COMMERCIAL AVIATION AND TRAVEL CO. V. VIMLA PANNALAL (1988) 3 SCC 423: AIR 1988 SC 1636
FACT
The respondent (plaintiff) filed a suit against the appellants (defendants) seeking dissolution of partnership and accounts.
The respondent valued the suit for jurisdiction at Rs 25 lakhs and for court fee purposes at Rs 500.
The appellants objected to the undervaluation of the suit, invoking Order VII, Rule 11(b) of the Code of Civil Procedure.
The High Court, including a Division Bench, upheld the respondent's valuation, citing precedents and rules framed by the Punjab High Court.
Rule 4 of the Punjab High Court rules allows valuation for court fees and jurisdictional purposes to be different.
Hence the present appeal against the Division bench of HC.
ISSUE
Whether the plaintiff's valuation could be deemed arbitrary or unreasonable, warranting interference by the court under Order VII, Rule 11(b).
RULE
Order VII, Rule 11 (b) of the Code of Civil Procedure provides, 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.
Court concluded that unless objective standards or materials for valuation exist, plaintiffs have the right to tentatively value the relief sought.
HELD
The court acknowledged that plaintiffs are generally entitled to provide their own valuations, guided by Section 7(iv) of the Court Fees Act.
The Punjab High Court has rules under Section 9 of the Suits Valuation Act for the Union Territory of Delhi, but they do not provide any standard of valuation for suits under Section 7(iv) of the Court Fees Act. Rule 4(i) of the Punjab High Court Rules states that the value of the lawsuit for accounts will be determined by the Court Fees Act, and the plaintiff must determine the relief's valuation under Section 7(iv) (f) of the Court Fees Act.
The court cited precedent, including the S. Rm. Ar. S. Sp. Sathappa Chettiar v. S. Rm. Ar. Rm. Ramanathan Chettiar [AIR 1958 SC 245, which emphasized the plaintiff's option to value the claim in suits under Section 7(iv).
In Urmilabala Biswas v. Binapani Biswas [AIR 1938 Cal 161], a suit was filed for declaration of title to a specific sum of Provident Fund money. The Court said that the relief should have been valued at the amount of Provident Fund money claimed by the plaintiff.
In Meenaakshisundaram Chettiar v. Venkatachalam Chettiar [(1979) 3 SCR 385], the court observed that the Plaintiffs must state the amount they seek, even if they cannot estimate it accurately. In cases of management accounts, such estimates may be difficult. Nonetheless, it is important to provide a reasonable estimate of the relief sought.
The court noted that if objective standards are available, and the plaintiff disregards them, the court can intervene under Order VII, Rule 11(b).
The court emphasized that plaintiffs cannot arbitrarily undervalue suits when positive standards or materials exist, as demonstrated in the Abdul Hamid Shamsi v. Abdul Majid [(1988) 2 SCC 575], the plaintiff filed a suit for accounts but undervalued it compared to objective standards. Despite clear evidence suggesting a higher valuation, the plaintiff chose a lower amount arbitrarily. The court ruled that plaintiffs cannot undervalue suits arbitrarily when objective standards exist, emphasizing that valuations must be reasonable.
In the present case, the plaintiff's estimate of Rs 25-30 lakhs for accounts did not provide an objective standard for valuation, thus the plaintiff's valuation was deemed reasonable and not demonstratively arbitrary.
Ultimately, the court upheld the respondent's valuation for the relief of accounts, finding it neither unreasonable nor arbitrarily undervalued.