Beyond Revenue – Reimagining Court Fee As A Policy Tool For Judicial Administration

SUMMARY – The blog explores the nature and utility of court fees by considering the revenue raised through court fees and their potential to act as a limitation to access to justice. Highlighting the best practices of some states, the blog suggests a need for reevaluating the role and structure of court fees, moving away from its historical justifications and considering it as a tool for systemic improvement in the administration of justice.

Key takeaways

Court Fees Utility: Court fees don’t effectively deter frivolous litigation but are increasingly revised by states for revenue. However, the funds raised make up marginally towards expenditure on the administration of justice, emphasizing the need for a shift in perspective.
Equal Justice: Proposes exemptions for distressed litigants to eliminate court fees as a barrier. Recommends broadening exemptions to facilitate access to remedies under social legislation, aligning with the constitutional ideal of equal justice.
Beyond Revenue Generation: Identifies court fees as a contributor to judicial delays and suggests technological intervention for efficiency. Recommends remodelling court fees, potentially linking them to the number of hearings and time consumed in high-value cases, echoing Singapore’s system to discourage delaying tactics.
Cost-Benefit Analysis: Calls for a systematic cost-benefit analysis of the court fee regime, taking into consideration its revenue potential and its impact as a systemic issue in judicial administration.

Introduction

Court fees in a lawsuit are determined based on the relief sought. For cases involving declarations and consequential relief, an ad valorem system applies, correlating it with the market value of the claim. In instances without consequential relief, a fixed fee system is also applicable for various petitions and applications filed during the lifecycle of the case, including vakalatnamas and process fee.

Historical Justifications and current practice

The imposition of court fee was justified in the Bengal Regulations, 1795 with the stated objective to curb frivolous litigation. From its inception, the stated objective has gained little acceptance. The 14th Law Commission Report (1958) stated that “Court Fees have been generally justified, on the ground of the need for increased revenue because of the increased cost of the administration of justice”.

The state practices on levying court fees also indicate that the legislatures have started increases in court fees as a measure of recompense for their expenses, resulting in significant upward revisions in recent times. The legality of such upward revision in court fees has been challenged in the High Court of Delhi, Madras, Bombay, etc. and the courts have maintained that the court fees shouldn’t be in nature of tax i.e. to make litigants contribute to the increase of general public revenue and that there must be a broad correlation with the fees collected and the cost of administration of civil justice.

Court fee as a notional recovery

The rationale for court fees as discussed in the 14th Law Commission Report suggests that a modern welfare state cannot with any justification sell the dispensation of justice at a price.

It described the administration of justice as an essential function of the state, leading to community benefits akin to defence and maintenance of law and order. In the same vein, the 128th Report (1988) of the Law Commission viewed court fees as something ‘’incompatible with a society governed by rule of law and would, therefore, like to abolish it”. This view also finds support in other empowered committees that have examined the utility of court fees. The analysis of some state budgets for 2021-22 suggests that revenue raised through court fees and other levies in court processes only makes up for a small percentage of the expenditure incurred on the administration of justice and the court fee is just a ‘notional recovery’ when compared with the total expenditure for administration of justice.

Within revenue receipts, the court fee is calculated under the major head of Stamps-Judicial and Service fee, depending on the stage and nature of the levy. The other sources of revenue under the administration of justice are also minimal and a major component of its expenditure can be said to be met by general appropriation. The government in its capacity as a litigant and under the Legal Services Authorities Act, 1987 also pays for court fees and adds to the revenue thus, further reducing the effective revenue raised through court fees.

The user-pay principle

Another justification for court fees is that it is like user fees which make litigants contribute towards cost recovery in exchange for services and resources employed by the state for the administration of justice. However, there are practical difficulties in developing a court fee structure that reflects the actual costs of the services provided and takes into account the complexity and cost of different matters. Even the ad valorem court fee which is levied as per the market value of the subject matter does not conform to the principle of cost recovery since the ‘cost’ of a case to a judicial system may not entirely depend on the value of the claim.

The 253rd Law Commission report (2015) recommends that court fees need to be related to the time consumed by the litigants in the conduct of their case, much like in Singapore where court fees increase depending on the number of days taken up for hearing by the parties to the case. A similar mechanism can potentially curb delaying tactics by high-value litigants. It’s time for the legislatures to stop using court-fee as a measure of recompense for their expenses but instead, think of it as a policy tool to remedy systemic issues of judicial administration. Court fee can potentially disincentivise delaying tactics of high-value litigants while also ensuring that it does not act as a limitation and deterrent to access to justice.

Exemptions for distressed litigants

Internationally, there is continued focus on ensuring a balance between cost recovery and access to justice. In India, the Code of Civil Procedure (CPC) allows an indigent person to claim exemption from payment of court fees. The free legal aid program by the Legal Services Authority also covers court fee expenses for the beneficiaries. Further, the Court Fees Act of many states already provides enabling provisions for the state governments to reduce, remit, and exempt court fees for a certain class of people. The state of Odisha exempts seven categories of persons, including women from payment of court fees. The Kerala Law Reform Commission recommends exemption for persons below the poverty line, prisoners, and persons suffering from mental illness and other grave diseases. Though laudable, the scope and extent of such exemptions should be widened to give effect to the constitutional ideal of equal justice.

Court fees and Judicial Delays

The discourse around rationalising court fees and making them equitable should be preceded by a systematic cost-benefit analysis not just based on its financial implications but also its impact on systemic issues in the judiciary. Steps should be taken to identify and eliminate instances in the court fee regime that act as a barrier and add to delays. For example, disputes relating to ascertainment of court fees, non-payment and refund of court fees, and other ancillary breakouts potentially contribute to the delay in judicial administration. In 2016, Gujarat abolished process fees to clear the pendency arising out of non-payment of process fees. Along similar lines, technological interventions to streamline court fee regimes using online payment can have positive spillovers in making the court fee regime efficient and plug such instances.

Conclusion

Increased insistence on the revenue-raising potential of the judiciary through court fees runs the risk of commodifying justice. There is a need to locate the utility of court fees as a financial disincentive for litigants who employ delaying tactics. A distinction between high-value litigants and distressed litigants should be a prime consideration in formulating such standards. Justice dispensation is a public good and should be accessible to distressed litigants, premised on the principle that those who have less in life should have more in law. There is a need to think strategically about court fees as a policy tool to aid the administration of justice rather than a means of raising revenue.

Beyond Revenue – Reimagining Court Fee As A Policy Tool For Judicial Administration

Key takeaways

Table of Contents

Introduction

Historical Justifications and current practice

Court fee as a notional recovery

The user-pay principle

Exemptions for distressed litigants

Court fees and Judicial Delays

Conclusion

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Beyond Revenue – Reimagining Court Fee As A Policy Tool For Judicial Administration