Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS (OS) No. 574/2010
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% Reserved on: 3 September, 2013
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Decided on: 25 October, 2013
M/S ATMA RAM PROPERTIES (P) LTD ..... Plaintiff
Through: Mr. Amit Sethi and Mr. Mukesh
Ranjan, Advocates.
versus
DELHI TRANSPORT CORPORATION ..... Defendant
Through: Mr. J.S. Bhasin, Mr. Gurpreet Singh,
and Ms. Rashmi Priya, Advocates.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
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1. On 5 March, 2013 issues were framed by this Court wherein Issue
No. 4, which reads as under, was treated as a preliminary issue.
“4. Whether the present suit is barred under the Delhi Rent
Control Act? (OPD)”
2. The objection of the Defendant is that the Plaintiff has filed the
present suit seeking decree of possession, recovery of a sum of Rs. 1.20
crores, damages and cost of the suit in respect of property situated at Atma
Ram Mansion, Scindia House, Connaught Place, New Delhi. The Defendant
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has been a tenant in the building since 14 May, 1948 pursuant to Rent Deed
executed between the erstwhile owners of the building and the predecessor
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of the Defendant on 15 May, 1939. The rent agreed between the parties
CS (OS) No. 574 of 2010 Page 1 of 13
was Rs. 627.50 per month and thus the Defendant is protected under the
provisions of the Delhi Rent Control Act. 1958 (in short „the DRC Act‟). In
view of the said protection the present suit is not maintainable as the same is
actually a suit for eviction of the tenant which has to be filed in terms of the
DRC Act. It is contended by learned counsel for the Defendant that Section
3 (c) of the DRC Act does not apply to certain premises whether residential
or otherwise whose monthly rent exceeds Rs. 3,500/-. The Plaintiff by
including the house tax payable on the tenanted premises, as rent, which is
now assessable on the basis of unit area system and not on the basis of actual
rent cannot treat the same as rent, thus taking the tenancy of the Defendant
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out of the purview of the DRC Act. The notice dated 4 September, 2009
under Section 106 of the Transfer of Property Act (in short „TP Act‟) does
not seek eviction of the Defendant as a tenant and only seeks payment of
house tax pursuant to amendment in the byelaws. Section 8 of the DRC Act
prescribes the form in which notice is required to be issued to the tenant
expressing the intention of the landlord to increase the rent. The notice does
not say about the enhancement of rent. Since no notice of enhancement of
rent has been given to the Defendant thus the rent of the Defendant would be
deemed to be the one agreed between the parties, that is, less than Rs. 3,500/-
CS (OS) No. 574 of 2010 Page 2 of 13
There is no provision in law which permits house tax levied to be
automatically treated as rent. Thus the tenancy of the Defendant would be
covered under the provisions of DRC Act. Hence the present suit is liable
to be dismissed on this count itself.
3. Learned counsel for the Plaintiff on the other hand contends that the
landlord is required to seek eviction for non-payment of rent under Section
14 (1) (a) of the DRC Act only if the premises fetch rent below Rs. 3,500/-.
Since payment of house tax is the liability of the tenant, the same would also
be treated as rent thereby enhancing the rent above Rs. 3,500/- and taking the
suit out from the purview of the DRC Act. The Plaintiff issued a notice to
the Defendant under Section 106 of the Transfer of Property Act (in short
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„the TP Act‟) which was replied vide letter dated 10 August, 2009 by the
Defendant stating that it was not the Defendant‟s liability to pay the house
tax. Since the New Delhi Municipal Council Act, 1994 (in short „NDMC
Act‟) is a later act the provisions thereof would prevail over the DRC Act
and in view thereof the house tax now levied would be “rent” in the eyes of
law and thus the suit of the Plaintiff is not liable to be dismissed. Reliance is
placed on Calcutta Gujarati Education Society and another vs. Calcutta
Municipal Corpn and others, 2003 (10) SCC 533 and Ganga Ram vs. Mohd.
CS (OS) No. 574 of 2010 Page 3 of 13
Usman, ILR 1978 (1) Delhi 139 (Full Bench) . Relying upon United Indian
Assurance Company Ltd. vs. Smt. Anup Kaur, RSA No. 251/2008 decided on
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28 April, 2011 it is stated that this Court has even treated the maintenance
charges to be paid to a third party as part of the rent thereby holding that the
bar of Section 50 DRC Act would not be applicable. Relying on Section 105
of the TP Act it is contended that lease of an immovable property is a
transfer of right to enjoy such property, made for a certain time, expressed or
implied, or in perpetuity, in consideration of a price paid or promised, or of
money or service or share or anything of value. The definition specifically
states that the money, shares, services or other thing to be so rendered is
called the „rent‟. Hence the present suit filed by the Plaintiff is maintainable
and not barred in view of the provisions of DRC Act.
4. I have heard learned counsel for the parties.
5. In the present suit the Plaintiff has prayed not only for a decree of
possession in respect of the suit premises but has also sought decree for
recovery of a sum of Rs. 1,20,00,000/-, mesne profits and damages for which
the remedy does not lie under the DRC Act. Hence the present suit is
maintainable qua prayers (b) and (c) in the suit.
CS (OS) No. 574 of 2010 Page 4 of 13
6. As regards prayer (a), that is, a decree of possession of the suit
premises the moot questions which arise for decision before this Court are
whether the issue as noted above can be decided as a preliminary issue and if
the answer is in affirmative then whether the House Tax payable by the
landlord for tenanted premises would be treated as rent or not and the effect
thereof? The DRC Act neither defines the „lease nor the „rent‟. Section 105
of TP Act defines lease as under:-
“ 105. Lease defined.- A lease of immovable property is a
transfer of a right to enjoy such property, made for a certain
time, express or implied, or in perpetuity, in consideration of a
price paid or promised, or of money, a share of crops, service or
any other thing of value, to be rendered periodically or on
specified occasions to the transferor by the transferee, who
accepts the transfer on such terms”
7. It is thus apparent that the money, share, service or any other thing of
value for the purpose of a lease agreement is called the „Rent‟. In Calcutta
Gujarati Education Society and another (supra) the Hon‟ble Supreme Court
was dealing with Section 231 of Calcutta Municipal Corporation Act, 1980
(in short the CMC Act). In the CMC Act there was a departure from the
earlier repealed Act of 1951 wherein the property tax was limited by the fair
rent fixed under the tenancy law. However, by the CMC Act 1980 the
valuation for the property tax was on the basis of market rate of rent and
CS (OS) No. 574 of 2010 Page 5 of 13
higher rate of tax was levied by introducing a consolidated rate of
tax combining the tax on owners and tax on occupiers. The surcharge
leviable on the occupiers of properties for non-residential/commercial use
was included in the consolidated rate. While dealing with the challenge of
the applicability of the provisions contained in Section 231 of the CMC Act
it was held:
44. We have to examine the provisions of Section 231 of the
Act in the light of the scheme of the Act. Section 231 of the Act
reads thus:
"231. Mode of recovery - If any person primarily liable
to pay any consolidated rate on any land or building and is
entitled to recover any sum from an occupier of such land or
building, he shall have, for 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 recover such sum."
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 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 power to recover the portion of
tax payable by the tenant, sub-tenant or occupant who is
CS (OS) No. 574 of 2010 Page 6 of 13
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
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 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
particularly 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 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 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]2SCR564 which arose out of the provisions of
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.
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.
CS (OS) No. 574 of 2010 Page 7 of 13
A provision to fictionally treat 'tax' as 'rent' is necessitated
because in the absence of such a fiction in Section 231of 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.”
8. Thus the Hon‟ble Supreme Court fictionally treated the tax as „rent‟ as
otherwise landlord would be compelled to pay a whole amount of tax and
would be levy 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.
It was thus held that 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. Section 67 of the NDMC Act reproduced herein below is similar to
Section 231 of the CMC Act and thus the decision of Hon‟ble Supreme
CS (OS) No. 574 of 2010 Page 8 of 13
Court as noted above is applicable to the facts of the present case. Section
67, NDMC Act provides-
“Apportionment of liability for property tax
when the premises are let out or sub-let.
67.
(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 of 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) If the land or building is sub-let and its rateable value
exceeds the amount of rent payable in respect thereof to
the tenant by his sub-tenant, or the amount of rent
payable in respect thereof to a sub-tenant by the person
holding under the sub-tenant, the tenant shall be entitled
to receive from his sub-tenant or the sub-tenant shall be
entitled to receive from the person holding under him, as
the case may be, the difference between any sum
recovered under this section from such tenant or sub-
tenant and the amount of property tax which would be
liable in respect of the said land or building if the rateable
value thereof were equal to the difference between the
amount of rent which such tenant or sub-tenant receives
and the amount of rent which he pays.
(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 form whom he is entitled to receive the same.”
CS (OS) No. 574 of 2010 Page 9 of 13
9. The Full Bench of this Court in Ganga Ram (supra) while dealing with
the similar provision of DRC Act held:
“12. The owners-landlords preferred an appeal to the
Additional District Judge, Delhi, but the same was dismissed.
They then filed a petition in the High Court under Art. 227 of
the Constitution of India praying that the enhancement of the
rateable value may be quashed as being illegal and void. The
petition was heard by a Division Bench of this Court, S. N.
Andley C. J. and S. N. Shankar J. The Division Bench held
firstly that under S.124(3) of the Delhi Municipal Corporation
Act, notice had to be given to the owner or to any lessee or
Occupier of the building when the rateable value of the building
was sought to be increased, but that no notice of the proposed
increase was given by the Corporation to any of the tenants who
had made the unauthorized constructions so the basis of which
the annual rateable value was proposed to be increased and that
in the absence of such notice no increase could be made. The
division Bench then observed that in that view of the matter, a
contention urged on behalf of the Corporation that even if the
manual rateable value was increased without giving notice to
the tenants. the owners landlords could not have any complaint
as they could recover the additional tax from the tenants under
S. 121(1) of the Delhi municipal corporation Act as well as the
contention in reply by the owners landlords that by reason of
S. 7(2) of the Delhi Rent corporation Act .the additional tax on
the building could not recovered by them from the the tenants,
did not fall for determination. Yet the division Bench
considered the conflict between S. 121(1) of the corporation
Act and S. 7(2) of the Rent control Act and held that the Delhi
Rent control Act is a latter and special statue dealing with the
rights and liabilities between landlords and tenants and
Therefore the Delhi Control Act would prevail over the
corporation Act as held by the Supreme Court in Asa Ram v.
CS (OS) No. 574 of 2010 Page 10 of 13
The District Board Muzaffarnagar AIR 19 S. C. 48,where the
Supreme Court approved the following observation in King v
Justices of Middlesex (1831) 2 B and Ad 819
"Where, two acts of parliament which passed during the
same session and were to come into operation the same
day are repugnant to each other, that which last received
the Royal assent must prevail and be considered pro tanto
a repeal of the other."
In that view, the Division Bench expressed its opinion that the
right given by S. 121(1) of the corporation Act landlords was
set at naught by S 7.(2) of the Rent Control Act
13. With due respect we are unable to agree with the above
opinion of the Division Bench. In the first place, the' said
opinion was an obiter dictum. In 1he second place, the reason
given by the Division Bench for its view, namely that the Rent
Control Act was a later and special statute was: not correct. The
Delhi Municipal Corporation Act was enacted in 1957. At that
time, the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952)
was in force. It contained a provision in Section 6 thereof in
terms identical with the provision in S. 7(2) of the Delhi Rent
Control Act, 1958. It is not, Therefore, correct to proceed on the
basis that S. 7(2) of the Delhi Rent Control Act, 1958, was a
later provision. Further, as pointed out by H. R. Khanna C. J. in
Ganga Ram v. Mohd. Usman (1971) 1 Delhi 639 (supra) the bar
created by the provision in the Rent Control Act pertains to
"normal tax on a building" occupied by a tenant, while
S. 121(1) of the Corporation Act deals with the particular
contingency where the property tax levied for the tenanted
premises is 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. Thus, the provision in the
Delhi Municipal Corporation Act was the later and special
provision, and it would not be correct to proceed on the basis
that the provision in the Rent Control Act is a later and special
provision, while in fact S.121(1) of the Corporation Act is a
later and special provision. The decision in Gangs. Ram v.
CS (OS) No. 574 of 2010 Page 11 of 13
Mohd. Usman (supra) does not appear to have been brought to
the notice of the Division Bench which had, there fore, no
occasion to consider the reasons give by H. R. Khanna C. J. in
the case of Gangs, Ram (supra). For all the above reasons, we
are of the opinion that the view expressed by the Division
Bench .regarding the conflict between S.121(1) of the
Corporation Act and S. 7(2) of the Rent Control Act cannot be
accepted as laying down the correct law.
14. For the foregoing reasons, our answer to the second
question mentioned by B. C. Misra J. is in the affirmative and
we accordingly hold that the land lord is entitled to recover
under S. 121(1) of the Corporation Act the enhanced amount of
house tax from the tenant not withstanding the contract of
tenancy and the provisions of S. 7(2) and Section 4 of the Delhi
Rent Control Act. No other point or question was urged before
us in the Civil Petition.”
10. Further to decide the issue whether the house tax levied can be treated
as rent, intention of the parties while entering into the lease agreement has
also to be looked into. Thus since this would be an issue to be decided also
on the facts of the case besides law the same cannot be treated as preliminary
issue. It is no longer res-integra that an issue for which the evidence is
required to be led cannot be treated as a legal issue and therefore, cannot be
treated as a preliminary issue vide Ramesh B. Desai v. Bipin Vadilal Mehta,
2006 (5) SCC 638 . It was held that Order XIV Rule 2 of Code of Civil
Procedure confers no jurisdiction on a Court to decide mixed questions of
fact and law as preliminary issues. There is no provision in the TP Act much
less in the DRC Act that the House Tax forms part of the rent. Further there
CS (OS) No. 574 of 2010 Page 12 of 13
is no admission in the rent agreement that the Defendant is liable to pay
house tax by treating the same as part of rent. Therefore, whether house tax
is or is not part of rent is a disputed question of fact which requires trial and
cannot be decided as a preliminary issue.
11. Therefore, the Issue No. 4 is decided partially in favour of the Plaintiff
and against the Defendant holding that the present suit as regards prayers (b)
and (c) is not barred by the provisions of DRC Act. However, whether a
decree of possession can be passed in favour of the Plaintiff or not due to
applicability of the provisions of DRC Act would have to be decided by this
Court after the parties have led their evidence.
12. The plaintiff will file its list of witnesses in four weeks and evidence
by way of affidavit of its witnesses in twelve weeks.
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13. List the suit before the learned Joint Registrar on 17 March, 2014 for
fixing the dates of trial.
(MUKTA GUPTA)
JUDGE
OCTOBER 25, 2013
‘vn’
CS (OS) No. 574 of 2010 Page 13 of 13