Back
2016 Supreme(Del) 4206
IN THE HIGH COURT OF DELHI AT NEW DELHI
V.K. SHALI, J.
SHRI B M SHARMA – Appellant
Versus
SHRI BRIJ BHUSHAN SHARAN & ORS. – Respondent
R.F.A. No. 451, 356, 480 of 2013 & C.M. APPL. No. 14813, 16085 of 2013 & C.M. APPL. No. 29448, 29451, 31130 of 2015
Decided On : 30-05-2016
For the Appellant : Mr. Ravi Gupta, with Mr. Ashish Dholakiya, Mr. D. Kishore Kumar, Mr. Gautam Bajaj & Ms. Bhoomija Verma.
The main legal point established in the judgment is that property tax cannot be added to the rent to deny the tenant protection under the DRC Act unless agreed upon by the tenant.
Headnote:
Property Tax - Rent Control - Delhi Rent Control Act, 1958, Section 3, Section 6A, Section 7(2), Section 8; New Delhi Municipal Council Act, 1994, Section 60, Section 66, Section 67, Section 102 - The court discussed the issue of whether property tax payable by the tenant under Section 67(3) of the NDMC Act can be added to the rent to deny the tenant protection under the DRC Act if it exceeds Rs.3500. The court analyzed various legal provisions and case law to conclude that property tax cannot be added to the rent to take away the protection of the DRC Act unless agreed upon by the tenant. The court allowed the appeals and set aside the eviction orders, remanding one case for further proceedings.
Fact of the Case:
The court considered whether property tax payable by the tenant under the NDMC Act could be added to the rent to deny the tenant protection under the DRC Act if it exceeded Rs.3500. The cases involved landlords seeking eviction based on the combined amount of rent and property tax exceeding Rs.3500.
Finding of the Court:
The court found that property tax cannot be added to the rent to take away the protection of the DRC Act unless agreed upon by the tenant. The court allowed the appeals and set aside the eviction orders, remanding one case for further proceedings.
Issues: The main issue was whether property tax payable by the tenant under the NDMC Act could be added to the rent to deny the tenant protection under the DRC Act if it exceeded Rs.3500. Other issues included the interpretation of legal provisions and case law related to rent control and property tax.
Ratio Decidendi: The court held that property tax cannot be added to the rent to take away the protection of the DRC Act unless agreed upon by the tenant. The court emphasized the need for a harmonious interpretation of conflicting provisions and the importance of protecting tenants from eviction based on property tax.
Final Decision: The court allowed the appeals, setting aside the eviction orders, and remanded one case for further proceedings.
V.K. SHALI, J.
1. These are three Regular First Appeals in which the common question of law arises. The common question of law which arises for consideration is as to whether the property tax which is payable by the landlord under the New Delhi Municipal Council Act, 1994 (NDMC Act) and is recoverable from the tenant under Section 67 (3) of the NDMC Act as arrears of rent can be said to be forming part of the rent payable by the tenant to the landlord, so as to lose the protection of the Delhi Rent Control Act, 1958 (DRC Act) under Section 3(c) of the DRC Act, if it exceeds Rs.3500/-.
2. Briefly stated the facts of all the three cases are almost similar in the sense that there exists relationship of landlord and tenant and the rent of the premises in question is less than Rs.3500/- but in case the property tax assessed in respect of such property the rateable value exceeds the amount of rent payable then the difference between the tax levied and the tax leviable shall be receivable by the landlord and it can be recovered by him as arrears of rent [Section 67 (3)]. Further, if this differential amount plus the rents payable by the tenant exceeds Rs.3500/-, whether the landlord can file a suit for possession.
3. Before dealing with this question, it will be pertinent here to refer to few relevant provisions of the both the Delhi Rent Control Act, 1958 and the New Delhi Municipal Council Act, 1994 as follows:-
The Delhi Rent Control Act, 1958
“3. Act not to apply to certain premises- Nothing in this Act shall apply –
(a) .....
(b) .....
(c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees”.
………………………
“6A. Revision of rent – Notwithstanding anything contained in this Act, the standard rent, or, where no standard rent is fixed under the provisions of this Act in respect of any premises, the rent agreed upon between the landlord and the tenant, may be increased by ten per cent. every three years.”
………………………
“7.(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;
Provided that nothing in this sub-section shall affect the liability of any tenant under an agreement entered into before the 1st day of January, 1952, whether express or implied, to pay from time to time the amount of any such tax as aforesaid.”
…………………..
“8. Notice of increase of rent –
(1) Where a landlord wishes to increase the rent of any premises, he shall give the tenant notice of his intention to make the increase and in so far as such increase is lawful under this Act, it shall be due and recoverable only in respect of the period of the tenancy after the expiry of thirty days from the date on which the notice is given.
(2) Every notice under sub-section (1) shall be in writing signed by or on behalf of the landlord and given in the manner provided in Section 106 of the Transfer of Property Act, 1982.”
4. Chapter VIII of the NDMC Act deals with taxation.
“60. Taxes to be imposed by the Council under this Act. – (1) The Council shall for the purposes of this Act, levy the following taxes, namely:-
(a) property tax;
(b) to (e)…………………..
“66. Incidence of property tax – (1) The property tax shall be primarily leviable as follows:-
(a) If the land or building is let, upon the lessor;
(b) ………….
(c) ………….”
…………………….
“67. Apportionment of liability for property tax when the premises are let or sub-let.-
(l) 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
