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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]                                                         53      (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.                                                        54      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-                                                        55 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                                                        56 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                                                        57 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                                                       58 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.                                                        60      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                                                        63 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                                                        64 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.                                                        65