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2006 Supreme(Cal) 805
High Court Of Calcutta
Before: Sanjib Banerjee, J.
WEST BENGAL ELECTRONICS INDUSTRY DEVELOPMENT CORPORATION LTD - Appellant
Versus
CALCUTTA INVESTORS - Respondent
C. P. 485 Of 2004
Decided On : 12/20/2006
A.SEN, J.Chowdhary, R.BASU, S.N.MUKHERJEE, S.S.BOSE, S.TALUKDAR
A company's arguable defence to a claim for unpaid rent and allied charges under the West Bengal Premises Tenancy Act, 1977, based on the interpretation of "rent" and waiver of statutory benefits by agreement, may prevent the admission of a winding up petition.
Headnote:
RENT - ARREARS - WINDING UP PETITION - CLAIM FOR UNPAID RENT AND ALLIED CHARGES - APPLICABILITY OF WEST BENGAL PREMISES TENANCY ACT, 1977 - INTERPRETATION OF "RENT" - WAIVER OF STATUTORY BENEFITS BY AGREEMENT - ARGUABLE DEFENCE - ADMISSION OF WINDING UP PETITION FOR ADMITTED RENT - INTEREST - STAY OF PETITION ON PAYMENT.
Fact of the Case:
Petitioner filed a winding up petition against the company for unpaid rents and allied charges. The company disputed the claim, asserting that rent from August 1999 had been deposited with the rent controller and that the enhancement of rent was not applicable as the composite amount payable exceeded Rs. 10,000/-. The petitioner conceded that the claim for enhanced rent was not being pressed but pressed the claims for maintenance charge and municipal tax and commercial surcharge under the West Bengal Premises Tenancy Act, 1977.
Finding of the Court:
The court held that the company had made out an arguable case in defence to the petitioner's claim for maintenance charges and municipal tax and commercial surcharge, as the agreement between the parties contained several clauses providing for maintenance and payment of taxes. The court also noted that the company had offered to make immediate payment of the rent for the six months beginning April 1999 and to provide copies of documents evidencing due deposit of rent for the period beginning October 1999.
Issues: 1. Whether the provisions of the West Bengal Premises Tenancy Act, 1977 applied to the relationship between the parties. 2. Whether the company was liable to pay maintenance charges and municipal tax and commercial surcharge under the Act. 3. Whether the company's defence was sham or moonshine.
Ratio Decidendi: 1. The court did not conclusively pronounce on the issue of whether the provisions of the Act applied to the relationship between the parties, as it was not necessary for the decision in the winding up petition. 2. The court held that the company had made out an arguable case in defence to the petitioner's claim for maintenance charges and municipal tax and commercial surcharge, as the agreement between the parties contained several clauses providing for maintenance and payment of taxes. 3. The court held that the company's defence was neither sham nor moonshine, as it was a defence that may fail but was not demurrable.
Final Decision: The court admitted the winding up petition for the sum of Rs. 54,000/- being the rent admitted to be due for the months of April to September 1999, with interest at the rate of 8.33% per annum from the respective due dates of the rents till payment. The court stayed the petition on condition that the company paid off both the principal amount and the interest within four weeks from the date of the order. In default of payment, the petition was to be advertised and would be returnable on the next court date four weeks after the date of publication of the advertisement.
( 1 ) THIS winding up petition is founded on the claim of unpaid rents and allied charges.
( 2 ) AS the mandatory prelude to the winding up petition, a notice was issued on April 15, 2004 claiming a sum of Rs. 4,95,000/- on account of arrear rents from April 1999 to October 2003 at the rate of rs. 9,000/- per month. Rent for the period November 2003 to April 2004 was claimed at the enhanced rate of Rs. 54,000/- per month totalling to Rs. 2,70,000/ -. The enhanced rent for the period beginning november 2003 was claimed on the strength of section 17 (4a) of the west Bengal Premises Tenancy Act, 1977 (the said Act) that came into effect immediately prior thereto. Maintenance charges were sought at the rate of 10% of the rent in terms of section 5 (7) of the said Act for the period of November, 2003 to March 2004 amounting to rs. 27,000/ -. A further claim under section 5 (8) of the said Act towards municipal tax and commercial surcharge was made for a sum of rs. 3,06,000/ -.
( 3 ) THE petitioner's total claim of Rs. 10,98,000/- was denied in the company's reply of May 20, 2004 to the statutory notice. The company asserted that rent from August 1999 had been deposited with the rent controller upon the petitioner's refusal to accept two money orders of rs. 4,500/- each that had been tendered on account of rent for the month of August 1999. The enhancement of rent was disputed. The company argued that inasmuch as the composite amount payable by the company was in excess of Rs. 10,000/-, the provisions of the said act were inapplicable and, consequently, there could be no enhancement sought in terms of the said Act. Section 3 (f) (i) of the said act was cited in support of such argument. The claim of commercial surcharge was denied on the ground that the money on such account was being paid regularly by the company to the superior lessor on the strength of the company having permitted the same.
( 4 ) THE substance of the statutory notice was made the basis of the winding up petition. Learned counsel for the petitioner, however, fairly conceded that in view of the Division Bench decision of this Court reported at 2002 (2) CHN 384, enhacement of rent under the said Act had to be adjudged and could not be suo motu claimed by the landlord. Since no process of adjudication had been initiated for enhancing the rent, it was submitted on behalf of the petitioner, the claim on account of enhanced rent for the period beginning November 2003 was not being pressed in these proceedings. Learned counsel, however, submitted that the claims in the statutory notice pursuant to section 5 (7) and section 5 (8) of the said Act were being pressed.
( 5 ) IN respect of the first head of claim, that of arrears rent for the period April, 1999 to July 1999, it was submitted on behalf of the petitioner that there was no suggestion by the company that rent for such period had either been paid or had been deposited with the rent controller. In furtherance of the claims relating to maintenance charge and municipal tax and commercial surcharge, it was submitted that sub-sections (7) and (8) of section 5 of the said Act statutorily ordained that landlord was entitled to the same. The company's defence, both in the statutory notice and in the affidavit used in these proceedings, that the relationship between the parties would not be governed by the provisions of the said Act, was dealt with by citing the decisions reported at 2004 (2) CHN 399 and 2006 (2) CLT 322. In the first of these two cases, the Court was called upon to adjudicate whether the tenant was in default in paying rent. That was a suit for eviction founded, inter alia, on default in payment of rent. In such context, the loose definition of 'rent' was relied upon and it was held that non-payment of rent. In the second case it has been held that municipal rates cannot form part of the monthly rent inasmuch as the periodicity of liability in respect of municipal taxes was not on mont
