Whether the court can draw an inference that rented premises was sublet if the tenant fails to take steps for recovery of its possession from the third person?

 Undoubtedly, the NDMC appears to have not taken any action against the SOS Children's Villages of India to take back the possession of 1, Doctor's Lane, Gole Market, New Delhi after closure of the project Udayan in 2003 after revocation of the agreement dated 23.03.1981 with the SOS Children's Villages of India on 30.10.1998 but the same does not detract from the factum that in terms of the said agreement dated 23.03.1981 between the NDMC and the SOS Children's Villages of India, there has been no subletting or parting with the possession of the tenanted premises as rightly held by the learned RCT, New Delhi vide the impugned judgment dated 23.08.2018.

29. The factum that the officers concerned of the NDMC had not acted with diligence to recover the possession from the SOS Children's Villages of India from the tenanted premises in question, does not render the contention raised by the NDMC frivolous that it had not sublet the tenanted premises to the NGO i.e. the SOS Children's Villages of India. The verdict of the Hon'ble Supreme Court in "S.F. Engineer Vs. Metal Box India Limited and Another" MANU/SC/0246/2014 : (2014) 6 SCC 780, makes it apparent that the said inaction by the officers of the NDMC concerned by itself does not suffice to lead this Court to the conclusion that the subletting by the NDMC to the SOS Children's Villages of India as alleged by the petitioner, - had been established.

IN THE HIGH COURT OF DELHI

CM (M) 1229/2018 and C.M. Appl 42051/2018

Decided On: 30.06.2020

Abhishek Buildcon Pvt. Ltd.  Vs.   New Delhi Municipal Council

Hon'ble Judges/Coram:

Anu Malhotra, J.

Citation: MANU/DE/1317/2020

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Whether court should grant eviction decree on the ground of subletting if the tenant is not in control of business of the company working in rented premises?

In Sait Nagjee Purushotham (supra), the question was whether the partnership firm which was converted into a company had all the partners of the firm as the Directors. No evidence was led to show that the Directors were the same, accordingly, the Court held that there were subletting and observed as under:

"20. In view of the ratio laid down by this Court in the aforesaid decisions, various tests were laid down obtaining in the facts of each case. But the common ratio which runs in all these cases is that if there is voluntary transfer by the company to a newly incorporated company then in that case one has to plead and prove that all the members of the old firm continued in the new firm and it is essentially the same. The only exception which has been made is that the transfer of the old company to a new one is under the statute or law. Therefore, in the present case after verifying the records of the case, we have found that all the three courts have consistently observed that the benefit of Section 11(17) of the Act cannot be extended to the appellant in this case and we are of opinion that the view taken by the courts below is correct and there is no ground to interfere in this appeal."

25. Subsequent to the judgment in Sait Nagjee Purushotham (supra), the Supreme Court considered this very issue in Santosh Ajit Sachdeva and Ors. v. Anoopi Shahani, MANU/SC/7841/2007 : (2007) 7 SCC 675 wherein, on the question of subletting the Supreme Court observed as under:

"8. All other cases referred by learned Counsel were also examined and we do not feel any need to refer any more of them. The theory of lifting the corporate veil has been accepted in certain circumstances which have already been referred by this Court in a series of decisions. However, so far as this case is concerned, as per the finding of fact recorded by the appellate court as well as by the High Court that the appellant-defendant has not been able to successfully prove that she is controlling the company, it was held by the appellate court that merely by holding a large number of shares is not sufficient but something more is required to prove that she is actually controlling and managing the business herself. That finding of the Appellate Court has been upheld by the High Court. Hence, in view of the concurrent finding of both the courts below, there is no reason for us to take a different view of the matter. Hence, we do not find any merit in this appeal and accordingly the appeal stands dismissed. No order as to costs."

Thus, as per the judgment in Santosh Ajit Sachdeva and Ors. (supra), it is merely not enough for a tenant to hold a large number of shares in a company, something more would be required.

Conclusion

26. Applying the tests laid down in the above three decisions of the Supreme Court to the facts of the present case, the admitted facts show that there are three companies functioning from the tenanted premises. Two of the companies were incorporated by third persons. The tenants became Directors in the company a few years after incorporation. The companies had their registered office in the tenanted premises since inception. The exact shareholding of these Directors and their control is not clear to the Court. No evidence has been led to show as to who is in charge of the day to day handing of the business of these companies. In any event, the fact that there are other Directors in the companies and other shareholders itself shows that the corporate reflection and image of the said companies cannot be only Mr. Arun Kumar Jain and Ms. Archana Jain. Even going by the tests laid down in Madras Bangalore Transport Co. (supra), this is a clear case of subletting in view of the third-party Directors and shareholders in the said two companies. Under these circumstances, though not on the question of res judicata, even on merits, the finding of the ARC that there is subletting does not deserve to be interfered with.

 IN THE HIGH COURT OF DELHI

CM (M) 600/2019, CM Appls. 17972, 20292 and 20409/2019

Decided On: 19.02.2020

 Arun Kumar Jain  Vs.  Bhagwant Singh Pabla 

Hon'ble Judges/Coram:

Prathiba M. Singh, J.

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How to appreciate evidence in eviction suit if tenant takes the plea of partnership to conceal real transaction of subletting?

In order to prove mischief of subletting as a ground for eviction under the Rent Control laws, two ingredients have to be appreciated, (1) parting with possession of tenancy or part of it by the tenant in favour of a third party with exclusive right of possession, and (2) that such parting with possession has been done without the consent of the landlord and in lieu of compensation or rent. Inducting a partner or partners in the business 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 the transaction entered into by the tenant. The existence of deed of partnership between the tenant and the alleged sub tenant or the 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 cross-examination, making out a case of subletting or parting with possession in the tenancy premises with him, may be along with partners, the tenant may not be said to have parted with possession. The initial burden of proving sub-letting is on the landlord. But once he is able to establish that the third party is in exclusive possession of the premises and that the tenant has no legal possession of the tenanted premises, the onus shifts upon the tenant to prove the nature of occupation of such third party and that he still continues to hold legal possession of the tenanted premises. In other words, initial burden lying upon the landlord would stand discharged by adducing prima facie proof of the fact that the party other than the tenant was in exclusive possession of the premises. A presumption of subletting may then be raised and would amount to proof unless rebutted.1

15. As noticed earlier, there is discrepancy between the document at Exhibit 98 i.e. the deed of partnership dated 19 February 1981 and the entry dated 17 September 1981 in the extract of registration obtained from the Registrar of Firms. There is no clarity as to the precise deed or document produced by Thakkar at the stage of registration with the Registrar of Firms. However, even if the contention of Thakkar and others that deed of partnership dated 19 February 1981 was the document which was produced is to be accepted, the contents thereof establish that the real transaction between Thakkar and the so-called partners was of subletting. There is no dispute that no consent whether in writing or otherwise was obtained by Thakkar from the petitioners.

16. Clause 3 of the partnership deed states that no capital whatsoever shall be contributed by Thakkar, whether at the stage of entering into partnership or in future. However, it is stated that Thakkar 'shall give earlier mentioned premises admeasuring 10' x 40' along with all articles fixtures (list of all articles is enclosed)". Thakkar in his deposition (cross-examination) has admitted that when he entered into the partnership in 1981, his business was not that of tailoring. Further, that the list of articles mentioned in the agreement at Exhibit 98 was not attached to it. Thakkar has also admitted that he has no knowledge of tailoring work. Similarly Sailesh Shah (defendant No. 4) in his deposition has admitted that Thakkar had no knowledge of tailoring business or sale of clothes. It is also admitted by Sailesh Shah that Thakkar never took part in the management of the partnership business. The expression 'give earlier mentioned premises ... .......' In clause 3 of Exhibit 98, in said context means and implies that Thakkar parted with the possession of the suit premises in favour of Sailesh Shah and Arora in the guise of entering into partnership with them. This is clear from the rest of the clauses as well as oral evidence on record.

17. Clause 4 of the partnership deed at Exhibit 98 provides that Sailesh Shah and Arora shall manage the entire business of the firm, bear all expenses towards articles, baggage, municipal permissions, employees, electricity charges and incidental expenses. Thakkar is exempted from taking part in the business activities of the firm and is also exempted from any liability or responsibility of any type concerning the business of the firm. Clearly therefore, this is not a case where Thakkar, as a partner, has agreed to carry on the business of the firm together with other partners.

18. Clause 5 of the partnership deed at Exhibit 98, in terms provides that since the entire business of the firm is to be carried on by Sailesh Shah and Arora, only they shall be entitled to all the profits arising from the said business and similarly only they shall be entirely responsible for the losses. One of the essential ingredients in the matter of constitution of a partnership is that the partners agree to carry on business in partnership with each other and to share the profits of such business. The element of sharing of profits is clearly absent in this projected partnership. It is possible that there is a dormant partner, who does not take part in the day to day activities or the business of the firm. It is also possible that a partner does not bear the share of losses. However, the share in profits, is one of the vital ingredients in the constitution of a partnership firm. Such vital ingredient is absent in the partnership or the projected partnership.

19. Section 4 of the Indian Partnership Act, 1932 (Partnership Act) defines 'partnership' as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. From the definition itself, it is clear that one of essential elements necessary for determining the existence of partnership is that there must be an agreement to share the profits of business. Section 6 of the Partnership Act provides for mode of determining existence of partnership. This section provides that in determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be have to the real relation between the parties, as shown by all relevant facts taken together. The first explanation to this section provides that sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property, does not of itself make such persons partners. The second explanation provides that the receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of the profits or varying with the profits earned by a business, does not itself make him a partner with a person carrying on the business. This means that regard has to be had to the real intention between the parties, as shown by all relevant facts taken together. The receipt by a person of the share of the profits of a business is an important element and strong evidence of the existence of partnership between him and the persons carrying on business. It is, however, not conclusive. The crucial test is whether such participation in profits constitutes the relationship between the principal and agent between the persons taking profits and those actually carrying on the business. In this case the element of sharing the profits is absent.

20. Clause 6, again, in terms, provides that Thakkar, 'in lieu of making available his above mentioned premises ... ..... shall take for himself a sum of Rs. 800/- (Rupees Eight Hundred only) per month from income of said partnership business.' This clause further goes on to state that even if the firm makes losses, Sailesh Shah and Arora shall pay every month Rs. 800/- to Thakkar. Clause 8 then provides that Thakkar 'shall have right to take back in his possession above described premises ... ..... if the business of partnership is dissolved.'

21. A conjoint reading of clauses 3, 6 and 8 leave no manner of doubt that Thakkar, in lieu of consideration of Rs. 800/- per month has parted with his possession of the suit premises in favour of Sailesh Shah and Arora. In clause 3 there is reference to the giving of the suit premises to Shah and Arora. In clause 6 there is reference to making available the suit premises to Arora and Shah. In clause 8, Thakkar has reserved unto himself the right to take back in his possession the suit premises. All this is sufficient to establish that Thakkar has parted with the exclusive possession of the suit premises in favour of Sailesh Shah and Arora in the year 1981 and thereafter, in place of Arora, to Dinesh Amrutlal Shah. The deed at Exhibit 98, without anything further, discharges the initial burden which the law casts upon the petitioners.

22. In the case of Celina Coelho Pereira (supra), the Apex Court has held that the initial burden of proving subletting is upon the landlord, but once he is able to establish that the third party has no exclusive possession of the premises, the onus shifts upon the tenant. It is further held that the initial burden lying on the landlord would stand discharged by adducing prima facie proof of the fact that the party other than the tenant was in exclusive possession of the suit premises. A presumption of subletting may then be raised and would amount to proof unless rebutted. If reference is made to the deposition of Sailesh Shah and Thakkar, it will be evident that Thakkar has failed to discharge the onus. Rather, the deposition of Sailesh Shah and Thakkar establish that the so-called partnership was merely a cloak to conceal the real transaction of sub-letting.

23. In the case of Helper Girdharbhai (supra), the Apex Court has held that the issue whether a genuine partnership existed of which the tenant claims to be a partner, is a mixed issue of law and fact. It has been further held that the mere fact that tenant partner was entitled to a fixed percentage of the profit of the firm only and not to share its losses, was not by itself a consideration to hold that such partnership was not a genuine one and the tenant had merely sublet the premises to the so-called partners. This position, is distinguishable and will not apply to the facts and circumstances of the present case. Even in the case of Helper Girdharbhai (supra) the element of sharing of profits was present, although, the tenant partner was entitled to a fixed percentage of the profit of the firm. In the present case, as noted earlier, clause 5 of the deed at Exhibit 98 in terms provides that only Sailesh Shah and Arora will be entitled to the profit arising from the business. Thus, in the present case there is no element of sharing of profit whatsoever, as between Thakkar and the remaining partners. Clause 6 of the document at Exhibit 98 merely provides that Thakkar shall, in lieu of making available the suit premises, take for himself a fixed sum of Rs. 800/- per month from the income of the partnership business. This clause further provides that Sailesh Shah and Arora shall pay this fixed amount of Rs. 800/- per month to Thakkar irrespective of whether or not the partnership business earns profits or makes losses. Clearly this was not the fact situation in the case of Helper Girdharbhai (supra). Again, in the said decision, there were several other factors, which were noticed by the Apex Court to uphold the conclusion that the partnership was genuine and not merely ostensible transaction to conceal the real transaction of subletting.

24. In this case, if the tests summarised by the Apex Court in the case of Celina Coelho Pereira (supra) are applied, it is evident that the real transaction between the parties is one of subletting. Thakkar, has clearly parted with the possession of the suit premises for consideration of Rs. 800/- per month. Thakkar is not at all actively associated with the partnership business, rather is exempted from association with the partnership business. In the evidence, it has come on record that the partnership business is dealing in tailoring, sale of clothes, etc. and Thakkar, has neither any knowledge nor experience of this kind of business. This is not a case where Thakkar can be said to have retained any control over the suit premises. Thakkar, has only retained unto himself the right to take back in his possession the suit premises if the partnership firm is dissolved. Sailesh Shah in his deposition has at one place admitted that it is true that Thakkar has given the suit premises to Sailesh Shah and Arora "as sub tenants". Mr. Datar, however submitted that this admission appears to be a typographical error and on the basis of a stray statement in the deposition, the effect of the rest of the deposition cannot be whittled down.

25. Even if, the aforesaid categorical admission is excluded from consideration, there is other material in the deposition of Sailesh Shah and Thakkar, which establishes the case of sub-letting. There are admissions that Thakkar had no knowledge of tailoring business of sale of clothes. There are admissions that Thakkar never took any part in the management of the partnership business. There are admissions that there was no list of articles like sewing machines, cupboard etc. attached to the deed of partnership at Exhibit 98. There is evidence that no such articles were supplied by Thakkar to the remaining partners. All this coupled with the categoric provisions in the deed of partnership, to the effect that Thakkar was not entitled to any share in the profits of the firm, make it very clear that the entire transaction, in reality, was one of sub-letting and not partnership, as it was projected to be. In such a situation, the two Courts have failed in their duty to pierce the veil of partnership and determine the real nature of transaction between Thakkar and others who claim to be the partners.

26. There is evidence on record that the firm commenced its business from the suit premises in the year 1981 and invitation cards were printed for the inaugural. Upon such invitation cards even the name of Thakkar did not appear. True, as contended by Mr. Datar, this by itself, is not a relevant circumstance. However, if such several circumstances are considered cumulatively, it is clear that the partnership in the present case was only ostensible and a cloak to disguise the real transaction of subletting.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 1940 of 1996

Decided On: 24.07.2015

Taralakshmi Maneklal Thanawalla  Vs. Shantilal Makanji Dave

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Whether the court should take into consideration the hardship of subtenant while deciding bonafide need of landlord in eviction suit?

Accordingly, the issue of comparative hardship is required to be decided in favour of the landlord. The tenant Thakkar has already unlawfully sublet the suit premises. The provisions contained in section 13(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 do not oblige the Court to take into consideration the issue of hardship, if any, that may occasion to unlawful sub tenants or any other persons who may be carrying on business from the suit premises. Thakkar, from the material on record appears to be content with some fixed amount or in any case 10% profits from out of the business being carried out from the suit premises. In such circumstances, it can never be the case of Thakkar that the issue of comparative hardship be decided in his favour and against the landlords.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 1940 of 1996

Decided On: 24.07.2015

Taralakshmi Maneklal Thanawalla  Vs. Shantilal Makanji Dave

Hon'ble Judges/Coram:

M.S. Sonak, J.

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Whether inaction on part of landlord to take objection against sub tenant amounts to his implied consent?

Learned counsel for the respondent has placed reliance upon a decision of this court Hiralal Kapur v. Prabhu Choudhury - MANU/SC/0189/1988 : [1988]2SCR1058 . The tenant in this case seems to have sub-let a part of his tenant to a Trust which started its activities from the premises of which landlord may also have been aware. The tenant had also started paying the rent by two cheques - one in his name and another cheque of Trust. The rent so tendered was duly accepted by the landlord. In some correspondence which took place between the tenant and the landlord, the Trust was not accepted as a sub-tenant. It was held by this Court that merely by the fact that the cheque of the Trust was being accepted as a part of the amount of rent and the fact that landlord may have the knowledge of the fact that the Trust was using part of the premises would not lead to any implied inference or consent of sub-lease in favour of the sub-tenant. For this conclusion no doubt the letters of the landlord had also been referred to by which sub-tenancy was not accepted by the landlord yet the fact remains that Court did not come to the conclusion that that before writing of those letters it was to be taken a case of sub-tenancy by conduct. The fact is that knowledge of possession or a part of the accommodation with the Trust and the acceptance of the part of the rent by cheque from the Trust were not considered conclusive of an inference of consent for sub-tenancy. Yet another case relied upon by the learned counsel for the respondent is Ram Saran v. Pyare Lal and Anr. - MANU/SC/0596/1996 : [1996]1SCR501 equivalent to In this case also the tenant surrendered his tenancy rights in favour of a registered Society without consent of the landlord. The landlord had also started accepting the rent tendered by the tenant in the name of the registered society. It was held that no inference of authorised sub-tenancy could be drawn nor inference of implied consent and it was held that the landlord was not estopped from seeking eviction on the ground of unauthorised sub-letting. The conduct of the landlord in accepting the rent from the society was held to be of no consequence. We have already observed earlier that the inference drawn from findings of fact is a legal question. It would not amount to interfering or substituting the finding of fact by the revisional court. Hence the decision in the case of Ubaiba (supra) relied upon by the learned counsel for the appellant would not be of any assistance to it.

14. In view of the discussion held above, we find no reason to interfere with the order passed by the High Court setting aside the orders of the appellate authority and upholding the orders of the trial court, refusing to draw any inference of implied consent on the basis of inaction or conduct of the landlord. The consent as envisaged under Section 11 (4) (i) of the Kerala Buildings (Lease and Rent Control) Act 1965 would mean consent with some positive act which may lead to inference of conferring right on the tenant to sub-let the premises and mere inaction would not be sufficient to amount to implied consent on the part of the landlord.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 3158 of 2002

Decided On: 29.04.2002

P. John Chandy and Company (P) Ltd. Vs.  John P. Thomas

Hon'ble Judges/Coram:

D.P. Mohapatra and Brijesh Kumar, JJ.

Citation: AIR 2002(SC) 2057

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Whether subletting can be inferred if portion of tenanted premises is in possession of Company?

It may be recalled that the decree for eviction against the appellant has been passed on the ground that though subletting of the premises for rent has not been proved, yet the appellant must be held to have parted with possession of a portion of the premises to the club and such parting with possession would attract Section 13(1)(e) of the Rajasthan Premises (Control) of Rent & Eviction Act, 1950 (for short the Act). On a reading of Sub-clause (e) of Section 13(1), it is seen that a tenant will render himself liable for eviction if he has "assigned, sublet or otherwise parted with the possession of, the whole or any part of the premises without the permission of landlord." Consequently even if a tenant parts with possession of the whole or any part of the premises without assigning or subletting the premises, he would still be liable to be evicted from the premises under the Act. If from this perspective, the user of the premises by the club is examined, it can certainly be held that the Appellant had parted with the possession of the premises as envisaged in Clause (e) of sub-section 1 of Section 13. This conclusion is warranted by several factors. Admittedly, when the club began to function in the leased premises, a name board carrying the name of the Club came to be exhibited in the premises. It is also admitted that the members of the club assemble at the premises everyday and play cards and other indoor games from evening till about midnight Though the appellant would say that the club members cannot have access to the premises unless he or in his absence his brother or son opens the premises, there is no evidence to show that the appellant had at any time exercised his right to exclusive possession and kept the premises locked and denied the members of the club entry to the premises. That apart there is a significant fact which has escaped the notice of the Appellate Court and the High Court viz that the club has its registered office at the leased premises. Section 146 of the Indian Companies Act enjoins every company to have a registered office to which all communications and notices may be addressed . Once a company has a registered office it is bound to comply with several provisions of the Companies Act, viz. (a) the register of members is to be kept there (Section 163) ; (b) the right of inspection has to take place there (Section 163) ; (c) the register of directors, etc,, is also to be kept there (Section 303) ; (d) the account books are to be maintained there unless the directors decide otherwise (Section 20); e) the register of mortgages and charges and copies of registered documents are also to be kept there (Section 143) ; and the right of inspection of them is to be exercised there (Section 144) ; (f) service of documents should be effected there. These requirements of the Act of the have to be complied with by the club by virtue of its registered office being situated in the leased premises. The appellant cannot prevent the club from performing its statutory duties so long as the club has its registered office in the premises. Hence this factor also warrants the view that the appellant had parted with possession of the major portion of the premises to the club. In such circumstances we see no merit in the contention of the appellant that the user of a portion of the premises by the club is only of a permissive nature and that there was no parting with possession of the premises to the club. The Appellate Court and the High Court were therefore, right in holding that the user of the premises by the club would amount to the appellant having parted with possession of a portion of the premises" as contemplated under Section 13(1) (e) of the Act.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 855 of 1978 and C.M.P. No. 906 of 1979

Decided On: 29.03.1989

Roop Chand  Vs. Gopi Chand Thelia

Hon'ble Judges/Coram:

R.S. Pathak, C.J. and S. Natarajan, J.

Citation: AIR 1989 SC 183

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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.
Citation: AIR 2020 SC 322

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Whether it can be held that father has subletted tenanted premises to son if both are residing in joint family?

 As far as subletting of tenanted premises is concerned, evidence on record reveals that there is no parting of possession of tenanted premises in favour of respondent No. 2. Respondent No. 2 is the son of Amarjit Singh who is the Proprietor of the tenant - Firm. Both father and son are admittedly living jointly having a common mess. Therefore, it is rightly held by both the learned courts below that the petitioner failed to prove that respondent No. 2 is having exclusive control over the business being run in the tenanted premises. Both the learned courts have rendered concurrent findings of fact on a correct appreciation of the evidence on record.

IN THE HIGH COURT OF PUNJAB AND HARYANA

Civil Revision No. 3236 of 2004 (O&M)

Decided On: 14.02.2019

 Moorti Shri Sita Ram Vs.  Amar Metal Works and Ors.

Hon'ble Judges/Coram:

Lisa Gill, J.

Citation: 2019(1) RCR(Rent) 421

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Leading Supreme Court on subletting as ground for eviction

 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 sub-letting, 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 sub-tenant 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 cross-examination, making out a case of sub-letting 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 sub-letting may then be raised and would amount to proof unless rebutted.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 7258 of 2009 

Decided On: 30.10.2009

 Celina Coelho Pereira  Vs.  Ulhas Mahabaleshwar Kholkar and Ors.

Hon'ble Judges/Coram:

Tarun Chatterjee and R.M. Lodha, JJ.

R.M. Lodha, J.

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When eviction suit filed by landlord against tenant on ground of subletting will be barred by limitation?

After hearing both the learned Counsel, and after perusal of the Trial Court judgment and the lower Appellate Court judgment, it is clear that in the instant case, though the tenancy was created in favour of Respondent No. 1, the Respondent No. 1 never stayed in the suit premises, right from inception, i.e. 1st February, 1969. On the contrary, the Respondent No. 1 had illegally sub-let the same to Respondent Nos. 2 and 3 from 1st February, 1969. If that be so, the breach of tenancy conditions occurred on 1st February, 1969, and the suit ought to have been filed within 12 years, as per Article 66 of the Limitation Act. Ex-facie the suit is barred by law of limitation. I respectfully do not agree with the judgment of the Gujarat High Court, that in case of illegal subletting, there would be a continuing cause of action. The said view is contrary to the provisions of Article 66 of the Limitation Act. 

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 684 of 1991

Decided On: 05.12.2006

Taherbhai Taiyebhai Poonawala Vs. G. Hamid Hasan Patel and Ors.

Hon'ble Judges:

Dr. S. Radhakrishnan, J.

Citation: AIR 2007 Bom 80

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Whether tenant can create third party interest in tenanted premises if he is permitted to sublet tenanted premises?

 Yet another ground for eviction is construction of shops in the suit premises by the tenants and sub-letting the same in violation of terms of rent agreement. Though, there is a Clause in the rent agreement enabling the tenants to put up construction, there is no Clause in the lease agreement permitting the tenants to transfer his interest of tenancy to third party. It is the case of the Appellant that in violation of the rent agreement, Anwar Ul Haq who was one of the original tenants, transferred his interest of tenancy in favour of third Respondent Mohd. Ilyas alias Chaman. The Appellant-landlord specifically denied that such transfer of interest in the tenancy was with the consent of the original landlord. On the other hand, the Respondents-tenants in support of their claim submitted that such transfer of interest in tenancy had taken place with the consent and knowledge of the original landlord, relied upon Exs. A1 to A7 which are the receipts said to have been signed by the original landlord issuing to Mohd. Ilyas alias Chaman as one of the tenants. In view of specific denial by the Appellant-landlord that they have permitted such transfer of interest, the receipts Exs. A1 to A7 ought to have been proved by adducing evidence. The Respondents-tenants, though relied upon the said documents, had not taken steps to prove those documents.

15. On those issues, the courts below recorded findings that the rent agreement nowhere prohibited any of the tenants from transferring their interest in tenancy and therefore, there was no violation of any of the terms of the rent agreement. In noting so, the trial court lost sight of the fact that in the rent agreement, parties specifically incorporated Clause (9), permitting sub-letting by tenants. Had the parties agreed to create or transfer of interest in the tenancy in favour of third party, they would have added a specific term in that regard in the rent agreement. Though, sub-letting of the premises for commercial purpose was agreed to by the original parties, transfer of interest in tenancy leading to creation of third party interest in the suit property could not have been done in the absence of a specific term in the rent agreement. Thus, the Respondents-tenants are liable to be evicted on the ground of violation of terms of rent agreement by transfer of interest in tenancy to Respondent No. 3 - Mohd. Ilyas alias Chaman.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 20915 of 2017 (Arising out of SLP (C) No. 27765 of 2010)

Decided On: 06.12.2017

Syed Sughra Zaidi Vs. Laeeq Ahmad (Dead) through L.Rs. and Ors.

Hon'ble Judges/Coram:
Kurian Joseph and R. Banumathi, JJ.
2018(1) CIVIL COURT CASES 646 (S.C.)

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Whether it is mandatory to prove that tenanted premises is in exclusive possession of sub tenant for getting eviction decree?

In case of Nirmal Kanta (supra), the Apex Court observed in paragraph 16 thus;

"What constitutes sub-letting has repeatedly fallen for the consideration of this Court in various cases and it is now well-established that a sub-tenancy or a subletting comes into existence when the tenant inducts a third party stranger to the landlord into the tenanted accommodation and parts with possession thereof wholly or in part in favour of such third party and puts him in exclusive possession thereof. The lessor and/or a landlord seeking eviction of a lessee or tenant alleging creation of a sub-tenancy has to prove such allegation by producing proper evidence to that effect. Once, it is proved that the lessee and/or tenant has parted with exclusive possession of the demised premises for a monetary consideration, the creation of a sub-tenancy and/or the allegation of subletting stands established".

10. In the present case, the learned District Judge has observed in paragraph 11 that the suit premises was originally let out to one Yesammabai. The plaintiff claimed that defendant No. 1 Parubai was no way related to the original tenant. Since she was residing with the original tenant, the plaintiff recognized her as a tenant. The plaintiff alleged that defendant No. 1 has sublet the suit premises to defendants No. 2 and 3 who are no way related to defendant No. 1. The learned District Judge thereafter observed, "admittedly all the 3 defendants are residing in the suit premises". The question is whether the plaintiff has proved one of the ingredients of subletting. A perusal of the impugned order does not show that the learned District Judge recorded any finding as regards satisfaction of one of the ingredients of unlawful subletting. Before passing decree on the ground of subletting, it is necessary to record a finding to the effect that third party was found to be in exclusive possession of the rented premises. In the present case, no such finding is recorded by the learned District Judge. In view thereof, the impugned order cannot be sustained and as such is liable to be set aside.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 1964 of 1998

Decided On: 01.02.2019

 Parubai Vithal Kamble Vs. Girdharilal Agarwal

Hon'ble Judges/Coram:

R.G. Ketkar, J.

Citation: 2019(4) MHLJ 67,2019(1) RCR(Rent) 365

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Whether tenant can rely on terms of lease deed if it is unregistered?

The contention of the learned Counsel for the respondent that the aforesaid clause cannot be looked into for want of registration of the lease deed appears to be correct. Reliance has been placed on the observations of Fazal Ali, J. in Sachindra Mohan Ghose v. Ramjash Agarwalla MANU/BH/0077/1931 : AIR1932Pat97 that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose.

8. The learned Counsel for the appellant attempted to meet the point by saying that so far the consent of the landlord permitting sub-letting is concerned, it does not require registration and the clause, therefore, must be excepted from the requirement of registration and consequent exclusion from evidence. We do not see any force in this argument. The question whether a lessee is entitled to create a sub-lease or not is undoubtedly a term of the transaction of lease, and if it is incorporated in the document it cannot be disassociated from the lease and considered separately in isolation. If a document is inadmissible for non-registration, all its terms are inadmissible including the one dealing with landlord's permission to his tenant to sub-let. It follows that the appellant cannot, in the present circumstances, be allowed to rely upon the clause in his unregistered lease deed.

IN THE SUPREME COURT OF INDIA

Civil Appeal No.2443 of 1980

Decided On: 08.08.1989

Bajaj Auto Limited vs. Behari Lal Kohli

Hon'ble Judges/Coram:

L.M. Sharma and N.D. Ojha, JJ.

Citation: AIR 1989 SC 1806,(1989) 4 SCC 39.

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Whether landlord can seek eviction decree if tenant has subletted tenanted premises without consideration?

Even otherwise it was pointed out on behalf of the respondents that the eviction does not follow a finding of sub-letting in stricto sensu. It follows the finding that there is an illegal transfer in any other manner. The words "transferred in any other manner" in Section 13(1)(e) has been considered widely and will include gratuitous transfer and transfer without consideration. The Gujarat High Court in Sheth Jivaji Rajbhai & Sons v. Patel Hatimbhai Nazarali 1999 Bom.R.C. 409 has observed in para. 17 as follows:

17. In my view, the words `transfer in any other manner' in Section 13(1)(e) are definitely wider and such transfer will include gratuitous transfer and transfer without consideration. Consequently, if landlord places reliance upon the transfer or assigned tenancy rights by tenant-in-chief in other manner he need not prove existence of valuable consideration for such transfer as is required to be proved for illegal sub-letting. Thus, the trial Court was justified in decreeing the suit on grounds of illegal assignment or transfer of interest in the tenancy by tenant-in-chief to the defendant No. 2.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 3221 of 2001

Decided On: 04.10.2007

 Vijay K. Gupta Vs. Nalini Varjeevandas Shah and Ors.

Hon'ble Judges/Coram:

S.A. Bobde, J.

Citation: 2008(2) MHLJ 24

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Whether court can pass eviction decree on ground of subletting if exclusive possession of sub tenant is not proved?

 In the present case, the learned District Judge has observed in
paragraph 11 that the suit premises was originally let out to one Yesammabai.
The plaintiff claimed that defendant No.1 Parubai was no way related to the
original tenant. Since she was residing with the original tenant, the plaintiff
recognized her as a tenant. The plaintiff alleged that defendant No.1 has sublet
the suit premises to defendants No.2 and 3 who are no way related to
defendant No.1. The learned District Judge thereafter observed, “admittedly all
the 3 defendants are residing in the suit premises”. The question is whether the
plaintiff has proved one of the ingredients of subletting. A perusal of the
impugned order does not show that the learned District Judge recorded any
finding as regards satisfaction of one of the ingredients of unlawful subletting.
Before passing decree on the ground of subletting, it is necessary to record a
finding to the effect that third party was found to be in exclusive possession of
the rented premises. In the present case, no such finding is recorded by the
learned District Judge. In view thereof, the impugned order cannot be
sustained and as such is liable to be set aside. 

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE SIDE JURISDICTION
WRIT PETITION NO.1964 OF 1998

Parubai Vithal Kamble  Vs. Girdharilal Agarwal 


CORAM : R.G. KETKAR, J.
DATE : 1st FEBURARY, 2019.

Citation: 2019(4) MHLJ 67

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Whether eviction decree can be passed against tenant on ground of non user of premises if he has subletted it?

Hence for a claim under Section 13(1)(k) it is not necessary for a landlord to establish that the premises are left to a total non-user. It is enough if he proves that his tenant has not used the premises for the purpose for which they were let for a continuous period of six months immediately preceding the date of the suit and the same was without reasonable cause. Though the premises are shown to be in use say by a third person or for a purpose other than the one for which they were let, the same cannot detract from the concept of 'non-user' contemplated under Section 13(1)(k). In this view of the matter, though the premises had been occupied by a third party, the ground of non-user is still open to the plaintiff for claiming possession.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

W.P. No. 4598 of 2005

Decided On: 20.10.2005

 Bhaskar Wamanrao Rithe  Vs. Indira Iyer

Hon'ble Judges/Coram:

B.P. Dharmadhikari, J.

Citation: 2006 (1) MHLJ 155

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Whether claim of landlord for eviction on ground of bonafide need should not be rejected?

 Learned Counsel for the revision petitioner then submitted that there was one tenant by name Dadaji Dabji who was in occupation of very large premises. The said Dadaji Dhabji has sublet some portions of his premises to Standard Chartered Bank, New India Assurance Company and Nicson Dadaji Ltd. Again, it is not the case of the revision petitioner that the premises let out to Dadaji Dhabji ever came in the possession of the respondent. According to the revision petitioner, Dadaji Dhabji has sublet the premises. There is no evidence on record to show whether agreement of tenancy with Dadaji Dhabji prohibits subletting. As stated earlier, under Section 15 of the Bombay Rent Act there is no absolute prohibition against subletting by a tenant. Subletting is not illegal if the contract of tenancy permits it or if the landlord consents to the subletting. Assuming that the landlord did not take action against a tenant who had illegally sublet his premises or any part thereof, that by itself would not result in rejecting the claim of bona fide requirement made by the landlord in a pending suit against another tenant.

IN THE HIGH COURT OF BOMBAY

Civil Revision Application No. 370 of 2003, Appeal No. 737 of 2001 and R.A.E. Suit No. 924 of 1990

Decided On: 09.10.2006

Praised Darius Gandhi Vs. B.A. Rane and Ors.

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How to appreciate evidence if tenant produces letter permitting him to sublet premises sent prior to thirty years by previous owner?

 While admitting the Letter on record, the learned Trial Judge had expressly kept the question open as to whether the Letter was created in the year 1992 or it was of the date 1 July 1960. Therefore, even assuming that Matadin has signed the Letter and had admitted that he created this Letter, the question still remained whether this entire exercise was carried out in the year 1992. One of the question to be considered was whether the letter was created around the year 1992, after Matadin had long since ceased to be the owner, or it is genuinely a Letter of 1 July 1960 when he was still the owner. Perusal of the decision of the Trial Judge will show that the argument of the Plaintiffs that the Letter had come into being during the course of the Trial sometime in the year 1992 and was not a document created in 1960 and that it was created only as a tailor-made defence to the suit, was not considered by the Trial Judge. This area of adjudication was expressly kept open while taking the Letter on record. The Trial judge basically proceeded to hold that the issue regarding the Letter was closed. The Trial Judge found nothing curious about the circumstances with which the Letter, a defence to all charges, appearing thirty-one years after the institution of the suit. The litigation is bitterly fought. The property is of immense value. Any prudent person would be on his guard when confronted with such a situation. The Trial Judge found the whole episode a routine affair of merely taking a document on record. The stage at which the Letter surfaced, what was the position of Matadin when he affirmed the affidavit, what is the language of this Letter, how Defendant No. 2C Bindu could identify the signatures, were some of the crucial aspects which the Trial Judge did not bother to look at. The Appellate Court correctly examined these aspects. Matadin passed away before the trial was concluded. He was not examined as a witness by the Defendants. Matadin had long ceased to be an owner of the property. He had ceased to be an owner even before the suit was filed. When he filed his alleged affidavit, he was a complete stranger to the property. Having ceased to be the owner in the year 1967, he had nothing to lose by filing the affidavit in the year 1992 or even for that matter signing the Letter, even if it is back dated.

49. The manner in which the Letter appeared in the proceedings and the role of Matadin are the relevant considerations, which have been rightly taken note of by the Appellate Court. The Defendants led only the evidence of Bindu, Defendant No. 2C. The argument that once a document is admitted in evidence, it will have to be given effect to, cannot be accepted in the facts of the present case. Mr. Kadam is right when he contends that the Letter is a Bespoke letter. It is an amazing coincidence that a letter of an earlier owner surfaces after thirty years, giving a tailor made answer to all charges. As the order fixing the compensation in these Revisions would show that the Bungalow is located in one of the most expensive part of an already expensive city. When an agreement was executed in favour of Defendant No. 3, it must have been preceded by negotiations. The sudden birth of this Letter, which gives free charter to create sub-tenancies, is in close proximity to the entry of Defendant No. 3. That a suit must be tried as per legal principles, cannot be disputed, but the adjudication cannot be completely divorced from common sense. The letter could easily be created during the trial by roping in an earlier owner when he had nothing to lose. Therefore even assuming the letter was produced by a family member, stamp duty was paid, it cannot be held with certainty that the letter was created when Matadin was the owner. From the factors discussed above it appears that the Letter was created during the trial and was not a genuine letter of the year 1960. Therefore, the finding of the Appellate Court that the letter is not genuine, is correct.

IN THE HIGH COURT OF BOMBAY

Civil Revision Application Nos. 345 and 716 of 2014

Decided On: 30.03.2017

 Urmi Developers Pvt. Ltd. Vs. Kanoria Brothers and Ors.

Hon'ble Judges/Coram:

N.M. Jamdar, J.

Citation : 2017(3) ABR 419

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Whether sub tenancy can be presumed if person other than tenant is present in shop?

The application for eviction was based on the allegation of sub-tenancy. The allegation that the premises had been sub-let to Pavan Trading Company had to be proved as a fact by the landlord and merely on the basis of photograph showing the presence of the son of the proprietor of Pavan Trading Company within the room, sub-letting could not be presumed. We must indicate that the approach of the trial Judge was totally vitiated. Merely from the presence of a person other than the tenants in the shop sub-letting cannot be presumed. There may be several situations in which a person other than the tenant may be found sitting in the shop ; for instance, he may be a customer waiting to be (sic) ant; a distributor who may have come to deliver his goods at the shop for sale; a creditor coming for collection of the dues; a friend visiting for some social purpose or the like. As long as control over the premises is kept by the tenant and the business run in the premises is of the tenant, sub-letting flowing from the presence of a person other than the tenant in the shop cannot be assumed. The Act does not require the Court to assume a subtenancy merely from the fact of presence of an outsider. 

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 2147 of 1980

Decided On: 15.03.1984

Jagdish Prasad  Vs.Angoori Devi

Hon'ble Judges/Coram:

D.A. Desai and Ranganath Misra, JJ.

Citation: AIR 1984 SC 1447

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Whether father can sublet tenanted premises to son?

The question for consideration is whether the mischief contemplated under Section 14(1)(b) of the Act has been committed as the tenant had sublet assigned, or otherwise parted with the possession of the whole or part of the premises without obtaining the consent in writing of the landlord. There is no dispute that there was no consent in writing of the landlord in this case. There is also no evidence that there has been any subletting or assignment. The only ground perhaps upon which the landlord was seeking eviction was parting with possession. It is well-settled that

parting with possession meant giving possession to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant; user by other person is not parting with possession so long as the tenant retains the legal possession himself, or in other words there must be vesting of possession by the tenant in another person by divesting himself not only of physical possession but also of the right to possession. So long as the tenant retains the right to possession there is no parting with possession in terms of Clause (b) of Section 14(1) of the Act.

Even though the father had retired from tson can be subtenant of he business and the sons had been looking after the business, in the facts of this case, it cannot be said that the father had divested himself of the legal right to be in possession. It the father has a right to displace the possession of the occupants, i.e., his sons, it cannot be said that the tenant had parted with possession.

This Court in Smt. Krishnawati v. Shri Hans Raj, MANU/SC/0420/1973 : [1974]2SCR524 had occasion to discuss the same aspect of the matter. There two persons lived in a house as husband and wife and one of them who rented the premises, allowed the other to carry on business in a part of it. The question was whether it son can be subtenant of amounted to sub-letting and attracted the provisions of Sub-section (4) of Section 14 of the Delhi Rent Control Act. this Court held that if two persons live together in a house as husband and wife and one of them who owns the house allows the other to carry on business in a part of it, it will be in the absence of any other evidence, a rash inference to draw that the owner has let out that part of the premises. In this case if the father was carrying on the business with his sons and the family was a joint Hindu family, it is difficult to presume that the father had parted with possession legally to attract the mischief of Section 14(1)(b) of the Act.Section 14 of the Delhi Rent Control Act. this Court held that if two persons live together in a house as husband and wife and one of them who owns the house allows the other to carry on business in a part of it, it will be in the absence of any other evidence, a rash inference to draw that the owner has let out that part of the premises. In this case if the father was carrying on the business with his sons and the family was a joint Hindu family, it is difficult to presume that the father had parted with possession legally to attract the mischief of Section 14(1)(b) of the Act.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1127 of 1985

Decided On: 11.05.1988

Jagan Nath   Vs. Chander Bhan and Ors.

Hon'ble Judges/Coram:

S. Natarajan and Sabyasachi Mukherjee, JJ.

Citation: AIR 1988 SC 1362

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