G.P. Mathur, J. - (1.) This appeal, by special leave, has been preferred by the defendants (State of Himachal Pradesh and three others) against the judgment and decree dated 10-12-1997 of the High Court of Himachal Pradesh by which the Second Appeal filed by the appellants was dismissed and the judgment and decree passed by the District Judge and also Senior Sub-Judge, Solan decreeing the plaintiffs suit were affirmed.
(2.) M/s. Shivalik Agro Poly Products Ltd. and others filed the suit seeking a declaration that the notification dated 14-4-1969 issued by the State of Himachal Pradesh under section 78 of the Registration Act be declared void and ultra vires and for recovery of Rs.27,771/- paid by them as registration fee for registering the mortgage deed dated 30-10-1978. The case of the plaintiffs, in brief, was that they were allotted an industrial plot in Parwanoo by the Himachal Pradesh Housing Board for establishing an industrial unit. They were sanctioned two loans of Rs. 30 lacs and Rs.27.76 lacs by Himachal Pradesh Financial Corporation and Himachal Pradesh Mineral and Industrial Development Corporation respectively and in order to secure the loan, they were required to mortgage and hypothecate the fixed assets of their leasehold rights in the industrial plot and the machinery installed therein with the aforesaid Corporations for which a deed of simple mortgage was required to be executed. At the time of the execution of the mortgage deed, the plaintiffs were required to pay stamp duty of Rs. 45,804/- and registration charges amounting to Rs. 27,760/- in accordance with the notification issued under sections 78 and 79 of the Registration Act by the State of Himachal Pradesh. The plaintiffs challenged the vires of the notification fixing the registration fee by filing Civil Writ Petition No.105 of 1979 which was summarily dismissed by a Division Bench of the High Court on 22-5-1979 on the ground that the plaintiffs had an equally efficacious alternative remedy of filing a civil suit wherein the validity of the notification could be challenged. After dismissal of the writ petition, the suit was instituted claiming the reliefs mentioned above. The defendant-appellants contested the suit on the grounds, inter alia, that the impugned notification had been issued by the State Government in exercise of the statutory power conferred by Sections 78 and 79 of the Registration Act and, therefore, it was a sovereign function of the State for which no suit was maintainable; that the notification was perfectly legal and valid; that the registration fee had been charged in accordance with the schedule of fee fixed by the State Government in the notification for the registration of documents and that the registration fee charged was perfectly justified.
(3.) The Senior Sub-Judge, Solan, decreed the suit and declared the notification dated 14-4-1969 issued by the State Government prescribing the registration fee to be null and void and also passed a decree for refund of Rs.27,771/- in favour of the plaintiffs, which was affirmed in appeal by the District Judge and also in Second Appeal by the High Court. The main ground on which the plaintiffs suit has been decreed is that there is a distinction between tax and fee. Fee is levied for certain services given to individuals and the amount realized has to be earmarked to meet the expenses incurred in rendering the services and the amount should not go to the general pool nor should be spent for any other purposes. The State had not led any evidence to show that the amount realized by way of registration fee is deposited under a separate head and that it is exclusively utilized for the maintenance of the registration department. In absence of any evidence, the conclusion was inevitable that the amount realized was put in the Consolidated Fund of the State Government and was being utilized by the Government for general purposes. Placing reliance upon Commissioner, Hindu Religious Endowments, Madras vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282, (for short Shirur Mutt case) a conclusion has been drawn that it is a tax and not a fee and consequently the impugned notification is ultra vires the Registration Act.;