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            REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURSIDCITON

CIVIL APPEAL NO.20913 OF 2017 (Arising out of S.L.P. (Civil) No.17117 of 2016)

ATMA RAM PROPERTIES PVT. LTD. … APPELLANT  

VERSUS

THE ORIENTAL INSURANCE CO. LTD. …RESPONDENT

J U D G M E N T

S.ABDUL NAZEER, J.

1. Leave granted.

2. This  appeal  involves  an  important  question  of  law  as  to

whether property tax recoverable from the tenant under Section

67(3)  of  the New Delhi  Municipal  Council  Act,  1994 (for  short

‘NDMC Act’)  as  arrears  of  rent  by  the  landlord/owner  can  be

considered  to  be  forming  part  of  the  rent  for  the  purpose  of

seeking  eviction  or  ejectment  of  such  tenant  who  defaults  in

payment  of  such  recoverable  tax  as  rent  and  when  the  rent

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including  recoverable  tax  in  respect  of  the  tenanted  premises

exceeds Rs.3500/- per month, thereby losing protection of the

Delhi Rent Control Act, 1958 (for short ‘Rent Act’).  

3. The appellant/plaintiff is the owner/landlord of the building

known  as  Atma  Ram  Mansion  (previously  known  as  Scindia

House),  Connaught  Circus,  New  Delhi-110001  by  virtue  of  a

registered  sale-deed  dated  31.5.1980  executed  by  previous

owners in favour of the plaintiff. The respondent/defendant has

been a tenant in respect of a portion of the aforesaid property.

The rent of tenanted premises prior to termination of tenancy was

Rs.1438/- per month exclusive of electricity and water charges.

The defendant has been paying service tax of Rs.148/- on the

said  amount  of  Rs.1438/-  and  thus  the  last  paid  rent  was

Rs.1586/- per month.

4. Pursuant  to  the  amendment  of  the  New  Delhi  Municipal

Council  (Determination  of  Annual  Rent)  Byelaws,  2009,  (for

brevity  ‘the  Byelaws  2009’)  the  house  tax  on  the  properties

situated in the New Delhi  Municipal  Council  (for  short ‘NDMC’)

area  was  assessable  on  the  basis  of  Unit  Area  System.  The

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tenanted premises in occupation of the defendant fell within the

jurisdiction of NDMC. The house tax payable on the said property

in accordance with the Unit Area System comes to Rs.9,64,710/-

per  annum,  i.e.  Rs.80,392.50  per  month.  According  to  the

plaintiff, the defendant was liable to pay the said amount. The

plaintiff  issued  a  notice  dated  6.7.2009  calling  upon  the

defendant  to  pay  the  entire  house  tax  or  pay  its  monthly

installment. However, the defendant neither replied to the same

nor deposited/paid house tax to the plaintiff.  The plaintiff issued

a further notice dated 8.12.2009 calling upon the defendant to

pay the house tax. The defendant did not come forward to make

payment of the house tax.  In order to safeguard its property and

to avoid any penal action, the plaintiff deposited the total house

tax of Rs.2,94,23,237/- on the basis of  self-assessment of  the

property tax with NDMC. After  payment of  the house tax,  the

plaintiff  again  sent  a  notice  dated  7.4.2010  calling  upon  the

defendant to pay the said amount of tax. The notice was returned

with the report “left without address”.

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5. According to the plaintiff, the tax paid on the suit property

was far more than the initial rent, the amount of property tax

levied  by  NDMC  and  the  initial  rent  became  recoverable  as

arrears of rent and the suit property having fetched rent above

Rs.3500/- per month has ceased the protection of the Rent Act.

As  such  the  plaintiff  vide  legal  notice  dated  16.6.2010,

terminated the tenancy of the defendant without prejudice to its

legal rights. The defendant sent a reply dated 23.7.2010 denying

its liability to pay the rent. Therefore, plaintiff filed the aforesaid

suit  for  a  decree for  possession of  the tenanted premises,  for

damages/mesne  profits  of  Rs.6,24,600/-  per  month  w.e.f.

1.5.2011 till 31.5.2011 and for directing an enquiry under Order

XX Rule 12 of the Code of Civil Procedure, 1908 (for short ‘CPC’)

for assessment of future damages/mesne profits till the delivery

of vacant possession of the tenanted premises.

6. The defendant filed the written statement denying its liability

to pay the enhanced rent.  It was contended that the plaintiff has

no authority or power to increase the rent on its own.  It was

further contended that the tenanted premises is governed by the

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Rent Act and that the defendant is a protected tenant.  The NDMC

byelaws cannot govern the relationship of landlord and tenant by

by-passing  the  provisions  of  the  Rent  Act.  It  was  further

contended that  the house tax cannot be treated as arrears  of

rent, which takes away the premises from the ambit of the Rent

Act. It was denied that the premises are governed by the Transfer

of Property Act. It was contended that Section 67 of the NDMC

Act speaks of apportionment of liability of tax when the premises

are let out and sub-let.  It is only the right to recover the house

tax for which the landlord is entitled to. He cannot go for eviction

of the tenant on any ground which is not specified under the Rent

Act. Therefore, the suit for possession filed by the plaintiff in a

court other than the court  of  Rent Controller  is  barred by the

provisions of Section 50 of the Rent Act.  

7. The plaintiff filed an application under Order XII Rule 6 read

with Section 151 of the CPC for passing a decree for possession

of the tenanted premises for the reasons mentioned therein. The

defendant opposed the application by filing objections.  

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8. The trial  Court passed an order dated 12.8.2013 granting

decree of possession of the tenanted premises in favour of the

plaintiff. The High Court by the order dated 30.5.2016 has set

aside the order of the trial Court and has remanded the matter to

the trial Court. The appellant has called in question the legality

and correctness of the said order in this appeal.

9. Shri  Dushyant Dave,  learned senior counsel  appearing for

the appellant/plaintiff, submits that after coming into force of the

Byelaws  2009,  the  property  tax  in  the NDMC area  was  to  be

assessed on the basis of  unit  area system instead of previous

basis  of  property  tax  on  actual  rent.  As  a  result,  the  annual

property  tax  payable for  the area occupied by the respondent

worked out at Rs.9,64,710/- p.a. i.e Rs.80,392.50/- per month

when divided over twelve months period. The respondent failed to

pay  the  house  tax  despite  repeated  request  of  the  appellant;

therefore the appellant was left with no alternative but to deposit

entire  arrears  of  tax.  The  appellant  issued  a  notice  dated

16.06.2010  terminating  the  tenancy  on  the  failure  of  the

respondent to pay the said amount of rent and instituted the suit

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under  the  provisions  of  the  Transfer  of  Property  Act.  It  is

contended that the rate of rent per month was Rs.1438/- and

after adding the tax, it exceeded Rs.3500/- per month. Therefore,

the tenant lost protection of the Rent Act. It is argued that the

full  Bench  of  the  Delhi  High  Court  in  Ganga  Ram  v. Mohd.

Usman reported in ILR (1978) 1 Delhi page 139, has laid down

that the amount of tax on building or land becomes part of the

rent. Section 121(1) of the Delhi Municipal Corporation Act, 1957

(for short ‘the Corporation Act’) enables the landlord to recover

from the tenant in excess of the amount of house tax which has

been levied on the building and which is in excess of the amount

which  would  be  leviable  on  the  amount  of  contracted  rent

received from the tenant. The Full Bench held that the landlord is

entitled  to  recover, under  Section  121(1)  of  the  said  Act,  the

enhanced amount of house tax from the tenant notwithstanding

the contract of tenancy and the provisions of Section 7(2) and

Section 4 of the Rent Act.  Sub-sections (1) and (3) of Section

121 of the Corporation Act is in pari materia with sub-sections (1)

and (3) of Section 67 of the NDMC Act.  For the reasons set out in

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the judgment of the Full Bench in Ganga Ram (supra), the High

Court ought to have dismissed the appeals.

10. It is further argued that Section 7(2) of the Rent Act could

not be the basis for denying the benefit of Section 67(3) of the

NDMC Act.  The tax component becomes a part of the rent. If the

tax component is added to the monthly rent, the total rent of the

premises exceeds Rs.3,500/-. It is submitted that the property

tax has to be fictionally treated as rent under Section 67(1) of the

NDMC Act  because  in  the  absence  of  the  same;  the  landlord

would be compelled to pay the whole  amount of  tax which is

recoverable  from him and  would  be  left  to  an  expensive  and

cumbersome remedy of filing a civil suit for recovery of such tax.

It  is  submitted that  the liability to  pay excess  property tax is

solely  that  of  tenant and the landlord has been provided with

‘rights  and  remedies’  for  recovery  of  such  amounts  as  rents.

Therefore, the High Court was not justified in holding that the

property tax will  not constitute rent to enable the appellant to

seek  ejectment/possession  of  the  suit  property.  In  this

connection,  he  has  relied  on  the  decisions  of  this  Court  in

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Karnani  Properties  Ltd.  v. Augustine, (1957)  SCR  20,

Bombay  Municipal  Corporation  v. Life  Insurance

Corporation, Bombay (1970) 1 SCC 791, Raju Kakara Shetty

v. Ramesh Prataprao Shirole, (1991) 1 SCC 570, D.C. Bhatia

v. Union of India, (1995) 1 SCC 104 and  Calcutta Gujarati

Education Society  v. Calcutta Municipal Corpn., (2003) 10

SCC 533.

11. Shri Vikas Singh, learned senior counsel appearing for the

respondent submits that the contractual rent of the suit property

was Rs.1,586/- per month. The Rent Act is a special enactment,

and  has  a  non-obstante clause  and  the  NDMC  Act  does  not

contain  a  non-obstante clause.  Section  411  of  the  NDMC  Act

provides that other laws not to be disregarded. The primacy of

the  statue  would  have  to  be  determined  on  the  basis  of  the

intention of the legislature. The NDMC Act is a general enactment

and the special enactment prevails over the general enactment. It

is  pointed  out  that  Section  67(3)  of  NDMC  Act  permits  the

landlord to recover rent.  However, for non-payment of the rent

which  includes  tax  component,  the  landlord  cannot  sue  for

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eviction/ejectment of the tenant. Alternatively, it is argued that

even if the NDMC Act prevailing over the Rent Act, still this Court

has to harmoniously construe the provisions so as to ensure that

latter enactment does not violate the Rent Act. Section 67(3) of

the NDMC Act merely gives a right to recover the rent and even if

the latter enactment was to override the earlier enactment in so

far as obviating the effect of Section 7(2) of the Rent Act, still the

tax could not be added as a rent for the purpose of determining

as to whether the tenant will lose the protection under the Rent

Act  by  adding  the  said  rent  to  the  contractual  rent  so  as  to

consider it above Rs.3,500/- per month.  

12. The  issue  which  arises  for  consideration  in  the  present

matter is regarding the interplay of Section 67(3) of the NDMC

Act vis-à-vis Section 7(2) of the Rent Act.  Under Section 67(3)

the landlord has been given the right to recover the house tax

from the tenant as if the same were rent whereas under Section

7(2) of the Rent Act, there is a specific bar to recover any tax as

rent from the tenant.                            

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13. Having regard the contentions urged, let us first consider as

to whether in Ganga Ram (supra) Delhi High Court has taken a

view that the tax recoverable under the Corporation Act can be

made a part of the rent for the purpose of eviction/ejectment of a

tenant. In Ganga Ram (supra) the tenant had sub-let a portion

of  the  property  and  was  receiving  rents  from the  sub-tenant.

After taking into consideration the rents received by the tenant

from the sub-tenant and the rent payable by him to the landlord,

the corporation determined the rateable value on the basis that

the premises was fetching higher rent than that of the rent paid

by the tenant to the landlord.  It was the case of the landlord that

he was entitled, under Section 121(1) of the Corporation Act, to

recover from the tenant the difference between the amount of

property tax levied on the property and the amount of tax which

would be leviable upon the premises if the tax was calculated only

on the amount of rent paid by the tenant to the landlord without

taking into consideration the rent received by the tenant from the

sub-tenant. Taking into consideration this plea, the Court framed

second question for determination as under:

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“(2)  If so, whether the landlord is entitled to recover under  section  121  of  the  Corporation  Act  the enhanced  amount  of  house  tax  from  the  tenant notwithstanding  the  contract  of  tenancy  and  the provisions of sub-section (2) of Section 7 and 4 of the Delhi Rent Control Act?”

 14. It was held that the bar created by the provisions in the

Rent Control Act pertains to “normal tax on a building” occupied

by tenant.  Bar containing in Section 7(2) in the Rent Act pertains

to normal tax on a building occupied by a tenant while Section

121(1)  of  the  Corporation  Act  deals  with  the  particular

contingency  where  the  property  tax  levied  for  the  tenanted

premises if more than the amount which would have been levied,

had the assessment been made on the basis of the rent payable

by the tenant to  the landlord.  The Court held that landlord is

entitled to recover, under Section 121 of the Corporation Act, the

enhanced amount of house tax from the tenant notwithstanding

the contract of tenancy and the provisions of sub-section (2) of

Section  7  and  Section  4  of  the  Rent  Act.  The  Court  has  not

considered the question relating to eviction of a tenant under the

provisions of Rent Act where protection is accorded to the tenant

from eviction.  

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15. The  question  for  consideration  in  this  appeal  is  entirely

different. The question is whether non-payment of property tax

recoverable  from the  tenant  as  rent  can  be  a  ground  for  his

eviction/ejectment from the premises.  The Rent Act is beneficial

and also restrictive in nature.  It is primarily an Act to provide for

the  control  of  rents  and  evictions.  It  is  settled  that  while

interpreting the provisions of  this  Act,  the Courts are under  a

legal compulsion to harmoniously read the provisions of the Act

so as to balance the rights of the landlord and the obligations of

the tenant towards each other, keeping in mind that one of the

objects of the legislature while enacting the Rent Act was to curb

the tendency of the greedy landlords to throw out the tenants

paying lower rent and to rent out the premises at the market

rate.  Section 14 occurring in Chapter 3 of the Rent Act provides

for  controlling  of  eviction  of  tenants.  It  puts  an  embargo  as

regards recovery of possession of any premises at the instance of

the  landlord  unless  the  Controller  satisfies  himself  as  regards

existence of  any of  the grounds specifically  referred  to  in  the

proviso appended thereto.

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16. Section 2(i) of the Rent Act defines the “premises”.  Section

3(c)  states,  “nothing  in  the  Act  shall  apply  to  any  premises

whether  residential  or  not,  whose  monthly  rent  exceeds  Rs.

3,500/-“. Sub-section (2) of Section 7 puts an embargo on the

landlord not to recover from the tenant any amount of tax on the

building or land imposed in respect of the premises occupied by

the tenant.  This provision is as under:

“(2) Where  a  landlord  pays  in  respect  of  the premises  any  charge  for  electricity  or  water consumed in the premises or any other charge levied by a local  authority having jurisdiction in the area which is  ordinarily  payable by the tenant,  he may recover from the tenant the amount so paid by him; but the landlord shall  not recover from the tenant whether  by  means  of  an  increase  in  rent  or otherwise the amount of any tax on building or land imposed in respect of the premises occupied by the tenant.”

17. Section 50 of the Rent Act bars the civil court to entertain

any suit  or  proceedings  insofar  as  it  relates  to the fixation  of

standard rents in relation to any premises to which the Rent Act

applies or to eviction of  any tenant therefrom or to any other

matter which the controller is empowered by or under the said

Act.

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18. It is also relevant to notice two provisions of the NDMC Act

namely;  sub-sections  (1)  and  (3)  of  Section  67  which  are  as

under:

“67.  Apportionment of liability for property tax when the premises are let or sub-let.-(1) If any land or building assessed to property tax is let, and its  rateable  value  exceeds  the  amount  of  rent payable in respect thereof to the person upon whom under  the  provision  of  section  66  the  said  tax  is leviable, that person shall be entitled to receive from his tenant the difference between the amount of the property tax levied upon him and the amount which would  be  leviable  upon  him  if  the  said  tax  was calculated on the amount of rent payable to him. (2) .................

(3)  Any person entitled to receive any sum under this section shall have, for the recovery thereof, the same rights and remedies as if such sum were rent payable  to  him  by  the  person  from  whom  he  is entitled to receive the same.”

19. Yet another provision which requires consideration is Section

411 of the NDMC Act, which reads as under:

“411. Other laws not to be disregarded.- Save as provided  in  this  Act  nothing  contained  in  this  Act shall  be construed as authorising the disregard by the  Council  or  the  Chairperson  or  any  municipal officer or other municipal employee of any laws for the time being in force.”

20. While the normal principle is that the latter enactment will

prevail in cases where the latter enactment has a  non-obstante

clause, that is, giving it overriding effect and secondly, if it is also

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held to be a special enactment with regard to the matter in issue.

In the instant case,  the earlier  enactment has a  non-obstante

clause in Section 14 which grants protection to the tenant from

being evicted from any premises “notwithstanding anything to the

contrary  contained  in  any  other  law  or  contract,  no  order  of

decree for the recovery of possession of any premises shall be

made by any Court or Controller in favour of the landlord against

a  tenant.”  Thus  the  earlier  enactment  which  is  a  special

enactment has a  non-obstante  clause and the latter enactment

which is not a special enactment as far as landlord tenant issue is

concerned and the same does not have a  non-obstante clause

and in fact, has a section namely Section 411 which provides that

other laws not to be disregarded.     

21. In Life Insurance Corporation of India v. D.J. Bahadur

and Ors., (1981)1 SCC 315, this Court was considering a conflict

between the Industrial Disputes Act, 1947 and the Life Insurance

Act, 1956. It was held that so far as matters concerning industrial

dispute are concerned, the Industrial Disputes Act would prevail

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over the latter enactment i.e. Life Insurance Corporation of India

Act.

22. In Sanwarmal Kejriwal v. Viswa Co-operative Housing

Society Ltd. and Ors., (1990) 2 SCC 288,  it was held that Rent

Act  of  1947  will  prevail  over  the  Maharashtra  Co-operative

Societies Act, 1960, so far as the protection of the tenant from

eviction  is  concerned.  Here  also,  both  the  Acts  held  a

non-obstante clause but still  the earlier enactment was held to

cover the field and hence, was to be given primacy over the latter

enactment.   

23. As seen from the abovementioned judgments, this Court has

held that an earlier enactment will prevail over a latter enactment

even if, there is a non-obstante clause in the latter enactment, if

it  were  to  be  held  that  the  earlier  enactment  is  a  special

enactment on the particular subject being in issue.  

24. Assuming  that  the  latter  enactment  prevailing  over  the

earlier enactment were to apply to this case, the two enactments

have to be harmoniously construed so as to ensure that the latter

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enactment does not cause violence to the intent of  the earlier

enactment.   

In  St Stephen’s College v. University of Delhi, (1992)1 SCC

558, it has been held thus:-

“140. … The golden rule of interpretation is that  words  should  be read in  the ordinary, natural  and  grammatical  meaning  and  the principle of  harmonious construction merely applies the rule that where there is a general provision of law dealing with a subject, and a special  provision  dealing  with  the  same subject, the special prevails over the general. If it is not constructed in that way the result would be that the special provision would be wholly defeated”.

Similarly, in  Gobind Sugar Mills  Ltd.  v. State of  Bihar and

Ors. (1999) 7 SCC 76 this Court has held as under:

“10.  While  determining  the  question  whether  a statute is a general or a special one, focus must be on  the  principal  subject-matter  coupled  with  a particular  perspective  with  reference  to  the intendment  of  the  Act.  Keeping in  mind this  basic principle, we will have to examine the provisions of the  two Acts  to  find out  whether  it  is  possible  to construe harmoniously the provisions of Section 4 of the  Finance  Act  and  Section  49  of  the  Sugarcane Act……….”

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25. In  Commercial  Tax  Officer,  Rajasthan  v.  Binani

Cements Limited and Anr. (2014) 8 SCC 319, it was held that

when  a  general  law and  a  special  law dealing  with  the  same

aspect dealt with by the general law are in question, the general

law  to  the  extent  dealt  with  by  the  special  law  is  impliedly

repealed.  

26. The object of the Rent Act is to provide protection to tenants

who under common law, including Transfer of Property Act could

be evicted from the premises let out to them at any time by the

landlord on the termination of their tenancy.  It restricts the right

of the landlord to evict the tenant at their will.  It is a special law

in relation to landlord and tenant issue.  Therefore, the Rent Act

has to prevail insofar as landlord and tenant issue is concerned.  

27. Let  us  now  consider  the  judgments  relied  upon  by  Shri

Dushyant Dave. In Karnani Property Ltd. (supra) by agreement

of the parties, the rent fixed included payment of the additional

amenities  and  services.  In  Bombay  Municipal  Corporation

(supra) the question relating to eviction of a tenant has not been

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considered. In Raju Kakara Shetty (supra) the statutory right to

recover the education cess in respect of demised premises from

the occupant–tenant was quantified by agreement of the parties.

In  D.C. Bhatia (supra) this Court has considered the validity of

Section 3(c)  of  the Delhi  Rent Control  Act,  1958. In  Calcutta

Gujarati  Education  Society  (supra)  this  Court  has  not

considered the eviction of a tenant  nor the interplay between a

provision similar to sub-section (2) of Section 7 of the Rent Act

and Section 231 of the Calcutta Municipal Corporation Act, 1980

which is pari materia with Section 67(3) of the NDMC Act.  Hence,

these judgments have no application to the facts of the instant

case.

28. Therefore, we are of the view that though the Rent Act is an

earlier  Act  when  compared  to  the  NDMC  Act,  it  is  a  special

enactment  with  regard  to  the  matter  in  issue  and  has  a

non-obstante clause. The NDMC Act is not a special enactment

insofar  as  landlord-tenant  issue  is  concerned  and  it  contains

Section 411 which provides that other laws not to be disregarded.

Section 67(3) of the NDMC Act merely gives a right to recover the

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tax in respect of the premises as rent.  It does not override the

Rent Act insofar as obviating the effect of Section 7(2) of the Rent

Act.  In our opinion, the tax recoverable from the tenant under

Section 67(3) of the NDMC Act as arrears of rent by the appellant

cannot  be  considered  to  be  forming  part  of  the  rent  for  the

purpose  of  seeking  eviction/ejectment  of  the  respondent  who

defaults in payment of such recoverable tax as rent.   

29. The appeal is devoid of merit and is accordingly dismissed

with no orders as to costs.

      …………………………………………J.    (J. CHELAMESWAR)

       …………………………………………J.    (S. ABDUL NAZEER)

New Delhi; December 06, 2017.