REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  6299  OF 2010 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 2517 OF 2007

VINAYKISHORE PUNAMCHAND MUNDHADA & ANR. … APPELLANTS

VERSUS

SHRI BHUMI KALPATARU & ORS. …  RESPONDENTS

JUDGMENT

B. SUDERSHAN REDDY, J.

1. Leave granted.

2. This appeal by special leave is directed against the final  

judgment and order dated 20th September, 2006 passed  

in Writ Petition No. 1206 of 1996 by the High Court of  

judicature  at  Bombay,  Nagpur  Bench,  Nagpur  whereby  

the High Court set aside the order dated 6.9.1995 passed  

by  the  reviewing  authority  granting  permission  under

clause 13(3)(iii) of the C.P. & Berar Letting of Houses and  

Rent Control Order, 1949 (hereinafter referred to as ‘the  

Rent Control Order’).

3. The  facts  leading  to  filing  of  this  appeal  lie  in  a  very  

narrow compass. The appellants are the landlords of the  

suit  premises.  Respondent  No.  4,  Madankumar  

Govardhandas Pasari was inducted as a tenant in the year  

1974 who constituted a partnership firm under the name  

and style ‘Bhumi Kalpataru’ consisting of five partners and  

carried  on  business  till  1991.  The  appellants  filed  an  

application  under  clause  13(3)(i)(iii)(iv)  and (vi)  of  the  

Rent Control Order before the Rent Controller, Amravati  

against the original tenant Messrs Bhumi Kalpataru and  

its Managing Partner Madankumar Govardhandas Pasari,  

the  respondent  No.4  (since  died)  on  the  ground  that  

Madankumar Govardhandas Pasari dissolved the firm and  

clandestinely sub-let the suit premises to respondent No.2  

Jagdish  Champalal  Mundhada  who  deceptively   gave  

similar  name  to  the  partnership  by  prefixing  the  word  

‘Shri’  and  it  was  known  as  ‘Shri  Bhumi  Kalpataru’  

resembling the firm to whom the premises was let out in  

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the year 1974. The present occupiers of the suit premises  

being the sub-tenant,  namely the respondent No.1 firm  

‘Shri Bhumi Kalpataru’, its Managing Partner, respondent  

No.2 and other partners, respondents 5 to 7 were duly  

impleaded as party respondents. The simple case set up  

by the appellants before the Rent Controller is that the  

original tenant firm ‘Bhumi Kalpataru’ had sub-let the suit  

premises without  the sanction of  the landlords and the  

sub-tenants carried on the business under the name ‘Shri  

Bhumi Kalpataru’ by prefixing commonly used ‘Shri’ to the  

original tenant firm ‘Bhumi Kalpataru’.

4. The application was resisted by respondents No.1, 2, 5, 6  

& 7 inter alia contending that they were recognized as the  

tenants of the suit premises by the landlords by accepting  

rent amount from ‘Shri Bhumi Kalpataru’. It was also their  

case that there was disruption of relationship of landlord  

and  tenant  between  the  appellants  and  the  original  

tenant. The original tenant firm ‘Bhumi Kalpataru’ and its  

Managing  Partner,  Madankumar  Govardhandas  Pasari  

though duly served, did not enter their appearance and  

chose to remain absent throughout.

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5. The  Rent  Controller  upon  appreciation  of  the  material  

available  on  record  passed  the  necessary  orders  

upholding the plea of sub-tenancy and granted permission  

under  clause  13(3)(iii)  of  the  Rent  Control  Order.  The  

appellate authority, however, on the appeal filed by the  

respondents,  reversed the  findings  of  sub-tenancy.  The  

appellants  preferred  Review  Petition  under  clause  

21(2)(a) of the Rent Control Order challenging the orders  

of  the  appellate  authority  and  the said  Review Petition  

was  allowed  restoring  the  order  of  the  Rent  Controller  

granting permission as prayed for by the appellants.

6. Shri  Bhumi Kalpataru  and its  Managing Partner  Jagdish  

Champalal Mundhada filed Writ Petition No. 1206 of 1995  

under Article 226/227 of the Constitution of India before  

the High Court of judicature at Bombay, Nagpur Bench,  

Nagpur challenging the order of the reviewing authority.  

The other partners were impleaded as respondents. The  

High  Court,  relying  on  the  decision  in  Bhairulal  

Balmukund  Verma  Vs.  Poonamchand  Kasturchand  

Sancheti1 allowed the writ petition. Hence this appeal.

1 1996 (2) Mh.L.J. 866

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7. Shri U.U. Lalit, learned senior counsel for the appellants  

submitted  that  the  High  Court  committed  an  error  in  

interfering with the just and reasonable orders passed by  

the reviewing authority. It was submitted that the High  

Court committed a serious error in refusing to take into  

consideration the settled principles of law that sub-letting  

and  parting  with  the  possession  by  the  tenant  for  

consideration  is  to  be  inferred  from  the  facts  and  

circumstances  brought  on  record  and  it  is  not  the  

requirement in law that it  is  for the landlords to prove  

that parting of possession by the original tenant was for  

actual consideration. Learned counsel for the respondent,  

Shri  Satyajit  A.  Desai  submitted  that  landlords  having  

accepted the rents for a period of three years from the  

respondents  without  any  demur,  cannot  be  allowed  to  

turn down and contend that the premises was sub-let by  

the original tenant. It was his submission that relationship  

of landlord and tenant came into existence ever since the  

landlords accepted the rents from the respondents.

8. Before adverting to the question as to whether the High  

Court rightly interfered with the orders of the reviewing  

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authority,  it  may  be  just  and  necessary  to  notice  the  

relevant provision of C.P. & Berar Letting of Houses and  

Rent Control Order, 1949 which runs as under:

13. (1) No landlord shall, except with the previous  written permission of the Controller—

(a) give  notice  to  a  tenant  determining  the  lease  or  determine  the  lease  If  the  lease  is  expressed  to  be  determinable at his option; or

(b) ……

(2)  …….

(3) …….

(i) ……..

(ii) …….

(iii) that  the  tenant  has  without  the  written permission of the landlord  sub let the entire house (premises)  or any portion thereof;

(iv) ……..

9. It may be of some importance to note that the original  

tenant did not join any issue with the landlords though he  

was impleaded as a party respondent to the proceedings.  

It is an admitted fact that none of the partners of ‘Bhumi  

Kalpataru’ including respondent No.4 who constituted the  

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firm ‘Bhumi Kalpataru’ are the partners in the firm ‘Shri  

Bhumi Kalpataru’. It is not a case of reconstitution of the  

firm where the original tenant continued to be a partner  

of such newly reconstituted firm. It is clearly evident from  

the record and findings recorded by the authorities that  

‘Shri  Bhumi  Kalpataru’  consists  of  altogether  different  

individuals  and  the  Managing  Partner  thereof  being  

Jagdish Champalal Mundhada. It is also an admitted fact  

that there was no further agreement as such between the  

appellants and the respondents recognizing ‘Shri  Bhumi  

Kalpataru’ and its partners as the tenants. In such view of  

the matter, the authorities in clear and categorical terms  

found  that  the  respondents  have  been  inducted  into  

possession of the premises by the original tenant without  

the  required  written  permission  of  the  landlords.  It  is  

under  those  circumstances  that  the  reviewing authority  

came to the  correct  conclusion that  the original  tenant  

had  no  right  to  transfer  and  part  away  with  the  

possession of the premises to the respondents without the  

required written permission from the landlords. None of  

the respondents were the partners in the previous firm  

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that  was  constituted  by  Madankumar  Govardhandas  

Pasari known as ‘Bhumi Kalpataru’.

10.It  was absolutely  an internal  arrangement between an  

original tenant and newly inducted one about which the  

landlord was never put on notice. The mere acceptance of  

the  rents  from the  newly  constituted  firm  ‘Shri  Bhumi  

Kalpataru’ on the facts and circumstances in the present  

case  by  itself  cannot  lead  to  any  inference  that  the  

landlords accepted the rents knowing fully well as if they  

were  accepting  the  rents  from  the  sub-tenants.  The  

“landlord and tenant” relationship in the circumstances of  

this  case  cannot  be  inferred  as  the  word  ‘Shri’  was  

prefixed to the original tenanted firm ‘Bhumi Kalpataru’.  

The said firm ‘Bhumi Kalpataru’, in a clandestine manner  

became  ‘Shri  Bhumi  Kalpataru’  by  adding  ‘Shri’  in  an  

innocuous manner to ‘Bhumi Kalpataru’. Once it is clearly  

established  that  none  of  the  previous  partners  of  the  

‘Bhumi  Kalpataru’  continued  to  be  the  partners  of  the  

newly constituted firm, it  becomes very clear that ‘Shri  

Bhumi Kalpataru’ is altogether a different firm consisting  

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of new partners who were inducted into possession by the  

previous tenant.

11.That, clause 2(5) of the Rent Control Order defines the  

‘tenant’ as under:

“’Tenant’ means any person by whom or on whose  account  rent  is  payable  for  a  premises  and  includes a sub-tenant and a person continuing in  possession  after  the  term  of  his  tenancy  has  expired”.

12.In our considered opinion,  the expression ‘any person’  

means  any  one  lawfully  inducted  as  a  tenant  into  the  

premises  and  by  whom  or  on  whose  account  rent  is  

payable  for  the  premises.  It  may include  a  sub-tenant  

inducted  as  such  into  possession  with  the  previous  

knowledge,  consent  and  written  permission  of  the  

landlord.

13. This  Court  in  Parvinder  Singh  Vs.  Renu  Gautam &  

Ors.2 held:

“8.  The  rent  control  legislations  which  extend  many a protection to the tenant, also provide for  grounds  of  eviction.  One  such  ground,  most  common in  all  the  legislations,  is  sub-letting  or  parting with possession of the tenancy premises  by the tenant.  Rent control  laws usually  protect  the  tenant  so  long  as  he  may  himself  use  the  

2 (2004) 4 SCC 794

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premises  but  not  his  transferee  inducted  into  possession  of  the  premises,  in  breach  of  the  contract or the law, which act is often done with  the  object  of  illegitimate  profiteering  or  rack- renting. To defeat the provisions of law, a device  is at times adopted by unscrupulous tenants and  sub-tenants of bringing into existence a deed of  partnership which gives the relationship of tenant  and  sub-tenant  an  outward  appearance  of  partnership  while  in  effect  what  has  come  into  existence  is  a  sub-tenancy  or  parting  with  possession  camouflaged  under  the  cloak  of  partnership. Merely because a tenant has entered  into a partnership he cannot necessarily be held to  have  sub-let  the  premises  or  parted  with  possession thereof in favour of his partners. If the  tenant is actively associated with the partnership  business and retains the use and control over the  tenancy premises with him, maybe along with the  partners,  the  tenant  may  not  be  said  to  have  parted with possession. However, if the user and  control  of  the  tenancy  premises  has  been  parted  with  and  deed  of  partnership  has  been  drawn  up  as  an  indirect  method  of  collecting  the consideration  for  creation  of  sub-tenancy  or  for  providing  a  cloak  or  cover  to  conceal  a  transaction not permitted by law, the court is not  estopped from tearing the veil of partnership and  finding out the real nature of transaction entered  into  between  the  tenant  and  the  alleged  sub- tenant.

9. A person having secured a lease of premises for  the  purpose  of  his  business  may be  in  need of  capital or finance or someone to assist him in his  business and to achieve such like purpose he may  enter into partnership with strangers. Quite often  partnership is entered into between the members  of any family as a part of tax planning. There is no  stranger brought on the premises. So long as the  

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premises remain in occupation of the tenant or in  his control, a mere entering into partnership may  not provide a ground for eviction by running into  conflict  with  prohibition  against  sub-letting  or  parting  with  possession.  This  is  a  general  statement of law which ought to be read in the  light  of  the  lease  agreement  and  the  law  governing the tenancy. There are cases wherein  the  tenant  sub-lets  the  premises  or  parts  with  possession in defiance of the terms of lease or the  rent  control  legislation  and  in  order  to  save  himself  from  the  peril  of  eviction  brings  into  existence, a deed of partnership between him and  his sub-lessee to act as a cloak on the reality of  the  transaction.  The  existence  of  deed  of  partnership  between the tenant  and the  alleged  sub-tenant 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  or  interest  in  tenancy  premises by the tenant in favour of a third person.  The rule as to exclusion of oral by documentary  evidence  governs  the  parties  to  the  deed  in  writing. A stranger to the document is not bound  by the terms of the document and is, therefore,  not  excluded  from demonstrating  the  untrue  or  collusive nature of the document or the fraudulent  or  illegal  purpose  for  which  it  was  brought  into  being. An enquiry into reality of transaction is not  excluded merely by availability of writing reciting  the  transaction.  Tyagaraja  Mudaliyar v.  Vedathanni, AIR 1936 PC 70 : 63 IA 126 is an  authority for the proposition that oral evidence in  departure  from  the  terms  of  a  written  deed  is  admissible to show that what is mentioned in the  deed  was  not  the  real  transaction  between  the  parties but it was something different. A lease of  immovable property is transfer of a right to enjoy  such property. Parting with possession or control  over the tenancy premises by the tenant in favour  

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of  a  third  person  would  amount  to  the  tenant  having  “transferred  his  rights  under  the  lease”  within the meaning of Section 14(2)(ii)(a) of the  Act”.

14. In  Ram  Saran  Vs.  Pyare  Lal  &  Anr.3 this  Court  

observed  that  “by  a  unilateral  action  of  the  tenant  of  

surrendering his right of tenancy in favour of a third party  

by delivering possession of the tenanted premises to the  

said third party, no new tenancy is  created which may  

legally bind the landlord. By mere acceptance of rent for  

the  tenanted  premises  tendered  by  the  tenant  in  the  

name of the registered society, neither a new tenancy nor  

a  valid  sub-tenancy  in  favour  of  the  said  registered  

society  has  been  created.”  It  is  said  in  clear  and  

categorical terms that “the Rent Act is a special statute  

governing and regulating tenancy and sub-tenancy. Such  

provisions  in  the  special  statute  supersede  the  general  

law of tenancy if the provisions of the special statute are  

incompatible  with  the  general  law  of  tenancy”.  It  is  

observed  that  “mere  knowledge  of  the  landlord  about  

occupation  of  the  tenanted  premises  by  the  said  

3 (1996) 11 SCC 728

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registered society and acceptance of rent for the tenanted  

premises  tendered  by  the  tenant  in  the  name  of  the  

registered society,  will  not  create a sub-tenancy unless  

induction of a sub-tenant is made with the written  

consent  of  the  landlord.  Even  if  the  landlord  has  

accepted payment of the rent for the disputed premises  

…. Such acceptance of rent will not constitute legal and  

valid sub-tenancy …… Consequently, landlord will not be  

estopped  from  claiming  eviction  of  unauthorized  sub-

tenant  along  with  the  tenant  for  indulging  in  inducting  

sub-tenant without lawful authority”. (emphasis by us)

15.We are not impressed by the submission made by the  

learned counsel for the respondents that unless payment  

of  consideration was established as a fact  between the  

tenant  and  sub-tenant,  the  application  under  the  

provisions of the Rent Control order filed by the landlord  

cannot  be  allowed.  Is  it  possible  for  any  landlord  to  

establish the actual agreement or understanding between  

the tenant and the person to whom the possession of the  

premises is delivered? It is well settled that sub-tenancy  

or  sub-letting  comes  into  existence  when  the  tenant  

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voluntarily  surrenders  possession  of  the  tenanted  

premises  wholly  or  in  part  and  puts  another  person in  

exclusive possession thereof without the knowledge of the  

landlord. In all such cases, invariably the landlord is kept  

out  of  scene  rather,  such  arrangement  whereby  and  

whereunder the possession is parted away by the tenant  

is always clandestine and such arrangements take place  

behind the back of the landlord. It is the actual physical  

and exclusive possession of  the newly inducted person,  

instead  of  the  tenant,  which  is  material  and  it  is  that  

factor which reveals to the landlord that the tenant has  

put some other person into possession of  the tenanted  

property. It would be impossible for the landlord to prove,  

by direct evidence, the arrangement between the tenant  

and sub-tenant. It would not be possible to establish by  

direct  evidence as to whether  the person inducted into  

possession by the tenant had paid monetary consideration  

to the tenant. Such arrangement which may have been  

made secretly, cannot be proved by affirmative evidence  

and in such circumstances, the Court is required to draw  

its own inference upon the facts of the case proved at the  

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enquiry. Delivery of exclusive possession by the tenant to  

a  stranger  to  the  landlord  and  without  the  prior  

permission of the landlord is one dominant factor based  

on which the Court could infer as to whether the premises  

was sub-let.

16. What remains for our consideration is as to whether the  

High Court properly understood the ratio of the decision in  

Bhairulal (supra). In the said case, the High Court clearly  

held  that  on  the basis  of  the  evidence  of  the  landlord  

himself,  it  was not possible to say that the tenant has  

parted  with  legal  possession  of  the  portion  of  the  

premises in question to the alleged sub-tenant.  On the  

other hand, it was apparent that though the alleged sub-

tenant has been working on the sewing machine located  

in  the  premises  where  the  tenant  himself  has  been  

carrying  on  his  business  in  clothes  in  the  disputed  

premises. The High Court in the said decision clearly held  

that  mere  use  by  other  person  is  not  parting  with  

possession so long as tenant retains the legal possession  

himself. We fail to appreciate as to how the ratio of the  

said judgment is applicable to the fact situation on hand.

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17. The case on hand clearly  demonstrates that it  is  not a  

case  of  any  reconstitution  of  the  existing  firm  by  the  

tenant  whereby  the  original  tenant  continued  to  be  a  

dominant  partner  of  such  newly  constituted  firm  and  

retained legal possession of the premises. That would be  

a different situation where the original tenant retains the  

legal  possession  of  the  premises as the tenant  without  

parting away the possession of the premises or any part  

thereof to a stranger. On the other hand, this is a clear  

case  where  the  original  tenant  parted  away  with  legal  

possession  by  inducting  altogether  a  new  firm  into  

possession  of  which  the  original  tenant  is  not  even  a  

partner and such parting away with the possession was  

without  the  knowledge and consent  and much less the  

written permission from the landlords. Thus the ratio of  

Bhairulal has no application to the case on hand.

18.Before  parting  with  the  case  we  are  constrained  to  

observe  that  the  High  Court  practically  substituted  the  

findings for that of the authorities by reappreciating the  

evidence available on record, which is impermissible in a  

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proceeding under Article 226/227 of  the Constitution of  

India.

19.For the aforesaid reasons, we find it difficult to sustain  

the impugned judgment of the High Court. The same is  

accordingly set aside.

20.The appeal is allowed with costs.

………………………………………..J. (B. SUDERSHAN REDDY)

…………………………………………J. (SURINDER SINGH NIJJAR)

NEW DELHI, AUGUST  05, 2010.  

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