Safiya Malik

The High Court of Calcutta Single Bench of Justice Rai Chattopadhyay held that a lessee in lawful occupation of a heritage property under a registered lease deed must be treated on par with an owner for the purpose of seeking exemption from municipal taxes under Section 425K of the Kolkata Municipal Corporation Act, 1980. The Court directed the Kolkata Municipal Corporation to consider entering into an agreement with the petitioner for exemption—wholly or partly—from property tax, and to keep the existing tax demand in abeyance until such consideration is concluded. The Corporation has been instructed to conduct a meeting with the petitioner, pass a reasoned resolution, and complete the entire process within eight weeks.

The writ petitioner, a lessee of premises located at No. 27, Ezra Street, Kolkata, challenged a demand notice dated August 6, 2021, which required payment of Rs. 59,37,328 as property tax, including interest and penalty. The petitioner also contested a prior intimation letter dated March 25, 2021, detailing outstanding dues of Rs. 55,15,196. It was further submitted that despite a written representation dated June 17, 2021, the Corporation failed to consider the grievances presented.

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The petitioner asserted valid leasehold rights over premises No. 27 and 31 Ezra Street, and No. 19 Parsi Church Street, Kolkata, under a 99-year lease executed on December 9, 1994, by the trustee-shebait of Rustomjee Cowasjee Fire Temple. Although the petitioner had maintained and preserved the property since 2003, it was alleged that the premises were infested with illegal occupants, hindering lawful possession and upkeep.

Mr. Dhiraj Trivedi, learned counsel for the petitioner, stated that the property in question had been declared a Grade-I heritage building by the Heritage Conservation Committee of the Kolkata Municipal Corporation on February 25, 2009. Citing Section 425K of the Kolkata Municipal Corporation Act, he argued that the Corporation should enter into an agreement to exempt the petitioner from municipal taxes, given the significant financial burden and the petitioner’s inability to generate sufficient income due to illegal occupancy.

The respondents, represented by Mr. Alak Kumar Ghosh and Mr. Manojit Pal, countered the petitioner’s claims, asserting that the petitioner, being an occupier and not the owner, was ineligible for relief under Section 425K. They further contended that the petitioner was a habitual defaulter in tax payments and had not fulfilled its obligations under Section 425A of the Act, which requires the preservation and conservation of heritage buildings.

The respondents maintained that the authority to grant exemptions under Section 425K was discretionary and subject to the objective satisfaction of the Corporation. It was also argued that commercial activities were being conducted from the premises, disqualifying the petitioner from seeking exemption.

Justice Rai Chattopadhyay meticulously examined the statutory framework, particularly the definitions and responsibilities outlined under the Kolkata Municipal Corporation Act, 1980. The Court recorded that “the law has bestowed similar responsibility to the occupier of the building akin to the original owner, and the occupier is responsible for discharging all statutory liabilities in respect of the building as if he was the owner thereof.”

The Court noted that under Section 425A, the term "owner" includes not only the actual titleholder but also the manager, trustee, or person vested with the power of management. Additionally, it was observed that Section 425A explicitly states that “every owner or occupier of the heritage building declared as such by the Corporation shall maintain, preserve and conserve it.”

Justice Chattopadhyay concluded that "if an occupier is entrusted with the liabilities and obligations under the Act, it would only be arbitrary and unjust to deny such occupier the benefits available under the same statute, including those under Section 425K." The Court further recorded that the respondents' argument created an irrational distinction between the owner and the occupier, which was neither supported by the statutory scheme nor consistent with the legislative intent.

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The Court issued the following directives:

1. "The notice of demand issued by the respondent/Corporation dated August 6, 2021 for payment of Rs. 59,37,328.18/- be kept in abeyance till completion of the process as directed below."

2. "Let the Corporation consider entering into an agreement with the petitioner in terms of Section 425K and in order to grant exemption wholly or partly of the taxes or fees for such heritage building."

3. "In doing so, the respondent/Corporation shall seek attendance of the petitioner for a meeting with it and pass a detailed resolution in the said meeting. The resolution as above shall bear the reasons, if not an agreement is immediately entered into by the Corporation with the writ petitioner, in accordance with law."

4. "The entire exercise as above should be concluded by the respondent/Corporation within a period of eight weeks from the date of communication of this judgment."

5. "A fresh demand notice may be issued, if at all necessary, only after conclusion of the exercise as directed above and in terms of the decision arrived at during the course."

Advocates Representing the Parties

For the Petitioner: Mr. Dhiraj Trivedi, Mr. Bikash Kumar Singh, Mr. Sunil Gupta, Ms. Swapna Jha

For the Kolkata Municipal Corporation: Mr. Alak Kumar Ghosh, Mr. Manojit Pal

Case Title: M/S. Monotona Marketing (P) Ltd. Vs. The Kolkata Municipal Corporation & Ors.

Case Number: WPO 903 of 2021

Bench: Justice Rai Chattopadhyay

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