REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6299 OF 2010
ARISING OUT OF
SPECIAL LEAVE PETITION (C) NO. 2517 OF 2007
VINAYKISHORE PUNAMCHAND
MUNDHADA & ANR. ... APPELLANTS
VERSUS
SHRI BHUMI KALPATARU & ORS. ... RESPONDENTS
JUDGMENT
B. SUDERSHAN REDDY, J.
1. Leave granted.
2. This appeal by special leave is directed against the final
judgment and order dated 20th September, 2006 passed
in Writ Petition No. 1206 of 1996 by the High Court of
judicature at Bombay, Nagpur Bench, Nagpur whereby
the High Court set aside the order dated 6.9.1995 passed
by the reviewing authority granting permission under
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clause 13(3)(iii) of the C.P. & Berar Letting of Houses and
Rent Control Order, 1949 (hereinafter referred to as `the
Rent Control Order’).
3. The facts leading to filing of this appeal lie in a very
narrow compass. The appellants are the landlords of the
suit premises. Respondent No. 4, Madankumar
Govardhandas Pasari was inducted as a tenant in the year
1974 who constituted a partnership firm under the name
and style `Bhumi Kalpataru’ consisting of five partners and
carried on business till 1991. The appellants filed an
application under clause 13(3)(i)(iii)(iv) and (vi) of the
Rent Control Order before the Rent Controller, Amravati
against the original tenant Messrs Bhumi Kalpataru and
its Managing Partner Madankumar Govardhandas Pasari,
the respondent No.4 (since died) on the ground that
Madankumar Govardhandas Pasari dissolved the firm and
clandestinely sub-let the suit premises to respondent No.2
Jagdish Champalal Mundhada who deceptively gave
similar name to the partnership by prefixing the word
`Shri’ and it was known as `Shri Bhumi Kalpataru’
resembling the firm to whom the premises was let out in
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the year 1974. The present occupiers of the suit premises
being the sub-tenant, namely the respondent No.1 firm
`Shri Bhumi Kalpataru’, its Managing Partner, respondent
No.2 and other partners, respondents 5 to 7 were duly
impleaded as party respondents. The simple case set up
by the appellants before the Rent Controller is that the
original tenant firm `Bhumi Kalpataru’ had sub-let the suit
premises without the sanction of the landlords and the
sub-tenants carried on the business under the name `Shri
Bhumi Kalpataru’ by prefixing commonly used `Shri’ to the
original tenant firm `Bhumi Kalpataru’.
4. The application was resisted by respondents No.1, 2, 5, 6
& 7 inter alia contending that they were recognized as the
tenants of the suit premises by the landlords by accepting
rent amount from `Shri Bhumi Kalpataru’. It was also their
case that there was disruption of relationship of landlord
and tenant between the appellants and the original
tenant. The original tenant firm `Bhumi Kalpataru’ and its
Managing Partner, Madankumar Govardhandas Pasari
though duly served, did not enter their appearance and
chose to remain absent throughout.
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
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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
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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
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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
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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
10premises 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
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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
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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
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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
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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
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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.
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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
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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.