Vinaykishore Punamchandji Mundhada & anr. vs Bhumi Kalptru & Ors.

4

5. The Rent Controller upon appreciation of the material

available on record passed the necessary orders

upholding the plea of sub-tenancy and granted permission

under clause 13(3)(iii) of the Rent Control Order. The

appellate authority, however, on the appeal filed by the

respondents, reversed the findings of sub-tenancy. The

appellants preferred Review Petition under clause

21(2)(a) of the Rent Control Order challenging the orders

of the appellate authority and the said Review Petition

was allowed restoring the order of the Rent Controller

granting permission as prayed for by the appellants.

6. Shri Bhumi Kalpataru and its Managing Partner Jagdish

Champalal Mundhada filed Writ Petition No. 1206 of 1995

under Article 226/227 of the Constitution of India before

the High Court of judicature at Bombay, Nagpur Bench,

Nagpur challenging the order of the reviewing authority.

The other partners were impleaded as respondents. The

High Court, relying on the decision in Bhairulal

Balmukund Verma Vs. Poonamchand Kasturchand

Sancheti1 allowed the writ petition. Hence this appeal.

1 1996 (2) Mh.L.J. 866 5

7. Shri U.U. Lalit, learned senior counsel for the appellants

submitted that the High Court committed an error in

interfering with the just and reasonable orders passed by

the reviewing authority. It was submitted that the High

Court committed a serious error in refusing to take into

consideration the settled principles of law that sub-letting

and parting with the possession by the tenant for

consideration is to be inferred from the facts and

circumstances brought on record and it is not the

requirement in law that it is for the landlords to prove

that parting of possession by the original tenant was for

actual consideration. Learned counsel for the respondent,

Shri Satyajit A. Desai submitted that landlords having

accepted the rents for a period of three years from the

respondents without any demur, cannot be allowed to

turn down and contend that the premises was sub-let by

the original tenant. It was his submission that relationship

of landlord and tenant came into existence ever since the

landlords accepted the rents from the respondents.

8. Before adverting to the question as to whether the High

Court rightly interfered with the orders of the reviewing 6

authority, it may be just and necessary to notice the

relevant provision of C.P. & Berar Letting of Houses and

Rent Control Order, 1949 which runs as under:

13. (1) No landlord shall, except with the previous written permission of the Controller--

(a) give notice to a tenant determining the lease or determine the lease If the lease is expressed to be determinable at his option; or

(b) ......

(2) .......

(3) .......

(i) ........

(ii) .......

(iii) that the tenant has without the written permission of the landlord sub let the entire house (premises) or any portion thereof;

(iv) ........

9. It may be of some importance to note that the original

tenant did not join any issue with the landlords though he

was impleaded as a party respondent to the proceedings.

It is an admitted fact that none of the partners of `Bhumi

Kalpataru' including respondent No.4 who constituted the 7

firm `Bhumi Kalpataru' are the partners in the firm `Shri

Bhumi Kalpataru'. It is not a case of reconstitution of the

firm where the original tenant continued to be a partner

of such newly reconstituted firm. It is clearly evident from

the record and findings recorded by the authorities that

`Shri Bhumi Kalpataru' consists of altogether different

individuals and the Managing Partner thereof being

Jagdish Champalal Mundhada. It is also an admitted fact

that there was no further agreement as such between the

appellants and the respondents recognizing `Shri Bhumi

Kalpataru' and its partners as the tenants. In such view of

the matter, the authorities in clear and categorical terms

found that the respondents have been inducted into

possession of the premises by the original tenant without

the required written permission of the landlords. It is

under those circumstances that the reviewing authority

came to the correct conclusion that the original tenant

had no right to transfer and part away with the

possession of the premises to the respondents without the

required written permission from the landlords. None of

the respondents were the partners in the previous firm 8

that was constituted by Madankumar Govardhandas

Pasari known as `Bhumi Kalpataru'.

10.It was absolutely an internal arrangement between an

original tenant and newly inducted one about which the

landlord was never put on notice. The mere acceptance of

the rents from the newly constituted firm `Shri Bhumi

Kalpataru' on the facts and circumstances in the present

case by itself cannot lead to any inference that the

landlords accepted the rents knowing fully well as if they

were accepting the rents from the sub-tenants. The

"landlord and tenant" relationship in the circumstances of

this case cannot be inferred as the word `Shri' was

prefixed to the original tenanted firm `Bhumi Kalpataru'.

The said firm `Bhumi Kalpataru', in a clandestine manner

became `Shri Bhumi Kalpataru' by adding `Shri' in an

innocuous manner to `Bhumi Kalpataru'. Once it is clearly

established that none of the previous partners of the

`Bhumi Kalpataru' continued to be the partners of the

newly constituted firm, it becomes very clear that `Shri

Bhumi Kalpataru' is altogether a different firm consisting 9

of new partners who were inducted into possession by the

previous tenant.

11.That, clause 2(5) of the Rent Control Order defines the

`tenant' as under:

"'Tenant' means any person by whom or on whose account rent is payable for a premises and includes a sub-tenant and a person continuing in possession after the term of his tenancy has expired".

12.In our considered opinion, the expression `any person'

means any one lawfully inducted as a tenant into the

premises and by whom or on whose account rent is

payable for the premises. It may include a sub-tenant

inducted as such into possession with the previous

knowledge, consent and written permission of the

landlord.

13. This Court in Parvinder Singh Vs. Renu Gautam &

Ors.2 held:

"8. The rent control legislations which extend many a protection to the tenant, also provide for grounds of eviction. One such ground, most common in all the legislations, is sub-letting or parting with possession of the tenancy premises by the tenant. Rent control laws usually protect the tenant so long as he may himself use the 2 (2004) 4 SCC 794 10

premises but not his transferee inducted into possession of the premises, in breach of the contract or the law, which act is often done with the object of illegitimate profiteering or rack-

renting. To defeat the provisions of law, a device is at times adopted by unscrupulous tenants and sub-tenants of bringing into existence a deed of partnership which gives the relationship of tenant and sub-tenant an outward appearance of partnership while in effect what has come into existence is a sub-tenancy or parting with possession camouflaged under the cloak of partnership. Merely because a tenant has entered into a partnership he cannot necessarily be held to have sub-let the premises or parted with possession thereof in favour of his partners. If the tenant is actively associated with the partnership business and retains the use and control over the tenancy premises with him, maybe along with the partners, the tenant may not be said to have parted with possession. However, if the user and control of the tenancy premises has been parted with and deed of partnership has been drawn up as an indirect method of collecting the consideration for creation of sub-tenancy or for providing a cloak or cover to conceal a transaction not permitted by law, the court is not estopped from tearing the veil of partnership and finding out the real nature of transaction entered into between the tenant and the alleged sub- tenant.

9. A person having secured a lease of premises for the purpose of his business may be in need of capital or finance or someone to assist him in his business and to achieve such like purpose he may enter into partnership with strangers. Quite often partnership is entered into between the members of any family as a part of tax planning. There is no stranger brought on the premises. So long as the 11

premises remain in occupation of the tenant or in his control, a mere entering into partnership may not provide a ground for eviction by running into conflict with prohibition against sub-letting or parting with possession. This is a general statement of law which ought to be read in the light of the lease agreement and the law governing the tenancy. There are cases wherein the tenant sub-lets the premises or parts with possession in defiance of the terms of lease or the rent control legislation and in order to save himself from the peril of eviction brings into existence, a deed of partnership between him and his sub-lessee to act as a cloak on the reality of the transaction. The existence of deed of partnership between the tenant and the alleged sub-tenant 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 or interest in tenancy premises by the tenant in favour of a third person. The rule as to exclusion of oral by documentary evidence governs the parties to the deed in writing. A stranger to the document is not bound by the terms of the document and is, therefore, not excluded from demonstrating the untrue or collusive nature of the document or the fraudulent or illegal purpose for which it was brought into being. An enquiry into reality of transaction is not excluded merely by availability of writing reciting the transaction. Tyagaraja Mudaliyar v. Vedathanni, AIR 1936 PC 70 : 63 IA 126 is an authority for the proposition that oral evidence in departure from the terms of a written deed is admissible to show that what is mentioned in the deed was not the real transaction between the parties but it was something different. A lease of immovable property is transfer of a right to enjoy such property. Parting with possession or control over the tenancy premises by the tenant in favour 12

of a third person would amount to the tenant having "transferred his rights under the lease"

within the meaning of Section 14(2)(ii)(a) of the Act".

14. In Ram Saran Vs. Pyare Lal & Anr.3 this Court

observed that "by a unilateral action of the tenant of

surrendering his right of tenancy in favour of a third party

by delivering possession of the tenanted premises to the

said third party, no new tenancy is created which may

legally bind the landlord. By mere acceptance of rent for

the tenanted premises tendered by the tenant in the

name of the registered society, neither a new tenancy nor

a valid sub-tenancy in favour of the said registered

society has been created." It is said in clear and

categorical terms that "the Rent Act is a special statute

governing and regulating tenancy and sub-tenancy. Such

provisions in the special statute supersede the general

law of tenancy if the provisions of the special statute are

incompatible with the general law of tenancy". It is

observed that "mere knowledge of the landlord about

occupation of the tenanted premises by the said

3 (1996) 11 SCC 728 13

registered society and acceptance of rent for the tenanted

premises tendered by the tenant in the name of the

registered society, will not create a sub-tenancy unless

induction of a sub-tenant is made with the written

consent of the landlord. Even if the landlord has

accepted payment of the rent for the disputed premises

.... Such acceptance of rent will not constitute legal and

valid sub-tenancy ...... Consequently, landlord will not be

estopped from claiming eviction of unauthorized sub-

tenant along with the tenant for indulging in inducting

sub-tenant without lawful authority". (emphasis by us)

15.We are not impressed by the submission made by the

learned counsel for the respondents that unless payment

of consideration was established as a fact between the

tenant and sub-tenant, the application under the

provisions of the Rent Control order filed by the landlord

cannot be allowed. Is it possible for any landlord to

establish the actual agreement or understanding between

the tenant and the person to whom the possession of the

premises is delivered? It is well settled that sub-tenancy

or sub-letting comes into existence when the tenant 14

voluntarily surrenders possession of the tenanted

premises wholly or in part and puts another person in

exclusive possession thereof without the knowledge of the

landlord. In all such cases, invariably the landlord is kept

out of scene rather, such arrangement whereby and

whereunder the possession is parted away by the tenant

is always clandestine and such arrangements take place

behind the back of the landlord. It is the actual physical

and exclusive possession of the newly inducted person,

instead of the tenant, which is material and it is that

factor which reveals to the landlord that the tenant has

put some other person into possession of the tenanted

property. It would be impossible for the landlord to prove,

by direct evidence, the arrangement between the tenant

and sub-tenant. It would not be possible to establish by

direct evidence as to whether the person inducted into

possession by the tenant had paid monetary consideration

to the tenant. Such arrangement which may have been

made secretly, cannot be proved by affirmative evidence

and in such circumstances, the Court is required to draw

its own inference upon the facts of the case proved at the 15

enquiry. Delivery of exclusive possession by the tenant to

a stranger to the landlord and without the prior

permission of the landlord is one dominant factor based

on which the Court could infer as to whether the premises

was sub-let.

16. What remains for our consideration is as to whether the

High Court properly understood the ratio of the decision in

Bhairulal (supra). In the said case, the High Court clearly

held that on the basis of the evidence of the landlord

himself, it was not possible to say that the tenant has

parted with legal possession of the portion of the

premises in question to the alleged sub-tenant. On the

other hand, it was apparent that though the alleged sub-

tenant has been working on the sewing machine located

in the premises where the tenant himself has been

carrying on his business in clothes in the disputed

premises. The High Court in the said decision clearly held

that mere use by other person is not parting with

possession so long as tenant retains the legal possession

himself. We fail to appreciate as to how the ratio of the

said judgment is applicable to the fact situation on hand. 16

17. The case on hand clearly demonstrates that it is not a

case of any reconstitution of the existing firm by the

tenant whereby the original tenant continued to be a

dominant partner of such newly constituted firm and

retained legal possession of the premises. That would be

a different situation where the original tenant retains the

legal possession of the premises as the tenant without

parting away the possession of the premises or any part

thereof to a stranger. On the other hand, this is a clear

case where the original tenant parted away with legal

possession by inducting altogether a new firm into

possession of which the original tenant is not even a

partner and such parting away with the possession was

without the knowledge and consent and much less the

written permission from the landlords. Thus the ratio of

Bhairulal has no application to the case on hand.

18.Before parting with the case we are constrained to

observe that the High Court practically substituted the

findings for that of the authorities by reappreciating the

evidence available on record, which is impermissible in a 17

proceeding under Article 226/227 of the Constitution of

India.

19.For the aforesaid reasons, we find it difficult to sustain

the impugned judgment of the High Court. The same is

accordingly set aside.

20.The appeal is allowed with costs.

...............................................J. (B. SUDERSHAN REDDY)

................................................J. (SURINDER SINGH NIJJAR)

NEW DELHI, AUGUST 05, 2010.