Case: M/S POPAT AND KOTECHA PROPERTY  Vs. ASHIM KUMAR DEY

2. This appeal by special leave by the landlord is against the order dated 7 th 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 thet 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 which view has been upheld in appeal by the High Court.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 10 th July, 2001 and after incorporation ofn (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.n (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 7 th February, 2003 upon thet to pay his share of the municipal taxes. Thet by reply dated 29 th March, 2003 to the said notice had sought for a reconsideration/review of the matter on ae spirit for the sake of harmonious relation between tenant and landlord. As the6. 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 thet 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.

Reasoning:
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 10 th July, 2001 and upon incorporation ofn (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 Act9. 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. As already noticed, in his reply, thet 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…t 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 Act11. 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 the course of assessment and recovery of portion of tax from the tenants,s 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,t 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,t or the occupant, the owner or lessor has to be conferred with the power to recover the portion of tax payable by the tenant,t or occupant who is actually enjoying the property and putting it to use for commercial orl 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,s 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,t or occupier as the other parties. The whole amount of tax is recoverable from the lessor and may also be recovered from the tenant ort 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, 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 landlord12. 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 tot 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.