Full Judgment Text
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PETITIONER:
RAJU KAKARA SHETTY
Vs.
RESPONDENT:
RAMESH PRATAPRAO SHIROLE AND ANR.
DATE OF JUDGMENT15/01/1991
BENCH:
AHMADI, A.M. (J)
BENCH:
AHMADI, A.M. (J)
SHETTY, K.J. (J)
SAHAI, R.M. (J)
CITATION:
1991 SCR (1) 51 1991 SCC (1) 570
JT 1991 (1) 128 1991 SCALE (1)26
ACT:
Bombay Rents, Hotel and Lodging House Rates Control
Act, 1947--Section 12(3)(a) and 13(1)(b)--Landlord’s right
claim education cess--When arises--Whether its yearly
payment could agreement be reduced to a monthly payment.
HEADNOTE:
The appellant-tenant executed a lease agreement of the
demised premises on a standard rent of Rs. 900 per month.
In addition thereto, the tenant also undertook to pay a
lump-sum of Rs. 120 per month by way of education cess and
other daxes in respect of the premises.
The 1st respondent filed a suit for eviction of the
tenant inter alia on the ground that he was in arrear of
rent for more than six months and had failed and neglected
to pay the amount within one month from the date of receipt
of the notice served on him terminating the tenancy and for
eviction.
During the pendency of the suit, section 12(3) of the
Bombay Rent, Hotel and Lodging House Rates Control Act, 1947
was amended whereby clauses (a) and (b) of sub-section 3 of
section 12 were deleted and instead a new sub-section 3 was
substituted which restricted the court’s right to pass a
decree of eviction on the ground of arrears of standard
rent, etc., if the tenant paid or tendered in Court the
arrears as stipulated in the amended clause. The appellant
claimed that the said amendment had retrospective effect and
he was entitled to the benefit thereof.
The Trial Court dismissed the suit. The Court held
that since the tenant had failed to pay or deposit the
arrears claimed by the eviction notice within one one month
from the receipt thereof, he was liable to be evicted under
section 12(3)(a) of the Act, but in view of the substituted
section 12(3), he was entitled to protection he had paid the
entire arrears together with interest and costs before the
passing of the decree.
On appeal, the Appellate Court reversed the decree of
the trial
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Court. The Appellate Court held that the tenant having
failed to pay arrears within one month of receipt of a valid
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notice, he was liable to be evicted under section 12(3)(a)
of the Act, since the amended section 12(3) was prospective
in nature.
The appellant-tenant preferred a writ petition to the
High Court, which was dismissed on the ground of sub-
letting.
Before this Court it was inter alia contended on behalf
of the appellant that (i) since the tenant was obliged to
pay the education cess and other taxes, by way of permitted
increases, which were payable at the end of the year, the
case would not attract section 12(3)(a) as a part of the
rent became payable annually and not monthly and therefore
the case attracted section 12(3)(b); and (ii) the tenant
having deposited the arrears, etc., in time, the courts
below were justified in granting and eviction decree for
arrears of rent under section 12(3)(a).
On the other hand, it was contended on behalf of the
respondent that the case was clearly governed by the
provisions of section 12(3)(a) since indisputably the rent
inclusive of the quantified tax amount was payable by the
month. It was argued that once the quantum in respect of
the tax was determined by agreement between the parties,
same formed part of the rent and it was not open to contend
that notwithstanding the agreement the tax amount remained
payable by the year and the tenant was obliged to pay the
same only after the landlord had paid the taxes to the local
authority.
Dismissing the appeal, this Court,
HELD:(1) In view of the decision of this Court, the
case would be governed by section 12(3) as it stood before
its amendment, since the substituted section 12(3) was found
to be prospective in nature. [57G]
Arjun Khaimal Makhijani v. Jamnadas C. Tuliani, [1989]
4 S.C.C. 612, followed.
(2) It is clear from the term of the lease agreement
that the parties intended the tenancy to be a monthly
tenancy. [62C]
(3) The statutory right to recover the amount of
education cess in respect of the demised premises from the
occupant/tenant can be quantified by agreement of parties so
long as the amount quantified does not exceed the total
amount actually paid by the owner by way of education case.
[62E]
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(4) It seems to be well-settled that education cess is
a part of ’rent’ within the meaning of the ACt and when the
same is claimed addition to the contractual or standard rent
in respect of the demised premises it constitutes a
permitted increase within the meaning of section 5(7) of the
Act and being payable on a year to year basis, the rent
ceases to be payable by the month within the meaning of
section 12(3)(a) of the Act. [63D-E)
Panchal Mohanlal Ishwardas v. Maheshwari Mills
Ltd.,[1962] 3 G.L.J. 574; Prakash Surya v. Rasiklal
Ishverlal Mehta, [1978] 1 R.C.R. 10; Vanlila Vadilal Shah v.
Mahendrakumar J. Shah, A.I.R. 1975 Guj. 163; Muktabai
Gangadas Kadam v. Muktabai Laxman Palwankar,[1969] 71 B.L.R.
752; Bombay Municipal Corporation v. Life Insurance
Corporation of India, Bombay, [1971] 1 S.C.R. 335.
(5) If for convenience and to facilitate payment, the
parties by mutual consent work out an arrangement for the
enforcement of the owner’s statutory right to recover the
tax amount and for discharging the tenant-occupant’s
statutory obligation to reimburse the owner, no reasons are
seen for refusing to uphold such a contract and if the
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parties have agreed thereunder to the tenant-occupant
discharging his liability by a fixed monthly payment not
exceeding the total tax liability, the said monthly payment
would constitute ’rent’ payable by the month within the
meaning of section 12(3) (a) Act. [64B.C]
Vishwambar Hemandas v. Narendra Jethalal Gajjar, A.I.R.
1986 Guj. 153 overruled.
(6) As the tenant had failed to comply with the
requirement of section 12(3)(a) to seek protection from
eviction, the Courts below were justified in ordering his
eviction. [64E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5020 of
1989.
From the Judgment and Order dated 7.12.1989 of the
Bombay High Court in W.P. No. 5021 of 1989.
Dr. Y.S. Chitale, V.N. Ganpule, B. Rastogi, Ms. Suman
and Ms. Punam Kumari for the Appellant.
V.M. Tarkunde, Ejaz Iqbal, H.S. Anand, R.F. Nariman and
H.D. Adhar for the Respondents.
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The Judgment of the Court was delivered by
AHMADI, J. This is a tenant’s appeal by special leave
directed against the judgment of the High Court of
Maharashtra at Bombay whereby it confirmed the eviction
order passed by the 6th Additional District Judge, Pune, in
Civil Appeal No. 662 of 1988 in reversal of the order of
dismissal of the suit passed by the Learned Additional Judge
of the Court of Small Causes, Pune, in Civil Suit No. 348/85
on 30th April, 1988. The brief facts giving rise to this
appeal are as under:
On 5th February, 1976 the appellant executed a lease
agreement in respect of a part of the ground floor of
property bearing City Survey No. 1205/2/9 situate at Shivaji
nagar, Pune city, more particularly described in paragraph 1
of the said agreement. The said premises were taken on rent
for the purposes of restaurant business on monthly rental
basis. By clause 3 of the agreement the appellant undertook
to pay a total rent of Rs. 1,000 per month for the demised
premises (Rs.900 for the hotel portion and Rs. 100 for the
garage); the said rent being payable every month in advance.
Clause 5 of the agreement prohibited sub-letting of the
premises or parting with the possession thereof in any other
manner. As the appellant committed a default in the payment
of rent from June, 1983 to December, 1984 in respect of
hotel portion and from November, 1979 to December, 1984 in
respect of the garage, the first respondent despatched a
notice dated 31st December, 1984 terminating the appellant’s
tenancy as required by Section 106 of the Transfer of
Property Act. The appellant failed to respond to the said
notice and neglected to pay the amount of arrears of rent
claimed therein within one month from the date of receipt of
the notice. Consequently, the first respondent filed the
suit which has given rise to this appeal on 26th February,
1985, being Civil Suit No. 348 of 1985, seeking eviction on
four grounds, namely, (i) the tenant was in arrears of rent
for more than six months and had failed and neglected to pay
the amount due within one month from the date of receipt of
the eviction notice, (ii) the tenant had raised a permanent
structure in the suit premises in breach of section 13(1)(b)
of the Bombay Rents, Hotel and Lodging House Rates Control
Act, 1947 (hereinafter called ’the Act’), (iii) the tenant
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was guilty of causing nuisance and annoyance to the
neighbors and (iv) the tenant had sub-let the premises to
second respondent without his consent.
The suit was contested by the appellant-tenant by his
written statement Exh. 25 and the supplementary written
statements Exhs. 56 and 60 filed after the amendments in the
plaint. The second respon-
55
dent, the alleged sub-tenant, adopted the written statement
of the appellant by his purshis Exh. 30. During the
pendenacy of the suit Section 12(3) of the Act was amended
by Section 25 of the Amendment Act 18 of 1987 whereby
clauses (a) and (b) of sub-section 3 of section 12 were
deleted and instead a new sub-section 3 was substituted
which restricted the court’s right to pass a decree for
eviction on the ground of arrears o standard rent and
permitted increases, if on the first date of the hearing of
the suit or on such other date as the Court may fix, the
tenant paid or tendered in court the standard rent and
permitted increase then due together with simple interest on
the amount of arrears at the rate of 9% per annum and
thereafter continued to pay or tender in court regularly
such standard rent and permitted increases till the final
decision of the suit and also paid the cost of the suit as
directed by the court. The appellant contended that the
said amendment had retrospective effect and he was entitled
to the benefit thereof. In the alternative he also
contended that he had paid the rent to the first respondent
but the latter had failed to issue rent receipts. He also
questioned the validity of the notice terminating his
tenancy. He denied the allegation that he had sub-let the
premises or had aparted with the possession thereof in
favour of the second respondent or that he was guilty of
causing nuisance and annoyance to the neighbours. The
allegation that he had raised a structure of a permanent
nature in the hotel premises without the permission of first
respondent was also disputed. He, therefore, contended that
the suit was liable to fail.
The learned Additional Small Causes Judge, Pune raised
issues at Exh. 36 and came to the conclusion that the agreed
rent for the hotel and the garage was Rs. 900 per month and
in addition thereto the tenant had agreed to pay Rs. 120 per
month for education cess and other taxes. He also concluded
that the tenant had failed to pay the rent in respect of the
garage from November, 1979 and in respect of hotel from
June, 1983. Since the tenant had failed to pay or deposit
the arrears claimed by the eviction notice dated 31.12.1984
within one month from the receipt thereof, the Court held
he was liable to be evicted under section 12(3)(a) of the
Act but in view of the substituted Section 12(3), he was
entitled to protection as he had paid the entire arrears
together with interest and costs before the passing of the
decree. He also held that there was no reliable evidence to
show that the tenant had sub-let the premises or had made
any alteration of a permanent nature without the consent of
the first respondent. The allegation of nuisance and
annoyance was held not proved on facts and was even
otherwise found to relate to a post-suit incident of 1986.
on
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these findings the learned Trial Judge dismissed the suit
with no order as to costs.
The first respondent, felling aggrieved by the order of
dismissal of his suit, preferred an appeal being Civil
Appeal No. 662/88. The appellate court reversed the decree
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of the trial court holding that the rent was payable by the
month and there being no dispute regarding standard rent and
permitted increases and the tenant having failed to pay the
arrears within one month from the date of receipt of a valid
eviction notice dated 31st December, 1984, he was liable to
be evicted under section 12(3)(a) of the Act since the
amended section 12(3) introduced by Amending Act 18 of 1987
was prospective in nature. It also took the view that since
the premises was sub-let by the appellant to the second
respondent on a rental of Rs. 2,000 per month, the former
was guilty of profiteering. So far as the other two
contentions regarding raising of a permanent structure and
allegation of nuisance and annoyance were concerned, the
appellate court concurred with the findings recorded by the
trial court. In this view that the appellate court took it
allowed the appeal and ordered both the tenant and sub-
tenant to deliver vacant possession of the demised premises
within two months from the date of the order with costs
throughout.
The appellant-tenant, feeling aggrieved by the order of
eviction passed by the learned 6th Additional District
Judge, Pune, preferred a writ petition No. 5021 of 1989 to
the High Court. The writ petition was rejected at the
admission stage by a short speaking order. The High Court
observed that the eviction notice was legal and proper and
the lower appellate court was right in concluding that the
appellant had sub-let the premises to the second respondent
as alleged. The request for extention of time to vacate was
rejected as the tenant was unwilling to file an undertaking
in the usual form. Feeling aggrieved by the said order the
tenant has preferred the present appeal after obtaining
special leave.
The standard rent in respect of the demised premises
has been found by all the three courts to be Rs. 900 per
month (Rs. 750 in respect of the hotel premises and Rs. 150
in respect of the garage). In addition thereto the tenant
had undertaken to pay a lump-sum of Rs. 120 per month by way
of education cess and other taxes in respect of the demised
premises. Thus the tenant was required to pay a
consolidated sum of Rs. 1020 per months as rent to the first
respondent. By 31st December, 1984 the appellant-tenant had
failed to pay the rent in respect of the hotel premises from
1st June, 1983 and in respect of the
57
garage area from 1st November, 1979; thus the arrears of
rent in respect of hotel premises came to Rs.16,530 and in
respect of the garage premises Rs.9,300 aggregating to
Rs.25,830. The first respondent, therefore, served the
appellant with a notice terminating the tenancy by the end
of 31st January, 1985 and called upon the appellant to pay
the arrears of rent and vacate and handover peaceful
possession of the demised premises by that date. Even after
the receipt of this notice, the appellant neither paid the
amount due within one month of the receipt of the notice nor
filed any application for fixation of standard rent and/or
the permitted increases under section 11 of the Act. On the
failure of the appellant to comply with the requirement of
the eviction notice, the first respondent filed a suit for
eviction on 26th February, 1985 on the grounds stated
earlier. In the said eviction suit the first respondent
claimed the arrears of rent upto the end of December, 1984
as set out in the eviction notice and damages of Rs. 1020
for month of January, 1985 together with Rs. 250 by way of
notice charges. The total claim made came to Rs.27,100.
The appellate Court and the High Court came to the
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conclusion that the newly substituted section 12(3) had no
application and the case was governed by section 12(3)(a) as
it stood before the amendment.
Dr. Chattel, the learned counsel for the appellant
frankly conceded that in view of the decision of this Court
in Arjun Khiamal Makhijani v. Jamnadas C. Tuliani & Ors.,
[1989] 4 SCC 612, the case would be governed by section
12(3) as it stood before its amendment by Amending Act 18 of
1987, since the substituted section 12(3) was found to be
prospective in nature. This Court in paragraph 14 of the
judgment at page 624 repelled the submission that it was
retrospective in operation in the following words:
"In our opinion, the tenants are not entitled even
to the benefit of the amended sub-section (3) of
Section 12 of the Act inasmuch as on a plain
reading of the sub-section it is not possible to
give it a retrospective operation."
Dr. Chitale was, therefore, justified in submitting
that the decision of this case must rest on the question
whether it attracted section 12(3)(a) or section 12(3)(b) as
it stood prior to the amendment. According to Dr. Chitale
since the tenant was obliged to pay the education cess and
other taxes by way of permitted increases which were payable
at the end of the year, the case would not attract section
12(3)(a) as a part of the rent became payable annually and
not monthly. He further contended that there was nothing on
the record to show that the landlord
58
had paid the amount of education cess and other taxes and
unless payment of the taxes to the local authority was
established the land lord had no right to claim the same
from the tenant. According to him, the landlord’s right to
recover the taxes arises not at the end of the financial
year but on the date on which he makes the payment to the
local authority. Dr. Chitale, therefore, submitted that the
case attracted section 12(3)(b) and when the tenant
deposited a sum of Rs.37,740 on 18th January, 1986 before
the issues were settled on 13th February, 1986 he could be
said to have made the full payment of the rent then due and
therefore the courts below were not justified in granting an
eviction decree for arrears of rent under section 12(3)(a)
of the Act. In support of his contention he invited our
attention to four decisions of the Gujarat High Court,
namely,Pancha Mohanlal Ishwardas v. Maheshwari Mills Ltd.,
[1962] 3 GLR 574; Prakash Surya v. Rasiklal Ishverlal Mehta,
[1978] 1 RCR 10; Vanlila Vadilal Shah v.Mahendrakumar J.
Shah, AIR 1975 Guj. 163 and Vishwambar Hemandas v. Narendra
Jethalal Gajjar, AIR 1986 Guj. 153. He also placed reliance
o a Bombay High Court decision in Muktabai Gangadas Kadam v.
Muktabai Laxman Palwankar, [1969] 71 BLR 752 and the
decision of this Court in Bombay Municipal Corporation v.
Life Insurance Corporation Of India, Bombay, [1971] 1 SCR
335. On the question of sub-letting he stated that the
Trial Court had rightly pointed out that the evidence falls
far short of proof of sub-tenancy and the Appellate Court as
well as the High Court were in error in reversing that view
of the Trial Court.
Mr. Tarkunde, the learned Advocate for the landlord, on
the other hand submitted that once the four ingredients of
section 12(3)(a) were shown to be satisfied, the Court had
no alternative but to decree the suit. According to him,
the standard rent in respect of the demised premises was
shown to be Rs. 900 per month and in addition thereto the
tenant had agreed to pay a quantified sum of Rs. 120 per
month by way of education cess and other taxes. It was
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proved as a fact that the tenant had failed to pay the rent
in respect of the garage from 1st November, 1979 and the
rent in respect of the hotel from 1st June,1983. The tenant
had also failed to pay the tax amount at the rate of Rs. 120
per month from 1st June, 1983. Since there was no dispute
in regard to standard rent or permitted increases in this
case, the tenant was under an obligation to pay the entire
amount due from him by way of rent and taxes within one
month of the receipt of the eviction notice dated 31st
December, 1984. Under section 12(1) of the Act a landlord
is not entitled to the recovery of possession of any
premises so long as the tenant pays, or is ready and willing
to pay, the amount of standard
59
rent and permitted increases, if any, and observes and
performs the other conditions of the tenancy, insofar as
they are consistent with the provisions of the Act. Section
12(2) places a restriction on the landlord’s right to sue
his tenant for recovery of possession on the ground of non-
payment of the standard rent and/or permitted increases due
from him. According to that section no suit for recovery of
possession can be instituted on the aforesaid ground until
the expiration of one month next after notice in writing of
the demand of the standard rent and/or permitted increases
has been served upon the tenant in the manner set out in
section 106 of the Transfer of Property Act. To comply with
this requirement the landlord had issued a notice on 31st
December, 1984 calling upon the tenant to pay the standard
rent which was in arrears along with the quantified tax
amount in arrears upto that date as detailed in the notice.
The tenancy was terminated w.e.f. 31st January, 1985.
Admittedly, the tenant did not respond to this notice nor
did he pay or deposit the amount of arrears as claimed in
the notice within one month of the receipt thereof. He also
did not file any application for fixation of standard rent
and/or permitted increases under section 11 of the Act.
There was, therefore, no question of the Court specifying
the amount of interim rent or permitted increases under sub-
section (3) of Section 11 during the pendency of such an
application. Mr. Tarkunde, therefore, submitted that the
case was clearly governed by the provisions of section
12(3)(a) since indisputably the rent inclusive of the
quantified tax amount was payable by the month; there was no
dispute as regards the standard rent/permitted increases:
the tenant was found to be in arrears of rent for more than
six months and he had failed to pay or deposit the rent
within one month after the receipt of the notice under
section 12(2) of the Act. According to Mr. Tarkunde the
submission that because the education cess was payable by
the year, a part of the rent was not payable by the month
and therefore section 12(3)(a) had no application is clearly
misconceived for the simple reason that in the present case
the landlord as well as the tenant had by agreement
quantified the amount of education cess and other taxes at
Rs.120 per month and had not left the determination of the
amount to fluctuations in the tax amount from time to time.
Once the quantum in respect of the tax liability is
determined by agreement between the parties, the same forms
part of the rent and it is not open to contend that
notwithstanding the agreement the tax amount remains payable
by the year and the tenant is obliged to pay the same only
after the landlord has paid the taxes to the local
authority. He, therefore, contended that the case law on
which Dr. Chitale had placed reliance can have no
application to the special facts and circumstances of the
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present case.
60
On the second question regarding sub-letting Mr.
Tarkunde submitted that this Court should not interfere with
a finding of fact recorded by the Appellate Court and
affirmed by the High Court since it is nobody’s case that
the finding is perverse and not based on evidence. In this
connection, he took us through the relevant part of the
pleadings and the evidence to support his contention that
the conclusion reached by the Appellate Court and the High
Court was based on evidence and was not perverse or against
the weight of evidence. He submitted that even if two views
are possible this Court in exercise of its powers under
Article 136 of the Constitution should refrain from
disturbing a possible and plausible view.
We have given our anxious consideration to the rival
views propounded by the learned counsel for the appellant-
tenant as well as the respondent-landlord. On a
consideration of the submissions made at the bar and having
regard to the provisions of law we are inclined to think
that the view taken by the Appellate Court and the High
Court does not demand interference. There is no dispute
regarding the standard rent of the demised premises. under
clause 3 of the lease agreement the rent was fixed at Rs.
1,000 per month but subsequently it seems to have been
revised by consent of parties to Rs.1,020 per month (Rs. 900
for the demised premises and Rs.120 for education cess and
taxes). The rent was payable ’every month regularly in
advance’ under clause 3 of the agreement. Clause 2 of the
agreement states that the premises have been hired for
restaurant business ’on monthly rental basis. It is ,
therefore, clear from the terms of the lease agreement that
the parties intended the tenancy to be a monthly tenancy.
The two clauses of section 12(3) as they stood before
the Amendment Act 18 of 1987 provided as under:
"12(3)(a). Where the rent is payable by the month
and there is no dispute regarding the amount of
standard rent or permitted increases, if such rent
or increases are in arrears for a period of six
months or more and the tenant neglects to make
payment thereof until the expiration of the period
or one month after notice referred to in sub-
section (2), the Court shall pass a decree for
eviction in any such suit for recovery of
possession.
(b) In any other case no decree for eviction shall
be passed in any such suit if, on the first day of
hearing of the suit or on or before such other date
as the Court may fix, the
61
tenant pays or tenders in Court the standard rent
and permitted increases then due and thereafter
continues to pay or tender in Court regularly such
rent and permitted increases till the suit is
finally decided and also pays costs of the suit as
directed by the Court."
Explanation I states that if there is any dispute regarding
standard rent or permitted increases the tenant shall be
deemed to be ready and willing to pay if, before the expiry
of the period of one month after notice referred to in sub-
section (2), he makes an application to the Court under
sub-section (3) of section 11 and thereafter pays or tenders
the amount of rent or permitted increases specified in the
order made by the Court.
Mr. Tarkunde, therefore, argued that even if the case
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is covered by section 12(3)(b) since the tenant had failed
to pay or deposit the full amount due to the landlord as
claimed in the eviction notice by the first date of hearing
of the suit, i.e. 13th February, 1986, and had also failed
to make an application under section 11(3) of the Act, the
tenant was not entitled to the protection of that provision
also. Mr. Tarkunde further submitted that the tenant was
not regular in the payment of rent and permitted increases
for the subsequent period also and there were long intervals
between two payments made during the pendency of the
litigation. He, therefore, submitted that even if section
12(3)(b) was invoked the tenant had failed to comply with
the requirement of the provision and was, therefore, not
entitled to its protection. Since we are of the opinion
that the case is covered by section 12(3)(a) we do not
consider it necessary to examine this submission based on
the true interpretation of section 12(3)(b) of the Act.
The only submission which Dr. Chitale made for taking
the case out of the purview of section 12(3)(a) was that the
entire rent was not payable by the month which was the first
condition to be satisfied for invoking the said provision.
According to him, since the tenant was bound to pay
education cess and other taxes in respect of the demised
premises which were payable from year to year, a part of the
rent was not payable by the month and therefore the first
condition of section 12(3)(a) was not satisfied. Hence,
submitted Dr. Chitale, the case fell within the phrase ’in
any other case’, by which clause (b) of section 12(3) opens.
Before we answer the submission of Dr. Chitale it may be
advantageous to refer to the relevant provisions of the
Maharashtra Education (Cess) Act (Maharashta Act XXVII of
1962). Section 4(a) of the said Act provides for the levy
and collection of tax (cess) on
62
lands and buildings at the rates specified in Schedule A on
the annual letting value of such lands or buildings. The
primary responsibility to pay this tax is cast by section 8
on the owner of the land or building irrespective of whether
or not he is in actual occupation thereof. Section 13 next
provides that on payment of the amount of the tax in respect
of such land or building the owner shall be entitled to
receive that amount from the person in actual occupation of
such land or building during the period for which the tax
was paid. Under section 15 any person entitled to receive
any sum under section 13 is conferred for the 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 receive the same. It thus seems clear that education
cess is a tax and the owner is primarily responsible to pay
the same to the local authority and on such payment a right
is conferred on him to recover the same from the actual
occupant in addition to the standard rent in respect of the
demised premises. Sub-section (3) of section 13 in terms
states that the recovery of any amount of tax from an
occupier under this provision shall not be deemed to be an
increase for the purposes of section 7 of the Act. It is,
therefore, obvious that the landlord has a statutory right
to recover the amount of education cess paid by him in
respect of the demised premises from the tenant-occupant and
such recovery shall not be an unlawful increase under of
section 7 of the Act but would squarely fall within the
expression ’permitted increases’ as defined by section 5(7)
of the Act. This statutory right to recover the amount of
education cess in respect of the demised premises from the
occupant-tenant can be quantified by agreement of parties so
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long as the amount quantified does not exceed the total
amount actually paid by the owner by way of education cess.
In the present case, it is nobody’s contention that the
amount of Rs. 120 per month payable by way of education cess
and other taxes was in excess of the amount actually payable
under the relevant statues to the local authority. The
Gujarat High Court has taken a consistent view that where
the tenant is obliged under the terms of the tenancy or by
virtue of the statute to pay the tax dues to the landlord,
since such taxes which form part of the rent are payable
annually the case ceases to the governed by section 12(3)(a)
and falls within the purview of section 12(3)(b) of the Act.
In Maheshwari Mills Ltd., under the terms of the tenancy the
tenant was obliged to pay the municipal taxes and property
taxes in respect of the demised premises. The Court took
the view that such payment was by way of rent and since the
municipal taxes and property taxes were payable on year to
year basis, a part of the rent was admittedly not payable by
the month and, therefore, section 12(3)(a) was not
attracted. In Prakash Surya the tenant had agreed to pay
the municipal tax
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and education cess. The amount payable towards these taxes
constituted rent and since the same was payable at the end
of the year the Court held that the rent had ceased to be
payable by the month and hence section 12(3)(a) had no
application. The same view was reiterated in Vanlila’s case
where education cess was payable by the tenant by virtue of
section 21 of the Gujarat Education Cess Act, 1962. Since
it constituted a part of the rent, to be precise permitted
increase under section 5(7) of the Act, it was held that it
took the case outside the scope of section 12(3)(a) of the
Act. In the case of Vishwambhar Hemendas also since the
rent was inclusive of taxes the Court held that the case was
governed by section 12(3)(b) of the Rent Act. The Bombay
High Court has expressed the same view in Muktabai’s case.
This Court in the Bombay Municipal Corporation’s case held
that while section 7 of the Act prohibits increase above
the standard rent it does not prohibit the recovery of
increase to which a landlord is entitled under the other
provisions of the said statue, namely, increase by way of
’permitted increases’. Education cess is specifically
recoverable as rent by virtue of section 13 and as sub-
section (3) thereof provides that it shall not be treated as
increase in rent under section 7 of the Act, there can be no
doubt that such an increase falls with the definition of
’permitted increases under section 5(7) of the Act. It,
therefore, seems to be well-settled that education cess is a
part of ’rent’ within the meaning of the Act and when the
same is claimed in addition to the contractual or standard
rent in respect of the demised premises it constitutes a
permitted increase within the meaning of section 5(7) of the
Act and being payable on a year to year basis, the rent
ceases to be payable by the month within the meaning of
section 12(3)(a) of the Act. But the question still survives
whether the parties can be agreement quantity the said
amount and make it payable on a month to month basis
provided of course the said amount does not exceed the tax
liability of the landlord; if it exceeds that liability it
would infringe section 7 of the Act and the excess would not
be allowed as permitted increase within the meaning of
section 5(7) of the Act. A right to recover a certain tax
amount from the tenant-occupant under the provisions of a
statute can be waived by the owner or quantified by
agreement at a figure not exceeding the total liability
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under the statue. If by agreement the amount is so
quantified and is made payable by the month not withstanding
the owner’s liability to pay the same annually to the local
authority, the question is whether is such circumstances the
’rent’ can be said to be payable by the month within the
meaning of section 12(3)(a) of the Act? We see no reason
why we should take the view that even where the parties
mutually agree and quantify the tax amount payable by the
tenant to the landlord on monthly basis, the
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rent should not be taken to be payable by the month within
the meaning of section 12(3)(a) of the Act. A statutory
right to recover the tax amount by way of reimbursement can
be waived or limited by the holder of such right or the
recovery can be regulated in the manner mutually arranged or
agreed upon by the concerned parties so also as it is not in
violation of statute. If for convenience and to facilitate
payment, the parties by mutual consent work out an
arrangement for the enforcement of the owner’s statutory
right to recover the tax amount and for discharging the
tenant-occupant’s statutory obligation to reimburse the
owner, we see no reason for refusing to uphold such a
contract and if thereunder the parties have agreed to the
tenant-occupant discharging his liability by a fixed monthly
payment not exceeding the tax liability. The said monthly
payment would constitute ’rent’ payable by the month within
the meaning of section 12(3) (a) of the Act. The view
expressed by the Gujarat High Court in Vishwambar Hemandas
does not, with respect, state the law correctly if it holds
that even in cases where the entire tax liability is on the
landlord and the tenant had to pay a gross rent of Rs. 19.50
p.m . the mere recital in the lease that the rent is
inclusive of taxes the case outside the purview of section
12(3)(a) of the Act. We are, therefore, in respectful
agreement with the view taken by the Appellate Court and the
High Court in that behalf. We, therefore, hold that as the
tenant had failed to comply with the requirement of section
12(3)(a) to seek protection from eviction, the Courts below
were justified in ordering his eviction.
In the view that we take on the first point discussed
above, it is unnecessary for us to examine the second point
regarding sub-tenancy.
In the result we see no merit in this appeal and
dismiss the same with costs. We, however, grant time upto
31st December, 1991 to the tenant to vacate.
R.S.S. Appeal dismissed.
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