Gujarat High Court
Babubhai Jugalkishore Through Power Of ... vs Jaichand Jayantilal on 22 July, 1998
Equivalent citations: (1999)3GLR2036, 1998 A I H C 4271, (1999) 1 RENCJ 505, (1999) 3 GUJ LR 2036, (1998) 2 GUJ LH 525, (1999) 1 RENCR 101, (1998) 2 RENTLR 638
Author: D.C. Srivastava
Bench: D.C. Srivastava
JUDGMENT D.C. Srivastava, J.
1. This Civil Revision Application, with the consent of the learned Counsel for the parties, is being disposed of finally at the admission stage.
2. Brief facts giving rise to this revision are-that the respondent had let out the disputed shop to the revisionist in individual capacity for running a shop. It was alleged that the defendant had sub-let, assigned or transferred the demised premises illegally without consent of the landlord and is not using the shop for running his business.
3. The suit was resisted by the revisionist on the ground that one Pramukhbhai Ranchhodbhai Patel, owner of Shree Watch Company is a tenant-in-possession of the shop in dispute and since he has not been impleaded in the suit, the suit is bad for non-joinder of necessary parties. It was pleaded that for the last several years the business was carried on in the name and style of Shree Watch Company in suit premises. It was a partnership firm in which the defendant was a partner and rent was paid and receipts were also issued in the name of Shree Watch Company. Since 1977 the defendant-revisionist and Pramukhbhai Patel were doing business in partnership and the said partnership was dissolved in the year 1983 whereafter Pramukhbhai Ranchhodbhai Patel became sole owner of the business and as such the defendant-revisionist had nothing to do with the plaintiff and the plaintiff knew about it but he never raised any objection. On these facts it was pleaded that no decree for eviction or arrears of rent can be passed against the revisionist.
4. The trial Court found that the suit was not bad for non-joinder of necessary party, viz., Pramukhbhai Ranchhodbhai Patel. It further found that the plaintiff established the allegation of sub-letting by the tenant-in-chief as such decree for eviction and arrears of rent, etc. was passed.
5. An Appeal was filed by the revisionist which was dismissed. Hence this revision.
6. The learned Counsel for the revisionist contended that the findings of the two Courts below regarding sub-letting is illegal and against the facts of the case. The second argument has been that Pramukhbhai Ranchhodbhai is tenant and as such in his absence no decree for eviction could be passed and he should have been joined as necessary party to the suit.
7. The learned Counsel for the respondent, on the other hand, contended that a sub-lessee or sub-tenant is not necessary party to the suit and he will be bound by the decree passed against the tenant-in-chief. He further contended that findings of the two Courts below on sub-letting is a concurrent finding hence no interference in this revision is called for.
8. Coming to the finding on sub-letting it is difficult to say that it is a concurrent finding of fact recorded by the two Courts below upon which no interference is required. The finding of sub-tenancy is a mixed finding on question of fact and law on the facts and circumstances of the case. It is a pure finding of fact as to when the sub-tenancy was created. On this point the parties are not identical. According to the learned Counsel for the revisionist, sub-tenancy was created right from 1-4-1954 when the tenancy was granted under the Rent Note by the respondent to the revisionist. It was also contended that since sub-tenancy was created before the Ordinance of 1959 it became legalised and no decree for eviction could be passed. Another contention has been that in view of the Bombay Government Notification issued under powers contained in Proviso to Section 15(1) of the Bombay Rent Act sub-tenancy even if created after 1959 or after the enforcement of the Act will be protected and will be deemed to have been legalised. Consequently, it is not a pure question of fact in which concurrent finding has to be recorded. It has to be seen first as to when the sub-tenancy was actually created and what is the effect of Sections 15(1) and 15(2) of the Act and the notification issued by the State Government under the proviso to Section 15(1) of the Act.
9. The learned Counsel for the revisionist vehemently urged that though in the rent note tenancy was granted to Patel Babubhai Jugaldas - the defendant-revisionist, yet right from the beginning sub-tenancy was created by the revisionist. Exh. 24 is the rent note which shows that the tenancy was granted to the defendant-revisionist on 1-4-1954 for 11 months at Rs. 40/- p.m. There was a specific stipulation in the Rent Note that the shop was hired for personal use of the revisionist and for no other purpose and there was further stipulation that he shall not let or sub-let it to any other person. The following material portion in the Rent Note can be extracted:
I have hired the said shop for my personal use only alone shall use it and I shall not let or sub-let it to any other person.
It is further clear from the concluding portion of the Rent Note that it was executed by the tenant in favour of the landlord and not as partner of any firm. The Rent Note was executed on 7-4-1954 though the tenancy was created with effect from 1-4-1954.
10. It appears from the record that three partnerships were created at different intervals. The first partnership was created somewhere in the beginning in which there were three partners including Sushilaben who is the wife of the tenant-in-chief. However, the said Deed of Partnership was not brought on record nor the dissolution Deed was filed. Consequently it cannot be ascertained who were the other partners in the said firm and whether the said firm was actually tenant and the creation of the partnership really amounted to creation of sub-tenancy or not.
11. It is well settled law that if tenancy is created in favour of the tenant-in-chief for running a shop in the demised premises and he enters into partnership (genuine partnership) to run the said business in the said premises the said partnership per se will not become a collusive transaction resulting to an inference of sub-tenancy. An attempt was made by the revisionist to show that the rent was paid from the partnership account but more than once the appellate Court observed that there is no evidence on record to show that the rent was paid from the partnership account or that the tenancy was created in the name of the partnership firm. Even the extracts of account were not filed. It is the admission of the revisionist in the witness box that he was controlling the business and was managing the business. Thus, if he was managing partner in which his wife was one partner and his father-in-law was another partner it cannot be said that he had parted exclusive possession of the portion of or the entire tenanted accommodation and that too for valuable consideration.
12. The second partnership was said to be again between three persons and instead of Sushilaben, Atmaram Khodidas was inducted as third partner. This partnership was created through a Deed Exh. 79. In this there is no mention about the terms of tenancy and acquisition of tenancy rights or transfer of tenancy rights. It is dated 27-11-1960. Again no Deed of dissolution of this firm was filed nor any rent receipt was filed showing that the landlord issued rent receipt in the name of the second firm. No account book of this firm was brought on record.
13. The third partnership was entered into between Pramukhbhai Ranchhodbhai and the revisionist-Babubhai Patel vide Exh. 65 on 11-5-1977. In this Deed there was mentions that all the rights of goodwill and tenancy are of the first party, viz., Pramukhbhai Ranchhodbhai, but this recital is no conclusive proof of creation of sub-tenancy or indication that this partnership was collusive transaction. It is also not clear how Pramukhbhai became tenant of the premises when the defendant was also a partner in this firm. Again transfer of exclusive possession by the revisionist to Pramukhbhai Ranchhodbhai under this Deed of Partnership is not established. It is also not established that Pramukhbhai Ranchhodbhai was doing business in partnership with the defendant-revisionist since 1954.
14. Exhibit 83 is the dissolution Deed of the third partnership between the defendant and Pramukhbhai Ranchhodbhai. It is through this dissolution Deed Exh. 83 dated 31-12-1983 that the business running stock, goodwill and tenancy rights were transferred by the defendant-revisionist to Pramukhbhai Ranchhodbhai. On the basis of recital in this dissolution Deed the Courts below came to the conclusion that the sub-tenancy was created actually with effect from 31-12-1983. From perusal of Ex. 83 it can be said that earlier partnership dated 11-5-1977 between the revisionist and Pramukhbhai Ranchhodbhai was dissolved on 31-12-1983. There are relevant and material recitals in this Deed of dissolution. In para 6 it is mentioned that the tenancy rights of the shop are given to the first party, viz., Pramukhbhai Ranchhodbhai. Further, it is mentioned that the tenancy rights, goodwill, stocks, etc. of the said partnership firm have been allotted to the first party. The defendant second party agreed to such allotment. He further agreed that Pramukhbhai Ranchhodbhai can get mutation in the municipal record showing that he is tenant in the disputed shop. The responsibility shall be thrown on the first party to own goodwill, tenancy rights, accounts of the firm, debts, dues, profits, losses and taxes, etc. The first party was made absolute owner and in exclusive possession of the shop of Shree Watch Company. It is thus clear that sub-tenancy was actually created on 31-12-1983 when exclusive possession of the shop was transferred to Pramukhbhai Ranchhodbhai Patel.
15. The landlord is required to establish the sub-tenancy in such circumstances by establishing two facts. The first that the entire premises or a part thereof was given in exclusive possession of the sub-tenant. On this point the respondent has succeeded because from the dissolution Deed itself it is clear that possession of the entire shop was given to the sub-tenant and he was made owner of the business, goodwill, tenancy rights, etc. The second condition to be established by the landlord is that such transfer of possession was for valuable consideration. It is very difficult for the landlord to establish passing of valuable consideration in such secret contracts. From circumstances of the case also the Courts can infer that such transfer must have been for valuable consideration. Those circumstances are that the revisionist himself averred that he was managing the business since inception on tenancy in 1954. He came out with a case that in 1977 he entered into partnership with Pramukhbhai Ranchhodbhai and the said partnership was dissolved on 31-12-1983. In the dissolution Deed everything was given to Pramukhbhai Ranchhodbhai, viz. shop, its possession, tenancy rights, running of business, goodwill, account books of the firm, etc. The transfer of these valuable rights in the circumstances of the case could not be gratuitous especially when it is proved that Pramukhbhai Ranchhodbhai is not a relation of the revisionist. He must have received consideration for parting with everything in the shop including the tenancy rights and the goodwill. Thus, the recitals in the Deed of dissolution speak volumes that such transfer was definitely for valuable consideration. The landlord-respondent, therefore, succeeded in establishing that sub-tenancy was created in December, 1983 in which exclusive transfer of possession of the shop was made in favour of sub-tenant and for valuable consideration.
16. If this is so it is to be seen whether such sub-tenancy can be regularised. The learned Counsel for the revisionist contended that the business of Shree Watch Company was carried on in the shop since inception of tenancy and the landlord knew that Pramukhbhai was running the business and since he never raised any objection hence he is estopped from saying that the sub-tenancy is illegal. Simple reply to this contention is that there can be no estoppel against statute. If the statute renders such sub-tenancy illegal the landlord cannot be said to have legalised it by acquiescence. There is no express contract between the landlord-respondent and Pramukhbhai to treat him as tenant of the shop.
17. It was next contended that since the sub-tenancy was created in breach of a specific stipulation in Rent Note since 1-4-1954 itself it may be sub-letting, but it is protected under Section 15(2) of the Act. This contention also cannot be accepted. Section 15(2) of the Act provides the bar against sub-letting, assigning or transferring the premises contained in Sub-section (1) be deemed not have had any effect before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 (Bom. Ordn. III of 1959), in any area in which it was in operation before such commencement and secondly notwithstanding anything contained in any contract or in judgment, decree or Order of a Court, any such sub-lease, assignment or transfer in favour of such person as have entered into possession despite other bar as sub-lessees, assignees, transferees, and have continued in possession at the commencement of the said Ordinance shall be deemed to be valid and effectual.
18. A plain reading of Section 15(2) shows that if sub-tenancy was created before coming into force of Ordinance of 1959 in presence of which the sub-tenant was in occupation on the date of commencement of the Ordinance it shall be deemed to be valid and effectual. The condition precedent is that the sub-tenancy should have been created before commencement of the Ordinance of 1959, viz. before 21-5-1959 and that on the date of commencement of the Ordinance sub-tenant was in actual possession. This provision was interpreted by the Apex Court in similar manner in Tota Singh v. Gold Field Leather Works Bombay reported in AIR 1985 SC 507. In this case the facts were that partnership firm was the tenant of entire building. The said partnership had sub-let a portion of the building on the ground floor to one "M" who sub-let it further to one "T" in the year 1953. It was admitted by the firm "G" the tenant- in-chief that "M" was lawful sub-tenant. It was held that in view of Section 5(15)(a) in respect of further sub-tenancy the "M" could be described as tenant, and "T" as his sub-tenant. And if that is so there could be no reason why "T's" sub-tenancy should not be regarded as a valid sub-tenancy inasmuch as it was created before May 21, 1959 and he had entered into possession of the premises before that date and was continuing in possession on that date.
19. The legal position in the aforesaid case was explained by the Apex Court as follows:
Upon the amendment of Sub-section (1) of Section 15 by the Ordinance and by its related Act the prohibition against sub-letting did not operate in those case where the sub-letting was permitted by contract between the landlord and tenant. In all such cases, if the landlord had permitted the tenant under a contract between them to sub-let the premises, no question would arise of a need to validate those sub-tenancies. It is in this light that the scope of Sub-section (2) of Section 15 has to be determined. The removal by Sub-section (2) of Section 15 of the prohibition is limited only to those sub-tenancies which were created before May 21, 1959. Such a limitation would be inappropriate to sub-tenancies permitted by contract which could be created regardless of whether they were brought into existence before May 21,1959 or after that date.Also, the sub-tenancies covered by Sub-Section (2) of Section 15 would be regarded as valid only if the sub-tenant had entered into possession before May 21, 1959 and was continued in possession on that date. Such a requirement would be wholly inconsistent in the case of sub-tenancies permitted by contract. Inasmuch as Sub-Section (2) of Section 15 specifically attaches the condition that the sub-tenant should have been in possession before the commencement of the Ordinance and should have continued in possession on that date. It is apparent that such a provision could be related only to illegal sub-tenants, that is to say sub-tenants who were let in and given possession without any contractual right conferred by the landlord on the tenant to do so.
20. Thus, it is clear that in the case before me the alleged sub-tenant Pramukhbhai was not in actual possession of the premises on 21-5-1959 and as such the sub-tenancy cannot be deemed to be legal and valid. At the most he entered into partnership in 1977, i.e., after the commencement of the Ordinance and even if he was running business in partnership with the revisionist it cannot be said that the sub-tenancy was regularised. Moreover, in view of the findings of the two Courts below that sub-tenancy was created on 31-12-1983 it cannot be regularised under Section 15(2) of the Act.
21. The same view was taken by this Court in Thakorlal Mohanlal Tankaria v. Saraswatiben W/o. Vadilal Laljibhai reported in 1993 (2) GLR 1047.
22. The next contention of the learned Counsel for the petitioner has been that even if sub-tenancy was created on 31-12-1983 it stands protected in view of Government Notification issued by the State of Bombay in exercise of powers conferred under the provisions of Section 15(1) and the proviso therein. To appreciate this contention Section 15(1) and the proviso thereunder have to be kept in mind.
23. Section 15(1) of the Act provides that notwithstanding anything contained in any law (but subject to any contract to the contrary) it shall not be lawful after coming into operation of this Act for any tenant to sub-let the part or any part of the premises let to him or assign or transfer in any other manner his interest therein. It is then manifest that Section 15(1) creates a bar upon the tenant creating sub-tenancy after coming into operation of the Act. This bar was diluted by Section 15(2) of the Act. But on the fact and for the reasons given above it has been held that the provisions of Section 15(2) are not attracted in the instant case. It has then to be seen whether the revisionist can get the protection of the proviso to Section 15(1) and Notification issued in exercise of the powers conferred on the State Government under this proviso.
24. Proviso to Section 15(1) provides that the State Government may by Notification in the official gazette permit in any area transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the Notification.
25. The State of Bombay vide Notification No. Bom. G.G.Ext. BT IP 4328 of 24-9-1949, Notification No. 5975/33 Health and Local Government Department on 21-12-1948 inter-alia provided in Para (2) of the Schedule of Notification as under:
(2) Transfer or assignment incidental to the sale of a business as a going concern together with the stock-in-trade and the goodwill thereof, provided that the transferor assignment is of the entire interest of the transferor or assignor in such lease hold premises together with the business and the stock-in-trade and goodwill thereof.
On the basis of this Notification read with stipulation in the deed of dissolution Exh. 83 it was contended by the learned Counsel for the revisionist that since everything including tenancy rights was transferred to Pramukhbhai Ranchhodbhai the so-called sub-letting is protected and has been legalised. He also placed reliance upon the case of Thakorlal Mohanlal (supra) in which the Notification issued by the State Government under the aforesaid proviso was considered. This case to my mind is distinguishable on facts.
26. Learned Counsel for the respondent on the other hand placed reliance upon the case of Budhalal Chhotalal Zaveri v. Lilavatiben Ratilal and Ors. reported in 1993 (2) GLH 391 : 1994 (1) GLR 209, wherein it was laid down that the person who wants to claim protection by virtue of the exception under notification issued by the State Government under the proviso to Section 15(1) is obliged to establish following ingredients:
(i) that there was a going business:
(ii) what stock-in-trade and goodwill:
(iii) that whole interest of the tenant including leasehold interest is transferred or assigned:
(iv) that the transferee is in a position to go on with the running business; and
(v) that it was done by a registered document.
27. The first four conditions laid down in this case are fulfilled from the dissolution Deed itself. Regarding 5th condition it was argued by the learned Counsel for the revisionist, and rightly so that the dissolution Deed is not required to be registered and such document is not compulsorily registrable. The contention could not be disputed from the other side. It was not a case of sale of immovable property worth more than one hundred rupees, hence assignment through a registered document was hardly required. Moreover, the Deed of dissolution does not require any registration.
28. Considering the words used in the dissolution Deed and further keeping in view Para 2 of the Schedule of the notification it can be said that actually it was not a case of sale of business, goodwill, stock and tenancy rights. On the other hand what is mentioned in Para 6 is that the tenancy rights of the said shop are given to the party of the first part and accordingly shop having tenancy rights, goodwill, stock, etc. of the said partnership firm have been allotted to the party of the first part The word "allotted" in this recital will not be synonymous to sale. The whole of the dissolution Deed does not indicate that these things were sold and that too for consideration. If it was not a case of sale of stock, goodwill, tenancy rights, etc. Para 2 of the Schedule will hardly be attracted. It would be improper to hold that mere transfer or assignment of business as going concern together with the stock-in-trade and the goodwill so also the tenancy rights, will attract the applicability of this part of the Schedule of Notification. On the other hand, the words transfer or assignment used in Para 2 of the Schedule are incidental to sale. Consequently, at first there should be sale and then the transfer or assignment should be incidental to sale. Since the ingredients of sale are missing in the dissolution Deed it cannot be said that transfer or assignment of the goodwill, stock, tenancy rights and account books etc. was incidental to sale. As such under this Para 2 of Schedule of Notification the sub-tenancy created on 31-12-1983 is not protected.
29. In view of the aforesaid discussions the two Courts below committed no error of law in recording finding that the sub-tenancy was created in 1983 and that too without consent of the landlord.
30. Coming to the next contention of the learned Counsel for the revisionist regarding non-joinder of Pramukhbhai Ranchhodbhai, I again find no force in this contention. In view of the above discussion, it is obvious that Pramukhbhai became sub-tenant with effect from 31-12-1983. The sub-tenancy is not protected under any provision discussed above. If he is illegal sub-tenant then it was not obligatory for the landlord to join him as defendant. It is settled law that the sub-tenant will go with the tenant-in-chief. If the decree for eviction is passed against the tenant-in-chief it will be binding on the sub-tenant. The Apex Court in Rupchand Gupta v. Raghuvanshi (Private) Ltd has laid down that where the landlord institutes a suit against the lessee for possession of the land on the basis of valid notice to quit served on the lessee and does not implead sub-lessee as a party to the suit, the object of the landlord is to eject the sub-lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub-lessee. This may act harshly on the sub-lessee, but this is a position well understood by him when took the sub-lease. The law allows this and so the omission cannot be said to be an improper act.
31. As such the two Courts below again committed no illegality in holding that the suit was not bad for non-joinder of Pramukhbhai Ranchhodbhai Patel.
No other point was pressed.For the reasons given above no merit is found in this revision which is liable to be dismissed and is hereby dismissed with no Order as to costs.