Calcutta High Court
Tea Trading Corporation Of India ... vs The Saturday Club Limited on 5 April, 2002
Equivalent citations: 2003(2)CHN369
Author: T. Chatterjee
Bench: Tarun Chatterjee
JUDGMENT T. Chatterjee, J.
1. This is an appeal from a judgment and/or order passed by a learned Judge of this Court on 16th December, 1991 in Company Petition No. 324 of 1991 whereby and whereunder the application for winding up of the Tea Trading Corporation of India Ltd. (hereinafter referred to as 'the company') the appellant herein was admitted subject to scrutiny for an amount of Rs. 10,35,314/-
2. The facts leading to filing of this appeal are enumerated below:--
The company had neglected to pay the respondent Rates and Taxes which they are liable to pay or deposit under an agreement dated 24th March, 1987 entered into by the company and the respondent. The respondent is a lessee of premises in question and they have sub-let a portion of the same to the company. The respondent was paying Municipal Taxes leviable in respect of the premises prior to 1st April, 1980. The valuation of the premises was determined on the basis of the rents paid by the respondent to the landlord. By reason of the creation of the tenancy in favour of the company, the valuation of the premises was enhanced and enhanced tax was also imposed by the Municipal Authorities. In addition, from 1st April, 1984 a surcharge was levied by the Municipal Authorities in respect of the said premises under the provisions of the Calcutta Municipal Corporation Act, 1980 (hereinafter referred to as the Act). The surcharge was payable by reason of the commercial user of the premises. On 24th March, 1987 an agreement was entered into between the respondent and the company, the operative part of which insofar as it is relevant provides as follows:--
"(I) Notwithstanding anything to the contrary contained in any earlier agreement, letter, pleading of documents and notwithstanding anything contained in the Calcutta Municipal Corporation Act. 1980 or any earlier or subsequent enactments, all municipal taxes payable thereunder in respect of the said premises by the Club shall be shared from 1st February,,, 1980 between the Club and the TTCI and follows:
(a) The Club shall be liable to pay the Club's share in its entirety.
(b) TTCI shall be liable to pay and pay TTCI's share in its entirety.
(c) The liability for surcharge shall be shared between the Club and TTCI proportionately in the same proportion as the Club's share bears to the TTCI's share."
3. By a letter dated 4th September, 1990 the respondent claimed a sum of Rs. 10,35,374/- with interest on account of the agreed share of Corporation taxes payable in respect of the said premises by the company and served a notice under Section 434 of the Companies Act, 1956 on the company/appellant. According to the respondent, no reply was received to the notice under Section 434 of the Companies Act by the respondent. Subsequently the application for winding up of the company was filed at the instance of the respondent on the ground that the company was commercially insolvent.
4. The company however after entering appearance raised various defences which are as follows:--
(1) The increase in the valuation of the premises was not attributable to the company alone. There were other sub-lessees under the petitioner and the rents payable by such other sub-lesses had also contributed to the increase in the annual valuation. Therefore, unless those sub-lessees were included, the apportionment of the Municipal Taxes could not be made rateably. Reference had been made to Sections 193, 194 and 195 of the Act in this connection.
(2) Sections 230 and 231 postulated that the superior lessor could recover taxes from the sub-lessees only if the superior lessor had already paid the taxes sought to be recovered from the company in respect of the premises. Admittedly the petitioner had not made such payment.
(3) The language of Section 231 permitted the superior lessor to recover the arrears of taxes as if it were rent. This would mean that what was recoverable had to be fair rent under Section 4 of the West Bengal Premises Tenancy Act, 1956. The sub-lessee was entitled to the benefits available to a tenant under the West Bengal Premises Tenancy Act, 1956. These benefits could not be contracted out. Reliance had been placed on Nagindas Ramdas v. Dalpatram Iccharam, .
(4) Clause 29 of the original agreement provided for default in payment of rent or any amount payable by the company under the agreement. This included liability to pay Corporation rates and taxes. The default entitled the respondent to re-enter the demised premises and to terminate the tenancy. This the respondent had not done. Clause 19 was restrictive of the right of the respondent to seek to recover amounts payable thereunder by the company in any other way.
(5) The amount claimed by the respondent was contrary to the demand actually raised by the Corporation. The break up of the demand raised on the company as set out in the chart annexed to the winding up petition was incomprehensible and required further investigation.
(6) The claim of the respondent was therefore bona fide disputed and therefore the application for winding up of the company was liable to be dismissed. Reliance was placed on behalf of the appellant before the learned Company Judge on the following decisions:--
(i) M. Gordhandas & Co. v. M.W. Industries, .
(ii) Ofulynx Ltd. v. Simon Carves India Ltd., .
(iii) The Dalhousie Jute Co. Ltd, v. Mulchand Lakshmi Chand, reported in (1982) 1 CLJ 364 at 379.
5. Let us first take up the first defence raised by the appellant before the Company Court. In order to give proper answer to this query we have to consider Section 193 of the Calcutta Municipal Corporation Act, 1980 (hereinafter referred to as the Act) which runs as under:--
"(1) The consolidated rate on lands and buildings shall be primarily leviable,--
(a) If the land or building is let, upon the lessor;
(b) If the land or building is sub-let, upon the superior lessor;
(c) If the land or building is unlet, upon the person in whom the right to let such land or building vests."
6. Under Section 194 of the Act the superior lessor is entitled to receive from his lessee the difference between the amounts of the consolidated rate calculated on the basis of the actual rent realised. Section 195 of the Act provides for the recovery of the consolidated rates from the occupiers and an occupier from whom any amount is recovered on account of rates and taxes prayer, shall be entitled to be reimbursed by the person primarily liable for such payment. It is not in dispute that although under Section 193 of the Act the primary liability for payment of Corporation rates and taxes is upon the respondent even then the respondent and the company entered into an agreement on 24th March, 1987 under which the rights and liabilities of the parties to pay the consolidated rates in respect of the premises in question were determined. The agreement in terms overrides any provision of the Act to the contrary by reason of the non-obstante clause therein which has already been quoted earlier. It is not in dispute that the company has not challenged this agreement either by way of independent proceedings or even in its affidavit in opposition filed in reply to the winding up petition. It is also not in dispute that there was an increase in the valuation of the premises by reason of additional constructions and letting out of such additional constructions to the company. The revaluation was made by the authorities on 21st June, 1984. As far as Infar India (also stated to be a tenant under the respondent in respect of a portion of the premises) is concerned, it does not appear from the Municipal Bills annexed to the winding up petition that there was any subsequent increase after 21st June, 1984 in respect of the valuation of the premises by reason of the premises being let out to Infar India. From the affidavit-in-reply filed by the respondent it appears that the valuation of the premises was not affected by the letting out of the premises to Infar India and that no municipal tax bill was raised on the basis of the rent paid or payable by Infar India. Accordingly the claim of the respondent was restricted to the increase in valuation of the premises occasioned solely by the tenancy of the company. The rateable distribution therefore on the basis of the annual valuation of the premises as determined under the order dated 21st June, 1984 and the surcharge payable thereon was liable to be made between respondent and the company in terms of the agreement dated 24th March, 1987. In view of the discussion made hereinabove we are unable to find any substance in the defence of the company so far as the first defence is concerned. Let us now take up the second defence. According to the company, since Sections 230 and 231 only postulate that the superior lessor can recover taxes from the sub-lesses only if the superior lessor had already paid the taxes sought to be recovered from the company in respect of the premises and as admittedly the respondent had not made such payment, the second defence of the company must be sustained. Since this defence relates to Sections 230 and 231 of the Act, we feel it proper to quote the said sections hereinunder, which are as follows:
"Section 230. Apportionment of consolidated rate by the person primarily liable to pay.-- Save as otherwise provided in the Act, the person primarily liable to pay the consolidated rate in respect of any land or building may recover--
(a) if there be but one occupier of the land or building, from such occupier half of the rate so paid, and may, if there be more than one occupier, recover from each occupier half of such sum as bears to the entire amount of rate so paid by the owner the same proportion as the value of the portion of the land or building in the occupation of such occupier bears to the entire value of such land or building:
Provided that if there be more than one occupier, such half of the amount may be apportioned and recovered from each occupier in such proportion as the annual value of the portion occupied by him bears to the total annual value of such land or building;
(b) The entire amount of the surcharge on the consolidated rate on any land or building from the occupier of such land or building who uses it for commercial or non-residential purposes:
Provided that if there is more than one such occupier, the amount of surcharge on the consolidated rate may be apportioned and recovered from each such occupier in such proportion as the annual value of the portion occupied by him bears to the total annual value of such land or building.
Section 231. Mode of Recovery.--If any person is 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."
7. So far as this second defence is concerned we are unable to find any substance in the same. In our view, the learned Trial Judge was perfectly justified in holding that the entitlement referred to in Section 231 of the Act of the superior lessor in this case arose under the terms of the agreement and not by virtue of the statute. From a plain reading of the different clauses of the agreement as quoted hereinearlier, in our opinion, this agreement does not require pre-payment of the share of the company by the respondent to the appellant as a condition for imposition of liability on the part of the company to make payment of the dues agreed to be paid by the company under the agreement. Accordingly, we are of the view, that the learned Trial Judge was fully justified in rejecting the second defence as well. Let us now take up the third defence as taken by the company, which has already been quoted hereinearlier. According to the learned Advocate for the appellant, under Section 231 of the Act, a sub-lessee was entitled to the benefits available to a tenant under the West Bengal Premises Tenancy Act, 1956 and these benefits could not be contracted out. In this connection reliance was placed before the learned Trial Judge on a decision of the Supreme Court in the case of Nagindas Ramdas v. Dalpatram Iccharam, . It was also relied, on by the learned Counsel Mr. Bhattacharjee appearing before us for the appellant. In our view the third defence of the company is also not sustainable. The company has not challenged the agreement dated 24th March, 1987 under which the apportionment of Corporation rates and taxes and surcharge had been specifically made between the respondent and the company. Such being the agreement entered into by the company, it cannot now be permitted to say that the amount payable in terms of the agreement was unfair. So far as the decision on which strong reliance was placed by Mr. Bhattacharjee before us is concerned, in our view, the learned Trial Judge was justified in holding that the principles laid down in the said decision were not applicable to the facts and circumstances of this case. Assuming that the principle of fair rent is applicable to the present case even then rates of taxes in this case admittedly had been fixed by the Corporation under the Act on the basis of the valuation made by the order dated 21st June, 1984. It is also not in dispute that the company or any one else has challenged the valuation. On the other hand it appears from the record that the company has relied on the order dated 21st June, 1984. In any view of the matter the company cannot be permitted to raise this defence as we find that in the pleadings the company has not raised the question that the terms and conditions of the agreement of the year 1987 were unfair. Be that as it may, even in reply to the statutory notice this defence was also not taken by the company and the only defence that was taken by it was that it had duly paid the agreed rate of municipal taxes as payable under the law amounting to Rs. 9,09,000/- and the respondent had accepted the same. So far as the fourth defence is concerned we are in full agreement with the learned Judge that the said defence is clearly not acceptable. It is well settled that the right to present a winding up petition is given by the statute and clause 19 of the original agreement has not impinged on such right. Accordingly the fourth defence has no leg to stand upon. So far as the fifth defence is concerned Mr. Bhattacharjee appearing on behalf of the appellant did not raise any substantial argument in respect of the finding of the learned Trial Judge. We are, therefore, of the view that the fifth defence is also not acceptable to us as was not acceptable by the learned Trial Judge. So far as the fifth defence of the company is concerned Mr. Bhattacharjee appearing on behalf of the appellant could not satisfy us that the amount claimed by the respondent was a varied one and was in fact contrary to the demand actually raised by the Corporation. Such being the position we need not deal with this defence any further. Since being the position we need not deal with this defence any further. Since the decisions on which the appellant relied on before the company court were not again relied on by Mr. Bhattacharjee before us, we do not find any reason to deal with those decisions, which were dealt with by the learned Company Judge in detail, any further in this appeal. Accordingly we are in full agreement with the learned Company Judge that defences of the appellant were neither in good faith nor of substance, nor likely to succeed in point of law nor had the company adduced any proof in relation to its contention of fair rent or any other fact on which its defence was based. No other point was raised by Mr. Bhattacharjee in support of this appeal. Accordingly we find no substance in this appeal is thus dismissed. There will be no order as to costs.
Asit Kumar Bisi, J.
8. I agree.