Arbitration Appeal No.6 of 2011,Arbitration Appeal No.7 of 2011

21st October, 2013

Petitioner Counsel: Shri A.A. NAIK, Shri ROHIT JOSHI
Respondent Counsel: Shri SUBODH DHARMADHIKARI, Shri A.K. SHUKUL, Shri M.P. KHAJANCHI

Cases Cited:
State of Bombay Vs. M/s. Supreme General Films Exchange Ltd. and Arati Cotton Mills Ltd., AIR 1960 SC 980 [Para 8]
Lakshmi Ammal Vs. K.M. Madhavakrishnan & Ors., AIR 1978 SC 1607 [Para 9]

JUDGMENT

JUDGMENT :- Both these appeals challenge the common judgment and order dated 28.2.2011 passed by the learned Principal District Judge, Chandrapur in Misc. Civil Application Nos.37 of 2005, 38 of 2005 and 40 of 2005 filed under Section 34 of the Arbitration and Conciliation Act ("the said Act"), for setting aside the Award dated 17-12-2004 passed by the Arbitrator.

2. The question involved in both these appeals arising out of a preliminary objection raised by the respondents is whether the provision of Section 3A of the Bombay Court Fees Act, 1959 introduced by the Maharashtra Act No.IX of 2010 with effect from 01-9-2009 is attracted in this case requiring the appellants to pay one-half of the ad valorem fee on the amount or value of the award sought to be set aside in an appeal under Section 37 of the said Act.

3. The facts are as under :

On 14-3-2005, three Misc. Civil Applications Nos.37 of 2005, 38 of 2005 and 40 of 2005 were filed under Section 34 of the said Act for setting aside the arbitral award passed on 17-12-2004. Each of these applications was filed on the fixed court fee stamp of Rs.20/-. These applications have been decided by the learned Principal District Judge, Chandrapur, by her common judgment and order dated 28-2-2011. Hence, these two appeals are preferred on 30-6-2011 under Section 37 of the said Act on the fixed court fee stamp of Rs.20/-.

4. Relying upon the provision of Section 3A of the Bombay Court Fees Act, 1959, introduced by the Bombay Court Fees (Amendment) Ordinance, 2009, i.e. the Maharashtra Act No.IX of 2010, with effect from 1-9-2009, Shri Subodh Dharmadhikari, the learned Senior Counsel, assisted by Shri A.K. Shukul, Advocate for the respondent No.1 in Arbitration Appeal No.6 of 2011 and for the respondent No.7 in Arbitration Appeal No.7 of 2011, has urged that the appellants are required to pay the court fee at the rate of one-half of the ad valorem on the amount or the value of the award sought to be set aside, and upon payment of such court fee, the matter will be out of the pecuniary jurisdiction of the learned Single Judge of this Court, which is to the extent of Rs.50 lacs, and it will have to be decided by the Division Bench. He submits that the Maharashtra Act No.IX of 2010 was brought into force during the pendency of the applications under Section 34 of the said Act for setting aside the arbitral award, and since the appeals have been preferred on 30-6-2011, the same are governed by the said provision.

5. Per contra, S/Shri Rohit Joshi and Akshay Naik, the learned counsels appearing for the appellants in both these appeals, have urged that a right of appeal is a substantive right, which accrued to the appellants on the date when the applications under Section 34 of the said Act were filed on 14-3-2005, and at that time, the provision of Section 3A, introduced by the Maharashtra Act No.IX of 2010, was not in existence. According to them, it came into force with effect from 1-9-2009 and operates prospectively without impairing the statutory right of appeal as was available to the appellants on the date of filing of the applications under Section 34 of the said Act. It is the further submission that Section 3A of the Bombay Court Fees Act imposes a more onerous condition and has, therefore, to be construed as operating prospectively without impairing the right of the appellants to file the appeals on the same court fee, as was paid on the applications under Section 34 of the said Act. They do not dispute that if Section 3A of the Bombay Court Fees Act is applicable, the valuation will be more than the pecuniary jurisdiction of the Single Judge to decide the matter and it will have to be decided by the Division Bench.

6. Shri Dharmadhikari, the learned Senior Counsel, does not dispute the position of law that a right of appeal is a substantive right and has accrued to the appellants on the date of filing of the applications under Section 34 of the said Act on 14-3-2005. He further submits that the amendment in question is not to the provision of appeal under Section 37 of the said Act, but it is introducing a provision of Section 3A under the Bombay Court Fees Act requiring the payment of court fee at the rate of one-half of the ad valorem payable on the amount or the value of the award sought to be set aside, has been introduced. He submits that a right of appeal has not at all been taken away, but the requirement of Section 3A of the Bombay Court Fees Act is introduced with retrospective effect, requiring the appellants to pay the court fee on the appeals filed after the said provision was brought into force.

7. The contentions raised by Shri Dharmadhikari, the learned Senior Counsel, are no longer res integra in view of the decision of this Court in the Reference under Section 5, Court-fees Act, reported in AIR 1955 Bombay 287. It was a case where the two first appeals and the cross-objections arising out of the suits filed for partition prior to 1-4-1954 when the Bombay Act No.12 of 1954 was brought into force. When the suits were filed, the court fees paid thereon were Rs.18-12-0 and that was on assumption that suits for partition by a coparcener fall under Schedule II, Article 17(vii) of the Court-fees Act. By virtue of Section 6 of the Bombay Act No.12 of 1954, new sub-clause to Section 7, which is sub-clause (vi-a), was added. The court fee to be calculated on the basis of the amendment was much more and burdensome upon the litigant. The argument was that the appellants had a substantive right of appeal, which could not have been taken away or impaired by any legislation passed subsequent to the filing of the suit unless a right is taken away or impaired expressly or by necessary intendment. The law laid down in the said decision is summarized as under :

(1) The first and the most important principle is that a right of appeal is not a procedural right and it is a substantive right vested in the litigant, who files a suit.

(2) An appeal is a continuation of the suit, and when a litigant files a suit, he has the right to continue the suit up to the final Court of appeal, and that substantive or vested right cannot be taken away unless the Legislature expressly intends that it should be so taken away.

(3) It is not merely that a right of appeal cannot be taken away by procedural enactment, which is not made expressly retrospective, but the right cannot even be impaired or imperilled, nor can new conditions be attached to the filing of the appeal, nor can a condition already existing be made more onerous or more stringent.

(4) The argument that it is not a right of appeal, which is taken away, but an additional condition was imposed before the right of appeal could be exercised, has been rejected by holding that the onerous condition may in a given case prevent the exercise of the right of appeal, for the reason that the appellant may not be in a position to find the necessary money in time.

(5) The argument based upon the distinction that it is not the provision of appeal, which is amended, but a provision in different law has been amended by imposing the condition upon the right of appeal for fiscal purposes by imposing the court fee payable on such appeal, has been rejected, holding that there cannot be any principle, which can support the distinction between the right of appeal being taken away or impaired by very law which confers the right of appeal and the case where the right of appeal is taken away or impaired by a different law.

(6) If a litigant has a right of appeal when he files a suit, that right is a substantive right, which he enjoys, and that right can neither be taken away nor made so onerous as to make out difficult for him to exercise it under certain circumstances.

(7) The argument that the provision does not deprive a person of a right of appeal, but he can still exercise it by payment of higher court fee, has been rejected, holding that very condition that the appellant has to pay higher court fee in order to prosecute the appeal, clearly shows that a right of appeal, which he had, when he filed the suit, is not the same right, which he would now be exercising under the amended Court Fees Act. The right, which he had, was a right to prefer the appeal on payment of certain amount of court fee. The right, which he now enjoys under the amended provision, is that he can only come in appeal, provided he takes upon himself a heavier burden, viz. payment of higher court fee.

(8) It is well established that an act or rule imposing a burden has always to be construed strictly.

8. The aforesaid law laid down by this Court has been confirmed by the Apex Court in its decision in the case of State of Bombay v. M/s. Supreme General Films Exchange Ltd. and Arati Cotton Mills Ltd., reported in AIR 1960 SC 980. After referring to the decision of this Court, cited supra, the Apex Court has held in paras 8 and 12 as under:

"(8) We proceed straightway to consider the arguments advanced on behalf of the appellant. So far as we have been able to appreciate the submissions made on behalf of the parties, the point of controversy is really this : is an impairment of the right of appeal by imposing a more stringent or onerous condition thereon a matter of procedure only or is it a matter of substantive right? We think that the question is really concluded by the decisions of this Court. We refer first to the decision, in 1953 SCR 987: (AIR 1953 SC 221). The facts of that case were these : Section 22(1) of the Central Provinces and Berar Sales Tax Act, 1947 provided that no appeal against an order of assessment should be entertained by the prescribed authority unless it was satisfied that such amount of tax as the appellant might admit to be due from him, had been paid. This Act was amended on the 25th November, 1949, and S.22(1) as amended provided that no appeal should be admitted by the said authority unless such appeal was accompanied by satisfactory proof of the payment of the tax in respect of which the appeal had been preferred. On the 26th of November, 1947, the appellant submitted a return to the Sales Tax Officer, who, finding that the turnover exceeded 2 lacs, submitted the case to the Assistant Commissioner for disposal and the latter made an assessment on the 8th April, 1950. The appellant preferred an appeal on the 10th May, 1950, without depositing the amount of tax in respect of which he had appealed. The Board of Revenue was of opinion that S.22(1) as amended applied to the case as the assessment was made, and the appeal was preferred, after the amendment came into force and rejected the appeal. It was held by this court that the appellant had a vested right of appeal when the proceedings were initiated in 1947 and his right of appeal was governed by the law as it stood then. It was further held that the amendment of 1950 could not be regarded as a mere alteration in procedure or an alteration regulating the exercise of the right of appeal; it whittled down the right itself, and had no retrospective effect as the Amendment Act of 1950 did not expressly or by necessary intendment give it retrospective effect. This decision proceeded on the principle that impairment of the right of appeal by imposing a more onerous condition is not a matter of procedure only. The decision in (1957) SCR 488 : ((S) AIR 1957 SC 540) (supra), referred specifically to two decisions relating to an increase in court fees by subsequent amendment of the Court Fees Act, and one of the decisions was Sawaldas Madhavdas v. Arati Cotton Mills, Limited, 57 Bom LR 394 : ((S) AIR 1955 Bom 332), the very decision which is under appeal here. The other decision was R.M. Seshadri v. Province of Madras, ILR 1954 Mad 643 : (AIR 1954 Mad 543). Perhaps, our attention was not then drawn to the circumstance that the decision in 57 Bom LR 394 : ((S) AIR 1955 Bom 332) (supra) was at the time pending in appeal here. The point of the decision in Garikapatti Veeraya, 1957 SCR 488 : ((S) AIR 1957 SC 540) (supra) is, however, this: this Court referred with approval to decisions which accepted the position that taking away a right of appeal and imposing a more onerous condition on such right involved the same principles as to retrospective effect of the subsequent legislation. A. Eswaramma v. M. Seethamma, (S) AIR 1955 Andhra 221 and ILR 1956 Nag 296 : ((S) AIR 1956 Nag 281)."

"(12) It is thus clear that in a long line of decisions approved by this Court and at least in one given by this Court, it has been held that an impairment of the right of appeal by putting a new restriction thereon or imposing a more onerous condition is not a matter of procedure only; it impairs or imperils a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment."

9. In the decision of the Apex Court in the case of Lakshmi Ammal v. K.M. Madhavakrishnan and others, reported in AIR 1978 SC 1607, it has been held in para 2 as under :

"2. It is unfortunate that long years have been spent by the courts below on a combat between two parties on the question of court-fee, leaving the real issues to be fought between them to come up leisurely. Two things have to be made clear. Courts should be anxious to grapple with the real issues and not spend their energies on peripheral ones. Secondly, court-fee, if it seriously restricts the rights of a person to see him remedies in courts of justice, should be strictly construed. After all access to justice is the basis of the legal system. In that view, where there is a doubt responsible, of course, the benefit must go to him who says that the lesser court fee alone be paid"

10. In view of above, all the contentions, as are raised by Shri Dharmadhikari, the learned Senior Counsel, have been answered in the aforesaid decision of this Court and that of the Apex Court. It has to be held that the provision of Section 3A of Bombay Court Fees Act, introduced by the Maharashtra Act No.IX of 2010 does not take away the right of appeal under Section 37 of the said Act, as was available to the appellants on the date of filing of the applications under Section 34 of the said Act for setting aside the arbitral award. To insist the appellants to pay higher court fee in order to prosecute appeal under Section 37 of the said Act would amount to impairing the right of appeal by imposing more onerous and stringent conditions. The provision of Section 3A of the Bombay Court Fees Act cannot be construed to operate retrospectively in the absence of any specific intention of the Legislature to that effect so as to require the appellants to pay court fee in terms thereof. The said provision will operate prospectively to all such cases where the applications under Section 34 of the said Act have been filed after 1-9-2009. The applications in question under Section 34 of the said Act were filed on 14-3-2005 and hence the provision of Section 3A of the Bombay Court Fees Act is not at all attracted in this case. The position as was prevailing on the date of filing of these applications was that the appellants were entitled to prefer an appeal on payment of court fee of Rs.20/- on the appeal preferred under Section 37 of the said Act, as was paid on the applications under Section 34 of the said Act. The preliminary objection is, therefore, rejected.

11. Both these arbitration appeals be placed for admission after Diwali Vacation, 2013.

Ordered accordingly.