Delhi District Court
Wenger & Co vs Nirmal Vijay & Co on 9 May, 2014
E No. 77/09 09.05.2014
IN THE COURT OF Ms. KIRAN GUPTA, SENIOR CIVIL JUDGECUM
RENT CONTROLLER, NEW DELHI DISTRICT, PATIALA HOUSE
COURTS, NEW DELHI
E77/09
Unique ID No. 02403C0102272009
Wenger & Co.
A16, Connaught Place,
New Delhi 01
....Petitioner
Versus
1. Nirmal Vijay & Co.
(Partners Nirmal Jain & Vijay Jain)
B7, Connaught Place, New Delhi 01
2. Nirmal Vijay Jewellers
(Prop/Principals Gaurav & Rahul)
A 17A, Connaught Place, New Delhi
...... Respondents
Date of institution : 18.04.2009
Date of final arguments : 07.04.2014
Date of judgment : 06.05.2014
JUDGMENT:
1 Present petition is under section 14 (1) (b) of the Delhi Rent Control Act (hereinafter referred as the Act), for recovery of possession of shop bearing no. A17A, Connaught Place, New Delhi as shown red in the site plan filed along with the petition (hereinafter referred as tenanted premises).
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 1of 32 E No. 77/09 09.05.2014 2 Brief facts of the case as stated in the petition are that:
Petitioner company is the landlord of the abovesaid tenanted premises which was let out to respondent no. 1 in 1984 for commercial purposes. It is alleged that respondent no. 1 did not use the premises which remained closed in the past and now has sublet the same to respondent no. 2 which has been disclosed by respondent no. 1 itself in another case. The rate of rent of the tenanted premises is Rs. 100/ per month exclusive of water and electricity charges and the space in the premises is just about 100 sq ft. The tenancy of respondent no 1 has been terminated by efflux of time and also vide notice dt. 28.05.2006. It is stated that since respondent no. 1 has sublet the tenanted premises to respondent no. 2 without the written consent and without obtaining permission from petitioner, respondent no. 1 is liable to be evicted . It is prayed that decree of eviction in respect of the tenanted premises be passed in favour of petitioner and against the respondents.
3 Common written statement has been filed by both the respondents denying all the allegations levelled in the petition. It is stated that initially respondent no. 1 started the firm at Kinari Bazar and a partnership between Sh. Nirmal Kumar Jain and Vijay Chand Jain was reduced into writing on 18.01.1975 and the tenanted premises was taken on rent in the year 1984 due to the expansion of business of respondent no. 1. Further due to expansion of business, respondent Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 2of 32 E No. 77/09 09.05.2014 no. 1 also took another premises on rent bearing no. B 7, Connaught Place, New Delhi vide rent deed dated 21.04.1992 through their partners Nirmal Kumar Jain and Vijay Chand Jain. The tenanted premises were never closed or locked by respondent no. 1. Respondent no. 1 and 2 are the family concern / business of Sh. Nirmal Kumar Jain and Vijay Chand Jain and subsequently their sons Gaurav Jain and Rahul Jain were also inducted as partners along with the existing partners in the business of respondent no. 2. Partners of respondent no. 1 are also the partners of respondent no. 2 being family members. Both the respondents are family concern of managing partners Mr. Nirmal Kr Jain and Vijay Chand Jain. It is stated that there is neither any abandonment nor divestment of the rights of respondent no. 1 or their partners Sh. Nirmal Kumar Jain and Vijay Chand Jain from the tenanted premises. Respondent no. 1 through their partners Sh. Nirmal Kumar Jain and Vijay Chand Jain continued and continue to be in physical and legal possession of the tenanted premises. It is denied that respondent no. 2 is the subtenant of respondent no. 1 in the tenanted premises. The firm of respondent no. 2 has four partners namely Sh. Nirmal Kumar Jain, Vijay Chand Jain, Gaurav Jain & Rahul Jain which is an export division of silver jewelery and other allied items and both the respondents through their partners have been carrying on the business in the suit premises. In the other premises i.e B 7, CP, New Delhi the business of retail shop of jewelery is being carried out in the name and style of Nirmal Vijay and company since the year 1998. It is alleged that petitioner has intentionally incorrectly described that respondent no. 2 has principal Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 3of 32 E No. 77/09 09.05.2014 partners Gaurav And Rahul whereas the sign board which has been displayed on the tenanted premises is "Nirmal Vijay and Co". The sign board on both the premises is displayed as "M/s. Nirmal Vijay & Co". It is stated that merely by taking the registration number by the sons of the partners namely Gaurav Jain and Rahul Jain does not tantamount to creating sub letting, more particularly when the suit premises continued and continues to be in physical and legal possession of respondent no. 1 through their partners Nirmal Kumar Jain and Vijay Chand Jain. Further the keys of the same also remain with them when the tenanted premises is open and closed by the partners of respondent no. 1 and their employees. Both the respondents are the family concerns of the partners of M/s. Nirmal Vijay & Co. and there can be no subletting between the partners of respondent no. 1 and their sister / family concerns and their sons as they form joint family business. Hence, there is no subletting by respondent no. 1 in favour of respondent no. 2. It is denied that there has been any disclosure by respondent no. 1 about the alleged sub letting in the previous eviction petition. The tenanted premises continued and continues to be in control, use and occupation of the partners of respondent no. 1. It is stated that respondents are one and the same concern and another premises was taken on rent i.e B 7 CP, due to the expansion of business. Further the concern of respondent no. 2 was started by partners of respondent no. 1 with their sons to start export division in order to settle them and for income tax purposes. It is further stated that respondents have become contractual tenancy month to month after the expiry of original tenancy tenure.
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 4of 32 E No. 77/09 09.05.2014 4 In the replication filed by the petitioner, petitioner while
reiterating the facts as stated in the petition has denied the contents of the written statement. It is stated that the two establishments ie respondent no. 1 and respondent no. 2 are distinct and separate entities, which is the own case of respondent no. 1 in the earlier petition. It is stated that the establishment operated from the tenanted premises is distinct from the one to which the premises was initially let out. It is denied that it is a contractual tenancy month to month or otherwise after the lapse and expiry of the original tenancy tenure. It is stated that since the respondents have shifted to a larger accommodation, suit premises remained closed in the past and it is only now after the earlier petition that it is being kept open.
5 Petitioner in order to support its contentions has examined Atul Tandon as PW 1 who has tendered his evidence by way of affidavit Ex. P1 and relied upon copy of certificate of registration of petitioner company as Ex. PW 1/1, letter of authority in his favour as Ex. PW 1/2, site plan of the tenanted premises as Ex. PW 1/3, copy of order of registration of respondent no. 2 from the suit premises as Ex. PW 1/4, copy of pleadings of respondent no. 1 in the other proceedings as Ex. PW 1/5 and Ex. PW 1/6, copy of website of yellow pages name just dial as Ex. PW 1/7 and Ex. PW 1/8 and letter for tender of rent as Ex. PW 1/9.
5.1 PW 2 Lal Singh, the Statistical Assistant, Sales Tax Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 5of 32 E No. 77/09 09.05.2014
Department has proved the registration file of Nirmal Vijay Jewelers, A 17A, Connaught Place, New Delhi as Ex. PW 2/A. 5.2 PW 3 Mrs. Madhu Sachdeva has proved the account opening form and copies of partnership deeds pertaining to account no. 2137(Old) and 5281 (old ) maintained with Oriental Bank of Commerce, CP Branch, by M/s. Nirmal Vijay and Company and M/s. Nirmal Vijay Jewelers. She has deposed that as per the account opening form, brought by her , the address of M/s. Nirmal Vijay and Company the account holder of account no. 2137(old) is A 17A, Connaught Place, New Delhi. As per the partnership deed furnished by the account holder at the time of opening of account, the partners in the said firm i.e M/.s. Nirmal Vijay & Co. were Sh Nirmal Kumar Jain and Sh. Vijay Chand Jain. As per the partnership deed the share in the profit of the firm of partners was in the ratio of 50:50. As per the opening form of M/s. Nirmal Vijay Jeweler , address of the said firm is A 17A, CP and as per the account opening form there are four partners namely Nirmal Kumar Jain, Vijay Chand Jain, Rahul Jain and Gaurav Jain with the profit sharing ratio as 10 %, 10 %, 40 % and 40 % respectively. PE was closed vide order dated 13.08.2012.
6 Respondents in order to support their contentions have examined Nirmal Kr Jain as RW 1 who has tendered his evidence by way of affidavit Ex. R1 and relied upon the partnership deed dt. 16.01.1975 as Ex. RW 1/1, rent agreement dt. 05.01.1984 as Ex. RW 1/2 , rent agreement dt. 21.04.1992 in respect of the premises bearing no.
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 6of 32 E No. 77/09 09.05.2014
B7 CP as Ex. RW 1/3. The partnership deed dt. 01.04.1998 of Vijay Jewelers as Ex. RW 1/4.
6.1 RW 2 Pashupati Nath Tiwari, RW 3 Makhan Lal Ghosh and RW 4 Raj Kumar Verma are the public witnesses who deal with the respondents. These witnesses have tendered their evidence by way of affidavit Ex. RW 2/A , RW 3/A and RW 4/A respectively and have been duly cross examined by the counsel for petitioner. RE was closed vide order dated 10.03.2014.
7 It is argued by counsel for petitioner that respondent no. 2 is the sub tenant of respondent no. 1 and respondent no. 1 has sub let the same without the consent of the petitioner, hence his petition which he has duly proved be decreed accordingly. It is further argued that respondent no. 1 has shifted from the tenanted premises to another accommodation which is an admitted fact, after sub letting the tenanted premises to respondent no. 2. It is further argued that respondent no. 2 is a separate entity and is paying rent to respondent no. 1 for the use of the premises as is evident from the cross examination of RW 1 and the ledger account produced by him during evidence. It is further argued that as per Ex. PW 1/4 it is evident that the business of Nirmal Vijay Jeweler is being run at the tenanted premises. It is further argued that RW 1 himself has admitted that in the tenanted premises the business is being carried out in the name of Nirmal Vijay Jeweler while the business by the name Nirmal Vijay & Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 7of 32 E No. 77/09 09.05.2014 Co. is being run from the other premises, hence the same tantamounts to sub letting as the respondent no. 2 is further paying rent to respondent no. 1 for the use of the same. It is further argued that the firm by the name of Nirmal Vijay Jeweler is a separate entity which is being run by the sons of Nirmal and Vijay and both of them have no concern in the said firm. It is further argued that Nirmal & Vijay have no concern with respondent no. 2 which is evident from the fact that no salary is being paid to them except Gaurav and Rahul. Further even the profit sharing ratio is that Rahul and Gaurav are entitled to 40 % each share while Nirmal & Vijay are entitled only 10 % each share in respondent no. 2. It is submitted that the respondent no. 1 has divested itself and handed over the exclusive possession to respondent no. 2, thereby subletting and parting with the possession. It is submitted that the case of petitioner is squarely covered u/s. 14 (1) (b) and section 14 (4) of the Act and be decreed accordingly. He in support of his contentions has filed following judgments:
a) Narain Singh (through LRs) & Ors v. Shanti Devi (through LRs) & Ors 2010 (115) DRJ 601
b) Cox & Kings Ltd. & Anr. v. Chander Malhotra (1997) 2 SCC 687
c) Ram Swroop v. Bharma Devi (1992) 23 DRJ 242
8 Per contra, it is argued by Ld. counsel for respondents that respondent no. 1 and respondent no. 2 are sister concerns having common partners Nirmal & Vijay. The other two partners in respondent no. 2 i.e Gaurav and Rahul Jain are the sons of Nirmal and Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 8of 32 E No. 77/09 09.05.2014 Vijay. They all being the family members are working together in the business of export of jewelery. It is argued that due to the expansion of the work, respondent no.1 shifted its office to another accommodation at B 7, Connaught place, New Delhi but still continued to work in the export division at the tenanted premises where the sister concern Nirmal Vijay Jeweler is also being run. It is argued that respondent no. 1 and 2 are not separate or distinct entities but sister concerns comprising of the family members who are the partners in them. It is further argued that the petitioner has miserably failed to show that the tenanted premises has been sub let by respondent no. 1 in favour of respondent no. 2, hence the petition be dismissed accordingly. Ld. counsel for Respondents has relied upon following judgments :
a) Niranjan Lal Kanodia v. Harbans Lal , 1999 (34) D RJ 14
b) M/s. Mool Chand v. Indermal Bishamber Sahai & anr. , CM (M) No. 541 /2002 decided on 30.10.2002.
9 Heard counsels for the parties. Perused the complete record file. Under clause (b) of proviso to subsection (1) of section 14 of Act 59 of 1958 the issues which fall for determination of the court are that:
(a) Whether there exists relationship of landlord and tenant between the parties;
(b) Whether the respondent without obtaining the written permission of the landlord has sublet, assigned or otherwise parted with possession of the whole or any part of the premises.
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 9of 32 E No. 77/09 09.05.2014 10 The foremost condition which has to be considered is whether there is a relationship of landlord and tenant between the parties. There is no dispute regarding the relationship of landlord and tenant between the petitioner and respondent no. 1, hence the same needs no adjudication.
11 The next question for determination is whether the premises has been sublet or its possession has been parted with by respondent no. 1 to respondent no. 2. There is no dispute that respondent no. 2 is functioning in the tenanted premises without the consent and permission of petitioner. It is contended by the petitioner that respondent no. 1 has vacated the tenanted premises after creating sub tenancy in favour of respondent no. 2. The petitioner claims to have knowledge of this fact when the same was disclosed by the respondent no. 1 in the leave to defend in the other petition U/s. 14 (1) (e) of the Act. The respondents have denied the contention of sub letting. It is stated that respondent no. 2 is nothing but the sister concern of respondent no. 1 where the partners of respondent no. 1 are common while the sons of the partners i.e Gaurav and Rahul Jain have also been inducted as other partners in respondent no. 2. It is further contended by the respondents that Nirmal Kumar Jain and Vijay Chand Jain are common partners in respondent no. 1 and respondent no. 2.
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 10of 32
E No. 77/09 09.05.2014
11.1 In Hazari Lal and Ram Babu V. Shri Gian Ram 1972 RCR
74 it was held that:
"9..........Clause (b) to the proviso to subsection (1) of Section 14 of the Rent Act uses three expressions, namely, "sublet", "assigned and otherwise parted with the possession " of the whole or any part of the premises without obtaining the consent in writing of the landlord. These three expressions deal with three different concepts and apply to different circumstances. In subletting there should exist the relationship of landlord and tenant as between the tenant and his sub tenant and all the incidents of letting or tenancy have to be found, namely, the transfer of an interest in the estate, payment of rent and the right of 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 "parted with the possession" undoubtedly postulates as has been held in the cases mentioned above the parting with legal possession. As we understand it, the lease has given parting with possession means giving possession to persons other than those whom possession has been given in lease and "the parting with possession" must have been by the tenant. The mere user by the other persons 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 claim possession from his guest who does not pay him any rent or other consideration, it would not be possible to say that the tenant has parted with possession even though for the duration of his stay, the guest has been given the exclusive use of the whole or a part of the tenancy premises. If the tenant has a right to disturb the possession of his guest at any time, he can be said to Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 11of 32 E No. 77/09 09.05.2014 have parted with the possession of the tenancy premises. The mere fact that the tenant himself is not in physical possession of the tenancy premises for any period of time would not amount to parting with the possession so long as, during his absence, the tenant has a right to return to the premises and be in possession thereof. A more privilege or licence to use the whole or a part of the demised premises which privilege or licence can be terminated at the sweet will and pleasure of the tenant at any time would not amount to "parting with possession ." The divestment or abandonment of the right to possession is necessary in order to invoke the clause of parting with possession".
12 Thus the onus to prove subletting is on the landlord. If the landlord prima facie shows that the occupant who was in exclusive possession of the premises was let out for valuable consideration, it would then be for the tenant to rebut the evidence. Thus, in the case of subletting, the onus lying on the landlord would stand discharged by adducing prima facie proof of the fact that the alleged subtenant was in exclusive possession of the premises or, to borrow the language of Section 105 of the Transfer of Property Act, was holding right to enjoy such property. A presumption of subletting may then be raised and would amount to proof unless rebutted [(reliance placed on Krishnawati v. Hans Raj [(1974) 1 SCC 289] reiterating the view taken in Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh [(1968) 2 SCR 548]] .
13 Petitioner has placed on record one document which is Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 12of 32 E No. 77/09 09.05.2014
Ex. PW 1/4 and also Ex. PW 2/A. As per the said document, which is the order of the sales tax department, the firm by the name of Nirmal Vijay Jeweler is functioning in the tenanted premises. On the second page of the said document, it is stated that another firm by the name of Nirmal Vijay and Company is also functioning in the tenanted premises. PW 1 during his cross examination admitted that it is possible that as per Ex. PW 2/1, respondent no. 1 is also carrying its business at the tenanted premises. It is not in dispute that respondent no. 2 is functioning from the tenanted premises and has its address of the tenanted premises. It is the case of the respondents that respondent no. 2 and respondent no. 1 are family concern / business having common partners Nirmal and Vijay. The physical and legal possession of tenanted premises is with Nirmal and Vijay. The other two partners in respondent no. 2 have no concern with the tenanted premises as the keys are retained by Nirmal and Vijay. The other two partners Rahul and Gaurav being their sons are carrying on the business under the supervision of Nirmal and Vijay who have complete control of both the businesses being run in the tenanted premises and at B 7 Connaught Place.
14 It is settled law that relationship between tenant and the sub tenant is not the test for determining subletting or parting with possession. Even when there is close relationship there can be sub letting or parting with possession. The test is, has the tenant divested himself of the right to possess the tenancy premises and whether he has totally effaced himself from the premises (reliance placed on the Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 13of 32 E No. 77/09 09.05.2014 judgment of High Court of Delhi in Niranjan Lal Kanodia vs. Harbans Lal , 1995 (34) DRJ 14).
15 It is argued by the counsel for petitioner that even though it is assumed that Nirmal and Vijay are the partners in respondent no. 2, however they are partners for the name sake and in actual the firm is being run by Gaurav and Rahul to whom the possession has been transferred by respondent no. 1 by shifting its business to the other premises which is established from the admission by RW 1 that they have shifted the respondent no. 1 to B 7 , Connaught Place. It is further argued that the sub letting is proved from the fact that the respondent no. 1 receives rent from respondent no. 2 in respect of the tenanted premises, which inturn is paid to the petitioner thereby creating the relationship of landlord and tenant inter se between respondent no. 1 and respondent no. 2. The Ld. counsel for petitioner has also drawn attention of the court to the cross examination of RW 1. Let the said arguments be considered in view of evidence on record specifically of RW 1.
16 RW 1 during his cross examination was shown certain portion of his affidavit Ex. R1 to which he deposed that:
"the attention of the witness is shown to para 5 of his affidavit from point A to A where it is mentioned that the functioning of respondent no. 1 was shifted from the tenanted premises to the premises no. B 7, Connaught place, New Delhi Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 14of 32 E No. 77/09 09.05.2014 and the witness states that the said fact is correct."
17 RW 1 during his cross examination was put the specific question about the Capital introduced by the partners at the time of constitution of respondent no. 2. He in order to show the same brought the ledger of respondent no. 2 for the financial year 199899 and deposed as follows:
" There is no opening balance in the capital account of Mr. Gaurav Jain . The closing bank in his capital account is Rs. 23,264.54. Total capital introduced by Sh. Gaurav Jain in the said year in Rs. 16,000/ . A salary of Rs. 18,000/ has been credited on 31.03.1999.An amount of Rs. 1200/ towards interest on capital has also been credited in the said account. There is no opening balance in the capital account of Mr. Rahul Jain . The closing bank in his capital account is Rs. 23,264.54. Total capital introduced by Sh. Rahul Jain in the said year in Rs. 16,000/. A salary of Rs. 18,000/ has been credited on 31.03.1999.An amount of Rs. 1200/ towards interest on capital has also been credited in the said account. There is no opening balance in the capital account of Mr. Nirmal Jain. The closing bank in his capital account is Rs. 2,391.14. Total capital introduced by Sh. Nirmal Jain in the said year is Rs. 5,000/. No salary has been credited in the said account. An amount of Rs. 375/ towards interest on capital has also been credited in the said account. The answer was same in respect of the account of Mr. Vijay Jain".
17.1 The said witness again produced the ledger account of respondent no. 2 for the year 19992000, 200001, 200102, 200203, 200304, 200405, 200506, 200607, 200708, 200809, 200910, 201011 and 201112. He explained the books during his testimony that the additional capital was brought into the firm by the partners on Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 15of 32 E No. 77/09 09.05.2014 which the interest was credited in their capital account. He also disclosed that the salary was paid to Rahul and Gaurav, however the net profit was credited in the account of each partner as per their share. The total amount withdrawn by the each partner has been put to and explained by witness during his testimony.
17.2 As regards the books of account pertaining to the year 200506 onwards, he admitted that there is rent account in the books which shows debit entry of certain amount and corresponding credit entry in the account of M/s. Nirmal Vijay & company, thereby giving credit paid by cheque to the petitioner for the said period. The relevant portion regarding the said admission in cross examination of RW 1 is as under:
"There is rent account in the said books which shows a debit entry of Rs. 1200/ on 30.03.2006. The corresponding credit entry has been made in the account of M/s. Nirmal Vijay & Co. thereby giving credit of Rs. 1200/ paid by cheque no. 201503 drawn on Citi Bank to the petitioner for the period 200506. The account of M/s. Nirmal Vijay & Co. in the books of the respondent no.2 shows a total debit entries of Rs. 21,50,000/ and credit entries of Rs. 16,85,689/ thereby leaving a debit closing balance of Rs. 4,64,311/."
"There is rent account in the said books which shows a debit entry of Rs. 1200/ on 31.03.2007. The corresponding credit entry has been made in the account of rent payable for the provision of rent being made on 31.03.2007 showing that this rent is payable to M/s. Wenger & Co.(petitioner herein)."
"There is a rent account in the said books showing a debit balance of Rs. 650/. The corresponding entries have been made to (1) rent payable account Rs. 1200/ and (2) M/s. Nirmal Vijay & Co. Rs. 1850/. This shows that the payment of Rs. 1850/ was made by M/s. Nirmal Vijay & Co. by cheque no. 208283 drawn on Citi Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 16of 32 E No. 77/09 09.05.2014 Bank to the petitioner for the rent from April, 2006 to September, 2007 including the amount of service tax for the period June, 2007 to September, 2007. This amount of rent has been paid in the books of respondent no.2."
"There is an rent account in the said books which shows a total debit balance of Rs. 51,684/ On 07.04.2008, there is payment of Rs. 674/ made by the respondent no.1 to the petitioner towards the rent for the period January, 2008 to June, 2008 vide cheque no. 292302 drawn on Citi Bank. The said amount of Rs. 674/ has been debited in the rent account in the books of respondent no.2 and credited to the account of respondent no.1. There is also an entry of Rs. 1010/ on 31.03.2009 in the said account showing the rent payable to the petitioner for the period July, 2008 to March, 2009. Apart from these two entries, there are ten entries showing the payment of rent to ACSA".
"There is a rent account in the said books which shows a single debit entry of Rs. 1324/ on 31.03.2010. By means of this entry, a provision of rent was made for the period 200910 being rent payable to the petitioner."
"There is a rent account in the said books wherein there is only one debit entry on 31.03.2011. By means of this entry a provision for rent payable has been made for Rs. 1324/ being the rent payable to the petitioner for the suit premises for the year 201011. The corresponding credit entry has been made in the account rent payable."
"There is a rent account in the said books of respondent no. 2 which contains an entry on 31.3.2012 by debiting Rs.1324/ being the amount of rent payable to the petitioner. The corresponding credit entry has been made in the account "rent payable".
Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 17of 32 E No. 77/09 09.05.2014 "It is correct that the rent paid by the respondent no. 1 to the petitioner is reimbursed by the respondent no. 2 to the respondent no. 1. It is also correct that the respondent no. 1 does not claim the payment of rent of the tenanted premises as an expenses in its books of accounts and it is only the respondent no. 2 who claims the payment as rent as an expense in its books of account".
17.3 From the said admissions made by RW 1 during his cross examination, it is evident that the amount of rent was received by respondent no. 1 from respondent no. 2 which in turn was paid by respondent no. 1 to petitioner. RW 1 had categorically admitted that the rent paid by respondent no. 1 to the petitioner is reimbursed by respondent no. 2 to respondent no. 1. He further admitted that respondent no. 1 does not claim the payment of rent of the tenanted premises as an expenses in its books of accounts and it is only the respondent no. 2 who claims the payment of rent as an expense in its books of account. Thus leading to the inference that the tenanted premises are being by the respondent no. 2 in lieu of payment of rent to respondent no. 1. Further RW 1 in his affidavit Ex. R1 at point A to A has admitted that the business of respondent no. 1 has been shifted to B7, Connaught Place, thereby leaving exclusive right of possession or interest in the premises in favour of respondent no. 2.
18 In (1999) 7 SCC 263 titled Resham Singh v. Raghubir Singh and Ors., it has been held that:
"the question of subletting is a conclusion on a question of law derived from the findings on the materials on record as to the transfer of exclusive possession and as Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 18of 32 E No. 77/09 09.05.2014 to the said transfer of possession being for consideration. To establish subletting, onus is on the landlord to prove through evidence that the subtenant was in exclusive possession of the property in question; that there was a relationship of lessee and lessor between the subtenant and tenant; and that the tenant has parted with possession in favour of subtenant exclusively."
18.1 In Deepak Banerjee v. Lilawati Chakravorty, AIR 1987 SC 2055, it was observed that:
"In order to prove tenancy or subtenancy, two ingredients had to be established. Firstly , the tenant must have exclusive right of possession or interest in the premises or part of the premises in question and secondly, that right must be in lieu of some compensation or payment of rent".
18.2 In Vishwanath Vs. Chaman Lal AIR 1975 Delhi 117, it was observed that:
" parting with possession is understood as parting with legal possession by one in favour of the other by giving him an exclusive possession to the ouster of the grantor. If the grantor had retained legal possession with him, it is not a case of parting with possession. The court also reiterated that to prove subtenancy two ingredients have to be established , firstly, the tenant must have exclusive right of possession or interests in the premises or part of the premises in question and secondly, the right must be in lieu of payment of some compensation or rent."
19 Thus from the cross examination of RW 1 it is evident that respondent no. 1 has shifted from the tenanted premises and is also Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 19of 32 E No. 77/09 09.05.2014 receiving rent from respondent no. 2. Since the petitioner has prima facie proved that the respondent no. 2 is in exclusive possession of the tenanted premises for valuable consideration, now what has to be seen is whether the respondents have rebutted the same and proved that the legal possession remained with the respondent no. 1.
20 It is argued by Ld. counsel for respondents that partnership firm is merely a compendious mode of describing the partners to constitute the said partnership, hence the premises was let to all the partners who constituted the partnership at that time. It is further argued that the partners of respondent no. 1 are also partners of respondent no. 2 and the other partners in the respondent no. 2 are the sons of the partners Nirmal and Vijay. Since Nirmal and Vijay are also the partners in respondent no. 2 and in possession of the tenanted premises, no case of subletting is made out. He has further placed reliance on the partnership deed Ex. RW 1/4.
21 Thus the question for consideration is whether the partnership deed Ex. RW 1/4 in respect of respondent no. 2 placed on record by the respondents is genuine or camouflaged to give outward appearance of partnership while in fact it is a sub tenancy or parting with possession. In the context of the premises having been sublet or possession parted with by the tenant by adopting the device of entering into partnership, it would be suffice to notice following decisions of Hon'ble Supreme Court of India.
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21.1 In Murlidhar v. Chuni Lal,(1970 Ren CJ 922), it was held
that :
" where a shop was let out to a firm of the name
of Chuni Lal Gherulal. The firm consisted of three partners, namely, Chuni Lal, Gherulal and Meghraj. This partnership closed and a new firm by the name of Meghraj Bansidhar commenced its business with partners Meghraj and Bansidhar. The tenant firm was sought to be evicted on the ground that the old firm and the new firm being two different legal entities, the occupation of the shop by the new firm amounted to subletting. The Court discarded the contention as "entirely without substance" and held that a partnership firm is not a legal entity; the firm name is only a compendious way of describing the partners of the firm. Therefore, occupation by a firm is only occupation by its partners. The two firms, old and new, had a common partner, namely, Meghraj, who continued to be in possession and it was fallacious to contend that earlier he was in possession in the capacity of partner of the old firm and later as a partner of the new firm. The landlord, in order to succeed, has to prove it as a fact that there was a sub letting by his tenant to another firm. As the premises continued to be in possession of one of the original tenants, Meghraj, then by a mere change in the constitution of the firm of which Meghraj continued to be a partner, an inference as to subletting could not be drawn in the absence of further evidence having been adduced to establish subletting".
21.2 In Helper Girdharbhai v. Saiyed Mohd. Mirasaheb Kadri [(1987) 3 SCC 538] it was held that:
"where the tenant had entered into a partnership and the firm was carrying on business in the tenancy Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 21of 32 E No. 77/09 09.05.2014 premises. Hon'ble Supreme Court held that if there was a partnership firm of which the appellant was a partner as a tenant, the same would not amount to subletting leading to forfeiture of the tenancy; for there cannot be a subletting unless the lessee parted with the legal possession. The mere fact that another person is allowed to use the premises while the lessee retains the legal possession is not enough to create a sublease".
21.3 In Parvinder Singh v. Renu Gautam [(2004) 4 SCC 794] a threeJudge Bench of this Court devised the test in these terms: (SCC p. 799, para 8) it was held that :
"If the tenant is actively associated with the partnership business and retains the use and control over the tenancy premises with him, maybe along with the partners, the tenant may not be said to have parted with possession. However, if the user and control of the tenancy premises has been parted with and deed of partnership has been drawn up as an indirect method of collecting the consideration for creation of subtenancy or for providing a cloak or cover to conceal a transaction not permitted by law, the court is not estopped from tearing the veil of partnership and finding out the real nature of transaction entered into between the tenant and the alleged sub tenant".
21.4 In the case of G.K. Bhatnagar (Dead) By LRs. v. Abdul Alim (2002) 9 SCC 516 :
"A conjoint reading of these provisions shows that on and after 961952, subletting, assigning or otherwise parting with the possession of the whole or any part of the tenancy premises, without obtaining the Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 22of 32 E No. 77/09 09.05.2014 consent in writing of the landlord, is not permitted and if done, the same provides a ground for eviction of the tenant by the landlord. However, inducting a partner in his business or profession by the tenant is permitted so long as such partnership is genuine. If the purpose of such partnership may ostensibly be to carry on the business or profession in partnership, but the real purpose be subletting of the premises to such other person who is inducted ostensibly as a partner, then the same shall be deemed to be an act of subletting attracting the applicability of clause (b) of sub section (1) of Section 14 of the Act."
22 Thus the thrust as laid upon by the Hon'ble Supreme Court of India is that, so long as the legal possession remained with the tenant, the mere facutm of tenant having entered into partnership for the purpose of carrying on the business in the tenancy premises would not amount to sub letting. So long as the premises remains in occupation of tenant or its control, a mere entering into partnership does not provide a ground for eviction by running into conflict with prohibition against sub letting or parting with possession. The existence of deed of partnership between the tenant and to alleged sub tenant does not precludes the landlord from bringing on record material and circumstances by adducing or by means of cross examination, making out a case of subletting or parting with possession or interest in tenancy premises by the tenant in favour of a third person. If the tenant is actively associated with the partnership business and retains the use and control over the tenancy premises with him, may be along with the partners, the tenant may not be said Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 23of 32 E No. 77/09 09.05.2014 to have parted with possession. However, if the user and control of the tenancy premises has been parted with and deed of partnership has been drawn up as an indirect method of collecting the consideration for creation of subtenancy or for providing a cloak or cover to conceal a transaction not permitted by law, the court is not estopped from tearing the veil of partnership and finding out the real nature of transaction entered into between the tenant and the alleged sub tenant.
23 As discussed above, the petitioner has prima facie established that it is only the respondent no. 2 who is functioning from the tenanted premises and that the respondent no. 1 is receiving rent ie valuable consideration from respondent no. 2 for the use of the tenanted premises. Now what has to be considered is whether legal possession has been retained by the common partners Nirmal and Vijay in respect of the tenanted premises. RW 1 during his cross examination admitted that the PAN number of respondent no. 1 and 2 is separate and they are registered separately with Sales Tax Department and are maintaining separate accounts. Respondent no. 2 came into existence in the year 1998 and has been maintaining the books of accounts since then. He and his other partners have been looking day to day business of respondent no. 2. Respondent no. 2 has been maintaining its account with Oriental Bank of Commerce, A Block, Connaught Place, New Delhi, Citi Bank, New Delhi and HDFC Bank, H block, Connaught circus, New Delhi. He admitted that he is the authorized signatory of respondent no. 2 regarding the bank Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 24of 32 E No. 77/09 09.05.2014 accounts maintained by it at Oriental Bank of Commerce, Citi Bank, N.A as well as HDFC Bank, Connaught Circus. He admitted that he has not deposited any money in cash in any of the above said accounts in the last month. Though RW 1 has admitted that he is the authorized signatory of the above said accounts, however no such document has been placed on record by RW 1. Petitioner has examined Ms. Madhu Sachdeva, Chief Manager, Oriental Bank of Commerce as PW 3 who has proved the account opening form of M/s. Nirmal Vijay & Company and Nirmal Vijay Jewelers.
24 Further, RW 1 during his cross examination admitted that in the business of respondent no. 2, the salary of partners is only paid to Sh. Gaurav Jain and Sh Rahul Jain. No salary is paid to him and Vijay Chand Jain by respondent no. 2. He admitted that respondent no. 2 has never paid salary to him or to Vijay Chand Jain since its inception in the year 1998 and has always paid salary to Sh. Gaurav and Rahul Jain. When he was put the specific question that salary to these two partners is given as they are the only working partners in respondent no. 2, he replied that salary is paid to them because their capital is to be built. He denied that Vijay Chand Jain and he are not the working partners in respondent no. 2 or they are the partners only for the name sake with no interest in the said business. He further denied the suggestion that they have got no control of any nature whatsoever in the business activities of respondent no. 2. He denied the suggestion that the books of accounts of respondent no. 2 does not reflect the correct state of affairs of respondent no. 2 or that they are manipulated Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 25of 32 E No. 77/09 09.05.2014 one. He denied the suggestion that neither he nor Vijay Chand Jain are carrying out any business activity in the tenanted premises and that they are carrying out the business of respondent no. 1 only from B 7, Connaught Place, New Delhi. He further denied the suggestion that he and Vijay Chand Jain have transferred the possession of tenanted premises to Gaurav and Rahul who alone are in possession of tenanted premises and are carrying out their business activities. He further denied the suggestion that the physical and legal possession of the tenanted premises is not with him and Vijay Chand but exclusively with Gaurav and Rahul Jain. He denied that it is only Gaurav and Rahul who open and close the tenanted premises or that the partnership deed Ex. PW 1/4 is camouflage document. He admitted that the rent paid by respondent no. 1 to the petitioner is reimbursed by respondent no. 2 to respondent no. 1. He also admitted that respondent no. 1 does not claim the payment of rent of tenanted premises as an expense in its books of account and it is only the respondent no. 2 who claims the payment of rent as an expense in its books of accounts.
25 Ex. RW 1/4 is the partnership deed of respondent no. 2. There is one photocopy of the said partnership deed which runs into three pages while the original of the same contains only two pages. RW 1 during his cross examination admitted that Ex. RW 1/4 is the only partnership deed of respondent no. 2 and there has not been any other partnership deed of the said firm till date. He deposed that " i cannot say whether Ex. RW 1/4 contains two pages only or there may be more Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 26of 32 E No. 77/09 09.05.2014 pages".
26 Punjab and Haryana High Court in Devki Nandan Vs. Om Prakash and Ors., 1972 RCR 321 ( P & H ) held has been that:
".........it is undisputed that if a tenant takes with him one or two more partners and carries on a joint business in the premises, which he has taken on rent, that would not afford a ground to the landlord for his eviction. It is only if it is established that he has nothing to do with the partnership business and has completely given over the possession of the premises to other partners that subletting can be inferred.....".
26.1 In Bharat Sales Ltd v. LIC of India (1998) 3 SCC 1, it has been held that:
"subtenancy or subletting 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 strander 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 Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 27of 32 E No. 77/09 09.05.2014 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 sublet had paid monetary 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 sublet or it may have been paid or promised to be paid periodically. Since the 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 sublet."
26.2 In Narayan Ratan v. India Mill Stores 1977 RCR, it was held by Hon'ble M.P. High Court that:
"the question whether there is unlawful subletting is, in most cases, a matter of inference to be drawn from the facts of each cases. The initial onus of proving unlawful subletting, in the first instance lies upon the plaintiff. Subtenancy can hardly be proved by direct evidence. All that the plaintiff can do is to place on record certain circumstances from which an inference has to be drawn. When such circumstances are proved, prima facie, the burden placed on the plaintiff is discharged, and the onus shifts on the defendant Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 28of 32 E No. 77/09 09.05.2014 not to prove any negative fact but establish a positive aspect about the capacity in which the alleged subtenant is occupying the premises and that he has not parted with the whole or a part of the tenanted accommodation. It follows that the pleading of the defendant must be clear and explicit as the facts, in which a third person has been inducted into the whole or any part of the premises are within his knowledge. The defendant must, therefore, specifically plead all the facts necessary to disprove the inference of subletting".
27 In the present case, RW 1 himself is not clear whether the partnership deed Ex. RW 1/4 runs into three pages or two pages. The photocopy of the same placed on record by the respondents, contains three pages while the original of the same placed on record by the respondents, contains only two pages, thereby creating doubt on its reliability and credence. On perusal of Ex. RW 1/4, it is revealed that the said partnership deed does not talk about respondent no. 1 or that the two of its partner Nirmal and Vijay are already running any such business in the tenanted premises. It is not the case that few partners were added in the already existing partnership firm. In the present case, a separate partnership firm has been constituted with two partners in common i.e Nirmal and Vijay. There is no clause in the partnership deed Ex. RW 1/4 that the tenanted premises would return to the original tenancy on partnership coming to an end. Merely because the partners of respondent no. 1 i.e Nirmal and Vijay are also partners in respondent no. 2 along with other partners, does not leads to the presumption that both the firms are one entity or that they are Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 29of 32 E No. 77/09 09.05.2014 not separate or distinct entities. RW 1 has categorically admitted that both respondent no. 1 and 2 have separate PAN numbers and registered separately with sales tax department and are maintaining separate accounts. Even the salary is paid only to Gaurav and Rahul. Even the share of Gaurav and Rahul is 40 % each while that of Nirmal and Vijay is 10 % each.
28 Though the respondent has examined three public witnesses i.e RW 2, RW 3 and RW 4 , however their testimony is not credible. As per RW 2 he is running the betel shop in front of tenanted premises, however the address as stated in his testimony is of Ghaziabad UP. The said witness has not placed on record any document or photograph to show that he is running his shop in front of tenanted premises. RW 3 in his affidavit stated that he is working as a labour under the respondents for the last 25 years , however during his cross examination, he stated that he is doing the business of manufacturing of jewelery from his premises at Chandni Chowk for the last 3035 years which is the only place of his business. RW 4 in his affidavit has stated that he is working as a labour of manufacturing under the respondents for the last 10 years, however during his cross examination, he stated that he is in the business of manufacturing of jewelery of gold and silver which he is carrying out from his premises at Chandni chowk for the last 20 years under his personal name. He admitted that he has no place of business at Connaught place or in the tenanted premises. He further admitted that he does not go to the Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 30of 32 E No. 77/09 09.05.2014 place of business of jewelers but carry out his business from the premises at Chandni Chowk. The testimony of these witnesses does not lends any credence to the claim of the respondents.
29 There is no denial of the fact that respondent no 1 and respondent no. 2 are two separate partnership firms having separate PAN numbers, sale tax accounts and that they are maintaining separate accounts. Even as per the profit sharing ratio of respondent no. 2 , Nirmal and Vijay only have 10% each share while Gaurav and Rahul have 40 % each share which further suggests that Nirmal and Vijay have simply tendered their names to respondent no. 2 to give a shape of partnership, while actually the business is entirely run by Gaurav and Rahul who are not only entitled to 40 % share each, even the salary is only being paid to Gaurav and Rahul since the date of inception of the partnership. No other witness or any of the partners have been examined by the respondents to show otherwise/prove the said partnership deed. On the basis of above discussion, it would not be out of context to hold that there is no genuine partnership and the partnership is only a camouflage for concealing the real nature of transaction.
30 From the above discussion, material on record, testimony of the witnesses and the relevant provisions of law , this court is of the opinion that the petitioner has proved that the tenanted premises Wenger & Co. Vs. Nirmal Vijay & Co. and Anr. Page 31of 32 E No. 77/09 09.05.2014 have been sublet by the respondent no. 1 to respondent no. 2 without obtaining its consent in writing. The petitioner has proved the ground of eviction under clause (b) of proviso to subsection (1) of section 14 of Act 59 of 1958 against the respondent. In these circumstances the petition for eviction is allowed with costs. Petitioner is entitled to recover the possession of the tenanted premises i.e shop bearing A17A, Connaught Place, New Delhi as shown red in the site plan attached with the petition.
Present petition is disposed of accordingly.
File be consigned to record room.
ANNOUNCED IN OPEN ( KIRAN GUPTA )
COURT ON 09.05.2014 SCJCUMRENT CONTROLLER
PATIALA HOUSE COURTS:NEW DELHI
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