JUDGMENT
D.G. Karnik, J.
1. Rule. By consent, rule is made returnable forthwith. Heard learned Counsel for the petitioners and learned Assistant Government Pleader for the respondents.
2. By this petition, the petitioners challenge the communication dated 4th July, 2002 by the Deputy Director, Vocational Education and Training Department (Respondent No. 3 herein) to the Principal and the letter dated 1st April, 2004 written by the Principal, Industrial Technical Institute (Respondent No. 4 herein) to the Chief Officer of Municipal Council, Chalisgaon, informing him that the property taxes in respect of the property taken on rent by respondent No. 4 should be recovered from the petitioners i.e. owners of the premises.
3. Petitioners are owners of their respective premises. By a written agreement (Exhibit “C”), the petitioner No. 1 let out and the respondent No. 4 took on lease her premises with effect from 1st July, 1996. By a written agreement (Exhibit “D”), petitioner No. 2 let out and the respondent No. 4 took on lease his premises with effect from 18th April, 1998. By a written agreement (Exhibit “E”), petitioner No. 3 let out and respondent No. 4 took on lease his premises with effect from 1st July, 1996. All the written agreements are identical and clause No. 14 of each of the said agreements provides that the property taxes in respect of the demised premises payable to the municipality shall be paid by the respondent No. 4 directly to the municipality. It appears that the respondent No. 4 applied to the respondent No. 2/3 for administrative sanction for payment of the rent of the demised premises as also the property taxes. The respondent No. 3 by his letter dated 4th July, 2002 informed the respondent No. 4 that at the time of sanctioning of the rent of the premises, the Public Works Department had sanctioned it excluding the property tax and, therefore, all the municipal taxes for the premises were required to be paid by the owner and the respondent No. 4 should only pay the rent, water and electricity bill. In pursuance of the said letter of the respondent No. 4, the respondent No. 4 by his letter dated 1st April, 2004 informed the Chief Officer, Chalisgaon Municipal Council that till then the respondent No. 4 – Institute was paying the property tax; however, as the Government had prevented it from paying property tax, the same should be recovered from the owners of the property. These two communications dated 4th July, 2002 and 1st April, 2004 are impugned in this petition.
4. Mr. U. K. Patil, learned Assistant Government Pleader appearing for the respondents, submitted that in view of the provisions of Section 125 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 (For short, hereinafter referred to as “Municipalities Act”), the property tax is required to be paid by the owner. Section 125 of the Municipalities Act reads as follows:
Primary responsibility for properly taxes on whom to rest.- (1) Subject to the provisions of Sub-section (2), property taxes assessed upon any premises shall be primarily leviable as follows, namely:
(a) If the premises are held immediately from the Government or from the Council, from the actual occupier thereof: Provided that, property taxes due in respect of buildings vesting in the Government and occupied by servants of the Government or other persons on payment of rent shall be leviable primarily from the Government;
(b) if the premises are not so held.-
(i) from the lessor if the premises are let;
(ii) from the superior lessor if the premises are sub-let;
(ii) from the person in whom the right to let the premises vests if they are unlet.
(2) If any land has been let for any term exceeding one year to a tenant, and such tenant has built upon the land, the property taxes assessed upon the said land and upon the building erected thereon shall be primarily leviable from the said tenant or any person deriving title from the said tenant by the operation of law or by assignment or transfer but not by sub-lease or the legal representative of the said tenant or person whether the premises be in the occupation of the said tenant or person or legal representative or a sub-tenant.
Clause (a) of Sub-section (1) applies where the premises are owned by the Government or by the Municipal Council. In case, the premises are held from the Government or from the Council, the property tax is required to be paid by the actual user. All other cases are covered by Clause (b) of Sub-section (1). Under Clause (b) of Sub-section (1), in all other cases, the primary liability for payment of property tax is that the lessor, if the premises are let. Since the premises are not held from the Government or Council, the present case is covered by Clause (b) and the primary liability of payment of the property tax is of the lessors i.e. the present petitioners. Learned Assistant Government Pleader appearing for the respondents, therefore, submitted that the communication issued by the respondent No. 3 to respondent No. 4, not to pay the property tax, and further communication issued by respondent No. 4 to the Chief Officer of the Municipal Council, that it would not pay the property tax and it should be recovered from the petitioners, is proper and legal.
5. In our view, the submission of the learned Assistant Government Pleader cannot be accepted. Section 125 of the Municipalities Act deals with the liability to pay the property tax to the Municipal Council. It governs the liability as between the Municipal Council and the owner or occupier of the premises. However, where the premises are let, the lessor and lessee may enter into a contract under which the lessee may agree to pay the property tax. Of course, despite such contract between the parties, so far as the Municipal Council is concerned, it would be entitled to recover the taxes from the owner/lessor in accordance with Section 125 of the Municipalities Act. But that would not absolve the lessee of his contractual obligation to the lessor. If the lessee has agreed with the lessor to pay the property tax then, as between the lessor and lessee, the lessee must pay the taxes. If the lessor is required to pay the taxes by reason of Section 125 of the Municipalities Act, the lessor can recover the taxes from lessee or can even taken appropriate action against the lessee for breach of the contract of lease. Section 125 of the Municipalities Act does not prohibit a lessee from entering into a contract with the lessor to pay the property tax. In our view, as between lessor and lessee, the contract of lease is binding on the parties and the lessee must abide by the terms and conditions of the contract. We wish to clarify that the order which we are passing in this petition would not prevent Chalisgaon Municipal Council from recovering the property tax from the lessor in view of Section 125 of the Municipalities Act. However, as between the petitioners and the respondents, the respondent No. 4 must pay the property tax and if it fails to pay the same, it would be breach of the contract of lease from which the lessee would be entitled to take appropriate action for recovery without prejudice to its rights under any other law.
6. For these reasons we pass the following order:
The writ petition is allowed. The impugned communications are quashed and set aside. It is, however, clarified that this order would not prevent the Chalisgaon Municipal Council from recovering the property tax from the petitioners. However, if the taxes are so recovered, the petitioner shall be entitled to recover the same from the respondent No. 4 and also take such action against it as is available under law.
7. Rule is made absolute to the extent indicated above.