Subletting – Eviction – Settled laws – tried to cover the subletting under the head of [fake] partnership plea with original tenant – 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.

Subletting – Eviction – Settled laws – tried to cover the subletting under the head of [fake] partnership plea with original tenant – 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.

“25. 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 been done without the

consent of the landlord and in lieu of 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 sub­letting,

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 sub­tenant 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 crossexamination, making out a case of sub­letting 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

15

presumption of sub­letting may then be raised and would amount

to proof unless rebutted.”

Applying the law laid down by this Court in the aforesaid

decisions to the facts of the case on hand and on appreciation of

evidence on record, we are of the opinion that there is no

genuine partnership between respondent no.1 and respondent

no.2. Respondent no.1 has come out with a case of partnership

only to get out from the allegation of sub­letting. The exclusive

possession of the suit premises is with respondent no.2.

Respondent no.2 is running the business in the suit premises as

an owner. Sales Tax Certificate and the licence are in the name

of respondent no.2. The bank accounts are in the name of

respondent no.2 and respondent no.2 is exclusively dealing with

the bank accounts. Under the circumstances, a clear case of

sub­letting has been made out. The High Court has committed

a grave error in setting aside the decree of eviction on the ground

of sub­letting.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9443 OF 2019

A.MAHALAKSHMI …APPELLANT

VERSUS

BALA VENKATRAM (D) THROUGH LR & ANR. …RESPONDENTS

J U D G M E N T

M.R. SHAH, J.

Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 24.04.2017 passed by the High Court

of Judicature at Madras in CRP (NPD) No. 2898/2013, by which

the High Court has allowed the said revision application preferred

by the respondents herein – original defendants, the original

plaintiff has preferred the present appeal.

  1. The facts leading to the present appeal in nutshell are as

under:

1

That one Dr. Sanjeevi and his wife Mrs. Porkodi, the earlier

owner of the suit premises in question had executed a power of

attorney dated 01.11.2016 in the name of the appellant herein

and in respect of the said property. That by way of rental

agreement dated 23.05.2007, the appellant let out the premises

in question to original respondent no.1 herein – Bala Venkatram

(now dead and represented through legal heirs) for running ‘Best

Mark Super Market’ from June, 2007 to July, 2009 on a monthly

rent of Rs.11,000/­. That an advance amount of Rs.1,00,000/­

was paid by way of security. That the rent was payable on 7th

day of every English calendar month. That the appellant –

landlady filed an eviction suit on the ground of sub­letting as well

as on the ground of arrears of rent against the respondents

herein – original defendants – Bala Venkatram and another

under Sections 10(2)(i), 10(2)(ii)(a)(b) and 10(2)(iii) of the Tamil

Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter

referred to as the ‘Act’) in the Court of District Munsiff, Pollachi.

According to the landlady the rent was initially paid by original

defendant no.1 – Bala Venkatram till October, 2007. It was the

case on behalf of the landlady that upon default in payment of

rent and noticing a change in the name as well as ownership of

2

the shop in the tenanted premises from ‘Best Mark Super Market’

to ‘Amutham Super Market’, she made enquiries and discovered

that not only there was a change in the name but a complete

change of hand from original defendant – Bala Venkatram to

respondent no.2 – Shahu Hameed which also on the face of it

was a gross breach of the rent agreement. According to the

landlady, the sub­letting was evident from the Certificate of

Registration, Government of Tamil Nadu, Commercial Tax

Department. Therefore, the landlady issued a legal notice to

original defendant – Bala Venkatram pointing out the said

breaches and called upon him to collect balance amount from the

advance payment deposited after adjusting the arrears of rent

and handover possession of the tenanted premises within 15

days failing which the appropriate legal action would be taken.

There was no reply to the legal notice from respondent no.1 –

original defendant no.1. Therefore, the landlady, the appellant

herein, filed R.C.O.P. No. 4 of 2008 for decree of eviction on the

ground of sub­letting and arrears of rent.

2.1 The suit was resisted by original defendant no.1 – the

original tenant by filing a written counter. It was stated that the

3

landlady has received the rent till December, 2007 and that the

first respondent has no necessity to get the permission from the

landlady for running business in any other name. It was the

case on behalf of original respondent no.1 – the original tenant

that since the landlady was trying to evict the respondents, they

filed O.S. No. 122/2008 for permanent injunction. According to

the first respondent – the original tenant, they were running

‘Amutham Super Market’ in the suit property. According to the

original tenant there were many branches, namely, ‘Amutham

Jewellery, Amutham Foods, Amutham Electronics, Amutham

Textiles etc. According to the original tenant since the

respondents refused to give the business in the name of the

landlady, she filed eviction petition with an ulterior motive. A

similar written counter was filed on behalf of original respondent

no.2 – sub­tenant.

2.2 That the learned Rent Controller dismissed the eviction

petition. Aggrieved by the same, the landlady preferred R.C.A.

No. 1 of 2012. That the learned Rent Control Appellate Authority

allowed the appeal in part. The learned Rent Control Appellate

Authority passed the eviction decree on the ground of sub­letting

4

only and therefore allowed the petition filed under Sections 10(2)

(i) and 10(2)(ii)(a)(b) of the Act. However, dismissed the petition

filed under Section 10(2)(iii) of the Act – wastage & material

alteration of the premises. That the original tenant – Bala

Venkatram died. Therefore, the legal heirs of the original tenant

– Bala Venkatram and the second respondent – sub­tenant

preferred the revision application before the High Court. That by

the impugned judgment and order, the High Court has allowed

the said revision application and has quashed and set aside the

eviction order passed by the Rent Control Appellate Authority.

2.3 Feeling aggrieved and dissatisfied with the impugned

Judgment and order passed by the High Court in quashing and

setting aside the eviction decree on the ground of sub­letting, the

landlady has preferred the present appeal.

  1. Shri Aniruddha Joshi, learned Advocate appearing on behalf

of the original plaintiff – landlady has vehemently submitted that

in the facts and circumstances of the case, the High Court has

committed a grave error in quashing and setting aside the

eviction decree on the ground of sub­letting. Learned Advocate

appearing on behalf of the appellant has vehemently submitted

5

that the High Court has committed a grave error in holding that

the landlady has not established and proved the sub­letting by

the original tenant in favour of respondent no.2 herein – subtenant.

3.1 It is further submitted by the learned Advocate appearing on

behalf of the original plaintiff that the finding recorded by the

High Court that the landlady has failed to establish and prove the

sub­letting by original respondent no.1 in favour of original

respondent no.2 is contrary to the evidence on record. It is

vehemently submitted that when the first appellate authority on

appreciation of evidence specifically found that there was a subletting of the premises by original respondent no.1 in favour of

original respondent no.2, the same was not required to be

interfered with by the High Court in exercise of its revisional

jurisdiction.

3.2 It is further submitted by the learned Advocate appearing on

behalf of the original plaintiff that there were ample

material/evidence on record, such as, sales tax certificate, licence

of the shop which stood in the name of original respondent no.2

which establish and prove the sub­letting by the original tenant –

6

respondent no.1 in favour of sub­tenant – original respondent

no.2. It is submitted that the aforesaid documents/evidence on

record have not at all been considered by the High Court.

3.3 It is further submitted by the learned Advocate appearing on

behalf of the original plaintiff that the High Court ought to have

appreciated that though the original tenant – respondent no.1 in

his cross­examination set up a case that he was a partner in the

business run by respondent no.2, however, no document was

placed on record to show the partnership.

3.4 It is further submitted by the learned Advocate appearing on

behalf of the original plaintiff that as all the ingredients of subletting are established and proved by the landlady, such as,

parting with possession of the tenancy in favour of respondent

no.2 with exclusive rights of possession and that such parting

with possession has been done without the consent of the

landlady, the landlady filed an eviction petition.

  1. The present appeal is vehemently opposed by Shri C.

Paramasivam, learned Advocate appearing on behalf of the

respondents. It is vehemently submitted on behalf of the

respondents that as the appellant is not the owner of the suit

7

premises and is only a power of attorney holder of the owner of

the premises, the eviction petition itself is not maintainable. It is

submitted that therefore the appellant cannot be said to be a

landlady and therefore the eviction petition at the instance of the

appellant is not maintainable.

4.1 Now so far as the impugned judgment and order passed by

the High Court is concerned, it is vehemently submitted by the

learned Advocate appearing on behalf of the respondents that on

appreciation of evidence and considering the fact that the

appellant has failed to prove that respondent no.1 had sub­let

the suit premises to the second respondent, the High Court has

rightly set aside the order passed by the Rent Control Appellate

Authority.

4.2 It is further submitted by the learned Advocate appearing on

behalf of the respondents that even in the deposition/evidence of

the landlady, it has come on record that respondent no.1 and

respondent no.2 – Shahu Hameed were running the shop as

partners. It is submitted therefore that when both, respondent

nos. 1 & 2 were running the shop as partners, there is no

question of sub­letting. It is submitted that therefore the High

8

Court has rightly set aside the eviction decree on the ground of

sub­letting.

  1. In rejoinder and on the maintainability of the eviction

petition by the appellant, as objected by the respondents, learned

Advocate appearing on behalf of the landlady has submitted that

as such no such contention was raised in the written counter to

the eviction petition. It is submitted that no such issue was

framed. It is submitted that as such in the written counter, they

have not disputed the status of the appellant as landlady. It is

submitted that even otherwise and considering Section 2(6) of the

Act and even considering the fact that lease deed was executed

by the appellant in favour of respondent no.1, the appellant can

be said to be a landlady/landlord and therefore the eviction

petition at the instance of the appellant would be maintainable.

  1. We have heard the learned Counsel for the respective

parties at length. We have also perused the impugned judgment

and order passed by the High Court. We have considered and

appreciated the entire evidence on record, more particularly the

rental agreement as well as deposition of original respondent no.1

– Bala Venkatram.

9

6.1 At the outset, it is required to be noted that the suit

premises was leased in favour of original respondent no.1 –

original tenant – Bala Venkatram pursuant to the rental

agreement dated 23.05.2007 executed by the appellant herein.

Therefore, the rental agreement was between the appellant and

original defendant no.1 – Bala Venkatram. Defendant no.1 was

put in possession as a tenant pursuant to the aforesaid rental

agreement dated 23.05.2007 executed by the appellant in favour

of original defendant no.1 – original tenant – Bala Venkatram.

Therefore, as such, it would not be open for the respondents to

deny the status of the appellant as a landlady. Therefore, the

original respondents cannot challenge the authority of the

appellant to file an eviction petition. Even otherwise, considering

Section 2(6) of the Act and considering the fact that respondent

no.1 was paying the rent to the appellant pursuant to the

aforesaid rental agreement dated 23.05.2007, the appellant can

be said to be the landlord/landlady and therefore the eviction

petition at the instance of the appellant would be maintainable.

At this stage, it is required to be noted that as such no such

objection was raised either before the High Court and/or before

the Rent Control authorities. Be that as it may, as observed

10

hereinabove, the appellant can be said to be the landlady even

within the definition of Section 2(6) of the Act and therefore the

eviction petition at the instance of the appellant would be

maintainable.

6.2 Now so far as the merits of the case are concerned, at the

outset, it is required to be noted that the landlady filed a suit for

eviction mainly on the ground of arrears of rent as well as on the

ground of sub­letting. The Rent Controller dismissed the eviction

petition. However, the Rent Control Appellate Authority passed

the eviction decree on the ground of sub­letting and arrears of

rent which has been upset by the High Court by the impugned

judgment and order. Therefore, the short question which is

posed for consideration of this Court is, whether in the facts and

circumstances of the case, the High Court is justified in setting

aside the eviction decree on the ground of sub­letting and arrears

of rent?

  1. It is not in dispute that in the rental agreement dated

23.05.2007, the suit premises was let out to respondent no.1 –

the original tenant for running ‘Best Mark Super Market’ for a

period of two years from June, 2007 to July, 2009. However, it

11

has been found that in the suit premises, respondent no.2 was

running the business in the name of ‘Amutham Super Market’

and the original tenant was confronted with the same and was

served with a legal notice, initially original respondent no.1 –

tenant did not respond to the legal notice. However, before the

Rent Control Authority, it was the case on behalf of respondent

No.1 – Bala Venkatram that because of the old age he was not in

a position to manage the affairs of the shop and that is why he

has handed over the possession of the shop to Shahu Hameed –

original respondent no.2 through a general power of attorney. It

was also the case on behalf of the original tenant that on the

basis of an oral agreement, he and Shahu Hameed were running

the business as partners. However, in the cross­examination, the

original tenant has specifically admitted that in the bank

accounts of the firm – Amutham Super Market, Shahu Hameed is

shown as the owner of the shop. He has also admitted that

licence for the shop is also in the name of Shahu Hameed. He

has also specifically admitted that Shahu Hameed is running the

shop as the owner. He has also specifically admitted that he is

not in possession of any document to show that he is running the

shop. He has also specifically admitted that he has handed over

12

the shop to Shahu Hameed through a power of attorney. He has

also specifically admitted that the application/sales tax certificate

in respect of the suit property is registered in the name of Shahu

Hameed. He has also specifically admitted that the bank

accounts are maintained by Shahu Hameed in the capacity of

owner of the shop. Thus, from the deposition of original

respondent no.1 – the original tenant and the material/evidence

on record, we are of the opinion that this is a clear case of subletting. All the ingredients suggesting sub­letting are established

and proved. As such, the High Court has not at all discussed the

evidence on record including even the deposition of original

respondent no.1 – the original tenant.

  1. Sub­letting means transfer of an exclusive right to enjoy the

property in favour of the third party. To constitute a sub­letting,

there must be a parting of legal possession, i.e., possession with

the right to include and also right to exclude others. Sub­letting,

assigning or otherwise parting with the possession of the whole

or any part of the tenancy premises, without obtaining the

consent in writing of the landlord, is not permitted and if done,

the same provides a ground for eviction of the tenant by the

13

landlord. When the eviction is sought on the ground of subletting, the onus to prove sub­letting is on the landlord. As held

by this Court in the case of Associated Hotels of India Limited v.

S.B. Sardar Ranjit Singh, AIR 1968 SC 933, if the landlord prima

facie shows that the third party is in exclusive possession of the

premises let out for valuable consideration, it would then be for

the tenant to rebut the evidence. At the same time, as held by

this Court in the case of G.K. Bhatnagar v. Abdul Alim, (2002) 9

SCC 516 and Helper Girdharbhai v. Saiyed Mohmad Mirasaheb

Kadri, (1987) 3 SCC 538, where a tenant becomes a partner of a

partnership firm and allows the firm to carry on business in the

premises while he himself retains the legal possession thereof,

the act of the tenant does not amount to sub­letting. It is further

observed and held that however inducting the partner in his

business or profession by the tenant is permitted so long as such

partnership is genuine. It is further observed that if the purpose

of such partnership is ostensible in carrying on business or

profession in a partnership but the real purpose in sub­letting

such premises to such other person who is inducted ostensibly

as a partner then the same shall be deemed to be an act of subletting. After considering catena of decisions of this Court on

14

sub­letting, in the case of Celina Coelho Pereira v. Ulhas

Mahabaleshwar Kholkar, (2010) 1 SCC 217, this Court has

summarised in paragraph 25 as under:

“25. 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 been done without the

consent of the landlord and in lieu of 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 sub­letting,

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 sub­tenant 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 crossexamination, making out a case of sub­letting 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

15

presumption of sub­letting may then be raised and would amount

to proof unless rebutted.”

  1. Applying the law laid down by this Court in the aforesaid

decisions to the facts of the case on hand and on appreciation of

evidence on record, we are of the opinion that there is no

genuine partnership between respondent no.1 and respondent

no.2. Respondent no.1 has come out with a case of partnership

only to get out from the allegation of sub­letting. The exclusive

possession of the suit premises is with respondent no.2.

Respondent no.2 is running the business in the suit premises as

an owner. Sales Tax Certificate and the licence are in the name

of respondent no.2. The bank accounts are in the name of

respondent no.2 and respondent no.2 is exclusively dealing with

the bank accounts. Under the circumstances, a clear case of

sub­letting has been made out. The High Court has committed

a grave error in setting aside the decree of eviction on the ground

of sub­letting.

  1. In view of the above and for the reasons stated above, the

present appeal is allowed. The impugned judgment and order

passed by the High Court is set aside and the judgment and

16

decree passed by the Rent Control Appellate Authority is hereby

restored. There shall be a decree on the ground of sub­letting.

Respondents to handover the peaceful possession of the suit

premises to the appellant herein within a period of three months

from today on filing usual undertaking before this Court and on

payment of full arrears of rent within a period of four weeks from

today.

………………………………J.

[ASHOK BHUSHAN]

NEW DELHI; ………………………………J.

JANUARY 07, 2020. [M.R. SHAH]

17