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PETITIONER:

RAJU KAKARA SHETTY

Vs.

RESPONDENT:

RAMESH PRATAPRAO SHIROLE AND ANR.

DATE OF JUDGMENT15/01/1991

BENCH:

AHMADI, A.M. (J)

BENCH:

AHMADI, A.M. (J)

SHETTY, K.J. (J)

SAHAI, R.M. (J)

CITATION:

1991 SCR (1) 51 1991 SCC (1) 570

JT 1991 (1) 128 1991 SCALE (1)26

ACT:

Bombay Rents, Hotel and Lodging House Rates Control

Act, 1947--Section 12(3)(a) and 13(1)(b)--Landlord's right

claim education cess--When arises--Whether its yearly

payment could agreement be reduced to a monthly payment.

HEADNOTE:

The appellant-tenant executed a lease agreement of the

demised premises on a standard rent of Rs. 900 per month.

In addition thereto, the tenant also undertook to pay a

lump-sum of Rs. 120 per month by way of education cess and

other daxes in respect of the premises.

The 1st respondent filed a suit for eviction of the

tenant inter alia on the ground that he was in arrear of

rent for more than six months and had failed and neglected

to pay the amount within one month from the date of receipt

of the notice served on him terminating the tenancy and for

eviction.

During the pendency of the suit, section 12(3) of the

Bombay Rent, Hotel and Lodging House Rates Control Act, 1947

was amended whereby clauses (a) and (b) of sub-section 3 of

section 12 were deleted and instead a new sub-section 3 was

substituted which restricted the court's right to pass a

decree of eviction on the ground of arrears of standard

rent, etc., if the tenant paid or tendered in Court the

arrears as stipulated in the amended clause. The appellant

claimed that the said amendment had retrospective effect and

he was entitled to the benefit thereof.

The Trial Court dismissed the suit. The Court held

that since the tenant had failed to pay or deposit the

arrears claimed by the eviction notice within one one month

from the receipt thereof, he was liable to be evicted under

section 12(3)(a) of the Act, but in view of the substituted

section 12(3), he was entitled to protection he had paid the

entire arrears together with interest and costs before the

passing of the decree.

On appeal, the Appellate Court reversed the decree of

the trial

52

Court. The Appellate Court held that the tenant having

failed to pay arrears within one month of receipt of a valid

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notice, he was liable to be evicted under section 12(3)(a)

of the Act, since the amended section 12(3) was prospective

in nature.

The appellant-tenant preferred a writ petition to the

High Court, which was dismissed on the ground of sub-

letting.

Before this Court it was inter alia contended on behalf

of the appellant that (i) since the tenant was obliged to

pay the education cess and other taxes, by way of permitted

increases, which were payable at the end of the year, the

case would not attract section 12(3)(a) as a part of the

rent became payable annually and not monthly and therefore

the case attracted section 12(3)(b); and (ii) the tenant

having deposited the arrears, etc., in time, the courts

below were justified in granting and eviction decree for

arrears of rent under section 12(3)(a).

On the other hand, it was contended on behalf of the

respondent that the case was clearly governed by the

provisions of section 12(3)(a) since indisputably the rent

inclusive of the quantified tax amount was payable by the

month. It was argued that once the quantum in respect of

the tax was determined by agreement between the parties,

same formed part of the rent and it was not open to contend

that notwithstanding the agreement the tax amount remained

payable by the year and the tenant was obliged to pay the

same only after the landlord had paid the taxes to the local

authority.

Dismissing the appeal, this Court,

HELD:(1) In view of the decision of this Court, the

case would be governed by section 12(3) as it stood before

its amendment, since the substituted section 12(3) was found

to be prospective in nature. [57G]

Arjun Khaimal Makhijani v. Jamnadas C. Tuliani, [1989]

4 S.C.C. 612, followed.

(2) It is clear from the term of the lease agreement

that the parties intended the tenancy to be a monthly

tenancy. [62C]

(3) The statutory right to recover the amount of

education cess in respect of the demised premises from the

occupant/tenant can be quantified by agreement of parties so

long as the amount quantified does not exceed the total

amount actually paid by the owner by way of education case.

[62E]

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(4) It seems to be well-settled that education cess is

a part of 'rent' within the meaning of the ACt and when the

same is claimed addition to the contractual or standard rent

in respect of the demised premises it constitutes a

permitted increase within the meaning of section 5(7) of the

Act and being payable on a year to year basis, the rent

ceases to be payable by the month within the meaning of

section 12(3)(a) of the Act. [63D-E)

Panchal Mohanlal Ishwardas v. Maheshwari Mills

Ltd.,[1962] 3 G.L.J. 574; Prakash Surya v. Rasiklal

Ishverlal Mehta, [1978] 1 R.C.R. 10; Vanlila Vadilal Shah v.

Mahendrakumar J. Shah, A.I.R. 1975 Guj. 163; Muktabai

Gangadas Kadam v. Muktabai Laxman Palwankar,[1969] 71 B.L.R.

752; Bombay Municipal Corporation v. Life Insurance

Corporation of India, Bombay, [1971] 1 S.C.R. 335.

(5) If for convenience and to facilitate payment, the

parties by mutual consent work out an arrangement for the

enforcement of the owner's statutory right to recover the

tax amount and for discharging the tenant-occupant's

statutory obligation to reimburse the owner, no reasons are

seen for refusing to uphold such a contract and if the

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parties have agreed thereunder to the tenant-occupant

discharging his liability by a fixed monthly payment not

exceeding the total tax liability, the said monthly payment

would constitute 'rent' payable by the month within the

meaning of section 12(3) (a) Act. [64B.C]

Vishwambar Hemandas v. Narendra Jethalal Gajjar, A.I.R.

1986 Guj. 153 overruled.

(6) As the tenant had failed to comply with the

requirement of section 12(3)(a) to seek protection from

eviction, the Courts below were justified in ordering his

eviction. [64E]

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5020 of

1989.

From the Judgment and Order dated 7.12.1989 of the

Bombay High Court in W.P. No. 5021 of 1989.

Dr. Y.S. Chitale, V.N. Ganpule, B. Rastogi, Ms. Suman

and Ms. Punam Kumari for the Appellant.

V.M. Tarkunde, Ejaz Iqbal, H.S. Anand, R.F. Nariman and

H.D. Adhar for the Respondents.

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The Judgment of the Court was delivered by

AHMADI, J. This is a tenant's appeal by special leave

directed against the judgment of the High Court of

Maharashtra at Bombay whereby it confirmed the eviction

order passed by the 6th Additional District Judge, Pune, in

Civil Appeal No. 662 of 1988 in reversal of the order of

dismissal of the suit passed by the Learned Additional Judge

of the Court of Small Causes, Pune, in Civil Suit No. 348/85

on 30th April, 1988. The brief facts giving rise to this

appeal are as under:

On 5th February, 1976 the appellant executed a lease

agreement in respect of a part of the ground floor of

property bearing City Survey No. 1205/2/9 situate at Shivaji

nagar, Pune city, more particularly described in paragraph 1

of the said agreement. The said premises were taken on rent

for the purposes of restaurant business on monthly rental

basis. By clause 3 of the agreement the appellant undertook

to pay a total rent of Rs. 1,000 per month for the demised

premises (Rs.900 for the hotel portion and Rs. 100 for the

garage); the said rent being payable every month in advance.

Clause 5 of the agreement prohibited sub-letting of the

premises or parting with the possession thereof in any other

manner. As the appellant committed a default in the payment

of rent from June, 1983 to December, 1984 in respect of

hotel portion and from November, 1979 to December, 1984 in

respect of the garage, the first respondent despatched a

notice dated 31st December, 1984 terminating the appellant's

tenancy as required by Section 106 of the Transfer of

Property Act. The appellant failed to respond to the said

notice and neglected to pay the amount of arrears of rent

claimed therein within one month from the date of receipt of

the notice. Consequently, the first respondent filed the

suit which has given rise to this appeal on 26th February,

1985, being Civil Suit No. 348 of 1985, seeking eviction on

four grounds, namely, (i) the tenant was in arrears of rent

for more than six months and had failed and neglected to pay

the amount due within one month from the date of receipt of

the eviction notice, (ii) the tenant had raised a permanent

structure in the suit premises in breach of section 13(1)(b)

of the Bombay Rents, Hotel and Lodging House Rates Control

Act, 1947 (hereinafter called 'the Act'), (iii) the tenant

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was guilty of causing nuisance and annoyance to the

neighbors and (iv) the tenant had sub-let the premises to

second respondent without his consent.

The suit was contested by the appellant-tenant by his

written statement Exh. 25 and the supplementary written

statements Exhs. 56 and 60 filed after the amendments in the

plaint. The second respon-

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dent, the alleged sub-tenant, adopted the written statement

of the appellant by his purshis Exh. 30. During the

pendenacy of the suit Section 12(3) of the Act was amended

by Section 25 of the Amendment Act 18 of 1987 whereby

clauses (a) and (b) of sub-section 3 of section 12 were

deleted and instead a new sub-section 3 was substituted

which restricted the court's right to pass a decree for

eviction on the ground of arrears o standard rent and

permitted increases, if on the first date of the hearing of

the suit or on such other date as the Court may fix, the

tenant paid or tendered in court the standard rent and

permitted increase then due together with simple interest on

the amount of arrears at the rate of 9% per annum and

thereafter continued to pay or tender in court regularly

such standard rent and permitted increases till the final

decision of the suit and also paid the cost of the suit as

directed by the court. The appellant contended that the

said amendment had retrospective effect and he was entitled

to the benefit thereof. In the alternative he also

contended that he had paid the rent to the first respondent

but the latter had failed to issue rent receipts. He also

questioned the validity of the notice terminating his

tenancy. He denied the allegation that he had sub-let the

premises or had aparted with the possession thereof in

favour of the second respondent or that he was guilty of

causing nuisance and annoyance to the neighbours. The

allegation that he had raised a structure of a permanent

nature in the hotel premises without the permission of first

respondent was also disputed. He, therefore, contended that

the suit was liable to fail.

The learned Additional Small Causes Judge, Pune raised

issues at Exh. 36 and came to the conclusion that the agreed

rent for the hotel and the garage was Rs. 900 per month and

in addition thereto the tenant had agreed to pay Rs. 120 per

month for education cess and other taxes. He also concluded

that the tenant had failed to pay the rent in respect of the

garage from November, 1979 and in respect of hotel from

June, 1983. Since the tenant had failed to pay or deposit

the arrears claimed by the eviction notice dated 31.12.1984

within one month from the receipt thereof, the Court held

he was liable to be evicted under section 12(3)(a) of the

Act but in view of the substituted Section 12(3), he was

entitled to protection as he had paid the entire arrears

together with interest and costs before the passing of the

decree. He also held that there was no reliable evidence to

show that the tenant had sub-let the premises or had made

any alteration of a permanent nature without the consent of

the first respondent. The allegation of nuisance and

annoyance was held not proved on facts and was even

otherwise found to relate to a post-suit incident of 1986.

on

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these findings the learned Trial Judge dismissed the suit

with no order as to costs.

The first respondent, felling aggrieved by the order of

dismissal of his suit, preferred an appeal being Civil

Appeal No. 662/88. The appellate court reversed the decree

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of the trial court holding that the rent was payable by the

month and there being no dispute regarding standard rent and

permitted increases and the tenant having failed to pay the

arrears within one month from the date of receipt of a valid

eviction notice dated 31st December, 1984, he was liable to

be evicted under section 12(3)(a) of the Act since the

amended section 12(3) introduced by Amending Act 18 of 1987

was prospective in nature. It also took the view that since

the premises was sub-let by the appellant to the second

respondent on a rental of Rs. 2,000 per month, the former

was guilty of profiteering. So far as the other two

contentions regarding raising of a permanent structure and

allegation of nuisance and annoyance were concerned, the

appellate court concurred with the findings recorded by the

trial court. In this view that the appellate court took it

allowed the appeal and ordered both the tenant and sub-

tenant to deliver vacant possession of the demised premises

within two months from the date of the order with costs

throughout.

The appellant-tenant, feeling aggrieved by the order of

eviction passed by the learned 6th Additional District

Judge, Pune, preferred a writ petition No. 5021 of 1989 to

the High Court. The writ petition was rejected at the

admission stage by a short speaking order. The High Court

observed that the eviction notice was legal and proper and

the lower appellate court was right in concluding that the

appellant had sub-let the premises to the second respondent

as alleged. The request for extention of time to vacate was

rejected as the tenant was unwilling to file an undertaking

in the usual form. Feeling aggrieved by the said order the

tenant has preferred the present appeal after obtaining

special leave.

The standard rent in respect of the demised premises

has been found by all the three courts to be Rs. 900 per

month (Rs. 750 in respect of the hotel premises and Rs. 150

in respect of the garage). In addition thereto the tenant

had undertaken to pay a lump-sum of Rs. 120 per month by way

of education cess and other taxes in respect of the demised

premises. Thus the tenant was required to pay a

consolidated sum of Rs. 1020 per months as rent to the first

respondent. By 31st December, 1984 the appellant-tenant had

failed to pay the rent in respect of the hotel premises from

1st June, 1983 and in respect of the

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garage area from 1st November, 1979; thus the arrears of

rent in respect of hotel premises came to Rs.16,530 and in

respect of the garage premises Rs.9,300 aggregating to

Rs.25,830. The first respondent, therefore, served the

appellant with a notice terminating the tenancy by the end

of 31st January, 1985 and called upon the appellant to pay

the arrears of rent and vacate and handover peaceful

possession of the demised premises by that date. Even after

the receipt of this notice, the appellant neither paid the

amount due within one month of the receipt of the notice nor

filed any application for fixation of standard rent and/or

the permitted increases under section 11 of the Act. On the

failure of the appellant to comply with the requirement of

the eviction notice, the first respondent filed a suit for

eviction on 26th February, 1985 on the grounds stated

earlier. In the said eviction suit the first respondent

claimed the arrears of rent upto the end of December, 1984

as set out in the eviction notice and damages of Rs. 1020

for month of January, 1985 together with Rs. 250 by way of

notice charges. The total claim made came to Rs.27,100.

The appellate Court and the High Court came to the

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conclusion that the newly substituted section 12(3) had no

application and the case was governed by section 12(3)(a) as

it stood before the amendment.

Dr. Chattel, the learned counsel for the appellant

frankly conceded that in view of the decision of this Court

in Arjun Khiamal Makhijani v. Jamnadas C. Tuliani & Ors.,

[1989] 4 SCC 612, the case would be governed by section

12(3) as it stood before its amendment by Amending Act 18 of

1987, since the substituted section 12(3) was found to be

prospective in nature. This Court in paragraph 14 of the

judgment at page 624 repelled the submission that it was

retrospective in operation in the following words:

"In our opinion, the tenants are not entitled even

to the benefit of the amended sub-section (3) of

Section 12 of the Act inasmuch as on a plain

reading of the sub-section it is not possible to

give it a retrospective operation."

Dr. Chitale was, therefore, justified in submitting

that the decision of this case must rest on the question

whether it attracted section 12(3)(a) or section 12(3)(b) as

it stood prior to the amendment. According to Dr. Chitale

since the tenant was obliged to pay the education cess and

other taxes by way of permitted increases which were payable

at the end of the year, the case would not attract section

12(3)(a) as a part of the rent became payable annually and

not monthly. He further contended that there was nothing on

the record to show that the landlord

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had paid the amount of education cess and other taxes and

unless payment of the taxes to the local authority was

established the land lord had no right to claim the same

from the tenant. According to him, the landlord's right to

recover the taxes arises not at the end of the financial

year but on the date on which he makes the payment to the

local authority. Dr. Chitale, therefore, submitted that the

case attracted section 12(3)(b) and when the tenant

deposited a sum of Rs.37,740 on 18th January, 1986 before

the issues were settled on 13th February, 1986 he could be

said to have made the full payment of the rent then due and

therefore the courts below were not justified in granting an

eviction decree for arrears of rent under section 12(3)(a)

of the Act. In support of his contention he invited our

attention to four decisions of the Gujarat High Court,

namely,Pancha Mohanlal Ishwardas v. Maheshwari Mills Ltd.,

[1962] 3 GLR 574; Prakash Surya v. Rasiklal Ishverlal Mehta,

[1978] 1 RCR 10; Vanlila Vadilal Shah v.Mahendrakumar J.

Shah, AIR 1975 Guj. 163 and Vishwambar Hemandas v. Narendra

Jethalal Gajjar, AIR 1986 Guj. 153. He also placed reliance

o a Bombay High Court decision in Muktabai Gangadas Kadam v.

Muktabai Laxman Palwankar, [1969] 71 BLR 752 and the

decision of this Court in Bombay Municipal Corporation v.

Life Insurance Corporation Of India, Bombay, [1971] 1 SCR

335. On the question of sub-letting he stated that the

Trial Court had rightly pointed out that the evidence falls

far short of proof of sub-tenancy and the Appellate Court as

well as the High Court were in error in reversing that view

of the Trial Court.

Mr. Tarkunde, the learned Advocate for the landlord, on

the other hand submitted that once the four ingredients of

section 12(3)(a) were shown to be satisfied, the Court had

no alternative but to decree the suit. According to him,

the standard rent in respect of the demised premises was

shown to be Rs. 900 per month and in addition thereto the

tenant had agreed to pay a quantified sum of Rs. 120 per

month by way of education cess and other taxes. It was

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proved as a fact that the tenant had failed to pay the rent

in respect of the garage from 1st November, 1979 and the

rent in respect of the hotel from 1st June,1983. The tenant

had also failed to pay the tax amount at the rate of Rs. 120

per month from 1st June, 1983. Since there was no dispute

in regard to standard rent or permitted increases in this

case, the tenant was under an obligation to pay the entire

amount due from him by way of rent and taxes within one

month of the receipt of the eviction notice dated 31st

December, 1984. Under section 12(1) of the Act a landlord

is not entitled to the recovery of possession of any

premises so long as the tenant pays, or is ready and willing

to pay, the amount of standard

59

rent and permitted increases, if any, and observes and

performs the other conditions of the tenancy, insofar as

they are consistent with the provisions of the Act. Section

12(2) places a restriction on the landlord's right to sue

his tenant for recovery of possession on the ground of non-

payment of the standard rent and/or permitted increases due

from him. According to that section no suit for recovery of

possession can be instituted on the aforesaid ground until

the expiration of one month next after notice in writing of

the demand of the standard rent and/or permitted increases

has been served upon the tenant in the manner set out in

section 106 of the Transfer of Property Act. To comply with

this requirement the landlord had issued a notice on 31st

December, 1984 calling upon the tenant to pay the standard

rent which was in arrears along with the quantified tax

amount in arrears upto that date as detailed in the notice.

The tenancy was terminated w.e.f. 31st January, 1985.

Admittedly, the tenant did not respond to this notice nor

did he pay or deposit the amount of arrears as claimed in

the notice within one month of the receipt thereof. He also

did not file any application for fixation of standard rent

and/or permitted increases under section 11 of the Act.

There was, therefore, no question of the Court specifying

the amount of interim rent or permitted increases under sub-

section (3) of Section 11 during the pendency of such an

application. Mr. Tarkunde, therefore, submitted that the

case was clearly governed by the provisions of section

12(3)(a) since indisputably the rent inclusive of the

quantified tax amount was payable by the month; there was no

dispute as regards the standard rent/permitted increases:

the tenant was found to be in arrears of rent for more than

six months and he had failed to pay or deposit the rent

within one month after the receipt of the notice under

section 12(2) of the Act. According to Mr. Tarkunde the

submission that because the education cess was payable by

the year, a part of the rent was not payable by the month

and therefore section 12(3)(a) had no application is clearly

misconceived for the simple reason that in the present case

the landlord as well as the tenant had by agreement

quantified the amount of education cess and other taxes at

Rs.120 per month and had not left the determination of the

amount to fluctuations in the tax amount from time to time.

Once the quantum in respect of the tax liability is

determined by agreement between the parties, the same forms

part of the rent and it is not open to contend that

notwithstanding the agreement the tax amount remains payable

by the year and the tenant is obliged to pay the same only

after the landlord has paid the taxes to the local

authority. He, therefore, contended that the case law on

which Dr. Chitale had placed reliance can have no

application to the special facts and circumstances of the

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present case.

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On the second question regarding sub-letting Mr.

Tarkunde submitted that this Court should not interfere with

a finding of fact recorded by the Appellate Court and

affirmed by the High Court since it is nobody's case that

the finding is perverse and not based on evidence. In this

connection, he took us through the relevant part of the

pleadings and the evidence to support his contention that

the conclusion reached by the Appellate Court and the High

Court was based on evidence and was not perverse or against

the weight of evidence. He submitted that even if two views

are possible this Court in exercise of its powers under

Article 136 of the Constitution should refrain from

disturbing a possible and plausible view.

We have given our anxious consideration to the rival

views propounded by the learned counsel for the appellant-

tenant as well as the respondent-landlord. On a

consideration of the submissions made at the bar and having

regard to the provisions of law we are inclined to think

that the view taken by the Appellate Court and the High

Court does not demand interference. There is no dispute

regarding the standard rent of the demised premises. under

clause 3 of the lease agreement the rent was fixed at Rs.

1,000 per month but subsequently it seems to have been

revised by consent of parties to Rs.1,020 per month (Rs. 900

for the demised premises and Rs.120 for education cess and

taxes). The rent was payable 'every month regularly in

advance' under clause 3 of the agreement. Clause 2 of the

agreement states that the premises have been hired for

restaurant business 'on monthly rental basis. It is ,

therefore, clear from the terms of the lease agreement that

the parties intended the tenancy to be a monthly tenancy.

The two clauses of section 12(3) as they stood before

the Amendment Act 18 of 1987 provided as under:

"12(3)(a). Where the rent is payable by the month

and there is no dispute regarding the amount of

standard rent or permitted increases, if such rent

or increases are in arrears for a period of six

months or more and the tenant neglects to make

payment thereof until the expiration of the period

or one month after notice referred to in sub-

section (2), the Court shall pass a decree for

eviction in any such suit for recovery of

possession.

(b) In any other case no decree for eviction shall

be passed in any such suit if, on the first day of

hearing of the suit or on or before such other date

as the Court may fix, the

61

tenant pays or tenders in Court the standard rent

and permitted increases then due and thereafter

continues to pay or tender in Court regularly such

rent and permitted increases till the suit is

finally decided and also pays costs of the suit as

directed by the Court."

Explanation I states that if there is any dispute regarding

standard rent or permitted increases the tenant shall be

deemed to be ready and willing to pay if, before the expiry

of the period of one month after notice referred to in sub-

section (2), he makes an application to the Court under

sub-section (3) of section 11 and thereafter pays or tenders

the amount of rent or permitted increases specified in the

order made by the Court.

Mr. Tarkunde, therefore, argued that even if the case

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is covered by section 12(3)(b) since the tenant had failed

to pay or deposit the full amount due to the landlord as

claimed in the eviction notice by the first date of hearing

of the suit, i.e. 13th February, 1986, and had also failed

to make an application under section 11(3) of the Act, the

tenant was not entitled to the protection of that provision

also. Mr. Tarkunde further submitted that the tenant was

not regular in the payment of rent and permitted increases

for the subsequent period also and there were long intervals

between two payments made during the pendency of the

litigation. He, therefore, submitted that even if section

12(3)(b) was invoked the tenant had failed to comply with

the requirement of the provision and was, therefore, not

entitled to its protection. Since we are of the opinion

that the case is covered by section 12(3)(a) we do not

consider it necessary to examine this submission based on

the true interpretation of section 12(3)(b) of the Act.

The only submission which Dr. Chitale made for taking

the case out of the purview of section 12(3)(a) was that the

entire rent was not payable by the month which was the first

condition to be satisfied for invoking the said provision.

According to him, since the tenant was bound to pay

education cess and other taxes in respect of the demised

premises which were payable from year to year, a part of the

rent was not payable by the month and therefore the first

condition of section 12(3)(a) was not satisfied. Hence,

submitted Dr. Chitale, the case fell within the phrase 'in

any other case', by which clause (b) of section 12(3) opens.

Before we answer the submission of Dr. Chitale it may be

advantageous to refer to the relevant provisions of the

Maharashtra Education (Cess) Act (Maharashta Act XXVII of

1962). Section 4(a) of the said Act provides for the levy

and collection of tax (cess) on

62

lands and buildings at the rates specified in Schedule A on

the annual letting value of such lands or buildings. The

primary responsibility to pay this tax is cast by section 8

on the owner of the land or building irrespective of whether

or not he is in actual occupation thereof. Section 13 next

provides that on payment of the amount of the tax in respect

of such land or building the owner shall be entitled to

receive that amount from the person in actual occupation of

such land or building during the period for which the tax

was paid. Under section 15 any person entitled to receive

any sum under section 13 is conferred for the 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 receive the same. It thus seems clear that education

cess is a tax and the owner is primarily responsible to pay

the same to the local authority and on such payment a right

is conferred on him to recover the same from the actual

occupant in addition to the standard rent in respect of the

demised premises. Sub-section (3) of section 13 in terms

states that the recovery of any amount of tax from an

occupier under this provision shall not be deemed to be an

increase for the purposes of section 7 of the Act. It is,

therefore, obvious that the landlord has a statutory right

to recover the amount of education cess paid by him in

respect of the demised premises from the tenant-occupant and

such recovery shall not be an unlawful increase under of

section 7 of the Act but would squarely fall within the

expression 'permitted increases' as defined by section 5(7)

of the Act. This statutory right to recover the amount of

education cess in respect of the demised premises from the

occupant-tenant can be quantified by agreement of parties so

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long as the amount quantified does not exceed the total

amount actually paid by the owner by way of education cess.

In the present case, it is nobody's contention that the

amount of Rs. 120 per month payable by way of education cess

and other taxes was in excess of the amount actually payable

under the relevant statues to the local authority. The

Gujarat High Court has taken a consistent view that where

the tenant is obliged under the terms of the tenancy or by

virtue of the statute to pay the tax dues to the landlord,

since such taxes which form part of the rent are payable

annually the case ceases to the governed by section 12(3)(a)

and falls within the purview of section 12(3)(b) of the Act.

In Maheshwari Mills Ltd., under the terms of the tenancy the

tenant was obliged to pay the municipal taxes and property

taxes in respect of the demised premises. The Court took

the view that such payment was by way of rent and since the

municipal taxes and property taxes were payable on year to

year basis, a part of the rent was admittedly not payable by

the month and, therefore, section 12(3)(a) was not

attracted. In Prakash Surya the tenant had agreed to pay

the municipal tax

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and education cess. The amount payable towards these taxes

constituted rent and since the same was payable at the end

of the year the Court held that the rent had ceased to be

payable by the month and hence section 12(3)(a) had no

application. The same view was reiterated in Vanlila's case

where education cess was payable by the tenant by virtue of

section 21 of the Gujarat Education Cess Act, 1962. Since

it constituted a part of the rent, to be precise permitted

increase under section 5(7) of the Act, it was held that it

took the case outside the scope of section 12(3)(a) of the

Act. In the case of Vishwambhar Hemendas also since the

rent was inclusive of taxes the Court held that the case was

governed by section 12(3)(b) of the Rent Act. The Bombay

High Court has expressed the same view in Muktabai's case.

This Court in the Bombay Municipal Corporation's case held

that while section 7 of the Act prohibits increase above

the standard rent it does not prohibit the recovery of

increase to which a landlord is entitled under the other

provisions of the said statue, namely, increase by way of

'permitted increases'. Education cess is specifically

recoverable as rent by virtue of section 13 and as sub-

section (3) thereof provides that it shall not be treated as

increase in rent under section 7 of the Act, there can be no

doubt that such an increase falls with the definition of

'permitted increases under section 5(7) of the Act. It,

therefore, seems to be well-settled that education cess is a

part of 'rent' within the meaning of the Act and when the

same is claimed in addition to the contractual or standard

rent in respect of the demised premises it constitutes a

permitted increase within the meaning of section 5(7) of the

Act and being payable on a year to year basis, the rent

ceases to be payable by the month within the meaning of

section 12(3)(a) of the Act. But the question still survives

whether the parties can be agreement quantity the said

amount and make it payable on a month to month basis

provided of course the said amount does not exceed the tax

liability of the landlord; if it exceeds that liability it

would infringe section 7 of the Act and the excess would not

be allowed as permitted increase within the meaning of

section 5(7) of the Act. A right to recover a certain tax

amount from the tenant-occupant under the provisions of a

statute can be waived by the owner or quantified by

agreement at a figure not exceeding the total liability

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under the statue. If by agreement the amount is so

quantified and is made payable by the month not withstanding

the owner's liability to pay the same annually to the local

authority, the question is whether is such circumstances the

'rent' can be said to be payable by the month within the

meaning of section 12(3)(a) of the Act? We see no reason

why we should take the view that even where the parties

mutually agree and quantify the tax amount payable by the

tenant to the landlord on monthly basis, the

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rent should not be taken to be payable by the month within

the meaning of section 12(3)(a) of the Act. A statutory

right to recover the tax amount by way of reimbursement can

be waived or limited by the holder of such right or the

recovery can be regulated in the manner mutually arranged or

agreed upon by the concerned parties so also as it is not in

violation of statute. If for convenience and to facilitate

payment, the parties by mutual consent work out an

arrangement for the enforcement of the owner's statutory

right to recover the tax amount and for discharging the

tenant-occupant's statutory obligation to reimburse the

owner, we see no reason for refusing to uphold such a

contract and if thereunder the parties have agreed to the

tenant-occupant discharging his liability by a fixed monthly

payment not exceeding the tax liability. The said monthly

payment would constitute 'rent' payable by the month within

the meaning of section 12(3) (a) of the Act. The view

expressed by the Gujarat High Court in Vishwambar Hemandas

does not, with respect, state the law correctly if it holds

that even in cases where the entire tax liability is on the

landlord and the tenant had to pay a gross rent of Rs. 19.50

p.m . the mere recital in the lease that the rent is

inclusive of taxes the case outside the purview of section

12(3)(a) of the Act. We are, therefore, in respectful

agreement with the view taken by the Appellate Court and the

High Court in that behalf. We, therefore, hold that as the

tenant had failed to comply with the requirement of section

12(3)(a) to seek protection from eviction, the Courts below

were justified in ordering his eviction.

In the view that we take on the first point discussed

above, it is unnecessary for us to examine the second point

regarding sub-tenancy.

In the result we see no merit in this appeal and

dismiss the same with costs. We, however, grant time upto

31st December, 1991 to the tenant to vacate.

R.S.S. Appeal dismissed.

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