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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4453 OF 2008

CARDAMOM MARKETING CORPORATION & ANR. .....APPELLANT(S)

VERSUS

STATE OF KERALA & ORS. .....RESPONDENT(S)

W I T H

WRIT PETITION (CIVIL) NO. 514 OF 2009

A N D

WRIT PETITION (CIVIL) NO. 490 OF 2011

J U D G M E N T A.K. SIKRI, J.

The two appellants before us in Civil Appeal No. 4453 of 2008, who

are the registered dealers under the Kerala General Sales Tax Act, 1963

and/or the Kerala Value Added Tax Act, 2003 in the State of Kerala.  They

challenged the vires of S.R.O. No. 226 of 2002 dated April 05, 2002 issued

by the Government of Kerala in exercise of powers under Section 76(1) of

the Kerala Court Fees and Suits Valuation Act, 1959 (hereinafter referred to

as  the  'CF  Act')  whereby  the  Government  authorised  the  tribunals  and

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appellate authorities constituted by or under special or local law, other than

civil  and criminal  courts,  to  levy  additional  court  fee  in  respect  of  each

appeal or revision at the rate of 0.5% of the amount involved in the dispute

in cases where it is capable of valuation, and at the rate of  ₹50 in other

cases.  This notification further provides that the amount so collected shall

be credited to the Kerala Legal Benefit Fund constituted under sub-section

(2) of Section 76 of the CF Act.  The main contention of the appellants was

that the aforesaid levy is in the nature of compulsory exaction/tax and the

element  of  service/quid  pro quo  was absent  and,  therefore,  such a fee

cannot be charged.  The High Court has repelled the challenge thereby

upholding the validity of the said notification following its earlier judgment in

Chackolas Spinning & Weaving Mills Ltd.  v. State of Kerala, 2006 (1)

KLT 989, vide its judgment dated July 13, 2007.  This judgment of the High

Court is challenged in this appeal on the same grounds.  Subject matter of

the two writ petitions is also identical.

2) Before  coming  to  the  detailed  submissions  in  this  behalf,  it  would  be

apposite to take note of the relevant provisions of the CF Act as well as

terms of the notification dated April 05, 2002.

3) The CF Act  relates  to  court  fees and valuation  of  suits  in  the  State  of

Kerala.  The court fee calculated as per the provision of the said Act has to

be paid in respect of various kinds of proceedings initiated in a court of law

in the State.  Clause (ii) of Section 3 defines 'court' and reads as under:

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“”Court” means any Civil, Revenue, or Criminal Court and includes  a  Tribunal  or  other  authority  having  jurisdiction under any special or local law to decide questions affecting the rights of parties;”

It is clear from the aforesaid definition that within the ambit of the CF Act, it

is not only civil or criminal courts but also revenue authorities, including the

tribunal  or  other  authority  having  jurisdiction  under  any  special  or  local

laws, to decide questions affecting the rights of the parties.  Thus, revenue

courts  as  well  as  tribunals,  when  such  bodies  are  deciding  questions

affecting the rights of the parties, are treated as 'court'  for the purpose of

CF Act.  Fee prescribed under the said Act becomes payable in respect of

proceedings before these authorities as well.

4) Section 76 of the CF Act, under which the impugned notification is issued,

deals with 'Legal Benefit Fund' and makes the following reading:

“76.  Legal Benefit Fund. –  (1)  Notwithstanding anything contained in this Act or any other law for the time being in force, it shall be competent for  Government  to  levy  an  additional  court  fee,  by notification  in  the  Gazette,  in  respect  of  appeals  or revisions to tribunals or  appellate  authorities,  other  than Civil and Criminal Courts, at a rate not exceeding one per cent of the amount involved in the dispute in cases where it is capable of valuation and in other cases at a rate not exceeding  one  hundred  rupees  for  each  appeal  or revision.

(2)  There shall be constituted a legal benefit fund to which shall be credited –

(i)  the proceeds of the additional court-fee levied and collected under sub-section (1);

(ii)  fifty per cent of the court fees levied and collected on mukhtarnama or vakalathnama under Article 16 of

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Schedule II of this Act.

(3)  The fund constituted under sub-section (2) shall be applied and utilised for the purpose of providing an efficient legal service for the people of the State and to provide  social  security  measures  for  the  legal profession.

(4)  The mode and manner in which legal service to the people  may be  made more  efficient  and  social  security measures for legal profession may be provided, shall be as prescribed by rules made by Government.”

5) As is clear from the plain language of the aforesaid Section, this provision

empowers the State Government to levy an additional court fee in respect

of appeals or revisions to tribunals or appellate authorities, other than civil

and criminal courts.  This can be done by notification in the Gazette.  The

upper limit of such an additional court fee is one per cent of the amount

involved in the dispute in cases where it  is capable of valuation, and in

other cases the additional court fee which can be levied is not to exceed

rupees hundred for each appeal or revision.  This levy of additional court

fee is meant for Legal Benefit Fund.  This Fund is to be applied and utilised

for the purpose of providing an efficient legal service for the people of the

State and to provide social security measures for the legal profession.  The

mode and manner in which legal services are to be made more efficient

and social security measures for legal profession need to be provided can

be prescribed by rules made by the Government.  For this purpose, the

State Government has framed the Kerala Legal Benefit Fund Rules, 1991,

These Rules prescribed the manner in which the Fund is to be operated.

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Rule 3 thereof enumerates the sources of monies to the said Fund and

reads as under:

“3.  Depositing of certain monies to the Fund. –  

(1)  The amount to be credited to the Legal Benefit Fund shall  be  drawn  from  the  head  of  account  2014-800-06 Legal  Benefit  Fund  –  Contributions  by  the  Secretary, Board of Revenue (L/R) and may be made available to the Secretary to Government, Law Department for depositing it in the Fund.  Government may make available in the first instance for deposit  in the Fund such amount as it  may deem necessary for the initial working of the Fund.  This amount  shall  be  adjusted  against  the  actual  amount payable  to  the  Fund  on  consolidation  of  Statements regarding  court  fees  actually  levied  from the  year  from which this (sic – these) rules shall be brought into force.

(2)   The  amount  of  additional  court  fees  levied  and collected under sub-section (1) of S.76 of the Act shall be added to the Fund as and when such additional court fees are levied and collections are made.  This amount will also be  made  available  to  the  Law  Secretary  during  the beginning of  every financial  year based on consolidated accounts of collection made in the previous year.

(3)   The  fund  shall  be  deposited  in  the  Public  Deposit account  as  'Fund'  in  the  District  Treasury, Thiruvananthapuram  in  the  name  of  the  Legal  Benefit Fund Trustee Committee constituted under rule 4.”

Under  Rule  4,  a  Fund  Trustee  Committee  is  constituted  and  detailed

provisions are made thereof for operating the Fund by the said Trustee

Committee as well as the functions which the said Trustee Committee is

supposed to discharge.

6) We may point out at this stage that the Legislature of the Kerala State has

also enacted a  law known as  the  Kerala  Advocates'  Welfare  Fund Act,

1980.  Rules are also framed under the said Act which are called as the

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Kerala Advocates'  Welfare Fund Rules,  1981.  The Welfare Fund Act is

aimed at providing of a Welfare Fund for the payment of retirement benefits

to advocates in the State of Kerala and for the matters connected therewith

or  incidental  thereto.   Section  3  thereof  deals  with  constitution  of  the

Advocates' Welfare Fund and reads as under:

“3.   Advocates'  Welfare Fund. –  (1)  The Government shall constitute a fund called the Advocates' Welfare Fund.

(2)  There shall be credited to the Fund –

(a)  all amounts paid by the Bar Council under section 12;

(b)  any other contribution made by the Bar Council;

(c)  any voluntary donation or contribution made to the Fund by the Bar Council of India, any Bar Association, any other association or institution, any advocate or any other person;

(d)  any grant made by the State Government to the Fund;

(e)  the amount set apart from the Legal Benefit Fund constituted under sub-section (2) of Section 76 of the Kerala Court Fees and Suits Valuation Act,  1959  (10  of  1960),  for  providing  social security measures for the legal profession;

(f)  any sum borrowed under section 10;

(g)   all  sums  received  from  the  Life  Insurance Corporation  of  India  on  the  death  of  an  advocate under the Group Insurance Policy;

(h)   any  profit  or  dividend  received  from  the  Life Insurance Corporation of India in respect of policies of Group Insurance of the members of the Fund;

(i)  any  interest  or  dividend  or  other  return  on  any investment made of any part of the Fund;

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(j)  all sums collected by way of sale of stamps under section 22;

(k)   all  sums collected under  section 15 by way of application fees and annual subscriptions and interest thereon.  

(3)  The sums specified in sub section (2) shall be paid or collected by such agencies at such intervals and in such manner, and the accounts of the Fund shall be maintained in such manner as may be prescribed.”

7) It becomes clear from clause (e) of sub-section (2) of Section 3 that the

amount set apart from the Legal Benefit Fund constituted under Section 76

of the CF Act is to be credited to the Advocates' Welfare Fund, for providing

efficient  legal  services  for  the  people  of  the  State  and  social  security

measures for the legal profession.

In  nutshell,  the  additional  court  fee  at  the  rate  of  0.5% of  the  amount

involved or  50 in  each case by the tribunals  and appellate  authorities₹

constituted  by  or  under  any  special  or  local  laws,  other  than  civil  and

criminal  courts,  is  meant  for  the aforesaid Welfare Fund which is  to be

utilised in accordance with the provisions of the Welfare Fund Act.

8) From the reading of the aforesaid provisions it becomes clear that Section

76  authorises  the  State  Government  to  issue  such  a  notification  and

notification has been issued in exercise of powers contained therein.  This

power extends to levy additional court fee by tribunals and other appellate

authorities  constituted  by  or  under  any  special  law.   The  impugned

notification, therefore, is  intra vires  the provision of Section 76 of the CF

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Act.  Even the rate which is prescribed in the notification is within the outer

limit prescribed under Section 76(2) of the Act.  To this extent, therefore,

there cannot be any quarrel.

9) However, the main argument of the appellants is that the additional court

fee which is to be paid on the appeals etc. which are to be filed either under

the Kerala General Sales Tax Act or the Kerala Value Added Tax Act by

virtue  of  the  aforesaid  notification,  have  no  nexus  with  the  object  and,

therefore,  it  does  not  have  any  character  of  'fee'  as  no  services  are

provided to the litigants in return.  To put it otherwise, it is submitted that

since  such  additional  court  fee  collected  from  the  assessees  like  the

appellants is used for the benefit of the advocates and no benefit thereof

accrues  to  the  litigants,  charging  of  such  additional  court  fee  is  clearly

impermissible as it amounts to compulsory exaction of the money from the

appellants  in  the  name  of  court  fee,  without  giving  any  corresponding

benefit to the appellants.  It is more so when such an additional fee has to

be  paid  at  each  and  every  subsequent  level  of  statutory  appeal  and

revision as well.

10) The aforesaid arguments of the appellants is devoid of any merit.  Insofar

as  the  argument  predicated  on  fee  vis-a-vis  tax  is  concerned,  i.e.  the

submission that the imposition in question is in the nature of tax inasmuch

as this imposition has no nexus to any object  sought to be achieved in

relation to the service available to the appellants and there is no quid pro

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quo, the same is dealt with by the High Court elaborately.  The High Court

has referred to Entry 3 in List II (State List) of the Seventh Schedule of the

Constitution as it stood in the year 1960 when the CF Act was enacted on

receiving the assent of the President of India.  This Entry reads as under:

“3.  Administration of justice, constitution and organization of all courts except the Supreme Court and the High Court; officers and servants of the High Court; procedure in Rent and Revenue Courts; fees taken in all courts except to the Supreme Court.”

By  the  Forty-Second  Amendment  to  the  Constitution  in  the  year  1976,

administration  of  justice  became  a  Concurrent  Subject,  having  been

included as Entry 11A in List III which resulted in requisite modification to

Entry 3 in List II as well.  At the same time, by the very same amendment,

Article 39-A was also inserted in Part IV of the Constitution which relates to

the Directive Principles of State Policy.  This Article exhorts the State to

provide equal justice and free legal aid and reads as under:

“39A.  Equal justice and free legal aid.  The State shall secure  that  the  operation  of  the  legal  system promotes justice,  on  a  basis  of  equal  opportunity,  and  shall,  in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.”

As  per  the  High  Court,  the  administration  of  justice,  thus,  becomes  a

distinct topic and Article 39A calls upon the State to ensure establishment

of such legal system which promotes justice and provides free legal aid.

11) We agree with the aforesaid approach of the High Court.  First of all, the

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argument of the appellants ignores that as per Section 76(3) of the CF Act,

one of the purposes for which the Fund is to be utilised is for providing

efficient legal services for the people of the State.  It  clearly amounts to

quid pro quo.  Other purpose is also for the benefit of the public at large.

When we talk of sound and stable system of administration of justice, all

the stakeholders in the said legal system need to be taken care of.  Legal

community  and advocates are inseparable  and important  part  of  robust

legal system and they not only aid in seeking access to justice but also

promote justice.   Judges cannot  perform their  task of  dispensing justice

effectively without the able support of advocates.  In that sense, advocates

play an important role in the administration of justice.  It is wisely said that

for  any  society  governed by  Rule  of  Law, effective  judicial  system is  a

necessary concomitant.  The Rule of Law reflects man's sense of order and

justice.   There can be no Government without order; there can be no order

without law; and there can be no administration of law without lawyers.  It is

no small service to be called upon to prosecute and enforce the rights of a

litigant through the court of law and in that sense the legal profession is

treated as service to the justice seekers.  It is, therefore, by contributing an

essential  aid  to  the  process  of  the  administration  of  justice  that  the

advocate discharges a public duty of the highest utility.

12) When the subject matter of the instant cases is examined in the aforesaid

hue,  it  becomes  apparent  that  providing  social  security  to  the  legal

profession becomes an essential part of any legal system which has to be

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effective, efficient and robust to enable it to provide necessary service to

the consumers of  justice.   Section 76 of  the CF Act  and the impugned

notification vide which additional court fee is imposed have a direct nexus

to the objective sought to be achieved in relation to the service available to

the appellants or others who approached the courts/tribunals for redressal

of their grievances.

13) We, thus, do not find any merit in the appeal and the writ petitions, which

are accordingly dismissed.

.............................................J. (A.K. SIKRI)

.............................................J. (S.A. BOBDE)

.............................................J. (ASHOK BHUSHAN)

NEW DELHI; SEPTEMBER 01, 2016.