Delhi District Court
Dr. Sunil Abrol vs Usha Sethi on 6 April, 2021
IN THE COURT OF MS NEENA BANSAL KRISHNA
PRINCIPAL DISTRICT & SESSIONS JUDGE
RENT CONTROL TRIBUNAL
SOUTH EAST: SAKET COURTS, NEW DELHI
RCT ARCT No. 04/2017
Dr. Sunil Abrol
S/o Late D. P. Abrol
R/o M27, Greater Kailash1
New Delhi110048.
.... Appellant/Landlord
Versus
1. Usha Sethi
W/o Sh. Kuldeep
Shop No. M27B
Greater Kailash1 Market
New Delhi110048. ....Respondent/ Tenant
2. M/s Basic Clothing Company
Through its Partner
Mr. Rajesh Jaju
ER3, Inderpuri
New Delhi
Also At :
S5, Pratap Chambers
Gurudware Road, Karol Bagh
New Delhi110005
3. M/s Westwood Clothings
Through its Proprietor Mr. Sushil Jaju
S5, Pratap Chambers
Gurudware Road, Karol Bagh
New Delhi110005
RCT ARCT No. 04/2017 Page 1 of 30 Pages
4. M/s Mohan Clothing Company Pvt. Ltd.
Through its Director Mr. Nikhil Mohan
76, Udhyog Vihar,
Phase1, Near Police Station,
Gurugram, Haryana122001
....Respondents/SubTenants
5. Mrs. Pamilla Kapur
D/o Late D. P. Abrol
R/o R156, Greater Kailash1,
New Delhi110048
6. Mrs. Meenakshi Nijhawan
D/o Late D. P. Abrol
R/o 35, Navjivan Vihar
New Delhi110017
.... Proforma Respondents
First date before this Court : 24.04.2017
Date of Order : 06.04.2021
ORDER:
1. This appeal under Section 38 of Delhi Rent Control Act, 1958 (hereinafter referred to as "the Act") has been filed against the judgment dated 15.03.2017 vide which the learned Additional Rent Controller has dismissed the eviction petition under Section 14 (1) (a) (b) and (j) of the Act filed by the landlord against the respondent / tenant. The present appeal is limited to the ground under Section 14 (1) (b) of the Act.
2. Facts in brief are that a shop bearing No. 27B forming part of property No. M27, Greater Kailash I, Main RCT ARCT No. 04/2017 Page 2 of 30 Pages Market, New Delhi was let out to respondent no. 1 vide Agreement dated 04.05.1982. The latrine and bathroom on the ground floor of the premises were being used in common along with other tenants on the ground floor and there was no access to the shop from the rear side of the building through the courtyard. It was claimed that the respondent no. 1 is in arrears of rent since 01.01.1997 @ Rs.290.40 up to 30.05.2000 and @ Rs.319.44 since 01.06.2000 which he has failed to pay despite service of legal notice dated 05.06.2000. It was further claimed that the respondent no. 1 has sublet, assigned or otherwise parted with the suit premises without obtaining the written consent of petitioner to respondent no. 2. M/s Basic Clothing Company who are the distributors of Lee Cooper Jeans and the entire income from the business is being retained by respondent no. 2 who is having complete control over the business as well as the tenanted premises. An advertisement in regard to the said business was taken out in Times of India on 13.10.1999 from where the petitioner came to know about the subletting of premises by respondent no. 1. The petitioner claimed that huge amount has been paid by respondent no. 2 to respondent no. 1 on account of subletting and substantial amount towards rent is also being paid by respondent no. 2 to respondent no. 1. Furthermore, substantial damage has been caused to the suit premises by the respondents who RCT ARCT No. 04/2017 Page 3 of 30 Pages have removed masonry columns and slabs which has led to weakening of the support of the roof slab. They have also failed to restore the property in its original condition despite service of notice dated 05.06.2000. Hence, the eviction petition was filed under Section 14(1) (a) (b) and (j) of the Act.
3. The respondent no. 1 opposed the petition by way of her written statement wherein it was asserted that respondent no. 1 has been regularly paying the rent through cheques but after May, 1998 petitioner refused to accept the rent. The respondent no. 1 along with other two cotenants i.e. her sons filed a petition under Section 31 of Punjab Relief Indebtedness Act and deposited the rent for the period 01.06.1998 to November, 1999 @ Rs.290.40 per month. The petitioner was duly served with the petition despite which he did not put an appearance and the petition was allowed exparte vide order dated 05.07.2000. In the meanwhile, a legal notice dated 05.06.2000 was served by the petitioner upon respondent no. 1 alleging arrears of rent. A reply dated 11.07.2000 was sent through UPC and registered post pointing out that the rent was Rs.290.40 per month and not Rs.280.40 per month. A draft of Rs.2,323.20 was also sent as rent for the period December, 1999 to July, 2000 along with the reply. The draft was not returned to the respondent and thus his liability stood discharged. The petitioner thereafter also did not accept RCT ARCT No. 04/2017 Page 4 of 30 Pages the rent and another petition under Section 31 of Punjab Relief Indebtedness Act was filed for deposit of further arrears of rent. It is asserted that there were no arrears of rent and the petition under Section 14(1) (a) of the Act was not maintainable.
4. The respondent no. 1 denied that she has sublet or parted with the legal possession. It was explained that earlier the tenancy was in the name of Shri Gurbax Singh, fatherin law of respondent no. 1 vide Agreement dated 04.05.1982. The tenancy rights were transferred in the name of respondent no. 1 and lease deed was so entered between petitioner and respondent no. 1 which included her sons. It has been explained that a composite Agreement was executed between West Wood Clothings through Shri Sushil Jaju and respondent no. 1 on 11.06.1998. As per the Agreement, respondent no. 1 had agreed to give the premises on leave and licence to the first party to stock their garments. The exclusive possession of the premises remained with respondent no. 1 who had the keys and it is she and her sons who were managing the shop. The goods / garments were also sold after purchasing the same from respondent no. 2. This Agreement operated for three years and the possession of the suit shop always remained exclusively with respondent no. 1. The telephone connection continued to be in the name of respondent no.
1. The electricity meter is in the name of Shri Gurbax RCT ARCT No. 04/2017 Page 5 of 30 Pages Singh, fatherinlaw of respondent no. 1. The premises have never been sublet to respondent no. 2 or to any other party.
5. The respondent no. 1 has further submitted that there are no details of alleged substantial damage caused to the suit premises. Even the time when such damage was caused is not disclosed. The petition is therefore time barred and is liable to be dismissed. Moreover, it is claimed that no material alteration or voluntary waste of the property has been done to the premises. Only decorative / cosmetic additions have been done. The steel and wooden racks required to keep the garments have been kept inside the shop. No wall or permanent structure of the shop has been broken. It is therefore submitted that none of grounds agitated by the petitioner are made out and the petition is liable to be dismissed.
6. In the replication, the petitioner has reaffirmed his assertions as contained in the petition.
7. The petitioner Dr. Sunil Abrol in support of his case examined himself as PW1 and tendered the evidence by way of affidavit. PW2 Shri Manu Bhatnagar, a qualified architect Interior Designer inspected the premises and gave the original plan of the shop which is Ex.PW2/A, altered plan of the said premises which is Ex.PW2/B and the certificate which is Ex.PW2/C. PW3 Shri Sachin, Tax RCT ARCT No. 04/2017 Page 6 of 30 Pages Assistant produced the summoned records pertaining to the Assessment years 199495 till 200708 which are Ex.PW3/1 to Ex.PW3/7 collectively.
8. The respondent examined RW1 Shri Jagjit Singh, attorney of respondent no. 1 in support of her case. He tendered his evidence by way of affidavit Ex.RW1/A. RW2 Shri R. S. Yadav was a Civil Engineer who inspected the suit premises and submitted his report Ex.PW2/1. The photographs of the suit premises are Ex.RW2/2 to 4.
9. The Additional Rent Controller on the basis of evidence and the documents proved by the parties concluded that there was no default in payment of arrears of rent and the ground for eviction under Section 14(1) (a) on account of nonpayment of rent was not made out. It was further held that the petitioner / landlord had also failed to prove subletting or parting with the possession of the tenanted premises by respondent no. 1 in favour of respondent no. 2 and the eviction under Section 14(1) (b) on account of subletting was also not made out. In regard to causing substantial damage to the suit premises, the learned ARC concluded that the evidence failed to establish substantial damage to the suit premises. Aggrieved by the said dismissal of the eviction petition, the present appeal has been preferred under Section 38 of the Act.
RCT ARCT No. 04/2017 Page 7 of 30 Pages
10.Learned counsel for the appellant made a statement on 27.09.2019 that he was not pressing his appeal under Section 14(1) (a) and (j) of the Act and only the appeal be considered in respect of Section 14(1) (b) of the Act.
11.Learned counsel on behalf of the appellant has argued that the relationship of landlordtenant is admitted. Consistently a sum of Rs.1,10,000/ per month has been credited to the account of respondent no. 1. It is clearly evident that it is not a Leave and Licence Agreement executed in favour of respondent no. 2 but in fact the premises have been rented out by respondent no. 1 to respondent no. 2 on a monthly rent of Rs.1,10,000/. The respondent no. 1 has tried to defend and claim that she is in possession by ascertaining that the electricity and telephone bills are in her name and she is continuing to pay the same. The payment of nominal amounts on account of electricity and telephone bills is nothing but a facade to camouflage the real relationship of landlord tenant between respondent no. 1 and 2. Moreover, it has been contemplated in the Agreement itself that if STD calls are made then the same shall be payable by respondent no. 2. It is quite evident from the arrangement that there was no role of respondent no. 1 and she was not even in the possession of the suit premises. The subletting is clearly proved from the evidence and documents and the RCT ARCT No. 04/2017 Page 8 of 30 Pages learned ARC wrongly dismissed the petition under Section 14(1) (b) of the Act.
12.The main grounds that are agitated in the appeal are that the respondent no. 1 had executed the Leave and Licence Agreement in favour of respondent no. 2 by virtue of which respondent no. 1 is described as the Stockist of respondent no. 2. As per the terms of the Agreement, an amount of Rs.1,10,000/ or 15% of the sales proceeds whichever is higher was payable per month. The learned ARC was however, swayed by the nomenclature of composite Agreement Ex.RW1/9 and failed to analyze and deconstruct its true nature and has wrongly concluded it to be a leave and licence Agreement. The perusal of bank statement of respondent no. 1 reveals that a precise fixed amount of Rs.1,10,000/p.m. was credited to her account, though she was entitled to get 15% commission on sales or Rs.1,10,000/ whichever was higher. However, her share was fixed at Rs.1,10,000/ per month.
13.It is further argued that a corresponding obligation was on respondent no. 1 to stock and sell products of respondent no. 2, pay salaries to sales staff and electricity and phone bills. During the evidence, it came on record that respondent no. 1 was neither engaged in any manner in the business of respondent no. 2 nor was she paying the salary of staff. No amount has been reflected by respondent no. 1 RCT ARCT No. 04/2017 Page 9 of 30 Pages towards expenses of business in the income tax returns. The electricity and phone bills were also in petty amount of around Rs.1,000/ per month. The role of respondent no. 1 in running the business never came clearly on record. Rather, as per the pleadings of respondent no. 1 it was respondent no. 3 who was running the business of garments supplied by respondent no. 2. Respondent no. 1 was not in possession of any account books nor had any role in bank operations. The entire business was being managed and appointed by respondent no. 2. The sales tax registration was also in the name of respondent no. 2. Even though as per the Agreement Ex.RW1/9, respondent no. 1 was appointed as Stockist but she was not even supposed to maintain the stock register. It is quite obvious from the evidence on record that respondent no. 1 was not contributing anything to business except paying petty electricity and phone bills. The only compelling reason of arrangement between respondent no. 1 and 2 was that the premises had been sublet to respondent no. 2 on a monthly rent of Rs.1,10,000/. The Agreement Ex.RW1/9 was only a camouflage to conceal real transaction of lease. Respondent no. 1 had no control and was not in possession of the shop and a self serving document had been created between respondent no. 1 and 2. The learned ARC turned a blind eye and did not remove the mask or the veil to ascertain the real relationship between respondent no. 1 RCT ARCT No. 04/2017 Page 10 of 30 Pages and 2.
14.Learned counsel for appellant has moved an application dated 07.07.2018 and respondents no. 3 and 4 have been deleted vide order dated 19.01.2019.
15.Learned counsel on behalf of the respondent has addressed arguments at length and submitted that the present appeal has been filed against the dismissal of the eviction petition under Section 14(1) (b). The appeal under Section 38 of the Act is maintainable only when some legal question of law is agitated. The appellant has failed to disclose any legal question of the law and the appeal is not maintainable.
16.It is further argued on behalf of the Respondent that Notice dated 05.06.2000 Ex.PW1/E has been served only upon respondent no. 1 and not respondent no. 2. Vague allegation was made in the Legal Notice that the property has been sublet to the third party without specifying the name of the alleged sub tenant. Likewise, in paragraph 16 of the petition it is merely claimed that the premises have been let out to respondent no. 2 since he is running the business from the suit premises. The other document relied upon by the appellant is a newspaper advertisement. There is neither any personal nor any documentary evidence to support the claim of subletting. On the other hand, the respondent has clarified in her written statement that RCT ARCT No. 04/2017 Page 11 of 30 Pages respondent no. 2 is only a distributor of jeans and respondent no. 1 is the stockist. There was a Collaboration/ Franchise Agreement with respondent no. 2 which also ended in June, 2001. The son of respondent no. 1 was admittedly found present in the suit premises. Despite specific averments made in the written statement there is no rebuttal to the same in the replication. The legal possession always continued with respondent no. 1. A finding of fact has been given by the learned ARC that there is no subletting and there is no appeal maintainable on the finding of fact. There was no case made out of subletting in the legal notice but a new case was set up in the pleadings. The Agreement Ex.RW1/9 also shows that they were only distributors of Lee Cooper Jeans.
17.Learned counsel for respondent has further argued that PW1 has appeared as attorney of his father but the Power of Attorney is not attested. The affidavit of evidence has also not been attested and there is no evidence on behalf of the appellant on record as per law. Furthermore, PW1 had no personal knowledge of subletting but his claim was based solely on an advertisement in the newspaper. The plea of subletting is speculative while respondent has proved her documents to show that it was only an arrangement on Commission basis with respondent no. 2 and legal possession was always retained by respondent no. 1. PW1 had visited the premises only once in RCT ARCT No. 04/2017 Page 12 of 30 Pages September, 2004 i.e. one month before his evidence and not even before filing of the eviction petition. There is no cogent evidence led to prove subletting and there is no error in the findings of the learned ARC and the appeal is therefore liable to be dismissed.
18.I have heard the arguments and perused the record. My observations are as under :
19.Section 14(1)(b) of the DRC Act provides for the ground for eviction if the tenant has sublet, assigned or parted with the possession of whole or part of the premises without obtaining the consent in writing from the landlord. The Section uses three words namely "subletting, assigned or otherwise parted with possession". These three expressions deal with different concepts and apply in different circumstances. In the case of Vishwa Nath Vs. Chaman Lal AIR 1975 Delhi 117 these three concepts were explained. It was observed that in "subletting" their exists a relationship of landlord and tenant between the tenant and the subtenant and all the incidents of letting or tenancy have to be found namely the transfer of an interest in the estate, payment of rent and the right to possession as against the tenant in respect of the tenanted premises.
20.In "Assignment", the tenant has to divest himself of all the rights that he has as a tenant. The expression "parted with possession" undoubtedly postulates parting with RCT ARCT No. 04/2017 Page 13 of 30 Pages legal possession. Parting with possession means giving possession to a person other than to whom the possession has been given by lease and parting with possession must have been by the tenant. The mere user by other person is no 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 right to possession. The divestment or abandonment of the right to possession is necessary in order to invoke the clause of parting with possession [Hazari Lal Vs. Gian Ram 1972 Ren CR 74 (Delhi)].
21.In Woodfall on 'Landlord and Tenant' 27th Edition Volume 1 page 523 it is said:
"A covenant against parting with possession in the demised premises is not broken so long as the lessee retains legal possession by allowing other person to use the premises, either under a licence or under a declaration of trust".
And again, "a lessee cannot be said to part with the possession of any part of the premises unless his agreement with his licensee wholly ousts him from the legal possession of that part."
22.In Delhi Stationers and Printers Vs. Rajendra Kumar (1990) 2 SCC 331, the term "subletting" was explained to mean transfer of an exclusive right to enjoy the property in lieu of payment of some compensation or rent. It was RCT ARCT No. 04/2017 Page 14 of 30 Pages observed that "parting with legal possession" mean parting with possession with the right to include and to exclude others and mere occupation is not sufficient to infer either subtenancy or parting with possession.
23.Similarly, in Bharat Sales Ltd. v LIC (1998) 3 SCC 1 it was held that subtenancy or subletting comes into existence when a tenant gives up the possession of the tenanted premises wholly or in part and puts another person in exclusive possession thereof in such process.
24.In Joginder Singh Sodhi Vs. Amar Kaur (2005) 1 SCC 31 the Supreme Court noted that as far as "subletting" is concerned, the two ingredients namely parting with possession and monetary consideration therefore have to be established.
25.In the light of the above case law it has to be now examined whether the case of subletting, parting with possession or assigning of the tenancy has been made out. In the present case, it is not the case of the landlord that there is assignment or subletting of tenancy. The only premise raised by the landlord is that there is "parting with possession". In the case law as discussed above it has been clearly held that so long as the landlord retained the legal possession, mere occupation of whole or part of premises by a third party would not amount to parting with RCT ARCT No. 04/2017 Page 15 of 30 Pages possession.
26.The first question is on whom the onus lie to prove sub letting. The Apex Court in Krishnawati Vs. Hansraj (1974) 2 SCR 524 reiterated the principles stated in Associated Hotels of India Ltd., Delhi Vs. S.B. Sardar Ranjit Singh (1968) 2 SCR 548 and noted that the onus of proving the subletting is on the landlord. If the landlord shows that the occupant who was in exclusive possession of the premises let out for valuable consideration, it would be then for the tenant to rebut the evidence. Where the tenant of subtenant is shown in exclusive possession of the premises, then a presumption may be raised of sub letting unless the same is rebutted. What thus, needs to be examined is whether the appellant / landlord has succeeded to prove that there was parting of legal possession by the tenant for establishing the ground for eviction under Section 14(1)(b) of the Act.
27.It is the admitted case of the parties that the suit premises was rented out initially to Shri Gurbax Singh, fatherinlaw of the respondent no. 1 and she was inducted as a tenant vide the written lease Agreement dated 04.05.1982. The relationship of landlordtenant between the appellant and respondent no. 1 is admitted. The appellant had sought the possession of the suit premises on various grounds one of which was that the premises has been sublet, assigned or RCT ARCT No. 04/2017 Page 16 of 30 Pages parted with possession to a third party without the consent of the landlord. The legal notice dated 05.06.2000 Ex.PW1/E was issued wherein it was merely asserted that the premises have been sublet without the consent of the landlord but did not specify the person or the manner in which the property has been sublet. The respondent in her reply Ex.RW1/3 dated 11.07.2000 to the said notice had specifically denied having sublet or assigned the suit premises. In the petition, the appellant had made a specific claim that respondent no. 2 was carrying on the business in the name and style of M/s Basic Clothing Company who are the distributors of Lee Cooper Jeans and the entire income was being retained by it and was having complete control over the premises. This was also proved from the advertisement in Times of India published on 13.10.1999 from where the petitioner came to know about the subletting. The petitioner had claimed that the premises have been sublet to respondent no. 2 M/s Basic Clothing Company.
28.PW1 Dr. Sunil Abrol in support of his claim that the suit premises had been sublet, had deposed that respondents no. 2 and 3 were running their Company's exclusive showroom of their products against payment of fixed monthly rent of respondent no. 1 for letting out the suit premises to them. Respondent no. 1 had no control over the suit premises and the possession had been handed over RCT ARCT No. 04/2017 Page 17 of 30 Pages to respondents no. 2 and 3 illegally without the consent and permission of the petitioner / landlord. The entire income from the business was being retained by respondents no. 2 and 3 and they were paying a huge amount as monthly rent to respondent no. 1 on account of subletting. The Agreement dated 11.06.1998 was an agreement of subletting with respondents no. 2 and 3 having the exclusive control and possession of the premises. The electricity charges, water charges, telephone bills, wages of the employees, expenses on fixtures and furniture and maintenance all were being borne by respondents' no. 2 and 3.
29.The respondent no. 1 on the other hand, has explained that there was no parting with possession but respondent no. 1 had entered into a Collaboration Agreement dated 11.06.1998 Ex.RW1/9 with West Wood Clothings through Sushil Jaju wherein respondent no. 1 Smt. Usha Sethi was described as Agent / licensor while M/s West Wood Clothings was described as Principal / licensee. As per the terms of the said Agreement, the employees to carry on the business i.e. for the sale of the garments were to be appointed by the principal i.e. West Wood Clothings but it was to be done with the consent of the agent and the salaries were also to be paid by the agent (Landlord). Furthermore, the guidelines and instructions for effecting sales, fixing of rates etc. were to be followed by the RCT ARCT No. 04/2017 Page 18 of 30 Pages Agent / respondent no. 1 which would be beneficial to the interest of the West Wood Clothings. Further, the goods were to be stocked only of Lee Cooper of which West Wood Clothings was having the exclusive franchise and it was further agreed that the garments of no other brand shall be sold or stocked. The other material clauses were that the telephone and electricity charges will be paid by respondent no. 1 but in case any STD or ISD calls were made the expenses for the same shall be borne by the principal. The exclusive possession of the shop was to remain with respondent no. 1 and West Wood Clothings was to have the permissive right to stock the products and to sell the same through respondent no. 1 who was the agent. Moreover, in case of breach of making any payment, she had a right to stop the entry of the Respondent No.2 and to cancel the permission to stock the garments or other products. The most important Clause was that the principal have agreed to guarantee a minimum commission on the sale of the goods to the extent of Rs.1,10,000/ per month or 15% of the total sale whichever was higher. The said Agreement was entered for a period of three years from 01.07.1998 till 30.06.2001.
30.PW1 Dr. Sunil Abrol the appellant in his cross examination had admitted that his knowledge that the electricity and telephone charges were being paid by the Sub Tenant was on the basis of a conversation which he RCT ARCT No. 04/2017 Page 19 of 30 Pages had with the Manager at the showroom about 5 years back but did not remember the name of the Manager. He admitted that he had no personal knowledge about who was making payment of the telephone and electricity charges. Shri Jagjit Singh, son / attorney of respondent no.1 had specifically deposed that the electricity and telephone charges were being paid by them and the bills are Ex.RW1/13 to 41.
31.The appellant had further claimed that the exclusive possession of the suit premises was with the sub tenant. However, in his crossexamination he has deposed that about 1 ½ month back (his testimony was recorded on 18.10.2004) he had gone to the shop of the respondent and purchased a pair of trousers. He met Jagjit Singh, son of the respondent no. 1 at shop. The bill was issued by a boy sitting at the counter while Jagjit Singh was standing outside the counter. He further deposed that the shop was being opened by the servant of the tenant but again stated that the servants of the sub tenant were opening the shop. He himself left for his office at 8.00 am while the shop was being opened at 1010.15 am. He tried to explain that his office was closed on Saturdays, Sundays and on holidays on which date the shop used to be open. His own testimony and admissions in the cross examination not only proves the presence of the son of the Landlady in the suit premises but also that she had the control over the use RCT ARCT No. 04/2017 Page 20 of 30 Pages of premises.
32.An argument was addressed that there was a nominal payment of electricity and the telephone bills. Moreover, as per the Agreement expenses of STD and ISD calls were to be borne by the sub tenant / respondent no. 2 which shows that this was only a camouflage but the actual physical possession to the exclusion of the tenant was with the sub tenant. However, the electricity and telephone bills show that all throughout these facilities continued to be in the name of the respondent no. 1 and the expenses were also borne by her.
33.The other instance of claiming subletting is the newspaper advertisements. PW1 Dr. Sunil Abrol had deposed that he came to know about the subletting of the premises from the advertisement in the newspaper Hindustan Times Ex.PW1/D dated 29.04.2001. What the advertisement says is merely that Lee Cooper has exclusive showroom at various places which included the tenanted premieres. This rather supports the claim of the respondent no. 1 that it had merely taken a Franchise in respect of the apparels of Lee Cooper through West Wood Clothings which was having its franchise.
34.Appellant has also relied on another advertisement Ex.PW1/F in respect of brand Black Berry Clothings. This again has been explained by RW1 Shri Jagjit Singh who has proved the Agreement Ex.RW1/10 dated 10.08.2001 RCT ARCT No. 04/2017 Page 21 of 30 Pages executed subsequently between respondent no. 1 Smt. Usha Sethi and M/s Mohan Clothing Company Pvt. Ltd. wherein respondent no. 1 entered into a Franchise Agreement for sale of readymade garments and other allied products of M/s Black Berrys as consignee agent of M/s New Royal Tent House. The remuneration clause was also similar as previous Agreement provided for minimum guaranteed commission of Rs.1,50,000/ per month or at rate of 7.5% of net sales value whichever is higher. The legal possession of the suit premises is proved to have always been with the Respondent No.1.
35.RW1 Shri Jagjit Singh in his crossexamination had clarified that goods were not being sold by Basic Clothing. During the currency of Agreement Ex.RW1/9 the goods were being sold by them. It was further explained that West Wood Clothing Company was having exclusive franchise of Lee Cooper brand. They were providing the apparels / garments to them which they were selling from the suit premises. It was specifically denied that respondent no. 2 was in exclusive possession or was operating from the suit premises. The respondent no. 1 has further explained that the sale proceeds were handed over to M/s West Wood Clothing Company after every week and the commission was paid on a monthly basis. The sale proceeds were never deposited in the bank but were handed over in cash to the representative of West Wood RCT ARCT No. 04/2017 Page 22 of 30 Pages Clothing. The sales used to be on cash basis but all the sales made through credit were directly credited in the account of M/s West Wood Clothing though the accounts were maintained by them. They did not obtain any sales tax number as it was that of West Wood Clothing Company which was being used. The testimony of Rw1 Jagjit Singh proves that it was a business of the Respondent No.2 having the franchise of brand Lee Cooper Garments that was being conducted from the premises and the accounts were also being maintained by Respondent No.2 but at the same time presence and control of the premises has also been established to be that of respondent No.1.
36.The respondent / tenant has thus, explained that it was merely an agency agreement that has been entered into by her with the other respondents. In Satwinder Singh Vs. Kanwar Krishan Anand 2008 (106) DRJ 852, Delhi High Court, the concept of agency was explained. It was stated that an agency is a fiduciary relationship created between the principal and the agent by express or implied contract in which agency acts on behalf of the principal and binds the principal by his works or actions. The basic theory of Agency device is to enable a person through the services of another to broaden the scope of its activities and receive the product of another's effort retaining net benefits resulting from the work of the agent. An agent is RCT ARCT No. 04/2017 Page 23 of 30 Pages normally entitled to a fee or a commission.
37.From the comprehensive reading of the evidence of the parties it can be concluded with fair amount of certainty that the respondent No.1 had merely entered into Franchise Agreements with third party and never lost control over the tenanted premises. The Collaboration Agreements were for a fixed period and each came to an end after three years. The control and legal possession always continued with the Respondent No.1.
38.Learned counsel on behalf of the appellant had vehemently argued that the LeaveLicence Agreements entered into by the respondent no. 1 were in fact rent agreements but were camouflaged seeing to be a licence agreement. It clearly provided for payment of fixed amount of Rs.1,10,000/ with a rider of 15% commission on the sales in case they were more. The Statement of Account of the respondent no. 1 would show that only a fixed amount every month was paid which again is a reflection of the rental amount. The respondent no. 1 may have been getting the fixed amount but the Agreements have not been shown to be a camouflage for subletting.
39.For subletting the crucial aspect to be determined is whether there is no retention of legal possession.
40.In Seth Narainbhai Ichharam Kurmi and Anr. Vs. Barbada Prasad Sheosahai Pande AIR 1941 Nag. 357, it was observed that possession includes legal possession and RCT ARCT No. 04/2017 Page 24 of 30 Pages unless the legal possession is parted with, ejectment cannot be ordered. Bare occupation and possession are two different concepts. Possession as it is understood in legal terminology is complex one which need not include actual occupation. It comprises rather the right to possession and right and control coupled with mental element namely the animus possidendi, that is to say knowledge of these rights and the desire and intention of exercising them, if need be.
41.In Gurdial Singh Vs. Brij Kishore & Ors. 1970 DLT 592, it was observed that simply because the tenant has allowed another person to use or share premises, it does not amount to breach of covenant not to part with the possession of the premises. It was further explained in this case that it is not the law that no sooner does any person other than the lessee occupies a premises, it must be held that the tenant has parted with possession of the demised premises. What has to be seen in such a case is whether the tenant has totally effaced himself and whether the possession of the third person is exclusively in his own right and to the ouster of the lessee.
42.In G.D. Chaudhary Vs. Anand Sarup 1966 DLT 28 it was held that so long as lessee retains legal possession of whole of the premises, he does not commit a breach of law against parting with the possession by allowing other RCT ARCT No. 04/2017 Page 25 of 30 Pages person to use the same.
43.In Hazari Lal and Ram Babu Vs. Shri Gian Ram & Ors. 1972 RCR 74, Delhi High Court observed that the mere fact that the tenant himself is not in physical possession of the tenancy premises for any period of time would not amount to parting with the possession so long as tenant has a right to return to the premises and be in possession thereof. A mere privilege or license to use the whole or a part of the demised premises which privilege or license can be terminated at the sweet will and pleasure of the tenant at any time would not amount to parting with possession. The divestment or abandonment of the right to possession is necessary in order to invoke the clause of parting with possession.
44.The facts as involved in the present case were considered by Hon'ble Delhi High Court in the case of Amolak Singh (deceased) through LR Vs. Vinay Narain & Ors. CM(M) 276/2012 decided on 02.04.2018. In the said case, an agreement was entered into between tenant and the alleged sub allottee wherein it was found that in terms of the Agreement, the readymade garments of the alleged subtenant were to be stocked in the premises under the tenancy of the tenant and were to be sold by the tenant himself through the salesman to be appointed by him. He was to earn a commission of 10% on the total net sale RCT ARCT No. 04/2017 Page 26 of 30 Pages conducted by him in the business in the said premises. The tenant was to wholly and fully engage himself in carrying on sale of readymade garments and was to have full control of the premises. He was to deploy regular accountant / cashier and to keep full account of the goods and the commission as stipulated. He was responsible to deposit the same in the bank account nominated by the alleged subtenant. The tenant was also entitled to recover any expenses that were incurred by him in the conduct of business including staff, salary etc. as was mutually agreed between the parties. All the expenses were to be accounted and paid from the sale proceeds on or before 15 th day of the succeeding month. It was held that the Agreement did not in any way create any tenancy in favour of the alleged subtenant. The tenant continued to be so as the alleged subtenant had no claim, charge, lien, and interest of any nature of whatsoever in the tenanted premises. The full control of the premises remained with the tenant. It was held that there was no evidence to show that the possession of the suit premises was exclusively with the subtenant. The agency agreement left no room of doubt that there was no parting of possession.
45.The Apex Court in Jagdish Prasad vs. Angoori Devi AIR 1984 SC 1447 observed that "the Act does not require the Court to assume a subtenancy merely from the fact of RCT ARCT No. 04/2017 Page 27 of 30 Pages presence of an outsider". Likewise, the Supreme Court in Jagan Nath vs. Chander Bhan AIR 1988 SC 136 observed that there was no parting with possession merely because the premises are used by another person so long as the tenant retains the legal possession.
46.Similarly, Delhi High Court in Niranjan Lal Kanodia vs. Harbans Lal 1995 (2) AD Delhi 347 had noted that the test applied was whether the tenant has given up of the right or lost the right to the premises? If he retains the right to possession, it would not be the case of subletting. In this case the tenant had partitioned his shop into two portions by way of a wooden partition and one part was being used by a tenant as a clinic while the other portion was being used for carrying on business of sale and purchase of motor cars by S. D. Company, a Company of his sons. It was held that even if it was It was held that t the presence of S. D. Company in the premises was established by evidence but there was no evidence to show that the tenant had divested himself of the right to possess the premises. The test as laid down was not satisfied and the mere presence of a third party would not lead to a conclusion of subletting.
47.In GD Chaudhary (supra), Delhi High Court noted that anything in the nature of a right to concurrent user would not amount to parting with possession.
48.The admissions made by the appellant in his cross RCT ARCT No. 04/2017 Page 28 of 30 Pages examination clearly reflect the presence of the respondent no. 1 through her son and his control over the premises and there was no parting of possession at any point of time. The respondent No.1 may have permitted Respondent No.2 to sell its goods from the suit shop and for the purpose may have taken a fixed monthly amount but the legal possession always continued with the respondent no.1 as is proved from the evidence on record. Much had been argued that the sale profits were never reflected by the respondent no.1 in her incometax returns and the salestax number was also of respondent no.2 but it is nowhere disputed that the business was being conducted by respondent no.2 but the possession was in the nature of licencee and not that of a tenant.
49.The respondent no. 1 may have been entering into Franchise agreements from time to time but she never parted with legal possession. In order to be successful in establishing subletting it had to be proved that there was parting with possession which the appellant has miserably failed to do. The learned ARC has rightly observed that there was never ever any parting of legal possession of the suit premises.
50.In the end it may be noted that the appellant has challenged the findings of the Ld. ARC purely on facts and has failed to raise any legal question.
51.In the light of the above discussion, there is no merit in RCT ARCT No. 04/2017 Page 29 of 30 Pages the present appeal and the same is hereby dismissed. Parties to bear their own costs. File be consigned to Digitally signed Record Room. NEENA by NEENA BANSAL BANSAL KRISHNA KRISHNA Date: 2021.04.07 15:14:19 +0530 Announced in the open court (Neena Bansal Krishna) th today i.e. 6 April, 2021 Principal District & Sessions Judge SouthEast District, Saket Courts, New Delhi.
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