Case: EIH LIMITED Vs. NADIA A VIRJI

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, sub- tenant 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 legislative incompetence. There does not appear any inter se conflict between the two Acts. Both have to be read and applied harmoniously to achieve the legislative intent in the two enactments. The contention based on Section 231 of the Act, therefore, also does not commend to us and is rejected. Thus, as observed and held by this Court in the case of Calcutta Gujarati Education Society (supra), 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. The aforesaid judgment cannot be read holding that the tax apportioned on the tenant be treated as part of the rent, as contended by Shri Rana Mukherjee, learned Senior Advocate appearing on behalf of the landlord. 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. Therefore, reliance placed upon the decision of this Court in the case of Calcutta Gujarati Education Society (supra) by learned counsel appearing on behalf of the landlord is on a misreading of the said decision. 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 and Kotecha Property (supra) is not applicable to the facts of the case on hand. 10. 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5.2 At the outset, it is required to be noted that in the present case, under the tenancy agreement under consideration the rent payable by the tenant would be Rs. 10,000/- per month. Over and above the rent, the tenant has also agreed to pay the municipal taxes payable to the Calcutta Municipal Corporation. However, it is required to be noted that the tenancy agreement does not provide that the parties have agreed that the rent would be inclusive of municipal taxes payable and that as and when such taxes are enhanced, rent would be proportionately raised. Under 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. On a fair reading of Section 3(f) of the Act 1997, which provides that any premises let out for non-residential purpose, which carries more than ten thousand rupees as monthly rent, nothing contained in the West Bengal Premises Tenancy Act, 1997 shall apply. The word used is monthly rent. As observed hereinabove, the term rent is not defined.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, 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 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.That thereafter, in paragraph 46, it is observed and held as under:46. The provisions of the Tenancy Act merely enable the landlord to make a demand of arrears of rent and in default of the payment 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, sub- tenant 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 legislative incompetence. There does not appear any inter se conflict between the two Acts. Both have to be read and applied harmoniously to achieve the legislative intent in the two enactments. The contention based on Section 231 of the Act, therefore, also does not commend to us and is rejected.Thus, as observed and held by this Court in the case of Calcutta Gujarati Education Society (supra), 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. The aforesaid judgment cannot be read holding that the tax apportioned on the tenant be treated as part of the rent, as contended by Shri Rana Mukherjee, learned Senior Advocate appearing on behalf of the landlord. 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. Therefore, reliance placed upon the decision of this Court in the case of Calcutta Gujarati Education Society (supra) by learned counsel appearing on behalf of the landlord is on a misreading of the said decision. 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 and Kotecha Property (supra) is not applicable to the facts of the case on hand.10. 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.