Civil Revision No.277 of 2001 (O&M) -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Civil Revision No.277 of 2001 (O&M)
Date of decision: 24.02.2009
Madanjit Singh and another .............. Petitioners
Vs.
Sh. P.K. Aggarwal ............Respondent
Present: Mr. Aman Chaudhary, Advocate
for the petitioners.
Mr. D.K. Gupta, Advocate
for the respondent.
CORAM: HON'BLE MR. JUSTICE K. KANNAN
1. Whether Reporters of local papers may be allowed to see
the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest ?
-.-
K.KANNAN, J.
1. The question for consideration in the civil revision petition
is the effect of a tenant who was carrying on business in his individual
capacity later introduced the company as the tenant although he
retained control over the affairs as a Director. The question that
requires to be answered is whether the change of entity from an
individual to a company constituted sub-tenancy.
2. Admittedly, the tenant was carrying on business in his
individual capacity. It is also admitted by him subsequently that he
had established a private company in the same premises and he
continued to run the same business from the demised premises. The
Rent Controller allowed the petition upholding the contention of the
landlord that there had been a sub-tenancy by the tenant in his
individual capacity to the company, which was a corporate entity. The
Appellate Court reversed the decision and found that there was no
Civil Revision No.277 of 2001 (O&M) -2-
sub-tenancy and that the mere change in character by the tenant
cannot amount to sub-tenancy so long as the physical possession of
the property had been continued in the hands of a tenant.
3. The point revolves around consideration of a proposition of
law which seems firmly established in favour of the landlord by its
decision in Ram Saran Vs. Pyare Lal and another AIR 1996 SC
2361. It was a case where the tenant, who was an individual, later was
responsible for forming a society in which he was a president and
continued to reside in the same premises. The Court addressed the
issue about the subsequent change of tenancy in favour of a registered
society and found a tenancy surrendered in favour of registered
society without the consent of landlord shall constitute a sub-tenancy.
The Hon’ble Supreme Court also held that even the acceptance of rent
tendered in the name of the registered society would not enable the
landlord from seeking eviction on the ground of unauthorized
subletting. While dealing with the case, the Court adverted to the
decision of Delhi High Court rendered in Vishwa Nath and another
Vs. Chaman Lal Khanna and another AIR 1975 Delhi 117 where the
Court dealt with typically a situation of tenant, who was an individual
and later allowed the property to be in the hands of company of which
he was a Director. In that case, the Delhi High Court had held that
there was no subletting. The Hon’ble Supreme Court distinguished
this decision and held that the Delhi High Court was only dealing with
the case where the name of the business had changed but all other
things remained the same and the original tenant continued to be a
tenant. The Hon’ble Supreme Court also distinguished its own
Civil Revision No.277 of 2001 (O&M) -3-
decision rendered earlier in M/s Madras Bangalore Transport
Company (West) Vs. Inder Singh and others A.I.R. 1986 S.C. 1564.
In that case the Hon’ble Supreme Court was dealing with the case of
tenancy in favour of a firm and the firm had subsequently associated
itself with another company with its partners as directors, allowing the
company to operate along with from the tenant premises. The Hon’ble
Supreme Court had held although firm and company were separate
legal entities and there was no subletting.
4. The distinction with the Hon’ble Supreme Court was making
in laying down the law that a society, which is a distinct legal entity
and to which tenanted premises had ultimately fallen to exclusive
possession as proof of sub-letting and at the same time distinguishing
the case that had been dealt with by the Delhi High Court and its own
decision rendered earlier in M/s Madras Bangalore Transport
Company’s case (supra) is but on a thin line but the aspect to be seen
is that there is a difference. In this case, it is not the case of an
individual tenant who contended that he continued as a tenant. On the
other hand, it is a case where individual tenant conceded that it was
the company which was the tenant under the landlord and that it was
paying rent to the landlord directly. In Delhi High Court’s case, the
Court found that apart from the change in the name of the business
nothing else had changed and original tenant continued as a tenant
while associating himself with the affairs of a company. In the
Hon’ble Supreme Court’s decision in M/s Madras Bangalore
Transport Company’s case (supra), the tenant which was a
partnership firm continued as a tenant while still the partners had
Civil Revision No.277 of 2001 (O&M) -4-
established a company with themselves as directors. In the said two
cases, the identity of the original tenant had not been effaced.
However in Ram Saran’s case (supra), the Hon’ble Supreme Court
was dealing with the situation which was on all fours with the fact at
hand. The tenant, who held possession in individual capacity later
allowed the property to be held in possession by the society and he
held the possession as a president of the society. The payment of rent
by the president of society was seen to be by a distinct legal entity and
was found to establish a sub-tenancy. Here the tenant in his
individual capacity had effaced himself and had allowed the society to
assume full control. Similarly, in this case the first respondent himself
was not in the business in his individual capacity but was associating
himself wholly with the company. It was the company, which was in
exclusive possession. To that extent being an independent entity
distinct from the original tenant, the exclusivity of its possession made
obvious the corollary, namely, that the tenant in his individual
capacity had lost his possession to the sub tenant.
5. In fine, the decision is inevitable that the point to be
answered is covered by the decision of Hon’ble Supreme Court in
Ram Saran’s case (supra). I set aside the order passed by the
Appellate Authority and the order of eviction issued by the Rent
Controller is restored. Civil revision petition is allowed accordingly.
However, there shall be no order as to costs. Time for eviction is two
months.
(K. KANNAN)
JUDGE
February 24 , 2009
Pankaj*