Department Must Pay Rs. 2.82 Crore Rent Arrears to Property Owners After Willful Default

HC upheld Single Bench decision directing department to pay Rs. 2,82,39,242/- as rent arrears to property owners. Department had willfully defaulted on paying revised rents per CPWD norms despite Income Tax Department fixing rent at Rs. 34,302/- monthly. Court found writ petition maintainable in private law realm citing SC precedents. No disputed facts existed as department consistently used CPWD rates. HC criticized department's prolonged delay and unfair treatment of landlords, ruling the directions legally sustainable.

---

---

Issues Involved: Maintainability of writ petition in contractual disputes, adherence to CPWD rates, unilateral rent fixation by the Income Tax Department, and entitlement to arrears of rent.

Issue-wise Detailed Analysis:

1. Maintainability of Writ Petition:
The primary contention raised by the Income Tax Department was that the learned Single Bench virtually passed a money decree by adjudicating disputed questions of fact and directing the payment of Rs. 2,84,39,242/- as arrears of rent. The Department argued that such a matter, being purely contractual and non-statutory, should not have been entertained under writ jurisdiction. However, the Court noted that the writ jurisdiction is a public law remedy and can be invoked even in private law realms if the complainant party establishes that the action or inaction of the State is arbitrary. The Court referred to the Supreme Court judgments in Union of India vs. Puna Hinda, Bharat Coking Coal Limited vs. Amr Dev Prabha, and M.P. Power Management Company Limited vs. Sky Power South-East Solar India Private Limited, which held that writ petitions can be maintainable in contractual disputes if there is no serious and genuine dispute regarding the liability of the State to make the payment.

2. Adherence to CPWD Rates:
The Court examined whether the Income Tax Department adhered to the CPWD rates for rent assessment. It was noted that the department had consistently acted based on CPWD rates for assessing the rent for the premises in question. The Central Public Works Department (CPWD) by office memorandum dated 30th January 1987, revived the hiring committee to issue the Reasonable Rent Certificate (CRR) for buildings hired by the department. The Chief Commissioner of Income Tax had fixed the rent at Rs. 34,032/- per month as recommended by the CPWD, which was accepted by the landlords. The Court found that the department could not deviate from these norms as they had been following CPWD rates all along.

3. Unilateral Rent Fixation:
The Court observed that the Income Tax Department had unilaterally fixed the rent without properly communicating or consulting the writ petitioners. The Chief Commissioner of Income Tax, Durgapur, had fixed the revised rent intervals and made observations regarding reimbursement of municipal taxes. However, the department's unilateral actions without reference to the writ petitioners and the lack of communication were deemed arbitrary. The Court found that the department did not take constructive steps to comply with the directions issued in the earlier writ petition (WP No. 4178 (W) of 2005).

4. Entitlement to Arrears of Rent:
The learned Single Bench had directed the payment of arrears of rent amounting to Rs. 2,84,39,242/-. The Court noted that the rent figures were not in dispute, and the details of the arrears were provided by the writ petitioners in a tabulated format. The Single Bench took note of the rent calculated according to recognized principles of valuation and deducted the amount already received by the writ petitioners. The balance receivable was Rs. 2,82,39,242/-, which was directed to be paid by the department. The Court found that the writ petitioners were unfairly dealt with for several years and that the department's actions were arbitrary, justifying the directions issued by the learned Single Bench.

Conclusion:
The appeal was dismissed, and the Court upheld the Single Bench's order directing the Income Tax Department to disburse the arrears of rent. The Court extended the time for compliance by two weeks from the date of receipt of the server copy of the order. The judgment emphasized that the writ petition was maintainable, the department's actions were arbitrary, and the writ petitioners were entitled to the arrears of rent as calculated based on CPWD rates.

---