# CHIEF COMMISSIONER, DELHI & ANR v. DELHI CLOTH AND GENERAL MILLS CO. LTD. & ORS

- **Citation:** [1978] 3 S.C.R. 657
- **Court:** Supreme Court of India
- **Decided:** 1978-04-07
- **Case number:** Civil Appeal No. 1959 of 1968
- **Bench:** S. Murtaza Fazal Ali, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chief-commissioner-delhi-anr-v-delhi-cloth-and-general-mills-co-ltd-ors-7413
- **Pages:** 3

## Headnote

Fee-Conditions to be satisfied to be a legal fee, within the meaning of the
Constitution.
The Respondent Company floated debenture loan of Rs. 2.50 crores and to
'Secure the repayment of the said loan executed debenture trust deed dated 10th
April, 1962, mortgaging certain properties of the Company for a considerat~on
of Rs. 2.50 crores in favour of the trustees \Vho were petitioners before the High
Court.
Stan1ps to the extent of Rs. 2,50,00 /- were paid under the Indian
Stamp Act and apart from that when the document was presented for registration, a registration fee of Rs. 1,25, 157.50 np. \Vere demanded as registration fee
by the Sub-Registrar under a notification issued by the appe1lant,
the
Chief
·Com~ssioner of Delhi on 15th December, 1952.
The registration fee
was
paid by the Respondents under compulsion, but the trustees filed a petition in
the High Court challenging the validity of the notification and the exorbitant
amount realised as registration fee as illegal levy not fulfi.11ing
the
essential
conditions of a fee within the meaning of the Constitution. The plea of the
trustees found favour with the High Court v,rhich held that the fee charged by
the Registration Department under the notification was an illegal impost and
·could not be levied. The High Court accordingly quashed the notification.
Dismissing the appeal by certificate, the Court
HEID : A fee in order to be a legal fee n1ust satisfy two conditions : (a)
There must be an element of quid pro quo, i.e. the authority levying the fee
·must render some service for the fee levied however remote the service may
be; and (b) That the fee realised n1ust be spent for the purpose of the imposition and should not form part of the general revenues of the State. [658 F-01
In the instant case, in view of the fact that it was ·not disputed that the fee
Tealised by the Registration Department under the impugned notification dated
15-2-1952 was to form part of the general revenues of the State, the second
<element of a fee was wholly wanting and the High Court was, therefore, right
in striking down this notification. [658 G-H]
Mahant Sri Jaga11nath Ran1anuj Das and Anr. v. The State of Orissa and
Anr. [19541 SCR 1046, Ratilal Panac1wnd Gandhi v. The State of Bombay and
-Ors. [1954) SCR at p. 1055 and State of Malfarashtra & Ors. v. The Salvation
Army, Western India Territory [1975] 3 SCR 475 applied.

## Text

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-
657
CHIEF COMMISSIONER, DELHI & ANR.
v
DELHI CLOTH AND GENERAL MILLS CO. LTD. & ORS.
April 7, 1978
[S. MURTAZA FAZAL ALI AND JASWANT SINGH, JJ]
Fee-Conditions to be satisfied to be a legal fee, within the meaning of the
Constitution.
The Respondent Company floated debenture loan of Rs. 2.50 crores and to
'Secure the repayment of the said loan executed debenture trust deed dated 10th
April, 1962, mortgaging certain properties of the Company for a considerat~on
of Rs. 2.50 crores in favour of the trustees \Vho were petitioners before the High
Court.
Stan1ps to the extent of Rs. 2,50,00 /- were paid under the Indian
Stamp Act and apart from that when the document was presented for registration, a registration fee of Rs. 1,25, 157.50 np. \Vere demanded as registration fee
by the Sub-Registrar under a notification issued by the appe1lant,
the
Chief
·Com~ssioner of Delhi on 15th December, 1952.
The registration fee
was
paid by the Respondents under compulsion, but the trustees filed a petition in
the High Court challenging the validity of the notification and the exorbitant
amount realised as registration fee as illegal levy not fulfi.11ing
the
essential
conditions of a fee within the meaning of the Constitution. The plea of the
trustees found favour with the High Court v,rhich held that the fee charged by
the Registration Department under the notification was an illegal impost and
·could not be levied. The High Court accordingly quashed the notification.
Dismissing the appeal by certificate, the Court
HEID : A fee in order to be a legal fee n1ust satisfy two conditions : (a)
There must be an element of quid pro quo, i.e. the authority levying the fee
·must render some service for the fee levied however remote the service may
be; and (b) That the fee realised n1ust be spent for the purpose of the imposition and should not form part of the general revenues of the State. [658 F-01
In the instant case, in view of the fact that it was ·not disputed that the fee
Tealised by the Registration Department under the impugned notification dated
15-2-1952 was to form part of the general revenues of the State, the second
<element of a fee was wholly wanting and the High Court was, therefore, right
in striking down this notification. [658 G-H]
Mahant Sri Jaga11nath Ran1anuj Das and Anr. v. The State of Orissa and
Anr. [19541 SCR 1046, Ratilal Panac1wnd Gandhi v. The State of Bombay and
-Ors. [1954) SCR at p. 1055 and State of Malfarashtra & Ors. v. The Salvation
Army, Western India Territory [1975] 3 SCR 475 applied.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1959 of 1968.
From the Judgment and Order dated the 7th May, 1964 of the
Puniah High Court, Circuit Bench at Delhi, in Civil Writ No. 227-D
Qf 1962.
R.P. Bhatt and Girish Chandra for the Appellant.
Hardayal Hardy, D.R. Thadani and A .N. Goyal for Respondents •
Sobhagmal Jain for the Intervener (The Slate of Rajasthan).
0. P. Rana Inc the Intervener (State ,,f U.P.).
A
B
c
D
E.
F
G
H
A
B
c
D
. E
F
G
H
658
SUPREME COURT REPORTS
(1978] 3 S.C.R.
The Judgment of the Court was delivered by
FAZAL ALI, J.
This appeal by certificate is directed against the
judgment and order of the Circuit Bench of the Punjab High Court at
Delhi dated the 7th May, 1964 and arises in the following
circumstances :
The respondent Company floated debenture loan of Rs. 2.50 crores
and to secure the repayment of the said loan, executed debenture trust
deed dated 10th April, 1962 mortgaging certain properties of the Company for a considera,tion of Rs. 2.50 crores iu favour of the trustees who
were petitioners before the High Court.
Further details have been
given in the judgment of the High Court and it is not necessary to
repeat them here. It appears that stamps to the extent of Rs. 2,50,300/-
were paid uuder the Indian Stamp Act and apart from that when the
document was presented for registration, a registration fee of Rs. 1,25,
157.50 np were demanded as registration fee by the Sub-Registrar under
a notification issued by the Chief Commissioner of Delhi, which is the
impugned notification in this case.
The registration fee was paid by
the respondents under compulsion but the trustees filed a petition in
the High Court challenging the, validity of the notification and the exorbitant amount realised as registration fee.
The short point taken before the High Court by the Respondents
was that the registration fee levied under the notification dated 15th
De<:ember, 1952 was an illegal levy as it did not fulfil the essential conditions of a: fee within the meaning of the Constitution. The plea of
the trustees fouud favour with the High Court which held that the fee
charged by the Registration Department under the notification was an
illegal impost and could not be levied . The High Court accordingly
quashed the notification and directed refund of the fee.
The main point which arises for consideration in this case is as to
whether or not the fee charged under the notification issued by the
Chief Commissioner was a legal impost justified by the provisions of
the Constitution. It is well settled that a fee in order t<:> be a legal fee,
must satisfy-two conditions :-
(i) there must be an element of quid pro quo that is to
say, the authority levying the fee must render some
service for the fee levied however remote the service
may be;
(ii) that the fee realised must be spent for the purposes of
the imposition and should not form part of the general
rev~nues of the State.
In the instant case, it was not disputed before the High Court that
the fee realised by the Registration Department under the notification
above-mentioned was to form part of the general revenues of the State.
It is, therefore, manifest that the second element of a fee was wholly
wanting in this case and the High Court was, therefore, right in striking
down the notification. Mr. Bhatt aphearing in support of the appeal,
submitted that by virtue of the fact t at the document was registered,
the respondents obtained initial advantage in using the document as all!
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bELHI COMMISSIONER V. D.C.G. MILLS (Fazal Ali, J.)
659
authentic piece of evidence as proof of title and this was, therefore. a
A
sufficient service rendered for the imposition of the fee. Even assuming
that this was so, the second essential ingredient of a valid fee, viz. that
the. fee .realised must be correlated with expenditure incurred on registration so as to be spent on maintenance of registration organisation,
was not satisfied in this case and on this ground alone the fee could
not be imposed. In Mahant Sri Jagannath Ramanuj Das and Anr. v.
The State of Orissa and Anr.('), this Court observed as follows :-
S
'Two, elements are thus essential in order that a payment
may be regarded as a fee.
In the first place, it must be levied
in consideration of certain services which
the individuals
accepted either willingly or unwillingly. But this by itself is
not enough to make the imposition a fee, if the payments
demanded for rendering of such services are not set apart or
specifically app.ropriated for that purpose but are merged in
the general revenue of the Stat(j to be spent for general public
purposes".
The same view was reiterated in Ratilal Panachand Gandhi v. The State
of Bombay and Ors.(')
In a recent decision of this Court in the case of State of Maharashtra
and Q,,. v. The Salvation Army, Western India Territory('), this
Court observed as follows :-
''Thus two elements are essential in order that a payment
may be regarded as a fee. In the first place, it must be levied
in consideration of certain services which the individuals accept either willingly or unwillingly and in the second place,
the amount collected must be earmarked to meet the expenses
of rende,ing these services and must not go to the general
revenue of the State to be spent for general public purpose".
In view of the long course of decisions of this Court, the view taken
c
E
by the High Court was absolutely correct and we arn unable to find any
error of Jaw. We understand that the notification has not been amended
F
and a maximum fee of Rs. 100/- has been fixed. Thus the point becon1es more or less academic except for cases arising during a particular
period.
For these reasons, therefore, we find no merit in this appeal which
fails and is accordingly, dismissed without any order as to costs.
S. R.
(I) [19541 S.C.R. P. 1046
(2) [1954] S.CR.P. 1055.
(3) [1975] 3 S.C R 475.
Appeal dismissed.