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Delhi District Court

Hazari Courts vs M/S Hitkari Brothers Of Delhi (Cycles) on 29 August, 2013

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 IN THE COURT OF SATISH KUMAR ARORA, ARC-1 (CENTRAL) TIS
                 HAZARI COURTS, DELHI.
                       E-599/09/08
M/s Supreme Properties Pvt. Ltd.
A company incorporated under the
Indian Companies Act.
Having its registered office at :
8-B, Netaji Subhash Marg, Darya Ganj, New Delhi-02.                     ...Petitioner
                                        VERSUS
M/s Hitkari Brothers of Delhi (Cycles)
Through Sh. Dhian Nath Kapoor,
14, Park Road, Karol Bagh, New Delhi-05.                      ...Respondent
                  Petition u/s 14 (1) (b) of Delhi Rent Control Act
1. Date of institution of the case       :      02.02.2008
2. Date of Judgment reserved             :      07.08.2013
3. Date of Judgment pronounced           :      29.08.2013
JUDGMENT

1. Briefly stated, the facts as narrated in the eviction petition are that petitioner is the owner/landlord and respondent is the tenant in respect of one shop with mezzanine in premises bearing no. 9-B, Netaji Subhash Marg, Darya Ganj, New Delhi, more specifically shown in red in the site plan filed therewith and hereinafter referred to as the suit property. It is stated that respondent is presently not in possession of the suit premises and had sub-let it to M/s Anil & Co. Pvt. Limited. Presently, M/s Anil & Co. Pvt. Limited is running a business of jewellery and readymade garments from the suit premises under the brand name of its unit M/s Ankur. It is further stated that respondent has filed two DR petitions no. 584/2003 & 341/2004 titled Hitkari Brothers of Delhi (Cycle) Vs. M/s Supreme Properties Pvt. Ltd. for depositing arrears of rent in favour of the petitioner for the period w.e.f. 01.05.2003 to 30.04.2005 and the said petitions were disposed of by the Ld. Senior Civil E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 1 of 28 //2// Judge, Delhi on 02.08.2005. It is on the basis of these facts that a prayer has been made for passing of an eviction order in respect of the suit premises in favour of the petitioner and against the respondent u/s 14(1)(b) of the DRC Act.

2. Written statement was filed on behalf of the respondent wherein it was stated that respondent firm is a registered partnership firm which at present is having two partners namely Sh. Dhian Nath Kapur and his wife Mrs. Anil Kapur. It was further stated that initially the tenancy was in the name of Sh. Dina Nath Kapur who was the sole proprietor of Hitkari Brothers and subsequently he inducted his two sons namely Sh. Pran Nath Kapur and Sh. Dhian Nath Kapur into the business and after his demise, the business was taken over by the said two sons as partners on the basis of the registered Will of Sh. Dina Nath Kapur executed on 15.05.1965. It was further stated that later on, one of the partners Pran Nath Kapur resigned from the partnership firm and in his place Mrs. Anil Kapur, wife of the other partner Dhian Nath Kapur, joined as a partner. It was further stated that both these partners (Sh. Dhian Nath Karpoor and his wife Mrs. Anil Kapur) are also carrying on the business as Directors of M/s Anil & Company (P) Ltd. since 1997 from the suit property. It was further stated that petitioner has no locus standi to file the present petition when the original landlord Sh. Babu Ram had permitted the Kapur family to induct any of their family members to carry on the business from the suit property when the rent of the suit premises was enhanced from Rs. 58.94/- to Rs. 95/- per month in April, 1964. The suit property had thereafter fallen in the Joint Hindu Family Partition to the share of S/Shri Madho Ram, Surinder Kumar and Govind Kant as per the information given by Sh. Babu Ram to the respondent firm on 27.05.1964. It was further stated E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 2 of 28 //3// that the premises is in the possession of Sh. Dhian Nath Kapur and Mrs. Anil Kapur who are the partners of the respondent firm as well as Directors of M/s Anil & Company (P) Limited. It was further stated that M/s Ankur Wears is also a Unit of Hitkari Bros. Of Delhi (Cycles). It was thus prayed that the present eviction petition be dismissed with costs.

3. Replication to the written statement was filed wherein the averments of the eviction petition were reiterated and reaffirmed and those made in the written statement were controverted and denied.

Evidence led by the parties

4. In order to prove its case, petitioner got examined its Director Sh. Manish Agarwal as PW-1 by way of affidavit Ex. P-1. Following documents were relied upon by the petitioner :-

(i) Ex. PW-1/1 is the copy of Certificate of Incorporation of the petitioner company.

(ii) Ex. PW-1/2 is the resolution dated 24.10.2007 of the petitioner company thereby authorizing one of its Directors Manish Aggarwal to represent its case.

(iii) Ex. PW-1/3 is the site plan.

(iv) Ex. PW-1/4 is the payment receipt regarding purchase of two suits from the suit premises under the brand name of M/s Ankur.

(v) Ex. PW-1/5 is the summons received from the Court of Senior Civil Judge, Delhi.

(vi) Ex. PW-1/D1 is the copy of the petition u/s 31 of the Punjab Relief of Indebtedness Act filed by the respondent herein against the petitioner company for deposit of rent for the period 01.05.2004 to 30.04.2005 @ Rs. 95/- per month.

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5. Respondent, on the other hand, examined one of its partner Dhian Nath Kapur as RW-1 by way of affidavit Ex. RW-1/A. Following documents were relied upon by the respondent :-

(i) Ex. DW-1/1 (three in number), is the Registrar of Firms Certified details of the partners in the respondent firm and it includes Form-A, Form-C and Form no. V.

(ii) Ex. DW-1/2 (OSR) is the copy of the partnership deed dated 30.03.1978 between S/Shri Pran Nath Kapur and Dhian Nath Kapur.

(iii) Ex. DW-1/3 (OSR) is the copy of partnership deed dated 31.03.2004 between RW-1 Dhian Nath Kapur and his wife Mrs. Anil Kapur.

(iv) Ex. DW-1/4 is the certificate issued by Assistant General Manager, State Bank of India, Ajmal Khan Road, New Delhi Branch certifying that RW-1 Dhian Nath Kapur and his wife Mrs. Anil Kapur are the Directors of M/s Anil & Co. Pvt. Ltd. since 1997. It also mentions that certificate has been issued at the request of the Directors.

(v) Ex. DW1-A/4 is the original relinquishment deed executed by Pran Nath Kapur in favour of Dhian Nath Kapur.

(vi) Ex. DW-1/5 are the two electricity bills in the name of Dina Nath Kapur with respect to the suit property.

(vii) Ex. DW-1/6 is the water bill issued by Delhi Jal Board in the name of the respondent firm with respect to the suit property.

(viii) Ex. DW-1/7 are the two telephone bills issued by MTNL in the name of the respondent firm with respect to the suit property.

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(ix) Ex. DW-1/8 are the two property tax receipts issued by MCD, one in the name of petitioner company and the other in the name of the respondent firm.

(x) Ex. DW-1/9 is the counterfoil of the rent receipt dated 27.04.1964 issued by erstwhile landlord Babu Ram in favour of respondent firm.

(xi) Ex. DW-1/10 is an intimation given by the erstwhile landlord Babu Ram to respondent firm on 27.05.1964 regarding the suit property falling into the share of his sons Madhu Ram, Surender Kumar and Govind Kant.

(xii) Ex. DW-1/11 is the receipt issued by the landlords Madhu Ram, Surender Kumar and Govind Kant on 26.08.1968 regarding receiving of a sum of Rs. 285/- towards rent from 01.04.1968 to 30.06.1968 from the respondent firm.

(xiii) Ex. DW-1/12 is the certificate issued by the Manager of Central Bank of India, Daryaganj, New Delhi Branch certifying that M/s Ankur Wears, a unit of Hitkari Brothers of Delhi (Cycles) holds a current account with the bank since 19.05.2006 with the partners Mrs. Anil Kapur and Dhian Nath Kapur.

6. Ld. Counsel for the petitioner and Ld. Counsel for the respondent were heard and the judicial record including the written submissions filed on behalf of the petitioner carefully perused and considered.

7. Ld. counsel for the petitioner argued that notwithstanding that the initial burden lies on the petitioner/landlord to establish that a party other than the tenant was in exclusive possession of the suit property on or before the filing of the eviction petition u/s 14(1)(b) of the DRC Act, in the present case the E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 5 of 28 //6// said onus stood discharged on account of the admission of the respondent in the written statement that M/s Anil & Co. Pvt. Ltd. is operating and carrying on its business from the suit property since 1997. It was further argued that regarding the conduct of business under the name and style of M/s Ankur Wears, it was also admitted by the respondent in its written statement. Ld. counsel for the petitioner further argued that respondent's witness RW-1 in his cross examination recorded on 22.12.2012 also admitted the said fact by stating that Ankur Hi-Fashion Ladies Suits, a unit of M/s Anil & Co. Pvt. Ltd. is not having any other branch except running its business from the suit property. It was then argued that once there is an admission by the respondent that instead of respondent firm operating from the suit property, some other entity is operating therefrom, a presumption of subletting can be raised as held by the Hon'ble Supreme Court in Celina Coelho Pereira (Ms) & Ors. Vs. Ulhas Mahabaleshwar Kholkar & Ors., (2010) 1 SCC 217 wherein the legal position regarding the issue of subletting was summarized.

8. Ld. counsel for the respondent, on the other hand, argued that what has been stated by the respondent in its written statement and in the testimony of RW-1 is not with respect to the admission that some other entity independent of the respondent firm is in possession of the suit property. It was further argued that what has been stated is that the two partners of the respondent firm besides continuing with the business under the respondent firm have incorporated a private limited company under the name and style of M/s Anil & Co. Pvt. Ltd. and the said company is nothing but the two partners of the respondent firm who are the sole directors of the said company. While so arguing, Ld. counsel for the petitioner referred to the documents proved and identified in the testimony of RW-1 as Ex. DW-1/4 and Ex. DW-1/12 E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 6 of 28 //7// respectively.

9. Another line of argument of the Ld. counsel for the petitioner has been that the documents as relied upon by the respondent through the testimony of RW-1 have no value in the eyes of law as the said documents which are more specifically identified as Ex. DW-1/4 and DW-1/12 respectively cannot be said to have been proved by the respondent as neither RW-1 is the executant thereof nor is a witness to the said documents. It was further argued that one of the stands taken up by the respondent was that initially the tenant under the erstwhile landlord was the proprietorship concern of Sh. Dina Nath Kapur who subsequently was assisted by his two sons Pran Nath Kapur and Dhian Nath Kapur. It was further argued that respondent further took a stand that the original tenant Sh. Dina Nath Kapur had executed a Will thereby bequeathing the tenancy rights in favour of his two sons who subsequently became the partners of the respondent firm M/s Hitkari Brothers. It was further argued that the law insofar as the testamentary disposition of the tenancy rights is concerned, the same is well settled and the tenancy rights cannot be bequeathed and if bequeathed would amount to parting with possession. While so arguing, Ld. counsel referred to the judgment of Hon'ble Supreme Court in Bhavarlal Labhchand Shah Vs. Kanaiya Lal Nathalal Intawala, AIR 1986 SC 600 wherein while dealing with the interpretation of section 5 (11)(c)(ii) and s. 15 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 observed that tenant of non residential premises continuing in occupation after contractual period is over cannot bequeath his right of occupation by Will in favour of person who was not member of his family carrying on business at the time of his death. Ld. counsel for the petitioner also referred to the judgment of Hon'ble High court of Delhi in E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 7 of 28 //8// Kenneth Solomon Vs. Dan Singh Bawa, AIR 1986 Delhi 1 wherein it was observed "that 'Will' as defined u/s 2(h) of the Indian Succession Act means the legal declaration of the intention of the testator with respect to his property which he desires to be carried into effect after his death. One characterstic of a Will as distinguished from other kinds of instruments disposing of property is its revocable nature. It is ambulatory until the death of the testator. It is dependent upon the testator's death for its vigour and effect. Till that event it is only an expression of intention to deal with the property in a particular manner. But the moment the testator dies it has the effect of vesting the property subject matter of the Will in the devisee. At that point of time it would have the same effect as a transfer of possession by sale or mortgage. The process of parting with possession thus starts on the execution of the Will but matures only on the death of the testator. The tenancy rights disposed under a Will would vest in the devisee immediately on the death of the testator. This vesting, in my judgment would amount to parting with possession within the meaning of the provisions contained in proviso (b)". Ld. counsel for the petitioner, thus, argued that once there is a specific admission by the respondent that initially the respondent was a proprietorship concern of Dina Nath Kapur and after his death as per his Will, it vested in his sons who became the partners in the respondent firm, it is a case of parting of possession of the suit property falling u/s 14(1)(b) of the DRC Act and thus the respondent is to be evicted on that ground alone. Ld. counsel for the respondent, on the other hand, argued that merely because it has been the stand of the respondent that initially respondent was a proprietorship concern of Late Sh. Dina Nath Kapur, it cannot be said that subsequently the vesting of tenancy rights in favour of his two sons through his Will is an incident of E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 8 of 28 //9// subletting u/s 14(1)(b) of DRC Act for the simple reason that the erstwhile owners/landlords have agreed to such disposition of the tenancy rights in favour of the partnership firm.

10. One of the contentions of the Ld. counsel for the respondent has been that the only witness examined by the witness in support of its case is PW-1 and he is claimed to be one of the Directors of the petitioner company. It was further argued that the said witness is not a competent witness as the proper authorization of his to appear and depose for and on behalf of the petitioner company has not been proved on record. While so arguing Ld. counsel for the respondent referred to the cross examination of PW-1 dated 04.08.2010 wherein the witness stated that he has filed only the resolution dated 24.10.2007 and not the two resolutions as mentioned in para no. 1 of his affidavit Ex. P-1. It was further argued that the minute book to prove the resolution authorizing PW-1 to depose for and on behalf of petitioner company was not brought on record and it was also admitted by PW-1 when during his cross examination he stated that he has not brought the minute book today. It was further argued that PW-1 further admitted that at the time of incorporation of petitioner's company he was not a Director and also does not remember whether there was any change in the Articles of Association or Memorandum of Association of the petitioner's company. Ld. counsel further argued that PW-1 in his further cross examination dated 04.08.2010 also admitted that he has not placed on record any document to show that he and Smt. Sushila Gupta are the Directors of the petitioner company. It was further argued that the witness also admitted of not having brought the said record with him. Ld. counsel further argued that the incompetency of the witness/PW-1 is also proved through his further cross examination dated 23.05.2011, 30.07.2011 E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 9 of 28 //10// and 15.12.2011 respectively. It was argued that PW-1 was ignorant or was having no knowledge about the status of the tenancy having been created by Sh. Babu Ram in favour of the respondent. He was also not aware whether the respondent was paying rent to Sh. Babu Ram @ Rs. 58.94/- per month which was subsequently raised to Rs. 95/- per month. Ld. counsel further argued that the witness was also altogether ignorant about the reason for the enhancement in the rate of rent which was giving permission to the respondent/tenant by the erstwhile landlord/owner to do business from the suit property in any name and style. Ld. counsel further argued that the witness was also not knowing as to at what rate the rent has been taken by the petitioner company from the respondent. Ld. counsel further argued that witness was also not knowing that one Smt. Neelam was a Director of the petitioner company. Ld. counsel for the petitioner, on the other hand, submitted that merely because the witness has no knowledge about the past/previous transaction between the respondent firm and the erstwhile landlords/owners, it cannot be said to be a ground to say that he is not a competent witness. Ld. counsel further argued that PW-1 through his testimony has proved on record the certificate of incorporation of the petitioner company as Ex. PW-1/1 and the resolution dated 24.10.2007 executed by the Directors of the petitioner company as Ex. PW-1/2. Ld. counsel argued that what more is required of the witness to establish his competency to depose for and on behalf of the petitioner company in the present matter. While so arguing, Ld. counsel for the petitioner relied upon the following citations - (1) United Bank of India Vs. Naresh Kumar & Ors., (1996) 6 SCC 660, (2) M/s Allied Motors Vs. M/s Sanderson Agencies, AIR 1992 Delhi 324 and (3) Ashok Bansal & Ors. Vs. M/s Rajendra Properties (Delhi) Pvt. Ltd.

//11// & Ors., Order dated 13.05.2013 in CS (OS) 2576/2010. Ld. counsel argued that these citations are to the effect that minor deficiencies and discrepancies in the testimony of a witness regarding his authorization and competency shall not come in the way of relying upon the otherwise coherent testimony of the witness.

11. Another contention of the Ld. counsel for the petitioner was that even if it is admitted that M/s Anil & Co. (P) Ltd. and M/s Ankur have the same two partners on board as that of the respondent firm, still there is no escape for the respondents from the provisions of section 14(1)(b) of the DRC Act. Reference was made to the judgment of Hon'ble Supreme Court in Singer India Ltd. Vs. Chander Mohan Chadha & Ors., (2004) 7 SCC 1 wherein while holding that the case of Madras Bangalore Transport Co. (West) Vs. Inder Singh, (1986) 3 SCC 62 was decided purely on facts peculiar to it and no principle of law was laid down, it was observed that "there is no ambiguity in the section 14(1)(b) of the DRC Act and it clearly says that if, without obtaining the consent in writing of the landlord the tenant has, on or after 09.06.1952 (i) sub-let, or (ii) assigned, or (iii) otherwise parted with the possession of the whole or any part of the premises, he should be liable for eviction. The applicability of the section depends upon occurrence of a factual situation, namely, sub-letting or assignment or otherwise parting with possession of the whole or any part of the premises by the tenant. Whether it is a voluntary act of the tenant or otherwise and also the reasons for doing so are wholly irrelevant and can have no bearing". While so observing, reference was made to Parasram Harnand Rao Vs. Shanti Prasad Narender Kumar Jain, AIR 1980 SC 1655 wherein it was observed that "language of section 14(1)(b) is wide enough not only to include any sublease but even an E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 11 of 28 //12// assignment or any other mode by which possession of the tenanted premises is parted with and the provision does not exclude even an involuntary sale. Reference was also made to Saraswati Industrial Syndicate Limited Vs. CIT,AIR 1991 SC 70 wherein it was held that "there can be no doubt that when two companies amalgamate and merge into one, the transferor company loses its identity as it ceases to have its business".

12. Ld. counsel for the respondent, on the other hand, argued that none of the citations as relied upon by the Ld. counsel for the petitioner are applicable to the facts in hand as in the present case not only the respondent firm M/s Hitkari Brothers is operating from the suit property through its partners, the partners of the said firm alone have incorporated a company M/s Anil & Co. Pvt. Ltd. which has no separate identity than that of the respondent firm. It was further argued that in effect both the partners are continuing the business though changed in the course of time with the change in needs and demands, and that there is neither any sub-letting or assignment or parting of possession of the whole or any part of the suit property.

13. From the rival contentions of the Ld. counsel for the parties, following issues emerge for determination :- (a) Whether the incorporation of M/s Anil & Co. (P) Ltd. by the partners of the respondent firm is an incident of subletting, assignment or parting with the possession as provided u/s 14(1)(b) of the DRC Act ; (b) whether the witness/PW-1 Manish Aggawal has failed to prove the authorization regarding his competency to depose and therefore, the case of the petitioner falls on that ground alone ; (c) whether the documents identified and proved by the respondent through the testimony of RW-1 are insufficient so as to make out any similarity between the respondent firm and the company M/s Anil & Co. Pvt. Limited.

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14. I will first take up the issue concerning the competency of PW-1 to depose for and on behalf of the petitioner company in the present matter. As is to be seen, PW-1 Manish Aggarwal in his testimony by way of affidavit Ex. P-1 deposed that he is a Director of the petitioner company and has been duly authorized vide both the resolutions dated 24.10.2007 to file the present case and to depose. The copy of the certificate of incorporation of the petitioner company was proved and identified by the witness as Ex. PW-1/1 and one of the resolution dated 24.10.2007 as Ex. PW-1/2. When the said documents were tendered in evidence of PW-1, no objection was raised by the Ld. counsel for the respondent. It was only in his cross examination that the witness was questioned regarding his competency to depose. It is not in dispute that the petitioner company is the landlord/owner of the suit property which is premises bearing no. 9-B, Netaji Subhash Marg, Daryaganj, New Delhi. Further, there is nothing brought on record or otherwise proved on behalf of the respondent so as to show or establish that PW-1 Manish Aggarwal is not a Director of the petitioner company. Thus, PW-1 even in the absence of any authorization can depose for and on behalf of the petitioner company which is a private limited company being one of its Directors. Further, merely because the witness was not knowing about the past transactions between the erstwhile landlord and the respondent, it cannot be said that he is not a competent witness as he in his cross examination stated that the petitioner company was purchased by them in the year 2000-01 and it was in 2002 that he and one Smt. Sushila Gupta were the Directors. Thus, mere non production of the minute book to prove the resolution Ex. PW-1/2 cannot be said to be a ground to disbelieve the entire testimony of the witness. The citation of United Bank of India and Naresh Kumar (supra) as E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 13 of 28 //14// relied upon by the Ld. counsel for the petitioner can be referred to wherein it was observed that it will be a travesty of justice, if the appellant is to be non suited for a technical reason which does not go to be root of the matter. The suit did not suffer from any jurisdictional infirmity and the only defect which was alleged on behalf of the respondents was one which was curable. Thus, petitioner's witness PW-1 is held to be competent to depose for and on behalf of the petitioner company.

15. One of the other issues between the parties is with respect to the assertion made by the respondent in its written statement that initially the respondent was a proprietorship concern of Late Sh. Dina Nath Kapur which was subsequently changed into a partnership firm having its partners as Pran Nath Kapur and Dhian Nath Kapur, the two sons of Late Sh. Dina Nath Kapur. The said subsequent change was also on the basis of the registered last Will of Sh. Dina Nath Kapur executed on 15.05.1965. Ld. counsel for the petitioner had argued that the bequeathing of the tenancy rights by the original tenant as claimed by the respondent itself non suits the respondent in the present eviction petition. While so arguing, Ld. counsel for the petitioner relied upon the judgment of Hon'ble Supreme Court in Bhavarlal Labhchand Shah Vs. Kanaiya Lal Nathalal Intawala (supra) and of the Hon'ble High Court of Delhi in Kenneth Solomon Vs. Dan Singh Bawa (supra). In my considered view, the contention of Ld. counsel for the petitioner holds no merits as, as per the petitioner itself, respondent/tenant has been shown as a partnership firm of one Kishan Kapur and Dhian Nath Kapur which was into the business of TSR/Taxi meters. When as per the petitioner itself respondent is a partnership firm, any assertion of the respondent in the written statement that initially the tenancy was of the proprietor Dina Nath Kapur makes no difference.

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16. The other two issues which are (a) Whether the incorporation of M/s Anil & Co. (P) Ltd. by the partners of the respondent firm is an incident of subletting, assignment or parting with the possession as provided u/s 14(1)(b) of the DRC Act and (b) whether the documents identified and proved by the respondent through the testimony of RW-1 are insufficient so as to make out any similarity between the respondent firm and the company M/s Anil & Co. Pvt. Limited, are taken up together as both these issues are concerning the aspect of subletting/assignment/parting with the possession as provided u/s 14(1)(b) of the DRC Act. But before that, reference can be made to the relevant provision which is clause (b) to proviso to sub section (1) of section 14 of the Delhi Rent Control Act, 1958. Section 14(1)(b) lays down that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on the ground that the tenant has, on or before 9th June, 1952, sublet, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord. Section 14 (1) (b) of the Act uses three expressions namely, "subletting", "assigning" and "parting with possession". As has been held by our Hon'ble High Court in Sohal Lal Vs. Sri Pal and others, 48 (1992) DLT 65 that "these three expressions deal with different concepts and apply to different circumstances. In subletting, there should exist the relationship of landlord and tenant as between the tenant and his subtenant and the instance of letting of the tenancy must be found namely the transfer of an interest in the estate, demand of rent and the right to possession against the tenant in respect of the premises sublet. In assignment the tenant has to divest himself of all the rights that he has as a tenant. The expression parting with E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 15 of 28 //16// possession undoubtedly postulates parting with legal possession. Parting with possession means giving possession to persons other than those to whom possession has been assigned by the lease and the parting with possession must have been by the tenant. The divestment or abandonment of right to possession is necessary in order to invoke the clause of parting with possession".

In M/s Bharat Sales Ltd. Vs. Life Insurance Corporation of India, AIR 1998 SC 1240, Hon'ble Supreme Court while dealing with the interpretation of section 14(1)(b) of the DRC Act observed that "Sub-tenancy or sub-letting comes into existence when the tenant gives up possession of the tenanted accommodation, wholly or in part, and puts another person in exclusive possession thereof. This arrangement comes about obviously under a mutual agreement or understanding between the tenant and the person to whom the possession is so delivered. In this process, the landlord is kept out of the scene. Rather, the scene is enacted behind the back of the landlord, concealing the overt acts and transferring possession clandestinely to a person who is an utter stranger to the landlord, in the sense that the landlord had not let out the premises to that person nor had he allowed or consented to his entering into possession over the demised property. It is the actual, physical and exclusive possession of that person, instead of the tenant, which ultimately reveals to the landlord that the tenant to whom the property was let out has put some other person into possession of that property. In such a situation, it would be difficult for the landlord to prove, by direct evidence, the contract or agreement or understanding between the tenant and the sub- tenant. It would also be difficult for the landlord to prove, by direct evidence, that the person to whom the property had been sub-let had paid monetary E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 16 of 28 //17// consideration to the tenant. Payment of rent, undoubtedly, is an essential element of lease or sub-lease. It may be paid in cash or in kind or may have been paid or promised to be paid. It may have been paid in lump sum in advance covering the period for which the premises is let out or sub-let or it may have been paid or promised to be paid periodically. Since payment of rent or monetary consideration may have been made secretly, the law does not require such payment to be proved by affirmative evidence and the court is permitted to draw its own inference upon the facts of the case proved at the trial, including the delivery of exclusive possession to infer that the premises were sub-let".

Finally, Hon'ble Supreme Court in Celina Coelho's case (supra) summarize the legal position with respect to the eviction on the grounds of sub-letting in the following :-

(i) In order to prove mischief of sub-letting as a ground for eviction under Rent Control Laws, two ingredients have to be establish, (one) parting with possession of tenancy or part of it by the tenant in favour of a third party with exclusive right of possession, and (two) that such parting with possession has been done without the consent of the landlord and in lieu of compensation or rent.

(ii) Inducting a partner or partners in the business or profession by a tenant by itself does not amount to sub-letting. However, if the purpose of such partnership is ostensible and a deed of partnership is drawn to conceal the real transaction of sub-

letting, the court may tear the veil of partnership to find out the real nature of transaction entered into by the tenant.

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(iii) The existence of deed of partnership between the tenant and alleged sub-tenant or ostensible transaction in any other form would not preclude the landlord from bringing on record material and circumstances, by adducing evidence or by means of cross examination, making out a case of sub-letting or parting with possession in tenancy premises by the tenant in favour of a third person.

(iv) If the tenant is actively associated with the partnership business and retains the control over the tenancy premises with him, may be alongwith partners, tenant may not be said to have parted with possession.

(v) Initial burden of proving sub-letting is on the landlord but once he is able to establish that a third party is in exclusive possession of the premises and that tenant has no legal possession of the tenanted premises, the onus shifts to the tenant to prove the nature of occupation of such third party and that he (tenant) continues to hold legal possession in tenancy premises.

(vi) In other words, initial burden lying on the landlord would stand discharged by adducing prima facie proof of the fact that a party other than the tenant was in exclusive possession of the premises. A presumption of sub-letting may then be raised and would amount to proof unless rebutted.

17. Applying the principles as aforesaid to the facts in hand, it is to be seen that petitioner in order to establish that a third party which as alleged by the petitioner is M/s Anil & Co. Pvt. Ltd. and M/s Ankur Wears is in exclusive possession of the suit property and that the respondent/tenant firm has no E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 18 of 28 //19// legal possession of the suit property, examined one of its Directors Manish Aggarwal as PW-1. With respect to the constitution of the respondent/tenant firm M/s Hitkari Brothers of Delhi (cycles), PW-1 in his examination in chief by way of affidavit Ex. P-1 stated in para no. (v) that at the time of letting out of the premises, respondent was partnership firm consisting of its partners namely Sh. Kishan Nath Kapur and Sh. Dhian Nath Kapur and the said firm was formed to run the business of TSR/Taxi meters. When the witness was asked in his cross examination as to whether he knows about Kishan Kapur or has any proof of the respondent partnership firm, he replied by stating that he does not know any Kishan Kapur and also does not have any proof of the partnership of the respondent firm. He further stated that he does not personally know Sh. Kishan Kapur and also has no documentary proof to show that Kishan Nath and Dhian Nath Kapur are the partners of respondent firm. While so stating, PW-1 volunteered that they were orally told by the person who transferred the company in their name. From the said testimony of PW-1, it gets established that petitioner is not even knowing the constitution of the respondent firm. Now, what is the constitution of the respondent firm is to be gathered from the evidence brought on record by the respondent side. Respondent, as already noted, in order to prove its case examined one of its partners Sh. Dhian Nath Kapur as RW-1 by way of affidavit Ex. RW-1/A. While stating in his evidence by way of affidavit that the present constitution of the respondent firm is of two partners, one himself and the other his wife Mrs. Anil Kapur, RW-1 also placed on record Ex. DW-1/1 which is the record of the respondent firm as available with the Registrar of Firms. Perusal thereof established on record that whereas initially Pran Nath Kapur and Dhian Nath Kapur were the partners of respondent firm from 20.03.1978, one the partners E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 19 of 28 //20// Pran Nath retired and in his place wife of the another partner Mrs. Anil Kapur joined the firm w.e.f 09.05.2006. Besides this, RW-1 also proved the partnership deeds, one between him and his brother Pran Nath Kapur as Ex. DW-1/2 and the other between him and his wife as Ex. DW-1/3. The relinquishment deed executed by the retiring partner Pran Nath Kapur was also brought on record by the witness and identified as Ex. DW1-A/4. Even in his cross examination RW-1 reiterated that he and his brother Pran Nath joined the business w.e.f 20.03.1978, the date when their father Dina Nath Kapur expired. He also reiterated that the partnership deed was entered between himself and his brother and was also registered. This establishes on record that the constitution of the respondent/tenant firm as on or before the date of the filing of the present eviction petition was of two partners namely RW-1 Dhian Nath Kapur and his wife Mrs. Anil Kapur. Now, the onus was upon the petitioner to establish that instead of the respondent/tenant Hitkari Brothers, some third party is in possession of the suit property and this possession is to the exclusion of the respondent/tenant. PW-1 in para no. 7 of his affidavit in evidence Ex. P-1 stated that the suit property/shop is under the control and possession of M/s Anil & Co. Pvt. Ltd., a company incorporated under the Companies Act, 1956 which is running its business under the brand name of M/s Ankur of jewellery and readymade garments. In para no. 9 of Ex. P-1, PW-1 stated that it has been wrongly alleged that partners of respondent firm and directors of M/s Anil & Co. Pvt. Ltd. are the same. The only document relied upon by PW-1 to show that M/s Anil & Co. Pvt. Ltd. is in possession of the suit property is Ex. PW-1/4 which is a payment receipt dated 25.07.2005 which is on the letter head of M/s Ankur, a unit of Anil & Co. Pvt. Ltd. operating from the suit property. It is also having a visiting card of E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 20 of 28 //21// M/s Ankur Hi-Fashion Ladies Salwar Suits with name of Mrs. A.Kapur shown therein and the address of its works shown as that of the suit property. In support of the said document, PW-1 in his cross examination dated 04.08.2010 stated that Ex. PW-1/4 was issued to his wife as she purchased two suits against the said bill. He further stated that he was also accompanying his wife when the articles were purchased vide Ex. PW-1/4. Thus, no other document was brought on record or otherwise proved on record by the petitioner so as to establish that the respondent firm is different from the company M/s Anil & Co. Pvt. Limited. Reference herein can also be made to the further cross examination of PW-1 which is dated 15.12.2011. In the said cross examination, to a specific question put to the witness as to what he knows about Anil & Co. Pvt. Ltd., PW-1 replied by stating that the Directors in the said company are different then the respondent. To an another question as to what he knows of the Directors of Anil & Co. Pvt. Ltd., PW-1 stated that he does not personally know the Directors of the said company and had never met them. When the witness was questioned with respect to the details of the partners of the respondent firm, he replied that he does not know that the sons of Dina Nath Kapur namely Pran Nath Kapur and Dhian Nath Kapur became the partners of Hitkari Brothers. He further showed his ignorance about the retirement of Pran Nath Kapur and after his retirement, wife of Dhian Nath Kapur becoming a partner of the respondent firm. However, PW-1 stated that Mrs. Anil Kapur is a Director of M/s Anil & Co. Pvt. Ltd. and does not know whether Dhian Nath Kapur is also a Director. PW-1 further stated that the possession of the suit premises is only with Mrs. Anil Kapur and not with her husband Dhian Nath Kapur. He further stated that he came to know that Anil & Co. Pvt. Ltd. is running its business from the suit E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 21 of 28 //22// premises since 1998. Thus, from the testimony of PW-1 who is the only witness examined by the petitioner to substantiate its case, it is apparent that the said witness has no knowledge as to whether the partners of the respondent firm are not the Directors of the alleged sub-tenant M/s Anil & Co. Pvt. Limited. As has been held by the Hon'ble Supreme Court in Celina Coelho's case that it is for the landlord to prove either by adducing evidence by bringing on record material and circumstances or by means of cross examination that the relationship between the tenant and the alleged sub- tenant is such that it makes out a case of sub-letting u/s 14(1)(b) of the DRC Act. As already noted, neither any document nor any material was brought in evidence by the petitioner company so as to establish that M/s Anil & Co. Pvt. Ltd. or its unit M/s Ankur is a sub-tenant of the respondent firm. Now, it is the cross examination of RW-1 which becomes relevant. In his cross examination dated 27.07.2012, RW-1 stated that the respondent firm is still running its business and is registered with the Income Tax and Sales Tax. With respect to the certificate Ex. DW-1/4 and DW-1/12 issued by the Manager of the concerned Banks, RW-1 denied the suggestions that they are forged and fabricated documents. He further stated and rather reiterated that M/s Anil & Co. Pvt. Ltd. has only two Directors, himself and his wife Mrs. Anil Kapur. He admitted that M/s Anil & Co. Pvt. Ltd. is running the business from the shop in question in the name of Ankur Hi-Fashion Ladies Suits. In his further cross examination dated 22.12.2012 RW-1 again reiterated that he and his wife Mrs. Anil Kapur are running the business from the shop in question and that the respondent at present is doing the business of garments in the name of Ankur and other different names. He further admitted that he and his wife besides other employees are drawing salaries from M/s Anil & Co. Pvt. Ltd. While so E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 22 of 28 //23// admitting, RW-1 stated that employees of M/s Anil & Co. Pvt. Ltd. are the same employees of the respondent firm. He denied the suggestions that M/s Anil & Co. Pvt. Ltd. in a secret way is paying rent to the respondent firm or that the constituents of M/s Anil & Co. Pvt. Ltd. are different and independent than that of the respondent. Thus, from the cross examination of RW-1 it is apparent that petitioner has failed to extract anything contrary or anything substantive to the effect that M/s Anil & Co. Pvt. Ltd. is a third party other than the tenant/respondent and is in exclusive possession of the suit property. Respondent, on the other hand, to substantiate its case relied upon two documents Ex. DW-1/4 and DW-1/12. Ex. DW-1/4 is a certificate issued by State Bank of India, Ajmal Khan Road Branch which certifies that on the request of the Directors it is informed that Sh. Dhian Nath Kapur and Mrs. Anil Kapur are the Directors of M/s Anil & Co. Pvt. Ltd. since 1997. Ex. DW-1/12 is the certificate issued by Central Bank of India, Daryaganj Branch certifying that M/s Ankur Wears, a unit of Hitkari Bros. Of Delhi (cycles), 9-B, Netaji Subhash Marg, New Delhi is having current account with the bank since 19.05.2006 with the partners Mrs. Anil Kapur w/o Dhian Nath Kapur and Dhian Nath Kapur s/o Deena Nath Kapur. Merely because, an objection was raised by the petitioner at the time of proof of the said documents and that a suggestion was given to RW-1 regarding the said two documents being forged and fabricated documents, it cannot be said that the petitioner/landlord has discharged the initial burden of proving that it is not the respondent but a third party which is in possession of the suit property. The judgment of Hon'ble Supreme Court of India in Singer India Ltd. Vs. Chander Mohan Chadha & Ors. (supra) as relied upon by the Ld. counsel for the petitioner is distinguishable to the extent that in the said case, the effect of parting of E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 23 of 28 //24// possession of the tenanted premises as a result of sanction of the scheme of amalgamation of companies was under consideration. However, it was also held therein that there is no ambiguity in section 14(1) proviso (b). The applicability thereof depends upon occurrence of a factual situation, namely, sub-letting or assignment or otherwise parting with possession of the whole or any part of the premises by the tenant. Whether it is a voluntary act of the tenant or otherwise and also the reasons for doing so are wholly irrelevant and can have no bearing. In the said case, a shop in New Delhi was let out to an American company under a registered lease deed and subsequently an eviction petition u/s 14(1)(b) of the DRC Act was preferred by the landlord claiming that the American company had without its written consent parted with the possession of the said premises in favour of another company, a Indian company. The plea taken up by the said Indian company that it was on the directions of the RBI issued to the American company and subsequent thereto on the orders of Bombay High Court that the American company was amalgamated with the Indian company was rejected by the Hon'ble Supreme Court and as already noted herein above it was held that whether it is a voluntary act of the tenant or otherwise and also the reasons for doing so are wholly irrelevant and can have no bearing. Accordingly, the eviction order was passed against the respondent/tenant on the grounds of sub-letting. In the present case, as already noted, petitioner has not been able to prove that the constituents of the respondent firm are different from that of the alleged sub-tenant M/s Anil & Co. Pvt. Limited. Instead, respondent has proved on record that the two partners of the respondent firm are also the only two Directors of the alleged sub-tenant M/s Anil & Co. Pvt. Limited. Reference herein can be made to the judgment of Hon'ble High Court of Delhi in Mrs. E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 24 of 28 //25// Prem Lata Bhatia Vs. Union of India & Ors., 128 (2006) DLT 24 wherein while making a reference to the judgment of Hon'ble Supreme Court in Singer India Limited case as aforesaid, it was held that "It is no doubt, true that a company is a distinct legal entity separate from its shareholders. However, the principle of piercing the veil of corporate personality is now a well settled principle of company law and is applicable to the present case". The facts before the Hon'ble High Court were that the petitioner Mrs. Prem Lata Bhatia was allotted in perpetuity shop no. 10 at K.G.Marg by Union of India at a monthly rent of Rs. 901/- and one of the clauses of the license deed was that the petitioner/tenant shall not permit the said premises or any part thereof being used by any other person for any purpose whatsoever without the previous consent in writing. The petitioner incorporated a company wherein she alongwith her husband was holding more than 97.93% shares in the company. Applying the principle as aforesaid to the facts before it, Hon'ble High Court observed that "In our opinion if an individual takes a premises on rent and then converts his sole proprietorship concern into a private limited company in which he has controlling interest he cannot be evicted from the premises, as the same person remains in possession though technically the company now runs the business". Reference herein can also be made to the judgment of Hon'ble High Court of Delhi in Vishwa Nath & Anr. Vs. Chaman Lal Khanna & Ors., SAO No. 128 of 1974 decided on 19.03.1975. In the said case, it was observed that "if an individual takes the premises on rent and then converts his sole proprietorship concern into a Pvt. Ltd. Company in which he has the controlling interest he cannot be evicted from the premises. On the proved facts this is the inevitable conclusion. The person who took the possession on rent remains in possession though E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 25 of 28 //26// he forms a company and ceases to be the sole proprietor. He does not cease to be in possession. He has not parted with the possession with anyone. He has changed the form of his business". Reference can also be made to the judgment of Hon'ble High Court of Delhi in Niranjan Lal Kanodia Vs. Harbans Lal , 1995 (34) DRJ wherein it was held that "the law on the question of subletting is fairly well settled. Mere user of a premises by any person or party does not amount to subletting, assigning or parting with possession so long as the tenant retains legal possession of the premises with himself. The test to be applied is :- has the tenant given up or lost the right to possess the premises? If he retains the right to possess the premises, it will not be a case of subletting" . While so holding, the court also relied upon the judgment of Hon'ble Supreme Court in Jagdish Prasad Vs. Angoori Devi, AIR 1984 SC 177 wherein it was observed "that the Act does not require the Court to assume a sub-tenancy merely from the fact of presence of an outsider". In Jagannath Vs. Chander Bhan, AIR 1988 SC 1362 wherein it was held that "it is well settled that parting with possession meant giving possession to persons other than those to whom possession had been given by the lease and the parting with possession must have been by the tenant. User by the other person is not 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 the right to possession. So long as the tenant retains the right to possession there is no parting with possession in terms of clause (b) of section 14 (1) of the Act".

In Niranjan Lal's case, the facts were that Niranjan Lal who was the E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 26 of 28 //27// sole tenant of the premises in his individual capacity was also the sole proprietor of M/s Kanodia Hosiery Mills and Kanodia Company. Further, he was also the Chairman and Director of Modern Straw Board Mills Pvt. Ltd. and with respect to M/s S.D & Company, he was a partner alongwith his wife and son. Hon'ble High Court in the said case further observed that "though in law the company has a separate entity yet Niranjan Lal Kanodia is practically the only man behind the said company. Therefore, it cannot be said that Niranjan Lal Kanodia has divested himself of the right to possession of the tenanted premises by allowing the company's presence in the premises. It was further observed that mere presence of the company cannot lead to the conclusion that there is subletting, assigning or parting with possession of the tenancy premises in its favour. The company may be carrying on its business from the premises in suit but the question remains who is the company? In reality, the company is none else then Niranjan Lal Kanodia. He is the man behind the company. The only other Director (which is there in order to meet the statutory requirement that there should be atleast two Directors in a Pvt. Ltd. Company) is his wife Smt. Shanti Devi. In these facts and applying the legal tests as laid down by the Supreme Court, can it be said that Niranjan Lal has effaced himself from the tenancy premises or a part of the tenancy premises? Further, in these facts can it be said that Niranjan Lal has divested himself of the right to possess the premises and the right to possess has vested in the company which is a third party. The answer to all these questions on the basis of the facts on record is only one and that is that none of these tests are satisfied. Niranjan Lal retains the right to possess the premises. He has not divested himself of the right to possess the premises. Mere presence of the company on the premises and E-599/09/08 M/s Supreme Properties Pvt. Ltd. Vs. M/s Hitkari Brothers Page 27 of 28 //28// the mere fact that it is functioning from the premises does not amount to subletting, assigning or parting with possession".

18. The principle of law as it emerges from the aforesaid judgments is that where the tenant retains the right to possess the tenanted premises and has not divested himself of the right to possess, mere presence of a company in the tenancy premises and the mere fact that it is functioning from the said premises does not amount to sub-letting, assigning or parting with possession. In the present case, as already noted, whereas petitioner failed to prove any distinction between the constitution of the respondent firm and the constitution of alleged sub-tenant M/s Anil & Co. Pvt. Ltd., on the other hand, respondent succeeded in reiterating its case that the partners of the respondent firm are the Directors of the alleged sub-tenant M/s Anil & Co. Pvt. Ltd. and thus the possession of the suit property remains with the partners of the respondent firm and not with any third person not associated with the tenant/respondent firm. Thus, the mere presence of M/s Anil & Co. Pvt. Ltd. and its unit M/s Ankur Wears in the suit property does not amount to and cannot be said to be an incident of sub-letting, assignment or parting with possession of the whole or part of the premises in dispute as provided u/s 14 (1) proviso (b) of the DRC Act.

19. In view of the foregoing, it is held that petitioner fails to prove its case of sub-letting of the suit property by the respondent/tenant. The present eviction petition u/s 14(1)(b) of the DRC Act is accordingly dismissed. No orders as to costs.

File be consigned to record room.

(Announced in the open court
on 29.08.13)                                                  (Satish Kumar Arora)
                                                            ARC-1/Central/THC/Delhi

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