YUVRAJ @ MUNNA PRALHAD JAGDALE & ORS. versus JANARDAN SUBAJIRAO WIDE on 21 March 2023

1. These civil appeals arise out of the judgment dated 03.12.2008of the Bombay High Court, allowing Writ Petition No. 1067 of 1992, andits later judgment dated 09.09.2009, dismissing Review Petition No. 75of 2009 in W.P No. 1067 of 1992, respectively. In turn, W.P No. 1067 of1992 filed by Janardhan Subajirao Wide, the respondent herein, aroseout of the judgment dated 21.12.1991 of the learned 13[th] Additional DistrictJudge, Pune, in Civil Appeal No. 1030 of 1987, confirming the judgmentdated 30.09.1987 of the learned II Additional S.C. Judge, Pune, in C.S.No. 386 of 1985.

2. C.S. No. 386 of 1985 was filed by late Ramachandra MarutiJagadale, plaintiff No.2, and his wife, late Sou. Rangubai Jagadale, plaintiffNo.1, the predecessors-in-title of the appellants herein, for recovery ofpossession of the leased premises bearing C.T.S No. 1873 at Bhamburda,Pune, from the tenant, Janardhan Subajirao Wide. By judgment dated30.09.1987, the Trial Court decreed their suit, holding them entitled toclaim eviction of the tenant under Section 13(1)(e) of the Bombay Rents,Hotel and Lodging House Rates (Control) Act, 1947 (for brevity, ‘theAct of 1947’). Two months’ time was granted to the tenant to vacatethe premises. This judgment of the Trial Court was confirmed in appealby the learned 13[th] Additional District Judge, Pune, vide judgment dated21.12.1991.

3. It is against these judgments that the tenant, viz., the respondentherein, filed W.P. No. 1067 of 1992 before the Bombay High Court. Byits judgment dated 03.12.2008, the High Court opined that a case of sub-tenancy was not made out, warranting eviction of the tenant on thatground, and quashed the decree of eviction/ possession. In consequence,C.S. No. 386 of 1985 was dismissed. Aggrieved thereby, the legalrepresentatives of the deceased plaintiffs, who were on record in thewrit petition, filed Review Petition No. 75 of 2009. However, by itsjudgment dated 09.09.2009, the High Court reiterated its finding that the A

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1138SUPREME COURT REPORTS

Atenant had never parted with possession of the leased premises and hadnever left the premises, being a partner. Holding so, the High Courtconcluded that there was no error on the face of the record and dismissedthe review petition. Presently, these two judgments are under appeal.

4. While so, the tenant, Janardhan Subajirao Wide, the soleBrespondent in these appeals, expired on 16.02.2018. Thereupon, theappellants filed I.A. No. 89838 of 2021 seeking condonation of the delayof 1169 days in taking steps and I.A. No. 89837 of 2021 to set aside theabatement of the appeals and to permit substitution of the legal heirs ofthe deceased respondent. Notice having been ordered thereon, Mr.Sudhanshu S. Choudhari, learned counsel, who had earlier appeared forCthe deceased respondent, e-filed his vakalatnama/appearance on behalfof the legal representatives on 05.11.2022. No counter was filed by himopposing the applications. Sufficient cause having been shown, delay intaking necessary steps is condoned; abatement of the appeals is setaside; and legal representatives of the deceased sole respondent are Dbrought on record. Registry shall make necessary changes in the causetitles in both the appeals before issuing certified copies of this judgment.

5. Heard Mr. Vinay Navare, learned senior counsel, appearingfor the appellants; and Mr. Sudhanshu S. Choudhari, learned counsel,appearing for the respondents.E

6. The leased premises, consisting of two blocks with anapproximate area of 455 sq. ft., are situated on the ground floor on theeastern side of the cement-concrete building, bearing C.T.S No. 1873 atBhamburda, Pune. These premises were let out to the tenant by theoriginal landlord and landlady, the predecessors-in-title of the appellants,Ffor the purpose of his hotel business under the name and style of HotelAmbika. Civil Suit No. 386 of 1985 was filed by the landlord and landladyfor eviction of the tenant on two grounds. Their claim was that the tenantcarried out unauthorized construction of a toilet in the leased premises,thereby violating the mandate of Section 13(1)(b) of the Act of 1947. Itwas also their case that the tenant parted with the running of the hotelGand possession of the leased premises in favour of one Krishna B Shetty,thereby committing breach of Section 13(1)(e) of the Act of 1947. Thesegrounds are borne out by the plaint filed in the suit, which is sought to beplaced on record, by way of I.A. No. 38142 of 2023, along with aphotocopy of Section 15 of the Act of 1947. I.A. No. 38143 of 2023 wasHfiled seeking exemption from filing an official translation of the plaint.

The I.A.s are allowed. The documents are taken on record and exemption,as prayed for, is granted.

7. The tenant filed a Written Statement denying the suit claims.Thereupon, the Trial Court settled three issues for consideration. Theplaintiffs examined three witnesses, including plaintiff No. 2, while thedefendant examined himself as DW1.

8. Plaintiff No. 2, speaking as PW1, stated that the suit premiseswas leased out to the tenant in the year 1975 for running his hotel business.He asserted that the tenant constructed a toilet in the leased premises inJanuary, 1985, without obtaining his consent and 2-4 days later, he soldhis rights in the hotel to Krishna B Shetty for a sum of ` 2,00,000/- andaccepted ` 50,000/- as earnest money. He claimed that Krishna B Shettywas running the hotel in the leased premises thereafter for about elevenmonths. He further stated that in November, 1985, there was a disputebetween the tenant and Krishna B Shetty, which led to the sealing of thepremises, and finally the key thereof was handed over by the Sub-Divisional Magistrate to the tenant and, thereafter, Krishna B Shetty didnot operate the hotel.

9. PW2, the Advocate-Commissioner, stated in her first report(Exh.8) that Krishna B Shetty was in occupation of the leased hotelpremises when she visited the same. In her subsequent report (Exh.23),she stated that she found no trace of a toilet constructed in the leasedpremises.

10. Krishna B Shetty was examined as PW3. He stated that heintended to purchase the hotel from the tenant and had taken possessionin January, 1985. He stated that the price was settled at ` 2,00,000/- andhe paid ` 50,000/- by way of earnest money at the time of execution ofthe agreement. He asserted that the tenant illegally evicted him from thehotel premises, constraining him to file a complaint and also a suit forspecific performance.

11. The tenant examined himself as DW1. In his examination-in-chief, he claimed that he had not given the hotel business to Krishna BShetty or anyone else and that Krishna B Shetty was not given possessionof the leased premises at any time. However, during his cross-examination, he admitted that he was carrying on hotel business in theleased premises with the name ‘Hotel Ambika’ and in the year 1984, hethought of admitting a partner to run the hotel. As Krishna B Shetty was A

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Aalso in the same business, he stated that he had talks with him aboutjoining the business. He denied that Krishna B Shetty was allowed byhim to join as a partner in January, 1985. He, however, admitted hissignatures in the partnership agreement executed in that regard (Exh.48)and conceded that his own Advocate had purchased the stamp paperand drafted the said agreement. He denied that Krishna B ShettyBperformed Satyanarayan Pooja on 07.01.1985, after execution of thepartnership agreement, but admitted that the Invitation Card (Exh.44)issued on that occasion bore his name. He also admitted his signaturesin the assignment agreement dated 15.01.1985 (Exh.49). He denied thatKrishna B Shetty was running the hotel as his own business in his individualCcapacity and that he forcibly dispossessed him in January, 1986. Headmitted that proceedings were initiated under Section 145, Cr.P.C. butasserted that final orders were passed in his favour.

12. Upon consideration of the pleadings and evidence, the TrialCourt answered the three issues framed by it as under: - D

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13. The Trial Court held against the plaintiffs in so far as theground under Section 13(1)(b) of the Act of 1947 was concerned, as theGAdvocate Commissioner’s second report (Exh.23) showed no trace ofa toilet having been constructed in the leased premises. However, asregards the ground raised under Section 13(1)(e) of the Act of 1947, thefinding was otherwise. The Trial Court took note of the admitted executionof the partnership agreement dated 01.01.1985 (Exh.48), whereby thetenant accepted Krishna B Shetty as a partner in his hotel business.H

Further, the Trial Court noted that the Invitation Card (Exh.44) for theSatyanarayan Pooja, mentioned the name of Hotel Ambika, the name ofthe tenant and the name of the new partner, Krishna B Shetty. The TrialCourt also noted that the tenant admitted his signatures in the assignmentagreement dated 15.01.1985 (Exh.49), whereby he had assigned his hotelbusiness in the leased premises to Krishna B Shetty for ` 2,00,000/- andaccepted ` 50,000/- as earnest money. It was accordingly held thatKrishna B Shetty was taken as a partner in the business initially but,thereafter, the business was sold to him for ` 2,00,000/-. The Trial Courtobserved that the original lease deed dated 22.01.1975 (Exh.55) statedclearly in page 4 that the tenant would not assign the business and wouldnot allow third persons to conduct the said business in any way norwould he transfer the said business in any way in favour of a third person.The Trial Court then adverted to Section 15(1) of the Act of 1947, whichprovides that, in the absence of a contract to the contrary, the tenantwould not be entitled to sublet or transfer or give on licence the leasedpremises and also the proviso thereto, which allowed the Government,by way of a notification in the Official Gazette, to permit in any areatransfer of interest in premises held under leases or a class of leases tosuch extent as may be specified in the notification. As the conditions ofthe proviso were not satisfied on facts and in the light of the clearprohibition of assignment in the lease deed, the Trial Court decreed thesuit.

14. The learned 13[th] Additional District Judge, Pune, affirmedthese findings of the Trial Court and dismissed Civil Appeal No. 1030 of1987 filed by the tenant. The Bombay High Court, however, reversedthe findings of both the Courts below. While accepting that there wasmaterial to show that the tenant had assigned his business in favour ofKrishna B Shetty, the High Court took recourse to the proviso to Section15(1) of the Act of 1947 and held that it was permissible thereunder fora statutory tenant to transfer his tenancy rights even though the leaseagreement prohibited such a transfer. Further, the High Court took noteof the fact that Civil Suit No. 623 of 1986 filed by Krishna B Shettyagainst the tenant for specific performance had been dismissed.According to the High Court, so long as the legal possession remainedwith the tenant, mere creation of a partnership agreement by the tenantfor the purpose of jointly carrying on business in the leased premiseswould not amount to sub-letting. Holding so, the High Court set aside thedecree of eviction/possession and dismissed the suit. By its later judgment AB

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Adated 09.09.2009, the High Court dismissed the Review Petition filed bythe appellants herein, reiterating that the tenant had never parted with orleft the premises and, being a partner, he was also involved in the business.Observing that the dominant purpose of the agreement executed by thetenant was not to sub-let the premises, the High Court opined that therewas no error on the face of the record warranting exercise of reviewBjurisdiction.

15. At this stage, we may note that neither of the parties thoughtit appropriate to place on record all the documents that they consideredrelevant. The original lease deed dated 22.01.1975 (Exh.55), relied uponby Mr. Vinay Navare, learned senior counsel, is not available for scrutiny.CSimilarly, the judgment in Civil Suit No. 623 of 1986, filed against thetenant by Krishna B Shetty, relied upon by the High Court andMr. Sudhanshu S. Choudhari, learned counsel, was not produced priorto conclusion of the hearing of these appeals. However, the learnedcounsel deemed it fit to enclose a copy of the said judgment along withDhis Written Submissions, after this judgment was reserved. As the saiddocument was not placed on record in keeping with due procedure andat the appropriate time, it is liable to be eschewed from consideration.More so, as the sole respondent entered appearance through counsel aslong back as in January, 2011, and had ample opportunity to do the needfuleven if the said judgment did not form part of the record before the HighECourt. This Court is, therefore, constrained to adjudicate on the strengthof the material available on record.

16. The issue for consideration is whether the tenant committedbreach of the lease condition with regard to assignment of his businessin the leased premises, warranting his eviction under Section 13(1)(e) ofFthe Act of 1947. Though the tenant denied the same, Mr. Vinay Navare,learned senior counsel, would assert that the admissions made by himduring his deposition as DW1 speak volumes to the contrary. He wouldpoint out that the tenant categorically admitted execution of the partnershipagreement dated 01.01.1985 (Exh.48) and the assignment agreementGdated 15.01.1985 (Exh.49), apart from conceding that the Invitation Card(Exh.44), issued in connection with the Satyanarayan Pooja performedin the hotel, mentioned his name along with those of Hotel Ambika andKrishna B Shetty.

17. Countering these contentions, Mr. Sudhanshu S. Choudhari,Hlearned counsel, would argue that execution of a partnership deed by

the tenant, whereby a third party was inducted into the business as apartner, is of no consequence. He would point out that the partnershipagreement dated 01.01.1985 (Exh.48) mentioned that the business wouldbe undertaken as a partnership with the tenant; his brother, Laxman;and Krishna B Shetty, as partners and that the relevant clause in the saiddocument, marked as Exh.51, indicated that Krishna B Shetty wouldlook after the business transactions. He would place reliance onParvinder Singh Vs. Renu Gautam and others[1]and Mahendra SareeEmporium (II) Vs. G.V. Srinivasa Murthy[2] in support of his contentionthat such a business arrangement would not amount to creation of anassignment or sub-tenancy.

18. In Parvinder Singh (supra), this Court observed that if thetenant is actively associated with the partnership business and retainsthe use and control over the tenanted premises with him, maybe alongwith partners, the tenant may not be said to have parted with possession,but if the user and control of the tenanted premises has been parted withand the deed of partnership has been drawn up as an indirect method ofcollecting consideration for creation of a sub-tenancy or for providing acloak to conceal a transaction not permitted by law, the Court is notestopped from tearing the veil of partnership and finding out the realnature of the transaction entered into between the tenant and the allegedsub-tenant.

19. This Court observed in Mahendra Saree Emporium (supra)that the transfer of a right to enjoy immovable property to the exclusionof all others during the term of the lease is the sine qua non of a leaseunder Section 105 of the Transfer of Property Act, 1882, and a sub-lease would imply parting with, by the tenant, of the right to enjoy suchproperty in favour of his sub-tenant. This Court further noted that thephraseology employed for inferring sub-letting is quite wide and wouldembrace within its scope sub-letting of the whole or part of the premisesas also assignment or transfer in any other manner of the lessee’s interestin the tenanted premises. On facts, however, it was held that the tenanttherein had not created a sub-tenancy merely by converting his soleproprietary business into a partnership business and as the tenant neverdissociated himself from the business activity.

1 (2004) 4 SCC 794

2 (2005) 1 SCC 481

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A20. It would be apposite at this stage to peruse the relevantstatutory provisions, viz., Section 13(1)(e) and Section 15(1) of the Actof 1947. They read as under: - ‘Section 13 (1) Notwithstanding anything contained in thisAct, but subject to the provisions of Section 15, a landlordBshall be entitled to recover possession of any premises if theCourt is satisfied- (a) - (d) ……

(e) that the tenant has, since the coming into operation of thisAct unlaw-fully sub-let the whole or part of the premises orCassigned or transferred in any other manner his interesttherein; or (ee)……..’

‘Section 15 (1) Notwithstanding anything contained in anyDlaw, but subject to any contract to the contrary, it shall not belawful after the coming into operation of this Act for anytenant to sub-let the whole or any part of the premises let tohim or to assign or transfer in any other manner his interesttherein and after the date of commencement of the BombayRents, Hotel and Lodging House Rates Control (Amendment)EAct, 1973, for any tenant to give on licence the whole or partof such premises Provided that the State Government may by notificationin the Official Gazette permit in any area the transfer ofinterest in premises held under such leases or class of leasesFor the giving on licence any premises or class of premisesand to such extent as may be specified in the notification.’

The aforestated provisions make it crystal clear that, in the ordinarycourse and notwithstanding anything contained in any other law, unlessthe contract itself permits sub-letting, it shall not be lawful, after comingGinto operation of the Act of 1947, for a tenant to sub-let the premises letout to him or to assign or transfer in any manner his interest therein. Theproviso to Section 15(1), however, authorizes the State Government topermit, in any area, transfer of interest in premises held under leases ora class of leases, by issuing a notification in the Official Gazette, dulydelineating the extent to which such transfer is permitted. Presently, it isH

nobody’s case that a notification was issued by the State Governmenthaving application to the case on hand. Viewed thus, reliance placed bythe High Court upon this provision was wholly misconceived. In theabsence of such a notification by the State Government, the issue iswhether the tenant could have assigned his leasehold interest in favourof Krishna B Shetty under the assignment agreement dated 15.01.1985(Exh.49), overriding the condition in the lease deed to the contrary.

21. It is in this context that the prohibitory condition in the leasedeed dated 22.01.1975 (Exh.55) assumes importance. The Trial Courtand the Appellate Court extracted the gist of the said lease condition intheir judgments. The Lease Deed is stated to have recorded unequivocallyin page 4 that the business of Hotel Ambika is the independent businessof the tenant and that he would not assign the business and would notallow third persons to conduct the said business in any way nor would hetransfer the said business in any way in favour of a third person.Therefore, there is a clear interdiction against transfer or assignment bythe tenant of the business being run in the leasehold premises in favourof a third person.

22. Given the clear proscription in the lease deed, duly endorsedby the explicit language of Sections 13(1)(e) and 15(1) of the Act of1947, the very execution of the assignment agreement dated 15.01.1985(Exh.49), whereby the tenant admittedly assigned his business in theleasehold premises in favour of Krishna B Shetty for ` 2,00,000/- andaccepted a sum of ` 50,000/- as earnest money, was sufficient in itselfto establish transgression of the lease condition and the statutory mandate.No doubt, the earlier decisions of this Court, referred to hereinabove,laid down the principle that the mere execution of a genuine partnershipdeed by a tenant, whereby he/she converted a sole proprietary concerninto a partnership business, while continuing to actively participate in thebusiness and retaining control over the tenanted premises wherein thebusiness is being run, would not amount to sub-letting. However, thatprinciple has no role to play in the case on hand as the tenant did not stopshort at executing the partnership agreement dated 01.01.1985 (Exh.48)but went on to execute the assignment agreement dated 15.01.1985(Exh.49), whereby he assigned his hotel business in the leased premisesto Krishna B Shetty and received earnest money also. The very act ofexecution of this document was sufficient in itself to complete the breachof the lease condition and the statutory mandate and did not require AB

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Aanything further. Therefore, the subsequent failure of Krishna B Shettyin his specific performance suit in Civil Suit No. 623 of 1986, be it forwhatever reason, is of absolutely no relevance or consequence. All themore so, as the landlord and landlady were admittedly not parties theretoand the judgment rendered in the said suit was not even placed on recordas per due procedure and at the relevant time. Irrespective of the resultBin the said suit, the ineluctable fact remains that the tenant admittedexecution of the assignment agreement (Exh.49) and that singular factsettled the issue as to whether there was an act of assignment on hispart. The High Court seems to have lost sight of this crucial aspect.

23. We, therefore, find on facts that the tenant admitted committingCa breach of the lease condition with regard to assignment of his leaseholdinterest in favour of a third party, when he signed the assignmentagreement dated 15.01.1985 (Exh.49) for a consideration of` 2,00,000/- and received ` 50,000/- as earnest money. The breach beingcomplete on his part upon such execution itself, the failure of the assignee, DKrishna B Shetty, in his suit for specific performance against the tenantis of no import.

24. The impugned judgments of the Bombay High Court areaccordingly set aside and the judgment of the Trial Court, as affirmed bythe Appellate Court, shall stand restored. In consequence, the respondentsEherein, being the legal representatives of the deceased tenant, shall vacatethe suit premises and hand over vacant and peaceful possession thereofto the appellants within 2 months, failing which the appellants shall be atliberty to initiate execution proceedings before the competent court.

25. The appeals and the I.As are allowed. There shall be no orderFas to costs.

Ankit Gyan

(Assisted by : Shivani Pundir and Aarsh Choudhary, LCRAs)

Appeals and I.As allowed.

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