2004 (10) TMI 337 - HC - Companies Law

Summary

Issues Involved:
1. Requirement to affix court fee on applications under Section 17(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the 2002 Act").
2. Validity of the notification extending the provisions of Rule 7 of the Debts Recovery Tribunal (Procedure) Rules, 1993 ("the 1993 Rules") to the 2002 Act.
3. Whether the court fee required under the 1993 Rules is oppressive and lacks nexus with the expenses incurred by the Tribunal.

Detailed Analysis:

Issue 1: Requirement to Affix Court Fee
The petitioners challenged the Registrar, Debts Recovery Tribunal's ("the Tribunal") requirement to affix a court fee of Rs. 21,000 on applications under Section 17(1) of the 2002 Act. They argued that following the Supreme Court's decision in Mardia Chemicals Ltd. v. Union of India, which struck down Section 17(2) of the 2002 Act as unconstitutional, no court fee could be demanded. The petitioners contended that the court fee requirement should similarly be invalidated.

Issue 2: Validity of the Notification
The petitioners argued that the notification extending Rule 7 of the 1993 Rules to the 2002 Act was an attempt to circumvent the Supreme Court's decision in Mardia Chemicals Ltd. They claimed that the 2002 Act lacks provisions similar to Sections 36(c) and (d) of the Recovery of Debt Due to Banks and Financial Institutions Act, 1993 ("the 1993 Act"), which authorize the government to prescribe court fees. The court, however, found that Section 17(3) of the 2002 Act allows the application of the 1993 Rules to proceedings under the 2002 Act. The notification merely reiterated this legislative intent.

Issue 3: Oppressiveness of the Court Fee
The petitioners also claimed that the court fee required was oppressive and unrelated to the expenses incurred by the Tribunal. The court rejected this argument, stating that the court fee is a levy to maintain adjudicatory facilities and is similar to fees under the Court Fees Act. The court emphasized that the fee structure under Rule 7 of the 1993 Rules is reasonable and necessary for the Tribunal's functioning.

Conclusion:
The court dismissed all the petitions, holding that the requirement to affix a court fee on applications under Section 17(1) of the 2002 Act is valid. The notification extending Rule 7 of the 1993 Rules to the 2002 Act was found to be consistent with legislative intent and not an attempt to circumvent the Supreme Court's decision. The court also held that the court fee is neither oppressive nor unrelated to the expenses incurred by the Tribunal, thus upholding its validity.