Bombay High Court
Satish Ghewarchand Mohta vs The Oriental Insurance Company ... on 17 November, 2025
2025:BHC-NAG:12220
SA 35 of 2021.odt
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
SECOND APPEAL NO.35/2021
APPELLANT : Satish Ghewarchand Mohta
Original Plaintiff Aged about 60 years,
On R.A. Occupation : Builder and Promoter,
Prop: Aditya Developers,
R/o Nelson Square, Chhindwara Road, Nagpur.
...VERSUS...
RESPONDENTS : 1. The Oriental Insurance
Original Defendants Company Limited
On R.A. Oriental House, A-25/27, Asaf Ali Road,
New Delhi.
2. The Regional Manager,
Regional Office,
The Oriental Insurance Company Limited
S.K. Tower, 4th Floor, Nelson Square,
Chhindwara Road, Nagpur.
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Mr. Anand Jaiswal, Sr. Advocate with Abhishek Kapoor and Radhika Bajaj,
Advocates for appellant
Mrs. Mrunal Naik, Advocate for respondents
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CORAM : ROHIT W. JOSHI, J.
Date of reserving the order : 10/11/2025
Date of pronouncing the order : 17 /11/2025
ORDER:
1. Notice was issued in the present second appeal vide order
dated 25/06/2021 on the following substantial questions of law :-
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(A) Whether the lower Appellate Court was justified
in interpreting Clause 23 of the lease deed (Exh.24) ?
(B) Whether the lower Appellate Court erred in
arriving at a finding that the term "service tax" was not
incorporated in lease-deed (Exh.24) ?
2. The present appellant is the original plaintiff, who had filed
suit being Special Civil Suit No.290/2012 for recovery of amount of
service tax amounting to Rs.19,30,838/- against the respondents, who
are the original defendants. The appellant and respondents in this
appeal will be referred to as "plaintiff and defendants" hereinafter. The
said suit was decreed by the learned trial Court vide judgment and
decree dated 16/11/2016. The learned trial Court directed the
defendants to pay the amount of service tax to the plaintiff along with
interest @ 12% per annum from the date of decision of the suit till
realization of amount. Aggrieved by the aforesaid judgment, the
respondents/defendants preferred an appeal being Regular Civil Appeal
No.227/2018 which was allowed vide judgment and decree dated
04/09/2019. The present second appeal is preferred against the said
judgment and decree passed by the learned first Appellate Court.
3. The appellant had let a property comprising of 4th floor
premises in building known and styled as "S.K. Tower", 742 Nelson
Square Chhindwara road, Nagpur to the defendants under the lease-
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deed dated 26/11/2008 for a period of 9 years commencing from
01/12/2008 till 30/11/2017. On the date of execution of lease-deed,
service tax was not leviable to lease of immovable properties. However,
service tax was made applicable to lease of immovable property vide
Finance Act of 2010 which was notified on 26/02/2010 with
retrospective effect from 01/06/2007.
4. Thus, service tax was leviable on the transaction of lease
between plaintiff and defendants. The plaintiff has paid the service tax
for the property in question and has thereafter filed suit for recovery of
the same against the defendants. The contention of the plaintiff is that
although service tax is not specifically referred in the agreement of lease
since the same was not payable as on the date of execution of lease
agreement, Clause 23 of the lease-deed makes it sufficiently clear that
the liability to pay all taxes including service tax would be of the
defendants/lessees. As against this, the defence of the
defendants/lessees is that Clause 23 of the lease agreement refers to
Municipal taxes and not other taxes. It is, therefore, contended that
Clause 23 will not be applicable to service tax.
5. The bone of contention between the parties relates to
interpretation of Clause 23. The substantial questions of law are also
framed with respect to interpretation of Clause 23. It will therefore be
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appropriate to reproduce Clause 23 of the lease-deed, which reads as
under :-
"23. That the Municipal Taxes as and if levied by the
Government in respect of the premises in occupation of the
Lessee, as raised by the Municipal Corporation and/or the
Government, as the case may be, shall be borne and paid by the
Lessee for the occupied portion only. The Municipal water
charges shall be borne and paid by the unit Association and
such charges shall be treated alongwith maintenance charges of
common areas as mentioned in clause 21 above."
It will be pertinent to state that lease-deed dated
26/11/2008 is an admitted document.
6. Before dealing with interpretation of Clause 23, it must
also be stated that Mr. Anand Jaiswal, learned Senior Advocate for the
plaintiff/landlord does not dispute that in the absence of any agreement
between the parties, service tax is payable by the lessor. The contention
of the learned Senior Advocate is that although service tax is payable by
the lessor, it is open for the parties i.e. lessor and lessee to enter into a
separate agreement whereby liability to make payment of service tax
can be fastened on the lessee or landlord may reserve the right to
recover the same from the lessee. He has placed reliance on the
judgments of the Hon'ble Supreme Court in the matter of Rashtriya
Ispat Nigam Limited Vs. Dewan Chand Ram Saran , reported in (2012) 5
SA 35 of 2021.odt
SCC 306 and Union of India and others Vs. Bengal Shrachi Housing
Development Limited and another, reported in (2018) 1 SCC 311 in
support of his contention.
7. Mrs. Naik, learned Advocate for the respondents/lessees
does not dispute the said legal proposition that parties can by an
agreement arrive at an arrangement where the lessee, who is recipient
of service, shall bear the burden of service tax as against the lessor i.e.
service provider.
8. In view of the above, Clause 23 of the lease-deed needs to
be interpreted. Perusal of Clause 23 of the lease-deed indicates that it
only refers to Municipal taxes and no other taxes. However, although
reference is made only to Municipal taxes, the said words 'Municipal
taxes' are qualified by the words, 'as and if levied by the Government' in
respect of the premises in occupation of lessee, as raised by Municipal
Corporation and/or the Government, as the case may be ....."
9. The contention of Mr. Jaiswal, learned Senior Advocate for
the appellant is that the agreement specifically refers to taxes that may
be imposed by the Government. He contends that service tax is a tax
imposed by the Government and as such, it is covered by Clause 23 of
the lease-deed. He contends that on a holistic interpretation of the
agreement, as a whole, it will be apparent that the liability to make
payment of all taxes with respect to the lease was on the
SA 35 of 2021.odt
defendants/lessees and not on the plaintiff/lessor. Mr. Jaiswal, learned
Senior Advocate therefore contends that the learned first Appellate
Court has erred in interpretation of Clause 23 of the lease-deed.
10. Per contra, Mrs. Naik, learned Advocate for the respondents
would contend that Clause 23 merely refers to Municipal taxes, which
obviously do not include service tax and therefore, the said clause
cannot be interpreted to mean that the liability of making payment of
service tax is to be borne by the defendants/lessees.
11. Perusal of Clause 23 of the lease-deed makes it is clear that
it refers only to Municipal taxes and no other taxes. Perusal of Clause 23
indicates that reference to Municipal Corporation and Government is
made as entities that may impose the tax. However, only Municipal tax
is referred in the said clause. The said clause does not deal with any tax
other than Municipal taxes. It appears that the word "Government" is
included in the clause by way of abundant caution.
12. It is the cardinal principle of law that while interpreting the
agreement, the Court must not add any words to the agreement, just as
it cannot discard any words enumerated in the agreement. If the
contention of the appellant is accepted, the words "....and any other
tax" will have to be added in Clause 23, which is not permissible. As
against this, the words "...as and if levied by the Government ...and/or
the Government", can be interpreted to mean that in cases where
SA 35 of 2021.odt
Municipal taxes are levied by the Government, the burden of payment
of the same will be on the lessee. The clause cannot be interpreted to
mean that any tax other than Municipal taxes will be payable by the
lessee. It must be stated that there are provisions under the erstwhile
City of Nagpur Corporation Act as also in the Maharashtra Municipal
Corporation Act, which provide for supersession of Municipal
Corporation and taking over the control of administration thereof by the
State Government. It appears that therefore the word "Government" has
been incorporated in Clause 23 of the agreement.
13. It will be pertinent to state that Clause 23 specifically refers
to only one tax i.e. Municipal tax and thereafter refers to two authorities
i.e. the Corporation and the State Government as entities, who may
impose the said tax. Clause 23 therefore cannot be interpreted to mean
that the taxes other than Municipal taxes are governed by the said
clause. The intention to deal with Municipal taxes only is writ large on
the face of said clause and reference to Municipal Corporation and the
State Government is only made as statutory authorities, who may
impose the said tax.
14. In view of the aforesaid, the substantial questions of law
framed in the appeal are required to be answered in favour of the
respondents/defendants and against the appellant/plaintiff. The second
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appeal is therefore liable to be dismissed and is accordingly dismissed
with no order as to costs.
(ROHIT W. JOSHI, J.)
Wadkar
Signed by: S.S. Wadkar (SSW)
Designation: PS To Honourable Judge
Date: 17/11/2025 18:06:54
