K. Ramachandra Aiyar vs C. Duraivelu Mudaliar

John Wallis, C.J.—The question raised in a this appeal is whether the lessor or lessee is bound to pay the taxes levied by the Madras

Municipality under Sections 129, 145 and 148 of the City Municipal Act III of 1904 ""on all buildings and lands,"" in so far as they are imposed on

lands as distinct from the buildings standing on them. The taxes to which land in the Municipality is subject are quit rent and land revenue leviable

under the Madras City Land Revenue Act, 1851, and the Municipal taxes alike are by law payable by the lessor as owner. The covenant of the

lessee in the lease Exhibit A is that he the said lessee will pay and discharge all taxes, rates and assessments whatsoever that may hereafter, during

the said term, become payable for and in respect of any building hereafter, to be erected upon the said lands hereby demised or any part thereof,

save and except only the land tax or quit rent payable to Government which shall be paid by the lessor, and the corresponding lessor''s covenant is

that the said lessor during the said term pay and discharge the quit rent or land tax payable to Government now or hereafter to become payable for

or in respect of the said pieces or parcels of land, hereby demised or any part thereof. Having regard to the fact that both the Government and

Municipal taxes were payable by the lessor as owner, the insertion of this express provision that, as between the lessor and the lessee, the lessor

should pay only the quit rent shows that it was the intention of the parties to supply any defect in the previous enumeration of the taxes that the

lessee had to pay, and to make it clear that the lessee was to pay the taxes now in question which are described in the Act as taxes on buildings

and lands. Section 129 imposes an annual tax not exceeding ten per cent.of the annualvalue as determined under the Act on all buildings and lands,

and Sections 145 and 143 impose further taxes on buildings and lands at rates not exceeding six and-a-half per cent and two per cent.by way of

water and drainage tax and lighting tax respectively. These three taxes, which may amount to eighteen and-a-half per cent.of the annual value, are

the Municipal taxes on buildings and lands leviable under the Act, and their existence must be taken to have been perfectly well known to every

one who has had anything to do with landed property in this City including the lessor and the lessee in the present case. These three taxes are

described as house, water and drainage, and lighting taxes in the Corporation notices of demand Exhibits B, B-1, and D1, and we may take it that

house tax was the name by which the tax u/s 129 was popularly known, although it is a tax leviable not only on buildings but also on lands. It is the

less surprising that they should the referred to in the lease as taxes in respect of buildings; but as I have already said, assuming this description here

to be defective, the subsequent provision that the lessor should only pay the quit rent makes the intention clear. Further the lease contains no

provision as to how it was to be determined, how much of the tax on lands and buildings was to be considered to be in respect of the buildings and

how much in respect of the lands on which the buildings stood. It is not suggested that in October 1910 when the lease was executed, the

Corporation had put separate assessments on the buildings and the lands. On the contrary the allegation in paragraph 7 of the plaint is that the

Corporation for purposes of their own introduced a system of this kind in 1911, a year after the execution of the lease. If so, it has no bearing on

the construction of the lease which must be construed with reference to the state of things when it was entered into. The evidence of this new

system is to be found in the'' notices of demand for house, water and drainage taxes for the first and second halves of 1914-15, when the building

on the premises had not been completed. It is said to be in respect of land, and is for Rs. 40-11-9 being as stated in the notice 17/- per cent.on the

annual valuation of Rs. 459. As regards the first half of 1915-16, April to September, 1915, the only document exhibited is a notice of assessment,

Exhibit C, served on 30th July, 1915, in which the property is referred to as a terraced and tiled bungalow. The fact that the tax is only made

payable from 15th May 1915 instead of 1st April, shows that that was the date on which the bungalow was taken to have been completed. No

annual valuation is given against 1914-15, but the proposed valuation is for 1915-16 and is Rs. 840 and the tax leviable as to this from May 15th

to September, 30th 1915 is Rs. 5610-9. It was admitted that in respect of the land Rs. 4011-9 was levied for this half year, as for previous half

rears, being 17 per cent.on Rs. 459, the annual value of the land. The total valuation would thus appear to be Rs. 1,299, of which Rs. 459

represents the land and Rs. 840 the premises standing on it. Thus the result of accepting the plaintiff''s contention would be to throw more than

one-third of the taxes leviable under Sections 129,145 and 143 on the lessor, who under the express provision of the lease was to be liable only

for the quit rent payable to Government and this out of the annual rent of Rs. 240 reserved by the lease. I think, for the reasons already stated, that

this liability was imposed upon the lessee by the lease and was not affected by any arrangement the Corporation may have subsequently entered

into to collect the taxes leviable under Sections 129, 145 and 143 separately on the lands and the buildings standing on the lands. This is the

conclusion arrived at by the City Civil Judge and accordingly the appeal fails and is dismissed with costs.

Oldfield, J.

I agree.