Holding

In suits filed in courts of unlimited pecuniary jurisdiction, the plaintiff’s disclosed valuation is deemed correct unless it is demonstrably arbitrary, and the court cannot compel re‑valuation on the defendant’s objection.

Issues considered

Whether a court can examine the correctness of the valuation of a suit for dissolution of partnership and direct the plaintiff to re‑value and pay additional court fee.
Whether a defendant has a right to raise an objection to alleged under‑valuation in a suit filed in a court of unlimited jurisdiction.

Legislation cited

Code of Civil Procedure, 1908s. 15, s. Order 7 Rule 11
Court Fees Act, 1870s. 7(iv)(t)
Kerala Court Fees and Suits Valuation Act, 1959s. 36

Subjects

court feevaluation of suitpartnership dissolutionunder‑valuationunlimited jurisdictionKerala Court Fees ActCivil Procedure Codepreliminary issuerevenue protection

Judgment

SUJIR KESHAV NAY AK
v.
SUJIR GANESH NAYAK

DECEMBER 12, 1991

[K. JAGANNATHA SHETIY AND R. M. SAHA!, JJ.]

Kerala Court Fees and Suits Valuation Act, 1959: Section 36-Suitfor
dissolution of partnership and account.r-Courtfee-Computaiion of-Defen-
dant raising objection as to under-valuation of suit-Whether court can -
examine correctness of valuation and direct the suit to ·be properly valued- .
Court Fees Act, 1870: Section ?(iv)(f)-Civil Procedure Code, 1908: Section
15 and Order 7, Rule 11.

The appellant was carrying on business in partnership with the re-
~pondent. Consequent on differences between them, the appellant flied a
suit for declaration that the partnership stood dissolved and the.respon-
dent was liable for rendition of accounts. The suit for purposes of court fee
and jurisdiction was valued at Rs. 10,050. The respondent claimed that the
appellant had withdrawn huge amounts from the account of firm at
another place which the appellant was primarily looking after and,
therefore, it was the respondent who was entitled for accounting to huge
amount from the appellant. In replication, the appellant claimed that from
the date of dissolution, asum of Rs.28 lakhs was due to him. In view of this
plea and on objection by respondent, an additional issue was framed about .
valuation of the suit.
,
The trial court held that in view of the appellarit's claim that a sum
of Rs. 28 lakhs was due to him on dissolution of partnership, it was obvious
that the suit was under-valued. It, therefore, directed him to correct the
valuation and pay the deficient court fee.

In revision, the High Court held that even though the Court was not
ordinarily entitled to examine the correctness of the valuation shown by
the plaintiff it has a duty to see whether the valuation so disclosed by the
plaintiff was liable to be rejected as arbitrary and he could be compelled
to give proper valuation and pay the court fee accordingly, ~md since from
the claim made in the replication it was clear that the plaintiff had under-
valued the suit by giving an arbitrary valuation, the order passed by' the
trial court was correct and the suit could be entertained only after the ap-
pellant-plaintiff corrected the valuation and paid the deficient court fee.
Hence the appeal.

409
410 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

A Allowing the appeal, this Court,

HELD: 1. Where the question of court fee is linked with jurisdiction,
a defendant has a right to raise objection and the court should decide it as
a preliminary issue. But in those cases where the suit is filed in court of
unlimited jurisdiction, the valuation disclosed by the plaintl.ff or payment
B of amount of court fee on relief claimed in plaint or memorandum of
appeal should be taken as correct. However, this does not preclude the
court even in suits filed in courts of unlimited jurisdiction ·from examin-
ing if the valuation on averments in plaint is arbitrary. [415 C-D]

S.R.A.S.S.Sathappa Chettiar v. S.R.AR.Ramanathan Chettiar,
c [1958] SCR 1024; Abdul Hamid Shamsi v. Abdul Majid and Ors,
[1988] 2 SCC 575; R.SJadhav Desai v. S. VJadhav Desai, [1918]
PC 188; Meenakshisundaram Chettiar v. Venkatachtilam Chet-
tiar, [1980] 1 SCC 616 and Tara Devi v. Sri Thakur Radha
Krishna Maharaj, [1987] 4 SCC 69, referred to.

D 2.1 Various provisions of the Kerala Court Fees and Suits Valuation
Act, 1957 or different sub-clauses of Section 7 of the Court Fees Act, 1870
contemplate three modes of valuation of the subject matter, namely,
according to market value, or subject matter or estimate by plaintiff or
according to which relief sought is valued. Payment of court fee on
estimate by the plaintiff or on the relief sought is a method provided for
E in such suits where the exact amount is not known or is not capable of
being known till it has been adjudicated upon on eviClence: [412H, 413A]

2.2 Sub-section (2) of Section 36 of Kerala Act amply safeguards the
interest of revenue. Similar provisions exist in Central Act. But under
Civil Procedure Code' plaint is liable to be rejected under Order 7 Rule
F 11 ifit is under-valued. To reconcile the two provisions, the one leaving it
to absolute discretion of plaintiff to value the suit as he considers proper
.and the· other to reject a plaint if it is under-vahied, it is necessary to
examine the scheme disclosed in the Civil Procedure Code relating to filing
of suit. [413 F] ·

G 2.3 Section 15 of the Civil Procedure Code provides that any suit
shall be instituted in the court of the lowest grade competent to try it. What
is a court of lowest grade and for what nature of suit has been determined
·and regulated· by State enactments. Competency refers to jurisdiction ter-
ritorial or pecuniary, of iimited or unlimited limits. In courts of limited
pecuniary jurisdiction valuation assumes great importance. A plaintiff
H may over or under-value the suit for purposes of avoiding a court of a
S. K. NA YAK v. S.G. NA YAK [SAHAI, J.] · 411

particular grade. In the former, the plaint may be returned under Order
7 Rule 10 for presentation in proper court but in the latter it is liable to
be rejected. Since under-valuation goes to the root of maintainability of
the suit, a defendant is entitled to raise the objection irrespective of the
nature of the suit. However, a defendant is not entitled to use it as a
weapon to non suit the plaintiff'.. [413 G; 414 A,C]
2.4 Therefore, in suits for accounting or for dissolution of partner-
ship and accounting filed in courts of limited pecuniary jurisdiction, the
plaintiff must take every care to disclose valuation which is not arbitrary
as the plaint is liable to be rejected on objection of the defendant. But in
suits of such nature filed before courts of unlimited jurisdiction, the
valllation disclosed by the plaintiff may be accepted as correct. This,
however, does not mean that the court's power to examine the correctness
of valuation is taken away. If on perusal of plaint the court is primafacie
satisfied that the plaintiff has not been fair and valued the suit or relief
arbitrarily it is not precluded from directing the plaintiff to value it
properly and pay court fee on it. But the defendant has no right to raise
such objection nor the court should dwelve into the matter after filing of
written statement on evidence. [414 F-G; 415 B]

2.5 In the instant case, the claim made by the appellant-plaintiff was
as counter blast to the claim made by the respondent-defendant. Whether
this claim was correct could be decided only after evidence was led. There-
fore, the High Court, in a suit filed in a court ofunlimitedjurisdiction, was
not entitled to direct the appellant-plaintiff to revalue the suit and pay
court fee on it.[416E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4897 of 1991.

Froin the Judgment and Order dated 2.4.1991 of the Kerala High Court
in Civil Revision Petition No. 1988 of 1990. ·

K.N.Bhat and Mukul Mudgal. for the Appellant.

Joseph Vellapally, K.J.John and Ms. Dipa Dixit for the Respondent.

The Judgment of the Court was delivered by

R.M. SAHAI, J. The question of law that arises for consideration in this
appeal directed against judgment of the Kerala High Court is if the court fee
liable to be paid under Section 36 of Kcrala Court Fees and Suits Valuation
412 SUPREME COURT. REPORTS .(1991) SUPP. 3 S. C.R.

A Act, 1959 (hereinafter referred to as 'the Act') in a suit for dissolution of
partnership and accounting is to be computed on the value of the plaintiffs
share in a partnership as estimated by him or as found by the Court.

Computation of court fee under the Kerala Act is g,oveined by Chapter
IV of the Act Section 35 of it deals with suits for accounts and Section 36 suit
B for dissolution of partnership. Since this appeal is concerned with Section 36
only it is extracted below:

"36. Suits for dissolution of partnership-( 1) In a suit for dissolution
of partnership and accounts or for accounts of dissolved partner-
ship, fee shall be computed on the value of the plaintiffs share in
c the partnership as estimateL. by the plaintiff.

(2) If the value of the plaintiffs share as ascertained in the suit
exceeds the value as estimated in the plaint, no decree, or where
there has been a preliminary decree, no final decree, shall be
passed in favour of the plaintiff, no payment shall be made out of
D the assets of the partnership and no property shall be allotted as for
the plaintiff's share, until the difference between the fee actually
paid and the fee that would have been payable had the suit com-
prised the whole of the value so ascertained, is paid.

(3) No final decree shall be passed, no money shall be paid and no
E allotment of property shall be made in favolir of a defendant in any
such suit as, for or on account of, his share of the assets of the
partnership, until the fee computed on the amount or value of his
share of the assets of the partnership is paid."

F The scheme followed in chapter IV of the Act is analogous to method of
computation of court fee provided for by Section 7(iv) and itS various sub-
clauses of Court Fees Act of 1870. Clause (t) of Section 7(iv) reads as
under:

"(t) for accounts-
G
according to the amount at which the relief sought is valued in the
plaint or memorandum of appeal;"

Various sections of the Kerala Act or different sub-clauses of Section 7
of Central Act contemplate three modes of valuation of the subject matter,
H namely, according to market value, or subject matter or estimate by plaintiff or
S.K. NAYAK v. S.G. NA YAK [SAHAI, J.] 413

according to the amount at which relief sought is valued. Payment of court fee
on estimate by the plaintiff or on the relief sought is a method provided for in
such suits where the exact amount is not known or is not capable of being'
known till it has been adjudicated upon on evidence. In SRA.S.S.Sathappa
Chettiar v. SRAR. Ramanathan Chettiar, [1958) SCR 1024 this Court, while
examining the scheme of computation of court fee in suits falling under Section
· 7(iv) of 1870 Act, observed,

"If the seheme laid down for the computation of fees payable in
suits covered by the several sub-sections of S.7 is considered, it
would be clear that, in respect of suits falling under sub-s.(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 thooretical
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 ..................... .
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 S.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."

Same reasoning applies to suits filed for dissolution of partnership and
accounting under Section 36 of Kerala Act

The question however is if the disclosure of valuation is in absolute
discretion or option of the plaintiff or it can be objected to by the defendants
and adjudicated upon by the Court, and if so in what cases. It was left open in
Chettiar' s case(supra). Provisions of Central and State Act have already been
extracted earlier. Sub-section (2) of Section 36 of Kerala Act amply safeguards
the interest of revenue. Similar provisions exist in Central Act. But under Civil
Procedure Code plaint is liable to be rejected under Order 7 Rule 11 if it is
under-valued. How to reconcile the two provisions, the one leaving it to
absolute discretion of plaintiff to value the suit as he considers proper and the.
other to reject a plaint if it is under-valued. For this it is necessary to examine
· the scheme disclosed in the Civil Procedure Code relating to filing of suit.
Section 15 of the Civil Procedure Code (hereinafter referred to as 'C.P.C.').
provides that any suit shall be instituted in the court of the lowest grade
competent to try it. What is a court of lowest grade and for what nature of suit
has been determined and regulated by State enactments. Competency refers to
jurisdiction territorial or pecuniary, of limited or unlimited limits. In courts of
414 SUPREME COURT REPORTS [1991) SUPP. 3 S. C.R.

A limited pecuniary jurisdiction valuation assumes great importance. A plaintiff
may over or under-value the suit for purposes of avoiding a court of a particular
grade. In the former the plaint may be returned under 0. 7 R.10 for presentation
.in proper court but in latter it is liable to be rejected. Since under-valuation goes
to the root of maintainability of the suit a defendant is entitled to raise the
objection irrespective of the nature of the suit. That is why this Court in Abdul
B Hamid Shamsi v. Abdul Majid And Ors .• [1988) 2 SCC 575 while upholding
the right of the plaintiff to value the suit for accounting according to his own
estimate held that he "has not been given the absolute right or option to place
any valuation whatever in such relief." Ifat that was a case of limited pecuniary
jurisdiction in which the defendant could object as arbitrary under-valuation
could result in rejection of the plaint. Such right should be denied in suits of
C unlimited jurisdiction for more than one reason. A defendant, as observed by
the Privy Council in R.SJadhav Desai v. S. VJadhav Desai, 1918 PC 188, is
not entitled to use it as a weapon to non suit the plaintiff. Then, by very nature
of the suit a defendant is, normally, interested in delaying its adjudication
which at times may frustrate the very purpose of the suit. Further, the
provisions in Central Act and State enactments ensure that interest of State may
D not suffer by providing that no decree shall be passed or executed unless the
court fee is paid on difference between the valuation disclosed and amount for
which the suit is deereed In Meenakshisundaram Chettiar v. Venkatachalam
Chettiar, (1980] 1 SCC 616 it was observed that even though in suit for
accounting the loss of revenue is ensured by statutory provision yet a plaintiff
has a duty to give a fair estimate of the amount for which he sues; Reason for
E it obviously was insistence on being honest and just when approaching a court
of law. The observation was made because of the duty cast on court by 0.7 R.11
of C.P.C. But there is no indication if the suit was filed in a court of limited
pecu"niary jurisdiction. It can thus be resolved that in suits for accounting or for
dissolution of partnership and accounting filed in courts of limited pecuniary
F. jurisdiction the plaintiffmust take every care to disclose valuation which is not
arbitrary as the plaint is liable to be rejected on objection of the defendant. But
in suits of such· nature' filed before courts of unlimited jurisdiction the valuation'
disclosed by the plaintiff may be accepted as correct. This, however, does not
mean that the courts power to examine the correctness of valuation is taken
away. If on perusal of plaint the court is primafacie satisfied that the plaintiff
G has not been fair and valued the suit or relief arbitrarily it is not precluded froin
directing the plaintiff to value it properly and pay court fee on it. In Tara Devi
v. Sri Thakur Radha Krishna Maharaj, (1987) 4 SCC 69 this Court observed,
"It is now well settled by the decisions of this Court in Sathappa Chettiar v.
Ramanathan ·Chettiar and Meenakshisundaram Chettiar v. Venkatachalam
Chetliar that in a suit for.declaration with consequential relief falling under
H Section 7(iv)(c) of the Court Fees Act, 1870, the plaintiff is free to make his
S.K. NAYAK v. S.G. NAYAK [SAHAI, J.] 415

own estimation of the reliefs sought in the plaint and such valuation both for
the purposes of court fee and jurisdiction has to be ordinarily accepted. 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." But the defendant has no right to raise such
objection nor the court should dwelve into the matter after filing of written
statement on·evidence. The law on this aspect, thus, should be taken to be as
under:

(1) Where the question of court fee is linked with jurisdiction a
defendant has a right to raise objection and the court should decide
it as a preliminary issue.

(2) But in those cases where the suit is filed in court of unlimited
jurisdiction the valuation disclosed by the plaintiff or payment of
amount of court fee on relief claimed in plaint or memorandum of
appeal should be taken as correct.

(3) This does not preclude the court even in suits filed in courts of
unlimited jurisdiction from examining if..,the valuation, on aver-
~ ...... ments in plaint, is arbitrary.
~

Coming to the facts the dispute arose between plaintiff and defendant
who are real brothers who had been carrying on business in partnership· since
1953.The share of plaintiff was 7/16 whereas that of the defendant was 9/16.
In consequence of differences that arose the plaintiff-appellant filed suit for
permanent injunction in which the defence taken was that the partnership had
come to an end in March 1981. Therefore, the plaintiff filed the present suit for
declaration that the partnership stood dissolved and the defendant was' liable
for rendition of account The suit for purposes.of court fee and j'urisdiction was
valued at Rs. 10,050. It was also mentioned that in case.the amount found due
in favour of plaintiff is more he shall pay the court fee on that. In written
statement the defendant claimed that the plaintiff had withdrawn huge amounts
from the account of firm at Bombay which the plaintiff was primarily looking
after and, therefore, in fact it was the defendant who was entitled on accounting
to huge amount.from plaintiff. In reply to it the plaintiff in,replication claimed
that from the date of dissolution, i.e., from March 1981, a sum of Rupees
Twenty Eight lakhs was due to the plaintiff. In view of the plea raised in
replication and on objection raised by defendant additional issue was framed
about valuation of the suit. The issue was decided as a· preliminary issue. The
trial court held that the plaint was silent as to which of the relief was valued

1'
_.,
\I.
l

416 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.
't
A under Section 36 of the Act. The court, however, held that from the plaint it was
clear that the declaratory relief and the relief for rendition of account were
valued under Section 36 of the Act The trial court found that in view of the·
replication filed by the plaintiff that a sum of Rupees Twenty Eight lakhs was
due to him on dissolution of partnership it was obvious that the suit was under-
'
l-
(
valued. Consequently it directed the plaintiff to correct the valuation within one
B week and pay the deficient court fee. In revision the High Court held that even
though the Court is not ordinarily entitled to examine the correctness of the
valuation shown by the plaintiff it has a duty to see whether the valuation so
disclosed by the plaintiff was liable to be rejected as arbitrary and he could be
compelled to give proper valuation and pay the court fee accordingly. It held
that since from the claim made in the replication it was clear that the plaintiff
C had under-valued the suit by giving an arbitrary valuation the order passed by
the trial court was correct and the suit could be entertained only after the
plaintiff corrected the valuation and paid the ·deficient court fee. Relevant
allegation in replication in this regard is extracted below:

"The plaintiff is entitled to realise from the defendant an amount
D of Rs. 28,00,000 at the time of settlement of accounts towards the
loss and damages sustained by the plaintiff from ·14~3-1981 which
date can be ,taken as the date of dissolution of the firm. as detailed
below ...... "

This was as counter blast to the claim made by the defendant. Whether
E this claim was correct could be decided only after evidence was led, In our
opinion, the High Court in a suit filed in a court of unlimited jurisdietion was
not entitled to direct the plaintiff to revalue the· suit and pay court fee on it.

F
Before parting we may observe that the suit was filed in 1983 but the
defendant by raising objection and the court entertaining it has succeeded in
delaying the suit for nine years only on preliminary issue. ·Tuatis why we have
{
r
construed the provision in Section 36 of the Kerala Act in a manner so as to
avoid such recurrence. · l
In the result this appeal succeeds. and is allowed: The order of the courts
below directing the appellant to revalue the suit and pay the court fee on it is
set aside. The trial court should now proceed to decide the suit in accordance
with law. The appellant shall be entitled to his costs throughout.

N.P.V. Appeal allowed.

' ...