SunTec Business Solutions Pvt. Ltd. v. State of Kerala, The Municipal Corporation of Trivandrum, and Electronics Technologies Park Kerala (Technopark)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **TUESDAY, THE 21[ST] DAY OF MARCH 2023 / 30TH PHALGUNA, 1944** ## **WP(C) NO. 11182 OF 2010** ## **PETITIONER/S:** SUN TEC BUSINESS SOLUTIONS PVT. LTD. 321 NILA, TECHNOPARK, TRIVANDRUM-695581,, REPRESENTED BY MR. NIRUP GOPALAKRISHNAN NAIR,, HEAD HUMAN RESOURCE, SUN TEC BUSINESS SOLUTIONS, PVT. LTD. BY ADVS. SRI.P.B.KRISHNAN SMT.GEETHA P.MENON SRI.P.M.NEELAKANDAN ## **RESPONDENT/S:** 1 THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, DEPARTMENT OF LOCAL SELF GOVERNMENT,, GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM. 2 THE MUNICIPAL CORPORATION OF TRIVANDRUM, REPRESENTED BY ITS SECRETARY,, TRIVANDRUM CORPORATION, TRIVANDRUM DIST. 3 ELECTRONICS TECHNOLOGY PARKSKERALA (TECHNOPARK) AN AUTONOMOUS BODY OF GOVT, OF KERALA, REPRESENTED BY ITS CHIEF EXECUTIVE, OFFICER, TECHNOPARK CAMPUS TRIVANDRUM-695581. BY ADVS. SUMAN CHAKRAVARTHY, SC, THIRUVANANTHAPURAM CORPORATION SRI.P.K.MANOJKUMAR SRI.N.NANDAKUMARA MENON SR. SMT.K.V.RASHMI, SC, TECHNOPARK THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21.03.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO. 11182 OF 2010** **2** ## **J U D G M E N T** Petitioner is a Private Limited Company incorporated under the provisions of the Indian Companies Act, 1956 in the name and style 'SunTec Business Solutions Pvt. Ltd.'. The third respondent, Technopark, is an autonomous body established by the Government of Kerala with the objective of creating infrastructure and environment required for setting up high technology electronics manufacturing units etc. 2. On the basis of the discussions between the petitioner and the third respondent, built-up spaces in different modules belonging to Technopark were let out to the petitioner for establishing its business venture. The details of built-up area let out to the petitioner on lease described in the writ petition, are given below: |are|given below:|||| |---|---|---|---|---| |Sl.<br>No.|Particulars of Lease<br>deeds|Area of the<br>building|Building/ Module<br>No.|Renewal details| |1|Ext.P1 lease deed<br>dated 11.8.2005.|6370 sq.ft|Nila Building,<br>Module<br>Nos.433, 434 &<br>435|Renewed up to<br>01.12.2009.| |2|Ext.P2 lease deed<br>dated 7.2.2006|2000 sq.ft|Module No.333|Renewed up to<br>01.12.2009.| |3|Lease deed dated<br>26.3.2001|8000 sq.ft|Nila Building,<br>Module<br>Nos.321-324|Renewed up to<br>01.12.2009 as per<br>Exts.P3 & P3(a)| **WP(C) NO. 11182 OF 2010** ## **3** 3. All the lease deeds contained a common clause, that the lessee shall, from time to time, pay statutory taxes and other levies due to the Government and other local bodies, as required by law. While renewing the original lease deeds, the parties had set their hands together to read the terms and conditions of the original lease deeds to be part of renewed lease deeds. The demand for property tax payment by the lessee was first raised by the third respondent only in 2007. The following table describes the details, such as periods and buildings/modules etc., in respect of which Ext.P4 series of bills were raised by the third respondent/lessor demanding property tax : |Sl.<br>No.|Bill Date|Period|Module|Amount<br>(Rs.)|Marked as| |---|---|---|---|---|---| |1|10.10.2007|1999-00<br>to<br>2002-03|441-444|77,124/-|Ext.P4| |2|11.10.2007|2000-01<br>to<br>2006-07|321-324|1,52,262/-|Ext.P4(a)| |3|16.10.2007|2005-06<br>to<br>2006-07|433-435|32,273/-|Ext.P4(b)| |4|16.10.2007|2005-06<br>to<br>2006-07|333|7,257/-|Ext.P4(c)| |5|24.7.2008|April 2007 to<br>March 2008|333, 321-<br>324 & 433-<br>435|51,134/-|Ext.P4(d)| |6|11.03.2009|2008-09|333, 321-<br>324 & 433-<br>435|51,134/-|Ext.P4(e)| **WP(C) NO. 11182 OF 2010** **4** 4. Vide Exts.P5 and P8 dated 15.10.2007 and 24.7.2008, the petitioner Company was requested to make payment of the building tax for the period from 1999-00 to 2007-08 as per the calculation sheet enclosed therewith. The third respondent informed the petitioner vide communication dated 2.11.2007, Ext.P6, regarding the decision of the Board that the liability to pay building tax is on the tenant. Thereafter vide communications dated 21.12.2007 and 19.08.2008, Exts.P7 and P9 respectively, the petitioner was requested to clear the dues as on that date as per the statements attached therewith within ten days. Thereafter, vide letter dated 27.08.2008, Ext.P10, the petitioner was requested to make payment of property tax amounting to Rs.2,68,916/- for the period from 1999-2000 to 2006-07 and Rs.51,134/- for the year 2007-08, pointing out the condition in the lease agreement. By communication dated 3.10.2008, Ext.P11, the petitioner replied to Exts.P7, P9 and P10 communications of the 3[rd] respondent, stating that the owner has the liability to pay building tax and property tax. Petitioner reiterated their aforesaid stand in the communication dated 9.6.2009, Ext.P14, **WP(C) NO. 11182 OF 2010** **5** made to the 3[rd] respondent. Petitioner had opted for deferment of rent, but for granting the same, 3[rd] respondent vide Ext.P16 communication dated 15.6.2009 insisted payment of property tax and other dues. The petitioner’s contention is that the condition in the lease deed does not include property tax, which is levied on the owner/lessor. The third respondent replied the petitioner that the total outstanding dues was Rs.9,67,750/-, including property tax for the years from 1999-2000 to 2008-09 (Rs.3,71,184/-) and surcharge for the years 2006-07 (Rs.2,771/-) and 2008-09 (Rs.4,639/-). The 3[rd] respondent vide communication dated 28.7.2009, Ext.P18, informed the petitioner that they were liable to pay property tax as per the terms of the license/lease agreement and since, there were various dues to the petitioner, including property tax, request of the petitioner for deferment of rent could not be considered. In the meanwhile, licence of Customs Bonded Private Warehouse, which was subject to renewal of lease deeds, was also renewed. For renewal of lease deeds, the 3[rd] respondent was approached, but renewal of the same was refused for want of payment of property tax. **WP(C) NO. 11182 OF 2010** **6** Vide Ext.P25 communication dated 15.2.2010 again request for renewal of lease deeds was submitted, but vide reply Ext.P27 dated 15.3.2010 the request of renewal of lease agreements was refused for want of payment of property tax. 5. Learned counsel appearing on behalf of the petitioner submitted that as and when the period of the last renewal of the lease deed expired, the third respondent forcibly wanted to incorporate the clause by fastening liability upon the lessee to pay “Property Tax”, which in fact is on the owner of the building to pay as per the provisions of Sections 233 and 526 of the Kerala Municipality Act, 1994 ('the Act', for short). In support of the aforementioned contention, the learned counsel for the petitioner relied upon two Single Bench decisions of this Court in Azeez v. Vaikom Municipality [1992(2) KLT 676] and Jayarajan v. Vadakara Nagarasabha [2004(2) KLT 672] . 6. When the writ petition came up for consideration on 9.6.2010, this Court passed the following order: “Heard the learned Senior Counsel for the petitioner, the learned Standing Counsel for the Corporation and the learned Counsel **WP(C) NO. 11182 OF 2010** **7** appearing for the third respondent. The learned Senior Counsel appearing for the petitioner submitted that pending further orders to be passed in the writ petition, the petitioner will remit the amount towards property tax covered by Exts.P4 to P4(e) and further amounts due, if any. It is pointed out that the renewal of the lease is held up for the non payment of property tax. The petitioner will remit the amount within one week and on remitting the amount, steps will be taken by the third respondent to renew the lease. This arrangement will be subject to further orders to be passed in the writ petition.” It was submitted, in pursuance to the interim order the lease deed was renewed without insistence of payment of the property tax, subject to the result of this writ petition. 7. On the other hand, the learned counsel appearing on behalf of the third respondent countered the aforementioned argument that the petitioner/lessee had already agreed as per the terms and conditions of the lease deeds to pay the statutory taxes and other levies due to the Government and local bodies as required by law. **WP(C) NO. 11182 OF 2010** **8** 8. Heard the learned counsel for the parties and appraised the paper book. 9. One of the clauses in the lease deed, whereby the lessee had agreed to pay statuary taxes reads as under: “The LESSEE shall from time to time, pay the statutory taxes and other levies due to Government and other Local Bodies, as required by law.” Similar clause was inserted in all the original lease deeds and as part and parcel at the time of the renewal. 10. The question which arises for consideration is in the absence of any action of recovery of property tax, the petitioner had any cause of action. 11. Section 233(1) of the Act deals with property tax, which reads as under: “ 233 Property Tax .- (1) Every Council of the Municipality shall, in accordance with the provisions of this Act and the rules as may be prescribed, levy property tax on every building (including the land appurtenant thereto) situated within the area of the respective Municipality and not exempted as per the provisions of the Act.” **WP(C) NO. 11182 OF 2010** **9** Section 526 of the Act relied upon by the petitioner, reads thus: “ 526. Recovery by occupier of sum leviable from owner .— Where the occupier of any building or land makes on behalf of the owner thereof any payment for which, under this Act, the owner but not the occupier is liable, such occupier shall be entitled to recover the same from the owner or may deduct the same from the rent then or thereafter due by him to the owner.” Perusal of the clauses ibid is evident that if any tax has been paid by the occupier, the occupier is liable to seek its refund from the owner or deduct from the future payment of rent, though property tax is of the buildings. 12. The decision of this Court in Azeez (supra) relied upon by the petitioner pertains to Taxation and Finance Rules under Schedule II of Municipalities Act, whereby by noticing the fact that the tax was not paid by the owner, the Municipality had issued notice to the tenant demanding property tax under Rule 37. In that decision, there was a discussion of the relevant provisions with regard to payment of tax in paragraphs 3 and 4 thereof, and it was observed as under: **WP(C) NO. 11182 OF 2010** **10** “3. The short question that arises for consideration is whether the Municipality can demand tax from the tenant when his landlord failed to pay the same. As per Ext.P11 notice, Municipality informed the petitioners that they are liable to pay the tax as the legal representatives of the Original landlord have failed to pay it. Under Schedule II Rule 37 of the Act there is specific provision making the tenant liable to pay the tax in case it remains unpaid by the landlord. Rule 37 states: If the tax due on account of any building or land remains unpaid in whole or in part at the end of the period specified in sub-rule (1) of rule 32, the commissioner may if the said tax has not remained unpaid for more than twelve months require the occupier for the time being of such building or land to pay the amount within a specified period not being less than fifteen days and if the occupier fails to occupy with such requisition, the commissioner may distrain and sell any movable property found on the building or land, and the provisions of the foregoing rule shall, mutatis mutandis apply to all distraints and sales effected under this rule, provided that no occupier shall be liable to prosecution or to a civil suit in respect of any sum recoverable from him under this rule, unless he has wilfully prevented distraint or a sufficient distraint.” The Act has safe-guarded the interest of a tenant who has paid tax when his landlord **WP(C) NO. 11182 OF 2010** **11** has failed to pay the same. S.374 postulates that the tenant who has paid the rent on behalf of his landlord can get it adjusted towards the rent due from him to the landlord. In view of the specific provisions in the Act and Rules, contention that the petitioners who are only the tenants of the building are not in any way liable to pay the tax demanded from them cannot be sustained. 4. Contention of the petitioners that if at all they are liable to pay building tax in the event of the default committed by their landlord the Municipality can at best claim only tax for one year is equally untenable. The Act does not say so. In the absence of any specific provision that the tenant is liable to pay only tax for one year and not accumulated arrears of tax, the aforesaid contention is only to be rejected. As the tenant is very well given the right to get the amount of tax paid by him to the Municipality from the rent due to the landlord, he is not in any way adversely affected. Section 374 adequately safeguards the interest of the Municipality as well as the tenant.” Since the aforesaid judgment pertains to the previous Act and the Rules, that would not have applicability **WP(C) NO. 11182 OF 2010** **12** to the facts of this case, as by the time the alleged cause of action accrued, amended Act had come into force. 13. In Jayarajan (supra), in which the decision in Azeez (supra) was referred to, provision of Section 235 of the Act pertaining to exemption of the building from payment of property tax was referred. In paragraph No.2 thereof, it was observed as under:- “2. Petitioner in these three cases are tenants. The tenanted premises are put to the use of running educational institutions. Under S.235(1)(d) of the Kerala Municipality Act, 1994 (hereinafter called 'the Act'), the exemption from payment of property tax is available only to "buildings recognised by the Government or registered with the Municipality under this Act and owned and occupied by educational institutions and used only for teaching and libraries open to public". There is no dispute that in these cases, the petitioners are tenants and they are paying rent to the respondents landlords. Therefore, the only issue to be decided in these cases, is as to whose liability it is to pay the tax. Shri Parthasarathy, learned counsel appearing for the petitioners, placing reliance on Ss.237 and 238 of the Act, contends that the liability is of the landlord. Ss.237 and 238 read as follows: **WP(C) NO. 11182 OF 2010** **13** " 237. Property tax, first charge on property. - (1) The property tax on buildings and lands shall, subject to the prior payment of land revenue, if any, due to the Government thereon, be a first charge upon the said buildings or lands and upon the movable property, if any, found within or upon the same and belonging to the person liable to such tax.” “ 238. Revision and time of payment of property tax.-- Subject to the rules made by Government the property tax shall be assessed and the half yearly tax determined once in every five years and the half yearly tax shall be payable by the owner of the assessed property within thirty days of the commencement of each half year. Provided that except in the case of substantial improvements or addition to an existing building since the last assessment, the annual value of any building shall not exceed the limit, if any, fixed by Government from time to time". However, the question raised by the petitioner herein is not pertaining to exemption of property tax. Thus it would not be relevant for the purpose of present controversy. 14. Similarly situated two tenants had earlier approached this Court in WP(C) No.10743 & 10762/2008 challenging the demand made by TECHNOPARK with regard **WP(C) NO. 11182 OF 2010** **14** to the payment of property tax. This Court vide judgment dated 31.03.2008 held that, “petitioners are only exempted from payment of building tax and not property tax, payable either half yearly or annually to the local authority.” 15. In the provisions referred to above, i.e. Section 526, nowhere it is specified that the liability to pay property tax is on the owner, though Section 233 envisages charging of property tax on buildings. In my view raising of the bill or the letter would have to be followed by an action for recovery in a competent court of law, which has so far not been initiated at the instance of the second respondent. In case of any proceedings, the petitioner would have a right to take all the defences regarding liability of lessor/owner. Court under Article 226 of the Constitution of India cannot compel the lessor to execute the lease deed with old terms and conditions. It is open to the lessee, if he is not bound by that condition, not to abide by the same, which would give a cause of action to the lessor on refusal to vacate the premises to take appropriate remedies, in accordance with law. Even for recovery **WP(C) NO. 11182 OF 2010** **15** of the property tax, keeping the question open whether it would be the liability of the owner or the occupier, it would not be construed to be by way of a bill or demand. It has to be followed by an action actuated under Section 9 of the Code of Civil Procedure or any other provisions of the Specific Relief Act. In view of what has been noticed above, question raised above is answered, and I do not find any justification warranting interference. The writ petition fails and is dismissed. Sd/- **AMIT RAWAL JUDGE** jg ## **WP(C) NO. 11182 OF 2010** ## **16** ## **APPENDIX** ## **PETITIONER'S EXHIBITS** P1 : TRUE COPY OF LEASE DEED DATED 11.8.2005 P1(a) : TRUE COPY OF RENEWAL LEASE DEED DATED 5.12.2007 P2 : TRUE COPY OF LEASE DEED DATED 7.2.2006 P2(a) : TRUE COPY OF RENEWAL LEASE DEED DATED 5.12.2007 P3 : TRUE COPY OF LEASE DEED DATED 24.10.2005 P3(a) : TRUE COPY OF RENEWAL LEASE DEED DATED 5.12.2007 P4 : TRUE COPY OF BILL FOR THE MODULES 441-444 DATED 10.10.2007 P4(a) : TRUE COPY OF BILL FOR THE MODULES 321-324 DATED 10.10.2007 P4(b) : TRUE COPY OF BILL FOR THE MODULES 433-435 DATED 16.10.2007 P4(c) : TRUE COPY OF BILL FOR THE MODULES 333 DATED 16.10.2007 P4(d) : TRUE COPY OF BILL FOR THE MODULES 333, 321-324 & 433-435 DATED 24.7.2008 P4(e) : TRUE COPY OF BILL DATED 11.3.2009 P5 : TRUE COPY OF THE LETTER FROM R3 TO THE PETITIONER DATED 15.10.2007. P6 : TRUE COPY OF LETTER RECEIVED BY THE PETITIONER FROM R3 DATED 2.11.2007. P7 : TRUE COPY OF REMINDER LETTER SENT BY R3 TO THE PETITIONER DATED 21.12.2007 P8 : TRUE COPY OF LETTER RECEIVED BY THE PETITIONER FROM R1 DATED 24.7.2008. **WP(C) NO. 11182 OF 2010** **17** P9 : TRUE COPY OF REMINDER LETTER FROM R3 TO THE PETITIONER DATED 19.8.2008 P10 : TRUE COPY OF DEMAND LETTER FROM R3 DATED 27.8.2008 P11 : TRUE COPY OF REPLY LETTER SENT BY THE PETITIONER TO R3 DATED 3.10.2008. P12 : TRUE COPY OF GO(RT) NO.107/2009/ITD DATED 30.5.2009. P13 : TRUE COPY OF LETTER FROM R3 TO THE PETITIONER DATED 4.6.2009. P14 : TRUE COPY OF REPLY SENT BY THE PETITIONER EXTS.P8 AND P10 DATED 9.6.2009. P15 : TRUE COPY OF LETTER SENT BY THE PETITIONER TO R3 DATED 12.6.2009. P16 :TRUE COPY OF E-MAIL LETTER RECEIVED BY THE PETITIONER FROM R3 DATED 15.6.2009. P17 : TRUE COPY OF LETTER SENT BY THE PETITIONER TO R3 DATED 29.6.2009. P18 : TRUE COPY OF LETTER RECEIVED BY THE PETITIONER FROM R3 DATED 28.7.2009. P19 : TRUE COPY OF JUDGMENT OF THIS COURT IN WPC 10743 & 10762/2008 DATED 31.3.2008. P20 : TRUE COPY OF REPLY SENT BY THE PETITIONER TO EXT.P18 DATED 28.8.2009. P21 : TRUE COPY OF APPLICATION BY THE PETITIONER BEFORE THE DY.COMMISSIONER OF CUSTOMS DATED 18.11.2009. P22 : TRUE COPY OF RECEIPT FOR THE RENT PAID FOR JANUARY 2010 DATED 26.12.2009. P23 : TRUE COPY OF RECEIPT FOR THE RENT PAID FOR FEBRUARY, 2010 DATED 25.1.2010. ## **WP(C) NO. 11182 OF 2010** **18** P24 : TRUE COPY OF RECEIPT FOR THE RENT PAID FOR MARCH, 2010 DATED 26.2.2010. P25 : TRUE COPY OF REQUEST MADE BY THE PETITIONER FOR RENEWAL OF LEASE DEED DATED 15.2.2010. P26 : TRUE COPY OF APPLICATION MADE BY THE PETITIONER BEFORE THE DY.COMMISIONER OF CUSTOMS DATED 15.2.2010. P27 : TRUE COPY OF THE REPLY RECEIVED BY THE PETITIONER FROM R3 DATED 15.3.2010. P28 : TRUE COPY OF RENEWAL LEASE IN RESPECT OF MODULE NOS.321, 322, 323 AND 324 DATED 23.12.2009. P29 : TRUE COPY OF RENEWED LEASE IN RESPECT OF MODULE NO.333 DATED 23.12.2009. P30 : TRUE COPY OF BILL NO.6513 DATED 7.3.2011. P31 : TRUE COPY OF LETTER NO.ETPK/COM-FIN/DUES/2011-12/240 DATED 20.1.2012. P32 : TRUE COPY OF BILL NO.6425 DATED 6.2.2012 REPONDENTS' EXHIBITS EXT.R3(1): TRUE COPY OF THE RENEWAL LEASE DEED DATED 24..10..05 VIDE LEASE DEEDS DATED 7..2..2006 & 17..8..2005. EXT.R3(2), TRUE COPY OF THE G.O.(RT)NO.107/2009/ITD DATED 30..5..2009. EXT.R3(3), TRUE COPY OF LETTER NO.ETPK/FIN/BILL PAYMENT/ 2009-10/01 DATED 4.6..09. EXT.R3(4), TRUE COPY OF THE LETTER FROM THE PETITIONER DATED 12..6..2009 TO THE TECHNOPARK EXT.R3(5), TRUE COPY OF THE EMAIL DATED 15..6..09 FROM TECHNOPARK TO THE PETITIONER. EXT.R3(6), TRUE COPY OF THE G.O.(RT) NO.2937/2004/RD DATED **19** ## **WP(C) NO. 11182 OF 2010** 28..7..2004. EXT.R3(7), TRUE COPY OF THE LETTER NO.ETPK/FIN/SUNTEC/ 2009-10/01 DATED 28..7..09. EXT.R3(8), TRUE COPY OF THE COMMON JUDGMENT OF THIS HON'BLE COURT DATED 31..3..2008 IN WPONO.10743 & 10762/2008. EXT.R3(9), TRUE COPY OF RENEWAL LEASE DEED DATED 23..12..09. EXT.R3(10), TRUE COPY OF THE EMAIL DATED 2..2..2010 FROM TECHNOPARK TO THE PETITIONER. EXT.R3(11), TRUE COPY OF THE LETTER NO.ETPK/FIN/PROP TAX/ 2009-10/11 DATED 15..3..2010.