Kerala High Court
Ramamoorthy Rao vs Musthapha Rawther on 5 July, 2002
Author: J.B. Koshy
Bench: J.B. Koshy, M. Ramachandran
ORDER J.B. Koshy, J.
1. This revision petition is filed by the landlords against the order of the Rent Control Appellate Authority reversing and setting aside an order of eviction passed by the Rent Control Court under Sections 11l(4)(i) and 1 l(4)(iii) of the Kerala Buildings (Lease and Rent Control) Act, 1965 (hereinafter referred to as 'the Act'). The petitioners are brothers and they are the joint owners of the petition schedule shop room. The respondent tenant was doing stationery business in the shop room in the' name of 'Kerala Stationeries'. It is the case of the petitioners that from January 1989 onwards, respondent was not seen in the shop and one M.G. Gopakumar (RW2) was doing the business therein. On 4.5.1989, they received a cheque (Ext. A2) towards rent issued by the said Gopakumar. The first revision petitioner asked Gopakumar Why he has issued the cheque. He answered that he purchased the shop room from the respondent. Thereafter, petitioners made enquiries and learnt that respondent/ tenant published an advertisement (Ext. A3) in widely circulated Malayalam daily for selling his shop. Therefore, Ext. A4 lawyer notice was issued on 28.6.1989 terminating the lease on account of subletting the property. Ext. A5 isjhe reply denying the allegations.
2. Petition for eviction was filed under Section 11(2)(b) (arrears of rent); 11(4)(i) (sublease); and 11(4) (iii) (tenant has other suitable building). Petitioners had a case that respondent/tenant had other three shop rooms named 'Sylviya', 'Supriya' and 'Fancy Shoe Mart'. According to the respondent/tenant, he has not transferred the exclusive possession of the building. Even though it was admitted that Ext. A3 advertisement of sale of the shop was published, according to him, it was not fruitful. He is doing the business in partnership with RW2 Gopakumar. Ext. B5 is the deed of partnership. Respondent has no other suitable building. 'Sylviya' is rented out to his son S.M. Akbar. 'Supriya' also belongs to his son S.M. Akbar. 'Fancy Shoe Mart' is rented out by his wife P.A. Saithoon.
3. The Rent Control Court allowed the petition under Section 11 (4)(i) and 11 (4)(iii) of the Act. Tenant filed appeal. Appeal was allowed. Landlord filed this revision application questioning the order of the appellate court.
4. Now, we may extract S. 11(4)(i) and (iii) of the Act:
"11. Eviction of tenants :-
xxx xxx xxx (4) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building,-
(i) if the tenant after the commencement of this Act, without the consent of the landlord, transfers his right under the lease or sublets the entire building or any portion thereof if the lease does not confer on him any right to do so:
xxx xxx xxx
(iii) if the tenant already has in his possession a building or subsequently acquires possession of or puts up a building, reasonably sufficient for his requirements in the same city, town or village;"
5. It is well-settled law that for eviction under Section 1 l(4)(i), tenant should part with exclusive possession of the whole or part of the tenanted premises for consideration without obtaining consent of the landlord and it is for the landlord to prove that the tenant has transferred exclusive possession of the whole or part of the tenanted building. It is equally well settled that if the tenant forms a partnership with another or others and carries on his business, it cannot be stated that there is exclusive transfer of possession. But, at the same time, if the partnership is sham and real purpose is subletting, the disguised partnership deed is not to be looked into. In such case there is no genuine partnership despite legal devices to camouflage the subletting. While interpreting similar provision which enabled the landlord to seek eviction if the premises is sublet after 1992 in the Delhi Rent Control Act, the Supreme Court in G.K. Bhatnagar (D) by LRs v. Abdul Alim (JT 2002 (Suppi.) SC 155), it was held as follows:
".....................subletting, assigning or otherwise parting with the possession of the whole or any part of the tenancy premises without obtaining the consent in writing of the landlord is not permitted and if done the same provides aground for eviction of the tenant by the landlord. However, inducting a partner in his business or profession by the tenant is permitted so long as such partnership is genuine. If the purpose of such partnership may ostensibly be to carry on the business or profession in partnership, but the real purpose be subletting of the premises to such other person who is inducted ostensibly as a partner, then the same shall be deemed to be an acl of subletting.........".
6. Now, we may analyse whether there was subletting in this case and whether partnership pleaded by the tenant is mere sham to disguise real subletting. The case of the tenant was that there was no subletting.and he was doing the business,with Gopakumar in partnership. However, it was admitted that he advertised for sale of the business by, Ext. A3 and now he has got 5% shares and name of the business 'Kerala Stationeries' was changed as 'M/s. M.G. Gopakumar and Co.' as can be seen from Ext. B7.agreement. The,tenant was examined as RW1 in this case. His evidence was discussed by the rent control authority as follows: .
"7. According to the respondent/tenant, he has been a heart patient for the last few years. Because of his illness and financial stringency, he made up his mind to close down and self the business in the petition schedule building. Accordingly, he made Ext. A3 advertisement. But, on a re-thinking, he decided to continue the business taking the help of the partners. Thus, Ext. B5 partnership deed was executed on 1.4.1989. As per this partnership deed, profits and loss have to be shared among three partners in the order of 60%, 35% and 5%. As per clause 4 of Ext. B5 partnership deed, value of furniture and stock at hand when the business was about to be taken over by the partnership firm was Rs. 53,000/-, RW1 (respondent) has testified to this effect. RW1 has also deposed that he invested an amount of Rs. 3,000/- in addition to the amount of Rs. 53.000/- paid by the other partners and started the partnership business. As per clause 5 of Ext. B5 partnership deed, the total capital of the firm is Rs. 63,000/-. RW1 has deposed against the real purport of.Ext. B5 partnership deed. As per clause 6 of Ext. B5 partnership deed, Mr. M.G.Gopakumar shall be the managing partner, who is authorised to manage the entire affairs' of the Firm. RW1 would depose to the effect that he is the super controlling power of the firm and that Mr. Gopakumar is acting according to his instructions. In his deposition in contravention of clause 6 of Ext. B5 partnership deed, one can detect the over enthusiasm of the respondent to make it appear that he is in exclusive possession of the petition schedule shop room and business therein for contradicting the case of subletting raised by the landlords. Ext. B7 is an agreement among the partners to change the name of the firm as M.G. Gopakumar and Company dated 19.5.1989. Ext. B8 series contain prescribed form No. 1 for applying for registration of partnership. This form is seen presented by M.G. Gopakumar. RW1 has deposed that it was so presented by Mr. Gopakumar on his instructions which is not evidenced. RW 1 has also slated in his deposition that he also used to go to the petition schedule shop room and sit in cash counter and issue cash bills. Ext, B9 cash bill book will not contain even a single leaflet which is purported to have been issued by RW1. On the other hand, RW2 who is none other than the managing partner Mr. Gopakumar has deposed that all the bills were issued by him."
7. The alleged sub-tenant Gopakumar was examined as RW2. His evidence was also considered by the trial court and found that the partnership deed was only a sham to hide subletting. He was not even aware of the partnership deed. His evidence was considered by the rent control authority as follows:
"8. According to RW 2 (Gopakumar) he is unaware of the details of the partnership. During cross-examination, he would depose that apart from the fact that his lather who is a bank manager invested some amount in the firm, he is ignorant of all other things. According to RW2, he was put in the petition schedule shop room as a helper and stilt he continues to be a helper. To the pointed question whether his father had not purchased the business in (he petition schedule room, his answer was that he did not know. He has not denied the suggestion clearly. At the same lime, he has deposed that he used to go to buy articles required for the business in the pelilion schedule shop room from the wholesale shop at Ernakulam. According to him, he invested an amount of Rs. 53,000/- in the partnership firm. As per Ext. B5 partnership deed, his capital has been fixed at Rs. 50,000/-. RW2 has also deposed that he has opened pygmy account in bank for his business of ihe firm which is in his name and thai he would deposit surplus income of Rs. 5 or 10 from the shop in that account. According lo him, he docs not draw any amount as a partner. On the other hand, a remuneration of Rs, 300/- or 400/- is used to be given to him by the respondent The essence of any partnership business is sharing of profits and loss among the partners. It is pertinent to note that in this case the respondent has not produced any account of the partnership firm. The entire deposition of RW2 will indicate that he is in fact denying the partnership arrangement. His deposition also is against the purport of Ext. B5 partnership deed. But, at the same time, he is admitting some note of exclusive control over the business as a proprietor, RW 1's deposition also is of the same nature. To the specific question put to RW2 during cross-examination whether the account of 'Kerala Stationers' would not reveal that RW2 is conducting proprietary concern, he answered in the affirmative. His clarification in the re-examination to the contrary is not at all genuine. It has come out in evidence that the telephone which had been installed in the petition schedule shop room was since transferred to another premises wherein partnership business under the name and style Sylviya is being conducted by RW 1 and RW 3 for which no sufficient explanation has been given by the respondent."
8. After considering the entire evidence, the trial Judge who has seen the demeanor of witnesses has held as follows:
".......... ....All the above said aspects will clinchingly show that Ext. B5 partnership deed is not at all genuine and actually acted upon. So much so, it leads to the conclusion that the aforesaid Mr. M.G. Gopakumar is conducting a proprietory concern in the petition schedule shop room. In other words, it is clear that the respondent has parted with exclusive possession of the petition schedule room to the said Gopakumar in violation of the stipulation in Ext, A1 rent deed under the camouflage of partnership business. Therefore, unlawful subletting is proved. The point is found in favour of the petitioners."
9. The appellate court did not analyse the evidence to find out whether partnership deed produced was only a sham or not and whether Rent Control Court was justified in finding that there was exclusive transfer of possession. The appellate court reiterated correctly the legal proposition that if the tenant continues his business by forming partnership firm, there is no subletting. But the question whether partnership was a sham only to hide the- real subletting was not considered at all.
10. Reasoning of the appellate court in reversing the judgment of the Rent Control Court is as follows:
"12. It may be that the forming of the partnership is a device formulated by the tenant to circumvent the impact of Section 11 (4)(i). Nevertheless, as long as hisacrion is within the limits of law, the court will not be justified in ignoring the existence of the partnership and in concluding that in spite of the formalion of the partnership, the appellant continues to have no interest in the alleged firm's business. For all purposes of law, by virtue of the partnership deed, the appellant is a partner with consequent legal rights and liabilities. When this is the position, there is no scope at all for granting eviction in this case under Section 11 (4)(i) of the Act. The appellant is entitled to succeed in his contention in the matter".
11. We are of the opinion that the appellate authority seriously erred in upsetting the findings of the Rent Control Court which is based on oral and documentary evidence adduced in this case. The Rent Control Court correctly found that the plea of partnership put forward by the respondent is only a camouflage to cover up the sub-lease. The appellate authority failed to note that the partnership deed is only a sham document not intended to be acted upon by the parties. It is very clear from the evidence that there was exclusive transfer of possession to Gopakumar and the deed of partnership was only a sham and a device to cover the real facts of subletting. The tenant and RW2 Gopakumar are strangers and consideration can be presumed in this case and RW1 who advertised for sale of the building will not part with possession except for consideration. When tenant parts with exclusive possession of business premises to stranger other than close blood relation, in the absence of contrary evidence, passing of consideration can be presumed. Hence, we agree with the finding of the Rent Control Court and set aside the findings in the appeal by the appellate authority and order eviction under Section 11(4)(i) of the Act.
12. We may now come to the ground under Section 11(4)(iii) of the Act. Petitioner's definite case is that the tenant has subsequently acquired possession of three other premises wherein he is conducting business under the name and style 'Sylviya', 'Supriya' and 'Fancy Shoe Mart' and the tenant can accommodate his business therein. The Rent Control Court found the contention in favour of the petitioner especially with respect to 'Fancy Shoe Mart' and 'Supriya1. With regard to 'Sylviya', the Rent Control Court was of the opinion that it is in the possession of the son of the tenant, RW3 Akbar, and no evidence was produced to prove that they are in the possession of the tenant himself. With regard to other two rooms, findings are contained in paragraphs 10 and 11 of the trial court order Since evidence is discussed, we extract below the same:
"10. Admittedly, at the three rooms Supriya, Sylviya, Fancy Shoe Mart, Supriya is comparatively bigger one. According to RW3, he is the tenant in occupation of this room. He has not produced any rent deed in substantiation of this contention. It has come out in evidence that RW1 and RW3 are conducting a partnership business therein. Ext. B2 is the copy of partnership deed produced by the respondent. While in the box, RW3 has made an attempt lo make a case that at present it is his proprietorship concern and that RW 1 his father has retired from the partnership. According to RW 1, an amount of Rs. 80,000/- had been advanced by the respondent to him for starting business in this premises on the condition that it would be returned at the time of marriage of RW 1's daughter. RW3 would depose that the amount was accordingly withdrawn by RW1 during the period 1988-89, The total investment of the partnership firm Sylviya is Rs. 85,000/- as borne out by Ext. B20 out of which Rs. 80,000/- is the investment of the respondent. Hence the implication of RW3 is that when this amount was returned to his father, the respondent, he has ceased to be a partner of the firm. The respondent has produced Ext. B 21 Day Book of the business to prove this case. The said Day Book would reveal that a sum of Rs, 92,000/- has been withdrawn by RW 1. It is clear that the drawing mentioned therein are the partners drawings which has nothing to do with the capital of the partnership firm. The clause 15 of Ext. B20 deed has stipulated the manner in which the partners are to retire from the partnership. RW3 has no case that the other partner RW1 has complied with this provision in the partnership deed. Moreover, he has not produced the ledger which admittedly contains all the details of the business transaction of Sylviya firm. RW 3 has no case that Ext. B20 was cancelled in view of the withdrawals banked upon by him. These aspects and circumstances will clearly indicate that RW3 is making a cock and bull story. His entire deposition would show mat there is an attempt to put the facts to sleep in the lullaby of his vac Minting statements in the box. No reliance can be placed on his evidence. Hence, the lion's share of the capital of the partnership firm which conducts the business in 'Sylviya' is invested by the respondent. RW3 is unaware of the material aspects of the partnership. He does not know the turnover of the business. He does not know anything about the account of profit and loss of the firm. He does not know the monthly income being derived from the business. All these will clearly show that he is not conducting the management of the business in that premises. As already mentioned there is absolutely no evidence to show that RW3 is the tenant of the premises. Admittedly, this is a large room. The burden is on the respondent to show that the business in the petition schedule building cannot be accommodated in the premises of Sylviya. That is not discharged by him.
11. According to the respondent, the business in the Fancy Shoe Mart has been closed down and that it was previously conducted by the respondent's wife Saithoon. There is no contra evidence to show that any business is being conducted in that premises. RW3 has stated that the room is being used as a godown of the business in Sylviya. Ext. A3 paper publication will also indicate that there was a move to close down the business therein. The clear case of the respondent is thai the premises of Fancy Shoe Mart was taken on rent by his wife for which also there is no evidence, It can be believed that the premises is being used for the business purposes in Sylviya. In view of the finding arrived at as regards Sylviya, it can be seen that the premises of Fancy Shoe Mart is also available for accommodating the business in the petition schedule shop room alongwith the shop room of Sylviya. As stated earlier, no special reason within the exclusive knowledge of the respondent/tenant has been established to show that these premises are not sufficient for the purpose of conducting the business in the petition schedule shop room. In view of what has been discussed above, it has to be held that the petitioners/landlords are entitled to an order for eviction under Section 11(4) (iii) of the Act 2/65."
13. With regard to 'Supriya', the appellate court found as follows:
"13. It was suggested to the appellants when examined as RW1 that the building in which the business by name 'Supriya' is conducted has been obtained based on a rent deed executed by himself. The answer was that he did not remember. Of course, he has a contention that such possession was obtained for the purpose of enabling his brother-in-law to start a business; that recently his son Akbar has taken over the business and that the appellant has nothing to do with the particular shop now. RW3 stated that he took over the business in 1976; but, Ext. B20 which is a document admitted by him will show that in 1978 he was only a minor aged 16 years. The falsity of the contention thus stands exposed. It is immaterial whether the particular shop is now possessed by the tenant himself or he has allowed his son RW3 to possess the same temporarily. Though Exts. B10, B11 and B 16show that Akbaris now managing thatbusiness, the fact remains that the appellant has tenancy right over the particular shop. As RW1 he admitted that he executed the required rent deed on behalf of his brother-in-law. It has to be presumed that the tenancy right is still with him though the rent due therefor is now being paid by his son Akbar as evident from Ext. B16 series."
But, the appellate court disallowed the case under Section 11(4)(iii) only because it was not proved by the landlord that it was not reasonably sufficient to accommodate the business of the tenant. It was observed in paragraph 14 as follows:
"14. The mere fact that the tenant has in his possession a building is not sufficient to attract the provisions of Section 1 l(4)(iii). The landlord can get a right to evict the tenant under the Section only if he is able to show further that the building so possessed is reasonably sufficient for the tenant's requirements. In the instant case, the question, therefore, is whether the space available in 'Supriya' is sufficient to shift the partnership business presently carried on in the scheduled building to the said shop. This is a matter which required evidence through a commission. Neither side has taken out a commission to prove this aspect."
14. We are of the opinion that the above reasoning is against law. When it was proved that tenant is in possession of another building, it is for the tenant to prove that it was not sufficient for his use. Since he was found to be in possession of the shop 'Supriya' and it was not proved by the tenant that it was not sufficient to accommodate the business, the Court should not have interfered in the order of eviction passed by the lower court under Section 11(4)(iii) of the Act.
15. With regard to the firm 'Sylviya', it was found by the appellate court that it was in possession of the firm in which petitioner was the partner. In paragraphs 15 and 16 and he found:
"15. The appellant has a contention that the tenancy right over the building housing 'Sylviya' vests with his son. Ext. B20 (same as Ext. A6) partnership deed of 1984 governs that business. RW1 has admitted that the telephone in his name which was previously working in the scheduled building has been shifted to and is working now in 'Sylviya'.
16. To prove that the tenant herein has tenancy right over the building where business by name'Sylviya' is conducted the landlord called for production of the rent deed concerned from the landlord of that building; but, the document produced pursuant to order passed in LA. No. 2899/91 could not be marked as the petitioner therein failed to pay up the deficient duty and penally. It stands impounded as per order dated 4.7.1991 and as such cannot be looked into for any purpose. Ext. B15 pass book and the oral evidence of RW3 show that at present rent for the building is being paid by the firm 'Sylviya' of which the appellant is a partner. The firm is not yet dissolved through any deed. In the circumstances, it cannot be said that the appellant has no interest at all in the tenancy right thereover. All the same, the landlord's contention also has no merit because the business 'Silviya' is not conducted in the appellant's individual capacity. The available evidence only shows that the firm of which the appellant is a partner holds the tenancy right. Assuch, eviction under Section 11(4)(iii)cannot be allowed on the basis of the business of 'Sylviya' also".
The appellate court disallowed the contention only because appellant was not doing business in individual capacity; but in partnership. The question to be looked into is whether tenant has got any other suitable building to conduct business and that was not considered by the appellate court. Every arguments were considered by the Rent Control Court in paragraph 10 of the order. Since we are agreeing with the above, we are not quoting the order and we are of the opinion that there was no material to reverse the judgment on this point.
16. With regard to 'Fancy Shoe Mart', it was held by the appellate court that it was in the possession of P. A. Saithoon, wife of the tenant. Merely because property tax was paid by the wife, it cannot be stated that the business is done by his wife. There was no evidence to show that the business was conducted by the wife. It is admitted in evidence that Ext. A3 advertisement for sale relates to 'Fancy Shoe Mart' also. This was advertised by the tenant. If it was not his business, he cannot advertise it for sale. No rent deed was produced to show that it was taken in the name of his wife. Even according to the tenant, it is used for storing goods of 'Sylviya' in which firm he is a partner and Sylviya is not owned by his wife and his wife is not a partner. On a consideration of the evidence, we are of the opinion that consideration of evidence by the appellate court is perverse in this regard and Rent Control Court correctly considered the matter and held in favour of the landlord. Tenant is liable to be evicted as he is in possession of this building also. In any event, even the appellate court also found that Supriya was in possession of the tenant. We have already held that when it is proved that tenant is in possession of another building in the town, it is for the tenant to prove that the above room was not sufficient. Even according to the appellate court there is no evidence regarding this. Therefore, tenant cannot contend that the above room is not sufficient to conduct his business. Petitioner is entitled to evict the tenant under Section 11(4)(iii) of the Act also.
In the above circumstances, we are of the opinion that the tenant is liable to be evicted under Section 11(4)(i) and 1 1(4)(iii) of the Act. The above order of eviction is binding on all persons claiming under him including the sub-tenant. We are also of the opinion that in spite of service of notice, tenant did not appear and contest the case, may be, because of subletting proved in this case. He may not be interested. In the circumstances of the case, we are not ordering cost. Revision petition is allowed, order of the appellate authority is set aside and judgment of the Rent Control Court is restored.