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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).8149 OF 2018 [ARISING OUT OF SLP(C) NO.13912 OF 2017]

M/S POPAT & KOTECHA PROPERTY & ORS. ..APPELLANT(S)

VERSUS

ASHIM KUMAR DEY  .RESPONDENT(S)

J U D G M E N T  

RANJAN GOGOI, J.

1. Leave granted.

2. This  appeal  by  special  leave  by  the

landlord is against the order dated 7th December,

2016  passed  by  the  Calcutta  High  Court  in  a

proceeding 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

his share of municipal tax as an occupier under

the  provisions  of  the  Kolkata  Municipal

Corporation Act, 1980 (hereinafter referred to as

“the 1980 Act”).  The application filed by the

landlord was dismissed by the learned Trial Court

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which view has been upheld in appeal by the High

Court.  

3. The matter lies in a very short compass and

the  question  arising  may  be  formulated  as

hereunder:  

“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.”

4. The rent agreement governing the parties in

the present case was executed in the year 1991.

Under the said agreement the parties had agreed

that the rent would include all municipal taxes

payable  and  that  as  and  when  such  taxes  are

enhanced  rent  should  be  proportionately  raised.

However, with the amendment of the Act with effect

from 10th July, 2001 and after incorporation of

sub-section (8) of Section 5 the obligation to pay

the municipal tax/taxes was specifically cast on

the  tenant  in  his/her  capacity  as  an  occupier.

Sub-Section (8) of Section 5 is in the following

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terms:

“5. Obligations of tenant.- *** *** *** *** *** ***

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

5. In the present case, the property tax

payable  in  respect  of  the  suit  property  was

reassessed  and  enhanced.  There  were  several

tenants in occupation of the suit property.  The

landlord apportioned the tax between the tenants

and issued a notice dated 7th February, 2003 upon

the  respondent-tenant  to  pay  his  share  of  the

municipal taxes.  The respondent-tenant by reply

dated  29th March,  2003  to  the  said  notice  had

sought for a reconsideration/review of the matter

on  a  “co-operative  spirit  for  the  sake  of

harmonious  relation between tenant and landlord.”

As  the  respondent-tenant  had  not  remitted  the

amount due as his share of the municipal tax, the

landlord instituted the proceedings for eviction

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on the ground of default of payment of rent on the

part of the respondent-tenant.

6. The  learned  Trial  Court  dismissed  the

claim  of  the  landlord  on  the  ground  that  no

documentary  evidence  with  regard  to  the

enhancement of property tax was forthcoming and as

the  respondent-tenant  had  been  depositing  the

monthly rent payable with the Rent Controller, the

tenant cannot be deemed to be the defaulter.  

7. In  appeal,  the  High  Court  upheld  the

order  of  the  learned  Trial  Court  though  on  a

different  reasoning.   The  High  Court  held  that

even if the municipal taxes are to be held to be

part of the rent payable, there is no automatic

enhancement of the rent by an unilateral notice on

the part of the landlord under Section 20 of the

1997  Act  and  that  such  enhancement  has  to  be

ordered by the Rent Controller. As the aforesaid

requirement was not met, the High Court dismissed

the appeal filed by the landlord.   

8. In the present case, under the tenancy

agreement  municipal  taxes  were  included  in  the

monthly rent payable and any enhancement thereof

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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.

9. In  the  present  case  following  the

enhancement of municipal taxes by the Municipal

Corporation  in  respect  of  the  suit  property  an

apportionment of the share of each tenant was made

by the landlord and a 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 his share of the municipal tax

and had sought for a reconsideration/review.  In

the written statement apart from an evasive denial

in the following terms there was no other denial

or dispute raised:

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

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10. 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.

11. This aspect of the matter came up for

consideration  before  this  Court  in  Calcutta

Gujarati  Education  Society  and  another  vs.

Calcutta  Municipal  Corpn.  and  others  1 and  the

views expressed by this Court is found to be in

paragraph 45 of the said report which is extracted

below:

“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

1. (2003) 10 SCC 533

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the course of assessment and recovery of portion of tax from the tenants, sub-tenants  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”  required  to satisfy  the  demand  towards  tax  with right to recover it from the tenant, sub-tenant  or  the  occupant.  If  the landlord or the owner is obliged to make payment of whole amount of tax inclusive of his own share and share of  the  tenant,  sub-tenant  or  the occupant, the owner or lessor has to be conferred with the power to recover the  portion  of  tax  payable  by  the tenant, sub-tenant or occupant who is actually  enjoying  the  property  and putting it to use for commercial or non-residential  purpose.  The legislature has taken note of the fact that a large number of properties in the metropolitan city of Calcutta are in occupation of tenants, sub-tenants or occupants on a comparatively small amount of rent or lease money. In such a situation, to impose entire burden of tax on the owner or lessor, would be  inequitable,  more  so  when  the tenancy law does not allow increase in rent beyond a particular limit and the right of eviction of the landlord is restricted  to  the  grounds  under  the Tenancy  Act.  By  the  impugned provisions of the Act, therefore, the legislature  has  thought  of apportioning  the  tax  burden  between owner or the lessor as one party and the tenant, sub-tenant or occupier as the other parties. The whole amount of tax is recoverable from the lessor and may also be recovered from the tenant

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or  sub-tenant  through  attachment  of the rent. In case where the lessor or landlord  has  paid  the  whole  tax including the portion of tax payable by  the  tenant  or  sub-tenant,  the landlord has to be equipped with the power  to  get  himself  reimbursed  by recovery of the portion of tax paid by him on behalf of the tenant. Section 231 of the Act, therefore, creates a fiction that the “tax” apportioned on the tenant would be treated as “rent” and would be recoverable as such. The word “rent” has not been defined in the  tenancy  law  and  this  Court  has taken note of this legal position in the case of   Puspa Sen Gupta   v.   Susma Ghose (1990) 2 SCC 651   which arose out of the provisions of the Tenancy Act applicable to West Bengal. Rent is a compendious  expression  which  may include  lease  money  with  service charges  for  water,  electricity  and other taxes leviable on the tenanted premises.”    (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 it was

held that municipal taxes would be a part of the

“rent” payable by the tenant to the landlord.

12. While  the  provisions  of  the  1980  Act

make  it  very  clear  that  an  occupier  as

distinguished  from  the  owner  i.e.  ‘person

primarily  liable’  is  entitled  to  pre-assessment

notice  and  to  participate  in  the  assessment

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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 different

parts of such premises in occupation of different

tenants is not contemplated under the 1980 Act.

Rather, 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.  

13. 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

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imposed  on  the  landlord  the  requirement  of

obtaining a formal order of enhancement of rent

from the Rent Controller.

14. For the aforesaid reasons, we allow this

appeal and set aside the order of the High Court

affirming the order of the learned Trial Court.

The application filed by the landlord for eviction

of the respondent-tenant is allowed.

...................,J. (RANJAN GOGOI)

...................,J.    (R. BANUMATHI)

...................,J.    (NAVIN SINHA)

NEW DELHI AUGUST 09, 2018