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TMI Blog2022 (8) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... an obligation on the tenant to pay his share of municipal tax as an occupier of the premises in accordance with the provisions of the Act 1980. As observed and held by this Court in the case of Calcutta Gujarati Education Society [ 2003 (8) TMI 476 - SUPREME COURT] , the amount of tax due and payable by the tenant under Section 230 of the Act 1980 r/w Section 5(8) of the Act 1997 can be recovered as arrears of rent (Section 231 of the Act 1980) and for that purpose, namely, for the purpose of recovery the tax apportioned on the tenant would be treated as rent and would be recoverable as such. So far as reliance being placed upon Section 18 of the Act 1997 and the submission that under Section 18 of the Act 1997 the rent shall be automatically increased by revision of 5% every three years and therefore by giving the increase by revision of 5% every three years, the rent payable would be more than rupees ten thousand per month is concerned, the aforesaid contention has no substance. Section 18 of the Act 1997 shall be applicable in a case where the fair rent is determined and fixed by the Controller under Section 17 of the Act 1997. That is not the case here. Therefore, Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expiry of the notice period, the appellant original plaintiff landlord filed a suit before the learned Single Judge (Original Side) of the Calcutta High Court being Civil Suit No. 354/2012, seeking eviction of the respondent tenant from the tenanted premises. According to the appellant original plaintiff, as the liability to pay the tax payable to the Calcutta Municipal Corporation was upon the respondent tenant and in view of Section 5(8) of the Act 1997 r/w Section 3(f), the total rent payable by the tenant inclusive of monthly rent and taxes would exceed the ceiling limit of Rs.10,000/- per month specified in Section 3(f)(i) of the Act 1997 for commercial premises, hence the Act 1997 is not applicable and therefore the original plaintiff landlord terminated the tenancy by issuing notice under Section 106 of the TP Act. The original plaintiff also prayed for the summary judgment. 2.2 The original defendant tenant after appearing in the suit filed an application before the learned Single Judge under Order 7 Rule 11 CPC for rejection of the plaint, inter alia, on the ground that the suit was barred by reasons of the provisions of the Act 1997 being applicable bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appearing on behalf of the original plaintiff landlord that both, the learned Single Judge as well as the Division Bench of the High Court have committed a serious error in observing and holding that the Act 1997 shall be applicable. 3.2 It is vehemently submitted that as per Section 5(8) of the Act 1997, r/w Section 230 231 of the Act 1980 and as observed and held by this Court in the case of Calcutta Gujarati Education Society (supra), the expression rent includes municipal tax payable to the Corporation and in the present case the liability to pay the municipal tax under the tenancy agreement is upon the tenant and even otherwise as per Section 230 of the Act 1980, fifty per cent of the tax liability would be upon the tenant and the same is statutorily to be paid and the same can be recoverable as if it is a rent. That even under Section 5(8) of the Act 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 rent includes the municipal tax element. It is submitted that therefore as the tenant is required to pay more than ten thousand (rupees ten thousand towards rent plus the municipal ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon 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 that as observed and held by this Court, after considering the decision of this Court in the case of Karnani Properties Limited v. Augustine (Miss), AIR 1957 SC 309 that in the event of taxes having been agreed to be paid by the tenant, the same forms part of the rent. 3.6 Making the above submissions and relying upon the aforesaid decisions, it is prayed to allow the present appeal and quash and set aside the orders passed by the learned Single Judge and Division Bench of the High Court taking the view that the Act 1997 shall be applicable. 4. While opposing the present appeal, Shri Siddharth Dave, learned Senior Advocate appearing on behalf of the respondent tenant has vehemently submitted that in the present case as per the tenancy agreement, the rent due and payable by the tenant would be Rs.10,000/- per month. It is submitted that, may be, as per Section 230 of the Act 1980 and/or even as per Section 5(8) of the Act 1997, fifty per cent of the tax liability would be upon the tenant and on non-payment of the same the landlord can recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 1997, by which, the liability to pay the municipal tax payable to the Corporation (to the extent of 50% of the tax liability) now would be on the tenant and therefore the same is held to be recoverable as arrears of rent. It is submitted that being a private person, it was not possible for the landlord to file a suit for recovery of the tax from the tenant (prior to amending Section 230 of the Act 1980) and in many cases it was observed that the tax liability would be more than the rent to be paid by the tenant and therefore Section 230 of the Act 1980 came to be amended under which now 50% of the tax liability would be upon the tenant and as there was no machinery for recovery available to the landlord, 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 and as observed and held by this Court in Calcutta Gujarati Education Society (supra) the same is recoverable as arrears of rent from the tenant. It is submitted that under Section 231 of the Act 1980 r/w Section 5(8) of the Act 1997, it is only the mode of recovery of tax due and payable by the tenant as arrears of rent and by no stretch of imaginat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society (supra) the arrears of municipal tax can be recovered as arrears of rent and therefore the 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 Gujarati Education Society (supra) and the subsequent decision in the case of Popat and Kotecha Property (supra). 7. While considering the issue on hand, namely, whether the share of the municipal tax payable by the tenant in accordance with the provisions of Sections 230 231 of the Act 1980 r/w Section 5(8) of the Act 1997 can be said to be a part of the rent for the purpose of Section 3(f) of the Act 1997, Sections 230 231 of the Act 1980 and Section 5(8) of the Act 1997 are required to be referred to, which are as under: Section 230 : Apportionment of property tax by the person primarily liable to pay. Save as otherwise provided in this Act, the person primarily liable to pay the property tax in respect of any land or building may recover (a) If there be but one occupier of the land or building, from such occupier half of the rate so paid, and may, if there be more than one occupier, recover from each occupier half of such sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and remedies as if such sum were rent payable to him by the person from whom he is entitled to recover such sum. Section 5(8) of the Act 1997 casts an obligation on the tenant to pay his share of municipal tax as an occupier of the premises in accordance with the provisions of the Act 1980. 8. Sections 230 231 of the Act 1980 fell for consideration before this Court in the case of Calcutta Gujarati Education Society (supra). Before this Court, the validity of the aforesaid two provisions of the Act 1980 were under challenge. This Court had an occasion to consider the object and purpose of Section 231 of the Act 1980 in para 45, which reads as under: 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 the course of assessment and recovery of portion of tax from the tenants, subtenants 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 requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of the same, sue the tenant for recovery of rent or eviction on the ground of non-payment of rent despite demand. The tenant can get protection against eviction on the ground of arrears of rent only if he makes requisite deposit of the arrears in the manner laid down in the provisions of the Tenancy Act. A provision to fictionally treat tax as rent is necessitated because in the absence of such a fiction in Section 231 of the Act, the landlord would be compelled to pay the whole amount of tax which is recoverable from him under the Act and would be left to an expensive and cumbersome remedy of filing a civil suit for recovery of such tax paid on behalf of the tenant, subtenant or occupant. Such a fiction is required to be incorporated under Section 231 of the Act because a private party cannot recover tax. If a lessor is obliged to pay a portion of tax leviable on the tenant, the landlord can recover the same not as tax but only as part of rent . The fiction created by the legislation in Section 231 to treat tax as rent has to be taken to its logical conclusion. The Act under consideration and the Tenancy Act, both are State legislations. No question arises of legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. As observed hereinabove, the said decision cannot be read to mean that the tax apportioned can be said to be part of the rent as sought to be contended by Shri Rana Mukherjee, learned Senior Advocate appearing on behalf of the landlord. 9. Now so far as reliance being placed upon the subsequent decision of this Court in the case of Popat and Kotecha Property (supra) is concerned, 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 Education Society (supra) has been considered and not para 46, reproduced hereinabove. Even on facts, the said decision is not applicable. In the said decision, under the agreement the parties agreed that the rent would include all municipal taxes payable and that as and when such taxes are enhanced 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 liability to pay the taxes under the agreement would be over and above the amount of rent, i.e., Rs. 10,000/- per month. Therefore, on facts, the decision of this Court in the case of Popat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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