Abdul Hamid Shamsi v. Abdul Majid, (1988)

Relevant provisions 

Section 7(iv)(f) of the Court Fees Act, 1870 grants the plaintiff the right to determine the valuation of the relief in the suits for accounts, but the question arises—what if this valuation appears deliberately underestimated?

Introduction

The case Abdul Hamid Shamsi v. Abdul Masjid (1988) is a landmark judgment concerning the interpretation of Section 7(iv)(f) of the Court Fees Act, 1870. This provision allows the plaintiff to assign a value to the relief sought when the relief pertains to accounts, with the court fee being paid accordingly. However, the case raised an important question: Is this valuation by the plaintiff absolute and unquestionable?

Facts of the Case

• Abdul Samand, father of both plaintiff and defendants, initially ran a proprietary business.
• Later, he converted the business into a partnership firm, making the plaintiff (respondent) and his two brothers (defendants/appellants) partners.
• After the father’s death, the plaintiff expected that the partnership would continue or be reconstituted.
• However, defendants excluded the plaintiff from the business and submitted a new partnership deed before the Income Tax Department, stating that the plaintiff had no interest in the business.
• The plaintiff filed a civil suit demanding four reliefs, which included:
1. Declaration that the new partnership deed was illegal.
2. Dissolution of the newly formed partnership.
3. Examination of accounts (profit/loss).
4. Payment of due share to the plaintiff.
• For all of this, the plaintiff valued the relief under Section 7(iv)(f) and paid only Rs. 150 as court fee.

Defendants' Objections 

The appellants (defendants) raised two major objections:

1. The valuation was grossly undervalued, given that the business was worth lakhs of rupees.
2. Due to such undervaluation, the jurisdiction of the civil court was also questionable, as the court lacked pecuniary jurisdiction.

Issues Before the Supreme Court

1. Whether the plaintiff's valuation of relief under Section 7(iv)(f) was correct and binding?
2. Whether the Civil Court had jurisdiction, considering the actual valuation of the claim?

Supreme Court’s Observations and Ratio Decidendi

The Supreme Court, while examining Section 7(iv)(f), made the following key observations:

1. The provision allows the plaintiff to determine the valuation, but this right is not absolute.
2. The court has the authority to scrutinize and correct the valuation if it appears to be:
1. Deliberately undervalued, or
2. Arbitrary and unreasonable.
3. The Court cited the Tara Devi v. Sri Thakur Radha Krishna Maharaj (1987) case, reiterating that courts can interfere if the valuation is manipulated to avoid higher fees or jurisdictional limits.
4. Additionally, the Court invoked Order 7 Rule 10 and 11 of the CPC:
1. Rule 10: A suit beyond a court’s pecuniary jurisdiction should be returned for filing in the appropriate court.
2. Rule 11: If the suit is undervalued, the plaint can be rejected.

Final Judgment and Decision

The Supreme Court held that:

1. The plaintiff’s valuation appeared clearly arbitrary and unreasonable.
2. Therefore, the matter was remanded to the trial court to:
1. Examine the true valuation of the reliefs.
2. If found beyond its pecuniary limits, transfer the case to the appropriate court.
3. Hence, the appeal was allowed, and the valuation by the plaintiff was rejected.