Delhi High Court

Mr. K.S. Bakshi And Ors. vs M/S. S.N. Surinder Nath Pvt. Ltd. & ... on 8 December, 2011

Author: Valmiki J. Mehta

*              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?





 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

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

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.

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

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

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

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