Bombay High Court
Nagji Vallabhaji And Co. vs Meghji Vijpar And Co. And Ors. on 3 September, 1986
Equivalent citations: 1987(1)BOMCR547, (1986)88BOMLR633
Author: Sharad Manohar
Bench: Sharad Manohar
JUDGMENT Sharad Manohar, J.
1. This is defendant's appeal against whom decree for possession has been passed by the City Civil Court. The plaintiffs, who are the respondents before me, had filed the suit against the defendant contending, inter alia, that the defendant was the tenant of plaintiff No. 2 on the date of the suit, that the Bombay Rent Act did not apply to the premises in question and that the defendant's tenancy had been duly terminated by the plaintiff and that, hence, the plaintiff was entitled to possession of the suit premises from the defendant.
The defendant, inter alia, contended that he was protected by the provisions of the Bombay Rent Act and hence---
(a) that no decree for eviction against him could be passed by the City Civil Court; and
(b) that he was entitled to the protection under the Rent Act even, otherwise.
This defendant's contention was negatived by the trial Court and a decree for possession was passed in favour of the plaintiff. When this Appeal, initially came before a learned Single Judge of this Court (Tulpule, J.) various pleas were raised before him. The main plea regarding the applicability of the Rent Act to the suit premises was decided by the learned Judge and he held that the Rent Act did not apply to the suit premises, with the result that the defendant was not entitled to any protection under the provisions of the Rent Act. Naturally, he also held that the question of jurisdiction was irrelevant because section 28 of the Bombay Rent Act, which ousted the jurisdiction of the City Civil Court in such a case, was itself not applicable to the premises.
However, he had to consider the question as to whether the notice of termination of the tenancy given by plaintiff No. 1 was valid and legal in the eyes of law. In this connection, the learned Judge seems to have been of the view that the notice of termination of the tenancy could be given only by the defendant lessor and since there exists a dispute in this case as to whether the plaintiff or any one of them were the defendant's lessor or not, the learned Judge framed relevant issues on that question and sent for finding on those issues from the trial Court. The issues sent down are the following :-
"1) Who were the lessors of the defendants whose monthly tenancy commenced in the year 1957 ?
2) Whether the Tenancy in this case was legally and validly determined so as to give a cause of action to the plaintiffs ?"
The trial Court has recorded a finding on these issues, holding that none of the plaintiffs were the lessors of the defendant and hence it could not be said that the defendant's tenancy stood validly terminated by notice given by plaintiff No. 1. Against this finding, objection have been filed on behalf of the plaintiff and this Appeal is now placed for final hearing before me for consideration of the various questions, including the question whether the finding of the learned Judge on the two issues is correct or not. It goes without saying that the question regarding applicability of the Rent Act is no longer res integra between the parties because the judgement of my brother Judge Shri Justice Tulpule has decided the point finally, holding that the Rent Act has no application to the suit premises.
2. Before I come to the examination of the various questions, let me set out the relevant facts, most of which are admitted facts, or, at least, are facts about which there existed hardly any dispute :-
(a) There was a Partnership Firm by name M/s. Meghji Vijpar & Co. Meghji Vijpar & Kanji Vijpar, the two brothers, were the partners of the same. Some time before 1957, the Bombay Port Trust, who is the owner of the suit premises, viz. Bay No. 4 (which means Gala No. 4) in I-Gully Compartment, situate at Rayon Grain Market, at Dana Bundar, Bombay-9 gave on lease the said Gala No. 4 to the two brothers, Meghji Vijpar & Kanji Vijpar. There is no dispute that the lease was not in the name of the Firm as such. The lease was in the name of Meghji Vijpar and Kanji Vijpar, trading in the name of Meghji Vijpar & Co. I may mention at this stage itself that the trial Court's finding to the effect that the lease was not given by the Port Trust to the firm, of which these two brothers were the partners appears to be quite an acceptable finding. At least, prima facie, it appears that although these two brothers, Meghji Vijpar and Kanji Vijpar, were having a Partnership Firm M/s. Meghji Vijpar & Co., and were the two partners of the same, the lease given by the Bombay Port Trust was not to the firm or to the brothers in their capacity as partners of the firm, nor was it taken by them on behalf of the Firm. The lease was given by the Port Trust to them as joint tenants and the fact that they were described as trading in the name of M/s. Meghji Vijpar & Co., was only the description of these two brothers. I may state this position at this stage itself because the learned Judge has given very good reasons for coming to that conclusion and, further, Mr. Meghani, appearing before me, stated that he was prepared to argue the appeal on the basis that this part of the finding is correct. In fact the entire arguments by both the sides have proceeded upon this basis, viz. that the lease given by the Port Trust to these two brothers was in their individual capacity, as joint tenants, and not to the Partnership Firm of which they were the partners.
(b) However, the fact that these two brothers also happened to be the partners of the Firm M/s. Meghji Vijpar & Co., gave rise to quite some conclusion and the questions arising in the present appeal are the direct result of the said confusion. The two brothers inducted the present defendant in the suit premises. At one stage, there did exist a question as to whether the defendant was their tenant or not. But even before the date of the suit, this question has stood resolved because the plaintiffs have filed the suit stating unequivocally that they were filing it on the basis that the defendant was their tenant. We must, therefore, proceed upon the assumption that the defendant was inducted by these two brothers in the suit premises as their tenant. Question is as to whether he was inducted by them in their individual capacity or in their capacity as the partners of the Firm.
(c) The first Rent Receipt executed in favour of the defendant in this behalf is of a tell-tale character. It is dated 29-10-1957. The receipt is executed by Meghji Vijpar for M/s. Meghji Vijpar & Co., in favour the present defendant for having received storage charges and commission of Rs. 1295.50. There is no dispute that this amount really represents rent paid by the defendant to the recipient thereof. There is no dispute that the defendant started occupying the suit premises as a tenant from the year 1957 onwards and till the date of the notice of termination of his tenancy dated 13th January, 1972 (Exh. 'G' colly) he continued to be the tenant in respect of the suit premises. I may, however, mention that the Agreement of tenancy was not for a continuous period of all these years, but there were various agreements executed by the same lessor in favour of the same lessee viz. the defendant at various times. The 1st Agreement in this behalf is dated 24-10-1957 (Exh. 1 colly) and it is signed by the defendant, Nagji Vallabhji & Co., as a lessee and by Meghji Vijpar and Co., which is a partnership firm, referred to above. The receipt dated 29-10-1957 is a subsequent document. The Rent Receipt is executed by the self-same Meghji Vijpar in his capacity as partner of M/s. Meghji Vijpar & Co., as mentioned above.
The 2nd Agreement is dated 4-11-1958. It is between the same parties. It is signed by Nagji Vallabhji & Co., as lessee and M/s. Meghji Vijpar & Co., as lessor.
In the similar fashion, we have about 13 Agreements in all, executed by the identical parties in the identical manner, except perhaps the two agreements dated 4-11-1958 & 9-11-1961 were on behalf of the lessor signature is to be found only of Meghji Vijpar. There is no indication on these two agreements that Meghji Vijpar was signing on behalf of any partnership firm as such. But the endeavour of Mr. Advani to make capital of this slight variation is really of no consequence. Firstly, the fact that he was a partner of the firm is an admitted fact. But what is more important is that all the remaining agreements do show that he had been signing those agreements not in his individual capacity, but as a partner of the firm M/s. Meghji Vijpar & Co. In fact there is a letter on record dated 7th November, 1970 addressed by the lessor to the lessee and it is signed by a partner of M/s. Meghji Vijpar & Co. Below that letter, one finds a receipt for the sum of Rs. 1360/- being received from the defendant by the lessor. That receipt is also signed by a partner of M/s. Meghji Vijpar & Co.
(d) This relationship of lessor & lessee admittedly continued till the impugned notice of termination of tenancy dated 13th January, 1972 was given by Shri J.J. Thakkar, Advocate under the instructions of M/s. Meghji Vijpar & Co. By the said notice, the defendant was called upon to quit and vacate the suit premises on the expiry of the month next after the current month of the Samvat year. By the said notice, the defendant was also called upon to pay arrears of mesne profits, Rs. 3000/-, within a week from the receipt of the notice. What needs to be specially mentioned about this notice is that it is specifically mentioned therein that M/s. Meghji Vijpar & Co., were the lessees of the Bombay Port Trust in respect of the said premises. It is further mentioned therein that there existed an agreement between M/s. Meghji Vijpar & Co., on the one and the defendant on the other, by which agreement the defendant was allowed to occupy the suit premises on certain terms and conditions. It was further stated therein that the defendant's right to use and occupy the suit premises had come to an end by efflux of time on 19th October, 1971 and that the notice of termination had been given just by way of abundant caution.
To this notice, the reply dated 14th January, 1972 was given on behalf of the defendant and the averments made therein are of vital relevance for this judgement. It was denied in the reply that the defendant was merely the user and occupier of the suit premises. It was specifically averred in the reply that the defendant was in exclusive use, enjoyment and possession of the suit premises and was a lawful sub-tenant in respect of the suit premises. But what is crucial is the specific claim and contentions of the defendant to the effect that the defendant was the sub-tenant of the firm M/s. Meghji Vijpar & Co., plaintiff No. 1 in the instant suit.
It will be, thus seen that at all the relevant times, during all those years, the defendant's own case was that he was a sub-tenant of Meghji Vijpar & Co., a partnership firm, and not a sub-tenant of the two brothers, Meghji Vijpar & Kanji Vijpar who were the joint tenants of the Port Trust. But what is equally important about the said reply is the fact that by the said reply, a cheque for Rs. 2040/- was sent by the defendant to the plaintiff firm. The cheque itself is not on record. But when asked as to whether the cheque was not given in the name of the plaintiff/firm, Mr. Advani stated that he was prepared to argue the matter on the basis that the cheque was issued by the defendant in the name of the plaintiff/firm for the said sum of Rs. 2040/- as rent for the three months (Kartik, Magh & Paush).
Upon the receipt of the said reply, the plaintiff/firm gave another notice dated 3rd February, 1972 to the defendant. By the said notice, the plaintiff/firm stated that if it was the contention of the defendant that the defendant was the plaintiff/firm's sub-tenant, then they were prepared to accept that contention and in that capacity the tenancy of the defendant was once again terminated by the plaintiff/firm without prejudice to the earlier notice, terminating the defendant's tenancy once again from and upon the expiry of the month next after the current month of the defendant's sub-tenancy.
This then is the genesis of the instant suit filed by the plaintiff against the defendant/firm for recovery of possession of the suit premises. The plaintiff's contention is that the defendant is the tenant of the plaintiff/firm that the defendant's tenancy has been duly terminated, that the provisions of the Bombay Rent Act do not apply to the suit premises and that, hence, the plaintiff is entitled to possession of the suit premises.
(e) I may mention here that initially the plaint showed M/s. Meghji Vijpar & Co., to be the sole plaintiff. It was only later on that the two partners of the said firm were brought on record. The two partners at that time were Meghji Vijpar and Ratansi Ravji. This Ratansi Ravji happened to be the partner of the firm after the retirement of Kanji Vijpar. But at the time when he was sought to be brought on record, he was dead. Hence, his legal representatives, plaintiffs Nos. 3 to 8, were brought on record. Thus, we find that on record there were 8 plaintiffs. Plaintiff No. 1 was the partnership firm M/s. Meghji Vijpar & Co., and plaintiff Nos. 2 to 8 were its partners or the heirs of one of the partners.
3. I need not refer to the various defences to the suit raised by the defendant, because we are concerned only with the defences which are relevant for the purpose of this judgment.
The main defence to the suit was that the suit premises were governed by the Bombay Rent Act and that, hence, the City Civil Court had no jurisdiction to entertain the suit. It was also contended naturally, that the defendant was entitled to protection of the Rent Act even otherwise. As stated at the outset, this contention was negatived by the learned trial Judge. The learned Judge, Mr. Suresh, who decided the suit, held that the Bombay Rent Act had no application to the suit premises. He further held that this was not a suit between a landlord and tenant but that the plaintiff's suit was on title against the trespasser and that hence, the question of City Civil Court's not having jurisdiction would not arise. He also held that the notice of termination of tenancy was valid. He, therefore, decreed the plaintiff's suit for possession with costs.
4. As stated above, the 1st question urged on behalf of the defendant in this appeal was as to whether the suit premises were governed by the Bombay Rent Act and whether the defendant was entitled to protection under the Bombay Rent Act or not.
By a very elaborate judgment delivered by the learned Single Judge, the question was decided against the present defendant. The learned Judge held that the provisions of section 4 of the Bombay Rent Act were unequivocal in that the application of the Rent Act is to be considered with reference to the premises, not with reference to the personality of the lessor and the lessee. In the instant case, the Port Trust, which is admittedly a Local Authority within the meaning of section 4 of the Rent Act was the owner of the suit premises and the premises owned by such Local Authority were explicitly exempted from the provisions of the Rent Act by said section 4. After examination of the various authorities on this question, the learned Judge came to a firm conclusion and held that the suit premises were not governed by the provisions of the Bombay Rent Act at all with the result that the defendant was not entitled to any of the protection afforded by the said Rent Act.
5. But since the defendant was admittedly a tenant in respect of the suit premises, the question of a decree for possession against him could not arise unless his tenancy stood validly and lawfully terminated and this question, in its turn, would depend on the question, in the instance case, whether the person giving the notice of termination was the landlord of the defendant or not. The learned Judge found that the stand taken by both the parties in this connection was inconsistent at various times. The learned Judge was also found that the Court had not framed the necessary issue for pinpointing the attention of the parties to the relevant question. He therefore, passed an order directing that two additional issues should be framed and the trial court's finding was called for on the said issues. The issues have been already set out above.
6. When the matter was opened before the learned trial Judge, no further evidence was led by either of the parties and the learned Judge was called upon to decide the question on the existing evidence itself.
I may state at this stage itself that the learned Judge was very much impressed by the evidence of the defendant to the effect that the negotiations in respect of the tenancy created in favour of the defendant were carried on by the two brothers' Meghji & Kanji Vijpar. It appears that this part of the evidence was not subjected to very serious challenge in the cross-examination. For considering the question as to who was the defendant's lessor, the learned Judge found it necessary to consider as to whether who was the Port Trust's lessee. In this connection, the learned Judge rightly relied upon the rent bill issued by the Bombay Port Trust indicating as to who were the tenants in respect of the suit premises. The document is of the conjoined nature; a bill as well as a receipt and it states as follows :
"Received from M/s. Meghji Vijpar and another (as joint tenants) trading as M/s. Meghji Vijpar & Co., a sum of Rs....."
There is no dispute that Meghji Vijpar & Kanji Vijpar were the two brothers, trading as M/s. Meghji Vijpar & Co., at that time. It is thus clear that it was not the Partnership Firm but these two brothers, Meghji Vijpar and Kanji Vijpar, who were recognised as joint tenants in respect of the suit premises by the Bombay Port Trust. This conclusion is further reinforced by the fact that they have been described as joint tenants. If this firm was recognised as the tenant, there would be no question of joint tenancy. The conclusion arrived at by the learned Judge is therefore, quite unassailable.
But the question that arises in this case is whether these two brothers were the persons who had leased the suit premises to the defendant in their individual capacity or whether they had given the lease in their capacity as the partners of the firm M/s. Meghji Vijpar & Co. As has been observed above and as will be presently pointed out briefly, the entire conduct of both the parties till the date of the suit and even thereafter leaves no room for doubt that the defendant purported to take the tenancy not from the two brothers in their individual capacity but from the firm M/s. Meghji Vijpar & Co., and the real question that falls fro consideration of the Court is the impact of the provisions of section 116 of the Evidence Act upon this factual position.
7. While stating that facts, I have observed that these two brothers had confused their own capacities. Probably, they were the partners of the same firm from the year 1957 onwards. A Caveat is put by Mr. Advani, the learned Counsel for the defendant, that the partnership firm was not in existence till the year 1963 and hence the tenancy in defendant's favour could not have been created by the partnership firm at all. I am quite sceptic about this proposition. The document evidencing the initial lease in favour of the two brothers, Meghji & Kanji, itself shows that they were trading in the name of M/s. Meghji and Kanji & Co., which cannot be anything else but a partnership. There is no evidence on record to show that there existed no such partnership firm. But on the other hand, there exists abundant evidence to show that these two brothers carried on business in the name & style of M/s. Meghji Vijpar & Co., even at the time of the initial lease, which means that they were trading as partners of the partnership firm. But really speaking, this point is somewhat academic, because even as per Mr. Advani's contention, the firm M/s. Meghji Vijpar & Co., came into existence at least from the year 1963 and at least from that year onwards all the agreement of tenancy have been executed between M/s. Meghji Vijpar & Co., on the one hand and the defendant on the other. Likewise, payments have been made by the defendant to the firm, M/s. Meghji Vijpar & Co. and the receipts have been executed by one of the partners of M/s. Meghji Vijpar & Co., as such partner. If this is the position, then it follows that at the commencement of each of the tenancies, assuming that each of the agreement constituted a separate tenancy it was the partnership firm M/s. Meghji Vijpar & Co., which was the lessor of the lessee defendant and not the two brothers Meghji Vijpar & Kanji Vijpar, in their individual capacity. It, therefore, follows that in between that partnership firm, Meghji Vijpar & Co., and the defendant, it was the firm which was the landlord of the defendant/tenant and no one else. 8. The learned Judge has devoted a large portion of his judgement to the question as to whether the firm could be the lessor. He has devoted his attention to the question as to whether the firm was the lessee of the Port Trust at all and he has rightly come to the conclusion that the firm was not the lessee of the Port Trust and on this premise he has arrived at the conclusion that if the plaintiff/firm was not a tenant of the Port Trust, the firm could not have given tenancy to the defendant.
To my mind, it is exactly here the learned Judge's slip of reasoning starts showing. What is lost sight of by the learned Judge is that even a trespasser can create a tenancy in favour of any other person and the point is that is a trespasser crates such tenancy and if a genuine person takes tenancy from such a trespasser, there comes into existence a relationship between the two of "landlord" and "tenant". The further point, which is completely lost sight of by the learned Judge is that by virtue of the provisions of section 116 of the Evidence Act, such a tenant is estopped from denying the title of his "landlord" at the commencement of the tenancy even though, empirically and objectively speaking, his landlord is none other than a rank trespasser on the land in question. Vis-a-vis the real owner of the land, the said "landlord" will have no title to the land in question. As against the real owner, the said landlord will have no defence in a suit for possession filed by him, but vis-a-vis his own tenant, section 116 gives a complete title to him. His own tenant cannot deny his title at the time of the commencement of the tenancy. Further, he can not do so during the continuance of the tenancy.
9. A question had arisen before this Court on several occasions as to whether the words "during the continuance of the tenancy" finding place in section 116 of the Evidence Act, would enable the tenant to deny his landlord's title after his tenancy was terminated by his "landlord". If he could do so, it would be open for the defendant in the present suit to contend that after his tenancy was terminated by the plaintiff/firm by its notice date 3rd February, 1972, it was perfectly open for him to question the title of the plaintiff/firm at the commencement of the tenancy. But the legal position is that the expression "during the continuance of the tenancy" has been interpreted by this Court, and now even by the Supreme Court, to mean that the tenant cannot question such title even after the formal termination of his tenancy unless and until he has surrendered possession of the premises in question to the landlord. If any authority was necessary for this proposition, it is to be found in the judgement of the Supreme Court in Sant Lal Jain v. Avtar Singh, . That was a case between the licensor and licensee. But it can not be disputed that the principle is the same whether it is a case between a lessor and a lessee or between a licensor and a licensee, because section 116 makes no distinction, in principle on this point. In this connection, the Supreme Court held as follows :
"Further, the respondent was a licensee, and he must be deemed to be always a licensee. It is not open to him, during the subsistence of the licence or in the suit for recovery of possession of the property instituted after the revocation of the licence to set up title to the property in himself or anyone else. It is his plain duty to surrender possession of the property as a licensee and seek his remedy separately in case he has acquired title to the property subsequently through some other person. He need not do so if he has acquired title to the property from the licensor or from some one else lawfully claiming under him, in which case there would be clear merger. The respondent has not surrendered possession of the property to the appellant even after the termination of the licence and the institution of the suit. The appellant is, therefore, entitled to recover possession of the property."
Having regard to this statement of law, it follows that even if it is assumed that the plaintiff/firm had no title to the suit premises on the date of the commencement of the tenancy of the defendant, still it is not open for the defendant to contend that the plaintiff/firm had no such title. Between plaintiff and the defendant, the plaintiff/firm's title to the suit premises is complete and in this view of the matter the plaintiff/firm had every right to file suit for possession against the defendant in the Court of law.
A question of somewhat similar character had arisen before a Full Bench of this Court in the case of Dr. Manohar Ramchandra Sarfare v. The Konkan Co-operative Housing Society Ltd., 63 Bom.L.R. Page 1001, at page 1007. In that case, the legal position was that the Society allotted a plot to a member, but the member was not a tenant of the Society as such under the Rules of Society, it was not open for the members to let out the flat to any one else without the Society's consent. Question arose whether if a member let out a flat to a stranger or even to a member without the consent of the Society, there could not come into existence a relationship of landlord and the tenant between the member and the stranger ? It is in this context that Chinani, C.J., who delivered the judgment of the Full Bench observed as follows :
"The next question, which arises for our determination, is about the relationship created when the tenement is given for occupation by a member of a Co-operative Housing Society to another member or a nominal member of such Society. Under regulation No. 5, a tenement cannot be given to any other member without the consent of the Society ........................In law, however, it is possible for a person, with a possessory title, to create a tenancy. Such a transaction will be binding between him and his tenant, though it may be defensible at the hands of the person with a superior title.
To my mind, this statement of law is, in reality, a paraphrase of section 116 of the Evidence Act. The section itself makes the position evidently clear viz. that a person who has taken lease from another person cannot challenge the title of his own lessor at the time of the commencement of the lease and if he has to do so, he can do it only after the lease ceases to continue and as mentioned above, the lease can be said to be ceasing to continue only when the lessee has handed over possession of the premises back to his own lessor, irrespective of the question whether the lessor, had the title to create lease in favour of the lessee or not.
10. This takes me to the examination of the arguments advanced by Mr. Advani, the learned Counsel for the defendant.
His 1st contention was that the Firm M/s. Meghji Vijpar & Co., could not be the defendant's landlord, because the Firm itself was never a tenant of the suit premises. To point out the factual basis for this argument, he invited my attention to the finding recorded by the trial Court, which, having regard to the evidence on record, unassailable according to him. The finding is that these two brothers, Meghji & Kanji, never executed any assignment of tenancy right in favour of the Firm and hence the firm never could become the tenant in respect of the suit premises.
I am a little sceptic about this finding.
It is possible to contend that the original partners of the partnership firm can be said to have made assignment of their own leasehold interest in the suit premises to the firm. This can be said to be clear from their conduct from the way in which they dealt with the suit premises as if the leasehold rights belonged to the firm. In this connection, it needs to be noted that no formal assignment as such is necessary in such cases because the individuality of the partner is not distinct from the individuality of the partnership firm as such. In the eyes of law, a partnership firm is not a distinct entity like a Joint Stock Company registered under the Companies Act. The partners of a firm do not have a different existence distinguishable as such from the individuals forming the partnership.
11. This question has fallen for the consideration of various courts, including the Supreme Court, in the context of the Income-tax Act and may mention only few authorities on this point.
(a) The leading authority on this question is the judgement of the Supreme Court in the case of Malabar Fisheries Co. v. Commissioner of Income tax, Kerala, (1979) Income-tax Reports. Vol. 120, Page 49.
The head-note of the report itself would be sufficient to bring out the statement of law laid down by that authority. It was held there that -
"A partnership firm under the Indian Partnership Act, 1932 is not a distinct legal entity apart from the partners constituting it and equally in law the firm as such has no separate rights of its own in the partnership assets and when one talks of the firm's property of the firms assets all that it meant is property or assets in which all partners have a joint or common interest. It cannot, therefore, be said that, upon dissolution, the firm's rights in the partnership assets are extinguished. It is the partners who own jointly or in common the assets of the partnership and, therefore, the consequence of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is noting but a mutual adjustment of rights between partners and there is no question of any extinguishment of the firm's rights in the partnership assets amounting to an transfer of assets involved even in the sense of any extinguishment of the firm's rights in the partnership assets when distribution takes place upon dissolution."
(b) The above Malabar Fisheries' case is the case of the partner bringing his assets into the firm at the time of the formation of the partnership. The judgement of the Supreme Court in Commissioner of Income tax, U.P. v. Bankey Lal Vaidya, relates to the exactly reverse position; that is to say it is in connection with the assets having been acquired by the individual partner from the dissolved partnership firm. Question arose as to whether when a partnership is dissolved and when some of the assets of the partnership were received by one of the partners exclusively as his share in the assets of the firm, the transaction could be said to be one of sale or transfer. The Supreme Court held that the transaction was one of only distribution of assets of the firm on dissolution. There was no sale or exchange by one of the partners of the firm in the capital assets of the firm. It was held further that it did not even amount to any kind of transfer.
(c) I may also refer to another judgement of the Supreme Court in Addanki Narayanappa v. Baskara Krishnappa, .
In that case, the members of the two Joint Hindu Families A & B had entered into the partnership business was later on dissolved. At that time, a document styles as "Karar" was executed between the two families. The document recorded the fact that the partnership had come to an end and that family "A" had given up its share in the machinery etc., and also in the business and that the said assets had been made over to the family "B" alone by way of adjustment. The document, viz. the Karar, was not registered. In subsequent suit for dissolution of partnership and account brought by the members of the family "A", it was contended that since the partnership assets included immovable property and the document recorded relinquishment by the members of the family "A" of their interest in those assets, this document was compulsorily registerable under section 17(1)(c) of the Registration Act and since it was not registered, it was not admissible in evidence to prove the dissolution of the partnership and settlement of accounts. Negativing this contention, the Supreme Court held that the interest of partners of family "A" in the partnership assets was movable property even though some of the assets of the firm were in the form of immovable property. In this view of the matter, it was held that the document evidencing the relinquishment of that interest was not compulsory registerable under said section 17.
All these authorities involve one common principle, viz. that when an individual's interest even in immovable property is brought by him in the common pool of the assets of the partnership firm of which he is a partner, he does not sell, assign, or transfer his said interest in favour of the partnership. In this connection, I may observe that an assignment is after all a sale. When it is contended by Mr. Advani that there was no Deed of Assignment by the two individuals in respect of their leasehold interest in the suit premises in favour of the partnership firm constituted by the same two individuals, what he loses sight of is that no transfer in the nature of sale or assignment takes place. The property goes from the left hand to the right hand or vice-versa, the entity of the transferor and tranferee remaining the same. No formal assignment is necessary at all in such a case, because the transaction which is not one of sale or transfer is not required to be effected by any formal document that document, does not require registration. To put the same thing in other words, one may say that is such cases, there may be a de facto assignment in common parlance, but no de jure assignment in the eyes of law.
The further point is that the factum of such de facto assignment can be inferred from the conduct of the parties and, in the instant case, the conduct, not only of Meghji & Kanji, (who were the joint tenants of the suit premises in their individual capacity and were also the partners of the firm in question), but also of the defendant in taking the sub-lease from the partnership firm and paying rent to the partnership firm, proves that the suit premises were considered by all the parties concerned as the partnership assets. In view of this position, it can be held, irrespective of the principle of estopper contained in section 116 of the Evidence Act, that the defendant's lessor was the firm itself.
One somewhat curious, aspect of the defendant's case, having some relevance with this question, may be mentioned here. Fact is that right from 14-1-1972 (when the defendant-firm gave its reply to the plaintiff's quit-notice dated 13-1-1972) till the date of filling of this suit and therefore till the defendant-firm filed its Written Statement even thereafter the defendant-firm has been emphatically vociferating that it is a sub-tenant of the plaintiff/firm. In its written statement, the defendant has whole-heatedly fallen in with this assertion of the plaintiff. But what is lost sight of is that implicit in the assertion of the defendant's "sub-tenancy" is the admission of the plaintiff/firm's "tenancy". This is just one of the indication of the fact that the plaintiff/firm's tenancy was never denied by the defendant till the hearing of this appeal before Tulpule, J.
I may, however, hasten to mention that this is just one of the circumstances belying the defendant's present contention, to be considered not all by itself but in conjunction with the other circumstances mentioned above.
12. Having regard to the authorities mentioned above, it will be clear that the Firm and the individual members of the Firm are not distinct entities with the result that a conveyance from the members to the partnership firm may not be always necessary. A partner can bring his own assets in the form of immovable properties or in the form of piece of immovable property belonging to him as his contribution to the capital of the partnership firm and if he so brings the said assets in the partnership firm, it becomes the partnership assets even in the absence of any conveyance as such. In the instant case, in particular, the position was that the property belonged exclusively to the two partners in their individual capacity and the self-same persons were the only two partners of the partnership firm. There was no third partner at the time of the commencement of the partnership. If this was so normally speaking, there should be no difficulty in holding that in the fact the partnership firm had been constituted a tenant of the suit premises even in the absence of any conveyance by the two individual, who also happened to be the partners of the partnership firm, in favour of the partnership.
13. But I am prepared to proceed upon the assumption, as is done by Mr. Meghani, that in fact the partnership firm had not been constituted tenant in respect of the suit premises. The point, however, is that the defendant has all along been regarding the firm as his own landlord. He has obtained the tenancy from the plaintiff/firm. The documents referred to above, viz. the agreements of occupation and the receipts executed by the defendant, leave no room for doubt that these two individuals, Meghji Vijpar & Kanji Vijpar, had given lease of the suit premises to the defendant in their capacity as partner of the partnership firm. I can visualise as to how this must have happened. From the very nature of things, these two individuals could not be expected to know the legal niceties of these various tricky concept of law. They were the tenants of the suits premises. They were the partners of the partnership firm and they did not find any distinguishable feature in their two capacities: their individual capacity and their capacity as partners of the firm. Fact, however, remains that they leased the suit premises to the defendant in their capacity as partner of the firm; the defendant took the lease of the suit premises from these two brother as partners of the partnership firm. It paid rent to the partnership firm. Not only this, but when the plaintiff/firm gave notive dated 13th January, 1972 to the defendant, demanding possession of the suit premises, the defendant came out with a positive and emphatic case that the defendant was a tenant of the plaintiff/firm, not of Meghji Vijpar, and Kanji Vijpar in their individual capacity.
But this conduct of the defendant died not end here. As pointed out by Mr. Meghani, even the plaintiff makes a positive averment to the effect that the defendant is the tenant of the plaintiff/firm and this averment has not only not been denied by the defendant but by necessary implication, has been accepted by the defendant. It is only at the time of this appeal that this contention was raised before my brother Judge, Tulpule, J., that not the firm but the two brothers in their individual capacity were the joint landlords of the defendant and that, hence, the notice given by the firm was not a valid notice.
Having regard to all these circumstances, to my mind, it is a contention of futility that the defendant was not a tenant of the firm. The contention must fail on both the grounds: firstly because it is not correct to say that the plaintiff/firm could not or did not become tenant in respect of the suit premises and secondly because section 116 of the Evidence Act creates a bar against the defendant from raising any such contention.
14. The next argument of Mr. Advani was that what is being set-up by the defendant against now is the plea of estoppel and, according to the learned Counsel, estoppel cannot be used against any party unless there has been a pleading about the same and evidence about the same.
In the context of normal cases, when we are dealing with general estoppel under section 115 of the Evidence Act and, particularly, when the estoppel is being set-up by the defendant, the proposition of law stated by Mr. Advani would certainly hold good. No defendant can take advantage of the defences of estoppel without pleading the same. But this is so, because the plea of estoppel is mixed plea of law and fact. It involves certain factual position. I may state here that the mere plea of estoppel will also be not enough. If the factual position giving rise to the plea of estoppel is not pleaded, the pleading would be defective in law. If, on the other hand, the factual position giving rise to estoppel is pleaded and if only the word "estoppel" is not pleaded, the Court would be entitled to connive at that much of inadequacy of pleading. This is so because facts giving rise to legal position have got to be pleaded; not the law or evidence. If the substance of the estoppel is pleaded but only the nomenclature remains up-pleaded, that mush short-coming of the pleading is at least pardonable. All the relevant facts are on record and are un-disputed. Question is only of the application of the provisions of section 116 to the set of those undisputed facts. I do not think that the Court will be justified in refusing to apply the said provisions to such set of facts.
But the further point is that, normally speaking, the pleading of estoppel is necessary when the defendant wants to plead estoppel or when the plaintiff wants to base his title on estoppel. In the instant case, the plaintiff had no occasion to plead estoppel. The conduct of the defendant throughout has been that the defendant regarded the plaintiff/firm as his landlord. In this connection, I may also point out that the reply dated 14th January, 1972 to notice dated 13th January, 1972 mentions that the defendant was sending a cheque for Rs. 2000/-. The number of the cheque is mentioned in the reply. I called upon Mr. Advani to show me as to in whose favour the cheque was drawn. Mr. Advani stated fairly enough that he was prepared to proceed under the assumption that the said cheque sent by the defendant was drawn in favour of the plaintiff/firm, not in favour of the two individuals, Meghji & Kanji Vijpar and, to my mind, this could not have been otherwise, because all the receipts executed by the plaintiff/firm in favour of the defendant go to show that the payment was made by the defendant to the plaintiff/firm.
The 2nd argument of Mr. Advani is, therefore equally unavailable for the defendant.
15. Nextly, the learned Counsel contended that there could be no estoppel against statute. With respect for the learned Counsel, I am of the opinion that no question of estoppel against statute arises in this case. There is no statutory bar against the two individuals owning leasehold rights treating the lease hold rights to be the assets of the partnership firm, of which they are themselves the partners.
16. The next argument of Mr. Advani was that Tulpule, J., has called for finding on two issue only. According to the learned Counsel, no finding on issue arising out of section 116 was called for at all. As pointed out above, the issue as to who was the lessor is inclusive of the issue relating to section 116 of the Evidence Act. Question is as; to whether the plaintiff/firm was the landlord or not and the point is that the plaintiff/firm becomes the landlord vis-a-vis the defendant/tentant, if not for any other reason, at least because the defendant had taken the lease from the plaintiff/firm and hence the provisions of section 116 of the Evidence Act directly come into operation.
17. The learned Counsel also tried to impress upon me the fact that the defendant's evidence to the effect that he had negotiations with Meghji & Kanji has goes on un-challenged. I fail to appreciate this contention. Even if the plaintiff/firm happens to be the landlord, still the negotiation would be carried on between Meghji & Kanji only, because Meghji & Kanji were themselves the partners of the firm. The defendant had no-where stated that he had negotiated with these two brothers only in their individual capacity. In fact this distinction between their individual capacity and their capacity as partners of the firm was not present in the minds of the parties at all on the date when the Written Statement was filed by the defendant in the present suit. This is the precise reason why the defendant had not denied the plaintiff's averment that the defendant was the tenant of the plaintiff/firm.
16. Nextly, the learned Counsel argued that if the defendant was to be the plaintiff/firm's tenant, he would be a sub-tenant of the Port Turst. He pointed out that the plaintiff/firm has specifically accepted the position that the defendant was a sub-tenant. This means that the plaintiff/firm was the tenant of the Port Trust, which fact is not proved at all. The long and short of this contention is that since the plaintiff/firm to accepted the defendant only to be its sub-tenant, it is not open for the plaintiff/firm to contend that only the tenancy relationship and not the relationship and not the relationship of sub-tenancy exists between the parties.
To my mind, this is nothing but a play upon words. It is the defendant's own case that he was defendant/firm's sub-tenant and when he came out with that case, the plaintiff/firm accepted that position and terminated his tenancy or sub-tenancy on that footing. This, in fact, showed that, according to the defendant himself, the plaintiff/firm was the tenant of the Port Trust. It is the defendant's own case that it was the firm's sub-tenant and the plaintiff/firm accepted the position, because they were entitled to recover possession even on that basis for the very simple reason that the Rent Act did not apply to the suit premises.
19. Mr. Advani then argued that if the plaintiff/firm was the tenant, then the defendant as its tenant would be entitled to the protection of the Rent Act.
To my mind, this contention is no more open for the defendant at this stage of the appeal. The judgment of my brother Judge Shri Tulpule, J., completely fore closes the defendant's case on this point, I do not know whether it would be open for him to argue this question before the Division Bench, if and when he files an appeal against my present judgment. If it is open for him to do so, no doubt Mr. Advani will advise his client accordingly. But the point is that in the present proceedings, the question is no longer res integra.
20. Lastly, the learned Counsel also invited my attention to the fact that the plaintiff/firm in fact did not exit in the year 1963. He contended that, hence, there could arise no question of plaintiff/firm giving tenancy to defendant.
As stated earlier, this plea appears to be having no basis in the evidence. But assuming the factual position to be so, point is that even from 1963 onwards it is the plaintiff/firm which has entered into agreements of occupation of the suit premises (which turn out to be the agreements of lease) with the defendant, not Meghj & Kanji in their individual capacity. As a matter of fact it is possible to hold that each of the agreement of lease is a distinct transaction. The last agreement is dated 7th November, 1970 (Exh. 'F'). That agreement also is between the plaintiff/firm on the one hand and the defendant on the other. It follows that the defendant could not have challenged the plaintiff's title as landlord of the suit premises late as on 7-11-1970 and he could not raise it even subsequently unless he has handed over possession back to the plaintiff/firm. The plea that the partnership firm came into existence in 1963 is, therefore, of no legal consequence.
21. But this apart, Mr. Advani invited my attention to certain subsequent events which make the defendant's defence, more or less, academic. It is the fact brought on record in this suit that after the partnership was formed by Meghji & Kanji, Kanji retired from the partnership in April 1964. But before that, one Ratansi Ravji was taken into partnership. After he was taken into partnership, Kanji retired and the Deed of Retirement is produced at Exh. 'J'. The position thus, was that from 1964 onwards Meghji & Ratansi became the partners of the firm. The tenancy agreement continued to be between the firm on the one hand and the defendant on the other. But this time, not Kanji but Ratansi was the partner of Meghji. The further peculiar and significant fact, however, is that in the year 1974 the Port Trust recognised these two partners as tenants of the suit premises, viz. Gala No. 4 as also of another Gala viz. Gala No. 5. This fact is sufficiently proved by the rent bills and receipts given by the Port Trust to these two partners vide Exh. 'II'. But the further point is that even this Ratansi retired from the partnership and Meghji continued the business of the partnership as a sole proprietor and consequently in the year 1978 the Port Trust recognised Meghji Vijpar, plaintiff No. 2, alone as the tenant of the Port Trust.I may repeat, he carried on the same business of the partnership but now as the sole proprietor. Possession is claimed both by plaintiff Nos. 1 and 2.
It is, thus, clear that even assuming that the suit on title had to be filed against the defendant by the owner in whom the title had vested in the eyes of law, the suit at the instance of plaintiff No. 2 for possession of the suit premises from the defendant is perfectly maintainable. As is well known, the Court is entitled to, nay, owes a judicial obligation to take notice of the events subsequent to the filling of the suit and is duty-bound to mould its decree according to the subsequent events. This is done by the Court with a view to avoid multiplicity of litigations. I do not propose to cite any authority for this proposition, because, to my mind, this proposition is too deeply entrenched in our corpus juris to require any support from any authority as such. It is, therefore, clear that plaintiff No. 2 who is the owner of the leasehold rights and who was one of the owners of the leasehold rights from the year 1957, according to the defendant, is entitled to maintain this suit against the defendant.
22. It was contended that though the suit may be competent, the notice was not given by Meghani and, therefore, the notice was not valid. I have already given answer to the said plea by showing that it is not open for the defendant to contend that the firm had no locus to give the notice. Moreover, admittedly plaintiff No. 2 was a partner of the plaintiff/firm and the capacity of a partner of a firm is not different from his individual capacity. May we take the way we like, the contention cannot be accepted that either the notice or the suit at the instance of plaintiff No. 2 is incompetent.
23. For the reasons mentioned, I am of the opinion that the finding recorded by the learned trial Judge cannot be accepted. To my mind, the notice dated 3rd February, 1972 was a valid notice terminating the defendant's tenancy and since the provision of the Rent Act do not apply, the plaintiff's suit has no defence and the decree for possession passed against him by the City Civil Court must stand.
The Appeal, therefore, fails and the same is hereby dismissed. However, in the circumstances of the case, thee shall be no order as to costs.