Eih Limited vs Nadiavirji

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 between the appellant (landlord) and the respondent (tenant) – Under the Tenancy Agreement, the rent was fixed at Rs.10,000/- per month – Further, the liability to pay the taxes including surcharge and water tax/fees was also upon the tenant – The appellant terminated the tenancy by issuing notice u/s. 106 of TPA – Upon expiry of the notice period, the appellant filed a eviction suit – According to the appellant as the respondent is liable to pay taxes in view of the 1997 Act, the total rent exceed the ceiling limits of 10,000/- – Hence, the Act 1997 is not applicable and therefore the Landlord terminated the tenancy by issuing notice under TP Act – The respondent filed application for rejection of plaint, inter-alia, on the ground that the suit was barred by reasons of the provisions of the Act 1997 being applicable because the rent of the premises was Rs.10,000/- and the tenancy being for commercial purpose is not exempted u/s. 3(f)(i) of the Act, 1997 – Single Judge of the High Court allowed the said application and rejected the plaint – Division Bench of the High Court dismissed the appeal – On appeal, held: As per the tenancy agreement, the rent payable would be Rs. 10,000/- per month and the liability to pay municipal taxes is separate and distinct on the tenant – Merely because the obligation to pay half of the property tax and surcharge would be upon the tenant as per s. 230 of the Kolkata Municipal Corporation Act, 1980 and the tenant is obliged to pay his share of municipal 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 tax due from the tenant, such tax apportioned can be recovered as rent, such tax cannot become part of the rent of the premises which is tenanted – The terms and conditions mentioned in the tenancy agreement are required to be considered – The monthly rent due and payable was Rs. 10,000/- per month, the High Court rightly observed and held that the Act, 1997 shall be applicable and therefore the civil suit filed by invoking s.106 of the TP Act is impliedly barred – The plaint was rightly rejected by the High Court – Kolkata Municipal Corporation Act, 1980 – ss. 230, 231. Dismissing the appeals, this Court

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

2. As per Section 230 of the Act 1980, a person primarily liable to pay the property tax (lessor) in respect of any land or building may recover half of the amount of the property tax from the occupier (lessee/tenant) of the property. Section 231 of the Act 1980 provides that the person primarily liable to pay any property tax is entitled to recover the consolidated rate including surcharge from the occupier of the property and for that purpose the person primarily liable shall have the same rights 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. Merely because the obligation to pay half of the property tax and surcharge would be upon the tenant as per section 230 of the Act 1980 and the tenant is obliged to pay his share of municipal tax as an occupier of the premises under Section 5(8) of the Act 1997 and merely because for the purpose of recovery of the tax due from the tenant, such tax apportioned can be recovered as rent, such tax apportioned (half of the amount of the property tax and surcharge) cannot become part of the rent of the premises which is tenanted. For that purpose, the terms and conditions mentioned in the tenancy agreement/lease agreement are required to be considered. For example, if in the tenancy agreement if it is provided that the tenant shall pay ‘X’ amount which shall include the taxes, the tax component can be said to be ‘part of the rent’. However, if under the agreement and/or even under Section 230 of the Act 1980 r/w Section 5(8) of the Act 1997, the tenant is liable to pay tax separately or half of the amount of tax now statutorily liable to be 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, the same cannot be said to be ‘part of the rent’. [Paras 7 & 8][1022-D-F; 1025-AD]

3. Now 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, Section 18 of the Act 1997 is not applicable at all to the facts and circumstances of the case. In view of the above discussion and for the reasons stated above and as the monthly rent due and payable would be Rs. 10,000/- per month which cannot be said to be more than ten thousand rupees as monthly rent, the High Court has rightly observed and held that the Act 1997 shall be applicable and therefore the civil suit filed by invoking Section 106 of the TP Act is impliedly barred. Therefore, the High Court has rightly rejected the plaint in exercise of powers under Order 7 Rule 11 CPC. No interference of this Court is called for. Accordingly, the present appeals stand dismissed. [Paras 10 & 11][1026-A-D]

Popat and Kotecha Property v. Ashim Kumar Dey (2018)

9 SCC 149 : [2018] 9 SCR 518 – held inapplicable. Calcutta Gujarati Education Society v. Calcutta Municipal Corporation (2003) 10 SCC 533 : [2003] 2 Suppl. SCR 915; Abdul Kader v. G.D. Govindaraj

(Dead) By Lrs. (2002) 5 SCC 51 : [2002] 3

SCR 460; Karnani Properties Limited v. Augustine (Miss) AIR 1957 SC 309 : [1957] 0 SCR 20 – referred to.