Allahabad High Court
Praveen Sharma (Since Deceased) And 2 ... vs Ravi Kumar And Another on 6 March, 2019
Author: Manoj Kumar Gupta
Bench: Manoj Kumar Gupta
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. 19 S.C.C. Revision No. 269 of 2014 Praveen Sharma (since deceased) and others Versus Ravi Kumar and another ____________ Hon'ble Manoj Kumar Gupta, J.
The instant revision under Section 25 of the Provincial Small Cause Courts Act, 1887 has been filed assailing the judgment and decree dated 3.5.2014 passed by the Court of Small Causes in SCC Suit No. 71/2011 whereby, the suit filed by the plaintiff-respondents for recovery of arrears of rent and for eviction of the defendant-revisionists from a shop on Ist floor of building bearing Municipal No. 182, Shankar Market, Abu Lane, Merrut Cantt. Meerut (for short 'the disputed shop') was decreed.
The facts, in brief, necessary for the disposal of the instant revision, are as follows : -
The plaintiffs instituted the suit, referred to above, with the allegation that they are owners and landlords of building No. 182, Shankar Market, Abu Lane, Meerut Cantt, Meerut, a two storied building; they had purchased the same by registered sale deed dated 18.12.2006 from the erstwhile owner and landlady Smt. Swarn Lata Aggi wife of late Satish Chandra Aggi; partnership firm M/s. Janta Finance & Trading Corporation (for short 'the firm') in which defendant Nos. 1 & 2 along with their father late Gajendra Sharma were partners, was tenant of the disputed shop on a rent of Rs. 1000/- per month; upon death of one of the partners Gajendra Sharma, the partnership firm got dissolved; the remaining partners did not reconstitute the firm; presently, no business is being transacted by the defendants from the disputed shop; after death of Gajendra Sharma, the defendants being his heirs and legal representatives have inherited the tenancy; rent from 1.12.2010 is due; despite notice under Section 106 of the Transfer of Property Act, 1882 dated 17.8.2011, sent by registered post on 24.8.2011, and served upon the defendants on 28.8.2011, the defendants have failed to pay arrears of rent; the defendants have sub-let the disputed shop to Siya Ram Kasturi Devi Education Society (for short 'the Society') registered under the Societies Registration Act, 1860 on a rent of Rs. 6000/- per month; consequently, the defendants are liable to eviction on the ground of default in payment of rent and for sub-letting the disputed shop to the Society.
The suit was contested by the defendants by filing written statement and in paragraph 1 thereof, it is pleaded that the sale deed dated 18.12.2006 is illegal and void, as permission from Cantonment Board, in terms of Governor General Order No. 179 of 1836 was not obtained; rent of Rs. 1000/- per month is being regularly tendered to the plaintiffs; after death of Gajendra Sharma, their father, the firm was duly reconstituted; the firm has not been made party to the proceedings, therefore, the suit is bad for non-joinder of the partnership firm; rent from 1.8.2010 was duly deposited in the account of the plaintiffs at Punjab National Bank, Abu Lane, Meerut Cantt. Meerut; the defendants had also deposited entire arrears of rent along with interest, cost, etc. since 1.12.2010 in the suit itself to avail the benefit of Section 20(4) of U.P. Act No. 13 of 1972 (for short 'the Act'); the disputed shop has not been sub-let to anyone as alleged; the disputed shop was taken on rent sometime in 1998-99 whereas, the Society got registered prior to that in the year 1995 thus, there is no question of the shop being sub-let to the Society; the defendants along with other partners are carrying on business in the disputed shop in the firm name M/s. Janta Finance & Trading Corporation and the allegation of sub-letting is incorrect.
The trial Court, while decreeing the suit by impugned judgment dated 3.5.2014, recorded the following findings : -
a) DW 1 in his affidavit has admitted that the defendants are tenant on behalf of the plaintiffs on a monthly rent of Rs. 1000/-. They have also admitted that the disputed shop in which defendant Nos. 1 & 2 along with their father Late Gajendra Sharma were partners had taken the shop on rent in the year 1998-99. The tender of rent during the period 2008-10 was made to the plaintiffs by different cheques, issued from time to time. Thus, it is duly established that the firm was tenant to the disputed shop and there exists relationship of landlord and tenant between the parties;
b) The defendants have defaulted in payment of rent since December 2010;
c) The defendants are not entitled to the benefit of deposits made under Section 20(4) of the Act, as they have denied the title of the plaintiffs;
d) The defendants are also not entitled to benefit of Section 20(4) of the Act, as they had purchased an open plot of land for residential purposes by sale deed dated 12.1.1999, consequently, the Proviso to sub-Section (4) of Section 20 gets attracted;
e) The defendants have failed to prove that after death of their father Gajendra Sharma, the firm was reconstituted. They also failed to prove that the said firm is transacting any business from the disputed shop;
f) On the other hand, the evidence on record proves that the Society is carrying on its business from the disputed shop. The case taken by the defendants in their oral statement that they are only receiving correspondence of the Society at the address of the disputed shop, has been disbelieved and it has been held that the Society is not only receiving its correspondence at the dispute shop, but it has also got (i) its registration certificate renewed by giving address of the disputed shop; (ii) it has submitted regular Income Tax Returns mentioning the address of the disputed shop as registered office of the Society; (iii) there is other documentary evidence to establish that the Society is carrying on its business from the disputed shop. Accordingly, it is held that the shop had been sub-let.
g) That notice under Section 106 of the Transfer of Property Act, 1882, was duly served;
Counsel for the defendant-revisionists Sri Ashish Kumar Singh, made the following submissions : -
a) Since the trial Court has held that partnership firm was tenant of the disputed shop, therefore, non-impleadment of the firm renders the suit defective. In support of the contention, he has placed reliance upon the provisions of Order 30 CPC;
b) The defendants have bonafidely raised the plea that in the absence of permission from Cantonment Board regarding sale of the building, which is situated in Cantonment area, as per Governor General Order No. 179 of 1836, the sale was illegal and void. The defendants have not denied the title of the original owner and landlord. It is open to the defendants to question the derivative title. The defendants have not renounced their title nor have set-up title in any third person. They have admitted the plaintiffs as landlords and even tendered rent to them. In paragraph 14 of the written statement, it was specifically pleaded that rent under Section20(4) of the Act had been deposited unconditionally. In such circumstances, the view taken by the Court below that the defendants had denied title of the plaintiffs, consequently, they are not entitled to benefit of Section 20(4) of the Act is manifestly illegal.
c) The purchase of a plot, meant for construction of a residential building would not deprive the defendants of the benefit of Section 20(4) of the Act. The trial Court has erred in misconstruing the scope of the Proviso to sub-section(4) of Section 20 of the Act.
d) The defendants have not sub-let the disputed shop to the Society. They were only receiving the postage and correspondence of the Society at the address of the disputed shop. They have not parted possession of the shop to the Society. There is no finding that exclusive possession has been handed over to the Society. Consequently, the finding rendered by the trial Court on the issue of sub-letting is manifestly illegal.
On the other hand, Sri Atul Dayal, learned counsel for the plaintiffs assisted by Sri Sumit Daga submitted that -
(a) the suit as framed was perfectly in accordance with the legal provisions. A partnership firm is not a legal entity. It cannot enter into contract, nor was tenant in the eyes of law, but it was the partners of the said firm, who were tenants of the disputed shop and they having been duly impleaded as defendants. There was no defect in the suit instituted against the defendants. In support of the said submission, he has placed reliance on a judgment of this Court in Gokul Prasad Versus VIIth Additional District and Sessions Judge, Allahabad and others, 2003(1) ARC 347;
(b) the defendants have categorically denied the title of the plaintiffs in paragraph 21 of the written statement and also in the statement of DW 1. In such circumstances, the trial Court was justified in not extending the benefit of Section 20(4) of the Act to the defendants.
(c) learned counsel very fairly conceded that purchase of open piece of land, even for residential purposes, would not deprive the defendants of the benefit of Section 20(4) of the Act until constructions are raised over it.
(d) the finding of sub-letting recorded by the trial Court is a finding of fact. The trial Court rightly came to the conclusion that the disputed shop has been sub-let. It has recorded a clear-cut finding that the Society is transacting its business from the disputed shop. The trial Court has also recorded a categorical finding that the partnership firm, after its dissolution pursuant to death of one of its partner, was never got re-constituted nor is transacting any business from the disputed shop. The abundant documentary evidence shows that the Society is not merely receiving correspondence at the address of the disputed shop but is using it as its Head Office. He further submitted that since sub-letting is done surreptitiously, therefore, there could be no direct evidence of sub-tenancy. It is only on basis of preponderance of evidence on record that inference has to be drawn whether sub-tenant is in possession or not. It is urged that the plaintiffs have succeeded in proving the same, therefore, this Court in exercise of revisional jurisdiction should desist from interfering with the findings recorded in this regard by the trial Court.
I have considered the submissions of learned counsel for the parties and perused the pleadings and evidence on record.
The first issue, which falls for determination, is whether the suit was bad for non-joinder of the partnership firm M/s. Janta Finance & Trading Corporation. Order 30, Rule 1 CPC provides that any two or more persons claiming or being liable as partners and carrying on business in India may sue or be sued in the name of the firm (if any) of which such persons were partners at the time of the accruing of the cause of action, and any party to a suit may in such case apply to the Court for a statement of the names and addresses of the persons who were, at the time of the accruing of the cause of action, partners in such firm, to be furnished and verified in such manner as the Court may direct.
A Division Bench of Jammu and Kashmir High Court in Messers Jodh Singh Gujral Versus S. Kesar Singh and others, AIR 1959 J & K 96, after taking into consideration Order 30, Rule 1 has held that the provision only prescribes a convenient procedure for suing a firm. It does not vary or abrogate the right which is available to the plaintiff under Section 43 of the Indian Contract Act, 1872, which provides, as follows : -
"When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.
This section varies the rule of Common Law as to the liability on joint contracts. It makes all joint contracts joint and several. It allows a promises to sue each one or more of the several joint promissors as he chooses and excludes the right of a joint promisor to be sued along with his co-promissors."
It has also been held that Order 30, Rule 1, does not control or over-ride the provisions of Order 1, Rule 6 CPC, which reads thus : -
Joinder of parties liable on same contract. - The plaintiff may, at his option, join as parties to the same suit all or any of the persons severally, or jointly and severally, liable on any one contract, including parties to bills of exchange, hundis and promissory notes.
After referring to the above provisions, the Division Bench concluded by holding that the plaintiff can chose to sue the partners without bringing on record the firm itself. They are equally entitled to bring an action against only some of the partners. Order 30, Rule 1 merely prescribes the procedure in case the plaintiff desires to sue the firm. It does not in any manner affect right conferred by Section 43 of the Indian Contract Act, 1872 and Order 1, Rule 6 CPC.
In Puran Chand Versus Rent Control and Eviction Officer, Kanpur and another, 1959 ALJ 343, this Court held that a firm does not have legal status of a person. It is merely convenient name or label of person or persons who own it. A firm, as such is incapable of making a contract or becoming a tenant. The statement that a firm became tenant or secured contract is a layman's way of describing the real relation namely that the partners of the firm became tenants or entered into contract of tenancy.
Learned counsel for the defendant-revisionists submitted that under the Act, there is specific provision for making allotment of a premises in favour of a partnership firm. The said provision in view of the discussion made above, does not result in elevating the status of a firm to a legal entity. It is only a convenient way of making allotment in the firm's name instead of mentioning names of all the partners individually.
In Gokul Prasad Versus VII ADJ, 2003 (1) ARC 347, wherein an identical issue came up for consideration, a learned single Judge placing reliance on the judgments of referred to above, repelled the contention and held as under : -
"52. Thus in view of the aforesaid decisions, it is evident that the partnership firm cannot be a tenant. In fact, partners of the firm are the tenants.
53. In view of this legal position, the partnership firm M/s. Gauri Shankar Gokul Prasad in the present case was not required to be impleaded as an opposite party in the release application."
Having regard to the above legal position, this Court has no doubt in its mind that the suit as drafted was perfectly in accordance with the legal provisions and it was not necessary to implead the partnership firm. Moreover, it is not disputed that upon death of Gajendra Sharma, one of the partners of the firm, the firm got dissolved. The trial Court has entered a specific finding that although the tenant claimed that the firm was got reconstituted and a fresh partnership deed was also executed, but no such evidence was brought on record. The theory of reconstitution of the firm has been disbelieved by the trial Court. Order 30, Rule 4 CPC provides that where two or more persons sues in the firm's name and any of such persons dies, whether before the institution or during the pendency of any suit, it shall not be necessary to join the legal representative of the deceased as a party to the suit. In the instant case, the remaining partners of the firm namely defendant Nos. 1 & 2 were duly impleaded. Apart from them, the plaintiffs have also taken care to implead Smt. Prem Lata Sharma widow of late Gajendra Sharma, the deceased partner. This was by way of abundant condition, though not required in view of Order 30, Rule 4 CPC. This Court, therefore, finds no force in the submission that on account of non-impleadment of partnership firm, the suit as instituted was bad in law.
The finding that there was default in payment of rent within the meaning of clause (a) of sub-section (2) of Section 20 of the Act has not been challenged before this Court. The submission of learned counsel for the revisionists, as noted above, is only in respect of the finding recorded by the trial Court declining to grant benefit of sub-section (4) of Section 20 of the Act to the defendants. The first ground on which the benefit of Section 20(4) has not been given is that the defendants had denied the title of the plaintiffs and thus, not entitled to benefit of the said provision.
In paragraph 1 of the written statement, the defendants have taken a plea that sale deed dated 18.12.2006 set-up by the plaintiffs is illegal and void, as prior permission for sale of the said property was not taken from the Cantonment Board in terms of Governor General Order No. 179 of 1836. The same stand was taken by DW 1 in his oral testimony. It is noteworthy that the defendants have not denied the title of the original owner and landlord, who had inducted the defendants in the disputed shop as tenant. They have also not denied the relationship of landlord and tenant between themselves and the plaintiffs. Rather, they have admitted in paragraph 2 of the written statement that they are tenant on behalf of the plaintiffs on a monthly rent of Rs. 1000/-. In paragraph 3 of the additional pleas, they have given details of the rent deposited by them in bank in favour of the plaintiffs. Again in paragraph 14 & 15 of the written statement, it is pleaded that they had deposited entire rent from 1.12.2010 to 31.7.2012 @ Rs. 1000/- per month along with interest, cost, etc. in order to take benefit of Section 20(4) of the Act and that the said deposit had been made without any condition attached to it.
Under common law as well as under different provisions of Rent Control Act in various States including the State of U.P., there is specific provision for forfeiture of tenancy on the ground of denial of title of the landlord. The same is based on the principle contained in Section 116 of the Evidence Act, which embodies a rule of estoppel that no tenant of immoveable property, or person claiming through such tenant, shall, during the continuance of the tenancy, be permitted to deny that the landlord of such tenant had, at the beginning of the tenancy, a title to such immoveable property.
The Supreme Court, while interpreting the principles contained in Section 116 of the Evidence Act in Subhash Chandra Versus Mohammad Sharif and others, AIR 1990 SC 636 held that "where the landlord has not himself inducted the tenant in the disputed property and his rights are founded on a derivative title, for example, as an assignee, donee, vendee, heir, etc., the position is a little different. A tenant already in possession can challenge the plaintiff's claim of derivative title showing that the real owner is somebody else, but this is subject to the rule enunciated by S. 116 of the Evidence Act. The section does not permit the tenant, during the continuance of the tenancy, to deny that his landlord had at the beginning of the tenancy a title to the property. The rule is not confined in its application to cases where the original landlord brings an action for eviction, a transferee from a landlord also can claim the benefit, but that will be limited to the question of the title of the original landlord at the time when the tenant was let in."
Where the tenant denies the title of the assignee, landlord bonafidely, to satisfy himself that he has acquired a valid title, it is held by the Supreme Court in Sheela & others Versus Firm Prahlad Rai Prem Prakash, 2002 (47) ALR 415 that it would not result in forfeiture of the tenancy on the ground of denial of title. It has also been observed by the Supreme Court that since forfeiture on the ground of denial of title operates harshly against the tenant, therefore, in order that the same operates as a ground for eviction, the denial of the title of the landlord should not be for bona fide reasons. The relevant extract from the law report is as under : -
In our opinion, denial of landlord's title or disclaimer of tenancy by tenant is an act which is likely to affect adversely and substantially the interest of the landlord and hence is a ground for eviction of tenant within the meaning of clause (c) of sub-section (1) of Section 12 of M.P. Accommodation Control Act, 1961. To amount to such denial or disclaimer, as would entail forfeiture of tenancy rights and incur the liability to be evicted, the tenant should have renounced his character as tenant and in clear and unequivocal terms set up title of the landlord in himself or in a third party. A tenant bona fide calling upon the landlord to prove his ownership or putting the landlord to proof of his title so as to protect himself (i.e. the tenant) or to earn a protection made available to him by Rent Control Law but without disowning his character of possession over the tenancy premises as tenant cannot be said to have denied the title of landlord or disclaimed the tenancy. Such an act of the tenant does not attract applicability of Section 12(1)(c) abovesaid. It is the intention of the tenant, as culled out from the nature of the plea raised by him, which is determinative of its vulnerability."
The same view has been taken by the Supreme Court in A.V.G.P. Chettiar and Sons and others Versus T. Palanisamy Gounder, AIR 2002 SC 2171, while observing -
"38. This Court has recently held that Section 10(2)(vii) is based on "the rule of estoppel contained in Section 116 of the Evidence Act which estops the tenant from denying the title of the landlord at the commencement of the tenancy and the estoppel continues to operate so long as the tenant does not surrender possession over the tenancy premises to the landlord who inducted him in possession. The tenant is not estopped from denying the title of the landlord if it comes to an end subsequent to the creation of the tenancy nor is he estopped from questioning the derivative title of a transferee of his landlord". [JJ. Lal Pvt. Ltd. and others vs. M.R. Murali and another 2002 (3) SCC."
A learned single Judge of this Court, in Chhotey Lal Shukla versus IXth Additional District Judge, 2007 (2) ARC 453, held as under : -
"However, as far as second point is concerned I do not agree with the view taken by the revisional Court. It is correct that a tenant who denies the title of the landlord is not entitled to the benefit of Section 20(4) of U.P. Act No. 13 of 1972. However, this proposition will have to be read along with Section 116 of the Evidence Act which prohibits the tenant from questioning the title of the landlord who inducted him a tenant. However, a tenant is entitled to question the derivative title of the subsequent landlord. In the instant case, petitioner-tenant was not inducted by respondent No. 2, hence he could not be estopped from questioning the title of respondent No. 2. In this regard reference may be made to Sheela Versus Firm Prahlad Rai Prem Prakash, 2002 (2) SCR 177."
Learned counsel for the plaintiff-revisionists has placed reliance on a judgment of the Supreme Court in Keshar Bai Versus Chhunulal, 2014 (11) SCC 438. In the said case, the tenant denied the genuineness of the sale deed on basis of which plaintiff was claiming himself to be landlord. He also denied attornment between the parties or that any relationship of landlord and tenant had come into existence. The denial was despite the fact that there was abundant evidence on record to establish that the plaintiff was owner and landlord of the premises. It is in the aforesaid background that the Supreme Court held that it was not a simple case of denial of derivative title; it was a case where denial was found to be mala fide. The relevant observations made by the Supreme Court in this regard are as follows : -
"There is a specific reference to the registered document under which the appellant purchased the suit building from the earlier landlord in the plaint. Yet, in the written statement the respondent denied the title of the appellant. We notice that there are several documents on record relating to the ownership of the appellant, apart from the registered sale deed, such as municipal tax receipts, ration card etc. Yet, the respondent refused to acknowledge the appellant's title. He denied it in his evidence. This is not a simple case of denial of derivative title by a person who did not know about the purchase of the building by the landlord. Even after going through the relevant documents relating to the appellant's title the respondent feigned ignorance about it. The High Court has accepted that in his crossexamination the respondent has stated that he was not accepting the appellant as his landlady. The High Court has, however, gone on to say that by this piece of evidence no decree of eviction can be passed against the respondent under Section 12(1)(c) of the M.P. Act because the respondent will have no occasion to establish in what circumstances he denied the title of the appellant. The High Court has further held that the respondent was within permissible limit in asking the appellant to produce documentary evidence about his title as a landlord. The High Court, in our opinion, fell into a grave error in drawing such a conclusion. Even denial of a landlord's title in the written statement can provide a ground for eviction of a tenant. It is also settled position in law that it is not necessary that the denial of title by the landlord should be anterior to the institution of eviction proceedings. This is so stated by this Court in Majati Subbarao v. P.V.K. Krishna Rao."
The case in hand is clearly distinguishable. The defendants while stating that the sale deed is void as prior permission of the Cantonment Board was not obtained did not dispute the relationship of landlord and tenant between the parties. They even specifically pleaded that they had been tendering rent to the plaintiffs since after purchase of the disputed shop and the building by them. The tenant had also deposited rent under Section 20(4) of the Act and in paragraph 14 of the written statement specifically pleaded that the deposit is unconditional.
It is noteworthy that the instant suit has not been decreed on the ground of denial of title. The issue has cropped up, as the trial Court has recorded a finding that the defendants could not be given benefit of Section 20(4) of the Act as they have denied the title of the plaintiffs. Sub-section (4) of Section 20 reads as follows : -
"(4) In any suit for eviction on the ground mentioned in clause (a) of sub-section (2), if at the first hearing of the suit the tenant unconditionally pays or tenders to the landlord the entire amount of rent and damages for use and occupation of the building due from him such damages for use and occupation being calculated at the same rate as rent) together with interest thereon at the rate of nine per cent per annum and the landlords' costs of the suit in respect thereof, after deducting therefrom any amount already deposited by the tenant under sub-section (1) of section 30, the court may, in lieu of passing a decree for eviction on that ground, pass an order relieving the tenant against his liability for eviction on that ground."
The provision does not specifically stipulate that in case of denial of title, benefit of the said provision would not be given to the tenant. However, one of the conditions for making the deposit under Section 20(4) in order to avail benefit of the said section is that the deposit should be unconditional. It has been held by a Division Bench of this Court in 1983 (1) ARC 74 that deposit made under Section 20(4) becomes conditional, if any string is attached to the same so that the landlord is not in a position to withdraw the amount forthwith. In Mangal Sen Versus Kanchhid Mal, 1981 ARC 432, the Supreme Court held that unconditional deposit would only mean that the amount deposited is liable to be paid to the landlord without attaching any condition thereto. By mere protest, it was held that the amount deposited would not become conditional. It would only mean that the person depositing the rent does not accept the case of his adversary. However, in a case where the tenant stated in the written statement that the amount deposited should not be paid to the plaintiff until he establishes his good title, the deposit was held to be conditional by this Court in Sheo Murti Gupta Versus D.J. Allahabad, 1986 (U.P.) RCC 54.
In the instant case, albeit the defendants having taken a plea that the sale deed is illegal and void they not only attorned in favour of the plaintiffs but while making deposit under Section 20(4), they specifically pleaded that the deposit is unconditional meaning thereby that it could be withdrawn by the landlord forthwith. In case, there had been any pleading that unless the plaintiffs prove their title to the disputed shop, they should not be permitted to withdraw the amount deposited under Section 20(4) of the Act, it would have made the deposit conditional. Since no such condition was imposed, therefore, in considered opinion of the Court, the deposit made under Section20(4) of the Act cannot be said to be a conditional deposit. The view taken by the trial Court to the contrary is manifestly illegal.
The next ground on which benefit of Section 20(4) has not been extended is that the defendants have purchased a plot for residential purposes by a sale deed dated 12.1.1999. It is clear from the Proviso to sub-section (4) that the benefit of the main provision would not be extended to the tenant, in case, he or any member of whose family has built or has otherwise acquired in a vacant state, or has got vacated after acquisition any residential building in the same city, municipality, notified area or town area. Acquisition of an open piece of land for residential purposes would not attract the proviso, as also fairly agreed to by Sri Atul Dayal, learned counsel for the plaintiff-respondents.
It is not in dispute that the entire amount required to be deposited under Section 20(4) was deposited by the defendants before the trial Court on Ist date of hearing. Having regard to the above discussion, the deposit was unconditional, consequently, the benefit of sub-section (4) of the Act could not be denied to the defendants. Accordingly, the tenants stands relieved from the liability of eviction on ground of default in payment of rent. The view of trial Court to the contrary is not sustainable in law.
The next issue which arises for consideration is regarding alleged sub-letting of the disputed shop to the Society. Before dwelling on the facts of the case, it is worthwhile to note law on the point. The Supreme Court in Celina Coelho Pereira (ms) and others Versus Ulhas Mahabaleshwar Kholkar and others, (2010) 1 SCC 217, after considering number of previous judgments, has deduced the following principles relating to sub-tenancy in para 25 of the law report : -
" The legal position that emerges from the aforesaid decisions can be summarised thus :
i) In order to prove mischief of subletting as a ground for eviction under rent control laws, two ingredients have to be established, (one) parting with possession of tenancy or part of it by tenant in favour of a third party with exclusive right of possession and (two) that such parting with possession has compensation or rent.
(ii) Inducting a partner or partners in the business or profession by a tenant by itself does not amount to subletting. However, if the purpose of such partnership is ostensible and a deed of partnership is drawn to conceal the real transaction of sub-letting, the court may tear the veil of partnership to find out the real nature of transaction entered into by the tenant.
(iii) The existence of deed of partnership between tenant and alleged sub-tenant or ostensible transaction in any other form would not preclude the landlord from bringing on record material and circumstances, by adducing evidence or by means of cross-examination, making out a case of sub-letting or parting with possession in tenancy premises by the tenant in favour of a third person.
(iv) If tenant is actively associated with the partnership business and retains the control over the tenancy premises with him, may be along with partners, the tenant may not be said to have parted with possession.
(v) Initial burden of proving subletting is on landlord but once he is able to establish that a third party is in exclusive possession of the premises and that tenant has no legal possession of the tenanted premises, the onus shifts to tenant to prove the nature of occupation of such third party and that he (tenant) continues to hold legal possession in tenancy premises.
(vi) In other words, initial burden lying on landlord would stand discharged by adducing prima facie proof of the fact that a party other than tenant was in exclusive possession of the premises. A presumption of sub-letting may then be raised and would amount to proof unless rebutted."
The Supreme Court thereafter proceeded to consider whether the defendant tenant had sub-let the tenanted premises to M/s. Mandovi Tours and Travels under the garb of doing business in partnership. The Supreme Court observed that a transfer such as sub-letting by tenant which is not permissible under law is mostly done under a deceptive arrangement so that the landlord may not come to know of true facts. Consequently, pleadings in such matters ought not to be construed too technically. The true test is to see whether the other side has been taken by surprise or prejudiced. It is apt to quote the observations made by the Supreme Court in this regard : -
" If the purpose of constituting partnership by the tenant is ostensible and a deed of partnership is drawn to conceal the real transaction of subletting in a given case, the court may be required to tear the veil of partnership to find out the real nature of transaction entered into by the tenant and in such circumstances the evidence let in by the landlord cannot be ignored on the ground that there is some variance between pleading and proof. In a case such as the present one, the rule of secundum allegata et probata is not strictly applicable as the tenant cannot be said to have been put to any prejudice."
Again, the Supreme Court in M/s. Bharat Sales Ltd. Versus Life Insurance Corporation of India, AIR 1998 SC 1240, has observed that in case of a sub-tenancy, normally the scene is enacted behind the back of the landlord concealing the overt acts and transferring possession clandestinely to a person who is an utter stranger to the landlord. In 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 property has been sub-let had paid monetary consideration to the tenant. The Court is therefore permitted to draw its own inference upon the facts of the case proved at the trial, including the delivery of exclusive possession to infer that the premises were sub-let.
In a more recent judgment of the Supreme Court in Prem Prakash Versus Santosh Kumar Jain and Sons (HUF) and others, 2018 (12) SCC 637, the Supreme Court has laid down the standard of proof which lies upon the landlord to prove possession of the sub-tenant. It has been held that the same is based on preponderance of probability only and once he succeeds in the same, the burden to rebut lies on the tenant. The relevant observations are as follows : -
"Undoubtedly, the initial burden to prove that the sub-tenant is in exclusive possession of the property is on the owner, however, the onus to prove the exclusive possession of the sub tenant is that of preponderance of probability only and he has to prove the same prima facie only and if he succeeds then the burden to rebut the same lies on the tenant."
It is noteworthy that under U.P. Act No. 13 of 1972, sub-letting is one of the grounds for eviction of a tenant. The relevant provision is Section 20(2)(c), which is as follows : -
"(e) that the tenant has sub-let, in contravention of the provisions of Section 25, or as the case may be, of the old Act the whole or any part of the building."
Section 25 of the Act reads as follows : -
" 25. Prohibition of sub-letting.- (1) No tenant shall sub-let the whole of the building under his tenancy.
(2) The tenant may with the permission in writing of the landlord and of the District Magistrate, sub-let a part of the building.
Explanation.- For the purposes of this section-
(i) where the tenant ceases, within the meaning of clause (b) of sub-section (1) or sub-section (2) of section 12, to occupy the building or any part thereof he shall be deemed to have sub-let that building or part ;
(ii) lodging a person in a hotel or a lodging house shall not amount to sub-letting."
Under the Act, sub-letting has been given an extended definition, which is not there under common law. This is clear from sub-section (2) of Section 25 quoted above, which provides that where the tenant ceases within the meaning of clause (b) of sub-section (1) or sub-section (2) of Section 12, to occupy the building or any part thereof, he shall be deemed to have sub-let that building or part. In the said context, it would be worthwhile to take note of clause (b) of sub-section (1) and sub-section (2) of Section 12 which are as follows : -
"12. Deemed vacancy of building in certain cases.-
(b) he has allowed it to be occupied by any person who is not a member of his family, or (2) In the case of a non-residential building, where a tenant carrying on business in the building admits a person who is not a member of his family as a partner or a new partner, as the case may be, the tenant shall be deemed to have ceased to occupy the building."
Under common law, taking a partner in business is not forbidden unless it is by way of a cloak to sub-let. However, under the extended definition of sub-letting contained in the Act, even where the defendant does not withdraw his possession from the building in his tenancy, but admits a person, who is not member of his family, as partner in business, he is deemed to have sub-let the building. The facts of the case has, therefore, to be examined in the context of the extended definition of sub-tenancy contained under the Act.
The Supreme Court in Ram Murti Devi Versus Pushpa Devi and others, 2017 (15) SCC 230, had the occasion to consider a plea of sub-tenancy in context of U.P. Act No. 13 of 1972. After taking specific note of Section 25 of the Act, the Supreme Court in that case upheld the finding of sub-letting and repelled the claim of the tenant that one Mohd. Ezaj, who was sitting in the shop along with the tenant, was their worker and held that the shop was in fact sub-let to him. I may usefully reproduce paragraph 31 from the law report : -
"Present is not a case wherein Trial Court had considered any irrelevant factor or has ignored any relevant factor. It may be noticed that Trial Court had also held that although defendants tenants claimed that Mohd. Ezaj was their worker but they had not brought on record any evidence to prove the same. Requisite proof of the intimation of name of Mohd. Ezaj had not been given, as required by statutory provisions of UP Shops & Commercial Establishments Act 1962."
M/s. Janta Finance & Tading Corporation, after the death of Gajendra Sharma, father of defendant Nos. 1 & 2 got dissolved. Although, the defendants claimed that the firm was reconstituted, but no evidence in that regard was led by the defendants. The trial Court has entered a specific finding that the firm M/s. Janta Finance & Trading Corporation, after its dissolution, was never reconstituted. The said finding has not been shown to be illegal or perverse in any manner by the learned counsel for the defendants.
The trial Court has held that after dissolution of the firm M/s. Janta Finance & Trading Corporation, apart from the fact that it was not reconstituted, there is no evidence to show that it was doing any business. For coming to the said conclusion, the trial Court has placed reliance upon the cross-examination of DW 1 (Praveen Sharma - defendant No. 1). He has admitted in his testimony that he could not say whether any business of finance which the firm was involved in, is being done from the disputed shop or not. He also could not disclose whether any money lending licence was there in the name of firm or not. He feigned ignorance regarding maintenance of balance sheets and account books. He also could not disclose name of any person to whom the firm has given any finance. The defendants, despite a specific plea that no business of the firm is being transacted from the disputed shop, did not bring on record any evidence to prove that any business is being transacted by the firm or by the defendants themselves. The said finding, which is a pure finding of fact, has also not been shown to be illegal or perverse in any manner, so as to warrant interference by this Court in exercise of revisional power.
The plaintiffs have taken specific case in the plaint that the disputed shop has been sub-let to the Society. The defendants in their written statement denied the said fact by merely stating that the Society was got registered even before the inception of tenancy in respect of the disputed shop. They did not mention about any kind of relationship between the Society and the disputed shop. Thereafter, PW 1 along with his affidavit filed by way of examination-in-chief brought on record abundant evidence to establish a direct link between the Society and the disputed shop. The evidence comprises of (i) renewal certificate of the Society mentioning its address as 182, Shankar Market, Abu Lane, Meerut Cantt. Meerut (Ext. 8); Bye laws of the Society bearing signatures of defendant Nos. 1 & 2 and their father M.P. Sharma (Ext. 9); Memorandum of Association, again signed by the same persons (Ext. 10); Affidavit of defendant No. 2 submitted before Deputy Registrar,Firms, Societies and Chits, Meerut in the year 2010 as Secretary of the Society seeking renewal of the Society (Ext. 11); Registered lease deed in favour of Society dated 18.2.2008 (Ext. 13) mentioning its address as that of the disputed shop; Income Tax Return of the Society of different years - 2008-09, 2009-10, 2010-11, mentioning address of the disputed shop as address of the Society. Only thereafter, DW 1 for the first time in his testimony stated that he has been receiving correspondence of the Society at the address of the disputed shop. He also admitted in his testimony that earlier there was a room on second floor of the same building in the tenancy of the defendants. The said room remained in their tenancy from 1987 to 1997. The Society was got registered for the first time in the year 1995, at which point of time, the room on second floor was in the tenancy of the defendants. Thus, it is not difficult to co-relate the registration of the Society from the same address. Concededly, the said shop was vacated in the year 1997. The disputed shop was taken on rent in the year 1998. It is apt to note that one more shop on the first floor is in the tenancy of the defendants from which they are carrying on another business in the name of Master and Inks, but DW 1 has admitted that the postage of the Society, which is received by him, is at the address of the disputed shop. It is not his case that the postage is received at the other shop in the same building. Thus, whatever connection the Society has with the building No. 182, Shankar Market, is in respect of the disputed shop.
The question, which now falls for consideration is whether the defendants are merely receiving correspondence of the Society at the disputed shop or there is some deeper connection apart from receiving correspondence and whether the same could amount to subletting within the meaning of the Act.
It is not in dispute that the defendants are office bearers of the Society and their entire family is in one manner or other connected with the said Society. The Memorandum of Association of the Society reveals that the Society was founded by eight person and all the defendants were signatories thereto. Even after the room on the second floor was vacated in the year 1997, the Society obtained its renewal at the same address. Sudhir Sharma, defendant No. 2 gave his affidavit at the time of obtaining renewal in the year 2010, in which he stated that the disclosures made in the form for obtaining renewal are correct. The renewal certificate obtained in the year 2010, after inception of tenancy in the disputed shop continues to bear the same address as was given at the time of registration. The Society in its Income Tax Return has also been giving the same address. It has also obtained various lease deeds and other registered conveyance deeds in which also the address of the same building i.e. 182, Shankar Market, Abu Lane, Meerut Cantt. Meerut has been given. PW 1 in his cross-examination stated that he had seen office of the Society being run from the disputed shop. He also specifically stated that all correspondence of the Society is being received at the disputed shop. He stated that he went to the disputed shop at least four times. He also stated that office is being run. He then said that office of Janta Trading is being run or that of Siya Ram. No doubt, the latter part of the statement is a little vague, but if it is read along with statement made in the earlier part, the only irresistible conclusion which could be drawn is that PW 1 asserted that office of the Society is being run in the disputed shop. Despite the above specific case in the plaint and in the testimony of PW 1, the defendants did not bring any evidence to prove that their registered office is at some other place, though they claimed that the Society has some office at Shastri Nagar. In respect of registered office, he again feigned ignorance.
The trial Court has disbelieved the case of the defendants that any business of partnership firm was being run from the disputed shop. The trial Court has placed reliance on Income Tax Returns, renewal certificates, apart from the fact that correspondence of the Society is being received at the disputed shop, coupled with the fact that the partnership firm to which shop was let out had already wound up its business, in coming to the conclusion that it is the Society which is running its operations from the disputed shop.
A Society registered under the Societies Registration Act, 1860 is an entity separate and distinct from its office bearers unlike in case of a partnership firm. It can sue or be sued in its own name. The position of a Society registered under the Societies Registration Act is more like a Corporation, incorporated under the provisions of the Societies Registration Act, 1860. The parting of possession to the Society which is a separate entity, distinct from the defendants who were tenant of the shop in their individual capacity would definitely bring the case within the ambit of Section 25 of the Act and would amount to sub-letting. In Prem Prakash (supra), the Supreme Court has held that the standard of proof relating to parting of possession to the sub-tenant is that of preponderance of probability only and once the same stand discharged by the landlord, the burden shifts on the tenant to rebut the same. In the facts of the instant case, the landlords have successfully discharged their burden. On the other hand, the defendants themselves being office bearers of the said Society, a heavy burden rested upon them to lead positive evidence to show that they are actually transacting business of their firm M/s. Janta Finance & Trading Corporation from the disputed shop and the Society has no connection with the disputed shop except the fact that it is receiving correspondence at the address of the disputed shop, but in which they utterly failed.
In the circumstances aforesaid, this Court does not find any illegality in the findings recorded by the trial Court, as regards sub-letting of the disputed shop to the Society.
In consequence and having regard to the above discussion, the decree of eviction passed against the revisionists has to be maintained. The plaintiffs shall be entitled to withdraw rent deposited by the revisionists in the suit in satisfaction of the decree of arrears of rent. The decree passed by the trial Court stands modified to the above limited extent.
The revision stands disposed of accordingly, but without any orders as to cost.
(Manoj Kumar Gupta) Dated: 6.3.2019 AM/-
Civil Misc. Application No. 338349 of 2017 In S.C.C. Revision No. 269 of 2014 Praveen Sharma (since deceased) and others Versus Ravi Kumar and another ____________ Hon'ble Manoj Kumar Gupta, J.
Counsel for the revisionists states that in view of the finding recorded by this Court that the defendants are entitled to benefit of Section 20(4) of the Act, the application is not being pressed.
It is accordingly rejected.
(Manoj Kumar Gupta) Dated: 6.3.2019 AM/-
Civil Misc. Application No. 338348 of 2017 In S.C.C. Revision No. 269 of 2014 Praveen Sharma (since deceased) and others Versus Ravi Kumar and another ____________ Hon'ble Manoj Kumar Gupta, J.
In view of judgment rendered in SCC Revision No. 269 of 2014, the application has become infructuous.
It is accordingly rejected.
(Manoj Kumar Gupta) Dated: 6.3.2019 AM/-