M/S Atma Ram Properties Pvt. Ltd. vs M/S Allied Motors Ltd. & Ors.
2013 Latest Caselaw 3291 Del

$~
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      CS(OS) 1206/2009

       M/S ATMA RAM PROPERTIES PVT. LTD.       ..... Plaintiff
                    Through: Mr. Sandeep Sethi, Senior
                             Advocate with Mr. Ramesh
                             Singh with Mr. Amit Sethi,
                             Advocates

                   versus

       M/S ALLIED MOTORS LTD. & ORS.        ..... Defendants
                    Through: Mr. Neeraj Kishan Kaul, Senior
                              Advocate with Ms. Diya Kapur
                              and Ms. Manjira Dasgupta,
                              Advocates for defendant No.1.
                              Mr. Rajesh Yadav, Advocate
                              for defendants No.3 and 4.

%                               Reserved on:      11th July , 2013.
                                Date of Decision: 30th July , 2013.

CORAM:
HON'BLE MR. JUSTICE MANMOHAN


                            JUDGMENT

MANMOHAN, J

I.A. 15081/2009 in CS(OS) 1206/2009

1. Present application has been filed by plaintiff under Order XII Rule 6 CPC seeking judgment on admission.

2. This suit has been filed by the plaintiff seeking recovery of possession of the suit premises, for arrears and future damages for use and occupation against its tenant defendant no. 1-company through its Director, defendant no. 2 and also against defendant no. 3 and its partner defendant no. 4 who are sub-tenant with regard to a portion of the suit property. The present suit has been filed on the basis that the plaintiff vide notice dated 12th March, 2009 had determined the tenancy of the defendant No.1 and furthermore, that the rent receivable from the suit premises has increased to more than Rs. 3,500/- thus the defendants are not entitled to protection under Delhi Rent Control Act, 1958 (hereinafter referred to as 'Act, 1958').

3. The plaintiff's case is that it is the landlord and owner of the suit premises admeasuring 8849.33 sq. ft. It is stated that the defendant was inducted as a tenant vide agreement dated 1st March, 1937 followed by subsequent agreements dated 25th August, 1943 and 31st July, 1946 with regard to major portion of the suit premises and Agreement dated 1st April, 1967 with respect to additionally built up mezzanine floor. It is stated that the plaintiff vide notice dated 13th June, 2007 had increased the rent and then vide subsequent notice dated 12th March, 2009 terminated the tenancy. It is also stated that in spite of the service of the notices the defendant has neither paid the increased rent nor vacated the premises. Hence the present suit.

4. Mr. Sandeep Sethi, learned senior counsel for the plaintiff contended that the defendant no. 1 in its written statement has admitted itself to be a tenant in the suit premises and has also admitted receipt of both the notices dated 13th June, 2007 and 12th March, 2009

whereby the plaintiff had increased the rent and terminated the tenancy respectively. He pointed out that defendant nos. 3 and 4 in their written statement have admitted that they are the sub-tenants at a monthly rental of Rs. 345/-.

5. Mr. Sethi submitted that the defence taken by the defendant No.1 in its reply dated 27th March, 2009 to the termination notice that increase of rent of seventy eight percent by single notice is misplaced. According to him, Section 6A of Act, 1958 gives a statutory right to a landlord to exercise the option of increasing rent by ten percent and once the option is exercised the tenant has no right to object to it. Mr. Sethi submitted that Section 6A permits the landlord to increase the rent by a single notice for all the preceding intervals of three years, i.e., after 10, 15 or 18 years. Therefore, this right can be exercised by landlord after any number of years from the date when the rent was first fixed.

6. Mr. Sethi submitted that with the subsequent insertion of Section 6A in the Act, 1958, the requirement of a notice as stipulated under Section 8 of the Act, 1958 was done away with. He pointed out that Section 6A starts with a non-obstante clause.

7. Mr. Sethi contended that it is an admitted position that the defendant was paying Rs. 1802.37 per month as rent and the plaintiff had vide notice dated 13th June, 2007 increased the rent by ten percent every three year from 1988 onwards. He submitted that ten percent enhancement from 1988 onwards after every three years, comes to a total of six such enhancements till 2006, thereby making the rent payable by defendant No.1 to Rs. 3,193/-. Mr. Sethi submitted that

adding Rs.345/- per month paid by defendant no. 3 to this increased rent of Rs.3,193/- makes the total monthly rent fetched from the suit premises to Rs. 3,538/-, thereby taking the premises out of the purview of the Act, 1958. He relied upon a judgment of Division Bench of this Court in Atma Ram Properties Pvt. Ltd. vs. P.S. Jain & Co. wherein it has been held that once the rent of the premises whether paid by the landlord to tenant or paid by sub-tenant to tenant exceeds Rs.3,500/- per month, the protection to premises ceases to exist.

8. Mr. Sethi further submitted that by virtue of the Agreements dated 01st March, 1937, 25th August, 1943 and 31st July, 1946 the house tax and water charges are liable to be paid by the tenant in addition to the rent. According to Mr. Sethi, with the enactment of NDMC (Determination of Annual Rent) Bye-laws, 2009, the house tax applicable to the suit premises has become payable on Unit Area basis and not on the basis of annual rent. He pointed out that the annual house tax on the area in possession of defendants comes to Rs.16,46,034/- i.e. Rs.1,37,170/- per month, which the defendants have admittedly failed to pay in spite of receiving the demand letter dated 13th July, 2009.

9. Mr. Sethi submitted that by virtue of Section 67 of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as 'Act, 1994'), if house tax of the premises exceeds the rent payable by the tenant, then the landlord is entitled to receive from the tenant, the difference between the property tax levied/payable and the amount of tax calculable on the amount of rent. He further submitted that Section 67 of the Act, 1994 entitles the landlord to recover tax amount from

the tenant in the same manner as rent. According to him, it is an admitted position that the house tax has not been paid by the defendant No1, therefore, the differential amount payable by defendant No.1 to plaintiff is nothing, but arrears of rent. He submitted that the house tax forms part of the rent and, therefore, the total amount of house tax of the suit premises along with rent far exceeds Rs.3,500/- per month, which is another reason whereby the suit property has lost the protection of the Act, 1958.

10. Per contra, Mr. Neeraj Kishan Kaul, learned senior counsel for defendants No.1 and 2 submitted that the present suit itself is barred by Section 50 of the Act, 1958. He submitted that whether the plaintiff has lawfully increased the monthly rent is exclusively vested with the Rent Controller and the jurisdiction of this Court is expressly barred. Mr. Kaul relied upon Atma Ram Properties (P) Ltd. vs. Escorts Ltd. & Anr., 2012 (129) DRJ 229 wherein it has been held as under:

"47. In the present case, the position in law becomes more clear, if one adopts the plan rule of construction of the enactment, it can be easily discerned that the express bar contained under Section 50 would continue to govern the matters relating to increase in agreed rate of rent as the language of Section 50 is wide enough when it enacts "any other matter which the controller is empowered by or under this act to decide" to take within its sweep the matters relating to increase of the agreed rate of rent provided under Section 6A of the Act. Thus, the arrears of the rent or disputes relating increase in the rent as provided under Section 6A would also attract the bar of Section 50 of the Act when it comes to the jurisdiction of the civil court as they are matters falling within the domain of Rent Controller."

11. Mr. Kaul contended that even otherwise the plaintiff by resorting to Section 6A of the Act, 1958 cannot increase the rent by ten percent every three years since 1988 by issuing a single notice. He submitted that Section 6A only gives a right to increase and the manner in which such increase is to be effected is provided under Section 8 of the Act, 1958. He submitted that this right to increase the rent has to be exercised in a particular manner, that is for each enhancement sought by the landlord, a notice to this effect is to be issued to the tenant. He submitted that the plaintiff not having done so, cannot in the year 2007 deem that it was so exercised.

12. Mr. Kaul further submitted that Section 67 of Act, 1994 only provides that in case house tax is to be recovered from tenant, the landlord will have the same rights and remedies to recover it, as it has in the case of recovery of rent. Mr. Kaul also submitted that the Act,1958 defines rent in terms of monthly period and the house tax, being an annual charge under the Act, 1994 would certainly not form part of the term monthly rent under the Act, 1958.

13. Mr. Kaul lastly submitted that in the present case there are serious contentious issues which are to be determined and these issues cannot be decided in an application under Order XII Rule 6 of CPC. He submitted that when the defence raised is not moonshine but which calls for careful consideration and issues of interpretation are involved there can be no express admission and Order XII Rule 6, CPC would not apply. In this regard, he placed reliance on Jeevan Diesels vs. Jasbir Singh Chaddha, AIR 2010 SC 1890 wherein the Supreme Court has held as under:-

"14. In Uttam Singh Duggal & Co. Ltd. v. United Bank of India and Ors. reported in (2000) 7 SCC 120 the provision of Order 12 Rule 6 came up for consideration before this Court. This Court on a detailed consideration of the provisions of Order 12 Rule 6 made it clear "wherever there is a clear admission of facts in the face of which it is impossible for the party making such admission to succeed" the principle will apply. In the instant case it cannot be said that there is a clear admission of the case of the respondents-plaintiffs about termination of tenancy by the appellant in its written statement or in its reply to the petition of the respondents-plaintiffs under Order 12 Rule 6.

xxxx xxxx xxxx xxxx

16. In this connection reference may be made to an old decision of the Court of Appeal between Gilbert v. Smith reported in 1875-76 (2) CD 686. Dealing with the principles of Order XL, Rule 11, which was a similar provision in English Law, Lord Justice James held, "if there was anything clearly admitted upon which something ought to be done, the plaintiff might come to the Court at once to have that thing done, without any further delay or expense" (see page 687). Lord Justice Mellish expressing the same opinion made the position further clear by saying, "it must, however, be such an admission of facts as would shew that the plaintiff is clearly entitled to the order asked for". The learned Judge made it further clear by holding, "the rule was not meant to apply when there is any serious question of law to be argued. But if there is an admission on the pleading which clearly entitles the plaintiff to an order, then the intention was that he should not have to wait but might at once obtain any order" (see page 689).

14. Mr. Rajesh Bhardwaj, learned counsel for defendants No.3 and 4 apart from supporting the arguments advanced by defendants No.1

and 2 submitted that the present suit is barred under Order 23 Rule 1(4) CPC. He stated that the plaintiff on 22nd September, 2009 had withdrawn an earlier suit bearing CS(OS) No.925/2008 against the defendants No.3 and 4 for possession of the same premises without reserving any liberty. He, therefore, submitted that the present suit is not maintainable against defendants No.3 and 4.

15. Mr. Rajesh Bhardwaj lastly submitted that the present case is further barred on account of misjoinder of parties. He contended that premises occupied by the defendant no. 1 and defendant no. 3 are different premises and a single suit is not maintainable. He argued that there is no privity of contract between the plaintiff and defendant nos. 3 and 4.

16. Having perused the paper book and heard the learned counsel for parties, this Court is of the view that the primary issue involved is whether a landlord has to issue a compulsory notice for each increase in rent after every three years under Section 6A of the Act, 1958 or can a landlord enhance the rent for any number of multiple of three years by a single notice or without any notice at all.

17. This Court is of the opinion that though Section 6A of the Act, 1958 allows a landlord to increase the agreed rent by way of ten percent every three years, yet it contemplates that this should be done in a particular manner. The contention of the petitioner that the increase in rent is automatic and no notice is required to be issued is untenable in law. Sections 6A and 8 of the Act, 1958 read as under:-

"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.

xxx xxx xxx

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..........."

18. If the intention of the legislature would have been as suggested by Mr. Sethi, it would not have used the expression 'may'. This Court is of the opinion that the insertion of the word 'may' clearly shows that the power to increase rent by ten percent after three years is optional and consequently for this the landlord must do some overt act.

19. Moreover, this Court is of the view that even presuming that the landlord is entitled to increase the rent by ten percent every three years and the tenant has no inherent right to object to the increase, but still the landlord has to exercise the entitlement. Once, the landlord has failed to exercise his right/entitlement at the expiry of three years from the last agreed rent, it would amount to waiver of the right and the landlord cannot exercise the said right retrospectively after any number of years according to his whim and fancy.

20. Further, this Court is of the opinion that even presuming that the word 'may' as appearing in the Section 6A has to be read in mandatory terms, then also the plaintiff's submission is untenable as though the tenant may have no say insofar as the increase in rent after three years

is concerned, yet in the opinion of this Court, the tenant has the option not to accept the increase and vacate the premises whenever the tenant is asked to pay incremental rent after three years. If the interpretation of the plaintiff is accepted, it would amount to taking away of the tenant's option to vacate the premises or to continue for next three years with the increased rent. This valuable option would be available to the tenant only when each enhancement in rent every three years is exercised by serving a notice to the tenant.

21. In the event, if number of such enhancements can be effected by only a single notice, the tenant may be faced with extremely high percentage of increase in rent in one go.

22. Consequently, this Court is of the view that for a reasonable, effective and equitable interpretation of Section 6A of the Act, 1958, the requirement of a notice has to be read into the said Section.

23. Moreover, the non obstante clause in Section 6A of Act, 1958 would come into play only when there is some conflict between the provisions of this Section and any other section. This Court is of the opinion that there is no conflict between Section 6A and Section 8 which mandates a compulsory notice whenever rent has to be increased by the landlord.

24. Section 8 of the Act, 1958 lays down the procedure to give effect to Section 6A of the Act, 1958. These two sections complement and supplement each other. Section 6A does not and cannot render Section 8 otiose. Consequently, both Sections are capable of harmonious construction. As held hereinabove, the requirement of a notice has to be read into Section 6A.

25. The Supreme Court has been consistently following the principle, which originated from Taylor Vs. Taylor, (1875) 1 Ch. D. 426, that when a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and other methods of performance are forbidden. [See Nazir Vs. King Emperor, AIR 1936 PC 253, State of U.P. Vs. Singhara Singh, (1964) SCR 485, Babu Verghese Vs. Bar Council of Kerala, (1993) 3 SCC 422]

26. Consequently, this Court is of the opinion that a landlord by way of single notice cannot ask for any number of enhancement of ten percent each, for past periods--as suggested by the plaintiff.

27. The contention of the plaintiff that the landlord under Section 67(3) of the Act, 1994 is entitled to recover house tax amount from the tenant in the same manner as 'rent' and since the defendants have not paid the house tax, the differential amount payable by the defendants is nothing but arrears of rent and, therefore, house tax forms part of the rent, is untenable. Section 67 of the Act, 1994 is reproduced hereinbelow:-

"67 Apportionment of liability for property tax when the premises are let or sub-let. (1) 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.

(2) If the land or building is sub-let and its rateable value exceeds the amount of rent payable in respect thereof to the tenant by his sub-tenant, or the amount of rent payable in respect thereof to a sub-tenant by the person holding under the sub-

tenant, the tenant shall be entitled to receive from his sub-tenant or the sub-tenant shall be entitled to receive from the person holding under him, as the case may be, the difference between any sum recovered under this section from such tenant or sub- tenant and the amount of property tax which would be liable in respect of the said land or building if the rateable value thereof were equal to the difference between the amount of rent which such tenant or

(3) Any person entitled to receive any sum under this section shall have, for the recovery thereof, he same rights and remedies as if such sum were rent payable to him by the person from whom he is entitled to receive the same.

28. This Court is of the view that Section 67(3) of the Act, 1994 only contemplates that the landlord only has the same rights and remedies to recover the house tax 'as rent' but it does not state that house tax 'is rent'. The Supreme Court in Calcutta Gujarati Education Society and Anr. Vs. Calcutta Municipal Corporation & Ors., (2003) 10 SCC 533 while examining Section 231 of the Kolkata Municipal Corporation Act, 1980 which is pari materia with Section 67(3) of the Act, 1994 held as under:-

"44. We have to examine the provisions of Section 231 of the Act in the light of the scheme of the Act. Section 231 of the Act reads thus:

"Mode of recovery - If any person primarily liable to pay any consolidated rate on any land or building and is entitled to recover any sum from an occupier of such land or building, he shall have, for recovery thereof, the same rights and remedies as if such sum were rent payable to him by the person from whom he is entitled to recover such sum."

xxxx xxxx xxxx xxxx

50.......... The portion of tax liable to be paid by the occupant or tenant is not directly recovered by the Corporation from them but is recoverable through the landlord and the landlord has been given right of reimbursement by demanding it from the tenant, sub-tenant or the occupant. For recovering such portion the tax payable by the tenant, sub-tenant or occupant, which has been paid by the landlord, is deemed to be "rent" only for the limited purpose of its recovery. The modes of recovery are by a demand notice under the Tenancy Act and if necessary by filing an eviction suit. Resort to remedy before the regular court is also not prohibited. On this aspect of apportionment of tax and mode of recovery of tax, the Act does not make any discrimination between tenants of premises covered by the Tenancy Act and others not covered by the said Act.

(emphasis supplied)

29. Consequently, as there is no admission which calls for a judgment, present application is dismissed.

30. Further, the issue whether the present suit in view of Section 50 of Act, 1958 is maintainable or not needs to be examined. However, in view of the change of Roster, it has not been possible to hear argument on this aspect. Accordingly, list the suit before Regular Roster Bench on 09th September, 2013.

MANMOHAN, J JULY 30, 2013 ms/rn/js