Holding

The transfer of lease rights to a surviving partner after dissolution does not constitute sub‑letting, and the eviction suit must be dismissed.

Summary

The landlord, Amar Nath Agarwala, filed an eviction suit against Dhillon Transport Agency alleging that the tenant had sub-let, assigned or transferred possession of the premises without his consent. The original tenancy was granted to a partnership of four partners which later dissolved; all assets were transferred to one partner who formed a new partnership and continued to occupy the premises. The landlord relied on documents attached to his written submission to prove sub‑letting, but those documents were never exhibited as evidence, and the tenant was not given an opportunity to respond. The High Court held that the legal possession remained with a partner of the original tenant, so no sub‑letting occurred, and dismissed the eviction suit. The Supreme Court affirmed this view, applying the principle that a partnership is not a separate legal entity and that possession retained by an original partner does not constitute sub‑letting, and also ruled that the undisclosed documents could not be considered.

Issues considered

Whether the devolution of lease rights to a surviving partner after dissolution of a partnership, without the landlord's consent, amounts to sub‑letting.
Whether additional evidence is required to establish sub‑letting when such a transfer of rights occurs.
Whether documents filed with written submissions but not put in evidence can be considered for proof.

Subjects

evictionsub‑lettingpartnership dissolutionlegal possessionrent controlevidence admissibilitydocuments not exhibited

Judgment

A AMAR NATH AGARWALLA
v. t-
DHILLON TRANSPORT AGENCY

FEBRUARY 28, 2007

B [B.P. SINGH AND H.S. BED!, JJ.]

Rent Control and Eviction:

Eviction of tenant-Sought on ground of sub-letting-Premises
' -

c originally rented out to a partnership firm-Firm dissolved-Assets given to
one partner who carried on business in the same premises forming another
partnership with himself as one of the partners-Held, there was no sub-
letting-Suit of landlord was rightly dismissed by High Court-Partnership-
Firm carrying on business in rented premises -Original partnership dissolved
D and another partnership constituted-Effect on tenancy.

Evidence-Documents filed along with written submission and not
exhibited at the trial--Held, cannot be looked into since they were not put
.-(
in evidence and defendant had no opportunity of replying to such documents.

E Appellant filed a suit for eviction of the respondent firm, on the ground
that the defendant had sub-let, assigned/transferred possession of the suit
premises without the consent of the plaintiff-landlord. The defendant contested
the suit stating that originally the tenant-partnership comprised four partners
and when the said firm was dissolved all of its assets were given to one of
them who formed another firm with himself as one of the partners and,
F therefore, unless the 1tenancy was transferred by such partner to a third
person, it would not amount to sub-letting. The plaintiff, along with his written
submission filed certain documents to prove sub-letting which were not y •
exhibited at tite trial. The trial court decreed the suit, but the High Court
held that no sub-tenancy was created. Aggrieved, the landlord filed the appeal.
G On the question: whether carrying on business in the suit premises by
one of the partners of the firm, which was originally the tenant amounts to
sub-letting of the premises by the original tenant,

Dismissing the a1ppeals of the landlord, the Court
H 442
AMAR NA TH AGAR WALLA v. DHILLON TRANSPORT AGENCY 443

HELD: 1. It is patent that one of the partners of the firm which was the A
... \ original tenant has continued in legal possession of the premises as a partner
of another firm constituted after dissolution of the original firm. Thus the
legal possession is retained by a partner who was one of the original tenants.
In these circumstances, in view of the principles laid down by this Court, the
High Court rightly held that there was no sub-letting of the premises and,
therefore, the suit for eviction deserved to be dismissed. (Para 11]
B
(446-H; 447-A]

Murli Dhar v. Chuni Lal & Ors., [1969] SCR 563; Mohammedkasam
-J Haji Gulambhai v. Bakerali Fatehali (dead) by Lrs., (1998] 7 SCC 608 and
Mahendra Saree Emporium (II) v. G. V. Srinivasa Murthy, [2005] 1 SCC 481,
relied on.
c
2. The documents which were filed by the plaintiff along with his written
submissions and were not exhibited at the trial cannot be looked into since
they were not put in evidence and the defendant had no opportunity of replying
those documents. (Para 4) (444-Fl D
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1223-1224 of
2005.
>
·> From the Final Judgment and Order dated 13.8.2002 of the High Court
of Judicature at Calcutta in F.A. No. 231/1995 & F.A. No. 232/1995. E
Rakesh Dwivedi, Aruneshwar Gupta, Naveen Kumar Singh, Vimla Sinha,
Amit Kr. Singh for the Appellant.

Kailash Vasdev, l.S. Alag, J.S. Lamba, Bhuwan Puri, Amit Bhagat, Pradeep
Kumar Bakshi for the Respondent. F
The Judgment of the Court was delivered
• ....,
I. The appellant in these appeals by special leave is the landlord who
filed a suit for eviction of the respondent tenant from the premises in question.
The tenancy was created in favour of the respondent firm which consisted G
of four partners.

2. The eviction of the respondent was sought on the ground that the
-· defendant had sub-let, assigned and/or transferred possession of the said
premises and/or part thereof to Dhillon Transport Quick Service and Dhillon
Roadways Corporation and others consent in writing of the plaintiff landlord. H
444 SUPREME COURT REPORTS (2007] 3 S.C.R.

A In its written statement the tenant denied the allegation of sub tenancy and
submitted that Mis Dhillon Transport Agency, a partnership firm was originally
the tenant. The partnership had four partners who carried on business in the
name and style of Dhillon transport Agency. Since disputes and differences
arose amongst the partners, Title Suit No. 19 of 1991 was filed in the Court
of the I st Subordinate Judge at Patna and all matters were settled by
B compromise. Consequently. The firm was dissolved and one of the partners
was given all the assets of the firm and he formed another firm with himself
as one of the partners. It was averred that unless the tenancy was transferred
by such partner to a third party, it would not amount to sub-letting. The
defendant therefore aserted that there was no sub-letting since one of the
C partners, Ajit Singh continued to occupy the premises having legal possession
thereof.

3. In his deposition PW-I, Ajit Singh deposed that the tenancy was
originally created in favour of the firm of which he was one of the partners.
The firm was running a transport agency business in the suit premises and
D had never inducted any sub tenant in the suit premises. In his corss
examination it was elicited that the partnership firm originally consisting of
four partners existed for about 3 5 to 40 years. He denied the suggestion that
he was not looking after the affairs of the defendant and that it inducted other
persons and/or firm for carrying on business in the suit premises by the name
E of Dhillon Quick Transport Service or Dhillon Roadways Corporation. He
asserted that he looks after the affairs of the partnership firm which is carrying
on business in the premises of which he is a partner.

4. It appears that along with his written submission, the plaintiff filed
certain documents which were not exhibited at the trial to prove sub-letting.
p In our view those documents cannot be looked into since they were not put
in evidence and the defendant had no opportunity of replying to those
documents.
l' •

5. The trial Court decreed the suit for eviction but its judgment and
order has been set aside by the High Court. The High Court after appreciating
G the evidence on re1:ord has found that since one of the partners of the original
tenant namely, the firm Dhillon Transport Agency, is still running his transport
agency business in the same premises, it cannot be held that a sub-tenancy
has been created. The High Court, therefore, held that the appellant had failed ~-
to prove sub-letting of premises by the respondent.
H 6. In the Special Leave Petition filed by the appellants two questions
AMAR NA TH AGAR WALLA v. DHILLON TRANSPORT AGENCY 445
of law have been formulated which read as follows:- A
~
\
(a) If it is an admitted fact that the firm (with four partners) in favour
of which lease/tenancy was granted as dissolved, as a result whereof
the three resigning partners devolved and/or transferred and/or
assigned their interest in the tenancy/lease rights in favour of one of
th partner who continued as owner of the firm, whether such an B
assignment/devolution/transfer of the lease rights without obtaining
the consent of the landlord ipso facto amounts to sub-letting by the
resigning partners?
- 'If.
(b) If dissolution of the partnership firm and devolution and/or transfer
and/or assignment of the same by the resigning partners in favour of c
the surviving partner is an admitted fact, whether any further evidence
is required to be submitted by the plaintiff-landlord to establish sub-
letting?

7. As would be apparent from a mere reading of the submissions urged
on behalf of the appellant, after dissolution of the firm all the rights of the D
tenant firm including tenancy rights had been transferred to one of the
partners who has continued as the owner of the firm in occupation. The
;> question is whether carrying on business by one of the partners of the firm
.> which was originally the tenant amounts to sub-letting of the premises by the
original tenant. E
8. In Murli Dhar v. Chuni Lal and Ors., (1969) RCR 563 this Court had
repelled the contention that the old firm and the new firm being two different
legal entities, the occupation of the shop by the new firm was occupation by
the legal entity other than the original tenant and such occupation proved
sub-letting. Repelling the contention this Court held:- F
. # 'I "This contention is entirely without substance. A firm, unless expressly
provided for the purpose of any statute which is not the case here,
is not a legal entity. The firm name is only a compendious way of
describing the partners of the firm. Therefore, occupation by a firm is
only occupation by its partners. Here the firms have a common partner. G
Hence the occupation has been by one of the original tenants."
-1
9. In Mohammedkasam Haji Gulambhai v. Bakerali Fatehali (Dead)
by LRs., Reported in [ 1998] 7 SCC 608 this Court observed:

H
446 SUPREME COURT REPORTS [2007] 3 S.C.R.

A "There is absolute prohibition on the tenant from sub-letting, assigning
or transfen-ing in any other manner his interest in the tenanted premises. I _.
There appears to be no way around this subject of course if there is
any contract to the contrary between the landlord and the tenant. In
a partnership where the tenant is a partner, he retains legal possession
of the premises as a partnership is a compendium of the names of all
B the partners. In a partnership, the tenant does not divest himself of
his right in the premises. On the question of sub-letting etc. the law
is now very explicit. There is prohibition in absolute terms on the
tenant from sub-letting, assignment or disposition of his interest in
l(
the tenanted premises."
c 10. The same principle was reiterated by this Court in Mahendra Saree
Emporium (II) v. G. V. Srinivasa Murthy, reported in [2005] I SCC 481 wherein
this Court held:

"The mere fact that another person is allowed to use the premises
D while the lesses retains the legal possession is not enough to create
a sub lease. Thus, the thrust is, as laid down by this Court, on finding
out who is in legal possession of the premises. So long as the legal
possession remains with the tenant the mere factum of the tenant
having e:ntered into partnership for the purpose of carrying on the
business in the tenancy premises would not amount to sub-letting. In
E Parvinder Singh v. Renu Gautam a three-Judge Bench of this Court
devised the test in these terms: (SCC P. 799, Para 8)

"If the tenant is actively associated with the partnership business
and retains the use and control over the tenancy premises with him,
may be along with the partners, the tenant may not be said to have
F parted with possession. However, ifthe 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
G tearing the veil of partnership and finding out the real nature of
transaction entered into between the tenant and the alleged sub-
tenant."

11. Applying these principle to the instant case, it is patent that one
of the partners of the firm which was the original tenant has continued in legal .
H
AMAR NATH AGARWALLA v. DHILLON TRANSPORT AGENCY 447

- ... i
possession of the premises as a partner of another firm constituted after A
dissolution of the original firm. Thus the legal possession is retained by a
partner who was one of the original tenants. In these circumstances, we find
no fau It with the finding of the High Court there was no sub-letting of the
premises and hence the suit for eviction deserved to be dismissed.

12. There is not merit in these appeals and the same are accordingly B
dismissed.

R.P. Appeal Dismissed.
- )I