LAW COMMISSION OF INDIA REPORT ON …

1 LAW COMMISSION OF INDIA189TH REPORTONREVISION OF COURT FEES STRUCTUREFEBRUARY, 20041 JUSTICE LAW COMMISSION OF INDIAM. JAGANNADHA RAOSHASTRI BHAWAN,CHAIRMANNEW DELHI-110 001 TEL: 3384475 FAX: 3073864, 3388870 Residence: 1, Janpath, New : 3019465DO (3)82/2002-LC(LS)February 25, 2004 Dear Shri Arun Jaitley ji,I have great pleasure in forwarding the 189th REPORT of the Law COMMISSION on Revision of Court Fees Structure . The COMMISSION took up the subject on a referencereceived from the Dept. of Legal Affairs vide OM Feb. 11, 2003. In fact, the Dept. of Justice vide its letter made a request to the Dept. of Legal Affairs for referring the matter of upward revision of Court fees structure vis- -vis the need to build financial disincentivesto discourage vexatious litigation , to the Law COMMISSION for consideration.

2 The Justice, as mentioned in its letter, is of the view that the Court fees in majority of caseshas not been revised for a very long time, although valuation of rupee has come down,and currently it covers only a fraction of the administrative costs of the judicial being the first occasion for the Law COMMISSION to give a REPORT exclusivelyon subject of Court fees, the basic principles in regard to the collection of Court fee, havebeen elaborately discussed in this Law COMMISSION examined the issue of Court fee in the light of the modernconcept that the right of access to justice, is a basic right and dealt with this aspect inChapter II of the REPORT . The COMMISSION is of the firm view that as the right to accessto justice is now recognized as a basic human right world over, high rates of Court feemay become a barrier to access to justice and this view is shared today in all the countriesgoverned by the common law and civil law systems of discussed in Chapters IV and V of the REPORT , it is now recognized that it isone of the primary duties of the State to provide the machinery for administration ofjustice.

3 Administration of criminal justice is, as accepted in all countries, a sovereignfunction of the State and the view is that no fee can, in fact, be levied. So far as theadministration of civil justice is concerned, the view in all countries is that the principleof recovery of full costs of civil justice is no longer tenable. This is the view of variousLaw Commissions, Courts and jurists. It is their view that these costs have to be metfrom general revenues of the State. The Central and State Governments should thereforehave to meet substantial costs of the administration of justice out of general revenuescollected from the tax payers.

4 We may reiterate that in respect of the problem of findingfunds for meeting the costs of administration of justice, the trend, both in common lawand civil law jurisdiction countries is that, it should be met through general appropriationand governmental funding and not through the device of increase in Court has been suggested in the reference that Court fee must be increased todiscourage vexatious litigation. In regard to discouraging vexatious litigation, the LawCommission, in agreement with the view consistently expressed earlier by Lord Macaulayand in the judgments of Courts, is of the view that the idea of enhancing the Court fee todiscourage vexatious litigation is not correct in principle.

5 Jurists and Courts havepointed out that, on the contrary, higher rates of Court fee will certainly discourage evenhonest and genuine litigants, which cannot be allowed to happen. However, in order tocurb vexatious or frivolous litigation, the COMMISSION recommends that a Centrallegislation may be made on the lines of the State Act of former Madras State, namely, Vexatious Litigation (Prevention) Act, 1949 (Madras Act 8 of 1949). Such statutes arein force in UK, Australia etc. Apart from this, exemplary costs may also be imposed incases of vexatious or frivolous is necessary to mention that the subject of Court fee payable in any Courtexcept the Supreme Court falls under Entry 3 of List II (State List) of Schedule Seventhto the Constitution of INDIA .

6 Court fee payable in the Supreme Court falls under Entry 77of List I ( union List). As the Court fees payable in any Court except the Supreme Courtfalls under the State List , ten States have already repealed the Court Fees Act, 1870 inapplication to their respective states and have enacted their own Court fees of the other States have also amended the Court Fees Act, 1870 as applicable inthese States. union Territory of Pondicherry has also enacted a separate Court Fees can make law only for union Territories and the Supreme Court on the subjectof Court fee. The Supreme Court has made Rules in this behalf. On a detailed survey, the Law COMMISSION recommends that in order to eliminatethe effect of devaluation of the rupee, and increase in rates of inflation, the rates of fixedCourt fee as prescribed in Schedule 2 of the Court Fees Act, 1870 may be appropriatelyrevised.

7 However, ad valorem Court fees need not be revised inasmuch as the Court feewill be paid in proportionate to the value of the claim which in any event would reflectthe enhanced value of the claim after , the recommendation is that, in so far as the union Territories, notcovered by any special Acts, are concerned, it will be sufficient if the rates of Court fee asprescribed in the Court Fee Act, 1870, be enhanced keeping in mind the devaluation ofthe rupee over the years. We place on record the valuable contributions of Dr. S. Muralidhar, Part timeMember of our COMMISSION , in the preparation of this regards,Yours sincerely, (M.)

8 Jagannadha Rao)Sri Arun JaitleyUnion Minister for Law and JusticeGovernment of IndiaNEW OF CONTENTSCHAPTERSPAGE IIntroduction01-05 Chapter IIRight of access to justice06-33 Chapter IIIP ower of Parliament to enact or amenda law relating to the Court fees payable in High Courts and subordinate Courts 34-54 Chapter IVCan Court fee be enhanced to recovercost of administration of justice? (Viewsof Commissions, Committees, Courts Etc.)55-79 Chapter VFull cost recovery: An anathema to theconcept of access to justice: Theexperience in other countries80-92 Chapter VIWhether there is a need to revise theCourt fees structure in order to build financial disincentives to discourage vexatious litigation93-96 Chapter VIIM easures available to curb frivolous or vexatious litigation 97-104 Chapter VIII Revision of Court fees owing to the5 devaluation of the rupee 105-106 Chapter IXConclusions and Recommendations107-113 CHAPTER IINTRODUCTIONThe ReferenceThe Department of Legal Affairs, with approval of Hon'ble Minister of Law& Justice.

9 Has referred to the Law COMMISSION , the matter relating to the upward revision of court fees structure vis- -vis the need to build financialdisincentives to discourage vexatious litigation , vide LA, dated Feb. 11, 2003. The Department ofLegal Affairs was requested by the Department of Justice vide its dated for referring this matter ofrevision of court fees structure, to the Law COMMISSION . It was suggested in the meeting of Standing Committee of Secretaries, heldon 19th July, 2002, that there is a need to build financial disincentives inthe legal system so as to discourage vexatious litigation.

10 Accordingly, itwas decided in that meeting that this suggestion may be referred to the LawCommission for its consideration. It was informed to the StandingCommittee, that the court fees in majority of cases had not been revised fora very long time and currently covered only a fraction of theadministrative costs of the judicial process. The Department of Justice, in6its above mentioned letter has also expressed the similar view. It is stated inthe letter, that the court fees has not been revised for a very long time,although valuation of Rupee has came down tremendously compared to thevaluation in the year 1870 when the Court Fees Act came into is observed that it was also informed to the Standing Committee that theCentral Government is concerned with court fees payable in the SupremeCourt and other courts situated in the union Territories.