"PEOPLE'S COURT" has caught the fancy of millions of television viewers. Citizens who have never been to court themselves and who believed any such encounter to be expensive and time-consuming have learned about the special attributes of small-claims court. Cases that do not involve large sums of money are handled with dispatch and without lawyers. The parties simply tell their stories to a judge in their own words and, with minimal formality, offer witnesses and evidence. It's a way for small businessmen and consumers, neighbors and employees to settle grievances inexpensively and quickly.

We have a small-claims court in the District of Columbia, of course, but its caseload has been declining. It now handles 40 percent fewer cases than it did 10 years ago. This is not because of a trend against litigation or even a falling off of confidence in the courts. It is simply because the court's jurisdictional limits are too low.

The law now provides that any case in which the amount in dispute is $750 or less can be heard in small-claims court. That figure was set in 1971 and is so low as to force thousands of simple cases into civil court, which is both more formal and more expensive for the litigants. In Maryland, small claims courts can handle matters involving as much as $10,000; the comparable figure in Virginia is $5,000. In five other states the courts themselves have the power to raise the limit without going to the legislature, so the figure can easily be adjusted for inflation.

It would be simple for Congress to increase the ceiling for this city's courts, but the matter is now tied up in a controversial judicial appointments bill recently passed by the House. The bill would raise the small claims limit to $2,000, but the D.C. Bar believes it should be at leas $2,500. In any event, the present $750 ceiling is unrealistic and has the effect of severely limiting access to this useful forum. The whole problem could be solved, to the great benefit of the city, if a few members of Congress took an interest and added a three line amendment to some shoo-in bill.