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PETITIONER: JAI SINGH MORARJI & ORS.

       Vs.

RESPONDENT: M/s SOVANI PVT.  LTD. & ORS.

DATE OF JUDGMENT09/10/1972

BENCH: RAY, A.N. BENCH: RAY, A.N. PALEKAR, D.G. BEG, M. HAMEEDULLAH DWIVEDI, S.N.

CITATION:  1973 AIR  772            1973 SCR  (2) 603  1973 SCC  (1) 197  CITATOR INFO :  R          1981 SC1956  (1)  D          1985 SC 507  (11,15)

ACT: Bombay  Rents, Hotel and Lodging, House Rates  Central  Act, Section  15(2)--Validation of sub-letting by  1959  amending Ordinance--Protection  only  to transfers,  assignments,  or sub-leases by tenants--Sub-lease must be in possession  when amending Ordinance came into force.

HEADNOTE: The  owner let out the premises to one Occhhavlal  in  1952. Occhhavlal sub-let the premises to one Sovani.  About  1952, Sovani assigned his business with the possession of the suit premises  to  a  private  Company of  which  he  became  the Director.   Rent  was  paid to the  landlord  upto  1966  by Occhhavlal.   The owner obtained the possession of the  suit premises   in  execution  of  a  decree   obtained   against Occhhavlal  for  non-payment of rent and  sub-letting.   The assignee, private company, made an application for a  relief against  the dispossession under Order XXI, Rule 100 of  the Code  of  Civil  Procedure.  The  Trial  Court  granted  the relief,.  but  the  same  was  reversed  by  the   appellate authority  on the revision application filed by  the  owner. On  the  writ  petition filed by the  private  company,  the Bombay High Court allowed the Writ Petition holding that the private  company was a tenant entitled to the protection  of So. 15(2) of the Bombay Rent Act.  Allowing the appeal filed by the owner, HELD  :  Sec. 15(2) of the Act protects only  sub-leases  or assignments or transfer by the tenants, but does not protect subsequent   assignments  or  transfers  by   assignees   of transferees.   The proviso and explanation to Sec. 15(1)  of the  Act protects transfer of interest in notified lease  or class  of  lease  to assignees or  transferees  as  well  as subsequent  assignments  or transfers.  The  assignments  in favour  of  the  private  company was  not  covered  by  any notification  issued u/s 15 (1) of the Act.  The  assignment to  the private company was not made by the tenant but  sub- tenant.  When the Ordinance of 1959 came into force,  Sovani

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did not continue in possession.  It was the private  company which  was in possession.  Therefore the private company  is not entitled to protection u/s 15 (2) of the Act. Section  108  (2) of the Transfer of  Property  Act  notices distinction  between sub-lease by a lessee and  transfer  by sub-lessee of his interest by subsequent transfer. [607C, F] N.  W.  Nayak  v.  Chhotalal Harirain,  69  Bom.   LR.  551, approved.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2669  of 1972. Appeal  by special leave from the judgment and order-  dated January  28, 1972 of the Bombay High Court in Special  Civil Application No. 2108 of 1971. 604 V.   M.Tarkunde  D. N. Misra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants. D.   V. Patel, S. S. Javali, D. N. Hungund and Vineet  Kumar for the respondents. The Judgment of the Court was delivered by RAY,  J.--This is an appeal by special leave from the  judg- ment dated 28 January 1970 of the High Court at Bombay. The  High Court in a writ petition under Article 227 of  the Constitution quashed an order of the Court of Small  Causes, Bombay. A  trust  known as Padamsi Bhanji Trust of  Bombay  owned  a godown  at 8 Mugbhat Lane, Girgaum, Bombay.  The  tenant  of the property before 1952 was Ochhavlal.  The property there- after came into possession of S. V. Sovani.  Sovani  carried on  the  business  of preparation  and  sale  of  scientific apparatus.   About  1952 Sovani became  Director  of  Sovani Private Limited Company referred to as the Private  Company. The  Private Company went into possession of the  godown  as also the business which was carried on by Sovani.  Rent  was paid  up  to the year 1966 in the name of  Ochhavlal.   Rent receipts  were also in the name of Ochhavlal.  In  the  year 1966 the trust employee who collected rent refused to accept rent.   Thereafter  rent  was sent by  money  order  to  the trustees.  The trustees did not accept the money orders. The  trustees  in  the  year  1970  filed  suit  possession. Ochhavlal  was the defendant in the suit.  The  grounds  for eviction of Ochhavlal were first that he was a defaulter  in the payment of rent from 1966, and, secondly, he was  guilty of sub-letting.  The suit was decreed ex-parte in the  month of  March,  1971.  On 8 April, 1971 the,  trustees  obtained possession. Thereafter an application was made under Order XXI rule  100 of  the Code of Civil Procedure by the Private  Company  for relief  against  dispossession in execution of  the  decree. The  trial  Court accepted the, contention  of  the  private Company that they became sub-tenants. Against  that Order an application in revision was filed  by the  trustees.  The Small Causes Court set aside  the  order passed by the trial Court. The  Private  Company thereupon made  an  application  under Article 227 of the Constitution in the High Court.  The High 605 Court held that the Small Causes Court in revision committed an  error in applying section 15(2) of the Bombay  Rent  Act 1947.   The High Court held that the Private Company  was  a tenant within the meaning of the Bombay Act. This  appeal turns entirely on the provisions  contained  in

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section 15 of the Bombay Rent Act referred to as the Act. Section 15(1) of the Act is as follows               "Notwithstanding  anything  contained  in  any               law,  but  subject  to  any  contract  to  the               contrary,  it  shall not be lawful  after  the               coming  into  operation of this  Act  for  any               tenant to sub-let the whole or any part of the               premises  let to him or to assign or  transfer               in any other manner his interest therein. The present sub-section (1) was numbered as sub-section  (2) by  Bombay  Ordinance No. 111 of 1959 published on  21  May, 1959.  This was subsequently enacted in Bombay Act No. 49 of 1959.   Prior to the renumbering with the exception of  tile words  "but  subject to, any contract to the  contrary"  the body of the section was the same.               There  is a proviso to sub-section  (1)  which               runs thus               "Provided  that the State Government  may,  by               notification  in the official Gazette,  permit               in  any  area  the  transfer  of  interest  in               premises  held under such leases or  class  of               leases and to such extent as may be  specified               in the notification." There  is also an explanation to sub-section (1).  This  ex- planation was added by Maharashtra Act No. 17 of 1968.   The explanation is that leases or class of leases shall  include and  shall  be deemed always to have included  within  their meaning  assignments  and other transfers of the  leases  or class   of  leases,  and  accordingly  notwithstanding   any judgment,  decree or order of any Court, provisions  in  any notification  under  the proviso-which  purports  to  permit assignments and transfers by lessees shall include and shall always be deemed to have included assignments and  transfers of the leasehold, made on or after 12 May 1948, and  whether made  by the original lessees or their assignees  or  trans- feree-,  or any subsequently assignees or transferees.   The net effect of the explanation is that where leases or  class of  leases  are specified in  the  Government  notifications assignments and transfers by original lessees on or after 12 May  1048  and  subsequent  assignments  and  transfers   by assignees and transferees are all protected. 606 One  of the Government notifications permitted  transfer  or assignment  incidental to the sale of a business as a  going concern  together with the stock-in-trade and  the  goodwill thereof, provided that the transfer or assignment is of  the entire  interest  of  the transferor  or  assignor  in  such leasehold premises together with the business and the stock- in-trade   and   goodwill   thereof.    There   were   other notifications  under the proviso to section 15  (1)  whereby the  Government  of Bombay permitted in all areas  to  which Part  11 of the Act extends several types of  transfers  and assignments  by  lessees  of their  interests  in  leasehold premises   as,   and  to  the  extent   specified   in   the notifications.  The present assignment is not covered by any of   the  specified  types  mentioned  in   the   Government notifications. The relevant provision for the purpose or the present appeal is  sub-section  (2)  of section 15  of  the  Act.   Broadly stated,  the  first  limb of the  sub-section  is  that  the prohibition against subletting by the tenant of whole or any part of the premises and against the assignment or  transfer in  any other manner of the interest of the tenant  therein, contained   in  sub-section  (1),  shall,  subject  to   the provisions  of  sub-section (2), be deemed to have  had,  no

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effect  before the commencement of the Bombay  Rents,  Hotel and  Lodging House Rates Control (Amendment) Ordinance  1959 on  21  May  1959  in any area in  which  this  Act  or  the provisions were in operation before the commencement.   Sec- tion 15(2) of the Act was inserted on 21 May 1959 by  Bombay Ordinance No. III of 1959.  It was later deemed to have been substituted on 21 May, 1959 for the original by  Maharashtra Act  No.  38 of. 1962.  Prior to the Bombay  Ordinance  1959 section 15 as it originally stood prohibited sub-letting  by any  tenant  or  assignment  or  transfer  of  his  interest therein.  This prohibition against sub-letting or assignment or transfer by the tenant of his interest contained in  sub- section (1) shall be deemed to have had no effect before the Ordinance.   Therefore,  the  ban against  subletting  by  a tenant  or  assignment or transfer of his  interest  therein prior to the Ordinance of 1959 is removed. The matter does not rest there because of the second limb of sub-section  (2) of section 15 of the Act.  It  is  provided there that any such sub-lease, assignment or transfer or any such purported sub-lease assignment or transfer in favour of any  person who has entered into possession before 1959  and has  continued  to be in possession shall be  deemed  to  be valid and effective.  Therefore, the subletting before  1959 by  a  tenant is valid under sub-section (2)  provided  such sub-lessee   entered  into  possession  and   continued   in possession at the commencement of the Ordinance.  Such  sub- letting is rendered valid notwithstanding anything contained in any contract or any decree or order of Court.  The Act is a corollary also introduced the measure that 607 any  tenant who has sub-let shall not be liable to  eviction under section 13(1) (a) of the Act. The proviso and the explanation to section 15(1) of the  Act protect transfer of interest in notified leases or class  of leases  to assignees or transferees as well  as-  subsequent assignees  or  transferees.   Section  15  (2)  of  the  Act protects  only  sub-lease or assignment or transfer  by  the tenant  but  does  not  protect  subsequent  assignments  or transfers by assignees or transferees. The  entire  question in the present appeal is  whether  the Private  Company  is a sub-lessee  protected  under  section 15(2) of the Act. The answer to the question is whether the respondent Private Company was a sub-tenant prior to 1959 and continued in pos- session  at  the  commencement of  the  Ordinance  in  1959. Ochhavlal  in the present case gave the sub-lease to  Sovani before the Ordinance.  It is an indisputable feature in  the present  case that Sovani did not continue in possession  at the commencement of the Ordinance of 1959.  Sovani became  a Director of the Private Company.  It is the Private  Company which claims to be a sub-leasee.  The Private Company was in the  first  place  not  a sublessee  of  the  tenant  but  a subsequent  assignee from the sub-lessee.   Secondly  Sovani who was the sub-lessee was not in possession on the date  of the  Ordinance on 21 May 1959.  It was the  Private  Company which was in possession.  Therefore, the Private Company  is not within the protection of section 15(2) of the Act. Section 108 of the Transfer of Property Act provides that  a lessee  may transfer absolutely by way of mortgage  or  sub- lease the whole or any part of his interest in the property, and  any  transferee  of such interest  or  part  may  again transfer it.  This provision contained in section 108(j)  of the Transfer of Property Act notices the distinction between the sub-lease by a lessee and transfer by such sub-lessee of his  interest by a subsequent transfer.  Section 15  of  the

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Bombay Act. dealt with only sub-letting by the tenant.  That sub-letting by the tenant is no longer unlawful provided the conditions  in section 15(2) are fulfilled.  It is only  the sub-lease by the tenant which is mentioned in subsection (1) and  rendered valid in sub-section (2) of section 15 of  the Act.  The Bombay Rent Act does not in section 15(2)  protect any further lease or transfer by the sub-lessee. The Bombay High Court in a Bench decision in N. M. Nayak  v. Chhotalal  Hariram  69  Bom.  L.R.  551  tightly  held  that section  15(2)  of  the  Act  validated  only   sub-letting, transfer  and  assignments by tenants and  no  further  sub- letting or further derivative transfer or assignment by such sub-lessees, transferees or assignees. 608 The word ’tenant’ in section 15 of the Bombay Act means  the contractual  tenant.   In Anand Nivas (P.) Ltd.  v.  Anandji [1964]  4  S.C.R. 892 this Court said  that  the  expression "tenant" in section 15 (1) of the Act means the  contractual tenant and not the statutory tenant.  The legislature by the Ordinance-of  1959  intended to confer  protection  on  sub- tenants  of  contractual  tenants.  The  Ordinance  did  not confer  any protection on further transfer or  further  sub- letting by sub-lessees of the contractual tenants. Section  5(ii) of the Act defines "Tenant". to include  sub- tenants  or  other  persons as have derived  title  under  a tenant before the Ordinance of 1959.  After the decision  of the  Bombay  High Court in Nayak’s case  (supra)  sub-clause (aa) was introduced to clause (ii) in section 5 of the  Act. The Amendment was as follows:-               "Any  person to whom interest in premises  has               been assigned or transferred as permitted,  or               deemed to be permitted, under section 15". The amendment was introduced into the Act by the Maharashtra Act No. 17 of 1968 with retrospective effect as from 12  May 1948.  The amendment was brought into existence as a  result of  the  decision of the Bombay High Court in  Nayak’s  case (supra).   The  High Court held in that case that  a  person seeking  to claim protection by the provisions contained  in the notification issued under the proviso to section 15 (1 ) of  the Act must establish that his transferor was a  lessee of  the premises transferred or assigned.  The decision  was to  the  effect that the only persons who were  entitled  to transfer  or  assign the interest of the  premises  were  to satisfy the character of a lessee as defined in section  105 of  the Transfer of Property Act.  The assignee of a  lessee was  held not to be a lessee as defined by the  Transfer  of Property  Act.  In this context, the explanation to  section 15(1)  of the Act as well as sub-clause (aa) in clause  (ii) of section 5 of the Act were introduced to confer protection on the successive transfer by original lessees in regard  to leases  or  class of leases notified under  the  proviso  to section 15(1) of the Act. A  faint attempt was made by counsel for the respondents  to suggest  that  the  respondents would be  protected  by  the explanation  to  section  15 (1) of the Act.   There  is  no foundation for such a case in the High Court.  There are  no materials  to support such a plea.  This  contention  cannot therefore be entertained. The  learned Single Judge of the High Court was  clearly  in error  in  holding that the respondent Private  Company  was protected  by  section  15(2) of the Act.   The  appeal  is, therefore, 609 allowed,  The judgment of the High Court is set aside.   The appellants will be entitled to costs.

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S.B.W.                                Appeal allowed. 610