC 913  (27)

ACT:     Bombay Court Fees Act, 1959-Ad valorem Court fee without any  upper  limit had to be paid on grants of  probate  etc. discriminatory. %     Constitution of India 1950: Court fees--Levy of  uniform ad valorem levy without prescribing any upper limit--Whether alters  character  of levy and converts if from  ‘fee’  into ‘tax’--Whether legal and permissible.     Karnataka  Court  Fees and Suits Valuation  Act,  1958-- Rajasthan  Court Fees and Suits Valuation Act,  1961--Bombay Court Fees Act, 1959-Constitutional validity of.     ‘Tax’   and  ‘fee’-  Distinction  between   governmental agencies imposing fee to justify impost and its  quantum  as return for for special services.     Courts cannot compel State to bring forth legislation to implement  and effectuate Directive Principles--Doubt as  to constiutionality  of  law--To  be  resolved  in  favour   of constitutionality of the law.     Karnataka  Court  Fees and Suits  Valuation  Act,  1958- Section 20 and Article 1 Schedule 1 Court  Fees--Imposition- of-Uniform   ad valorem levy at rate of Rs. 1 for every  Rs. 10--Of  the  amount or value of the subject  matter  without prescribing   any  upper  limit-Whether  valid,  legal   and constitutional.     Rajasthan  Court  Fees And Suits  Valuation  Act,  1961: Section 20 and Article 1 Schedule 1--Court fees--Uniform ad- valorem  impost of  Rs.5--For every Rs. 100     art  thereof without   any  upper  limit--  Whether  valid,   legal   and constitutional.

HEADNOTE:     These     three     groups     of     special      leave petitions/appeals/writ  petitions  concern  the  policy  and legality  of the levy of Court fees under the Provisions  of the Karnataka Court Fees and Suits valuation Act, 1958,  the                                                    PG NO 155                                                    PG NO 156

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Rajasthan  Court Fees and Suits Valuation Act, 1961 and  the Bombay Court Fees Act, 1959.     The petitioners from Rajasthan had challenged before the High Court the constitutional validity of the provisions  of section  20 read with Article 1 Schedule 1 of the  Rajasthan Act  which prescribed and authorised the levy of  court-fees on  an uniform ad valorem basis without the prescription  of any upper limit. the High Court upheld the constitutionality of the impugned provision.     The   appeal  and  the  special  leave  petitions   from Karnataka  are  directed  against the common  order  of  the Karnataka   High  Court  upholding  the  validity   of   the corresponding provision of the Karnataka Act which similarly imposed  an  ad-valorem court fee  without  prescribing  any upper   limit.  The  writ  petitions  have  challenged   the provision directly in this Court.     So  far  as the Bombay Act is concerned,  the  State  of Maharashtra  has come up in appeal against the  judgment  of the  Division Bench of the Bombay High Court  affirming  the order  of  the  learned  Single  Judge  striking  down   the provisions of section 29(1) read with entry 10 of Schedule I of  the  Act in so far as they purport to prescribe  an  ad- valorem  court  fee, without any upper limit, on  grants  of probate, letters of administrative etc., while in respect of all  other suits, appeal and proceedings an upper  limit  of court-fee  of Rs.15,000 is prescribed. The High  Court  held this prescription of ad-valorem court-fee without any  upper limit    on   this   class   of   proceedings   alone    was constitutionally  impermissible in that it sought to  single out this class of litigants.     It was contended on behalf of the petitioners/appellants that  (i) the imposition of court fees at nearly 10% of  the value  of the subject matter in each of the  courts  through which  the case sojourns before it reaches a  finally  would seriously detract from fairness and justness of the  system; (11)  the exaction of ad-valorem fee uniformly at a  certain percentage  of the subject matter without an upper limit  or without  the  tapering down after a  certain  stage  onwards would  negate  the  concept of e fee and  part-take  of  the character  of  a tax outside the boundaries of  the  State’s power; (111) the ad-valorem yardstick, which is relevant and appropriate to taxation, is wholly inappropriate because the principle  or  basis of distribution in the case  of  a  fee should  be  the  proportionate  cost  of  services  inter-se amongst  the beneficiaries; (iv) in the very nature  of  the Judicial  process,  a stage is reached  beyond  which  there could  be  no proportionate or progressive increase  in  the services  rendered  to a litigant  either  qualitatively  or                                                    PG NO 157 quantitatively;  (v)  in  the process  of  ‘adjudication  of disputes  before courts, judicial-time and the machinery  of justice  are not utilised in direct proportion to the  value or the amount of the subject matter of the controversy; (vi) a  recognition  of  the  outermost  limit  of  the  possible services  and a prescription of a corresponding upper  limit of  court  fee should be made, lest the levy, in  excess  of that conceptual limit, becomes a tax; and (vii) though India is  a  federal polity, the judicial system, however,  is  an integrated  one  and that therefore different  standards  of court fee in different States would be unconstitutional .     The  contentions of the State were that (i) as  long  as their  power  to  raise the funds to meet  the  expenses  of administration of civil justice was not disputed and as long as the funds raised show a correlation to such expenses, the States should have sufficient play at the joints to work-out

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the  incidents of the levy in some reasonable and  practical way;  (ii)  it would, quite obviously, be  impracticable  to measure-out  the levy directly in proportion to  the  actual judicial  time consumed in each individual case,  hence  the need  to tailor some rough and ready workable  basis  which, though may not be an ideal or the most perfect one, would at least be the least hostile; (iii) if an upper limit is fixed and the collection fell short of what the Government intends and is entitled to collect, this would eventually result  in the  enhancement of the general rates of court-fee  for  all categories;  (iv)  if the value of the subject matter  is  a relevant  factor  in proportioning the burden of  the  court fee.  where  the  line  should  be  drawn  in  applying  the principle  it  is more a matter of  legislative  wisdom  and preference  than  of  the  strict  judicial  evaluation  and adjudication;  and  (v)  courts   cannot-compel  the   State to bring-forth any legislation to implement and effectuate a Directive Principle.     Dismissing  the appeals, writ petitions and the  special leave petition, this Court,     HELD: ( I) All civilised Governments recognise the  need for  access to justice being free. Whether the whole of  the expenses   of  administration  of  civil  justice   also--in addition  to those of criminal justice--should be  free  and met  entirely  by public revenue or  whether  the  litigants should contribute and if so, to what extent, are matters  of policy. [170G]     (2)  A fee is a charge for the special service  rendered to a class of citizens by Government or Government  agencies and is generally based on the expenses incurred in rendering the services. [174B]                                                    PG NO 158     The Commissioner, Hindu Religious Endowments, Madras  v. Lakshmindra Thirtha Swamiar of Shirur Mutt., [1954] SCR  (1) 1005  and Om Prakash Agarwal v. Guni Ray, AIR 1986 (SC)  726 referred to.     (3) It is for the governmental agencies imposing the fee to  justify its impost and its quantum as a return for  some special services.     (4) Once a broad correlation between the totality of the expenses  on the services, conceived as a whole, on the  one hand and the totality of the funds raised by way of the fee, on  the other, is established, it would be no part  of  the legitimate    exercise   in   the   examination    of    the constitutionality of the concept of the impost to embark its effect in individual cases. Such a grievance would be one of disproportionate  nature  of the distribution  of  the  fees amongst those liable to contribute and not one touching  the conceptual nature of the fee. [184A-B]     (5)  The test is one of the comprehensive level  of  the value  of the totality of the services, set off against  the totality  of the receipts. If the character of the ‘fee’  is thus  established, the vagaries in its Distribution  amongst the  Class,  do not detract from the concept of a  ‘fee’  as such,  though a wholly arbitrary distribution of the  burden might violate other constitutional limitations. [185G]     Municipal Corporation of Delhi & Ors. v. Mohd .  Yasin., [1983]  3  SCC  233;  H.H.  Sudhundra  Thirtha  Swamiar   v. Commissioner  for Hindu Religious & Charitahle  Endowments., [1963] Supp. 2 SCR 302; Sreenivasa General Traders & Ors. v. Andhra  Pradesh  & Ors., [1983] 1 AIR (SC) 1248;  State  of’ Maharashtra  &  Ors. v. The Salvation  Army,  Western  India Territorv  [1975]  3 SCR 485; Kewal Krishan Puri &  Anr.  v. State  of  Punjab  &  Ors. [1979]  3  SCR  1244;  Secretary. Government of’ Madras, Home Department & Anr. v. Zenith Lamp

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JUDGMENT: &  Anr.  v.  State  of  Kanataka,  AI  1979  (SC)  119;  The Commissioner  Hindu  Religious  Endowments  Madras  v.   Sri Lakshmindra Thirtha Swantiar of Sri Shirur Mutt., [1954] SCR 1005;  Om Prakash Agarwal v. Giri Raj Kishori, [1986] SCC  1 730; N.M. Desai v. The  Teesteels Ltd. & Anr., AIR 1980  (2) SC  2125; Lady Tanumuti Girijaprasad & Anr. v. Special  Rent Acquisition   Officer,   Western   Railway   Special   Civil Application  No. 979 of 1970 with Special Civil  Application 287   of   1967;  The  City  Corporation   of   Calicut   v. Thachambalath  Sadasvian & Ors., [1985] 2 SCC 115,  referred to.     Indian  Organic Chemicals v. Chemtax Fibres, [1983]  Bom LR  406 Secretary, Government of Madras Home  Department  v. Zenith  Lamp  &  Electrial  Ltd.,  ILR  1968  (Madras)   247 overruled.                                                    PG NO 159     (6)  Though legislative measures dealing  with  economic regulation are not outside article 14, it is well recognised that the State enjoys the widest latitude where measures  of economic regulation are,concerned. These measures for fiscal and economic regulation involve an evaluation of diverse and quite often conflicting economic criteria and adjustment and balancing of various conflicting social and economic  values and  interests. It is for the State to decide what  economic and social policy it should pursue and what  discriminations advance  those social and economic policies. In view of  the inherent complexity of these fiscal adjustments, courts give a larger discretion to the Legislature in the matter of  its preferences  of economic and social policies and  effectuate the  chosen  system  in all possible  and  reasonable  ways. [187G-H; 188A-B]     East  India  Tobacoo  Co. v. State  of  Andhra  Pradesh, [1963] 1 SCR 411; The State of Gujarat & Anr. v. Shri Ambica Mills Ltd. Ahmedabad, [1974] 3 SCR 764 referred to.    (7) The lack of perfection in a legislative measure  does not necessarily imply its unconstitutionality. It is rightly said that no economic measure has yet been devised which  is free  from  all  discriminatory impact and that  is  such  a complex  arena in which no perfect alternatives  exist,  the court  does  well not to impose too rigorous a  standard  of criticism.  under  the equal  protection  clause.  reviewing fiscal services. [189F-G ]     G.K.  Krishnan etc. v. The Slate of Tamil Nadu [1975]  2 SCR  715  730; San Antonic Independent  School  Districf  v. Bodriguer. 411 U.S.I. at p. 41.     Income  Tax  Officer, Shillong & Anr. v.  N.  Takim  Roy Rymbai etc. [1976] 3 SCR 413, referred to.     8.  It  is  trite that for purposes  of  testing  a  law enacted  by  one State in exercise of  its  own  independent legishtive powers for its alleged violation of Article 14 it cannot  be  contrasted-with laws enacted  by  other  States. [192C]     The  State of Madhya Pradesh v. G.C. Mandawar, [1955]  1 SCR 599, referred to.     (9)  Having regard to the nature and complexity of  this matter It is, perhaps, difficult to say that the  ad-valorem principle  which may not be an ideal basis for  distribution of  a fee can at the same time be said to  be so  irrational                                                    PG NO 160 as to incur any unconstitutional infirmity. The  presumption of  constitutionality of laws requires that any doubt as  to the constitutionality of a law has to be resolved in  favour of constitutionality. Though the scheme cannot be upheld, at the same time, it cannot be struck down either. [192E-F]

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   (10)  The  State  is in theory  entitled  to  raise  the totality  of  the expenses by way of fee.  Any  interference with  the present yardstick for sharing the burden might  in turn  produce a yardstick less advantageous to litigants  at lower levels. [192G]     (11)  The High Court has struck down the  provisions  of section 29(1) read with entry 10 of Schedule I of the Bombay Court  Fees Act, 1959 on the ground that the levy  of  court fee  on  proceedings  for grant of probate  and  letters  of administration ad-valorem without the upper limit prescribed for all other litigants is discriminatory. If in respect  of all  other suits of whatever nature and complexity an  upper limit  of Rs.15,000 on the court fee is fixed, there  is  no logical  justification for singling out this proceeding  for an ad-valorem impost without the benefit of some upper limit prescribed   by  the  same  statute  respecting  all   other litigants. [193A-B; F]     (12) The Directive Principles of State Policy though not strictly  enforceable in courts of law, are yet  fundamental in the governance in the country. They constitute fons-juris in a Welfare  State. [194E]     U.B.S.E. Board v. Hari Shanker, AIR 1979 SC 69  referred to.     (13) The power to raise funds through the fiscal tool of a  ‘fee’ is not to be confused with a compulsion to  do  so. While  ‘fee’ meant to defray expenses of services cannot  be applied towards objects of general public utility as part of general revenues, the converse is not valid. General  Public revenues  can,  with  justification, be  utilised  to  meet, wholly  or  in  a  substantial part,  the  expenses  on  the administration of civil justice. [194G-H]     (14)  The prescription of such high rates of  court-fees even  in  small  claims as also without an  upper  limit  in larger  claims  is  perilously close  to  arbitrariness,  an inconstitutionality. [194E]     (15)  Though the Court has abstained from striking  down the      legislation,  yet,  it appears to  the  Court  that immediate  steps  are  called  for  and  are  imperative  to rationalise the levies. [195C]                                                    PG NO 161

&     CIVIL  APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) Nos. 2604-06 of 1988 etc.     From  the  Judgment  and Order dated  6.11.1987  of  the Karnataka  High Court in W.P. Nos. 3138 of 1987,  12784  and 18359 of 1986.     F.S.   Nariman,   B.R.L.  Iyengar,  L.N.   Sihna,   K.K. Venugopal,  Soli J. Sorabjee, Dr. Y.S. Chitale, U.R.  Lalit, M.S.  Nesargi,  S.K.  Dholakia,  A.5.  Bobde,  Adv.   Genl., Aruneshwar Gupta, B.P. Gupta, Sudhir Gupta, Inderbit  Singh, L.R.  Singh, Rakesh Khanna, R.P. Singh, P.H. Parekh,  Sanjay Bhartary,  S.S. Javali, R. Ramachandran, P.G. Gokhale,  Raja Venkatappa Naik, N.N. Sharma, P. Mahale, S.K. Kulkarni, D.L. N.  Rao, Surya Kant, E.C. Vidvasagar, R.B. Mehrotra,  D.N.N. Reddy,  N. Nettar, Kailash Vasdev, G.L. Rawal,  S.C.  Birla, Miss C.K. Sucharita, Mohan Katarki, Mrs. Kiran Suri,  K.M.K. Nair,  S.N.  Bhat,  R.P. Wadhwani and A.S.  Bhasme  for  the Petitioners.     Kuldip  Singh, Additional Solicitor General, K.N.  Bhat, D.R.  Dhanuka, Anil Mehta, P.R. Ramasesh, Badri Das  Sharma, K.  R.  Dhanuka, R.C. Misra and Dr. Meera  Agarwal  for  the Respondents.

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   The Judgment of the Court was delivered by     VENKATACHALIAH,  .J. The point in these appeals  is  the recurring and vexed theme of the policy and legality of  the levy of Court fees--ad-valorem on the value or amount of the subject-matter of suits and appeals without the prescription of  any upper limit--under the provisions of  the  Karnataka Court Fees and Suits Valuation Act 1958 ("Karnataka Act’ for short).  The Rajasthan Court Fees and Suits  Valuation  Act, 1961  (Act 23 of 19f)]) (‘Rajasthan Act’ for short) and  the Bombay Court Fees Act, 1959 (‘Bombay Act’ for short).     So  far  as  the ‘Bombay Act’ is  concerned,  the  point raised  in the concerned appeals is a limited one,  confined to  the question of the validity of Section 29(1) read  with entry  10 of the First-Schedule to the ‘Bombay  Act’  which, without  reference  to  the  upper limit  of  Court  Fee  of Rs.15,000  prescribed for all other suits  and  proceedings, requires payment of ad-valorem Court fee on proceedings  for grants of probate and letters of administration. One of  the grounds of challenge so far as this provision in the ‘Bombay Act’ is concerned, is the constitutional impermissibility of an  unlimited exaction by way of court fee, which is  common to other  appeals  as well. The other contention against the                                                    PG NO 162 validity  of Section 29(1) read with Entry 10 of the  First- Schedule  to the ‘Bombay Act’ is based on Article 14 of  the Constitution on the ground of discrimination as between  the proceedings   for   grant   of  probate   and   Letters   of Administration  on  the  one hand and all  other  suits  and proceedings respecting which an upper limit of Rs.15,000  is fixed under the statute, on the other.     2.  The  present  batch of  appeals  and  Special  Leave Petitions comprise of a large number of cases arising  under the said three Statutes. We may, however, refer to the facts of some of the cases which could be taken to be typical  and representative of all other cases of each group.     Special  Leave Petition 13344 of 1988 typifies,  and  is representative of he appeals and Special Leave Petitions  at arise  out of the Rajasthan Court Fees and  Suits  Valuation Act,  1961.  The  petition arises out  of  and  is  directed against  the  common order dated 16th October, 1987  of  the Division  Bench  of the Rajasthan High  Court  in  Division1 Bench Civil Writ Petition No. 474 of 1984 and a large number of  writ  petitions  involving the same  question.  In  Writ Petition  No. 474 of 1984, the present appellant--The  State Bank   of  India--challenged  before  the  High  Court   the Constitutional validity of the provisions of Section 20 read with  Article  1  Schedule 1 of the  ‘Rajasthan  ,Act  which prescribed and authorised the levy of court-fees on  plaints or written statements pleading a set-off or counter-claim or memoranda  of  appeals presented to Courts  an  uniform  ad- valorem  impost  of Rs.5 for every hundred  Rupees  or  part thereof  on  the amount or value of  the  subject-matter  in excess  of Rs.5,000. On the first slab of  Rs.5.000  however certain rates are also prescribed.     We may. briefly. trace the course of development of  the law as to Court-fee in Rajasthan. The Rajasthan Ordinance  9 of  1950,  adapted  and  extended  to  the  territories   of Rajasthan  with  effect 1.3.1950, the Court Fees  Act,  1870 (Central  Act, 1870). The provisions of the Central Act,  as adapted and extended to Rajasthan, were amendment from  time to time till 1.11.1961 when the present ‘Rajasthan Act’  was enacted and promulgated. Prior to 1.11.1961, at the law  the stood. the levy of court-fee was subject to  the maximum  of Rs.7,500. This ceiling was done away with under the  present Rajasthan  Act and Court fee ad-valorem at 5%,  without  any

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upper limit  was imposed under the impugned provisions.     On 25.4.1984 the appellant-bank instituted. in the Court                                                    PG NO 163 of District Judge, Jaipur City, a suit for recovery of a sum of  Rs.5,04,75,826 from the defendant in the suit viz.,  The Jaipur Spinning and Weaving Mills Ltd. The Court-Fee payable on  the said plaint under Section 20 read with Article 1  of the  Schedule  1  of the ‘Rajasthan Act’ was  stated  to  be Rs.25,23,860.  Incidently, it was pointed out by  Shri  F.S. Nariman, learned Senior Advocate for the appellant that  the court-fee   payable  on  this  plaint  alone  would   amount approximately to 1/7th of the total estimated collection  of court-fee  for  the  year 1983-84  which  was  estimated  at Rs.176.41 lakhs in the State.     4. Special Leave Petitions 832 of 1988 and 833 of 1988-- which  are representative of the Karnataka cases--arise  out of and are directed against the common order dated  6.1.1988 of the Division Bench of the Karnataka High Court  upholding the   validity  of  the  corresponding  provisions  of   the Karnataka   Court   Fees  and  Suit  Valuation   Act,   1958 (‘Karnataka  Act’ for short) which similarly impose  an  ad- valorem  court  fee  on  the  plaints,  written  statements, pleading  set-of or counter claims, or memoranda of  appeals presented  to  any court, an at-valorem  court  fee  at  the uniform rate of Re.1 for every Rs.10 of the amount. or value of  the  subject matter in dispute without  prescribing  any upper limit.     The Bank of Baroda, the petitioner in the Special  Leave Petition 832 of 1988, questions the correctness of the  view taken  by  the Karnataka High Court in the  large  batch  of cases  disposed of by it upholding the constitutionality  of the provisions in the ‘Karnataka Act’ .     Appellant-bank  had brought, in one of the civil  courts in  Karnataka, a suit for recovery of  Rs.16,97,811.57  from the  defendants therein and was called upon to pay  a  court fees of Rs.1,69,792 on the plaint. The provisions of section 20 read with Article 1 of Schedule 1 of the ‘Karnataka  Act’ are  in  pari-materia with Section 20 read with  Article  1, Schedule 1 of the ‘Rajasthan Act’ except for the rate of fee which is substantially higher under the ‘Karnataka Act’. The questions  that  arise  in the  appeals  and  Special  Leave Petitions  from  Karnataka and Rajasthan  are  substantially similar.     5.  In  Civil  Appeal No. 1511 of  1988,  the  State  of Maharashtra has come up in appeal against the Judgment dated 1.2.1988  of  the Division Bench of the  Bombay  High  Court affirming  the order dated 20.11.1987 of the Learned  Single Judge  striking  down the provisions of Section  29(1)  read with entry 10 of Schedule 1 of the ‘Bombay Act’ in so far as                                                    PG NO 164 they  purport to prescribe an ad-valorem court fee,  without any   upper  limit,  on  grants  of  probate,   letters   of Administration  etc., while in respect of all  other  suits, appeals  and proceedings an upper limit of court-fee of  Rs. 15,000 is prescribed under the ‘Bombay Act’. The Bombay High Court  has,  by  its judgment now  under  appeal  held  this prescription of ad-valorem court-fee without any upper limit on   this  class  of  proceedings   alone   constitutionally impermissible  in that it seeks to single-out this class  of litigants to share a disproportionately higher share of  the burden of fees while all other litigants, whatever the value of their claim or complexity of the question raised in their cases be, are not required to pay beyond Rs.15,000 which  is fixed as the upper limit in all other cases.     In  W.P.  No. 1105/86 before the High Court  of  Bombay,

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from which C.A. No. 1511/88 now before us arises, Mrs. Jyoti Nikul   Jariwala   and   Jaiprakash   Mungaturam   Bairajra, Respondents  herein,  in  their capacity  as  Executrix  and Executor  respectively as also the Trustees, under the  Last Will  and  Testament  dated 5.3.1985,  said  to   have  been executed by a certain Harihar Jethalal Jariwala alias Sanjiv Kumar had sought probate of the said will. They  challenged, in the writ-petition before the High Court, the order  dated 23.7.1986 of the Prothonotary and Senior Master of the  High Court  of  Bombay  made  in  the  said  probate  proceedings requiring  from  the said Executors a probate  court-fee  of Rs.6,15 814.50 as a condition for the grant of the  probate. The said Executors and Trustees challenged the legality  and validity  of this Memo and also the relevant  provisions  of the  ‘Bombay  Act’ pursuant to and under  the  authority  of which the said order came to be made.     Learned Single Judge of the High Court struck down the impugned  provisions and  the Division Bench has upheld  the decision of the Learned Single Judge.     6. We have heard Sri l .N. Sinha. Sri F.S. Nariman,  Sri K.K.  Venugopal,  Sri Shanti Bhushan,  Sri  B.R.L.  Iyengar. learned Senior Advocates for the appellants in Karnataka and Rajasthan  batch of cases and Sri Kuldip  Singh,  Additional Solicitor  General and Sri Badridas Sharma, Senior  Advocate for the State of Karnataka and Rajasthan respectively.     Sri Bobde, learned Advocate General, Maharashtra and Sri S.K.  Dholakia, Senior Advocate appeared in support  of  the appeals of the State of Maharashtra.                                                    PG NO 165     7. Though a number of contentions covering a wide  field appears  to  have  been raised and argued  before  the  High Courts,  the submissions of Learned Counsel before us  were, however,  less expensive and centred around what was  stated to   belong   to  certain  basic  values   and   ideals   of administration  of  justice in a Welfare-State  and  to  the importance of access to justice and what--in the context  of the  concept of a ‘fee’--is likely to happen to the  concept if an ad-valorem exaction without any upper limit whatsoever is  pushed to a point where the correlationship between  the levy and the service very nearly breaks down. It ceases,  it is said, to be a service and becomes a disservice.  Emphasis was  also  placed on the basic obligations of the  State  to administer  justice  within  its  territories  and  on   the Directive  Principles of State Policy in Article  39A  which enjoins  the State to ensure that opportunities of  securing justice are not denied to any citizen by reason of  economic or other disabilities.     It  was contended that in a system of Administration  of Justice  which was already encumbered by heavy expenses  and long  delays, the imposition of court fees at nearly 10%  of the  value  of  the subject matter in  each  of  the  courts through  which  the  case  sojourns  before  it  reaches   a finality, would seriously detract from fairness and justness of  the  system. The levy--ad-valorem  irrespective  of  the nature  and  quality of the adjudicative  process  the  case attracts and without reference to the demands that it  makes on  the judicial time--would be, it is  urged,  demonstrably unfair  and  it  would be  legitimate  to  acknowledge  that somewhere in the trail of this unlimited levy the sustaining correlation  between  the levy and the service  rendered  is bound to snap. It was urged that the exaction of  ad-valorem fee  uniformally  at  a certain percentage  of  the  subject matter without an upper limit or without the rates  tapering down after a certain stage onwards would negate the  concept of a fee and par-take of the character of a tax outside  the

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boundaries of the State’s power.    It  is true that the twin evils that be devil  the  legal system  and  the  administration of justice  are  the  laws’ delays  and expenses of litigation which have become  almost proverbial.  Court-tee  should not become  another  stifling factor   aggravating   an  already,   explosive   situation. Constitutional  ethos and the new social and economic  order grimly struggling to be born lay great store by the peaceful social  or  economic  change  to  be  achieved  through  the processes  of law. If social and economic change is of  high constitutional   priority,  then,  their  effectuation   and realisation   which   are  directly  proportional   to   the availability  and  efficacy of expeditious  and  unexpensive legal  remedies, must also as a logical  corollory,  receive                                                    PG NO 166 the same emphasis in priorities:     The  public  importance of the question and  the  public interest the policy of court-fee evokes are reflected in the trenchant humour of A.P. Herbert’s "More Uncommon Law"  from the words of the Judge in the fictional Hogby v. Hogby,     "That if the Crown must charge for justice, at least the fee  should be like the fee for postage that is to  say,  it should be the same, however long the journey may be. For  it is  no  fault of one litigant that his plea  to  the  King’s judges  raises  questions more difficult to  determine  than another’s and will require a longer hearing in court. He  is asking for justice, not renting house-property."     There  is  also in the following exchanges  between  the Attorney General and the Judge the echo of the argument that State whose primary duty is to administer justice, should do so out of public  revenues and not put justice up for sale:     The Attorney- General:  "As  to that, milord, may I suggest  one  possible line  of thought? The Crown, in this connection,  means  the whole body of tax-payers. Would it be fair and equitable  if the  general tax-payer had to provide all the facilities  of the courts for the benefit of the litigant? The Judge:            "Why not? Everybody pays for the police, but some people use them more than other. Nobody complains. You don’t have to pay a special fee every time you have a burglary, or ask a policeman the way. I don’t follow you, Sir Anthony. I  will go further. I hold that the Crown not  merely  ought not,  but  is unable, to act in this way, by reason  of  the passage in the Great Charter which I have quoted. The  Rules of  Court, then, which purpose to impose these  charges  are ultra  vires,  unconstitutional, and of no effect:  and  Mr. Hogby may continue to decline to pay them.-’     9. The fortieth clause of the Great Charter of  declared that  Justice shall not be sold, denied or  delayed:  "Nulli Vendemus,   nulli  negabimus,  aut  differemus  rectum   aut justiclam. " What was implicit in the need for this  promise was  that  royal justice was, otherwise,  popular;  but  the                                                    PG NO 167 complaint  was  that  it was too dear and  it  was  slow  in coming.   The   subsequent   course  of   history   of   the administration  of justice in England shows that the  Magna- Carta  did  not  wholly stop the evils  of  delays  in,  and expensiveness  of, Royal Justice but it did, after  all,  do something, perhaps something substantial, to cheapen justice and stop the abuses which were rampant in King John’s Reign: (See History of English law 57-58).     Dr. R.M. Jackson "Machinery of Justice in England" Fifth Ed.,  321,  points out the dependence of  Royal  Justice  in England   in   part   atleast,  on  the   profits   of   its

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administration earned:     "In the past the growth of royal justice was partly  due to  the profits that accrued from  exercising  jurisdiction. The  early  itinerant  justices  were  more  concerned  with safeguarding the King s fiscal rights than with the trial of ordinary actions. A law court was expected to pay for itself and show profit for the king. It is some time since  justice has  been  a  substantial  source of  income,  but  the  old survives in the idea that the courts ought not to be run  at a loss.                                          (Emphasis supplied)     The  court-fee as a limitation on access to  Justice  is inextricably inter-twined with a "highly emotional and  even evocative  subject stimulating visions of a social order  in which  justice  will  be brought within  the  reach  of  all citizens  of all ranks in society. both those  blessed  with affluence and those depressed with their poverty." It is, it is  said, like a clarion call to make the administration  of civil  justice  available to all on the basis  of  equality, equity  and fairness with its corollary that  no-one  should suffer  injustice  be  reason of his  not  affording  or  is deterred  from  access to justice. The need  for  access  to justice, recognises the primordeal need to maintain order in society disincentive of inclinations towards  extra-judicial and  violent means of settling disputes. On this  a  learned authority "access to Justice" by Cappellbtti. Vol . 1,  Book 1,419 says:     "The  need for access to justice may be said to  be  two fold;  first,  we must ensure that the  rights  of  citizens should  be recognised and made effective for otherwise  they not  be  real  hut merely illusory; and  secondly  we   must enable  legal  disputes,  conflicts  and  complaints   which inevitably arise in society to be resolved in an orderly way according  to  the  justice of the case so  as  to  promote.                                                    PG NO 168 harmony  and  peace in society, lest they foster  and  breed discontent  and  disturbance. In truth, the  phrase  itself, "access  to justice", is a profound and powerful  expression of  a  social  need which is  imperative,  urgent  and  more widespread than is generally acknowledged."     10.  The  stipulation  of court-fee  is,  undoubtedly  a deterrent  to  free  "access to justice",  but  one  of  the earlier avowed objects of court-fee was stated to be--as was done in the preamble of the Bengal Regulation which in  1795 imposed   high  court-fees--discouragement  of   litigation, particularly the speculative and the frivolous variety. Lord Macaulay  called  that Preamble "the most  eminently  absurd Preamble,  that was ever drawn". The view of  Macaulay  "The Crisis of the Indian Legal System’’ By Upendra Baxi, 54,  on the subject are worth recalling:     "If what the courts administer be justice, is justice  a thing  which the Government ought to grudge to  the  people? vexatious suits should be instituted. But it is an evil  for which  the  Government  has only itself and  its  agents  to blame,  and  for which it has the power of  proving  a  most efficient remedy. The real way to prevent unjust suits is to take care that there shall be just decision. No man goes  to law  except  in  the hope of succeeding.  No  man  hopes  to succeed in a had cause unless he has reason to believe  that it  will  be  determined according to bad  laws  or  by  bad judges.  Dishonest  suits will never he  common  unless  the public   entertains   an   unfavourable   opinion   of   the administration  of justice. And the public will  never  long entertain  such  an opinion without good  reason  ....  (The imposition  of  court  fees)  neither  makes  the  pleadings

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clearer  nor the law plainer, nor the corrupt  judge  purer, nor the stupid judge wiser. It will no doubt drive away  the honest  plaintiffs who cannot pay the fee. But it will  also drive  away  dishonest  plaintiffs  who  are  in  the   same situation".                                         (Emphasis supplied).     The Krishna Iyer Committee on Legal aid also said:     Something  must be done, we venture to state, to  arrest the escalating vice of burdensome scales of court fee.  That the State should not sell justice is an obvious proposition                                                    PG NO 169 but  the high rate of court fee now levied leaves  no  valid alibi  is  also obvious. The Fourteenth Report  of  the  Law Commission,  the  practice of 2 per cent  in  the  socialist countries,  and the small standard filing fee  prevalent  in many Western Countries make the Indian position indefensible and perilously near unconstitutional. If the legal system is not to be undemocratically expensive, there is a strong case for reducing court fees and instituting suitors fund to meet the  cost directed to be paid by a party because he  is  the loser but in the circumstances cannot bear the burden .                                                  (See P. 35)     11.  The  proverbial  costs of litigation  has  its  own dimensions  of  unpredictability. Even as the outcome  of  a litigation is said to depend on the "glorious  uncertainties of  the Law" the size of the bill of cost a litigant has  to foot is, not so, gloriously foreseeable.     The Evershed Committee Report said:     It  is  notoriously  impossible to count  the  costs  of litigation  beforehand.  It is difficult enough  for  either party to forecast what his own costs are likely to be, since much depends on the manner in which the other side  conducts the  case.  It is utterly impossible to  forecast  what  the other  side s cost will be, and this means that no  litigant can  have the least idea of what he will have to pay  if  he loses the case."     Small  claims and the small litigants are at  a  special disadvantage  in  the  matter  of  costs.  The  expenses  of litigation  very  nearly  consume  the  claim  itself.  This imparts to the policy formulation behind the levy of  court- tee the imperative, of having lower fees for lesser  claims. This  is  an analysis of costs in small claims:  ‘Access  to Justice, Vol. 1. Book 1; 13.     Claims, involving relatively small sums of money  suffer most  from  the  barrier of cost. If the dispute  is  to  be resolved by formal court processes, the costs may exceed the amount in controversy or, if not, may still eat away so much of  the  claim  as  to  make  litigation  futile.  The  data assembled  for  the Florence Project show clearly  that  the ratio  of costs to amount in controversy steadily  increases as  the financial value of the claim goes down. In  Germany, for  example, the cost of litigating a claim for about  U.S.                                                    PG NO 170 $100 in the regular court system is estimated to be  roughly U.S.  $150,  even though only a court of first  instance  is involved, while the cost for a U.S. $5,000 claim,  involving two  instances, would be about U.S. $4,200--still very  high but a substantially smaller proportion of the claim’s value. Examples need not be multiplied in this area; clearly, small claims problems require special attention if access is to be obtained.                                         (Emphasis supplied).     Conversely,  those  who are  endowed  with  considerable financial resources that can be utilised for litigation have obvious  advantages  in pursuing or defending claims  by  or

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against them. It is said: "Access to Justice". Vol. 1.  Book 1 15.     "Persons  or  organisations possessing ,  or  relatively considerable,  financial resources than can be utilized  for litigation have obvious advantages in pursuing or  defending claims. In the first place they can afford to litigate. They are.   in  addition,  able  to  withstand  the   delays   of litigation.  Each of these capabilities, if in the hands  of only  one  party, can be a powerful weapon;  the  threat  of litigation  becomes both credible and  effective.  Similarly one  of two parties to a dispute ma be able to  outspend  he other   and,  as  a  result  present  his   arguments   more effectively.  Passive decision makes, whatever their  other, more  admirable,  characteristics, clearly  exacerbate  this problem  by  relying on the parties  for  investigating  and presenting evidence and for developing and arguing the case"                                   ( Emphasis supplied).     12  These are the realities in the back ground of  which the  impact  of court-fees is to he considered.  Indeed  all civilised  Governments  recognise  the need  for  access  to justice  being  free. Whether the whole of the  expenses  of administration  of civil justice also--in addition to  those of  criminal  justice--should be free and  not  entirely  by public  revenue or whether the litigants  should  contribute and  it  so. to what extent, are matters  of  policy.  These ideals are again to be balanced against the stark  realities of  constraints of finance before any judicial criticism  of the policy acknowledgment should be made of the Government’s power to raise the resources for providing the services from those  who use and benefit from the services. The idea  that there should be uniform fixed fee for all cases, instead  of                                                   PG NO 171 the  ad-valorem  system, has its own nettling  problems  and bristles with anomolies. How far these policy considerations have  an  adjudicative disposition and how  far  courts  can mould and give direction to the policy is much debated.  The Directive   Principles  in  Article  39A  are,   no   doubt, fundamental  in  the governance of the country,  though  not enforceable in courts of law. The following observations  of Chinappa  Reddy, J. in U.B.S.E. Board v. Hari  Shanker,  AIR 1979 SC 69 recognise the limitations of courts:     ".....the  principles are ‘nevertheless  fundamental  in the governance of the country’ and ‘it shall be the duty  of the  state  to  apply  these  principles  in  making  laws’. Addressed to courts, what the injunction means is that while courts  are  not free to direct the making  of  legislation, courts  are bound to evolve affirm and adopt  principles  of interpretation  which will further and not hinder the  goals set out in the Directive Principles of State Policy."                                          (Emphasis supplied)     It  is  in  the light of these  conflicting  claims  and interests that the propositions in the case would require to be resolved.     13.  On  the  contentions  urged  at  the  hearing,  the following points fall for determination, the first three  in Karnataka  and Rajasthan cases, and the last in the  appeals arising under the Bombay Act’.:     (a) Whether the levies of court-fee under the "Karnataka Act" and the "Rajasthan Act" do not satisfy the requirements of  the concept of a ‘fee’ but par-take the character  of  a ‘tax’,  in as much as that the correlationship  between  the fee and the value of the services by way of quid pro quo, is not established.     (b)  Whether, even if the totality of the  expenses   on the administration of civil justice and the totality of  the

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court-fee  collected show a broad correlation, the  levy  of court-fees  on  ad-valorem basis, without  an  Upper  limit, renders the impost a tax, in as much as having regard to the very  nature of the service, which consists of  adjudication of  disputes, a stage is inevitably reached after and  above which an ad-valorem levy, the proportionate increase in  the                                                   PG NO 172 value  of  the  subject matter, ceases to  be  a  ‘fee’  and becomes a ‘tax’.     (c)  Whether,  at all events, the  distribution  of  the burden of the fees amongst those on whom the burden falls as the ad-valorem principles, dependent merely on the amount or value  of the claim in the case irrespective of the  nature, quality  and extent of adjudicative services,  is  arbitrary and violative of Article 14 of the Constitution.     (d)  Whether,  in so far as the  provisions  of  section 29(i) read with Entry 20 Schedule I of the ‘Bombay Act’  are concerned,  singling  out  of a class  of  litigation  viz., applications   for   grant  of  probate   and   letters   of administration for levy of ad-valorem court-fee without  the benefit  of  the  upper limit of Rs.  15,000  prescribed  in respect  of all other suits and proceedings is, as  declared by  the  High Court, exposes that class of  litigants  to  a hostile discrimination and is violative of Article 14 of the Constitution.     14. Re: Contention (a):     The concept of a ’fee’ as distinct from that of a  ‘tax’ in the Constitutional scheme has been considered in a series of  pronouncements  starting from  The  Commissioner,  Hindu Religious Endowments, Madras v. Lakshmindra Thirtha  Swamiar of  Sri  Shirur  Mutt, [1954] SCR 1  1005  upto  Om  Prakash Agarwal v. Guni Ray, AIR 1986 SC, 726.     Of  ‘Fees and Taxes’ a learned author, First  Principles of Public Finance, by De Marco 78 says:     "Levies are divided into two large categories: fees  and taxes.  To this division corresponds the differentiation  of public services as special or general".     "A. Fee" says another author, Public Finance, Third Ed., by Buehler, 519:     "is a charge for a particular service of special benefit to  individuals or to a class and of general benefit to  the public,  or it is a charge to meet the cost of a  regulation                                                   PG NO 173 that primarily benefits society."     "Fees  must  be  paid  to  secure  the  enjoyment  of  a particular  government  service such as the  provisions  for patents,  copyrights, or the registration of mortgages,  and the  services  of  a court or  a  public  official".  Public Finance, Third Edn., p. 519.     Another review of all the earlier pronouncements of this court  on the conceptual distinction between a ‘fee’  and  a ‘tax’  and  the various contexts in  which  the  distinction becomes  telling is an idle parade of familiar learning  and unnecessary. What emerges from these pronouncements is  that if  the  essential  character of the  impost  is  that  some special  service is intended or envisaged as a quid pro  quo to the class of citizens which is intended to be  benefitted by the service and there is a broad and general  correlation between  the amount so raised and the expenses  involved  in providing  the  services,  the  impost  would  par-take  the character  of a ‘fee’ notwithstanding the circumstance  that the  identity  of the amount so raised is  not  always  kept distinguished  but is merged in the general revenues of  the State  and  notwithstanding  the  fact  that  such   special services, for which the amount is raised, are, as they  very

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often  do,  incidentally or indirectly benefit  the  general public also. The test is the primary object of the levy  and the  essential  purpose  it  is  intended  to  achieve.  The correlationship between the amount raised through the  ‘fee’ and the expenses involved in providing the services need not be  examined  with  a view  to  ascertaining  any  accurate, arithmetical  equivalence or precision in  the  correlation; but it would be sufficient that there is a broad and general correlation. But a fee loses its character as such if it  is intended  to and does go to enrich the general  revenues  of the State to be applied for general purposes of  Government. Conversely,  from this latter element stems  the  sequential proposition that the object to be served by raising the  fee should not include objects which are, otherwise, within  the ambit  of general governmental obligations  and  activities. The concept of fee is not satisfied merely by showing  that, the  class of persons from whom  the fee is  collected  also derives  some benefit from those activities  of  Government. The benefit the class of payers of fee obtain in such a case is  clearly not a benefit intended as special service to  it but derived by it as part of the general public.     15.  Nor  does  the  concept  of  a  fee-  and  this  is important-require  for its sustenance the  requirement  that every  member of the class on whom the fee is imposed,  must                                                   PG NO 174 receive  a  corresponding  benefit  or  degree  of   benefit commensurate  with or proportionate to the payment  that  he individually makes. It would be sufficient if the benefit of the  special  services is available to and received  by  the class  as  such. It is not necessary that  every  individual composing  the  class should be shown to  have  derived  any direct  benefit. A fee has also the element of a  compulsory exaction which it shares in common with the concept of a tax as  the  class of persons intended to be benefitted  by  the special  services has no volition to decline the benefit  of the services. A fee is, therefore, a charge for the  special services  rendered to a class of citizens by  Government  or Government  at  agencies  and  is  generally  based  on  the expenses incurred in rendering the services.     16. The extent and degree of the correlation required to support  the fees, has also been considered in a  number  of pronouncements  of this court. It has been held that  it  is for  the governmental agencies imposing the fee  to  justify its  impost  and its quantum as a return  for  some  special services.     In  Municipal Corporation of Delhi and Others  v.  Mohd. Yasin, [1983] 3 SCC; 233 this court relied on H.H. Sudhundra Thirtha  Swamiar  v. Commissioner for  Hindu  Religious  and Charitable  endowments,  [1963] Suppl. 2  S.C.R.  302  which held:     "If  with a view to provide a specific service, levy  is imposed by law and expenses for maintaining the service  are met  out of the amounts collected there being  a  reasonable relation  between  the levy and the expenses,  incurred  for rendering services, the levy would be in the nature of a fee and not in the nature of a tax ......"                                          (Emphasis supplied)     In Sreenivasa General Traders and others etc. v.  Andhra Pradesh and Others etc., [1983] 1 AIR (SC); 1248 this  court observed:     "Correlationship  between  the  levy  and  the  services rendered/expected  is  one of general character and  not  of mathematical exactitude. All that is necessary is that there should  be a "reasonable relationship" between the  levy  of the fee and the services rendered."

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   A fee which at the inception is supportable as one might shed  its  complexion as a fee and assume that of a  tax  by reason of the accumulation of surpluses or the happening  of                                                   PG NO 175 events  which  tend  to affect and  unsettle  the  requisite degree of correlation.     In  State of Maharashtra & Ors. v. The  Salvation  Army, Western  India  Territory,  [1975] 3  SCR;  485  this  court generally  indicated what, broadly, is the requisite  degree of correlationship:     ".......This  court  has expressly stated in  the  Delhi Cloth and General Mills case (supra) that services worth  61 per cent of contribution would be sufficient quid pro quo to make  a levy a fee. So, when we find that in this  case  the organisation  has been rendering services worth 62 per  cent of the  contribution, it cannot per se he said that there is no   correlation  between the fee levied  and  the  services rendered."                                          (Emphasis supplied)     In Kewal Krishan Puri and another v. State of Punjab and other, [1979] 3 SCR 1244 this court said:     "That  the element of quid pro quo may not be  possible, or  even  necessary,  to be  established  with  arithmetical exactitude  but  even  broadly and  reasonably  it  must  be established by the authorities who charge the fees that  the amount  is  being spent for rendering services to  those  on whom falls the burden of the fee.     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 certainly as being spent for rendering services of the  kind mentioned above."                                          (Emphasis supplied)     In  regard  to  the  nature of  court-fee  we  have  the pronouncement  of  this court in  Secretary,  Government  of Madras,  Home  Department  and  Another  v.  Zenith  Lamp  & Electrical Ltd., [1973] 2 SCR; p. 973 (1981-82). This  court after referring to the legislative entries pertaining to the legislative  fields distributed over the three lists of  the Seventh   Schedule   to  the  Constitution,   repelled   the contention  that ‘fees taken in court’ occurring in Entry  3 of  List  II are really in the nature of a ‘tax’ or  at  any rate constitute an impost sui-generis. This Court held:                                                   PG NO 176     "It seems to us that the separate mention of "fees taken in  Court"  in the Entries referred to above  has  no  other significance  than  that they logically come  under  entries dealing  with  administration  of Justice  and  courts.  The draftsman  has  followed the scheme designed in  the   Court Fees  Act, 1870 of dealing with fees taken in court  at  one place......."     "It  seems  plain  that "fees taken in  court"  are  not taxes,  for if it were so, the word ‘taxes’ would have  been used  or  Some other indication given .....It  follows  that "fees taken in court" cannot be equated to ‘Taxes’. If  this is so, is there any essential difference between fees  taken in court and other fees? ...."     "But  one thing the Legislature is not competent to  do, and that is to make litigants contribute to the increase  of general  public  revenue.  In other  words,  it  cannot  tax litigation, and make litigations pay, say for road  building or  education or other beneficial schemes that a  State  may have.  There must be a broad correlationship with  the  fees collected that the cost of administration of civil justice."     In  the present cases, the concerned  State  Governments

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have  filed  in  the  proceedings  before  the  High   Court statements   of   the   receipts   and   expenses   on   the administration  of Justice in their effort to establish  the requisite  correlation.  It is not necessary to go,  in  any particular detail, into the break-up of these figures.  Both High Courts, after an examination of the statistics felt  no hesitation  in  upholding the correlation. We did  not  also understand  the  learned  counsel  for  the  appellants   as questioning the correctness of the figures and the inference as to correlation suggested thereby. Learned counsel for the respective States submitted that if the outlays on  capital- expenditure  are also taken into account, there will  be  no shadow of doubt that the expenditure would be further higher than  the  fee receipts. So far as the  Karnataka  State  is concerned, similar exercise was done in an earlier case also in  Ram  Bhadur  Thakur  &  Co.  and  another  v.  State  of Karnataka, AIR 1979 (SC); 119.     In  the Karnataka Cases the relevant figures for  the  5 years from 1980-81 to 1984-85 respectively are: (the figures in  brackets indicate expenditure) 1980-81  Rs.  5,22,08,513 (Rs.6,80,33,119); 1981-82 Rs.6,69,10.019                                                   PG NO 177     (Rs.7,97,76,852);   1982-83        Rs.8,28,46,359     (Rs.9,41,161);      1983-84        Rs.8,21,49,626     (Rs.9,44,61,594);   1984-85        Rs.8,00,18,673     (Rs .12,15,90,418).     In   the   Rajasthan  cases   the   financial-statements furnished before the High Court for the 7 years from 1977-78 to 1983-84, the receipts (in lakhs) by way of court fee  and expenditure   incurred  for  the  services   (furnished   in brackets) are respectively: 1977-78 Rs.101.42.  (Rs.264.56); 1978-79 Rs.95.50 (Rs.286-90); 1979-80 Rs.114.63 (Rs.323.04); 1980-81    Rs.134-92    (Rs.379-89);    1981-81    Rs.159.62 (Rs.444.83);   1982-83   Rs.179-87   (Rs.544.76);    1983-84 Rs.176.41 (Rs. 692.11).     It is true that in the Rajasthan statements there was no break   up   of   the   figures   between   expenditure   on administration  of civil justice and criminal  justice;  but having  regard to the figure, a reasonable estimate  of  the proportion  of  the former is possible and  the  figures  do indicate and establish the requisite correlationship.     The contention (a) of the appellants is insubstantial.     18. Re: Contention (b)     The  basic  argument is that having regard to  the  very nature of the judicial process of resolution of disputed  in civil  courts,  the  postulate that  judicial-time  and  the service of the machinery of justice is consumed and utilised in  direct proportion to the amount or value of the  subject matter is the first and fundamental error. The rationale  of the   imposition  of  court-fee  on  an  increasing   scale, according as the value or the amount of the subject  matter, is,  it is urged, an error which is the logical  result  and outcome  of the first. In the distribution of the burden  of the  court-fee amongst the litigants, it is urged,  the  ad- valorem  yardstick,  which is relevant  and  appropriate  to taxation,  is wholly inappropriate because the principle  or basis  of  distribution in the case of a fee should  be  the proportionate   cost  of  services  inter-se   amongst   the beneficiaries. Reliance is placed on The Commissioner, Hindu Religious  Endowments,  Madras v.  Sri  Lakshmindra  Thirtha Swamiar of Sri Shirur Mutt, [1954] SCR, 1005.     Reliance is also placed on the following observations of Mukherjea  J.,  in Commissioner Hindu  Religious  Endowment, Madras  v.  Sri Lakshmindra Thirtha Swamiar  of  Sri  Shirur Mutt, [1954] S.C.R. 1005, relied on by Venkataramiah, J.  in

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Om Prakash Aggarwal etc. etc.                                                   PG NO 178 v.  Giri  Raj Kishori and others etc. etc. [1986]  SCC  (1); 730.     "Coming now to fees, a "fee" is generally defined to  be a  charge for a special service rendered to  individuals  by some  governmental  agency.  The amount  of  fee  levied  is supposed  to  be  based  on the  expenses  incurred  by  the government  in rendering the service, though in  many  cases the  costs are arbitrarily assessed. "Ordinarily,  the  fees are uniform and no account is taken of the varying abilities of different recepients to pay."                                          (Emphasis supplied)     The  following observations of Krishna Iyer J.  in  N.M. Desai  v. The Teesteels Ltd. and another, AIR 1980  (2)  SC: 2125 are also relied upon:     "It  is  more deplorable that the culture of  the  magna carta notwithstanding the anglo-lndian forensic system-  and currently  free  India’s  court process-  should  insist  on payment  of court-fee on such a profiteering  scale  without correlative  expenditure  on  the  administration  of  civil justice  that the levies often smack of sale of  justice  in the  Indian  Republic  where  equality  before  the  law  is guaranteed  constitutional fundamental and the legal  system has   been   directed  by  Article  39A  "to   ensure   that opportunities  for  securing justice are not denied  to  any citizen by reason of economic......disabilities." The  right of  effective  access to justice has emerged  in  the  Third World  countries  as the first among the new  social  rights what  with  public  interest  litigation,  community   based actions  and pro bono public proceedings. "Effective  access to  justice can thus be seen as the most basic  requirement- the most basic ‘Human Right’--of a system which purports  to guarantee legal rights."     However,  the observations in Shirur Mutt’s case  as  to the  uniformity of the levy must be understood in the  light of the next sentence in that very passage which says:     "....   These  are  undoubtedly  some  of  the   general characteristics, but as there may be various kinds of  fees, it  is not possible to formulate a definition that would  be applicable to all cases."                                                   PG NO 179     The criticism of Krishna Iyer J. as to the ‘profiteering scale’  would, as the passage relied upon itself  indicates, be  attracted only if the levy is "without  the  correlative expenditure in the administration of civil justice."     Reference  was also made to certain observations of  the learned  author  H.M. Seervai Constitutional Law  of  India, Third  Edn.  Vol  II, 1958 that court-fee should  not  be  a weapon  to  stifle suits or proceedings and that  though  in fixing  the  court-fees regard may be given  to  the  amount involved,  "a  stage is reached when  an  increasing  amount ceases to be justified."     ".......Thus,  an ad-valorem court fee of 1 percent  for suits  involving  Rs.  l  lack or more  with  a  maximum  of Rs.15,000  or  Rs.20,000 may be justified; but a  court  fee without  limit  cannot  be justified, for  after  a  certain amount  is  reached, no greater service can be  rendered  to whole classes of litigants; on the contrary, such  increased court  fees  render  disservice by  rendering  the  cost  of litigation prohibitive."                                          (Emphasis supplied)     Learned  counsel  also referred to and relied  Upon  the decision  of  the  Bombay  High  Court  in  Indian   Organic Chemicals  v.  Chemtax Fibres, [1983] Bombay  LR;  406  upon

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certain observations of the Madras High Court in  Secretary, Government of Madras, Home Department, And Another v. Zenith Lamp  &  Electrical Ltd., ILR 1968 (Madras); 247  and  on  a judgment  dated 22.12.1972 of the FUll Bench of the  Gujarat High  Court  in Lady Tanumati Girijaprasad  and  another  v. Special   Rent   Acquisition   Officer,   Western   Railway, Ahemadabad,  Special Civil Application No. 979 of 1970  with Special Civil Application 287 of 1967.     19.  The  submissions  on this  point,  in  some  areas, overlap contention (c) but the point sought to be emphasised so  far as the present contention is concerned, is that  the essence  and the planitude of the concept of ‘fee’  requires not  only  that  there should  be  a  broad  correlationship between the impost and the services but also a  requirement, inherent  in and as a part of the concept itself,  that  the expenses  for  the services must also be distributed  in  an equitable  manner  amongst  those  constituting  the   class receiving  the  services.   This aspect,  it  is  urged,  is distinct  from  the  susceptibility  of  the  impost  to  be declared   unconstitutional   on   the   ground   that   the distribution  of  its burden is arbitrary.  The  same  event demonstrating  the  unfairness of the  distribution  of  the                                                   PG NO 180 burden  would,  it  is urged,  produce  two  distinct  legal consequences: first, detracting from the fundamental concept of  a  fee  and,  secondly,  by  reason  of  the   invidious discrimination   wrought   by  it  is   violative   of   the constitutional pledge of equality.     20.  State Governments would, however, say that this  is merely two different ways of saying the same thing and  that the  concept  of  a  ‘fee’ never  really  depended  for  its validity, conceptually as a ‘fee’, upon the requirement of a just  and equitable distribution of its burden  amongst  the recipients  of  the  service and that as  long  as  a  broad approximation  between the expenses of the services and  the amount  raised by the fee is established, the  impost  would continue  to retain and not shed its complexion as a fee  If there is arbitrariness of inequitability in the distribution of  the  burden,  that aspect would, it  is  submitted,  not detract  from  basic  concept of the levy  as  a  ‘fee’  but vitiates the levy for hostile discrimination.     21. Perhaps the most lucid formulation and  presentation of  the appellants contention- for whatever it is  worth  in the ultimate analysis-are to be found in the Judgment of the Madras  High Court in the Zenith Lamp Case, (lLR 1968  Mad., 247)  which came up before this court in 1973(2)  SCR,  973. Those observations sum up the matter succinctly:     "Irrespective  of  the magnitude of the  claim  and  the complexity  of  the case and the anxiety of  the  suitor,  a limit  will be reached so far as the service that  could  be rendered in courts is concerned. Judicial time is not  spent in direct proportion to the value of the claim. It may  have relation  to the question involved. That appears to  be  the reason behind the maximum court fee originally prevalent and even now found in some states."     "......The problem is in the distribution of the levy in a  practical  and  reasonable manner so as  to  fall  fairly equitably  on  all  suitors, that  no  particular  class  or section  of them is disproportionately hit and made to  bear more  than  their  fair  share of  the  expenditure  on  the administration of justice, on considerations not germane  in the context of the levy authorised by law."     "As  it is, as the value of the claim goes up, the  levy becomes more and more unrelated to the object of the levy. A                                                   PG NO 181

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few  suitors  would  be made to bear a heavy  share  of  the expenditure unrelated to the services required by them  with the  result that, when the claims are high, only one of  the two essential elements of a levy to be regarded as a fee  is left  While  the  occasion for the levy  is  the  demand  of special  service  by  the suitor that  is,  one  element  is present,  there  is no reasonable. correlation  between  the levy  and  the  services  that is,  the  second  element  is lacking.    The    levy    becomes    excessive,     grossly disproportionate and unreasonable qua the particular  suitor it ceases to be a fee and becomes a tax for him."  (Emphasis supplied), ILR, Mad., 1968 (368-372).     This is the crux of the matter and a fair summing-up  of the arguments of the learned counsel for the appellants.     This again, is what the High Court of Bombay adopted  in the  case  of Indian Organic Chemicals  v.  Chemtax  Fibres, [1983]  LR Bombay, 406, one of the cases relied upon by  the appellants.     22.  We may, briefly, refer to the setting in which  the matter   arose  before  the  Bombay  High  Court.   In   the proceedings, the plaintiffs challenged the provisions of the Bombay  Court  Fees (Second Amendment) Act, 1974  by  which, inter-alia,  the upper limit of the court fee, of  Rs.15,000 then obtaining was done away with. The consequence was  that ad-valorem court fee, without any upper limit, had had to be paid.  The  matter  arose out of what  was  alleged  as  the ‘Backbay  Scandal’ in which various plots of land  reclaimed from the Sea in South Bombay were disposed of by Government, according  to  plaintiffs’ allegation, in violation  of  the prescribed  rules  and for a pittance in order to  confer  a largesse  on  the  chosen. The allotment  of  plots  appears initially, to have been challenged in writ proceedings;  but ultimately a suit had had to be filed as disputed  questions of facts were stated to have been involved. The value of the subject  matter of the suit was Rs. 5,56,30,731.87  and  the court  fee  payable was Rs.5,60,000 under  the  amended  Act which had, in the meantime, come into force.     The amendment was challenged on three grounds. The first was  that  the  legislation was itself  mala  fide  and  was ushered  in with oblique motives of stifling the  very  suit and the challenge to the impugned allotments. The second was that  levy of court-fees ad-valorem without any upper  limit would  alter the character of the levy and convert  it  from ‘fee’  into  a  ‘tax’. The third  contention  was  that  the amendment was a colourable piece of legislation and was  not a  legitimate exercise to raise a fee but to impose, in  the                                                   PG NO 182 cloak  of  a  fee,  a tax  to  augment  the  general  public revenues.     The Bombay High Court rejected the first contention; but accepted the second and held that even if the Government had satisfied itself that there was necessity for collection  of enhanced quantum of court-fee, it could have done so on  the basis of a rationalised structure which might result in  the enhancement of the ceiling from Rs. 15,000 to 20,000 or even 25,000  in which event the court would not be able  to  hold that  the  levy  had  become so  excessive  and  so  grossly disproportionate and unreasonable qua a particular suitor as to cease to be a fee and become a tax. The High Court held:     "......In the case before us the fact that the plaintiff on its claim is called upon to pay after the amending Act of 1974 court-fees of Rs. 5,60,000 eloquently testifies to  the harshness, the excessive character and the  unreasonableness of  the levy and once such conclusions are reached, it  will have to be held that this levy at the higher figure which is

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secured  by  the impugned Act has converted exation  from  a ‘fee’  into a ‘tax’. If that be the result  secured  through the enactment, which has brought about this result would  be liable  to be struck down." (ILR), Bom.; 1981 Vol. 83;  415- 16.     On the third ground also the court upheld the challenge, being  of the view that the Government had  not  established the quid pro quo to the requisite extent.     23.  So  far as the decision of the Full  Bench  of  the Gujarat  High  Court  in  Lady  Tanumati  Girijaprasad   and another   v.  Special  Rent  Acquisition  Officer,   Western Railway,  Ahemadabad, Special Civil Application No.  979  of 1970  with  Special  Civil  Application  287  of  1967,   is concerned, that decision, even to the extent it goes, is not on  the  aspects emphasised in these appeals.  The  decision really  turned on the question whether  correlation  between the  services and the fee had taken established or not.  The High Court was of the view that it had not.     24.  Sri  F.S. Nariman submitted that the facts  of  the Rajasthan   appeal   were  itself   demonstrative   of   the arbitrariness  and inequities inherent in the imposition  of the  ad-valorem impost without an upper limit. In that  case the  appellant was called upon to pay on his  plaint  almost                                                   PG NO 183 l/7th  of  the entire estimated court-fees receipts  of  the year  and it would be inconceivable  that,  proportionately, 1/7th  of  the judicial-time would be spent  on  this  suit. Learned  counsel  submitted that in the very nature  of  the judicial  process,  a stage is reached  beyond  which  there could  be  no proportionate or progressive increase  in  the services  rendered  to a litigant  either  qualitatively  or quantitatively.  Unless  that  limit  is  recognised  and  a corresponding ceiling of court fee fixed, the impost qua the particular litigant, it is urged, would shed its  complexion as  a  fee and would par-take of the nature of  an  exaction more resembling a tax than a fee. Learned counsel  submitted that  in  the  process of adjudication  of  disputes  before courts,  judicial-time and the machinery of justice are  not utilised in direct proportion to the value or the amount  of the subject matter of the controversy. Cases involving  very small claims might raise difficult questions of fact and law requiring   the   expenditure  of   judicial   time   wholly disproportionate   to  the  court-fee  paid  in  the   case. Conversely, claims involving heavy financial sums might not, as in the case of suits on negotiable instruments generally, take much time of the court at all. That apart, it is urged, a  recognition  of  the outer-most  limit  of  the  possible services  and a prescription of a corresponding upper  limit of  court  fee should be made, lest the levy, in  excess  of that  conceptual limit, becomes a tax. The ideal measure  or yardstick  of court fee, learned counsel said, was a fee  in proportionate  to the judicial the expended over a case  and if  this  measure or yardstick is difficult  of  application owing  to  its practical difficulties in  its  effectuation, either  of  the  two  further  alternatives  could  save   a legislation  imposing  a fee. One such was to fix  an  upper limit commensurate with conceptionalised outer most limit of the   money   value  of  the  maximum   possible   services. hypothetically  so  conceived. The second was  to  stipulate after  a  particular  stage, progressively  lower  rates  on correspondingly increasing slabs of the value of the subject matter or in other words, after a certain stage, to make the rates go-down according as the value goes-up.     25. We have given our careful and anxious  consideration to  this  vexed  problem  which  is  a  subject  matter   of

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considerable   debate  both  in  and  outside  courts.   The anomalies that the policy behind the impugned provisions can produce  in conceivable cases could, indeed, be  inequitable or  even  quite startling. But, the argument,  in  the  last analysis, becomes indistinguishable from the contention that the correlation of the services to the fee would have to  be decided on the basis of how the correlation operates in each individual  case. It would be an insistance on  testing  the conceptual  nature of the fee on the basis of the degree  of the quid pro quo in the case of each individual payer of the                                                   PG NO 184 fee. That is the peccant part of the argument. Once a  broad correlation  between  the totality of the  expenses  on  the services,  conceived  as a whole, on the one  hand  and  the totality  of  the  funds raised by way of the  fee,  on  the other,  is  established,  it  would  be  no  part   of   the legitimate    exercise   in   the   examination    of    the constitutionality  of  the concept of the impost  to  embark upon its effect in individual cases. Such a grievance  would be one of disproportionate nature of the distribution of the fees  amongst  these  liable  to  contribute  and  not   one touching  the  conceptual  nature of the  fee.  Indeed  this position was clearly recognised by the Madras High Court  in Zenith  Lamp’s case itself in the following passage  of  the Judgment:     "If,  in  substance, the levy is not to  raise  revenues also  for the general purpose of the State the mere  absence of uniformity of the fact that it has no direct relation  to the  actual  services  rendered by  the  authority  to  each individual  who obtains the benefit of the service, or  that some of the contributories do not obtain the same degree  of service  as  other  may,  will  not  change  the   essential character of the levy." ILR Mad., 1968; 340-41.     26.   There  might,  conceivably,  be  cases   where   a particular individual-contributor may not derive any benefit at all, though as a member of the class he has no option but to  make  the  contribution. The  principle  underlying  the contention that beyond a point the impost ceases to have the quality  of a fee, if valid, can be visualised  and  applied even   to  cases  where,  despite  the  uniformity  in   the distribution of the burden, a particular individual does not obtain  any service at all. This cannot be a legitimate  and permissible ground of invalidation.     This  is,  however,  not to say that if  the  scheme  of distribution of the burden is so arbitrary, so  unreasonable and  disproportionate  as  to  offend  the  requirements  of Article  14, the levy does not fail as violative of  Article 14.     In  H.H. Sudhundra Thirtha Swamiar v.  Commissioner  For Hindu  Religious & Charitable Endowments, Mysore,  [1963]  2 SCR Suppl. 323 this court held:     ".....Nor  is it a postulate of a fee that it must  have direct  relation  to  the actual services  rendered  by  the authority  to  individual  who obtains the  benefit  of  the service. If with a view to provide a specific service,  levy                                                   PG NO 185 is  imposed by law and expenses for maintaining the  service are  met  out  of  the  amounts  collected  there  being   a reasonable  relation  between  the  levy  and  the  expenses incurred for rendering the service, the levy would be in the nature of a fee and not in the nature of a tax."                                          (Emphasis supplied)     In  The  City Corporation of  Calicut  v.  Thachambalath Sadasivan and others, [l985] 2 SCC, 115 this court held: "It is not necessary to establish that those who pay the fee

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must  receive  direct benefit of the services  rendered  for which  the  fee is being paid. If one who is liable  to  pay receives general benefit from the authority levying the  fee the  element  of  service required  for  collecting  fee  is satisfied. It is not necessary that the person liable to pay must  receive some special benefit or advantage for  payment of the fee.                                          (Emphasis supplied)     27.  What emerges from the foregoing discussion is  that when a broad and general correlation between the totality of the fee on the one h;and and the totality of the expenses of the services on the other is established, the levy will  not fail in its essential character of a fee on the ground alone that  the  measure  of its distribution on  the  persons  of incidence   is  disproportionate  to  the  actual   services obtainable by them. The argument that where the levy, in  an individual case, for exceeds the maximum value, in terms  of money, of the services that could at all be possible,  them, qua  that  contributor,  the correlation breaks  down  is  a subtle  and  attractive  argument.  However,  on  a   proper comprehension  of  the true concept of a  fee  the  argument seems to us to be more subtle than accurate. The test of the correlation  is not in context of  individual  contributors. The  test is on the comprehensive level of the value of  the totality  of the services, set-off against the  totality  of the  receipts  of  the  character  of  the  ‘fee’  is   thus established,  the vagaries in its distribution  amongst  the class,  do not detract from the concept of a ‘fee’ as  such, though  a wholly arbitrary distribution of the burden  might violate other constitutional limitation. This idea that  the test of the correlation is at the "aggregate" level and  not at "individual" level is expressed thus. First Principles of Public Finance by De Marco. 83.     "The fee must be equal, in the aggregate to the cost of                                                   PG NO 186 production  of the service. That is the aggregate amount  of the fees which the State collects from individual  consumers must equal the aggregate expenses of production."                                         (Emphasis supplied).     The view taken of the matter by the Bombay High Court in the  Indian  Organic  Chemicals case and  the  view  of  the earlier  Madras  High  Court in Zenith Lamp’s  case  do  not commend  themselves as sound, having regard to the  accepted tests to determine the nature of a ‘fee’. Contention (b) is not substantiated.     28. Re Contention (c)     It  is urged that even if the requisite  correlationship could  be held to have been established, the  Rajasthan  and the  Karnataka legislations, by distributing the  burden  on the  ad-valorem principles based merely on the value of  the subject  matter,  independently  of  considerations  of  the utilisation  of  Judicial time, are  per-se  irrational  and bring  about an arbitrary and disproportionate  distribution of  the burden so irrational  and so divorced from  relevant criteria that the impugned provisions violate Article 14. It is  urged that a litigation, on which a litigant might  have paid  a mere Rs. 50 by way of court fee, might  involve  far more  substantial questions and take-up judicial time  in  a measure far greater than a litigation on which a litigant is called upon to pay Rs. 25 lakhs by way of court fee.     It  is  urged  that the ad-valorem  principle  which  is appropriate  to taxation would be inapposite in the  context of  an impost which is meant as a contribution  towards  the costs of services.     29.  The  contention of the States is that  as  long  as

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their  power  to  raise the funds to meet  the  expenses  of administration of civil justice is not disputed and as  long as the funds as raised show a correlation to such  expenses, the  State,  should have sufficient play at  the  joints  to work-out  the incidents of the levy in some  reasonable  and practical  way. It would, quite obviously impracticable,  so proceeds  the argument, to measure-out the levy directly  in proportion  to  the actual judicial time  consumed  in  each individual  case;  hence the need to tailor some  rough  and ready workable basis which though may not be an ideal or the most perfect one, would at least hostile. Perfection in  any system   of   imposition  of  monetary   exactions   is   an                                                   PG NO 187 unattainable  goal and that, therefore, the satisfaction  of high  positive virtues in the scheme is not to  be  expected but  what  is  to be seen is whether  any  serious  vice  of blatant discrimination without any rational basis whatsoever vitiates  the system. It will, obviously,  be  unreasonable, says  the States’ learned counsel, to distribute  the  total expenses amongst all the litigants uniformally  irrespective of  the  amount  or  value of  the  subject  matter  of  the litigation.  If, contends counsel, an upper limit  is  fixed and the collection fell short of what the Government intends and is entitled to collect, this would eventually result  in the  enhancement of the general rates of court-fee  for  all categories.  The ad-valorem principle is a  well  recognised principle;  it may not provide the best or the most  perfect answer;  but it can, it is urged, reasonably be expected  to provide the least hostile and workable basis of distribution of  the  burden.  If the value of the subject  matter  is  a relevant  factor  in proportioning the burden of  the  court fee, is indeed it has been so held, where the line should be drawn  in  applying  the principle it is more  a  matter  of legislative  wisdom  and  preference  than  of  the   strict judicial  evaluation and adjudication. There might  possibly be better methods of administering the collections but  that by itself, it is contended, is no ground to strike down what might  appearing  to be a less perfect  system  particularly when economic measures and regulations are concerned.     So  far as the Directive Principles in Article  39A  are concerned,  the  learned  Solicitor General  said  that  the directive  principles are fundamental in the  governance  of the  country cannot be gainsaid, but in  implementing  them, policy  considerations and priorities will have to  be  duly evaluated,  having regard to the financial constraints.  The grievance  in  these  petitions  is  by  the  class  of  the litigants  consisting  of big  financial  institutions  with superior  economic  power. The superiority of  the  economic power is not, it is urged, irrelevant in making them share a higher  burden  of  a public impost. At all  events,  it  is urged,  courts can not compel the State to  bring-forth  any legislation   to  implement  and  effectuate   a   Directive Principle.     30. The problem is, indeed, a complex one not free  from its  own  peculiar difficulties.  Though  other  legislative measures  dealing with economic regulation are  not  outside Article 14, it is well recognised that the State enjoys  the widest  latitude where measures of economic  regulation  are concerned. These measures for fiscal and economic regulation involve an evaluation of diverse and quite often conflicting economic  criteria and adjustment and balancing  of  various conflicting social and economic values and interests. It  is for  the State to decide what economic and social policy  it                                                   PG NO 188 should pursue and what discriminations advance those  social

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and economic policies. In view of the inherent complexity of these fiscal adjustments, courts give a larger discretion to the Legislature in the matter of its preferences of economic and social policies and effectuate the chosen system in  all possible  and  reasonable ways. If two or  more  methods  of adjustments  of  an  economic  measure  are  available,  the Legislative  preference in favour of one of them  cannot  be questioned  on the ground of lack of legislative  wisdom  or that  the method adopted is not the best or that there  were better ways of adjusting the competing interests and claims. The  Legislature  possesses  the greatest  freedom  in  such areas.  The analogy of principles of the burden of  tax  may not  also be inapposite in dealing with the validity of  the distribution of the burden of a ‘fee’ as well.     31.  This  Court in East India Tobacco Co. v.  State  of Andhra  pradesh [1963] 1 SCR 411 referred to  with  approval the  following  passage  in  Rottschaefer’s  "Constitutional Law", p. 668:     "The  decisions of the Supreme Court in this field  have permitted a State legislature to exercise an extremely  wide discretion in classifying property for tax purposes so  long as  it  refrained  from  clear  and  hostile  discrimination against particular persons or classes."     The   Legislature   has   to   reckon   with   practical difficulties of adjustments of conflicting interests. It has to  bring to bear a pragmatic approach to the resolution  of these conflicts and evolve a fiscal policy it thinks is best suited to the felt needs. The complexity of economic matters and the pragmatic solutions to be found for them defy and go beyond   conceptual  mental  models.  Social  and   economic problems  of  a  policy  do  not  accord  with  preconceived stereotypes   so  as  to  be  amenable   to   pre-determined solutions.  In  The  State of Gujarat and  Another  v.  Shri Ambica  Mills  Ltd., Ahemdabad Etc., [1974] 3 SCR  764  this court observed:     "......The court must be aware of its own remoteness and lack of familiarity with the local problems.  Classification is   dependent   on  the  particular  needs   and   specific difficulties of the community which are beyond the easy  ken of the court, and which the legislature alone was  competent to make. Consequently, lacking the capacity to inform itself fully   about  the  peculiarities  of  a  particular   local situation,  a court should hesitate to dub  the  legislative                                                   PG NO 189 classification as irrational...."     ".....The   question  whether,  under  Article   14,   a classification  is reasonable or unreasonable must,  in  the ultimate  analysis depend upon the judicial approach to  the problem.  The more complicated society becomes, the  greater the diversity of its problems and the more does  legislation direct itself to the diversities. In the utilities, tax  and economic  regulation  cases,  there  are  good  reasons  for judicial   self-restraint  if  not  official  deference   to legislative  judgment.  The courts have only  the  power  to destroy  but not to reconstruct. When to this are added  the complexity  of  economic  regulation,  the  uncertainty  the liability to error, the bewildering conflict of the experts, and  the number of times the judges have been  overruled  by events,  self  limitation  can be seen to  be  the  path  to judicial wisdom and institutional prestige and stability."     "Laws  regulating  economic activity  should  be  viewed differently  from  laws which touch and concern  freedom  of speech and religion, voting procreation, rights with respect to criminal procedure etc. Judicial deference to legislature in  instances  of economic regulation is  explained  by  the

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argument  that rationality of a classification depends  upon local   conditions   about  which   local   legislative   or administrative  bodies  would  be  better  informed  than  a court."     The lack of perfection in a legislative measure does not necessary imply its unconstitutionality. It is rightly  said that no economic measure has yet been devised which is  free from  all discriminatory impact and that in such  a  complex arena in which no perfect alternatives exist, the court does well  not  to impose too rigorous a standard  of  criticism, under   the  equal  protection  clause,   reviewing   fiscal services. In G.K. Krishnan etc., etc., v. The Stale of Tamil Nadu  and  Anr.  etc., [1975] 2 SCR, 715  (730)  this  Court referred to, with approval, the majority view in San Antonio Independend  School District v. Bodrigues  speaking  through Justice Stewart,, 411 US. I at page 41):     "No  scheme of taxation, whether the tax is  imposed  on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact.  In such a complex arena in which no perfect alternatives exist,                                                   PG NO 190 the court does well not to impose too rigorous a standard of scrutiny  lest all local fiscal schemes become  subjects  of criticism under the Equal Protection Clause." and  also to the dissent of Marshall, J. who summed  up  his conclusions thus:     "In summary, it seems to me inescapably clear that  this court has consistently adjusted the care with which it  will review state discrimination in light of the   constitutional significance of the interests affected and the invidiousness of  the  particular  classification.  In  the   context   of economic interests we find that discriminatory state  action is almost always sustained, for such interests are generally far  removed from constitutional guarantees. Moreover,  "the extremes to which the court has gone in dreaming up rational bases  for  state  regulation  in  that  area  may  in  many instances  be  described  to a healthy  revulsion  from  the court’s  earlier  excesses  in using  the   Constitution  to protect  interests  that  have more  than  enough  power  to protect  themselves in the legislative halls." Dandridge  v. Williams, 397 US at 520.     The  observations of this court in Income  Tax  Officer, Shillong  and  Anr. Etc. v. N. Takim Roy  Rymbai  Etc.  Etc. [1976]  3 SCR; 413 made in the context of taxation laws  are worth recalling:     "The mere fact that a tax falls more heavily on same  in the  same category, is not by itself a ground to render  the law  invalid.  It  is only when, within  the  range  of  its selection,   the  law  operates  unequally  and  cannot   be justified on the basis of a valid classification, that there would be a violation of Article 14."                                         (Emphasis supplied).     32. The question whether the measure of a tax or a ‘fee’ should  be  ad-valorem or ad-quantum is again  a  matter  of fiscal policy.     In the Zenith Lamp’s Case this court observed:     "The  fee  must have relation to the  administration  of civil   justice.   While  levying   fees   the   appropriate legislature  is competent to take into account all  relevant factors, the value of the subject matter of the dispute, the                                                   PG NO 191 various  steps  necessary in the prosecution of  a  suit  or matter, the entire cost of the upkeep of courts and officers administering  civil  justice,  the vexatious  nature  of  a certain type of litigation and other relevant matters. It is

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free  to  levy  a small fee in some cases, a  large  fee  in others, subject of course to the provisions of Article 14." (Emphasis supplied).     In the context of levy of market fee, a similar argument was  advanced  before a High Court that  the  imposition  of market  fee advalorem on different commodities  irrespective of their weight or volume and irrespective of the extent  of the  market services rendered in respect of their  marketing produced inequality and hostile discrimination. It was urged that  the  nature  and extent of services  afforded  by  the Market-Committees must necessarily vary having regard to the nature and volume of the agricultural produce and  therefore a  blind ad-valorem levy would be arbitrary as the  services rendered  to  a buyer who buys say a quintal  of  cotton  or tamarind  is quantitatively and qualitatively more than  the services  that  may  be envisaged to the  class  of  traders dealing   with   spices  of  equivalent   money-value.   The distribution  of the burden of the fee on the basis  of  the value  of the commodity, it is argued, was arbitrary  as  it did not recognise that the services are inherently different for  different classes of commodities but  treated  unequals equally. This argument has its ring of familiarity, with the arguments  in the present case. But the High Court ILR  1982 (Karnataka):  399 (reserved by the Supreme Court on  another point repelled this contention:     We  are  unable  to subscribe to this  view.  Indeed  it appears   to us that if the impost was ’ad quantum" and  not "ad  valorem"  it might have attracted.  quite  legitimately perhaps.  the criticism of being arbitrary. By an  advalorem impost, the goods independently of their volume and  quality are  treated  equally  in term of their  value.   An  impost advalorem" is a well accepted concept in  taxation Indeed in Ganga  Sagar Corporation’s case (AIR 1980 (SC), 286  Supreme Court dealing, though in a  different context stated:     .  .  . Article 14, a great right by any  canon  by  its promiscuous forensic misuse, despite the Dalmia decision has given  the impression of being the last sanctuary of  losing                                                   PG NO 192 litigants Price is surely a safe guide but other methods are not necessarily vocational. It depends     33.  It  was  then  argued  that  various  States   have different standards and that while some States have  rightly recognised  the  need  for  an  upper  limit  to  save   the constitutionality of the levy, other States like, Karnataka, Tamil Nadu, etc. envisaged an ad-valorem  levy with-out  any upper limit. It is contended that though India is a federal polity,  the judicial system, however, is an integrated  one and  that  therefore  different standards of  court  fee  in different States would be unconstitutional. But it is  trite that  for purposes of testing a law enacted by one State  in exercise  of its own independent legislative powers for  its alleged violation of Article 14 it cannot he contrasted with laws  enacted  by  other States.  In  The  State  of  Madhya Pradesh  v.  G.C. Mandawar. [ 1955] 1 SCR;  599  this  court observed:     "Article  14 does not authorise the striking down  of  a law  of one State on the ground that in contrast with a  law of  another  State on the same subject  its  provisions  are discriminatory. Nor Does it contemplates a law of the Center or of the State dealing with similar subjects being held  to be unconstitutional by a process of comparative study of the provisions of two enactments.’     34.  Having regard to the nature and complexity of  this matter it is, perhaps, difficult to say that the  ad-valorem principle  which may not be an ideal basis for  distribution

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of a tee can at the same time be said to be so irrational as to incur any unconstitutional infirmity. The presumption  of constitutionality of laws requires that any doubt as to  the constitutionality  of a law has to be resolved in favour  of constitutionality.  Though the scheme cannot be  upheld,  at the sametime, it cannot be struck down either.     35.  The  State  is  in theory  entitled  to  raise  the totality  of  the expenses by way of fee.  Any  interference with  the present yardstick for sharing the burden might  in turn  produce a yardstick less advantageous to litigants  at lower   levels.   Subject  to   certain   observations   and suggestions   we   propose  to  make  in   regard   to   the rationalisation  of  the  levies  in  view  of  the  general importance  of  the matter to the  administration  of  civil justice, we think we should decline to strike  down the law.                                                   PG NO 193 36. Re: Contention (d)  A     In the appeal of the State of Maharashtra arising out of the  Bombay Court Fees Act, 1959, the High Court has  struck down the impugned provisions on the ground that the levy  of court fee on proceedings for grant of probate and letters of administration ad-valorem without the upper limit prescribed for  all other litigants--the court-fee in the present  case amounts  to Rs.6,14,814--is discriminatory. The  High  Court has  also  held that, there is no intelligible  or  rational differentia  between  the two class of litigation  and  that having  regard to the fact that what is recovered is a  fee, the  purported classification has no rational nexus  to  the object. The argument was noticed by the Learned Single Judge thus:     "Petitioners  next  contend  that  the  impugned  clause discriminates as between different types of suiters and that there   is   no  justification  for   this   discrimination. Plaintiffs  who go to civil courts claiming decrees are  not required to pay court-fees in excess of Rs. 15,000. This  is irrespective  of the amounts claimed over and above  Rs.  15 lacs.  As  against this, persons claiming probates  have  no such relief in the form of an upper limit to fee payable."     This contention was accepted by the Learned Single Judge who  has upheld the appeal. Indeed, where a  proceeding  for grant  of  probate and letters of administration  becomes  a contentious matter, it is registered as a suit and proceeded with  accordingly.  If  in respect of  all  other  suits  of whatever nature and complexity an upper limit of Rs.  15,000 on   the   court  fees is  fixed,  there  is   no   logical justification  for singling out this proceeding for  an  ad- valorem  impost  without  the benefit of  some  upper  limit prescribed   by  the  same  statute  respecting  all   other litigants.  Neither  before the High  Court--nor  before  us here-was  the impost sought to be supported or justified  as something other than a mere fee, levy of which is  otherwise within  the State’s power or as separate ’fee’ from  another distinct source. It is purported to be collected and  sought to be justified only as court fee and nothing else.     The discrimination brought about by the statute, in  our opinion, fails to pass the constitutional master as  rightly pointed  out  by  the High Court. The  High  Court,  in  our opinion rightly, held:     "There is no answer to this contention, except that  the legislature  has not thought it fit to grant relief  to  the seekers of probates, whereas plaintiffs in civil suits were                                                   PG NO 194 thought deserving of such an upper limit. The discrimination is a piece of class legislation prohibited by the  guarantee of  equal protection of laws embodied in Article 14  of  the

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Constitution.  On  this  ground  also  item  10  cannot   be sustained "     We  approve  this reasoning of the High  Court  and  the decision  of  the  High Court is sustained  on  this  ground alone.  In view of this any other ground urged  against  the constitutionality of the levy is Unnecessary to be examined.     Contention (d) is accordingly held an answer against the appellant  and  the  appeals  preferred  by  the  State   of Maharashtra are liable to be and are hereby dismissed.     37.  Now  at  the end of the day, what  remains  is  the suggestion necessary in regard to the rationalisation of the court-fees under the ’Rajasthan Act’ and the ’Karnataka  Act The arguments in the case highlight an important aspect. The levy of court-fee at rates reaching 10% ad-valorem  operates harshly  and almost tends to price justice out of the  reach of  many distressed litigants. The Directive  Principles  of State  Policy, though not strictly enforceable in courts  of law,  are yet fundamental in the governance in the  country. They   constitute   fonsjuris  in  a  Welfare   State.   The prescription  of such high rates of courtfees even in  small claims  as also without an upper limit in larger  claims  is perilously  close to arbitrariness, an  unconstitutionality. The ideal is. of course, a state of affairs where the  state is  enabled  to do away with the pricing of justice  in  its courts of justice. In this reach for the ideal it serves  to recall  the words of Robert Kennedy:"Some men see  thing  as they  are and say why, I dream things that never  were   and say why not? "     The  power to raise funds through the fiscal tool  of  a fee is not to be confused with a compulsion so to do.  While ’fee meant to defray expenses of services cannot be  applied towards objects of general public utility as part of general revenues, the converse is not valid General Public  revenues can,  with justification, be utilised to meet. wholly or  in substantial  part,  the expenses on  the  administration  of civil justice. Many States including Karnataka and Rajasthan had earlier, statutory upper-limits fixed for the court fee. But  later  legislations  has sought to  do  away  with  the prescription  of an upper limit. The insistence  on  raising court  fees at high rates recalls of what Adam Smith  Wealth of Nations said:                                                   PG NO 195     "There  is no art which one government sooner learns  of another  than that of drawing money from the pockets of  the people.     Fees are levied no doubt to defray the cost of  services but  as  observed  by  Findlay  Shirras  Science  of  Public Finance, Vol. II, 674-675:     "Fees  are levied in order to defray usually a part,  in rare cases the whole of the cost of services done in  public interest and conferring some degree of advantage on the  fee payer.                                     (Emphasis supplied)     Though   we  have  abstained  from  striking  down   the legislation, yet, it appears to us that immediate steps  are called for and are imperative to rationalise the levies.  In doing  so  the  States should realise  the  desirability  of levying on the initial slab of the subject matter--say  upto Rs.  15,000--a nominal court-fees not exceeding 2 to  2-1/2% so  that small claims are not priced out of  Courts.  "Those who have less in life’ it is said should have more in  law". Claims in excess of Rs. 15,000 might admit of an  ad-volorem levy  at rates which, preferrably, should not  exceed  71/2% subject  further to an upper limit which, having  regard  to all  circumstances,  could be envisaged  at  Rs.75,000.  The

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upper  limit  even piror to 1974 under the  Bombay  Act  was Rs.15,000  and  prior to 1961 under the  Rajasthan  Act’  at Rs.7,500.  Having  regard to steep inflation  over  the  two decades  the  upper limit could perhaps go  upto  Rs.75,000. After that limit is reached, it is appropriate to impose  on gradually  increasing  slabs  of the value  of  the  subject matter,  progressively  decreasing rates, say  from  7-l/2/% down to 1/2% in graduated scales. The Governments  concerned should  bestow attention on these matters and bring about  a rationalisation of the levies.     With  these observations and directions we  dismiss  the appeals, writ petitions and special leave petitions, but  in the circumstances, without an order as to costs. R.S.S.                        Appeals & Petitions dismissed.