M/S Popat And Kotecha Property vs Ashim Kumar Dey

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).8149 OF 2018 [ARISING OUT OF SLP(C) NO.13912 OF 2017]

M/S POPAT & KOTECHA PROPERTY & ORS. ..APPELLANT(S)

VERSUS

ASHIM KUMAR DEY .RESPONDENT(S)

J U D G M E N T

RANJAN GOGOI, J.

1. Leave granted.

2. This appeal by special leave by the

landlord is against the order dated 7th December,

2016 passed by the Calcutta High Court in a

proceeding under the West Bengal Premises Tenancy

Act, 1997 (hereinafter referred as “the 1997 Act”)

for eviction of the respondent-tenant on the

ground that the tenant had defaulted in payment of

his share of municipal tax as an occupier under

the provisions of the Kolkata Municipal

Corporation Act, 1980 (hereinafter referred to as

Signature Not Verified “the 1980 Act”). The application filed by the Digitally signed by NEETU KHAJURIA Date: 2018.08.09 18:04:36 IST Reason: landlord was dismissed by the learned Trial Court 2

which view has been upheld in appeal by the High

Court.

3. The matter lies in a very short compass and

the question arising may be formulated as

hereunder:

“Whether after the amendment of the West Bengal premises Tenancy Act by Amendment Act No. 14 of 2001 with effect from 10th July, 2001 [which had incorporated sub-section (8) to Section 5] whether a tenant who defaults in payment of his/her share of municipal tax as apportioned by the landlord would be in default of rent rendering him/her liable to eviction.”

4. The rent agreement governing the parties in

the present case was executed in the year 1991.

Under the said agreement the parties had agreed

that the rent would include all municipal taxes

payable and that as and when such taxes are

enhanced rent should be proportionately raised.

However, with the amendment of the Act with effect

from 10th July, 2001 and after incorporation of

sub-section (8) of Section 5 the obligation to pay

the municipal tax/taxes was specifically cast on

the tenant in his/her capacity as an occupier.

Sub-Section (8) of Section 5 is in the following 3

terms:

“5. Obligations of tenant.-

*** *** *** *** *** ***

(8)Every tenant shall pay his share of municipal tax as an occupier of the premises in accordance with the provisions of the Kolkata Municipal Corporation Act, 1980 (West Bengal Act LIX of 1980) or the West Bengal Municipal Act, 1993 (West Bengal Act XXII of 1993).

5. In the present case, the property tax

payable in respect of the suit property was

reassessed and enhanced. There were several

tenants in occupation of the suit property. The

landlord apportioned the tax between the tenants

and issued a notice dated 7th February, 2003 upon

the respondent-tenant to pay his share of the

municipal taxes. The respondent-tenant by reply

dated 29th March, 2003 to the said notice had

sought for a reconsideration/review of the matter

on a “co-operative spirit for the sake of

harmonious relation between tenant and landlord.”

As the respondent-tenant had not remitted the

amount due as his share of the municipal tax, the

landlord instituted the proceedings for eviction 4

on the ground of default of payment of rent on the

part of the respondent-tenant.

6. The learned Trial Court dismissed the

claim of the landlord on the ground that no

documentary evidence with regard to the

enhancement of property tax was forthcoming and as

the respondent-tenant had been depositing the

monthly rent payable with the Rent Controller, the

tenant cannot be deemed to be the defaulter.

7. In appeal, the High Court upheld the

order of the learned Trial Court though on a

different reasoning. The High Court held that

even if the municipal taxes are to be held to be

part of the rent payable, there is no automatic

enhancement of the rent by an unilateral notice on

the part of the landlord under Section 20 of the

1997 Act and that such enhancement has to be

ordered by the Rent Controller. As the aforesaid

requirement was not met, the High Court dismissed

the appeal filed by the landlord.

8. In the present case, under the tenancy

agreement municipal taxes were included in the

monthly rent payable and any enhancement thereof 5

was to result in enhancement of the monthly rent

also. With the amendment made to the Act with

effect from 10th July, 2001 and upon incorporation

of sub-section (8) of Section 5, the obligation to

pay municipal taxes as an occupier of the premises

fell upon the tenant. The relevant clauses in the

rent agreement therefore stood superseded by the

statutory obligation cast on the tenant by the

amendment to the Act.

9. In the present case following the

enhancement of municipal taxes by the Municipal

Corporation in respect of the suit property an

apportionment of the share of each tenant was made

by the landlord and a notice to pay was served on

the respondent-tenant. As already noticed, in his

reply, the respondent-tenant did not dispute his

liability to pay his share of the municipal tax

and had sought for a reconsideration/review. In

the written statement apart from an evasive denial

in the following terms there was no other denial

or dispute raised:

“7…………The defendant further denies the legitimacy and/or authenticity of the calculation with regard to the enhancement of the rent…..” 6

10. The respondent-tenant nowhere denied in

any specific terms that the share of municipal

taxes demanded was disproportionate or excessive

or otherwise unauthorized in law. The argument

advanced at the bar that the landlord cannot

apportion the municipal taxes among different

tenants if the premises is to be occupied by more

than one tenant and it is the Municipal

Corporation who is the authority to separately

assess the tax payable by each tenant does not

find any support from the provisions of the 1980

Act.

11. This aspect of the matter came up for

consideration before this Court in Calcutta

Gujarati Education Society and another vs.

Calcutta Municipal Corpn. and others1 and the

views expressed by this Court is found to be in

paragraph 45 of the said report which is extracted

below:

“45. We find that the machinery provisions for assessment and recovery of tax basically involve the owner or the lessor who is “primarily liable” for the tax on property although in

1. (2003) 10 SCC 533 7

the course of assessment and recovery of portion of tax from the tenants, sub-tenants or occupants, their involvement is also directed. It is with the purpose to make the procedure of recovery of tax simpler that the owner or the lessor is proceeded against as the “person primarily liable”. The owner or lessor of the property is “primarily” required to satisfy the demand towards tax with right to recover it from the tenant, sub-tenant or the occupant. If the landlord or the owner is obliged to make payment of whole amount of tax inclusive of his own share and share of the tenant, sub-tenant or the occupant, the owner or lessor has to be conferred with the power to recover the portion of tax payable by the tenant, sub-tenant or occupant who is actually enjoying the property and putting it to use for commercial or non-residential purpose. The legislature has taken note of the fact that a large number of properties in the metropolitan city of Calcutta are in occupation of tenants, sub-tenants or occupants on a comparatively small amount of rent or lease money. In such a situation, to impose entire burden of tax on the owner or lessor, would be inequitable, more so when the tenancy law does not allow increase in rent beyond a particular limit and the right of eviction of the landlord is restricted to the grounds under the Tenancy Act. By the impugned provisions of the Act, therefore, the legislature has thought of apportioning the tax burden between owner or the lessor as one party and the tenant, sub-tenant or occupier as the other parties. The whole amount of tax is recoverable from the lessor and may also be recovered from the tenant 8

or sub-tenant through attachment of the rent. In case where the lessor or landlord has paid the whole tax including the portion of tax payable by the tenant or sub-tenant, the landlord has to be equipped with the power to get himself reimbursed by recovery of the portion of tax paid by him on behalf of the tenant. Section 231 of the Act, therefore, creates a fiction that the “tax” apportioned on the tenant would be treated as “rent” and would be recoverable as such. The word “rent” has not been defined in the tenancy law and this Court has taken note of this legal position in the case of Puspa Sen Gupta v. Susma Ghose (1990) 2 SCC 651 which arose out of the provisions of the Tenancy Act applicable to West Bengal. Rent is a compendious expression which may include lease money with service charges for water, electricity and other taxes leviable on the tenanted premises.” (underlining is ours)

As already seen, in paragraph 45 of the

report, extracted above, the provisions of Section

231 of the 1980 Act was also considered and it was

held that municipal taxes would be a part of the

“rent” payable by the tenant to the landlord.

12. While the provisions of the 1980 Act

make it very clear that an occupier as

distinguished from the owner i.e. ‘person

primarily liable’ is entitled to pre-assessment

notice and to participate in the assessment 9

proceedings and also to question the same by way

of an appeal, etc. assessment of a part of the

premises in occupation of a tenant or different

parts of such premises in occupation of different

tenants is not contemplated under the 1980 Act.

Rather, from the provisions of Section 230 of the

1980 Act, it is clear that the person to be

assessed to tax is the person primarily liable to

pay i.e. the owner who is vested with the right to

recover the portion of the tax paid by him on

behalf of the tenant, if required, proportionately

to the extent that the value of the area occupied

bears to the value of the total area of the

property. Under the 1980 Act, in the event of any

default on the part of the owner to pay the tax

the rent payable by the tenant(s) is liable to be

attached.

13. In the present case, default on the part

of the respondent-tenant is clear and evident. The

obligation to pay municipal taxes on the tenant

being over and above the obligation to pay the

rent by virtue of the provisions of Section 5(8)

of the 1997 Act, the High Court could not have 10

imposed on the landlord the requirement of

obtaining a formal order of enhancement of rent

from the Rent Controller.

14. For the aforesaid reasons, we allow this

appeal and set aside the order of the High Court

affirming the order of the learned Trial Court.

The application filed by the landlord for eviction

of the respondent-tenant is allowed.

...................,J.

(RANJAN GOGOI)

...................,J.

(R. BANUMATHI)

...................,J.

(NAVIN SINHA) NEW DELHI AUGUST 09, 2018