Fixed AC Charges Form Part of Rent, Calcutta HC Rules in Favour of Landlord in Eviction Suit [Read Order]

The Calcutta High Court, in its recent ruling, has held that fixed air-conditioning (AC) charges, when essential for the enjoyment of the tenancy, must be treated as part of rent. Consequently, the total monthly payment made by the tenant crossed the statutory ceiling of ₹10,000 under the West Bengal Premises Tenancy Act, 1997, taking the lease out of the purview of the Act and into the domain of the Transfer of Property Act, 1882.

The ruling came in a set of connected appeals between Celica Developers (P) Ltd. and M/s Wadhwana, concerning a long-standing tenancy dispute over commercial premises in Kolkata.,

The dispute dates back to two suits filed in 2008. Celica Developers, the landlord, filed a suit seeking eviction of Wadhwana, claiming that the tenant’s lease was governed by the Transfer of Property Act and had been validly terminated under Section 106. Wadhwana, in turn, filed a suit seeking a declaration that it was a monthly tenant under the West Bengal Premises Tenancy Act, 1997, entitled to protection from eviction and uninterrupted access to electricity and air conditioning.

The trial court sided with the tenant, declaring that the monthly rent was only ₹2,000, well below the ₹10,000 threshold of the 1997 Act. It treated AC charges and municipal taxes as extraneous payments, not part of the statutory definition of "rent."

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The High Court rejected this view. It carefully examined documentary evidence, including earlier undertakings before the Supreme Court and billing records, and concluded that the AC charges of ₹11,000 per month were fixed, essential, and inseparable from the tenancy.

The Court noted that AC has been an essential amenity for use and enjoyment of the tenancy and although, separate bills were issued for the AC, the same was an integral part of the tenancy.

It asserted that the AC charges were not variable like electricity bills, but fixed and obligatory, and had their genesis in orders of the Supreme Court stemming from prior litigation between the same parties. These undertakings required the tenant to pay for AC services through the landlord’s nominated agent, thus embedding them within the lease framework.

Citing precedents such as Pushpa Sen Gupta v. Susma Ghose and Popat & Kotecha Property v. Ashim Kumar Dey, the High Court reaffirmed that the term “rent” is a compendious expression, consisting not just the base rent but also fixed charges for essential services, like air conditioning, when they are indispensable to the tenant’s use of the property.

The Court further held that there is no hesitation to hold that the fixed monthly AC charge are an essential component of ‘rent’, being money payable for enjoyment of the tenancy. It was held that since the total consideration exceeded ₹13,000 per month, the tenant could no longer claim protection under the 1997 Act, which limits its application to premises let out at less than ₹10,000 per month for commercial use.

Respondent’s cross-objections, including arguments that the second eviction suit was barred under Order II Rule 2 and lacked proper company authorization under Order XXIX Rule 1, were also dismissed. The Court found that the second suit was based on a new cause of action, that the rent had exceeded the statutory ceiling, making it distinguishable from the first suit.

As a result the Court set aside the trial court’s judgment, granted eviction in favour of Celica Developers, and dismissed Wadhwana’s suit for injunction. The Court directed that no steps be taken to disturb possession for one month, based on a voluntary assurance by the landlord’s counsel.

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