Karnataka High Court
Sri K. Ramachandra Rao S/O Late K. ... vs Sri K.G. Ramamohana Gupta S/O K.N. ... on 21 April, 2006
Equivalent citations: AIR2006KANT247, ILR2006KAR2561, 2006(5)KARLJ273, AIR 2006 KARNATAKA 247, 2006 (4) AIR KANT HCR 490, (2006) 44 ALLINDCAS 920 (KAR), 2006 (44) ALLINDCAS 920, (2006) ILR (KANT) 2561, (2006) 5 KANT LJ 273, (2006) 4 ICC 560
Author: Ajit J. Gunjal
Bench: Ajit J. Gunjal
ORDER Ajit J. Gunjal, J.
1. The question involved in these writ petitions is common. Consequently, these writ petitions are disposed of by this common order.
2. The facts relating to W.P. No. 48113/04 will be referred to during the course of this order.
3. The petitioner is the owner of the property in question. The said property was leased to respondent under a lease deed dated 2.5.2002, a true copy of the said lease deed is at Annexure-A. In terms of the said lease deed, the respondent paid the petitioner a sum of Rs. 1.60 lakhs as refundable advance and agreeing to pay the monthly rent of Rs. 16,000/-. Notwithstanding the fact that the lease had expired and despite the request for vacating the premises, the respondent did not honour the said request. In the circumstances, a legal notice was issued. A copy of the legal notice is to be found at Annexure-B. Since the respondent did not vacate the premises even after termination of the lease, the petitioner was constrained to file an ejectment suit in FR No. 1645/04 on the file of the Civil Judge Bangalore. The suit was valued for the purpose of court fee and jurisdiction under Section 41(2) read with Article 1(iii) of Schedule I of the Karnataka Court Fees and Suits Valuation Act (for short 'the Act'). It appears the Registrar of the City Civil Court raised objection regarding valuation made on the subject matter of the suit. The said objection related to non-payment of court fee on the refundable advance of Rs. 1.60 lakhs. The petitioner there upon brought it to the notice of the court that the objection raised by the Registrar of the court was not justified. It was brought to the notice of the learned trial Judge that the petitioner was not liable to pay court fee on the refundable advance and that the construction placed on the refundable advance as premium was incorrect. The learned trial Judge, however, upheld the office objection and in turn has directed the petitioner to pay court fee on Rs. 1.60 lakhs. The said order directing the petitioner to pay court fee is questioned in this writ petition. Annexure-D is the impugned order.
4. The facts relating to the other writ petitions are almost identical. They have also instituted a suit for possession and court fee has been paid under Section 41(2) of the Act. In those petitions also the learned trial Judge has directed the petitioner to pay court fee on the security deposit received by the plaintiffs. Consequently they have also questioned the order directing them to pay the requisite court fee treating the said security deposit as a premium.
5. Mr. L. Govindaraj, learned Counsel appearing for the petitioner in W.P. 48113/04 would strenuously contend that the word 'premium' used in Section 41(2) of the Act can not be equated to security deposit or which is given as an advance. In the circumstances, he submits that it does not qualify the description of premium and the petitioners are not liable to pay court fee on the said amount. The learned Counsel appearing for the other petitioners have substantially advanced the same contention i.e., the definition of premium does not include the security deposit and consequently they are not liable to pay court fee.
6. The learned Counsel appearing for the respondents in all these writ petitions have contended that any money paid towards security deposit or advance will have to be treated as a premium and consequently the petitioners are liable to pay the requisite court fee.
7. Before appreciating the controversy in question, a reference will have to be made to the provisions of Section 41 of the Act. Section 41 of the Act would relate to the suits between landlord and tenant. Sub-section (1) of Section 41 would relate to the suits between the landlord and tenant in civil courts wherein the court fee will have to be computed on the amount of rent for the immovable property to which the suit relates payable for the year next before the date of presenting the plaint. Sub-section (2) of Section 41 reads as follows:
(2) In a suit for recovery of immovable property from a tenant including a tenant holding over after the termination of a tenancy, fee shall be computed on the premium, if any, and on the rent payable for the year next before the date of presenting the plaint.
Explanation: Rent includes also damages for use and occupation payable by a tenant holding over.
8. The only question which falls for consideration in this petition is whether the word 'premium' used in the said provision would partake the character of security deposit or advance and the petitioners are liable to pay any court fee on that sum.
9. There is a fine distinction between the word premium and the security deposit/advance. A premium includes any like sum, whether payable to the intermediate or a superior landlord; and any sum paid on or in connection with the granting of a tenancy is presumed to have been paid by way of premium except in so far as other sufficient consideration for the payment is shown to have been given. Apparently "premium" would mean the amount which is paid before the period of lease commenced and the liability for rent was incurred by the lessee. Such a sum paid in advance could only be a consideration for the grant of the lease and it clearly does not amount to premium which would necessarily mean that it is a money advanced in addition to the rent reserved. But however in the agreement if there is a stipulation for return of the advance or security deposit then it shall not partake character of a premium. A premium is in the nature of capital and such a sum could only be a consideration for grant of lease and only in such cases it would mean that it is premium as defined under Section 105 of the T.P. Act It is not the form but substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but would help having regard to the other circumstances to ascertain the intention of the parties. A perusal of the agreement clearly discloses that it is not in the nature a premium, but it is in the nature of a security deposit. It is useful to extract the terms of the agreement which would relate to the payment of the said deposit, which reads as under:
The tenant shall, on execution of this agreement, deposited with the landlord ten months rent at the rate of Rs. 16,000/- (sixteen thousand only) per month totally amounting to Rs. 1.50 lakhs (rupees one lakh and fifty thousand only) which the amount shall continue to remain as deposit. The said deposit amount of ten months rent shall not carry any interest.
10. A reading of this clause would clearly indicate that the said amount was paid as security deposit and not as a premium. Admittedly and it is not in dispute that if the amount is returnable after the term of the lease, then the plaintiff is not liable to pay court fee on the same amount. It is only if the said amount is not returnable it can be treated as premium and the petitioner will have to pay court fee on it. There is nothing on record to show that the said amount which is paid as security deposit is not refundable. It is clear from the provisions of Sub-section (2) of Section 41 of the Act that the sub-section is not attracted for payment of court fee on security deposit which is refundable.
11. The Full Bench of this Court in the case of The Chief Controlling Authority v. Taxas Instruments India Limited, , has ruled that the amount received under the particular clause of the lease deed would be the money advanced in addition to the rent reserved does not attract duty under Article 30(a) of Schedule to the Act. Since word 'premium' does not encompass the refundable security deposit, I am of the view that the impugned orders passed in these writ petitions are liable to be set aside.
12. Consequently, the petitions stand allowed. The impugned orders dated 4.11.2004 vide Annexure-A; dated 25.10.2004 at Annexure-D; dated 27.10.2003, Annexure-A and the order dated 5.3.2004 at Annexure-B are set aside. The petitioners are not liable to be pay court fee on the security deposit Petitions stand disposed of.