EIH LIMITED versus NADIAVIRJI on 1 August 2022

EIH LIMITED

v.

NADIA A VIRJI

(Civil Appeal Nos. 4797-4799 of 2022)

AUGUST 01, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

West Bengal Premises Tenancy Act, 1997 – ss. 5(8), 3(f)(i),18 – Applicability of – Civil Procedure Code, 1908 – Or.7, r.11 –Rejection of Plaint – Transfer of Property Act, 1882 – s. 106 –Municipal Tax as Rent – A tenancy agreement was executed betweenthe appellant (landlord) and the respondent (tenant) – Under theTenancy Agreement, the rent was fixed at Rs.10,000/- per month –Further, the liability to pay the taxes including surcharge and watertax/fees was also upon the tenant – The appellant terminated thetenancy by issuing notice u/s. 106 of TPA – Upon expiry of the noticeperiod, the appellant filed a eviction suit – According to the appellantas the respondent is liable to pay taxes in view of the 1997 Act, thetotal rent exceed the ceiling limits of 10,000/- – Hence, the Act 1997is not applicable and therefore the Landlord terminated the tenancyby issuing notice under TP Act – The respondent filed application forrejection of plaint, inter-alia, on the ground that the suit was barredby reasons of the provisions of the Act 1997 being applicablebecause the rent of the premises was Rs.10,000/- and the tenancybeing for commercial purpose is not exempted u/s. 3(f)(i) of the Act,1997 – Single Judge of the High Court allowed the said applicationand rejected the plaint – Division Bench of the High Court dismissedthe appeal – On appeal, held: As per the tenancy agreement, therent payable would be Rs. 10,000/- per month and the liability topay municipal taxes is separate and distinct on the tenant – Merelybecause the obligation to pay half of the property tax and surchargewould be upon the tenant as per s. 230 of the Kolkata MunicipalCorporation Act, 1980 and the tenant is obliged to pay his share ofmunicipal tax as an occupier of the premises u/s. 5(8) of the Act,1997 and merely because for the purpose of recovery of the taxdue from the tenant, such tax apportioned can be recovered as rent,such tax cannot become part of the rent of the premises which istenanted – The terms and conditions mentioned in the tenancy

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Aagreement are required to be considered – The monthly rent dueand payable was Rs. 10,000/- per month, the High Court rightlyobserved and held that the Act, 1997 shall be applicable andtherefore the civil suit filed by invoking s.106 of the TP Act is impliedlybarred – The plaint was rightly rejected by the High Court – KolkataMunicipal Corporation Act, 1980 – ss. 230, 231.B

Dismissing the appeals, this Court

HELD: 1. The short question which is posed for theconsideration of this Court is, “whether, share of municipal taxdue and payable by the tenant under Section 230 of the Act 1980Cand Section 5(8) of the Act 1997 shall be included within theexpression ‘rent’ or in other words, the share of municipal taxdue and payable by the tenant can be said to be a part of the rentof the premises let out?” It is the case on behalf of the landlordthat as under Section 5(8) of the Act 1997, every tenant is underan obligation to pay his share of municipal tax as an occupier ofDthe premises in accordance with the provisions of the KolkataMunicipal Corporation Act, 1980 and as per Section 230 of theAct 1980, 50% of the municipal tax shall have to be paid by everytenant and as per Section 231 of the Act 1980 the same shall berecoverable as arrears of rent. [Paras 5.1 & 6][1020-C-D, G-H]

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2. As per Section 230 of the Act 1980, a person primarilyliable to pay the property tax (lessor) in respect of any land orbuilding may recover half of the amount of the property tax fromthe occupier (lessee/tenant) of the property. Section 231 of theAct 1980 provides that the person primarily liable to pay anyFproperty tax is entitled to recover the consolidated rate includingsurcharge from the occupier of the property and for that purposethe person primarily liable shall have the same rights and remediesas if such sum were ‘rent’ payable to him by the person fromwhom he is entitled to recover such sum. Section 5(8) of the Act1997 casts an obligation on the tenant to pay his share of municipalGtax as an occupier of the premises in accordance with theprovisions of the Act 1980. Merely because the obligation to payhalf of the property tax and surcharge would be upon the tenantas per section 230 of the Act 1980 and the tenant is obliged to payhis share of municipal tax as an occupier of the premises under H

Section 5(8) of the Act 1997 and merely because for the purposeof recovery of the tax due from the tenant, such tax apportionedcan be recovered as rent, such tax apportioned (half of the amountof the property tax and surcharge) cannot become part of the rentof the premises which is tenanted. For that purpose, the termsand conditions mentioned in the tenancy agreement/leaseagreement are required to be considered. For example, if in thetenancy agreement if it is provided that the tenant shall pay ‘X’amount which shall include the taxes, the tax component can besaid to be ‘part of the rent’. However, if under the agreementand/or even under Section 230 of the Act 1980 r/w Section 5(8) ofthe Act 1997, the tenant is liable to pay tax separately or half ofthe amount of tax now statutorily liable to be paid, the same canbe recovered as arrears of rent because such ‘tax’ is to be treatedas ‘rent’ for the purpose of recovery. However, the same cannotbe said to be ‘part of the rent’. [Paras 7 & 8][1022-D-F; 1025-A-D]

3. Now so far as reliance being placed upon Section 18 ofthe Act 1997 and the submission that under Section 18 of the Act1997 the rent shall be automatically increased by revision of 5%every three years and therefore by giving the increase by revisionof 5% every three years, the rent payable would be more thanrupees ten thousand per month is concerned, the aforesaidcontention has no substance. Section 18 of the Act 1997 shall beapplicable in a case where the fair rent is determined and fixed bythe Controller under Section 17 of the Act 1997. That is not thecase here. Therefore, Section 18 of the Act 1997 is not applicableat all to the facts and circumstances of the case. In view of theabove discussion and for the reasons stated above and as themonthly rent due and payable would be Rs. 10,000/- per monthwhich cannot be said to be more than ten thousand rupees asmonthly rent, the High Court has rightly observed and held thatthe Act 1997 shall be applicable and therefore the civil suit filedby invoking Section 106 of the TP Act is impliedly barred.Therefore, the High Court has rightly rejected the plaint inexercise of powers under Order 7 Rule 11 CPC. No interferenceof this Court is called for. Accordingly, the present appeals standdismissed. [Paras 10 & 11][1026-A-D]

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APopat and Kotecha Property v. Ashim Kumar Dey (2018)9 SCC 149 : [2018] 9 SCR 518 – held inapplicable.

Calcutta Gujarati Education Society v. CalcuttaMunicipal Corporation (2003) 10 SCC 533 : [2003] 2Suppl. SCR 915; Abdul Kader v. G.D. GovindarajB(Dead) By Lrs. (2002) 5 SCC 51 : [2002] 3SCR 460; Karnani Properties Limited v. Augustine(Miss) AIR 1957 SC 309 : [1957] 0 SCR 20 – referredto.

Case Law Reference

DCIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4797-4799 of 2022.

From the Judgment and Order dated 25.06.2019 of the High Courtat Calcutta in A.P.D No. 265 of 2017 with G.A. No.1216 of 2016 withG.A. No.218 of 2013 in C.S. No.354 of 2012.E

Rana Mukherjee, Sr. Adv., Ms. Kanchan Yadav, Ms. SurabhiGuleria for M/s Victor Moses & Associates, Advs. for the Appellant.

Siddharth Dave, Sr. Adv., Ms. Ranjeeta Rohatgi, Ms. SamtenDoma, Advs. for the Respondent.

FThe Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 25.06.2019 passed by the Division Bench of the HighCourt at Calcutta in A.P.D. No. 265/2017 with G.A. No. 1216/2016 withGG.A. No. 218/2013 in Civil Suit No. 354/2012, by which the DivisionBench of the High Court has dismissed the said appeal and has confirmedthe order dated 22.03.2016 passed by the learned Single Judge allowingthe application under Order 7 Rule 11 CPC rejecting the plaint on theground that the suit before the learned Single Judge (original side) wouldHnot be maintainable as per the provisions of the West Bengal Premises EIH LIMITED v. NADIA A VIRJI[M. R. SHAH, J.]

Tenancy Act, 1997 (hereinafter referred to as the ‘Act 1997’), the originalplaintiff – landlord has preferred the present appeals.

2. The facts leading to the present appeals in a nutshell are asunder:

That by a Tenancy Agreement dated 6.5.1993, the appellant –original plaintiff – landlord inducted the respondent/defendant as tenantin respect of a showroom admeasuring 1700 sq. ft. on the ground floorof a prime location of Kolkata being the arcade of the Hotel OberoiGrand at Premises No. 15/2, Jawaharlal Nehru Road, Kolkata. Underthe Tenancy Agreement, the rent was fixed at Rs. 10,000/- per month.Under the Tenancy Agreement, the liability to pay the taxes includingsurcharge and water tax/fees was upon the respondent – tenant.

2.1 The appellant – original plaintiff – landlord terminated thetenancy by issuing notice under Section 106 of the Transfer of PropertyAct, 1882 (hereinafter referred to as the ‘TP Act’). Upon expiry of thenotice period, the appellant – original plaintiff – landlord filed a suit beforethe learned Single Judge (Original Side) of the Calcutta High Court beingCivil Suit No. 354/2012, seeking eviction of the respondent – tenantfrom the tenanted premises. According to the appellant – original plaintiff,as the liability to pay the tax payable to the Calcutta Municipal Corporationwas upon the respondent – tenant and in view of Section 5(8) of the Act1997 r/w Section 3(f), the total rent payable by the tenant inclusive ofmonthly rent and taxes would exceed the ceiling limit of Rs.10,000/- permonth specified in Section 3(f)(i) of the Act 1997 for commercialpremises, hence the Act 1997 is not applicable and therefore the originalplaintiff – landlord terminated the tenancy by issuing notice under Section106 of the TP Act. The original plaintiff also prayed for the summaryjudgment.

2.2 The original defendant – tenant after appearing in the suitfiled an application before the learned Single Judge under Order 7 Rule11 CPC for rejection of the plaint, inter alia, on the ground that the suitwas barred by reasons of the provisions of the Act 1997 being applicablebecause the rent of the said premises was Rs. 10,000/- per month andthe tenancy being for commercial purpose is not exempted under Section3(f)(i) of the Act 1997. The learned Single Judge allowed the saidapplication and rejected the plaint vide order dated 22.03.2016 by holdingthat the rent payable by the tenant is Rs. 10,000/- per month which is A

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Abelow the ceiling limit mentioned in Section 3(f)(i) of the Act 1997 andtherefore the Act 1997 is applicable and therefore the suit under Section106 of the TP Act is impliedly barred by the provisions of the Act 1997.

2.3 Feeling aggrieved and dissatisfied with the order passed bythe learned Single Judge in allowing the application under Order 7 RuleB11 CPC and holding that the Act 1997 shall be applicable and thereforethe suit under Section 106 of the TP Act is impliedly barred by theprovisions of the Act 1997, the appellant – original plaintiff – landlordfiled an appeal before the Division Bench of the High Court. By theimpugned judgment and order, the Division Bench of the High Court hasdismissed the said appeal, confirming the order passed by the learnedCSingle Judge.

2.4 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court and confirmingthe judgment and order passed by the learned Single Judge that as therent payable by the tenant is Rs. 10,000/- per month (excluding the liabilityDto pay the municipal taxes) and therefore the Act 1997 shall be applicableand therefore the suit under Section 106 of the TP Act would be impliedlybarred, the original plaintiff – appellant – landlord has preferred thepresent appeals.

3. Shri Rana Mukherjee, learned Senior Advocate has appearedEon behalf of the original plaintiff – landlord and Shri Siddharth Dave,learned Senior Advocate has appeared on behalf of the respondent –defendant – tenant.

3.1 Relying upon Sections 3, 5(8) of the Act 1997 r/w Section 230& 231 of the Kolkata Municipal Corporation Act, 1980 (hereinafterFreferred to as the ‘Act 1980’) and relying upon the decisions of thisCourt in the case of Calcutta Gujarati Education Society v. CalcuttaMunicipal Corporation, (2003) 10 SCC 533 (para 45) and thesubsequent decision in the case of Popat and Kotecha Property v.Ashim Kumar Dey, (2018) 9 SCC 149, it is vehemently submitted byGShri Rana Mukherjee, learned Senior Advocate appearing on behalf ofthe original plaintiff – landlord that both, the learned Single Judge as wellas the Division Bench of the High Court have committed a serious errorin observing and holding that the Act 1997 shall be applicable.

3.2 It is vehemently submitted that as per Section 5(8) of the Act1997, r/w Section 230 & 231 of the Act 1980 and as observed and heldH

by this Court in the case of Calcutta Gujarati Education Society(supra), the expression ‘rent’ includes municipal tax payable to theCorporation and in the present case the liability to pay the municipal taxunder the tenancy agreement is upon the tenant and even otherwise asper Section 230 of the Act 1980, fifty per cent of the tax liability wouldbe upon the tenant and the same is statutorily to be paid and the samecan be recoverable as if it is a rent. That even under Section 5(8) of theAct 1997, the arrears of tax is recoverable as if it is arrears of ‘rent’,every tenant shall have to pay his share of municipal tax and the rentincludes the municipal tax element. It is submitted that therefore as thetenant is required to pay more than ten thousand (rupees ten thousandtowards rent plus the municipal tax payable to the municipal corporation)as per Section 3(f)(i) of the Act 1997, the Act 1997 shall not be applicable.

3.3 Taking us to Section 45 of the Act 1997, it is submitted that theAct 1997 shall be applicable even with respect to tenancy agreementsexecuted prior to the Act 1997 and when the tenancy agreements havebeen executed at the time when the West Bengal Premises TenancyAct, 1956 (hereinafter referred to as the ‘Act 1956’) was in force. It issubmitted that as per Section 45 of the Act 1997, all suits and otherproceedings under the Act 1956 pending at the commencement of theAct 1997 are specifically saved, but not the tenancy agreements executedprior to the Act 1997 and the Act 1997 shall be applicable to theagreements executed at the time when the Act 1956 was in force. It issubmitted that as per Section 18 of the Act 1997, there shall be,automatically, increase of rent by revision of five per cent every threeyears. It is submitted that therefore the rent payable would be more thanRs. 10,000/- per month (after considering the increase as per Section 18of the Act 1997) and therefore also the Act 1997 shall not be applicable.

3.4 Shri Rana Mukherjee, learned Senior Advocate appearing onbehalf of the original plaintiff – landlord has heavily relied upon thedecision of this Court in the case of Calcutta Gujarati EducationSociety (supra), more particularly para 45, in support of his submissionthat the rent payable by the tenant would include the taxes payable tothe municipal corporation payable by the tenant. Relying upon the aforesaiddecision, it is submitted that even the tax is a part of the rent and thereforeif the same is included the rent payable would be more thanRs. 10,000/- and therefore Section 3(f)(i) of the Act 1997 would beapplicable and hence the Act 1997 shall not be applicable. It is submitted A

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Athat the said decision has been subsequently followed by this Court inthe case of Popat and Kotecha Property (supra). It is submitted thatin the case of Popat and Kotecha Property (supra), even this Courthas observed and held that for non-payment of tax due and payable bythe tenant under Section 230 of the Act 1980 r/w Section 5(8) of the Act1997 and as the tax can be said to be rent and even the eviction decreeBcan be passed for non-payment of tax.

3.5 Shri Rana Mukherjee, learned Senior Advocate has also reliedupon another decision of this Court in the case of Abdul Kader v. G.D.Govindaraj (Dead) By Lrs., (2002) 5 SCC 51 and has submitted thatas observed and held by this Court, after considering the decision of thisCCourt in the case of Karnani Properties Limited v. Augustine (Miss),AIR 1957 SC 309 that in the event of taxes having been agreed to bepaid by the tenant, the same forms part of the rent.

3.6 Making the above submissions and relying upon the aforesaiddecisions, it is prayed to allow the present appeal and quash and setDaside the orders passed by the learned Single Judge and Division Benchof the High Court taking the view that the Act 1997 shall be applicable.

4. While opposing the present appeal, Shri Siddharth Dave, learnedSenior Advocate appearing on behalf of the respondent – tenant hasvehemently submitted that in the present case as per the tenancyEagreement, the rent due and payable by the tenant would beRs.10,000/- per month. It is submitted that, may be, as per Section 230of the Act 1980 and/or even as per Section 5(8) of the Act 1997, fiftyper cent of the tax liability would be upon the tenant and on non-paymentof the same the landlord can recover the tax liability as arrears of rent asFper Section 231 of the Act 1980, but the amount of tax due and payableunder Section 230 of the Act 1980 r/w Section 5(8) of the Act 1997cannot be said to be rent as sought to be canvassed on behalf of thelandlord. It is submitted that even as per the judgment of this Court in thecase of Calcutta Gujarati Education Society (supra) what is observedis the mode of recovery of the taxes due as arrears of rent. He has alsoGrelied upon para 46 of the said judgment in the case of Calcutta GujaratiEducation Society (supra). It is contended that therefore the decisionof this Court in the case of Calcutta Gujarati Education Society (supra)cannot be construed to hold that the tax amount can be said to be a rent.It is submitted that the term “rent” is not defined. It is submitted thatHboth the components, namely, the rent and the tax are different and distinct. That the tax amount due and payable by the tenant cannot betermed as “rent”. However, the tax due and payable by the tenant canbe recovered as arrears of rent, but the same cannot be termed as “rent”.It is submitted that therefore in the present case as the rent due andpayable is Rs. 10,000/- per month and the premises is a commercialpremises, Section 3(f)(i) of the Act 1997 shall not be applicable and theAct 1997 shall be applicable.

4.1 It is further submitted that in the present case, it is not only aquestion of jurisdiction of the Court to entertain the suit under Section106 of the TP Act, but the question is with respect to protection whichmay be available to the tenant under the provisions of the Act 1997. It isurged that under the Act 1997, the landlord can recover the possessionand evict the tenant on very limited grounds and the protection under theAct 1997 shall not be available to the tenant in a suit for eviction underSection 106 of the TP Act.

4.2 Now so far as the reliance placed upon the decision of thisCourt in the case of Popat and Kotecha Property (supra), relied uponby the learned counsel appearing on behalf of the landlord is concerned,it is submitted that in the said decision, para 46 of the judgment in thecase of Calcutta Gujarati Education Society (supra) has not beennoticed. Learned counsel has also taken us to the objects and reasonsfor amendment in Section 230 of the Act 1980 and insertion of Section5(8) of the Act 1997, by which, the liability to pay the municipal taxpayable to the Corporation (to the extent of 50% of the tax liability) nowwould be on the tenant and therefore the same is held to be recoverableas arrears of rent. It is submitted that being a private person, it was notpossible for the landlord to file a suit for recovery of the tax from thetenant (prior to amending Section 230 of the Act 1980) and in manycases it was observed that the tax liability would be more than the rentto be paid by the tenant and therefore Section 230 of the Act 1980 cameto be amended under which now 50% of the tax liability would be uponthe tenant and as there was no machinery for recovery available to thelandlord, Section 5(8) of the Act 1997 has been inserted, under which,the landlord is under an obligation to pay his share of municipal tax andas observed and held by this Court in Calcutta Gujarati EducationSociety (supra) the same is recoverable as arrears of rent from thetenant. It is submitted that under Section 231 of the Act 1980 r/w Section5(8) of the Act 1997, it is only the mode of recovery of tax due and A

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Apayable by the tenant as arrears of rent and by no stretch of imaginationtax due and payable by the tenant/tax liability can be said to be a rentand/or part of the rent unless specifically agreed to by the parties bymeans of a contract.

4.3 Making the above submissions and relying upon the aforesaidBdecisions, it is prayed to dismiss the present appeals.

5. We have heard learned counsel for the landlord as well as thetenant at great length.

5.1 The short question which is posed for the consideration of thisCourt is, “whether, share of municipal tax due and payable by the tenantCunder Section 230 of the Act 1980 and Section 5(8) of the Act 1997 shallbe included within the expression ‘rent’ or in other words, the share ofmunicipal tax due and payable by the tenant can be said to be a part ofthe rent of the premises let out?”

5.2 At the outset, it is required to be noted that in the present case,Dunder the tenancy agreement under consideration the rent payable bythe tenant would be Rs. 10,000/- per month. Over and above the rent,the tenant has also agreed to pay the municipal taxes payable to theCalcutta Municipal Corporation. However, it is required to be noted thatthe tenancy agreement does not provide that the parties have agreedEthat the rent would be inclusive of municipal taxes payable and that asand when such taxes are enhanced, rent would be proportionately raised.Under the tenancy agreement, the rent payable would be Rs. 10,000/-per month and the liability to pay municipal taxes is separate and distincton the tenant. On a fair reading of Section 3(f) of the Act 1997, whichprovides that any premises let out for non-residential purpose, whichFcarries more than ten thousand rupees as monthly rent, nothing containedin the West Bengal Premises Tenancy Act, 1997 shall apply. The wordused is “monthly rent”. As observed hereinabove, the term “rent” is notdefined.

6. It is the case on behalf of the landlord that as under SectionG5(8) of the Act 1997, every tenant is under an obligation to pay his shareof municipal tax as an occupier of the premises in accordance with theprovisions of the Kolkata Municipal Corporation Act, 1980 and as perSection 230 of the Act 1980, 50% of the municipal tax shall have to bepaid by every tenant and as per Section 231 of the Act 1980 the sameshall be recoverable as arrears of rent and as per the decision of thisH

Court in the case of Calcutta Gujarati Education Society (supra) thearrears of municipal tax can be recovered as arrears of rent and thereforethe share of municipal tax payable by the tenant will be part of the rent.Heavy reliance is placed on para 45 in the case of Calcutta GujaratiEducation Society (supra) and the subsequent decision in the case ofPopat and Kotecha Property (supra).

7. While considering the issue on hand, namely, whether the shareof the municipal tax payable by the tenant in accordance with theprovisions of Sections 230 & 231 of the Act 1980 r/w Section 5(8) of theAct 1997 can be said to be a part of the rent for the purpose of Section3(f) of the Act 1997, Sections 230 & 231 of the Act 1980 and Section5(8) of the Act 1997 are required to be referred to, which are as under:

“Section 230 : Apportionment of property tax by the personprimarily liable to pay.

Save as otherwise provided in this Act, the person primarily liableto pay the property tax in respect of any land or building mayrecover –

(a) If there be but one occupier of the land or building, fromsuch occupier half of the rate so paid, and may, if there bemore than one occupier, recover from each occupier halfof such sum as bears to the entire amount of rate so paidby the owner the same proportion as the value of theportion of the land or building in the occupation of suchoccupier bears to the entire value of such land or building:

Provided that if there be more than one occupier, such half of theamount may be apportioned and recovered from each occupier insuch proportion as the annual value of the portion occupied byhim bears to the total annual value of such land or building; (b) the entire amount of the surcharge on the property tax onany land or building from the occupier of such land orbuilding who uses it for commercial or non-residentialpurposes Provided that if there is more than one such occupier, the amountof surcharge on the property tax may be apportioned andrecovered from each such occupier in such proportion as the annualvalue of the portion occupied by him bears to the total annualvalue of such land or building.

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Section 231: Mode of recovery: If any person primarily liable topay any property tax on any land or building and is entitled torecover any sum from an occupier of such land or building, heshall have, for recovery thereof, the same rights and remedy as ifsuch sum were rent payable to him by the person from whom heis entitled to recover such sum.

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Section 5(8) of the West Bengal Premises Tenancy Act 1997:

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

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Explanation – For the purposes of this sub-section, the term‘occupier’ means an occupier as defined in clause (6)) of section2 of the Kolkata Municipal Corporation Act, 1980 or clause (43)of section 2 of the West Bengal Municipal Act, 1993.”

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As per Section 230 of the Act 1980, a person primarily liable topay the property tax (lessor) in respect of any land or building mayrecover half of the amount of the property tax from the occupier (lessee/tenant) of the property. Section 231 of the Act 1980 provides that theEperson primarily liable to pay any property tax is entitled to recover theconsolidated rate including surcharge from the occupier of the propertyand for that purpose the person primarily liable shall have the samerights and remedies as if such sum were ‘rent’ payable to him by theperson from whom he is entitled to recover such sum. Section 5(8) ofthe Act 1997 casts an obligation on the tenant to pay his share of municipalFtax as an occupier of the premises in accordance with the provisions ofthe Act 1980.

8. Sections 230 & 231 of the Act 1980 fell for consideration beforethis Court in the case of Calcutta Gujarati Education Society (supra).Before this Court, the validity of the aforesaid two provisions of the ActG1980 were under challenge. This Court had an occasion to consider theobject and purpose of Section 231 of the Act 1980 in para 45, whichreads as under:

“45. We find that the machinery provisions for assessment andrecovery of tax basically involve the owner or the lessor who isH“primarily liable” for the tax on property although in the course of assessment and recovery of portion of tax from the tenants, sub-tenants or occupants, their involvement is also directed. It is withthe purpose to make the procedure of recovery of tax simplerthat the owner or the lessor is proceeded against as the “personprimarily liable”. The owner or lessor of the property is “primarily”required to satisfy the demand towards tax with right to recover itfrom the tenant, sub-tenant or the occupant. If the landlord or theowner is obliged to make payment of whole amount of tax inclusiveof his own share and share of the tenant, sub-tenant or theoccupant, the owner or lessor has to be conferred with the powerto recover the portion of tax payable by the tenant, sub-tenant oroccupant who is actually enjoying the property and putting it touse for commercial or non-residential purpose. The legislaturehas taken note of the fact that a large number of properties in themetropolitan city of Calcutta are in occupation of tenants, sub-tenants or occupants on a comparatively small amount of rent orlease money. In such a situation, to impose entire burden of tax onthe owner or lessor, would be inequitable, more so when thetenancy law does not allow increase in rent beyond a particularlimit and the right of eviction of the landlord is restricted to thegrounds under the Tenancy Act. By the impugned provisions ofthe Act, therefore, the legislature has thought of apportioning thetax burden between owner or the lessor as one party and thetenant, sub-tenant or occupier as the other parties. The wholeamount of tax is recoverable from the lessor and may also berecovered from the tenant or sub-tenant through attachment ofthe rent. In case where the lessor or landlord has paid the wholetax including the portion of tax payable by the tenant or sub-tenant,the landlord has to be equipped with the power to get himselfreimbursed by recovery of the portion of tax paid by him on behalfof the tenant. Section 231 of the Act, therefore, creates a fictionthat the “tax” apportioned on the tenant would be treated as “rent”and would be recoverable as such. The word “rent” has not beendefined in the tenancy law and this Court has taken note of thislegal position in the case of Puspa Sen Gupta v. SusmaGhose [(1990) 2 SCC 651] which arose out of the provisions ofthe Tenancy Act applicable to West Bengal. Rent is a compendiousexpression which may include lease money with service chargesfor water, electricity and other taxes leviable on the tenantedpremises.”

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AThat thereafter, in paragraph 46, it is observed and held as under:“46. The provisions of the Tenancy Act merely enable the landlordto make a demand of arrears of rent and in default of the paymentof the same, sue the tenant for recovery of rent or eviction on theground of non-payment of rent despite demand. The tenant canBget protection against eviction on the ground of arrears of rentonly if he makes requisite deposit of the arrears in the manner laiddown in the provisions of the Tenancy Act. A provision tofictionally treat “tax” as “rent” is necessitated because in theabsence of such a fiction in Section 231 of the Act, the landlordwould be compelled to pay the whole amount of tax which isCrecoverable from him under the Act and would be left to an A

expensive and cumbersome remedy of filing a civil suit for recoveryof such tax paid on behalf of the tenant, sub-tenant or occupant.Such a fiction is required to be incorporated under Section 231 ofthe Act because a private party cannot recover tax. If a lessor isobliged to pay a portion of tax leviable on the tenant, the landlordcan recover the same not as “tax” but only as part of “rent”. Thefiction created by the legislation in Section 231 to treat “tax” as“rent” has to be taken to its logical conclusion. The Act underconsideration and the Tenancy Act, both are State legislations.No question arises of legislative incompetence. There does notappear any inter se conflict between the two Acts. Both have tobe read and applied harmoniously to achieve the legislative intentin the two enactments. The contention based on Section 231 ofthe Act, therefore, also does not commend to us and is rejected.”

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Thus, as observed and held by this Court in the case of CalcuttaFGujarati Education Society (supra), the amount of tax due and payableby the tenant under Section 230 of the Act 1980 r/w Section 5(8) of theAct 1997 can be recovered as arrears of rent (Section 231 of the Act1980) and for that purpose, namely, for the purpose of recovery the taxapportioned on the tenant would be treated as ‘rent’ and would beGrecoverable as such. The aforesaid judgment cannot be read holdingthat the tax apportioned on the tenant be treated as ‘part of the rent’, ascontended by Shri Rana Mukherjee, learned Senior Advocate appearingon behalf of the landlord. Merely because the obligation to pay half ofthe property tax and surcharge would be upon the tenant as per section230 of the Act 1980 and the tenant is obliged to pay his share of municipal H

tax as an occupier of the premises under Section 5(8) of the Act 1997and merely because for the purpose of recovery of the tax due from thetenant, such tax apportioned can be recovered as rent, such taxapportioned (half of the amount of the property tax and surcharge) cannotbecome part of the rent of the premises which is tenanted. For thatpurpose, the terms and conditions mentioned in the tenancy agreement/lease agreement are required to be considered. For example, if in thetenancy agreement if it is provided that the tenant shall pay ‘X’ amountwhich shall include the taxes, the tax component can be said to be ‘partof the rent’. However, if under the agreement and/or even under Section230 of the Act 1980 r/w Section 5(8) of the Act 1997, the tenant is liableto pay tax separately or half of the amount of tax now statutorily liable tobe paid, the same can be recovered as arrears of rent because such‘tax’ is to be treated as ‘rent’ for the purpose of recovery. However, thesame cannot be said to be ‘part of the rent’. Therefore, reliance placedupon the decision of this Court in the case of Calcutta GujaratiEducation Society (supra) by learned counsel appearing on behalf ofthe landlord is on a misreading of the said decision. As observedhereinabove, the said decision cannot be read to mean that the taxapportioned can be said to be part of the rent as sought to be contendedby Shri Rana Mukherjee, learned Senior Advocate appearing on behalfof the landlord.

9. Now so far as reliance being placed upon the subsequent decisionof this Court in the case of Popat and Kotecha Property (supra) isconcerned, at the outset, it is required to be noted that in the said decision,para 45 of the decision in the case of Calcutta Gujarati EducationSociety (supra) has been considered and not para 46, reproducedhereinabove. Even on facts, the said decision is not applicable. In thesaid decision, under the agreement the parties agreed that the rent wouldinclude all municipal taxes payable and that as and when such taxes areenhanced rent should be proportionately raised. In the present case,under the tenancy agreement, the rent payable would be Rs. 10,000/-per month which does not include the municipal taxes payable. The liabilityto pay the taxes under the agreement would be over and above theamount of rent, i.e., Rs. 10,000/- per month. Therefore, on facts, thedecision of this Court in the case of Popat and Kotecha Property(supra) is not applicable to the facts of the case on hand.

10. Now so far as reliance being placed upon Section 18 of theAct 1997 and the submission that under Section 18 of the Act 1997 the AB

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Arent shall be automatically increased by revision of 5% every three yearsand therefore by giving the increase by revision of 5% every three years,the rent payable would be more than rupees ten thousand per month isconcerned, the aforesaid contention has no substance. Section 18 of theAct 1997 shall be applicable in a case where the fair rent is determinedand fixed by the Controller under Section 17 of the Act 1997. That is notBthe case here. Therefore, Section 18 of the Act 1997 is not applicable atall to the facts and circumstances of the case.

11. In view of the above discussion and for the reasons statedabove and as the monthly rent due and payable would beRs. 10,000/- per month which cannot be said to be more than ten thousandCrupees as monthly rent, the High Court has rightly observed and heldthat the Act 1997 shall be applicable and therefore the civil suit filed byinvoking Section 106 of the TP Act is impliedly barred. Therefore, theHigh Court has rightly rejected the plaint in exercise of powers underOrder 7 Rule 11 CPC. No interference of this Court is called for.DAccordingly, the present appeals stand dismissed.However, in the facts and circumstances of the case, there shallbe no order as to costs.

EAnkit Gyan

Appeals dismissed.

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