2018 (8) TMI 831 - SC - Indian Laws

Eviction of the respondent-tenant - eviction 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 - West Bengal Premises Tenancy Act, 1997. 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? Held that - In the present case, under the tenancy agreement municipal taxes were included in the monthly rent payable and any enhancement thereof 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 The relevant clauses in the rent agreement therefore stood superseded by the statutory obligation cast on the tenant by the amendment to the Act - The respondent-tenant nowhere denied in any specific terms that the share of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. 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 - 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 imposed on the landlord the requirement of obtaining a formal order of enhancement of rent from the Rent Controller. Appeal allowed - application filed by the landlord for eviction of the respondent-tenant is allowed.

Summary

Issues:
1. Interpretation of West Bengal Premises Tenancy Act, 1997 regarding default in payment of municipal tax by a tenant leading to eviction.

Analysis:
The judgment pertains to an appeal by a landlord against the Calcutta High Court's order in a tenancy eviction case under the West Bengal Premises Tenancy Act, 1997. The central issue was whether a tenant defaulting in payment of municipal tax, as per the Kolkata Municipal Corporation Act, 1980, could be considered in default of rent, warranting eviction. The amendment to the Act in 2001 introduced sub-section (8) to Section 5, shifting the obligation of paying municipal tax to the tenant as an occupier. The case involved a landlord seeking eviction due to a tenant's failure to pay the apportioned municipal tax share after property tax reassessment.

The trial court initially dismissed the landlord's claim citing lack of documentary evidence on tax enhancement and the tenant's regular rent payments to the Rent Controller. The High Court upheld the decision, emphasizing that unilateral rent enhancement required Rent Controller approval. However, the Supreme Court analyzed the case differently. It highlighted that the amended Act imposed the obligation of paying municipal taxes on the tenant, superseding any rent agreement clauses. The tenant's failure to dispute the tax share's legitimacy or excessiveness further weakened their defense.

The Supreme Court referenced previous case law to support its stance on tax apportionment between landlords and tenants, emphasizing the legislative intent to distribute tax burdens fairly. The judgment clarified that the owner's primary liability for property tax did not absolve tenants from their share, treated as part of rent. The Court differentiated between owners and occupiers, noting the owner's right to recover tenant tax portions. It emphasized that the tenant's obligation to pay municipal tax was distinct from rent payment, justifying eviction for default in tax payment.

Ultimately, the Supreme Court allowed the landlord's appeal, overturning the High Court's decision and granting eviction of the tenant. The judgment reinforced the statutory obligation on tenants to pay municipal taxes separately from rent, clarifying that failure to do so constituted grounds for eviction, irrespective of Rent Controller involvement in rent enhancement procedures.