Supreme Court rules ad valorem court fee applies to land acquisition appeals.

The Supreme Court has held that an appeal under Section 54 of the Land Acquisition Act, 1894, challenging only statutory benefits such as solatium and interest, is an appeal relating to compensation and therefore attracts ad valorem court fee under Section 8 of the Court Fees Act, 1870.

A Bench of Justices R Mahadevan and Manmohan said there can be no estoppel against a statute, and an erroneous acceptance of deficient court fee by the Registry or even by the court cannot confer any vested right on a litigant or dispense with compliance with the statutory requirement.

"Whenever deficiency is noticed, the court is fully empowered to require payment of the deficit court fee. At the same time, before any adverse consequence follows, the appellant must be afforded a reasonable opportunity to make good the deficiency," Court said.

Why does an appeal challenging only statutory benefits attract ad valorem court fee?

Court held that Section 8 of the Court Fees Act is a special provision governing the computation of court fee on appeals against orders relating to compensation for land acquisition. It requires court fees to be calculated on the difference between the amount awarded and the amount claimed.

The provision does not distinguish between different components of compensation. Therefore, a challenge to statutory components such as solatium or interest effectively seeks modification of the compensation amount awarded by the Reference Court, the Bench held.

Court was dealing with an appeal filed by Tehri Hydro Development Corporation Ltd. and affirmed that solatium and interest under Sections 23 and 28 of the Land Acquisition Act, 1894, are inseparable components of the composite compensation award.

It said the additional amount under Section 23(1-A), solatium under Section 23(2), and statutory interest under Section 28 are mandatory incidents of compensation and form an integral and inseparable part of the award. An award passed by the Reference Court comprises one composite determination of compensation under the Act, it added.

What was the dispute over court fee?

The appeal arose from a judgment and order dated October 25, 2017 passed by the Uttarakhand High Court at Nainital in a first appeal. The high court had directed the appellant to pay ad valorem court fee on the decreetal amount of Rs 2,34,03,602.05 within two weeks.

The appellant had challenged the judgment dated November 24, 2008 passed by the District Judge, Dehradun. By that judgment, the Reference Court had partly allowed the reference and held that the respondents were entitled to statutory benefits under the Land Acquisition Act, 1894.

These included an additional amount at the rate of 12% per annum on the compensation from the date of notification till the date of the award or taking possession, whichever was earlier; solatium at the rate of 30% on the compensation; and statutory interest at the rate of 9% per annum for the first year and thereafter at the rate of 15% per annum from the date of taking possession till the date of payment.

Aggrieved only by the grant of these statutory benefits, the appellant preferred a first appeal before the High Court under Section 54 of the Act. The appeal was valued at Rs 2,34,03,602.05. However, the appellant paid a fixed court fee of Rs 10, arguing that the appeal did not challenge the determination or enhancement of compensation.

By an order dated July 25, 2017, the high court expressed a prima facie view that the court fee paid was insufficient and called upon the appellant to file objections.

The appellant reiterated that its appeal was confined exclusively to the statutory benefits and did not challenge the determination or enhancement of compensation. It therefore argued that only a fixed court fee was payable.

The high court rejected the plea and, by its October 25, 2017 judgment, directed the appellant to pay ad valorem court fee on the decreetal amount of Rs 2,34,03,602.05, being the amount under challenge in the appeal.

Supreme Court explains why statutory benefits form part of compensation

While considering the challenge to the high court's order, the Supreme Court examined whether an appeal under Section 54 challenging only the statutory benefits awarded under Sections 23(1-A), 23(2) and 28 of the Land Acquisition Act attracts ad valorem court fee under Section 8 of the Court Fees Act, or whether a fixed court fee would suffice.

"The Court Fees Act, 1870 is a fiscal statute enacted to regulate the levy of fees on proceedings instituted before courts. Its object is two fold: first, to secure revenue connected with the administration of justice, and secondly, to regulate recourse to civil proceedings through a prescribed fee structure. Being a fiscal enactment, its provisions are required to be construed strictly," the Bench said.

Court noted that solatium is an inseparable component of compensation and not an independent statutory claim. It referred to its judgment in Gurpreet Singh v Union of India (2006), where it had observed that once compensation is determined, the decree represents one composite award of compensation comprising the market value together with all statutory additions.

The Bench also noted that Section 26 of the Court Fees Act declares that every award of the Reference Court shall be deemed to be a decree within the meaning of Section 2(2) of the Code of Civil Procedure.

"Consequently, an appeal under Section 54 is nothing but an appeal against such decree. Since the decree itself comprises market value together with all statutory components forming part of compensation, an appellant who seeks reduction or exclusion of any one of those quantified components necessarily seeks modification of the decree itself. The character of the appeal cannot vary merely because the appellant chooses to challenge only one constituent of the decretal amount," the Bench said.

Court also relied on its judgment in Indore Development Authority v. Tarak Singh and others (1995), where it had unequivocally held that the award passed by the Reference Court is a decree and that an appeal under Section 54 challenging such decree attracts Section 8 of the Court Fees Act.

"The ratio of Indore Development Authority squarely governs the present controversy and leaves no room for application of the fixed court fee prescribed elsewhere," the Bench said.

No exemption from ad valorem court fee without statutory amendment

The Supreme Court further found that there was no material to indicate that the State of Uttarakhand had amended Section 8 of the Court Fees Act to exclude statutory benefits from the computation of court fee or to prescribe a fixed court fee for appeals under Section 54 of the Land Acquisition Act.

On the contrary, the State continued to be governed by the unamended provisions of the Court Fees Act, Court said.

The Bench noted that in certain other States, including Maharashtra and Haryana, specific statutory amendments have been introduced either excluding statutory benefits or prescribing a fixed court fee. This, it said, reinforced the conclusion that any such exemption must flow from an express legislative provision.

"In the absence of any such amendment applicable to the State of Uttarakhand, the plain language of Section 8 must receive full effect. The court cannot read into the statute an exemption which the legislature has consciously chosen not to provide. To hold otherwise would amount to supplying a casus omissus, which is impermissible in the interpretation of a fiscal statute," the Bench said.

Court therefore held that since the appeal was one relating to compensation within the meaning of Section 8 of the Court Fees Act, the appellant was liable to pay ad valorem court fee on the value of the relief claimed. Payment of a fixed court fee of Rs 10 was legally impermissible, it said.

The Bench held that the additional amount under Section 23(1-A), solatium under Section 23(2) and statutory interest under Section 28 constituted integral and inseparable components of the compensation awarded under the Land Acquisition Act, 1894.

An appeal under Section 54 seeking reduction or exclusion of any such component is therefore an appeal against the decree of the Reference Court relating to compensation and consequently attracts ad valorem court fee under Section 8 of the Court Fees Act, Court said.

"We therefore find no error in the view taken by the High Court that the memorandum of appeal was liable to be accompanied by ad valorem court fee and that payment of a fixed court fee was contrary to law. The impugned judgment of the High Court, therefore, warrants no interference," the Bench said, dismissing the appeal.

Since the appellant had deposited the deficit court fee before the high court pursuant to an order passed by the Supreme Court in 2018, the Bench directed the high court to proceed with the first appeal in accordance with law.

Case Title: Tehri Hydro Development Corporation Vs S P Singh & Ors

Bench: Justices R Mahadevan and Manmohan

Date of Judgment: July 31, 2016

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