M/S POPAT & KOTECHA PROPERTY & ORS. versus ASHIM KUMAR DEY on 9 August 2018

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SUPREME COURT REPORTS

[2018] 9 S.C.R.

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M/S POPAT & KOTECHA PROPERTY & ORS.

v.

ASHIM KUMAR DEY

(Civil Appeal No. 8149 of 2018)

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AUGUST 09, 2018

[RANJAN GOGOI, R. BANUMATHIAND NAVIN SINHA, JJ.]

West Bengal Premises Tenancy Act, 1997 – sub-s.8 of s.5(Incorporated vide Amendment Act No.14 of 2001) – Landlord filedCapplication under the Act of 1997 for eviction of the respondent-tenant on the ground that the tenant had defaulted in payment ofhis share of municipal tax as an occupier under the provisions ofthe Kolkata Municipal Corporation Act, 1980 – Applicationdismissed by the trial Court – Dismissal upheld by the High Court –DOn appeal, held: With amendment to the Act of 1997 withincorporation of sub-s.8 of s.5, the obligation to pay municipaltaxes as an occupier of the premises fell upon the tenant – Ininstant case, respondent-tenant nowhere denied in any specific termsthat the share of municipal taxes demanded was disproportionateor excessive or otherwise unauthorised in law – Furthermore,Edefault on the part of the respondent-tenant was clear and evident– The obligation to pay municipal taxes on the tenant being overand above the obligation to pay the rent by virtue of the provisionsof Section 5(8) of the 1997 Act, the High Court could not haveimposed on the landlord the requirement of obtaining a formalForder of enhancement of rent from the Rent Controller – Thus,application filed for eviction is allowed – Kolkata MunicipalCorporation Act, 1980.

Kolkata Municipal Corporation Act, 1980 – ss.230 and 231– Municipal tax assessment when premises is occupied by more thanGone tenant – Held: Assessment of a part of premises in occupationof different tenants for municipal tax is not contemplated under the1980 Act – In fact, from the provisions of s.230 of the Act, it is clearthat the person to be assessed to tax is the person “primarily liableto pay” i.e. the owner who is further vested with the right to recover H

the portion of the tax paid by him on behalf of the tenant – Thus,the municipal taxes would be a part of the “rent” payable by thetenant to the landlord – Besides, the Act provides that in event ofany default on the part of the owner to pay the tax the rent payableby the tenant(s) is liable to be attached.

Allowing the appeal, the Court

HELD: 1. In the present case, under the tenancyagreement, municipal taxes were included in the monthly rentpayable and any enhancement thereof was to result inenhancement of the monthly rent also. With the amendment madeto the West Bengal Premises Tenancy Act, 1997 and uponincorporation of sub-section (8) of Section 5, the obligation topay municipal taxes as an occupier of the premises fell upon thetenant. The relevant clauses in the rent agreement thereforestood superseded by the statutory obligation cast on the tenantby the amendment to the Act. [Para 8] [522-F-G]

2. In the present case following the enhancement ofmunicipal taxes by the Municipal Corporation in respect of thesuit property an apportionment of the share of each tenant wasmade by the landlord and a notice to pay was served on therespondent-tenant. In his reply, the respondent-tenant did notdispute his liability to pay his share of the municipal tax and hadsought for a reconsideration/review. [Para 9] [522-H; 523-A-B]

3. The argument advanced that the landlord cannotapportion the municipal taxes among different tenants if thepremises is to be occupied by more than one tenant and it is theMunicipal Corporation who is the authority to separately assessthe tax payable by each tenant does not find any support from theprovisions of the Kolkata Municipal Corporation Act, 1980. Whilethe provisions of the 1980 Act make it very clear that an occupieras distinguished from the owner i.e. ‘person primarily liable’ isentitled to pre-assessment notice and to participate in theassessment proceedings and also to question the same by way ofan appeal, etc. assessment of a part of the premises in occupationof a tenant or different parts of such premises in occupation of A

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Adifferent tenants is not contemplated under the 1980 Act. Rather,from the provisions of Section 230 of the 1980 Act, it is clear thatthe person to be assessed to tax is the person primarily liable topay i.e. the owner who is vested with the right to recover theportion of the tax paid by him on behalf of the tenant, if required,proportionately to the extent that the value of the area occupiedBbears to the value of the total area of the property. Under the1980 Act, in the event of any default on the part of the owner topay the tax the rent payable by the tenant(s) is liable to be attached.[Paras 10 and 12] 523-C-D; 524-H; 525-A-C]

C4. In the present case, default on the part of the respondent-tenant is clear and evident. The obligation to pay municipal taxeson the tenant being over and above the obligation to pay the rentby virtue of the provisions of Section 5(8) of the 1997 Act, theHigh Court could not have imposed on the landlord therequirement of obtaining a formal order of enhancement of rentDfrom the Rent Controller. [Para 13] [525-C-D]

Calcutta Gujarati Education Society and Anotherv.Calcutta Municipal Corpn. and Others(2003) 10 SCC 533 : [2003] 2 Suppl. SCR 915– referred to.E

Case Law Reference

[2003] 2 Suppl. SCR 915 referred toPara 11

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8149Fof 2018.

From the Judgment and Order dated 07.12.2016 of the High Courtat Calcutta in C.O. No.3942 of 2015.

Rana Mukherjee, Sr. Adv., Siddharth Gautam, Shekhar Kumar,GMs. Daisy Hannah, Ms. Kasturika Kaumudi, Ms. Ekta Pradhan,Ms. Sreoshi Chatterjee, Advs. for the Appellants.

Rauf Rahim, Adv. for the Respondent.

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The Judgment of the Court was delivered by RANJAN GOGOI, J. 1. Leave granted.

2. This appeal by special leave by the landlord is against theorder dated 7[th] December, 2016 passed by the Calcutta High Court in aproceeding 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 hisshare of municipal tax as an occupier under the provisions of the KolkataMunicipal Corporation Act, 1980 (hereinafter referred to as “the 1980Act”). The application filed by the landlord was dismissed by the learnedTrial Court which view has been upheld in appeal by the High Court.

3. The matter lies in a very short compass and the question arisingmay be formulated as hereunder:

“Whether after the amendment of the West Bengal premisesTenancy Act by Amendment Act No. 14 of 2001 with effect from10[th] July, 2001 [which had incorporated sub-section (8) to Section5] whether a tenant who defaults in payment of his/her share ofmunicipal tax as apportioned by the landlord would be in defaultof rent rendering him/her liable to eviction.”

4. The rent agreement governing the parties in the present casewas executed in the year 1991. Under the said agreement the partieshad agreed that the rent would include all municipal taxes payable andthat as and when such taxes are enhanced rent should be proportionatelyraised. However, with the amendment of the Act with effect from 10[th]July, 2001 and after incorporation of sub-section (8) of Section 5 theobligation to pay the municipal tax/taxes was specifically cast on thetenant in his/her capacity as an occupier. Sub-Section (8) of Section 5 isin the following terms:

“5. Obligations of tenant.-

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(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)

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Aor the West Bengal Municipal Act, 1993 (West Bengal Act XXIIof 1993).

5. In the present case, the property tax payable in respect of thesuit property was reassessed and enhanced. There were several tenantsin occupation of the suit property. The landlord apportioned the taxBbetween the tenants and issued a notice dated 7[th] February, 2003 uponthe respondent-tenant to pay his share of the municipal taxes. Therespondent-tenant by reply dated 29[th] March, 2003 to the said noticehad sought for a reconsideration/review of the matter on a “co-operativespirit for the sake of harmonious relation between tenant andlandlord.” As the respondent-tenant had not remitted the amount dueCas his share of the municipal tax, the landlord instituted the proceedingsfor eviction on the ground of default of payment of rent on the part ofthe respondent-tenant.

6. The learned Trial Court dismissed the claim of the landlord onthe ground that no documentary evidence with regard to the enhancementDof property tax was forthcoming and as the respondent-tenant had beendepositing the monthly rent payable with the Rent Controller, the tenantcannot be deemed to be the defaulter.

7. In appeal, the High Court upheld the order of the learned TrialCourt though on a different reasoning. The High Court held that even ifEthe municipal taxes are to be held to be part of the rent payable, there isno automatic enhancement of the rent byan unilateral notice on the partof the landlord under Section 20 of the 1997 Act and that suchenhancement has to be ordered by the Rent Controller. As the aforesaidrequirement was not met, the High Court dismissed the appeal filed bythe landlord.F

8. In the present case, under the tenancy agreement municipaltaxes were included in the monthly rent payable and any enhancementthereof was to result in enhancement of the monthly rent also. With theamendment made to the Act with effect from 10[th] July, 2001 and uponGincorporation of sub-section (8) of Section 5, the obligation to pay municipaltaxes as an occupier of the premises fell upon the tenant. The relevantclauses in the rent agreement therefore stood superseded by the statutoryobligation cast on the tenant by the amendment to the Act.

9. In the present case following the enhancement of municipaltaxes by the Municipal Corporation in respect of the suit property anH

apportionment of the share of each tenant was made by the landlord anda 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 hisshare of the municipal tax and had sought for a reconsideration/review.In the written statement apart from an evasive denial in the followingterms there was no other denial or dispute raised:

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

10. The respondent-tenant nowhere denied in any specific termsthat the share of municipal taxes demanded was disproportionate orexcessive or otherwise unauthorized in law. The argument advanced atthe bar that the landlord cannot apportion the municipal taxes amongdifferent tenants if the premises is to be occupied by more than onetenant and it is the Municipal Corporation who is the authority to separatelyassess the tax payable by each tenant does not find any support fromthe provisions of the 1980 Act.

11. This aspect of the matter came up for consideration beforethis Court in Calcutta Gujarati Education Society and another vs.Calcutta Municipal Corpn. and others1 and the views expressed bythis Court is found to be in paragraph 45 of the said report which isextracted below:

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

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SUPREME COURT REPORTS

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Aoccupant 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 onBthe 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 theCtax 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 alsobe recovered from the tenant or sub-tenant throughattachment of the rent. In case where the lessor or landlordhas paid the whole tax including the portion of tax payableD-by the tenant or subtenant, the landlord has to be equippedwith the power to get himself reimbursed by recovery ofthe portion of tax paid by him on behalf of the tenant. Section231 of the Act, therefore, creates a fiction that the “tax”apportioned on the tenant would be treated as “rent” andEwould be recoverable as such. The word “rent” has notbeen defined in the tenancy law and this Court has takennote of this legal position in the case of Puspa Sen Gupta v.Susma Ghose (1990) 2 SCC 651 which arose out of theprovisions of the Tenancy Act applicable to West Bengal.Rent is a compendious expression which may include leaseFmoney with service charges for water, electricity and other”taxes leviable on the tenanted premises.

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(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 itGwas held that municipal taxes would be a part of the “rent” payable bythe tenant to the landlord.

12. While the provisions of the 1980 Act make it very clear thatan occupier as distinguished from the owner i.e. ‘person primarily liable’is entitled to pre-assessment notice and to participate in the assessment H

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 differentparts of such premises in occupation of different tenants is notcontemplated under the 1980 Act. Rather, from the provisions of Section230 of the 1980 Act, it is clear that the person to be assessed to tax is theperson primarily liable to pay i.e. the owner who is vested with the rightto recover the portion of the tax paid by him on behalf of the tenant, ifrequired, proportionately to the extent that the value of the area occupiedbears 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 therent 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 thetenant being over and above the obligation to pay the rent by virtue ofthe provisions of Section 5(8) of the 1997 Act, the High Court could nothave imposed on the landlord the requirement of obtaining a formal orderof enhancement of rent from the Rent Controller.

14. For the aforesaid reasons, we allow this appeal and set asidethe order of the High Court affirming the order of the learned TrialCourt. The application filed by the landlord for eviction of the respondent-tenant is allowed.

Ankit Gyan

Appeal allowed.

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