Wednesday, 8 January 2020

Supreme Court: Golden rules for finding out whether fake partnership deed is made for avoiding eviction decree on ground of subletting

 At the same time, as held by
this Court in the case of G.K. Bhatnagar v. Abdul Alim, (2002) 9 SCC 516 and Helper Girdharbhai v. Saiyed Mohmad Mirasaheb
Kadri, (1987) 3 SCC 538, where a tenant becomes a partner of a
partnership firm and allows the firm to carry on business in the
premises while he himself retains the legal possession thereof,
the act of the tenant does not amount to subletting.
It is further
observed and held that however inducting the partner in his
business or profession by the tenant is permitted so long as such
partnership is genuine. It is further observed that if the purpose
of such partnership is ostensible in carrying on business or
profession in a partnership but the real purpose in subletting
such premises to such other person who is inducted ostensibly
as a partner then the same shall be deemed to be an act of subletting.
After considering catena of decisions of this Court on

subletting,
in the case of Celina Coelho Pereira v. Ulhas
Mahabaleshwar Kholkar, (2010) 1 SCC 217, this Court has
summarised in paragraph 25 as under:
“25. The legal position that emerges from the aforesaid decisions
can be summarised thus :
(i) In order to prove mischief of subletting as a ground for eviction
under rent control laws, two ingredients have to be established,
(one) parting with possession of tenancy or part of it by tenant in
favour of a third party with exclusive right of possession and (two)
that such parting with possession has been done without the
consent of the landlord and in lieu of compensation or rent.
(ii) Inducting a partner or partners in the business or profession by
a tenant by itself does not amount to subletting. However, if the
purpose of such partnership is ostensible and a deed of
partnership is drawn to conceal the real transaction of subletting,
the court may tear the veil of partnership to find out the real
nature of transaction entered into by the tenant.
(iii) The existence of deed of partnership between tenant and
alleged subtenant
or ostensible transaction in any other form
would not preclude the landlord from bringing on record material
and circumstances, by adducing evidence or by means of crossexamination,
making out a case of subletting
or parting with
possession in tenancy premises by the tenant in favour of a third
person.
(iv) If tenant is actively associated with the partnership business
and retains the control over the tenancy premises with him, may
be along with partners, the tenant may not be said to have parted
with possession.
(v) Initial burden of proving subletting is on landlord but once he
is able to establish that a third party is in exclusive possession of
the premises and that tenant has no legal possession of the
tenanted premises, the onus shifts to tenant to prove the nature of
occupation of such third party and that he (tenant) continues to
hold legal possession in tenancy premises.
(vi) In other words, initial burden lying on landlord would stand
discharged by adducing prima facie proof of the fact that a party
other than tenant was in exclusive possession of the premises. A
presumption of subletting
may then be raised and would amount
to proof unless rebutted.”
9. Applying the law laid down by this Court in the aforesaid
decisions to the facts of the case on hand and on appreciation of
evidence on record, we are of the opinion that there is no
genuine partnership between respondent no.1 and respondent
no.2. Respondent no.1 has come out with a case of partnership
only to get out from the allegation of subletting.
The exclusive
possession of the suit premises is with respondent no.2.
Respondent no.2 is running the business in the suit premises as
an owner. Sales Tax Certificate and the licence are in the name
of respondent no.2. The bank accounts are in the name of
respondent no.2 and respondent no.2 is exclusively dealing with
the bank accounts. Under the circumstances, a clear case of
subletting
has been made out. The High Court has committed
a grave error in setting aside the decree of eviction on the ground
of subletting.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9443 OF 2019

A.MAHALAKSHMI Vs  BALA VENKATRAM

M.R. SHAH, J.
Dated:JANUARY 07, 2020.

Feeling aggrieved and dissatisfied with the impugned
judgment and order dated 24.04.2017 passed by the High Court
of Judicature at Madras in CRP (NPD) No. 2898/2013, by which
the High Court has allowed the said revision application preferred
by the respondents herein – original defendants, the original
plaintiff has preferred the present appeal.
2. The facts leading to the present appeal in nutshell are as
under:

That one Dr. Sanjeevi and his wife Mrs. Porkodi, the earlier
owner of the suit premises in question had executed a power of
attorney dated 01.11.2016 in the name of the appellant herein
and in respect of the said property. That by way of rental
agreement dated 23.05.2007, the appellant let out the premises
in question to original respondent no.1 herein – Bala Venkatram
(now dead and represented through legal heirs) for running ‘Best
Mark Super Market’ from June, 2007 to July, 2009 on a monthly
rent of Rs.11,000/.
That an advance amount of Rs.1,00,000/was
paid by way of security. That the rent was payable on 7th
day of every English calendar month. That the appellant –
landlady filed an eviction suit on the ground of subletting
as well
as on the ground of arrears of rent against the respondents
herein – original defendants – Bala Venkatram and another
under Sections 10(2)(i), 10(2)(ii)(a)(b) and 10(2)(iii) of the Tamil
Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter
referred to as the ‘Act’) in the Court of District Munsiff, Pollachi.
According to the landlady the rent was initially paid by original
defendant no.1 – Bala Venkatram till October, 2007. It was the
case on behalf of the landlady that upon default in payment of
rent and noticing a change in the name as well as ownership of

the shop in the tenanted premises from ‘Best Mark Super Market’
to ‘Amutham Super Market’, she made enquiries and discovered
that not only there was a change in the name but a complete
change of hand from original defendant – Bala Venkatram to
respondent no.2 – Shahu Hameed which also on the face of it
was a gross breach of the rent agreement. According to the
landlady, the subletting
was evident from the Certificate of
Registration, Government of Tamil Nadu, Commercial Tax
Department. Therefore, the landlady issued a legal notice to
original defendant – Bala Venkatram pointing out the said
breaches and called upon him to collect balance amount from the
advance payment deposited after adjusting the arrears of rent
and handover possession of the tenanted premises within 15
days failing which the appropriate legal action would be taken.
There was no reply to the legal notice from respondent no.1 –
original defendant no.1. Therefore, the landlady, the appellant
herein, filed R.C.O.P. No. 4 of 2008 for decree of eviction on the
ground of subletting
and arrears of rent.
2.1 The suit was resisted by original defendant no.1 – the
original tenant by filing a written counter. It was stated that the

landlady has received the rent till December, 2007 and that the
first respondent has no necessity to get the permission from the
landlady for running business in any other name. It was the
case on behalf of original respondent no.1 – the original tenant
that since the landlady was trying to evict the respondents, they
filed O.S. No. 122/2008 for permanent injunction. According to
the first respondent – the original tenant, they were running
‘Amutham Super Market’ in the suit property. According to the
original tenant there were many branches, namely, ‘Amutham
Jewellery, Amutham Foods, Amutham Electronics, Amutham
Textiles etc. According to the original tenant since the
respondents refused to give the business in the name of the
landlady, she filed eviction petition with an ulterior motive. A
similar written counter was filed on behalf of original respondent
no.2 – subtenant.
2.2 That the learned Rent Controller dismissed the eviction
petition. Aggrieved by the same, the landlady preferred R.C.A.
No. 1 of 2012. That the learned Rent Control Appellate Authority
allowed the appeal in part. The learned Rent Control Appellate
Authority passed the eviction decree on the ground of subletting

only and therefore allowed the petition filed under Sections 10(2)
(i) and 10(2)(ii)(a)(b) of the Act. However, dismissed the petition
filed under Section 10(2)(iii) of the Act – wastage & material
alteration of the premises. That the original tenant – Bala
Venkatram died. Therefore, the legal heirs of the original tenant
– Bala Venkatram and the second respondent – subtenant
preferred the revision application before the High Court. That by
the impugned judgment and order, the High Court has allowed
the said revision application and has quashed and set aside the
eviction order passed by the Rent Control Appellate Authority.
2.3 Feeling aggrieved and dissatisfied with the impugned
Judgment and order passed by the High Court in quashing and
setting aside the eviction decree on the ground of subletting,
the
landlady has preferred the present appeal.
3. Shri Aniruddha Joshi, learned Advocate appearing on behalf
of the original plaintiff – landlady has vehemently submitted that
in the facts and circumstances of the case, the High Court has
committed a grave error in quashing and setting aside the
eviction decree on the ground of subletting.
Learned Advocate
appearing on behalf of the appellant has vehemently submitted

that the High Court has committed a grave error in holding that
the landlady has not established and proved the subletting
by
the original tenant in favour of respondent no.2 herein – subtenant.
3.1 It is further submitted by the learned Advocate appearing on
behalf of the original plaintiff that the finding recorded by the
High Court that the landlady has failed to establish and prove the
subletting
by original respondent no.1 in favour of original
respondent no.2 is contrary to the evidence on record. It is
vehemently submitted that when the first appellate authority on
appreciation of evidence specifically found that there was a subletting
of the premises by original respondent no.1 in favour of
original respondent no.2, the same was not required to be
interfered with by the High Court in exercise of its revisional
jurisdiction.
3.2 It is further submitted by the learned Advocate appearing on
behalf of the original plaintiff that there were ample
material/evidence on record, such as, sales tax certificate, licence
of the shop which stood in the name of original respondent no.2
which establish and prove the subletting
by the original tenant –

respondent no.1 in favour of subtenant
– original respondent
no.2. It is submitted that the aforesaid documents/evidence on
record have not at all been considered by the High Court.
3.3 It is further submitted by the learned Advocate appearing on
behalf of the original plaintiff that the High Court ought to have
appreciated that though the original tenant – respondent no.1 in
his crossexamination
set up a case that he was a partner in the
business run by respondent no.2, however, no document was
placed on record to show the partnership.
3.4 It is further submitted by the learned Advocate appearing on
behalf of the original plaintiff that as all the ingredients of subletting
are established and proved by the landlady, such as,
parting with possession of the tenancy in favour of respondent
no.2 with exclusive rights of possession and that such parting
with possession has been done without the consent of the
landlady, the landlady filed an eviction petition.
4. The present appeal is vehemently opposed by Shri C.
Paramasivam, learned Advocate appearing on behalf of the
respondents. It is vehemently submitted on behalf of the
respondents that as the appellant is not the owner of the suit

premises and is only a power of attorney holder of the owner of
the premises, the eviction petition itself is not maintainable. It is
submitted that therefore the appellant cannot be said to be a
landlady and therefore the eviction petition at the instance of the
appellant is not maintainable.
4.1 Now so far as the impugned judgment and order passed by
the High Court is concerned, it is vehemently submitted by the
learned Advocate appearing on behalf of the respondents that on
appreciation of evidence and considering the fact that the
appellant has failed to prove that respondent no.1 had sublet
the suit premises to the second respondent, the High Court has
rightly set aside the order passed by the Rent Control Appellate
Authority.
4.2 It is further submitted by the learned Advocate appearing on
behalf of the respondents that even in the deposition/evidence of
the landlady, it has come on record that respondent no.1 and
respondent no.2 – Shahu Hameed were running the shop as
partners. It is submitted therefore that when both, respondent
nos. 1 & 2 were running the shop as partners, there is no
question of subletting.
It is submitted that therefore the High

Court has rightly set aside the eviction decree on the ground of
subletting.
5. In rejoinder and on the maintainability of the eviction
petition by the appellant, as objected by the respondents, learned
Advocate appearing on behalf of the landlady has submitted that
as such no such contention was raised in the written counter to
the eviction petition. It is submitted that no such issue was
framed. It is submitted that as such in the written counter, they
have not disputed the status of the appellant as landlady. It is
submitted that even otherwise and considering Section 2(6) of the
Act and even considering the fact that lease deed was executed
by the appellant in favour of respondent no.1, the appellant can
be said to be a landlady/landlord and therefore the eviction
petition at the instance of the appellant would be maintainable.
6. We have heard the learned Counsel for the respective
parties at length. We have also perused the impugned judgment
and order passed by the High Court. We have considered and
appreciated the entire evidence on record, more particularly the
rental agreement as well as deposition of original respondent no.1
– Bala Venkatram.

6.1 At the outset, it is required to be noted that the suit
premises was leased in favour of original respondent no.1 –
original tenant – Bala Venkatram pursuant to the rental
agreement dated 23.05.2007 executed by the appellant herein.
Therefore, the rental agreement was between the appellant and
original defendant no.1 – Bala Venkatram. Defendant no.1 was
put in possession as a tenant pursuant to the aforesaid rental
agreement dated 23.05.2007 executed by the appellant in favour
of original defendant no.1 – original tenant – Bala Venkatram.
Therefore, as such, it would not be open for the respondents to
deny the status of the appellant as a landlady. Therefore, the
original respondents cannot challenge the authority of the
appellant to file an eviction petition. Even otherwise, considering
Section 2(6) of the Act and considering the fact that respondent
no.1 was paying the rent to the appellant pursuant to the
aforesaid rental agreement dated 23.05.2007, the appellant can
be said to be the landlord/landlady and therefore the eviction
petition at the instance of the appellant would be maintainable.
At this stage, it is required to be noted that as such no such
objection was raised either before the High Court and/or before
the Rent Control authorities. Be that as it may, as observed

hereinabove, the appellant can be said to be the landlady even
within the definition of Section 2(6) of the Act and therefore the
eviction petition at the instance of the appellant would be
maintainable.
6.2 Now so far as the merits of the case are concerned, at the
outset, it is required to be noted that the landlady filed a suit for
eviction mainly on the ground of arrears of rent as well as on the
ground of subletting.
The Rent Controller dismissed the eviction
petition. However, the Rent Control Appellate Authority passed
the eviction decree on the ground of subletting
and arrears of
rent which has been upset by the High Court by the impugned
judgment and order. Therefore, the short question which is
posed for consideration of this Court is, whether in the facts and
circumstances of the case, the High Court is justified in setting
aside the eviction decree on the ground of subletting
and arrears
of rent?
7. It is not in dispute that in the rental agreement dated
23.05.2007, the suit premises was let out to respondent no.1 –
the original tenant for running ‘Best Mark Super Market’ for a
period of two years from June, 2007 to July, 2009. However, it

has been found that in the suit premises, respondent no.2 was
running the business in the name of ‘Amutham Super Market’
and the original tenant was confronted with the same and was
served with a legal notice, initially original respondent no.1 –
tenant did not respond to the legal notice. However, before the
Rent Control Authority, it was the case on behalf of respondent
No.1 – Bala Venkatram that because of the old age he was not in
a position to manage the affairs of the shop and that is why he
has handed over the possession of the shop to Shahu Hameed –
original respondent no.2 through a general power of attorney. It
was also the case on behalf of the original tenant that on the
basis of an oral agreement, he and Shahu Hameed were running
the business as partners. However, in the crossexamination,
the
original tenant has specifically admitted that in the bank
accounts of the firm – Amutham Super Market, Shahu Hameed is
shown as the owner of the shop. He has also admitted that
licence for the shop is also in the name of Shahu Hameed. He
has also specifically admitted that Shahu Hameed is running the
shop as the owner. He has also specifically admitted that he is
not in possession of any document to show that he is running the
shop. He has also specifically admitted that he has handed over

the shop to Shahu Hameed through a power of attorney. He has
also specifically admitted that the application/sales tax certificate
in respect of the suit property is registered in the name of Shahu
Hameed. He has also specifically admitted that the bank
accounts are maintained by Shahu Hameed in the capacity of
owner of the shop. Thus, from the deposition of original
respondent no.1 – the original tenant and the material/evidence
on record, we are of the opinion that this is a clear case of subletting.
All the ingredients suggesting subletting
are established
and proved. As such, the High Court has not at all discussed the
evidence on record including even the deposition of original
respondent no.1 – the original tenant.
8. Subletting
means transfer of an exclusive right to enjoy the
property in favour of the third party. To constitute a subletting,
there must be a parting of legal possession, i.e., possession with
the right to include and also right to exclude others. Subletting,
assigning or otherwise parting with the possession of the whole
or any part of the tenancy premises, without obtaining the
consent in writing of the landlord, is not permitted and if done,
the same provides a ground for eviction of the tenant by the

landlord. When the eviction is sought on the ground of subletting,
the onus to prove subletting
is on the landlord. As held
by this Court in the case of Associated Hotels of India Limited v.
S.B. Sardar Ranjit Singh, AIR 1968 SC 933, if the landlord prima
facie shows that the third party is in exclusive possession of the
premises let out for valuable consideration, it would then be for
the tenant to rebut the evidence. At the same time, as held by
this Court in the case of G.K. Bhatnagar v. Abdul Alim, (2002) 9
SCC 516 and Helper Girdharbhai v. Saiyed Mohmad Mirasaheb
Kadri, (1987) 3 SCC 538, where a tenant becomes a partner of a
partnership firm and allows the firm to carry on business in the
premises while he himself retains the legal possession thereof,
the act of the tenant does not amount to subletting.
It is further
observed and held that however inducting the partner in his
business or profession by the tenant is permitted so long as such
partnership is genuine. It is further observed that if the purpose
of such partnership is ostensible in carrying on business or
profession in a partnership but the real purpose in subletting
such premises to such other person who is inducted ostensibly
as a partner then the same shall be deemed to be an act of subletting.
After considering catena of decisions of this Court on

subletting,
in the case of Celina Coelho Pereira v. Ulhas
Mahabaleshwar Kholkar, (2010) 1 SCC 217, this Court has
summarised in paragraph 25 as under:
“25. The legal position that emerges from the aforesaid decisions
can be summarised thus :
(i) In order to prove mischief of subletting as a ground for eviction
under rent control laws, two ingredients have to be established,
(one) parting with possession of tenancy or part of it by tenant in
favour of a third party with exclusive right of possession and (two)
that such parting with possession has been done without the
consent of the landlord and in lieu of compensation or rent.
(ii) Inducting a partner or partners in the business or profession by
a tenant by itself does not amount to subletting. However, if the
purpose of such partnership is ostensible and a deed of
partnership is drawn to conceal the real transaction of subletting,
the court may tear the veil of partnership to find out the real
nature of transaction entered into by the tenant.
(iii) The existence of deed of partnership between tenant and
alleged subtenant
or ostensible transaction in any other form
would not preclude the landlord from bringing on record material
and circumstances, by adducing evidence or by means of crossexamination,
making out a case of subletting
or parting with
possession in tenancy premises by the tenant in favour of a third
person.
(iv) If tenant is actively associated with the partnership business
and retains the control over the tenancy premises with him, may
be along with partners, the tenant may not be said to have parted
with possession.
(v) Initial burden of proving subletting is on landlord but once he
is able to establish that a third party is in exclusive possession of
the premises and that tenant has no legal possession of the
tenanted premises, the onus shifts to tenant to prove the nature of
occupation of such third party and that he (tenant) continues to
hold legal possession in tenancy premises.
(vi) In other words, initial burden lying on landlord would stand
discharged by adducing prima facie proof of the fact that a party
other than tenant was in exclusive possession of the premises. A
presumption of subletting
may then be raised and would amount
to proof unless rebutted.”
9. Applying the law laid down by this Court in the aforesaid
decisions to the facts of the case on hand and on appreciation of
evidence on record, we are of the opinion that there is no
genuine partnership between respondent no.1 and respondent
no.2. Respondent no.1 has come out with a case of partnership
only to get out from the allegation of subletting.
The exclusive
possession of the suit premises is with respondent no.2.
Respondent no.2 is running the business in the suit premises as
an owner. Sales Tax Certificate and the licence are in the name
of respondent no.2. The bank accounts are in the name of
respondent no.2 and respondent no.2 is exclusively dealing with
the bank accounts. Under the circumstances, a clear case of
subletting
has been made out. The High Court has committed
a grave error in setting aside the decree of eviction on the ground
of subletting.
10. In view of the above and for the reasons stated above, the
present appeal is allowed. The impugned judgment and order
passed by the High Court is set aside and the judgment and

decree passed by the Rent Control Appellate Authority is hereby
restored. There shall be a decree on the ground of subletting.
Respondents to handover the peaceful possession of the suit
premises to the appellant herein within a period of three months
from today on filing usual undertaking before this Court and on
payment of full arrears of rent within a period of four weeks from
today.
………………………………J.
[ASHOK BHUSHAN]
NEW DELHI; ………………………………J.
JANUARY 07, 2020. [M.R. SHAH]

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