Delhi High Court
Rai & Sons (P) Ltd. And Ors. vs Phelps & Co. (P) Ltd. on 6 February, 1989
Equivalent citations: 38(1989)DLT94
Author: D.P. Wadhwa
Bench: D.P. Wadhwa
JUDGMENT D.P. Wadhwa, J.
(1) This second appeal under S. 39 of the Delhi Rent Control Act 1958 (for short 'the Act') has been filed by the Appellants numbering three against an order of eviction made against the first Appellant which was confirmed in appeal by the Rent Control Tribunal, the ground of eviction being subletting.
(2) It was on 26.2.1969 that M/s Phelps&Co. Pvt. Ltd. (for short'the landlord company' and now respondent in this appeal) filed a petitionfor eviction against five respondents of the allegation that M/s Rai & SonsPvt. Ltd. (for short 'the tenant company') was the tenant in respect of certain portion of the ground floor and the first floor of Phelps Building in Connaught Place. New Delhi, owned by the landlord company and that the tenant company sublet various portions of the tenant premises to respondentsNos. 2 to 5 without the consent in writing of the landlord company. Out of the respondents Nos. 2 to 5, alleged to be the sub-tenants, only respondents Nos. 2 and 3 namely, M/s Associated Artists and M/s Saha and RaiTravels Private Ltd., have joined the tenant company in filing the appeal In this court. The landlord company alleged that the premises were let out to the tenant company as from 1.11.1955 at a monthly rent of Rs. 1.940.00. the tenant company was also to pay Rs. 10.00 per month as water charges while electricity charges were to be paid by it separately. It was stated that there was no written lease deed executed by the tenant company in favor of the landlord company. It was then alleged that this subletting or assigning or otherwise parting with possession of the premises by the tenant company was without obtaining the consent in writing of the landlord company and that the landlord company had come to know of the fact of subletting about year ago. A notice of eviction dated 11.1.1969 was also stated to have been served on the tenant company denied that there was any relationship of landlord and tenant between the parties. It was stated that the premises let out to Rai Ranjit Rai ('Rai' for short) who, in fact, was the tenant of the landlord company and further that the premises were occupied by only those concerns with which Rai was associated. The date of tenancy was notdisputed, but it was stated that the premises were lei out to Rai and that this arrangement had been confirmed by means of letters exchanged between the parties. It was contended that it was expressly agreed between the parties that Rai would have the right to use the premises for all such offices and concerns with which he was associated and that the legal possession had always been with Rai. A plea of estoppel was also raised on the ground that the landlord company was aware that the premises were being used by all the five respondents to the eviction petition. Raiwas stated to be associated with all the five respondents It is not necessary to refer to the written statements of other respondents to the eviction petition except to note that they also in effect supported the stand of the tenant company. Plea of acquiescence was also raised. Then the landlord company filed replication: It asserted the existence of the relationship of landlord and tenant between it and the tenant company. Reference was made to the notice dated 1 1 1.1969 served by the landlord company on the tenant company in which there was demand on rent and termination oftenancy, to contend that after the receipt of this notice the tenant company did send the rent to the landlord company. It was also stated that the tenant company had been paying rent for the last about 14 years and receipts were also being issued in its name by the landlord company. Itwas stated that during all this period it was only the tenant company which was recognised and accepted as tenant and that the tenant company could not deny its tenancy.
(3) Evidence in the case comprised both documentary as well as oral.In support of its case, the landlord company examined three witnesses,namely, K.S. Malik, Director (AW 1), Hari Chand Gupta, Accountant(AW 2), and Ujjal Singb, Governing Director (AW 3). The tenant company examined only one witness, namely, Hari Deva, its Secretary. Documentary evidence brought on record is quite large.
(4) Both the Additional Rent Controller and the Rent Control Tribunal their respective orders dated 21.1.1975 and 14.12,1978 upheld the claim of the landlord company that there was a relationship of landlord and tenant between it and the tenant company. In coming to this conclusion both he courts raised a presumption against the tenant company for non-production of the relevant record of the tenant company and non-appearance of Raias a witness. The courts disbelieved (be plea of the tenant company that rent was being paid by it on behalf of Rai or under his instructions. They were of the view that if record of the tenant company had been produced that would have shown if the tenant company was the tenant of the landlord company and, if so, from which date. Relationship of landlord and tenant was held to exist since 1.11.1955. The main plea raised by the tenant company was that it was not the tenant in the premises and that it was Rai who was the tenant. It was stated before the Rent Control Tribunal by the tenant company, as would appear from the order, that if the finding of theAddl. Rent Controller that the tenant company was, in fact, the tenant wascorrect, then the ground of eviction was well made out and the order of eviction had to be affirmed. The only question that was, therefore, before the Tribunal was if there existed the relationship of landlord and tenant between the landlord company and the tenant company. That would appear to be the question before me as well.
(5) The landlord company has brought on record a statement of rent account (Ex. Aw 2/1) showing as from 4.9.1957 it is the tenant company which has throughout been paying rent. Bills towards rent due were raised in the name of the tenant company. Rent was received from the tenant company and rent receipt were also issued in the name of the tenant company. This continuous conduct between the parties would perhaps show the relationship of land lord and tenant. There are numerous letters exchange between the 'parties' ( by which I mean the landlord company, the tenant company and Rai), the tenor of which would show that parties accepted the tenant company as the tenant in the premises. But, then the matter is not as simple as that. There are many questions that arise though it was contended by Mr. Arun Mohan on behalf of the landlord company that irrespective of the fact as to wh(r)in and in whose name the tenancy originated in thebeginning, the court had only to see if the relationship of landlord and tenant existed between the landlord company and the tenant company as on the date of filing of the eviction petition. It could not be disputed that originally negotiations for letting out the premises started between the landlord company and Rai. The contention by the tenant company is that Rai acted in his own individual capacity while the landlord company contends to the contrary. It says that Rai negotiated on behalf of the tenant company. A look at the state of affairs as it existed at the time of negotiations would be necessary to appreciate the rival contentions. Mark'A' (now an Exhibit) is the first document on the subject. It .is dated15.4.1955. It is an agreement to lease in respect of the first floor potion of the premises measuring about 2600 sq. ft. and is between the landlord company and Rai. It is in the form of a letter addressed by Rai to the landlord company setting out the terms of the lease, which have been accepted by the landlord company, as the endorsement at the end of this letter would show. At that time, the building in which the premises are situate was under construction. Thus, two parties ie , the landlord company and Rai, agreed that the premises on the first floor would be let out at the rate of Rs. 40.00 per hundred sq. ft. for a period of five years and that twoyears' rent would be paid in advance and thereafter rent would be paid inadvance every month. Rs 12,000.00 were to be paid on the date of signing of this agreement; Rs 6,000.00attbeendof May 1955 and the balance ofRs. 6.000.00 on occupation. It was stipulated that the above amount would be refundable in case possession of the premises could not be delivered by1.7.1955 or within a reasonable time of that date. Finally, a lease deed was to be executed and registered and registration charges were to be paidby the tenant. This letter is signed by Rai, but uses the expressions 'us,'we' and 'our' at various places. This led to an argument that Rai was not writing this letter in his individuals capacity but was acting on behalf of the tenant company. Para 6 of this letter is significant and is as under :- "YOU will permit the undersigned to have offices of all companies with which he is associated".
The amount of Rs. 24,000.00 as mentioned in this letter was paid by Rai and receipts were issued in his name by the landlord company. It will be seen that the amount of Rs. 24,000.00 approximates the rent of two years at the rate of Rs. 1060.00 per month. Ex. R-20 is the letter dated 1.11.1955 written by Rai to the landlord company sending therewith a cheque for the amount of Rs. 6.000.00 which had been agreed to be payable to the landlord company at the time of occupation of the premises in terms of letter dated 16.4.1955(mark 'A'). Then, there is letter Ex. R-21 which is also dated 1.11.1955written by Rai to the landlord company. In this Rai has referred to discussions with the landlord company which, he said, he was having for the past five or six months pertaining to the renting out by him of showroom on the ground floor of the building in question. This letter also sets out the terms of the arrangement. Rent was to be paid at the rate of Rs. 900.00per month. An amount of Rs. 16.000.00 was also agreed to be paid by Rai which was to carry no interest and was to be adjusted against the rent payable subsequently. Thereafter, rent was to be paid every month in advance. With this letter a cheque for Rs 15,000.00was seat. It was also mentioned that prosecution of the show-room (ground floor) had been taken by Rai as an 1.II.1975 Para 7 of this letter is again relevant and is asunder:- "IT is agreed that you will permit me to have offices of all companies with which I am associated."
This letter was duly received by the landlord company. As mentioned In this letter, the landlord company sent to Rai a receipt for having received the amount of Rs. 15,000.00 by its letter dated 1.12.1955 (Ex. R-6) Receipt forRs. 6,000.00 was also similarly sent (Ex. Rs.-7).
(6) Then comes letter dated 25th/ 28/02/1956 written by the landlord company to Rai enclosing therewith a draft of the lease deed in respect of the premises taken on rent by Rai. This letter mentioned that stamp paper be purchased and after getting the lease typed on that, the same be sent to the landlord company for further action. Draft lease deed is quite like a proforma of a lease deed lifted from any text book on conveyancing. Only the name of the landlord company as Lesser, the building in which the premises are situate and the area thereof, monthly rate of rent and date of commencement of the lease are mentioned. The draft lease is silent as to the name of the lessee, agreement regarding payment of advance rent and how it is to be adjusted, period of the lease and the schedule regarding description of the premises and the payment of monthly rent after adjustment of the advance rent. The Tribunal has held that the parties did sot clearly agree in the beginning as to in whose name the tenancy was to be created and that it appeared that Rai was given a full choice to have the tenancy cither in his own name or in the name of the tenant company. He also observed that when the question of making clear the name of the tenant arose with the landlord sending the draft lease deed, Rai did not think it proper to execute any lease deed showing himself to be the tenant. On9.10.1957 (Ex. R-14), the landlord company wrote alerter to Rai sending there with two receipts for having received the amounts of Rs. 2500.00 andRs. 3120.00 which amounts were stated to have been sent by Rai by means of cheques toward rent for the period from 1.7.1957 to 30.9.1957. Then,this letter records as under : "WITH reference to your enquiry regarding the light load, we are writing to say that we were informed by the Delhi State Electricity Control Board that a lighting load of 0. 5 Kw bad been sanctioned in the name of A. Rdi & Sons Private Ltd. and another lighting load also of 0. 5 Kw had been sanctioned in the name of Saha& Rai Private Ltd., vide their letter No. F. 14 (ll-A)/56-E.B. dated 27/07/1956.The two receipts mentioned in the letter have not been produced. It was contended that the two receipts were issued in the name of the tenant company. Statement Ex. AW2/1 would also show that the two cheques towards rent were of the tenant company. Exs. AW3/1 and AW3/2 are two letters dated 18.9.1956 and 22.10.1956 written by the tenant company seeking information from the landlord company as to when possession of the premises was taken over by the tenant company. After 1.12.1955 there is no letter written by Rai to the landlord company though the landlord company has been writing most of its letters to Rai and the tenant company has been replying to these letters. There is one set of correspondence of the years 1961exchanged between the landlord company and the tenant company. By letter dated 12.4.1961 (Ex.A-14), the landlord company wrote to the tenant company that certain portion of the premises had been sublet to M/s, Saha& Rai Travels (Private) Ltd. and M/s Associated Artists. It was pointed out that subletting was not permitted without the consent of the landlord.The tenant company was asked to get the premises vacated from the subtenants. The tenant company replied by letter dated 18.4.1961 (Ex. A-9) and the letter is signed by one Ranbir Singh on behalf of the Secretary of the tenant company. It was mentioned that premises had been occupied by M/s.Saha & Rai Travels Private Ltd. and M/s Associated Artists within the framework of the tenancy entered into with the landlord company and that the occupation of the associates was within the knowledge and with the consent of the landlord company. The letter records that it was the tenant company which was the sole tenant of whole of the premises. The response to this letter by the landlord company is its letter dated 5.5.1961 (Ex. A-15).It was denied that M/s Saha & Rai Travels Private Ltd. and M/s Associated Artists were sub-tenants to the knowledge of the landlord company. Then this letter records as under :''We had asked you to be good enough to let us know the amount of rent that you are receiving from the above parties as we have to give this information to the New Delhi Municipal Committee in connection with our house tax assessment. Please be good enough to sind us the particulars asked for per return."
This correspondence ended at that.
(7) If it is held that it was Rai who was the tenant, then the other argument that there was concurrent and permissive user of the premises by the alleged sub-tenants would become unnecessary as in that case the petition itself would not have been maintainable. If, however, the relationship of landlord and tenant between the landlord company and the tenant company is established, all these arguments would have to be considered.But, then, as noted above, before the Tribunal it was conceded by the advocate for the tenant company that if the finding of Additional Controller was to be affirmed that in fact it was the tenant company which was the tenant in the premises then the ground of eviction was well made out and eviction order bad then to be affirmed. Mr. Verma said that this concession was not correctly given. However, Mr. Arum Mohan point out that the statement was made as the tenant company knew that there was subletting as alleged by the landlord company. He said the concession given could not be withdrawn and in that connection be referred to a decision of the Supreme Court in Bank of Bihar v. Mohabir Lal & Ors. which laid the following proposition : "WHERE a statement appears in the judgment of a court thata particular thing happened or did not happen before it, it ought not ordinarily to be permitted to be challenged by a party unless of course both-the parties to the litigation agree that the statement it wrong, or the court itself admits that the statement iserroneous."
I do not think Mr. Arun Mohan is quite correct in this submission. It is not the case of the tenant company that no such statement was made. A statement which is made under some misconception or even misapprehension can certainly be allowed to be withdrawn if it can be shown that it was contrary to the record and is not supported by facts and the law applicablethereto. This is the case here. It has not been shown to me that a statement made or concession given in any proceedings can never be allowed to bewithdrawn. It is not that on the basis of the concession given by the tenant company before the Tribunal, the landlord company has changed its position to its disadvantage in any way.
(8) Arguments have been addressed in detail but I think it appropriate only to decide if relationship of landlord and tenant exists between the landlord company and the tenant company.
(9) At this stage, I propose to deal with two questions, one relating to the effect of documents Ex Mark A and Ex. R-21 not having been registered and, second, if the petition for eviction was barred by limitation.Mr. Arun Mohan said that documents Ex. Mark A and Ex. R-21 were inadmissible in evidence as these were not registered as required underSec. 17 of the Registration Act 1908 (for short 'the Registration Act')and also under Sec. 107 of the Transfer or Property Act 1882 (for short 'the,T.P. Act'). Under Sec. 2(7) of the Registration Act, lease' includes acounterpart, kabuliyat, , undertaking to cultivate or occupy, and an agreement to lease Sec. 4 of the T.P. Act states that the provisions contained inSec. 107, r.P. Act shall be read as supplemental to the Registration Act.Sec. 105 of the T.P. Act defines lease. Under Sec. 107 thereof, a lease of immovable property for any term exceeding one year can be made only by a registered instrument, and where such a lease is made by a registered instrument such instrument or where there are more instruments than one, each such instrument shall be executed by both the Lesser and the lessee In MohanLal v. Gada Singh (AIR 1943 Lahore 127 (FB) ), it was observed that underSec. 107 of the T.P. Act, a lease could only be created in the manner stated in that section and a document executed by a lessee alone bad not been specified in that section as one of the modes by which a lease could becreated. In Trivenibai v. Smt Lilabai (AIR 1959 Sc 62), it was held that the expression "an agreement to lease" under Sec. 2(7) of the Registration Act,covered only such agreements as created a present demise. The Supreme Court also observed that a document executed by a layman without legal assistance must be liberally construed without recourse to technical considerations. The document Ex. Mark A though an agreement to lease does not amount to present demise in respect of the immovable property covered by it. It is an executory agreement. Various things have to be done by the lesser before the lease could be granted Building is yet to be completed and there is no certain date on which possession would be handed over by the lesser, i.e. the landlord company. It is merely an agreement to grant a lease in future and it does not require registration : see also Tolaram v.State of Bombay .
(10) As regards Ex. R-21 it was at first staled by Mr. Arun Mohan that this document was neither alease nor an agreement to lease. It washowever: subsequently argued by him that if it was an agreement to lease or even a lease then it was inadmissible in evidence, it being not properly stamped as required under the Indian Stamp Act 1899, and also it being not registered as required under the Registration Act. It could not be an agreement to lease as by the time it was written, possession of the immovable property covered by it had already been taken by Rai, the author of the document which is in the form of a letter, is also not a lease under Sec. 107 of the T.P. Act as per as the submission of Mr. Arun Mohan himself the terms had not been agreed to by the landlord company and signature on behalf of the landlord company on this document was merely in token of having received the same. This document Ex. R-21 would, therefore, in anycase, be relevant for the purpose of para 7 which has been reproduced elsewhere in this judgment.
(11) To me, however, it appears that the controversy as to whether documents Ex. Mark A and Ex. R-21 would require registration is irrelevant.The controversy has been raised by the landlord company so that the court does not look into para 6 of Ex. Mark A and para 7 of Ex. R-21. If these documents require registration then under Sec. 49 of the Registration Act these would not affect the immovable property comprised therein or be received as evidence of any transaction affecting such property though the same could be used as evidence of any collateral transaction not required to be effected by a registered instrument. Reliance was placed on a decision of this court in Engineering Projects (India) Ltd. v. S.K. Malhotra and another (1981 (1) R.C.R. 338) to contend that relevant paras of Ex. Mark A and Ex. R-21 could not be looked into. The lease deed in that case required registration and since it was not registered, it was held that under Sec. 49 of the Registration Act it could not be look into, and so it was held that the clause relating to subletting and parting with possession in the lease deed could not have been proved on recored. This judgment may appear to help Mr. Arun Mohan in his argument, but it also appears to me that the effect of the proviso to Sec. 49 of Registration Act was not referred to in this judgment. Under this proviso, there is no bar to leading of evidence of any collateral transaction not required to be effected by a registeredinstrument. Under proviso (b) to sub-see, (1) of Sec. 14 of the Act, a enant cannot sublet, assign or otherwise part with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord. This provision has overriding effect. A Rent Controller is only to see if there is a consent in writing of the landlord obtained by the tenant and there is no bar that when such a consent in writing is in a document which is compulsorily registrable and is no registered it cannot be lookedinto.
(12) Two earlier decisions of this court on the question of admissibility of an unregistered document were not referred to in the Engineering Projects (India) Ltd.' s case. In Mis Shalimar Tar Products (1935) Ltd. v.H.C-Sharma&Ors. (S.A.0. No. 294/72, decided on 21.9.1973), A learned single Judge (B.C. Misra, J.), took the view that both the landlord and the tenant could show from the unregistered deed that the tenant had obtained written consent of the landlord to sublet the premises. In this case,thought the document required registration and was attracting the provisions of Sec. 49 of the Registration Act, it was held to be admissible in evidence to show consent. In Pravin S Shah v. Govind K. Sharma etc.(1974 R.L.R, 128), another learned single Judge (T.V.R.Tatachari,J.,ashe then was) was of the view that if consent to sublet was given in an unregistered lease deed requiring registration, the clause about the consent was not inadmissible in evidence if it could be shown that it was a writing simplicities and not a term of the lease. The court observed that a term giving permission to the tenant to sublet was by itself not an essential ingredient of a lease as defined in Sec. 105 of the T.P. Act and.it had, therefore, to be presumed that it was a separable and independent term even when incorporated in the agreement of tenancy and, if at all, it was for the landlord to show that the term was an inseparable one. Thus whatever the view on the question if Ex. Mark A and Ex. R-21 required registration, paras 6and 7 in this case can be looked into though I have held that these documents did not require registration.
(13) It was contended by Mr. Verma that the petition for eviction was barred by limitation and also on account of laches and acquiescence.Provisions of proviso (b) to sub-s.(l) of S. 14 of the Act are to be read withS, 16 thereof. In the present case, subletting is alleged after the commencement of the Act. sub-s. (3) of S. 16 provides that in such a case, no tenantshall, without the previous consent in writing of the landlord, sublet the whole or any part of the premises held by him as a tenant. Sub-s. (2) of this section provides that no premises which have been sublet either in whole or in part on or after the 9th day of June 1952, without obtaining the consent in writing of the landlord, shall be deemed to have been lawfullysublet. Proviso to sub-s (1) of S. 14 provides that the Controller may, on an application made to him by the landlord, make an order for the recovery of possession of ibe premises on the grounds specified therein. As notedabove, in the present case, we as concerned with ground (b). The question that arises for consideration is if an application (petition) for eviction on the ground given in clause (b) could be filed at any time or within the period prescribed under the law relating to limitation under the Limitation Act 1963. Reference may be made to clause (b) of the proviso which contains another ground for seeking eviction of the tenant This clause becomes applicable where the tenant has, whether before or after the commencement of the Act, built, acquired vacant possession of, or been allotted, a residence.The Supreme Court had occasion to consider the question of limitation IN a case where an application for eviction has been filed on the ground contained in clause (b). This was in Ganpat Ram Sharma & Ors. v. Gayatri Devi . The court observed that the landlord must be quicken taking his action after the accrual of the cause of action, and that on the facts of the case article 66 of the Limitation Act, which prescribed a period of 12 years and not article 1 13 thereof, would apply because determination of the lease by notice under Sec. 106 of the T.P. Act was no longer necessary and that time would begin to run from the date of the knowledge of thefact that "the tenant had.........built acquired vacant possession of, or beenallotted, a residence" (see paras 21,22, 23 and 24 of the judgment). This judgment was delivered on 17.7.1987. Earlier on 6.5.1987, the Supreme Court delivered judgment in Smt Shakuntala S. Tiwari v. Hem Chand M.Singhania in a case which had been filed under the Bombay Rents, Hotel and Lodging Houses Rent Control Act 1947. This Act contemplates filing of a suit. Sec. 13 of that Act provided that a landlord could sue for eviction provided be established any one of the circumstances set out in that section. The grounds on which the landlord In that case filed a suit for possession against the tenant were that the tenant had (1) made alterations of permanent nature in respect of the demisedpremises; (2) committed acts of waste and damage; and (3) changed the user of the premises. The Supreme Court held that article 67 of the Limitation Act would be applicable which provided for a period of 12 years or,in any case, it was article 66 which again provided for a period of 12 years,the cause of action arising under 67 from the date when the tenancy was determined and under article 66 when the forfeiture was incurred or the condition was broken. Earlier to filing of the suit, the landlord had given notice to quit to the tenant. The court held that article 113, which dealt with the period of limitation for suits for which no period of limitation was provided elsewhere in the Schedule to the Limitation Act and provided the period of limitation as three years from the date when the right to sueaccrued, would not be applicable. There is, however, a vital difference between the Bombay Act and the Delhi Rent Control Act. While the Bombay Act contemplates filing of suit, under the Delhi Act an application for eviction in the form prescribed is to be filed. In such a cash, the period of limitation would be three years from the time when the right to apply accrues as provided under article 137 of the Limitation Act, which is applicable to applications for which no period of limitation is provided elsewhere in the Schedule. But, then in the Kerala State Electricity Board, Trivandurmv. T.P. Kunhaliumma , the Supreme Court held that article 137 of the Limitation Act would apply to any petition or application filed under any Act to a civil court. In this case, a petition had been filed under Sees. 10 and 16(5) of the Indian Telegraph Act 188 S read withSec. 51 of the Indian Electricity Act 1910 claiming compensation against the Kerala State Electricity Board. The petition filed before the DistrictJudge. An argument was raised that petition was barred by time under article 137 of the Limitation Act. The court held that the District Judge under the Indian Telegraph Act. acted as a civil court and further that the words "any other application" appearing under article137 would be petition or any application under any Act but that had to be an application to a court for the reason that Sees. 4 and 5 of the Limitation Act spoke of expiry of prescribed period when court was closed and extension of prescribed period if applicant satisfied the court that he had sufficient cause for not making he application during suchperiod. 'Application' under Sec. 2(b) of the Limitation Act includes a petition. This judgment, therefore, clearly lays down that article 137 of the Limitation Act would not apply to an application or petition filed before the Rent Controller under the Delhi Rent Control Act and for that matter Limitation Act would be inapplicable to proceedings under the Act. This judgment is by a 3-Judge Bench of the Supreme Court. It would appear,therefore, that the view taken therein has not been followed in Ganpat Ram Sharmas case (supra) which has been rendered by a 2-Judge Bench of the Supreme Court. Rent Controller is not a civil court (e.g. see Sec 50 of the Act which bars jurisdiction of civil courts). If I apply the law as laid by the Supreme Court in the Kerala Stale Electricity Board's case (spura)it may have to be held that there is no period of limitation prescribed for a petition for eviction on the ground prescribed in clause (b) of proviso to sub-section (1) of Sec. 14 of the Act In the present case. however, the issue of limitation is not a pure question of law. In the petition it was said that it was only a year before 'that the subletting came to the knowledge of the landlord 'company. Before me, however, it ws stated that it was in April 1961 that the landlord company came to know of the subletting.Parties had no opportunity to lead evidence on the question of limitation and I, therefore, do not think that I should allow this question to be raised for the first time in this second appeal.
(14) Mr Verma contended the tenancy need not be created by a written instrument only and that it could be oral as well He said basically four things were required to show the existence of tenancy and these being(1) the tenant, (2) the premises, (3) the rate of rent, and (4) possession of the premises by the tenant. He said all these for conditions were satisfied in the case of Rai. Admittedly, he said, negotiations to take the premises on rent were made by Rai. It was he who took possession of the premises on1.11.1955 and had paid the advance rent and also the security from his personal account. Receipts were issued in his name. The premises were taken on rent by Rai and could be used for the companies with which he was associated. In spite of there being two separate documents Ex. Mark A and Ex R-21, the parties considered that there was one tenancy. Mr.Verma referred fo Sec. 109 of the Evidence Act to contend that once it was shown that there was relationship of landlord and tenant between Rai andthe landlord company, it was for the landlord company to show that there was no such relationship or that if there was any such relationship it ceased to exist. In Support of this plea, he referred to a decision of the Supreme Court in Harish Chanter & Ors Ghisa Ram & Am . In this case the court, with reference to Sec. 109 of the Evidence Act, observed that when two persons had been shown to stand to each other in the relationship of landlord and tenant, the burden of proving that such relationship had ceased, was no the party who so asserted. In this case, the plaintiff, IN a suit for pre-emption, had contended that be was a tenant of the land. His name was recorded in the jamabandi as a tenant and under Sec. 44 of The Punjab Land Revenue Act 1887 a presumption of truth attaches to the entries in Jamabandi. The Supreme Court, therefore, held that in the instant case it could legitimately be presumed both with reference to Sec. 44 of The Punjab Land Revenue Act and Sec. 109 of the Evidence Act, that the.plaintiff continued to possess the Iced as a tenant till institution of the suit.
(15) In support of his submission that it was Rai who continued to be the tenant, Mr. Verma strongly relied on a decision of this court in Vishwa Nath and another v. Chamun Lal Khanna and another which on the question of concurrent and permissive user also met the approval of the Supreme Court. It is better to given the facts of this case in detail. Vishwa Nath had take premises on rent. After two years of that, he formed a limited company. After that rent was being paidby the company by pre-receipted cheques. At the reverse of the cheque a receipt was printed. The respondent landlord filed a petition for eviction mainly on ground that Vishwa Nath had sublet, assigned and parted with possession of the premises in favor of the company. Vishwa Nath andthe company took up the plea that it was the company which was the tenant and that the company was in exclusive possession and that ViswaNath was the chief executive of the company. Both the Controller andthe tribunal held that the premises were let to Vishwa Nath and not to the company and that it was Vishwa Nath and not the company who was the tenant and that Vishwa Nath had parted with possession of the premises in favor of the company. In the appeal before the Tribunal, VishwaNath wanted to amend his written statement to take the plea that the premises were taken on rent by the firm of which he was the sole proprietor and that possession of the premises 'was exclusively with him and that his firm bad been converted into a private limited company which was carrying on the business in the premises. His application was disallowed on the grounds that the amendment introduced a new case and that the application was mala fide as the application had been filed after the arguments had been concluded before the Tribunal. Vishwa Nath and the company filed second appeal in the High Court which was allowed. This court observed that when the company was formed it started paying rent and pre-receipted cheques were issued by the company and on the reverse the landlord had signed these cheques acknowledging to have received the amount from the company. The court observed that on the record it was proved that the tenant was not the company and that it was Vishwa Nath who was the tenant. This was so noth with standing the admission-in the written statement that the company was tenant which was in possession of the premises. The court further observed that the occupation of the company was merely that of a licensee and such an occupation was not necessarily exclusive and the tenant had not completely effected himself and that he was in legal possession and had a controlling interest in the company. The court, therefore, held that if an individual took the premises on rent and then converted his sole proprietorship concern into a private limited company in which he had the controlling interest he could not be evicted from the premises. The person who took the premises on rent remain-d in possession though he formed the company and ceased to be the sole proprietor. He did not cease to be inpossession. He had not parted with possession with anyone. He had changed the form of his business It was also held that so long as the lessee retained the legal possession of whole of the premises he did not commit a breach of law against parting with possession by allowing other people to use the same. A tenant could not be said to part with possession of any part of the premises unless his agreement with the licensee wholly ousted him from the legal possession of that part. If there was anything in the nature of aright to concurrent user, there was no parting with possession.
(16) Two more decisions relied upon by Mr. Verma may also be referred to. In Mis Madras Bangalore Transport Company (West) v. InderSingh & Ors. , the Supreme Court approved the decision of this court in Vishwa Nath's case (supra). In the case before the Supreme Court, the tenant of the premises was a firm. The firm founded a limited company with its partners as Directors. The firm allowed the company to operate from the tenanted premises along with it The landlord filed an eviction petition against the firm on the ground b( subletting. The court held that there was no subletting, assignment or parting with possession of the premises by the firm to the limited company so as to attract the provisions of Sec. 14(l)(b) of the Act. The firm continued to be in occupation of the premises even after the private limited company came in. The firm never effected itself and even though the firm and the company were distinct legal entities there was no subletting or assignment. In Karam Chand Thapar& Brs. (CS) Ltd. v. Prem Kumar Khullar and Ors. ,the premises were taken on rent by the appellant company for the residence of its general manager, one Mr. Gupta. Certain correspondence between the landlord and Gupta was brought on record to show that the landlord Treated Gupta as his tenant, received rent from him and issued him receipts in His name. Gupta had, however, left the employment of the appellant company.In the eviction petition, the appellant company was asked to deposit rent under an order under Sec. 15 of the Act. The appellant company appealed and contended that Gupta was the tenant. This court observed that under the lease deed it was the appellant company which had taken the premises though for the residence of Gupta and in these circumstances if the landlord addressed letters to Gupta and issued receipts to him it could not be said that the earlier tenancy had been terminated or, in fact, the tenancy had been granted in favor of Gupta.
(17) On the question that there was a concurrent finding of both the courts below that it was the tenant company which was the tenant and that this finding could not be disturbed in second appeal, Mr. Verma submitted that the finding was not supported by evidence on record and was, in fact,arrived at by misreading of the evidence and non-consideration of materialevidence. He said the courts applied wrong principles of law. He referred toa decision of the Supreme Court in Dipak Banerjee v. Smt. Lilavati Chakroborty where the court observed that if the essential ingredients necessary for finding of a fact had not, in fact, been found by the courts below, the Supreme Court was bound to examine the question whether injustice or wrong was done. The court held that it was unable to sustain the findings of the High Court and the courts below on the basis of the pleadings and evidence as the findings bad been arrived at without the basic facts and, therefore, could not be sustained.
(18) Reference was also made to another decision of the Supreme Court in Sheodhari Rai & Ors. v. Suraj Prasad Singh & Ors. where the Supreme Court held, on the facts of that case, that payment of rent did not establish relationship of landlord and tenant and that payments might only prove permissive occupation not amounting to any right or title to possession.
(19) Mr. Arun Moban, however, said that Rai was merely acting asan agent of the tenant company. He put his plea in the following words :-"My case is that Rai came to me and he said that he was taking the premises on rent for his company and that be would let me know the name of the company. Rai happened to be the managing director of the tenant company in whose name and for whose benefit the tenancy was taken. The amount of Rs. 39,000.00 paidby Rai was adjusted in the account of the tenant company and noting the account of Rai and thereafter continuously for all these years bills for rent were raised by the landlord company in the name of the tenant company which paid the rent and receipts were given inthe name of the tenant company under the directions of Rai".It will thus be seen that it is not the case of the landlord company that premises were originally taken on rent by Rai and that he either abandoned the tenancy or surrendered the same even impliedly in favor of the tenant company.
(20) In his turn, Mr. Arun Mohan strongly relied on a decision of this court in Devi Dayal Metal Industries (P) Ltd. v. Girnari Devi . This decision I must set out in detail. Certain premises were let out by respondent Girnari Devi to three persons called'Aggarwals' for a period of ten years. One of the terms of the lease deed was that Aggarwals were authorised to assign the demised premises for theuse of any of the companies in which they or any of them was a Director Or for the use of any of the firms in which they or any of them was a partner.Much before the lease agreement, the appellant company had been incorporated and two of the Aggarwals were the Directors therein. The landlady filed a petition for eviction against the appellant on the ground that it bad sublet, assigned or otherwise parted with possession of the premises in favor of two different companies. It was contended by the appellant that the tenants were Aggarwals and that one or more of the Aggarwals were also Dhectors in the two companies to whom the premises were alleged to have been sublet etc. Earlier, However, in reply to a notice from the landlady, the appellant did state that the premises were in theirname. The Rent Controller held that the rent had always been paid by the appellant and correspondence between the parties showed that the appellant was the tenant. He also held that on the date of the application for eviction,Aggarwals were not the tenants and that in any case they had assigned their rights in favor of the appellant and, therefore, there was a relationship of landlord and tenant between the parties. He also came to the conclusion that the appellant had parted with possession of the premises without the consent of the landlady as the appellant being a juristic person had delivered possession to two other companies which were also juristic persons.Appellant's appeal to the Tribunal was dismissed and then the second appeal was filed in the High Court. The High Court found that the lease agreement between the landlady and Aggarwals required registration but was not registered. It referred to findings of courts below that relationship of landlord and tenant existed between the company and the respondent landlady and not between Aggarwals and the respondent landlady. It further referred to the finding that the original agreement of lease between the landlady and the appellant company had not been acted upon and that that finding was based upon the fact that the company had been paying rent from the inception of the tenancy and that the company did not deny the tenancy in reply to the notice of the landlady. There was no rent receipting favor of Aggarwals, The two companies to whom the premises were sublet were paying rent and that showed subletting and parting with possession. It was contended before the High Court by the appellant company that the unregistered instrument showed that the Aggarwals were the tenants and they had permission to assign the demised premises as above-mentioned and that the appellant company and the company to whom the premises were stated to have been sublet were having one or two Directors put of the Aggarwals and they. could, therefore, use the premises and that would not make the appellant company as the tenant. Thecourt also noted the other argument that under the lease agreement it were the Aggarwals who were to deliver the premises to the landlady on the expiry of the lease which showed that Aggarwals continued to be the tenants.This court, however, negatived all these contentions and held that these terms could not be read into evidence as the instrument was not registered.It was also observed that according to the recitals the lessee included permitted assigns and there had been an absolute assignment of tenancy in favor of the appellant company and that if that was so, the appellant company had the obligation to deliver the demised premises to the landlady.The court also observed that it had not been possible for the appellant company to dislodge its admission that it was the tenant and was payingrent. In these circumstances, the court also held that Aggarwals were not necessary parties to the application for eviction.
(21) Mr Arun Mohan also raised the plea of estoppel as contained in S. 115 of the Evidence Act and he said the tenant company was stopped from saying that it was Rai and not it, who was the tenant. According tohim, S. 109 of the Evidence Act was inapplicable which merely incorporated the concept of burden of proof and was in contradistinction to Ss. 112, 113 and 114 of the Evidence Act. He also referred to S. 11 of the EvidenceAct. Mr. Arun Mohan said that it was not the case of the tenant company that it was paying rent on behalf of Rai and so it could not contend that Rai was the tenant.* He said court was only to see as to who was the tenant on the date of filing of the petition for eviction and that there was no principle of law which said that when continuously for a number of years a person had been occupying the premises, paying rent and getting receipts.could he say that he was not the tenant. Mr. Arun Mohan queried if the landlord company filed such a petition against Rai would the tenant company not come up with the plea that it was the tenant and had been so accepted by the landlord company. On the question of burden of proof.reference was made to a decision of the Supreme Court in Gopal KrishnajiKelkar v. Mohamed Haji Latif & Ors. In this case. thecourt observed as under :-
"EVEN if the burden of proof does not lie on party the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It isnot, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof".
(22) Then, Mr. Arun Mohan contended that subsequent conduct of the parties was relevant to show that Rai acted as a mere agent of the tenant company for the purpose of taking the premises on rent for the tenant company as he happened to be managing director and would be deemed to have that agency In support of his submission, he referred to a decision of the Supreme Court in the Godhra Electricity Co. Ltd. & Am.v. The State of Gujarat and another , where the Supreme Court, following its earlier decision, observed that extrinsic evidence to determine the effect of an instrument was permissible where there remained a doubt as to its true meaning and evidence of the acts done under it was a guide to the intention of the parties, particularly, when acts were done fact that the shortly after the date of the instrument. Mr. Arun Mohan also said that the tenant company had throughout paid the rent was a strong circumstance to show that the tenancy was created in favor of the tenant company.Lastly, again his argument was that as long as a relationship of landlord and tenant between the tenant company and the landlord company was establish at any point of time prior to filing of the petition for eviction, it was sufficient for the maintainability of the petition.
(23) Quite a few judgments were also cited by Mr. Arun Mohan forthe proposition that payment of rent was the normal incidence of tenancy and that in the second appeal concurrent findings of fact could not bedisturbed, notably being Rajbir Kaur & Anr. v. M/s.S. Chokesiri& Co. (1988 (2) R C.J. 316).
(24) There is nothing in documents Ex. Mark A and Ex. R-21 to show that the premises were taken on rent by the tenant company or by Rai for and on behalf of the tenant company. The expressions 'we', 'us' in Ex.Mark A would only show that Rai would have offices in the premises, of the companies with which be was associated. Para 6 in Ex. Mark A and- para 7in Ex. R-21 did not contemplate that such companies with which Rai was associated would use the space free and Rai would not get proportionate rent paid by them. It could well be that in that context the tenant company started paying rent and was also getting contributions from other companies.Statement of Hari Deva (RW 1), Secretary of the tenant company, would show that Rai was associated with all the respondents in the eviction petition and this, in fact, was the plea in the written statement as well. One must not also forget that documents Ex Mark A and Ex. R-21 are drafted by a layman. In spite of these two documents of different dates respecting the first and the ground floors of the premises and stipulating different rates of rent,the parties were in agreement that there was one tenancy. Possession of the premises was taken by Rai. Advance rent totalling Rs. 39,000.00was paid by Rai and receipts issued in his name As far back as 1957, the landlord company knew that Saha and Rai Travels Private Limited werein the premises, and in 1961 it knew the presence of Associated Artists in the premises. The landlord company is also having its offices in the premises.Even in the notice sent by the landlord company, before filing the petition for eviction, there is no mention that there was any subletting. All this period the landlord company did not raise any objection as to the user of the premises by the companies with which Rai was associated. It is not that Rai obliterated from the scene., .He was very much there. There is no document to show, at least prior to 195/, that the premises were taken on rent by the tenant company or on its behalf by Rai. Para6 ofEx. Mark Aandpara7of Ex R-21 are quite significant and these give valuable right to Rai which would also show that it was Rai who was the tenant. If it was the tenant, company which was the tenant,than these terms would look redundant. Statement of account (Ex. Aw 2/1)filed by the landlord company shows that as from 4.9.1957 and continuously thereafter the rent was being paid by the tenant company. As to what was the position before this date, no document has been brought on record by the landlord company. Now, on the submission of the landlord company the Tribunal held that when draft lease was sent, the choice of the name of the tenant was left with Rai If the landlord company itself was not sure as to who vas the tenant, at least till the time the draft lease was sent. how could it be said that it was the tenant company which was the tenant from the beginning and yet the choice was left with Rai to fill in the name of any tenant he so chose. An argument was raised that even if it was assumed that it was Rai who was the tenant in the beginning there was implied surrender by him and that thereafter the tenant company became the tenant. No such plea was raised earlier and in spite of there being a clear averment in the written statement the landlord stuck to its stand that it wasthe tenant company which took the premises on rent from 1.II.1955. The plea of surrender is not plea which is based merely on law and I did not permit it to be raised in the second appeal. Thus, once it is shown that It was Rai who was the tenant, the burden was on the landlord company to show that relationship ceased to exist, but then, as noted above, it was not its plea and could not be allowed to be taken. Courts below have raised a presumption against the tenant company for non-production of its books of account and non-examination of Rai as its witness. But, then the landlord company has also not shown from its books as to how the advance rent paid by Rai was adjusted in its books in the initial stages and was there any resolution of the landlord company to give the premises on rent to the tenant company and, if so, when any such resolution was passed.
(25) In the present case, I am of the view that the courts below while arriving at the concision that it was the tenant company which was the tenant did not apply correct principles of law and did not advert to the basic facts from which to draw such a conclusion. Their finding therefore is vitiated and can be challenged in second appeal. Facts, in the present case,are somewhat more similar to those in the case of Vishwa Nath and another(supra) and the principles laid therein would, therefore, apply. The decision in Devi Dayal Metal Industries (P) Ltd.'s case (supra) is quite distinguishable.
(26) Mr. Arun Mohan wanted me to examine Ex. Aw 2/1 (an extract from rent account) from March 1970 backwards up to September 1957 to see that consistently during all this period rent had been paid by the tenant company. But that would not be the correct approach. This document does not show the relationship as existed prior to September 1957 and as to howthe tenancy in the first instance originated in favor of the tenant company.Terms as contained in Ex. Mark A have been accepted by the landlord company and though the endorsement by the landlord company on Ex. R-21shows that the document was received by the landlord company but subsequent conduct and the letter, Ex. R-1 would clearly show that the terms of the document Ex. R-11 we re accepted by the landlord company. Again,if J may say so. considering the conduct of negotiations between Rai andthe landlord company, the existence of documents Ex. Mark A andEx.R-21,possession of the premises having been taken by Rai, payment of advance rent by Rai and receipts for that having been issued by the landlord company to Rai and the letter sending the draft lease deed to Rai and even the letter Ex. R-14 of the landlord company which is dated9.10.1957 and mentions that load of electricity had been sanctioned in the name of Rai & Sons Pvt. Ltd. (the name of the tenant company) and M/sSaha and Rai Travels Private Limited, only one conclusion is possible that it was Rai who originally took the premises on renal Correspondence between the tenant company and the landlord company which has been brought on record and particularly the documents Exs.AW 3/., Aw 3/2and A-9, which have been mentioned above, and continuous payment of rent would no doubt show that at some stage both the landlord and the tenant company considered that there was a relationship of landlord and tenant between them, but at what point of time this relationship came into existence there is nothing on record to indicate. It is not the case of landlord company that there was any such relationship between it and Rai and that relationship was at any time determined or that Rai surrendered his tenancy in favor of the tenant company. Any such plea at this stage will have to be negatived. In the face of the record showing that originally the premises were taken on rent by Rai and which record has not been considered by the courts below, it is difficult to accept the proposition that the tenant company is estopped from questioning the relationship of landlord and tenant existing between it and the landlord company on the date of filing of the petition. I do not think that in the circumstances of the present case the plea of estoppel as contained in S. 115 of the Evidence Act wouldapply. Under S. 114 of the Evidence Act, the court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.Under illustration (g) to this section, the court may presume that evidence which could be and is not produced would, if produced, be unfavorable to the person who withholds it. This presumption, to my mind, can be raised against the tenant company, but cannot be raised against Rai himself who is not a party in the proceedings. His being the managing director of the tenant company would not make any difference.
(27) Taking into consideration the various principles set out above,I would hold that there is no relationship of landlord and tenant between-the landlord company and the tenant company. Accordingly, this appeal is allowed, and the eviction petition filed by the landlord company M/s Phelps& Co. Pvt. Ltd. is dismissed. There will, however, be no order as to costs.