Friday, 28 November 2014

Court Fees Act: the purpose for which the property is being put to use, and not the nomenclature of any document, is material in determining whether court fee is to be paid on the basis of market value under Section 7(2) or 7(3), holds the High Court of Kerala


Relying on the dictum laid down in Narayanan Nair v. Dr.Lokeshan Nair1  that the predominant purpose for which the land is used is material in determining whether sub-section (2) or sub-section (3) of Section 7 Kerala Court Fees and Suits Valuation Act would apply in the matter of determination of market value for the purposes of paying court fee, the Kerala High Court in Soudamini v. A. Padmanabhan Namboodiri2 has held that the purpose for which the property is put to use, rather than the nomenclature shown in any document, is to be the basis for the purpose of fixing court fee under Section 7 of the Kerala Court Fees and Suits Valuation Act ("the Act" for short). 

Sub-sections (1), (2) and (3) of Section 7 of the Kerala Court Fees and Suits Valuation Act are extracted below:

7. Determination of market value.-(1) Save as otherwise provided, where the fee payable under this Act depends on the market value of any property, such value shall be determined as on the date of presentation of the plaint:

(2)The [“market value of agricultural land”] in suits falling under section 25 (a), 25 (b), 27 (a), 29, 30, 37 (1), 37 (3), 38, 45 or 48 shall be deemed to be ten times the annual gross profits of such land where it is capable of yielding annual profits minus the assessment if any made to the Government.

 (3) The market value of the building shall in cases where its rental value has been entered in the registers of any local authority, be ten times such rental value and in other cases the actual market value of the building as on the date of the plaint.

  [“(3A). The market value of any property other than agricultural land and building falling under sub-sections (2) and (3) shall be the value it will fetch on the date of institution of the suit.”]

In Soudamini (supra), in a suit for injunction, when the defendants disputed the title of the plaintiff over the plaint schedule property, issue on title was framed and the court below directed to remit court fee under Section 27(a) of the Court Fees and Suit Valuation Act. The plaintiff calculated the market value of the property under Section 7 (2) of the Act treating the suit property as agricultural land and claimed that he is only bound to pay court fee on that basis. This stand of the plaintiff was disputed by the defendants by pointing out that the property in question is a garden land with a residential building therein and if that be so, court fee will have to be paid under Section 7 (3A) of the Act. The Trial Court upheld the objection of the defendant and passed the impugned order directing the plaintiff to pay court fee under Section 7 (3A) of the Act.The plaintiff assailed the said order in the High Court of Kerala. 

Mr. P.V. Kunhikrishnan, the Counsel for the petitioner/plaintiff assailing the order passed by the Trial Court contended that merely because the property is described as garden land in the plaint, it does not mean that it cannot be used for agricultural purpose. Relying on Narayanan Nair v. Dr.Lokeshan Nair  (supra), he contended that the court below has to ascertain the purpose for which the property is put to use and fix court fee on that basis and not on the basis of nomenclature shown in any document. Nomenclature of the property shown in any of documents is not the sole criteria. But the actual purpose for which the property is put to use should determine the issue. The Counsel for the defendants, Mr. T. Sethumadhavan, Senior Advocate, on the other hand supported the order passed by the trial Court. He contended that having shown the property as garden land in the plaint and without amending the plaint, it cannot be now termed as agricultural land. It was also pointed out that the petitioner had assigned a portion of her property to her daughter in which too, the property is shown as garden land, and that it is an admitted fact that there is a residential building in the property. These facts cannot be lost sight of and if these aspects are taken into consideration, it follows that the property is not an agricultural property, contended the learned Counsel for the respondents/defendants. 

The High Court of Kerala speaking through Justice P. Bhavadasan accepted the contentions of the petitioner/plaintiff in the light of the dictum laid down in Narayanan Nair v. Dr.Lokeshan Nair  (supra) that Sub-section (3) of Section 7 of the Court Fees Act would apply only where the property consists of the building and not where a building is situated in an agricultural land. In that case, the High Court had held thus:

"The predominant purpose for which the land is used is material in determining whether sub-section   (2) or sub-section (3) would apply. If a commercial building  is  situated   in   a  property   and   the   predominant purpose is to generate income from the building and not from the land, it would be a case where sub-section (3) of S.7 of the Court Fees Act would apply.  On the other hand, when the predominant purpose is agricultural operation or agricultural operation-cum-residence, I am of the  view that sub-section (2) of S.7 of the Court Fees Act would apply. Sub-section (3A) of S.7 of the Court Fees Act would apply only when sub-sections (2) and (3) of S.7 would not apply."

Answering the contention of the respondents that in the documents executed by the petitioner assigning portion of the property to her daughter, the property was shown as garden land, the High Court of Kerala said that as long as agricultural land is not defined under the Court Fees and Suits Valuation Act and given the fact that there is no prohibition that garden land cannot be used as agricultural land, the dictum laid down in Narayanan Nair v. Dr.Lokeshan Nair  (supra) squarely applies to the facts of the case and held that nomenclature of the land as specified in the plaint or in the document may not have much relevance in the context."



The High Court of Kerala accordingly, held that the Trial Court had erred in directing the petitioner to pay court fee under Section 7 (3A) of the Court Fees and Suits Valuation Act, and going by the decision in Narayanan Nair v. Dr.Lokeshan Nair (supra), the property qualifies as agricultural property and that the petitioner needs to pay court fee under Section 7 (2) of the Act.

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1. 2014 (2) KLT 868
2. O.P. (C).No. 1435 of 2014 (O) decided on 30.10.2014

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