M/S POPAT & KOTECHA PROPERTY & ORS v. ASHIM KUMAR DEY

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 2018 INSC 680 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 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 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 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…..”

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:

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 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 imposed on the landlord the requirement of obtaining a formal order of enhancement of rent from the Rent Controller.