State of Bombay vs Supreme General Films Exchange Ltd.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeals Nos. 86 and 87 of 1956

Decision Date: 22 April 1960

Coram: S.K. Das, A.K. Sarkar, M. Hidayatullah

The case was styled State of Bombay versus Supreme General Films Exchange Ltd. and was decided on 22 April 1960 by the Supreme Court of India. Justice S K Das authored the opinion, and the bench was composed of Justices S K Das, A K Sarkar and M Hidayatullah. The petitioner was the State of Bombay and the respondent was Supreme General Films Exchange Limited, with a connected appeal included in the proceedings. The judgment was entered on 22 April 1960 and is reported in the All India Reporter at 1960 AIR 980 and in the Supreme Court Reports at 1960 SCR (3) 640. The principal question before the Court concerned the amendment of the Court Fees Act, 1870, as applied in Bombay by the Court Fees (Bombay Amendment) Act, 1954, and whether that amendment operated retrospectively for appeals filed after the amendment but arising from suits instituted before it. The statutes referred to were sections 4 and 6 of the Court Fees Act, 1870, Schedule 1, Article 1, together with the Court Fees (Bombay Amendment) Act, 1954 (Bombay Act No XII of 1954). The parties were represented by counsel for the appellant and counsel for the respondent, and the matter was listed as Civil Appeals Nos 86 and 87 of 1956, arising from the Bombay High Court judgment dated 24 November 1954 in Appeals Nos 89/X and 96/X of 1954.

In the headnote the Court observed that the 1954 amendments altered the system of charging court fees in the Bombay High Court on the original side, replacing a fixed fee on the plaint with ad valorem fees. These amendments became effective on 1 April 1954, but the amendment legislation contained no express or necessary provision to give them retrospective operation. Consequently, a question arose as to whether the court fees payable on memoranda of appeal filed after that date, relating to decrees passed in suits instituted before the amendment, should be assessed according to the law in force at the time the suits were commenced or according to the law in force at the time the appeals were filed. The Court held that the fees payable on the memoranda of appeal were to be determined by the law that existed on the date the suits were filed. The Court explained that imposing a new restriction or a more onerous condition on the right of appeal is not a mere procedural change; it affects a substantive right, and an enactment that does so is not retrospective unless it expressly states so or necessarily intends to. The Court followed the decisions in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh and others, [1953] S C R 987 and Garikapatti Veerayya v. N Subbiah Choudhuyy, [1957] S C R 488. It approved a reference under Section 5 of the Court Fees Act, cited (1954) 57 Bom L R 180, Amara Eswaramma and others v. Makkam Seethamma, 641 AIR 1955, Andhra 221, Ayjun v. Amyita and others, I L R [1956] Nag 296 and Nagendra Nath Bose v. Mon Mohan Singh, (1930) 34 C W N 1009. The Court distinguished Mohri Kunway v. Keshri Chand, I L R [1941] All 558. The judgment was delivered on 22 April 1960, concluding the appellate review of the High Court’s order dated 24 November 1954.

Judge S.K. Das delivered the judgment on these two consolidated appeals. Both appeals stem from the same judgment and order of the High Court of Bombay dated 24 November 1954, which resolved two separate applications that had been filed in two different appeals. The factual background of the two cases was identical, and the legal issue that arose from them was also the same. The issue concerned whether, in the absence of any provision granting retrospective effect to certain amendments made to the Court Fees Act, 1870, as applied in Bombay by the Court Fees (Bombay Amendment) Act, 1954 (Bombay Act No. XII of 1954) which became effective on 1 April 1954 (hereinafter referred to as the relevant date), the court fees payable on two memoranda of appeal should be assessed according to the law in force on the date the original suits were filed, which was before the relevant date, or according to the law in force on the date the memoranda of appeal were filed, which occurred after the relevant date.

The factual sequence is straightforward. On 16 April 1953, the firm of Sawaldas Madhavdas instituted a suit against Arati Cotton Mills Ltd., seeking a decree for a sum of rupees two lakh and odd. The decree was rendered on 22 July 1954. Arati Cotton Mills Ltd. filed a memorandum of appeal against that decree on 4 September 1954 and, at that time, paid court fees of rupees 3,193‑12‑0 on the memorandum. Subsequently, around 5 October 1954, the parties reached a settlement, and on 9 October 1954 a request was made to dismiss the appeal for want of prosecution. On 18 November 1954, Arati Cotton Mills Ltd. filed an application under section 151 of the Code of Civil Procedure seeking a refund of the excess court fees paid on the memorandum of appeal. In that application the appellants asserted that the appeal arose from a suit that had been instituted on or about 16 April 1953, which was well before the Court Fees (Bombay Amendment) Act, XII of 1954 came into force, and therefore no court fees were payable on the memorandum of appeal except those specified in the Table of Fees. They contended that, due to a bona‑fide mistake, inadvertence or oversight, they had been required to pay an institution fee of rupees 3,193‑12‑0, whereas only a fee of rupees 32 under item No. 58 of the Table of Fees (page 396 of the Court Rules) was legally payable. The appellants maintained that they were not legally bound to pay any amount exceeding rupees 32 and that the surplus payment of rupees 3,161‑12‑0 was made erroneously.

In the present matter the appellants contend that their ignorance of their legal rights or an inadvertent oversight caused them to pay a sum of Rs 3,161‑12‑0 in excess of the amount that should have been required for the memorandum of appeal, and they pray that, for the sake of justice, this excess amount be ordered to be refunded. In a similar situation, on 17 December 1953 Messrs Rasiklal and Company Ltd instituted a suit against Messrs Supreme General Films Exchange Ltd together with two other defendants; a decree was entered on 11 May 1954 ordering Messrs Supreme General Films Exchange Ltd to pay Rs 44,876‑12‑0. The latter filed a memorandum of appeal on 31 July 1954 and paid court fees of Rs 1,958 in connection with that appeal. The appeal was subsequently withdrawn with the permission of the High Court on 27 September 1954. Thereafter Messrs Supreme General Films Exchange Ltd applied for a refund of the excess court fees on grounds identical to those raised by Arati Cotton Mills Ltd. Both applications were heard together after a notice was issued to the Advocate‑General, Bombay, who appeared on behalf of the State of Bombay and opposed the refunds. By its judgment and order dated 24 November 1954 the High Court allowed the two refund applications. The State of Bombay subsequently obtained a certificate in the two consolidated cases affirming that they were fit for appeal to this Court, and the present appeals have been filed on the basis of that certificate. The learned Chief Justice, who delivered the judgment permitting the two applications, referred to an earlier decision reported as “A Reference Under Section 5 of the Court Fees Act (1)” and held that the earlier ruling applied to the present disputes. The facts that gave rise to the earlier decision were as follows: (i) before the relevant date a suit for partition of joint‑family property fell within Schedule II, Article 17(vii) of the Court Fees Act and attracted court fees of Rs 18‑12‑0; (ii) an amendment which became effective on the relevant date stipulated that court fees in such suits should be assessed according to the value of the share in respect of which the suit was instituted; and (iii) a suit for partition of joint‑family property had been commenced before the relevant date, but an appeal was filed after the amendment came into force. The question posed was which court fees were payable on the memorandum of appeal. Relying on the Supreme Court’s decision in Hoosein Kasam Dada (India) Ltd v The State of Madhya Pradesh and Others (2) and on several other authorities, the learned Chief Justice concluded that a right of appeal is a substantive right that vests in a litigant at the time the suit is filed and cannot be withdrawn unless the legislature expressly provides for such a withdrawal; further, an appeal constitutes a continuation of the original suit and is not merely a procedural step that may be altered retrospectively.

The Court observed that a procedural enactment that is not given retrospective effect cannot remove a right of appeal, nor may it impair or endanger that right. Moreover, the Court held that no new conditions may be imposed on the filing of an appeal. An existing condition also may not be made more onerous or stringent so as to affect the appeal right that arose before the enactment. The relevant authorities are (1) [1954] 57 Bom. L.R. 180 and (2) [1953] S.C.R. 987. Counsel for the appellant made a limited attempt to distinguish the decision in A Reference Under Section 5 of the Court Fees Act (1) on factual grounds. The Court remarked that if that decision is correct, it must govern the two matters presently before it, and although the facts differ, no principle difference was seen. Representing the State of Bombay, the appellant challenged the correctness of that decision, arguing that procedure does not create a vested right. The appellant relied on the principle that a presumption against retrospective construction does not apply to statutes that merely affect court procedure. This remains true even when such alteration may disadvantage a party (see Maxwell on Interpretation of Statutes, 10th Edn., p. 225). Strong reliance was placed on the judgment in Mohri Kunwar v. Keshri Chand (2). That decision observed that a litigant does not have a vested right to insist that, during the pendency of a suit he has started, the court‑fee statute cannot be altered. Consequently, the fee may be increased or decreased for future appeals. The litigant must proceed under the law in force when he files the appeal, even if that law differs from that applicable when the plaint was filed. Counsel for the respondent submitted that, after the decision of the Justice of the Bombay High Court in A Reference Under Section 5 of the Court Fees Act (1), the issue required further adjudication. The Supreme Court later addressed the question in Garikapatti Veerayya v. N. Subbiah Choudhury (3). It was argued that the proper principle is that an impairment of the right of appeal, or the imposition of a more onerous or stringent condition, is not retrospective. Such retrospective effect would require the legislature to expressly provide for it or to imply it by necessary intendment. The citations (1) [1954] 57 Bom. L.R. 180, (2) I.L.R. [1941] All. 558, and (3) [1957] S.C.R. 488 were cited. The Court noted that it was necessary to record what the High Court had distinctly pointed out regarding the amendments introduced by the Court Fees (Bombay Amendment) Act, 1954. On the relevant date, the entire scheme for assessing court fees in Bombay was altered, replacing a fixed fee structure with an ad valorem system, as will be discussed in the subsequent context.

In this case, the Court observed that the High Court on the Original Side had been changed so that, instead of a fixed fee payable on a plaint, an ad valorem fee became applicable in the same manner as in the districts; this alteration was effected, among other things, by deleting section 4 and amending section 6 of the Court Fees Act, 1870, as well as by modifying Article 1 of Schedule I to that Act. The Court further stated that there was no provision, either express or by necessary intendment, that gave retrospective effect to these amendments in a way that would affect a right of appeal arising from a suit instituted before the relevant date. As this lack of retrospective provision had not been contested by the parties, the Court saw no need to examine the specific provisions of the Amending Act and instead proceeded directly to consider the arguments presented on behalf of the appellant. According to the Court’s understanding of the parties’ submissions, the true controversy centred on whether imposing a more stringent or onerous condition on the right of appeal constitutes merely a procedural modification or amounts to an impairment of a substantive right. The Court expressed the view that this issue had already been settled by its earlier decisions, and it first referred to the judgment in Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and others. In that case, the facts were that section 22(1) of the Central Provinces and Berar Sales Tax Act, 1947, required that no appeal against an assessment could be entertained unless the appellant had paid the amount of tax he admitted to be due; the Act was amended on 25 November 1949 so that the revised section 22(1) required that any appeal be accompanied by satisfactory proof of payment of the tax in respect of which the appeal was filed. The appellant had filed a return on 26 November 1947, which, because the turnover exceeded two lakh rupees, was referred to the Assistant Commissioner, who then made an assessment on 8 April 1950. The appellant filed an appeal on 10 May 1950 without depositing the tax amount, and the Board of Revenue held that the amended section 22(1) applied because the assessment was made after the amendment, consequently rejecting the appeal. The Court held that the appellant possessed a vested right of appeal when the proceedings were initiated in 1947, and that his right was governed by the law in effect at that time; the Court further ruled that the 1950 amendment could not be treated as a mere procedural alteration or a regulation of the exercise of the right of appeal, because it effectively narrowed the substantive right itself, and therefore it was an impairment rather than a simple procedural change.

In this case, the Court observed that the Amendment Act of 1950 could not be given retrospective effect because the legislation neither expressly nor by necessary implication intended to operate retrospectively. The Court affirmed the principle that diminishing the right of appeal by imposing a condition that is more burdensome does not constitute a mere procedural change. The Court referred to the decision in Garikapatti Veerayya v. Subbiah Choudhury (1), which cited two earlier cases concerning an increase in court fees after amendment of the Court Fees Act. One of those cases was Sawaldas Madhavdas v. Arati Cotton Mills Ltd. (2), which is the very decision presently under appeal. The other case cited was R. M. Seshadri v. The Province of Madras (3). The Court noted that it had not earlier realized that the decision in Sawaldas Madhavdas v. Arati Cotton Mills Ltd. (2) was itself pending on appeal before this Court at the relevant time. The essential holding in Garikapatti Veerayya (1) was that this Court, with approval, relied on decisions that accepted the view that withdrawing a right of appeal or imposing a heavier condition on that right engages the same principles that govern whether a later statute has retrospective operation. The citations for this holding are (1) [1957] S.C.R. 488 and (2) [1954] 57 B.L.R. 394. A comparable stance was expressed in Amara Eswaramma and others v. Makkam Seethamma (1) and in Arjun v. Amrita and others (2). The appellant also relied upon In re Punya Nahako (3). That case involved a review, and the Court held that where, between the date of the plaint or appeal and the date for filing a review petition, the Court Fees Act was amended to raise the fee payable ad valorem, the petitioner must pay the increased amount. The learned Chief Justice, Chagla, C. J., observed that a review does not occupy the same position as an appeal and that a substantive right of review cannot be asserted. The Court further noted that a different view from that of the Madras High Court was taken in Parmeshar Kurmi v. Bakhtwar Pande (4). However, the Court found it unnecessary to elaborate on the law of review because the present matter concerned only the right of appeal. In Anand Ram Pramhans and others v. Ramgulam Sahu and others (5), the issue discussed related to the correct presentation of a memorandum of appeal, and it was incidentally observed that the new Bihar and Orissa Court Fees Act, which had already come into force, applied to that case. That judgment did not address whether the enactment was given retrospective effect. Finally, concerning the decision in Mohri Kunwar v. Keshri Chand (6), upon which the appellant placed considerable reliance, the Court clarified that the question there was whether the right of appeal created by section 6A of the Court Fees Act, introduced by a later amendment, could be invoked. The Court emphasized that the matter must be examined in the context of the law applicable at the time of filing and the specific provisions of the amendment.

In the case under consideration, the Court examined the effect of the amendment introduced by Act XIX of 1938, which added section 6A permitting an appeal against an order demanding payment of a deficiency in court fees. The Court noted that this amendment could apply only to orders issued after the amendment came into force, because at the time the plaint was filed the amendment did not exist and consequently no right of appeal existed on that date. The Court held that the amendment merely created a new right of appeal and did not extinguish any right that had vested in the plaintiff at the moment of filing the plaint. Likewise, the amendment did not deprive the defendant of any vested right; although the defendant could object to an improperly stamped plaint and could have a right to have the case determined by the court, the defendant possessed no vested right in the particular procedure used to determine sufficiency of court fees, and that procedure could be altered without impairing any vested right. The decision, the Court explained, was based on the principle that there is no vested right in the procedural mechanism by which a court ascertains the adequacy of court fees, a principle that differs from the issue presently before the Court, namely the retrospective operation of a later enactment that either removes a right of appeal or makes it more onerous. Consequently, the Court found that the Allahabad decision cited by the appellant did not provide useful guidance on the matter. The Court further observed that the issue had been addressed in the opposite direction in Delhi Cloth and General Mills Co. Ltd. v. Income‑Tax Commissioner, Delhi, where the principle articulated in Colonial Sugar Refining Co. v. Irving was applied. Another pertinent authority discussed was Nagendra Nath Bose v. Mon Mohan Singh Roy. In that case, the plaintiff instituted a suit for rent of Rs 1,306‑15‑0 and obtained a decree; the decree was executed by selling the defaulting tenant’s property on 20 November 1926 for Rs 1,600. On 19 December 1928 the petitioner, who was one of the judgment debtors, filed an application under Order 21, rule 90 of the Code of Civil Procedure seeking to set aside the sale, but the application was dismissed for his non‑appearance. The petitioner then appealed to the District Judge, Hooghly, who refused to admit the appeal on the ground that the amount recoverable under the decree had not been deposited as required by the proviso to section 174(c) of the Bengal Tenancy Act, as amended by the 1928 amendment. The petitioner contended that the amendment, which took effect on 21 February 1929, could not affect his right of appeal from the decision on the 19 December 1928 application. Justice Mitter expressed his view, stating, “We think the contention of the petitioner is well‑founded and must prevail. That a right of appeal is a substantive right cannot now be seriously disputed. It is not a mere matter of procedure. Prior to the amendment of 1928 there was an appeal against an order refusing to set aside a sale (for that is the effect also where the application to set aside the sale is dismissed for default) under the provisions of Order 43, rule (1), of the Code of Civil Procedure. That right was unhampered by any”.

In the case at hand, the execution of the decree had not been deposited as required by the proviso to section 174(c) of the Bengal Tenancy Act as amended by the amendment Act of 1928. The petitioner contended that the amending provision, which became operative on 21 February 1929, could not prejudice his right of appeal from the decision on an application filed on 19 December 1928 that sought to set aside the sale. Justice Mitter expressed the view that the petitioner’s contention was well‑founded and deserved to prevail. He observed that a right of appeal is a substantive right and not merely a procedural matter. Before the 1928 amendment, an appeal against an order refusing to set aside a sale—also the effect where an application to set aside the sale was dismissed for default—could be brought under Order 43, Rule 1 of the Code of Civil Procedure without any restriction of the kind later imposed by the proviso to section 174(5). The court was obliged to admit such an appeal irrespective of whether the appellant had deposited the amount recoverable in execution of the decree. By making the deposit a condition precedent to the admission of an appeal, the amendment introduced a new restriction that directly affected the right of appeal, rendering its admission conditional. In the absence of an express enactment, this new provision could not be applied to proceedings that were pending at the time the amendment became effective. Although the appeal was filed after the amendment came into force, Justice Mitter held that the relevant date for determining the effect of the amendment was the date of the original proceeding that ultimately gave rise to the appeal.

The judgment of Justice Mitter was subsequently endorsed by this Court in the decisions of Hoosein Kasam Dada and Gankapatti Veerayya. Those authorities, together with a long line of precedent, make clear that imposing a new restriction on the right of appeal or adding a more onerous condition impairs a substantive right rather than merely altering a procedural step. An enactment that does so is not retrospective unless it expressly states that it is or it can be inferred from its necessary purpose. Accordingly, the Court was of the view that the High Court had correctly exercised its jurisdiction, and that the orders directing the refund of excess court fees were legally sound. The appeals were therefore dismissed with costs, a single set of costs being awarded because the appeals had been consolidated and heard together. The appeals were dismissed.