* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA Nos.516/2009 and 518/2009
% 8th December, 2011
1. RFA No.516/2009
BOMBAY BUILDERS (INDIA) PVT. LTD. ..... Appellant
Through: Mr. Anil Airi, Advocate with Ms.
Sadhna Sharma, Advocate.
Versus
S.N. SURINDER NATH PVT. LTD. & ANR. ..... Respondents
Through: Mr. Manish Makhija, Advocate.
2. RFA No.518/2009
MR. K.S. BAKSHI AND ORS. ..... Appellants
Through: Mr. Anil Airi, Advocate with Ms.
Sadhna Sharma, Advocate.
Versus
M/S. S.N. SURINDER NATH PVT. LTD. & ANR. ..... Respondents
Through: Mr. Manish Makhija, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
RFA Nos.516/09 and 518/09 Page 1 of 8
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of these Regular First Appeals is to the impugned judgments of the trial Court dated 3.10.2009. By the impugned judgments, the trial Court relying upon Section 67(i) of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as „the Act‟) has passed a decree directing the appellants/tenants/defendants to pay the difference of the property tax and the actual rent i.e. that part of the property tax which is in exccess of the rent, the appellants/defendants/tenants have been directed to reimburse to the respondents/plaintiffs.
2. The facts of the case are that the respondents/plaintiffs filed the suits against the appellants/defendants/tenants claiming ` 11,95,281/- on the basis that the property tax had increased and the increased portion of the property tax is liable to be paid by the appellants/tenants. Two of the relevant paras of the plaint are paras 4 and 10 which read as under:-
"4. That under the lease it was categorically agreed between the parties that the defendants would keep the Plaintiff indemnify and harmless against any claim regarding any increase of house tax, ground rent, imposition of any penalty, tax, fee action for re- entry of the said premises or other portion of the property belonging to the Plaintiff.
10. That in view of the said enhancement of the rateable value of the property in question, the house tax of the demised premises RFA Nos.516/09 and 518/09 Page 2 of 8 has also increased, which is the liability of the defendant in terms of the Lease Deed. It is submitted that on account of the said enhancement, the plaintiff had to pay a huge extra amount of almost 10 times of the then prevailing rateable value. It is further submitted that after giving adjustment of the tax being paid on the rateable value, which was to be paid at `1,500/- per month, the plaintiff had to pay an extra amount, which works out to ` 11,95,281/- inclusive of interest thereon, the details of which are given in Annexure-A annexed to the plaint." (emphasis added) If there was any doubt with respect to the fact that cause of action in the suits was confined to the aspect of reimbursement due to increase of property tax, the same is removed by a reading of para 14 of the plaint which deals with the cause of action. Para 14 of the plaint reads as under:-
"14. That the cause of action arose w.e.f. 01.04.1994, when the rateable value of the property was increased by the NDMC vide its order dated 06.12.1996; again arose when the representations were made against the same; again arose when the rateable value was revised and rectified by NDMC vide order dated 26.8.2004; again arose when despite revision of the said rateable value and despite payment by the plaintiffs, the defendant refused to pay the difference of the house-tax despite having undertaken to pay under the Lease Deed dated 02.11.1993; and the same is continuing one as the defendant has not made the payment of the amount due till date." (emphasis added)
3. The appellants/defendants contested the suits and stated that there was no increase in the property tax. It was therefore pleaded that no amount which is claimed by the respondents/plaintiffs was accordingly RFA Nos.516/09 and 518/09 Page 3 of 8 payable.
4. In view of the aforesaid facts, it is quite clear that cause of action in the subject suits was not based on the entitlement of the respondents/plaintiffs being entitled to claim the difference of the property tax which is higher than the rent as per Section 67 of the Act, but only on account of the clauses in the leases pertaining to the liability of the tenants/appellants on account of increase of the property taxes.
5. In the subject suits, after completion of pleadings, the trial Court framed the following issues:-
"1. Whether the suit is filed within the period of limitation? OPP
2. Whether plaintiff is entitled to recover any amount from the defendant as claimed? OPP
3. If Issue No.2 is decided in favour of plaintiff, whether the plaintiff is entitled to recover any amount on account of interest, if so, at what rate for what period and to what amount? OPP
4. Relief."
6. A reading of the pleadings and issues framed shows that the suits were contested on the issue of entitlement of the respondents/plaintiffs to claim the increased tax from the appellants/defendants. There was no issue in the suits and nor was there any pleading of the entitlement of the claim of the respondents/plaintiffs as per Section 67 of the Act- the sole basis on which the suits have been decided.
RFA Nos.516/09 and 518/09 Page 4 of 8
7. I may note that when a landlord claims the entitlement of difference in the property tax, being the difference of the higher figure of property tax and the lower figure of rent, the tenant may have various defences to such a claim. One of the defence to such a claim arises because of peculiarity that the landlord instead of fixing a correct rent for the premises, on the contrary, fixes and takes a much lesser rent, because, the landlord in fact takes huge amount running into lacs of rupees either towards security deposit or toward the advance rent and so on. This methodology is applied by the landlords so as to evade payment of property tax to the local municipal authority inasmuch as higher the actual rent, higher is the property tax which would be payable with respect to the premises. Rent is defined to be the total charges/amounts received by the landlords and which will include the interests received by the landlords from the huge security deposits and advance rents which run into lacs and lacs of rupees. If therefore the suits were filed laying out a cause of action under Section 67 of the Act, the appellants/defendants/tenants would have had an opportunity to take up various factual and legal defences, including by pleading that the actual rental figure is much higher than the stated rent, so as to defeat such a claim which would have relied upon the cause of action of Section RFA Nos.516/09 and 518/09 Page 5 of 8 67 of the Act. As already stated above, there is not even a whisper in the entire plaint of the cause of action being based on Section 67 of the Act. A reference to the impugned judgments shows that the impugned judgments only and only decide the cases on the issue of Section 67 of the Act, and not on the issue as to whether the property tax has in fact increased, whether there are clauses in the lease deed entitling the respondents/plaintiffs to claim such increase in the property tax, what are the different clauses of the lease deed dealing with the respective rights and liabilities qua the original property tax or the increased property tax and so on. In a suit, where the pleadings were only on the basis of whether or not property tax had increased, the suit could also have been decided only on such issues and not on a totally new issue which was absent in the pleadings or in the issues which were framed.
8. The relevant para of the impugned judgments which has decreed the suits reads as under:-
"Finding on issue no.2.
'Whether plaintiff is entitled to recover any amount from the defendant as claimed? OPP'
7. Onus of proving this issue was on the plaintiff who has claimed excess amount paid on account of house tax as per Annexure A Ex. PW1/E to NDMC alongwith voucher of the same RFA Nos.516/09 and 518/09 Page 6 of 8 Ex.PW1/F1 to PW1/F47 alongwith interest total amounting to ` 11,95,281/-. It is contended by the counsel for the defendant that the alleged amount is not recoverable by the plaintiff from the defendant as the lease has expired in the 2002 which was for a period of nine years starting from 1993. As such the lease had expired and plaintiff is specifically given time as per the clause of the lease, he is not entitled to the same. Counsel for the plaintiff, on the other hand, has drawn attention of the court to Section 67(i) of the New Delhi Municipal Council Act, 1994, which provides as:
"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 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."
Though the plaintiff earlier claimed the amount on the basis of the agreement in the lease deed. However, in view of the provision of 67(i) of New Delhi Municipal Council Act, 1994, plaintiff is entitled to recover the amount from the defendant. Hence, this issue is accordingly decided in favour of the plaintiff and against the defendants."
9. In terms of the aforesaid findings with respect to issue No.2 and which deals only with Section 67 of the Act, the suit has been decreed, and which is therefore a clear cut illegality inasmuch as the suits have to be decided only in terms of pleadings filed and issues framed. The object of the pleadings filed and the issues framed is to put the opposite party to notice RFA Nos.516/09 and 518/09 Page 7 of 8 that the pleaded issues will have to be defended accordingly. Courts are not empowered to decide factual issues such as one under Section 67 (i) of the Act, when such a factual issue is not even pleaded, much less an actual issue framed thereon.
10. In view of the above, appeals are accepted. Impugned judgments dated 3.10.2009 are set aside. Matters are remanded back to the trial Court for disposal of the suits in accordance with law in terms of the pleadings of the parties, issues framed thereon and the evidence led by both the parties accordingly. Parties to appear before the District & Sessions Judge, Delhi on 17th January, 2012, and on which date the District & Sessions Judge will mark the suits for hearing and disposal in accordance with law to a competent Court from the stage of final arguments as the evidence of both the parties in the case has already been led.
11. With the aforesaid observations, appeals are disposed of and the suits are remanded for fresh judgments in accordance with law. Parties are left to bear their own costs. Trial Court record be sent back.
VALMIKI J. MEHTA, J DECEMBER 08, 2011 Ne RFA Nos.516/09 and 518/09 Page 8 of 8