Equivalent Citation: AIR1988SC1636, JT1988(3)SC41, (1988)94PLR288, 1988(2)SCALE1, (1988)3SCC423,

[1988]Supp1SCR431, 1988(2)UJ354(SC)

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 2137 of 1988

Decided On: 13.07.1988

Appellants: Commercial Aviation and Travel Company and Ors.

Hon'ble Judges: M.M. Dutt and Ranganath Misra, JJ.

Counsels:
For Appellant/Petitioner/Plaintiff: Soli J. Sorabjee, S.K. Mehta, P.H. Parekh and M.K.S. Menon, Advs

For Respondents/Defendant: Rajinder Sachar, K.C. Dua and G.S. Sistan, Advs.

Subject: Civil

Acts/Rules/Orders:
Suit Valuation Act, 1887 - Section 9; Civil Procedure Code (CPC) - Order 7, Rule 11 - Order 20, Rule 13; Court Fees
Act, 1870 - Section 7; Suit Valuation Rules - Rule 4

Prior History:
From the Judgment and Order dated March 14, 1986 of Delhi High Court in F.A.O. (O.S.) No. 65 of 1986

Citing Reference:
Smt. Sheila Devi and Ors. v. Shri Kishan Lal Kalra and Ors. MANU/DE/0073/1974 Discussed
S.Rm. Ar. S.Sp. Sathappa Chettiar v. S.Rm.Ar.Rm. Ramanathan Chettiar MANU/SC/0003/1957 Discussed
Urmilabala Biswas v. Binapani Biswas and Ors MANU/WB/0190/1937 Discussed
Kishori Lal Marwari v. Kumar Chandra Narain Deo and Anr Discussed
Nalini Nath Mallik Thakur v. Radhashyam Marwari and Ors., MANU/WB/0068/1940 Discussed
Meenaakshisundaram Chettiar v. Venkatachalam Chettiar, MANU/SC/0016/1979 Discussed
Tara Devi v. Sri Thakur Radha Krishna Maharaj MANU/SC/0054/1987 Discussed
Abdul Hamid Shamsi v. Abdul Majid and Ors. MANU/SC/0003/1988 Discussed
Atma Ram Charan Das v. Bisheshar Nath Dina Nath Discussed

JUDGMENT

1. Special leave is granted. Heard learned Counsel for the parties.

2. This appeal is at the instance of the defendants and is directed against the judgment of the Division Bench of the
Delhi High Court whereby the Division Bench affirmed the judgment of a learned Single Judge of that Court rejecting
the contention of the appellants that the suit was undervalued by the plaintiff-respondent and, accordingly, the plaint
should be rejected under Clause (b) of Rule 11 of Order VII of the CPC.

3. The respondent, who is the plaintiff, has filed a suit against the appellants, inter alia, for dissolution of partnership
and for accounts. The suit has been valued for the purpose of jurisdiction at Rs. 25 lakhs and at Rs. 500 for the
purpose of court fee.

4. The appellants filed an application wherein a preliminary objection was raised as to the valuation of the suit. It was
contended by them that the relief sought for in the suit had been grossly undervalued and the Court should reject the
plaint under Order VII, Rule 11(b) of the CPC. The learned Single Judge of the High Court overruled the said
preliminary objection and held that the suit was not undervalued. On appeal by the appellants, a Division Bench of
the High Court took the same view as that of the learned Single Judge. The Division Bench placed reliance upon and
followed a Full Bench decision of the same High Court in Smt. Sheila Devi and Ors. v. Shri Kishan Lal Kalra and Ors.

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MANU/DE/0073/1974 where it has been observed, inter alia, that paragraph (iv) of Section 7 of the Court Fees Act
gives a right to the plaintiff in any of the suits mentioned in the clauses of that paragraph to place any value that he
likes on the relief he seeks, subject, however, to any rule made under Section 9 of the Suits Valuation Act and the
Court has no power to interfere with the plaintiffs valuation. The Division Bench felt itself bound by the said Full
Bench decision and, accordingly, it dismissed the appeal of the appellants. Hence this appeal.

5. At the outset, it may be mentioned that in regard to suits for accounts, the Punjab High Court has framed rules
under Section 9 of the Suits Valuation Act fixing court fee and jurisdictional value of a suit for accounts. Rule 4 of the
Rules framed by the Punjab High Court provides as follows:

4(i) Suits in which the plaintiff in the plaint seeks to recover the amount which may be found to the plaintiff on taking
unsettled account between him and defendant;

(ii). suits of either of the kinds described in Order XX, Rule 13 of the CPC:

Value for the purpose of court fee…as determined by the Court Fees Act, 1870.

Value for the purposes of jurisdiction for the purpose of Suits Valuation Act, 1887 and the Punjab Courts Act, 1918 as
valued by the plaintiff in the plaint subject to determination by the court at any stage of the trial.

6. It is not disputed that the above rules framed by the Punjab High Court under Section 9 of the Suits Valuation Act
are applicable to the Union Territory of Delhi. It is apparent from Rule 4 extracted above that valuation for the
purposes of court fee and jurisdiction is not the same. Indeed, in the instant case, the respondent has valued the suit
at Rs. 25 lakhs for the purpose of jurisdiction. That valuation has not been challenged by the appellant either in the
High Court or in this Court. The only challenge that has been made by the appellant is the valuation of the suit for the
purpose of court fee.

7. So far as suits coming under Section 7(iv) of the Court Fees Act are concerned, the Legislature has left the
question of valuation of the relief sought in the plaint or memorandum of appeal to the plaintiff. The reason is obvious.
The suits which are mentioned under Section 7(iv) are of such nature that it is difficult to lay down any standard of
valuation. Indeed, the Legislature has not laid down any standard of valuation in the Court Fees Act. Under Section 9
of the Suits Valuation Act, the High Court may, with the previous sanction of the State Government, frame rules for
the valuation of suits referred to in Section 7(iv) of the Court fees Act. Although the Punjab High Court has framed
rules under Section 9 of the Suits Valuation Act which are applicable to the Union Territory of Delhi, such rules do not
lay down any standard of valuation with regard to suits coming under Section 7(iv) of the Court Fees Act. It has
already been noticed that under Rule 4(i) of the Punjab High Court Rules, the value of suit for accounts for purposes
of court fee will be as determined by the Court Fees Act, which means that the valuation of the relief will have to be
made by the plaintiff under Section 7(iv)(f) of the Court Fees Act.

8. In a suit for accounts it is almost impossible for the plaintiff to value the relief correctly. So long as the account is
not taken, the plaintiff cannot say what amount, if at all, would be found due to him on such accounting. The plaintiff
may think that a huge amount would be found due to him, but upon actual accounting it may be found that nothing is
due to the plaintiff. A suit for accounts is filed with the fond hope that on accounting a substantial amount would be
found due to the plaintiff. But the relief cannot be valued on such hope, surmise or conjecture.

9. In this connection, we may refer to the provision of Order VII, Rule II(b) of the CPC, which provides, inter alia, that
the plaint shall be rejected where the relief claimed is undervalued and the plaintiff, on being required by the Court to
correct the valuation within a time to be fixed by the Court, fails to do so. It is manifestly clear from the provision of
Order VII, Rule II(b) that a Court has to come to a finding that the relief claimed has been undervalued, which
necessarily means that the Court is able to decide and specify proper and correct valuation of the relief and, after
determination of the correct value of the relief, requires the plaintiff to correct his valuation within a time to be fixed by
the Court. If the plaintiff does not correct the valuation within the time allowed, the plaint is liable to be rejected. The
question is whether in a suit for accounts simpliciter, the Court can come to a finding as to the proper and correct
value of the relief until the final determination is made. In our opinion, ordinarily it is not possible for the Court at a
preliminary stage to determine the value of the relief in a suit for accounts simpliciter. If the Court is itself unable to
say what the correct valuation of the relief is, it cannot require the plaintiff to correct the valuation that has been made
by him. Indeed, in a suit for accounts it is also difficult for the Court to come to a finding even as to the approximate
correct valuation of the relief. In such a case, the Court has no other alternative than to accept plaintiff's valuation
tentatively.

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10. There has been a divergence of judicial opinion on the question as to whether the plaintiff in a suit for accounts is
entitled to put any valuation he likes. It is not necessary to refer to the decisions of different High Courts on the point,
and suffice it to say that they are not uniform, some holding that the plaintiff is free to give his own valuation and
others holding that the plaintiff is not entitled to give an arbitrary valuation without having any link or connection with
the relief in question.

11. In this connection, we may refer to a Five-Judge Bench decision of this Court in S.Rm. Ar. S.Sp. Sathappa
Chettiar v. S.Rm.Ar.Rm. Ramanathan Chettiar, [1958] SCR 1024 Gajendragadkar, J. speaking for the Court
observed as follows:

If the scheme laid down for the computation of fees payable in suits covered by the several sub-sections of Section 7
is considered, it would be clear that in respect of suits falling under Sub-section (iv), a departure has been made and
liberty has been given to the plaintiff to value his claim for the purposes of court fees. The theoretical basis of this
provision appears to be that in cases in which the plaintiff is given the option to value his claim, it is really difficult to
value the claim with any precision or definiteness. Take for instance the claim for partition where the plaintiff seeks to
enforce his right to share in any property on the ground that is joint family property. The basis of the claim is that the
property in respect of which a share is claimed is joint family property. In other words, it is property in which the
plaintiff has an undivided share. What the plaintiff purports to do by making a claim for partition is to ask the court to
give him certain specified properties separately and absolutely on his own account for his share in lieu of his
undivided share in the whole property. Now it would be clear that the conversion of the plaintiffs alleged undivided
share in the joint family property into his separate share cannot be easily valued in terms of rupees with any precision
or definiteness. That is why legislature has left it to the option of the plaintiff to value his claim for the payment of
court fees. It really means that in suits falling under Section 7(iv)(b) the amount stated by the plaintiff as the value of
his claim for partition has ordinarily to be accepted by the court in computing the court fees payable in respect of the
said relief. In the circumstances of this case it is unnecessary to consider whether, under the provisions of this
section, the plaintiff has been given an absolute right or option to place any valuation whatever on his relief.

12. In the above decision, this Court took the view that the conversion of the plaintiff's undivided share in the joint
family property into his separate share cannot be easily valued in terms of rupees with any precision or definiteness.
It is true that the Court did not consider whether the plaintiff had been given an absolute right or option to place any
valuation whatever on his relief under the provision of Section 7(iv) of the Court Fees Act, but the difficulty that would
be felt by the Court in exercising its power under Order VII, Rule 11(b) of the CPC is that if it is unable to determine
the correct value of the relief, it cannot direct the plaintiff to correct the valuation. Order VII, Rule 11(b) contemplates
correct valuation and not approximate correct valuation and such correct valuation of the relief has to be determined
by the Court. If the Court cannot determine the correct valuation of the relief claimed, it cannot require the plaintiff to
correct the valuation and, consequently, Order VII, Rule 11(b) will not be applicable.

13. But, there may be cases under Section 7(iv) where certain positive objective standard may be available for the
purpose of determination of the valuation of the relief. If there be materials or objective standards for the valuation of
the relief, and yet the plaintiff ignores the same and puts an arbitrary valuation, the Court, in our opinion, is entitled to
interfere under Order VII, Rule 11(b) of the CPC, for the Court will be in a position to determine the correct valuation
with reference to the objective standards or materials available to it. In Urmilabala Biswas v. Binapani Biswas and
Ors., MANU/WB/0190/1937 : AIR1938Cal161 a suit was instituted for declaration of title to Provident Fund money
amounting to a definite sum with a prayer for injunction restraining the defendant from withdrawing the said money. It
was held that there was no real distinction between the right to recover money and the right to that money itself, and
that the relief should have been valued at the Provident Fund amount to which title was claimed by the Plaintiff. Thus,
it appears that although in that case the suit was one under Section 7(iv)(c) of the Court Fees Act, there was an
objective standard which would enable the plaintiff and the Court too to value the relief correctly and, in such a case,
the Court would be competent to direct the plaintiff to value the relief accordingly.

14. In Kishori Lal Marwari v. Kumar Chandra Narain Deo and Anr., MANU/BH/0182/1939 : AIR1939Pat572 a
question arose as to the valuation of a suit for injunction restraining a decree-holder from executing his decree on the
ground that the decree was collusive and obtained by fraud and, therefore, void and incapable of execution. It was
held by the Patna High Court that the plaintiff must value his suit according to the amount of decree and must pay ad
valorem court fee on such amount. In this case also, there was a positive objective standard for the valuation of the
suit.

15. We may now refer to a decision of the Calcutta High Court in Nalini Nath Mallik Thakur v. Radhashyam Marwari
and Ors., MANU/WB/0068/1940 : AIR1940Cal482 . But, before we refer to the decision, we may point out that by the
Bengal Amendment Act VII of 1935, a new Section 8-C has been inserted in the Court Fees Act. Section 8-C
provides that if the Court is of opinion that the subject-matter of any suit has been wrongly valued, it may revise the
valuation and determine the correct valuation and may hold such enquiry as it thinks fit for such purpose. In Nalini

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Nath Mallik Thakur's case (supra), it has been observed that although a satisfactory valuation may not be possible in
the majority of the cases falling under Section 7(iv), when once the Court has formed the opinion that the plaintiffs
estimate is wrong, it becomes the duty of the Court to estimate a correct and reasonable valuation of the relief
claimed and it is for the Court to decide on the merits of each particular case whether the provisions of Section 8-C
should be invoked for the purpose of revising the plaintiffs valuation. Further, it has been observed that if the relief
claimed is impossible to value, the Court is, of course, not in a position to say that such relief has been wrongly
valued and there is consequently no scope for the operation of Section 8-C, but in a suit where it is sought to set
aside a decree, such valuation, although difficult, is not impossible. In a suit to set aside a decree prima facie the
value of the relief claimed by the plaintiff would be the value of the decree and the onus would clearly lie on him to
show that the relief should be valued at some smaller amount. It thus follows from the above decision that if the Court
is of the opinion that the plaintiffs estimate is wrong, it becomes the duty of the Court to estimate a correct and
reasonable value of the suit. If, however, the Court is not in a position to decide the correct value of the suit, it has to
accept the value that has been put the plaintiff on the relief claimed. In Nalini Nath Mallik Thakur's case (supra), there
was an objective standard of valuation, namely, the decree which was sought to be set aside.

16. Thus, where there are objective standards of valuation or, in other words, the plaintiff or the Court can reasonably
value the relief correctly on certain definite and positive materials, the plaintiff will not be permitted to put an arbitrary
valuation dehors such objective standards or materials.

17. Mr. Sorabjee, learned Counsel appearing on behalf of the appellants, has strenuously urged that, in the instant
case, the respondent has valued the suit most arbitrarily according to her whims. It is submitted by him that in a suit
for accounts the plaintiff cannot put an arbitrary valuation on the relief claimed by him. Much reliance has been placed
by him on a few decisions of this Court which will be referred to presently.

18. In Meenaakshisundaram Chettiar v. Venkatachalam Chettiar, MANU/SC/0016/1979 : [1979]3SCR385 this Court

The plaintiff is required to state the amount at which he values the relief sought. In suits for accounts it is not possible
for the plaintiff to estimate correctly the amount which he may be entitled to for, as in the present case, when the
plaintiff asks for accounting regarding the management by a power of attorney agent, he might not know the state of
affairs of the defendant's management and the amount to which he would be entitled to on accounting. But it is
necessary that the amount at which he values the relief sought for should be a reasonable estimate.

19. That observation has been made by this Court with reference to the special provision, namely, Section 35(1) of
the Tamil Nadu Court Fees and Suits Valuation Act XIV of 1955. Section 35(1) provides that in a suit for accounts,
fee shall be computed on the amount sued for as estimated in the plaint. Section 35(1) of the Tamil Nadu Court Fees
and Suits Valuation Act is different from Section 7(iv)(f) of the Court Fees Act. While under Section 7(iv), the court fee
is payable according to the amount at which the relief sought is valued in the plaint or memorandum of appeal, under
Section 35(1), the court fee shall be computed on the amount sued for as estimated in the plaint. In
Meenakshisundram's case (supra) the plaintiff had given a detailed estimate in the plaint and this Court was satisfied
that the estimate was quite adequate and reasonable.

20. In Tara Devi v. Sri Thakur Radha Krishna Maharaj, MANU/SC/0054/1987 : AIR1987SC2085 it has been laid
down by this Court that in a suit for declaration with consequential relief falling under Section 7(iv)(c) of the Court
Fees Act, the plaintiff is free to make his own estimation of the relief sought in the plaint and such valuation both for
purposes of court fee and jurisdiction has to be ordinarily accepted. Further it has been observed that it is only in
cases where it appears to the Court on a consideration of the facts and circumstances of the case that the valuation
is arbitrary, unreasonable and the plaint has been demonstratively undervalued, the Court can examine the valuation
and can revise the same. In that case, the plaintiff had valued the lease-hold interest on the basis of the rent and
such valuation was held to be reasonable and not demonstratively arbitrary.

21. In making the above observation, this Court has placed reliance upon its earlier decision in Meenakshisundram's
case (supra) which, as noticed above, related to Section 35(1) of the Tamil Nadu Court Fees and Suits Valuation Act.
But one significant fact that is to be noticed in the case is that there is an objective standard of valuation, that is, the
rent of the lease-hold interest. It may be reiterated that when there is an objective standard of valuation, to put a
valuation on the relief ignoring such objective standard, might be a demonstratively arbitrary and unreasonable
valuation and the Court would be entitled to interfere in the matter.

22. Another decision of this Court on which much reliance has been placed by the appellants is the case of Abdul
Hamid Shamsi v. Abdul Majid and Ors., MANU/SC/0003/1988 : [1988]3SCR507 . It was also a suit for accounts and
came under Section 7(iv)(f) of the Court Fees Act. It has been observed as follows:

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It is true that in a suit for accounts the correct amount payable by one party to the other can be ascertained only when
the accounts are examined and it is not possible to give an accurate valuation of the claim at the inception of the suit.
The plaintiff is, therefore, allowed to give his own tentative valuation. Ordinarily the Court shall not examine the
correctness of the valuation chose, but the plaintiff cannot act arbitrarily in this matter. If a plaintiff chooses
whimsically a ridiculous figure it is tantamount to not exercising his right in this regard. In such a case it is not only
open to the Court but its duty to reject such a valuation. The cases of some of the High Courts which have taken a
different view must be held to be incorrectly decided.

23. We are also of the view that the plaintiff cannot whimsically choose a ridiculous figure for filing the suit most
arbitrarily where there are positive materials and/or objective standards of valuation of the relief appearing on the face
of the plaint. These materials or objective standards will also enable the Court to determine the valuation for the
purpose of Order VII, Rule 11(b) of the CPC. Indeed, in Abdul Hamid Shamsi's case, it has been noticed by this Court
that the plaintiff has laid a claim to a sum of Rs 1,26,796.72, besides another sum of over Rs. 84,000 as his share in
the profit for a particular period by reference to the proceeding of the Income-Tax Department mentioned in
paragraph 11 of the plaint. Further, a copy of the profit and loss account for the calendar year 1979 was annexed by
the plaintiff to the additional affidavit filed on his behalf before this Court, which also gave positive indication as to the
valuation of the relief. The plaintiff in that case valued the suit without making any reference whatsoever to those
materials or objective standards available to him and in the context of these facts, this Court made the above
observation. But, if there be no material or objective standard, the plaintiff's valuation has to be accepted.

24. It is however, urged by Mr. Sorabjee that such an objective standard or positive material appears on the face of
the plaint. Our attention has been drawn to paragraph 33 of the plaint where it has been stated by the plaintiff that on
rendition of accounts, the plaintiff estimates that approximately a sum of Rs. 25 lakhs to 30 lakhs would become due
to her share. It is submitted on behalf of the appellants that in view of such a statement in the plaint, the respondent
should have valued the relief for rendition of accounts at Rs. 25 lakhs. We are unable to accept the contention. The
statement does not, in our opinion, constitute any objective standard of valuation or a positive material from which it
can be said with any amount of certainty that the valuation of the relief for accounts should be at the sum of Rs. 25
lakhs. The respondent was not required to make such a statement in the plaint. It is the wishful thinking of the
respondent that on account being taken, she would be entitled to such a huge amount. The respondent has not given
in the plaint any material in support of the estimate of Rs. 25 lakhs to Rs. 30 lakhs to her share. As has been stated
already, this is no material at all on which any reliance can be placed for the purpose of valuation of the relief. In this
connection, we may refer to a decision of the Lahore High Court in Atma Ram Charan Das v. Bisheshar Nath Dina
Nath, AIR 1935 Lah 689. In that case also the question was whether the plaintiff had correctly valued the relief for the
rendition of accounts, in the plaint, the plaintiff stated that a sum of Rs. 8,000 was due to him from the defendants,
but he valued the suit for purposes of jurisdiction and court fee at Rs. 5000 tentatively. It was held that the plaintiff
could not be prejudiced or damnified merely because he added to the plaint a computation which was unnecessary
for him to give.

25. We have considered the facts and circumstances of the case and also the legal position and, in our view, the
valuation of the relief for the rendition of accounts under Section 7(iv)(f) of the Court Fees Act is neither unreasonable
nor it is demonstratively arbitrary.

26. In the circumstances, the appeal is dismissed with costs quantified at Rs. 5,000.