Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2017 (12) TMI 1848

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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. Whether non-payment of property tax recoverable from the tenant as rent can be a ground for his eviction/ejectment from the premises? - HELD THAT:- 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 - 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 enactment does not cause violen .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ecoverable 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 tenanted premises in occupation of the Defendant fell within the juri .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... sions 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 Code of Civil Procedure for passing a decree for possession of the tenanted premises for the reasons mentioned therein. The Defendant opposed the application by filing objections. 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 t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ying 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 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. Bhat .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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: (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 t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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. 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 payabl .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... wal 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 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 gra .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... dered 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 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. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates