Messrs Escort Limited, Delhi and others vs The State of Punjab and others

Pritam Singh Pattar, J.—This is a petition under Articles 226 and 227 of the Constitution of India by Messrs Escorts Limited New Delhi and others to issue directions, order or writ to the respondents the State of Punjab, the Inspector General of Registration for the State of Punjab and the Sub-Registrar of Assurances, Ballabgarh, Respondents Nos. 1 to 3 not to give effect to the Notification No. so. /CA/16/1908./ss-78-79/66 dated 4th February. 1966 and not to impose the registration fee of Rs. 41,511/- on the mortgage deed dated 18th March 1966 executed by them in favour of the Industrial Finance Corporation of India, Delhi and than the Sub-Registrar, Respondent No. 3 may be directed to register the said mortgage deed without any payment or on payment of such amount of fee as this Court may determine.

The facts of this case are that Messrs Escorts Limited, petitioner No. 1 is a company duly registered under the Indian Companies Act, 1913 having its registered office at 26. Faiz Bazar, Darya Ganj, Delhi and Shri Harbans Singh Metha, petitioner No. 2 and Sodhi Kartar Singh petitioner No 3 are the Directors and shareholders of the Escorts Limited. Messrs Har Parshad and Company Private Limited, petitioner No. 4 is also a company duly registered under the petitioner No. 1 company and petitioners Nos. 5 and 6 are its Directors and Shareholders. The Petitioner No. 1 through petitioners Nos. 2 and 3 on 18th March, 1966 executed a mortgage deed to secure repayment of a sum of Rs. 41,50,000/- in pursuance of the resolution of the Board of Directors dated 21st December, 1965. The petitioner No. 4 through petitioners Nos. 5 and 6 also joined in the execution of this mortgage deed, which was executed in favour of Industrial Finance Corporation of India. The major portion of the Immovable properties mentioned in the mortgage deed are situated in Tehsil Ballabgarh, District Gurgaon within the jurisdiction of the Sub-Registrar, Respondent No, 3. The mortgage deed was written on a stamp paper worth Rs. 62,250/-. When the mortgage deed was presented on 11th April, 1966 before the Sub-Registrar of Assurances, Ballabgarh, Respondent No. 3, he demanded an amount of Rs. 41,511/- as registration fee for the said deed In pursuance of the notification referred to above dated 4th February, 1966, which had been Issued under sections 78 and 79 of the Indian Registration Act and the true copy of this notification is attached as Annexure ''A'' to the writ petition-An objection was taken by the petitioners before the Sub-Registrar that the sum of Rs. 41,511/- demanded by him was not fee in reality but was in the nature of tax and as such it was illegal, void, and unconstitutional, but the Sub Registrar did not entertain this objection. The petitioners, therefore, filed this writ petition that the respondents may be directed not to impose the registration fee of Rs. 41,511/- on the mortgage deed executed by them in favour of the Industrial Finance Corporation and the Sub-Registrar, Respondent No. 3 may be directed to register the document on payment of such amount as may be fixed by the High Court.

The State of Punjab (now State of Haryana) filed a written statement wherein the allegations made in the petition were contested. It was alleged that the petitioner had already paid the registration of Rs. 41,511/- on 10th June, 1966 at the time of the registration of the deed at Ballabgarh and, therefore, this petition had become anfractuous. It was further alleged that this registration fee was charged by the then State of Punjab, and, therefore, the state of Haryana, which came into existence on 1st November, 1966, was not liable to refund the same. It was maintained that under sections 78 and 79 of the Indian Registration Act, the State Government is competent to prepare a table of registration fee and that the fee of Rs. 41,511/- was correctly levied on the mortgage deed In accordance with the notification. It was prayed that there was no substance in this petition and the same may be dismissed.

Section 78 of the Indian Registration Act empowers the State Government to prepare a table of fees payable for the registration of documents and for searching the registers etc. According to section 79 of that Act, a table of the fees so payable shall be published in the Official Gazette and a copy thereof in English and the vernacular language of the district shall be exposed to public view in every registration office. Section 80 of that Act says that all fees for the registration of documents under this Act shall be payable on the presentation of such documents. The impugned notification dated 4th February, 1966 referred to above was issued u/s 78 of the Act and Its copy is Annexure ''A'' to the writ petition, wherein the table of the fees chargeable for the registration of documents is given. According to this table of fees, the registration fee on the mortgage deed is to be calculated at the rate of Rs. 21/- for the first Rs. 1,000/- of the consideration money and Rs. 5/- for every Rs. 500/- or part thereof in excess of the first Rs. 1.000/-.

A similar question for consideration came up before a Division Bench of the Punjab High Court (Delhi Bench) and this decision is reported in the Delhi Cloth and General Mills Co. Ltd. and others v. The Chief Commissioner, Delhi AIR 1964 P&H 492. The facts of this case were that company floated debenture loan of Rs. 2.5 crores and to secure the repayment of the said loan executed debenture trust deed mortgaging some of its properties of the consideration of Rs. 2 5 crores in favour of trustees for debenture-holders, under the said debenture trust deed. When the debenture trust deed was presented before the Sub-Registrar for registration, the Sub-Registrar demanded a sum of Rs. 1,25,157, 50 p. as registration fee. This demand was made in pursuance of notification No. F. 12 (20)/52-GAR dated the 15th December, 1952 issued under sections 78 and 79 of the Registration Act, 1908 The trustees took back the document and filed a writ petition in which they maintained that they were prepared to pay any reasonable fee for registration of the document, that the fee demanded from them for registration had no co-relation with the services, to be rendered under the Registration Act and was so excessive that it was merely a pretence for fee, that It was not fee and in reality was a tax and as such its levy was illegal void and unconstitutional. On these facts, it was held as under :

that the fee in the instant case, was not a fee but in its very nature was a tax the notification was ultra vires and in-operative for the following reasons, namely :

(1) that the fee is not deposited in a separate head or account but is merged in the general revenue of the State. It is not solely used for the maintenance of the registration department but goes into a consolidated fund which is utilised for various other Governmental functions.

(2) that there is no reasonable correlation between the fee levied and the costs of maintenance and administration or the registration department. The Act has no correlation with the Capacity of an individual to pay. This is being stated pertinently because imposition has something to do with the capacity of the individual to pay but all fees cannot be justified on that basis. For that purpose one has to keep in view the purpose and object of the Act. In the present case the purpose and the object of the Act have no relation to the paying capacity of an individual.

This authority is on all fours with the present case. The registration fee charged from the petitioner in the instant case was not a fee but in its very nature is a tax and the impugned notification is ultravires and in operative because the fee is not deposited under the separate head or account but is merged in the general revenue of the State. Also there is no correlation between the fee levied and the costs of maintenance and administration of the registration department. It is well settled that tax is a compulsory exaction of money by public authority for public purpose enforceable by law and is not payment for services rendered. It is not possible to formulate a definition of fee that can apply to all cases as there are various kinds of fees. But a fee may generally I be defined as 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 governmental in rendering the J service, though in many cases such expenses are arbitrarily assessed. The distinction between a tax and a fee lies primarily in the fact that a tax is leveled as part of a common burden, while a fee is a payment for a special benefit or privilege. Vide The Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt., . In view of the law laid down by the Supreme Court in these authorities, we hold that the impugned notification No. S.O./C.A. 16/1908/ss 78-79/66, dated 4th February, 1966 is illegal, invalid and ultravires and we quash the same. We direct the respondents to refund the sum of Rs. 41,511/- which was recovered from the petitioners as registration fee, on their furnishing security for reasonable amount, which may be payable as registration fee to be fixed by the Government In respect of the mortgage deed. The Respondent No. 1 is directed to fix the registration fee chargeable from the petitioners in respect of this Mortgage deed within a reasonable time and to recover the same from them. Under the circumstances of this case, there will be no order as to costs.

D.K. Mahajan, J.

I agree.