PARVINDER SINGHversusRENU GAUTAM AND ORS.

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A                                           PARVINDER SINGH
                                                   v.
                                      REND GAUTAM AND ORS.

                                             APRIL 22, 2004

B           [RC. LAH~TI, BRIJESH KUMAR AND ARUN KUMAR, JJ.]


          Rent. Control and Eviction:

          H.P. Urban Rent Control Act, 1987:
c
          Section 14(2)(ii)(a)-Sub-letting-Ground for eviction-8uit premises
    was sub-let by tenant-After the death of the tenent landlord filed suit for
    eviction of the heirs of the deceased tenant on the ground of sub-letting by
    deceased tenant-Suit. (/jsmissed by Rent Controller and appellate authority
D   as well as by High Court placing reliance on A.S. Sulochana 's Case (infra)
    holding that sub-letting to be ground for eviction must have been by present
    tenant and not his pred,e~~ssor-Correctness of-Held: Tenancy is a heritable
    right-One who inherite'<J tenancy, also inherited obligations incurred by the
    deceased tenant along }Sith the rights he had-Judgment of High Court and
    Appellate Authority sef aside;_Matter remanded to the Appellate Authority
E   to decide the appeal afre~h after recording a finding on the availability of
    ground for eviction un'der S. 14(2).

          Section i4(2)(ii)(a)-Sub-letting-Tenant entering into partnership
    carrying on business in suit premises-When amounts to sub-letting?-
    Principles for determination stated
F                                     t\,
           The appellant was the landlord-cum-owner of the suit premises governed
    by the H.P. Urban Rent Control Act, 1987. It was let out to the husband of
    respondent No. 1 under an oral lease. Respondent No. 1 inherited the tenancy
    rights after the death of her husband. The appellant initiated proceedings for
G   eviction of respondent No. 1 from the suit premises under Section 14(2)(ii)(a)
    of the Act on the ground that her husband had sublet the suit premises, which
    subletting had been continued by the heirs i.e. respondents Nos. 1 and 2, after
    t{!e death of the husband. The suit for eviction was dismissed by the Rent
    Co-ntroller and the appellate authority as well as by the High Court in civil
    revision. The plea of subletting had not been gone into on merits by any of the
H                                                 610
                    PARVINDERSINGHv. RENUGAUTAM                               611

courts below because of the law laid down by a two-Judges Bench of this Court        A
in A.S. Sulochana v. C. Dharmalingam, [1987) 1 SCC 180. Hence the appeal.

      Allowing the appeal, the Court

      HELD: 1.1. Tenancy is a heritable right unless a legal bar operating
against heritability is shown to exist. Thus, the one who inherits tenancy           B
rights, also inherits the obligations incurred by the deceased tenant along
with the rights, which he had. It is difficult to accept a proposition that on the
death of the tenant his heirs inherit only the rights and not the obligations.
If that be so, then the heirs would not be liable to pay any arrears of rent,
which were not paid by the deceased tenant [615-D-E]                                 C
      1.2. The judgments of the Rent Controller, the appellate authority and
the High Court which proceeded on the basis of A.S. Sulochana 's case, cannot
now be sustained and deserve to be set aside. (615-E]

      Jmdad Ali v. Keshav Chand, [2003] 4 SCC 6358, re,ied on.
                                                                                     D
     A.S. Su/ochana v. C. Dharmalingam, [1987) 1 SCC 180, held
inapplicable and not good law after Imdad Ali's case.

      2.1. Merely because a tenant has entered into a partnership, he cannot
necessarily be held to have sublet the premises or parted with possession            E
thereof in favour of his partners. If the tenant is actively associated with the
partnership business and retains the use and control over the ten~ncy
premises with him, may be along with the partners, the tenant may not t ~
said to have parted with possession. However, if the use 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-        .p
tenancy or for providing a cloak or cover to conceal the transaction'hot
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. [616-A-C)

      2.2. So long as the premises remain in occupation of the tenant or in          G
his control, a mere entering into partnership may not provide a ground for
eviction by running into conflict with prohibition against subletting or parting
with possession. This is a general statement of law, which ought to be read in
tbe light of the lease agreement, and the law governing the tenancy. The
existence of deed of partnership between the tenant and the alleged sub-tenant       H
    612                     SUPREME COURT REPORTS [2004] SUPP. 1 S.C.R.

A would not predude the landlord from bringing on record material and
    circumstances, by adducing evidence <!r by means of cross-examination,
    making out a case of sub-letting or parting with possession or interest in
    tenancy premises 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
B   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 wh!ch it was brought into
    being. An enquiry into the reality of transaction is not excluded merely by
    availability of writing reciting the transaction. (616-D-GJ

C           Tyagaraja v: Vedathanni, AIR (1936) PC 70, referred to.

          3. A lease of immovable property is a transfer of a right to enjoy such
    property. Parting with possession or control over the tenancy premises by
    the tena.nt in favour of a third person would amount to the tenant having
    'transferred his rights under the lease' within the ~eaning of Section
D   14(2)(ii)(a) of the H.P. Urban Rent Control Act, 1987. (617-A-BJ

          4. The mater is remanded to the App~ilate Authority to hear and decide
    !he appeal afresh after hearing of the parties and recording of a finding on
    the availability of ground for eviction under Section 14(2) of the H.P. Urban
    Rent Control Act, 1987. (617-D)
E
            CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1680-1681 of
    1999.

         From the Judgment and Order dated 27.3.98 of the Himachal Pradesh
    High Court in C.R.. No. 248/95 and C.M.P: No. 519of1997.
F
         Gourab Banerjee, Ms. Ruby, S. Ahuja and Mrs. Manik Karanjawala for
    the Appellant.

            Mrs. Rekha Palli and E.C. Agrawala for the Respondents.

G           The Judgment of the Court was delivered by

         R.C. LAHOTI, J. The suit premises consist of a shop bearing No. 96/
    l, Lower Bazar, Shimla, governed by the H.P. Urban Rent Control Act, 1987.
    The appe\lant is the landlord-cum-owner of the shop. It was let out to late
    Vijay .Gautam under an oral lease. On 31.12.1988, a partnership deed was
H   signed between late Vijay Gautam and Harbhajan Singh, the respondent No.3.
          PARVINDERSINGHv. RENUGAUTAM [LAHOTI,J.]                           613
herein. On 26.6.1991, Vijay Gautam died. The partnership stood dissolved            A
consequent thereupon. On 29.6.1991, another deed of partnership was signed
between respondent No. I, the widow of late Vijay Gautain acting for herself
and as guardian of respondent No. 2, the minor son of Vijay Gautam, on the
one hand and Harbhajan Singh, respondent No. 3 on the other hand. On
7.7.1992, appellant initiated proceeding for eviction of the respondents from       B
the shop alleging that the tenant Vijay Gautam had sublet the premises to
Harbhajan Singh which subletting has been continued by the heirs
Respondent Nos. I and 2, after the death of Vijay Gautam. A ground of
default in payment of rent was also taken. The suit for eviction was dismissed
by the Controller and the dismissal was upheld by the appellate authority as
also by the High Court in civil revision. Feeling aggrieved, the landlord has       C
filed this appeal by special leave.

      A perusal of the three judgments - impugned herein - shows that the
ground for eviction for default in payment of rent has been negatived by all
the three Courts. So far as the ground of subletting is concerned, the plea
has not been gone into on merits by any of the Courts because of the law D
laid down by a two-Judge Bench of this Court in A.S. Sulochana v. C.
Dharmalingam, [1987] l SCC 180. In A.S. Sulochana 's case, the tenant was
sought to be evicted on the ground of subletting within the meaning of
Section l0(2)(ii)(a) of Tamil Nadu Buildings (Lease and Rent Control) Act,
1960. The facts found therein were that the original landlord and tenant E
between whom the lease was created, had both died. No evidence, direct or
circumstantial, was available wherefrom it could be inferred if the lease
prohibited the tenant from creating a sub-tenancy or whether the sub-tenancy
was created by the tenant without the written consent of the landlord. Under
the Tamil Nadu Act, the landlord could not succeed in evicting the tenan~
without establishing that Section 10(2)(ii)(a) ·was violated. Thus, the Court F
found that an inference as to creation of an unlawful sub-tenancy within the
meaning of Section 10(2)(ii)(a) of the Tamil Nadu Act could not be drawn.
However, the Court went on to observe :-

        "When the statute says the tenant who is sought to be evict~d, must
        be guilty of the contravention, the court cannot say, 'guilt of his         G
        predecessor in interest' will suffice. The flouting of the law, the sin
        under the Rent Act must be the sin of the tenant sought to be evicted,
        and not that of his father or predecessor in interest. Respondent
        inherited the tenancy, not the sin, if any, of his father. The law in its
        wisdom seeks to punish the guilty who commits the sin, and not his          H
    614                     SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A           son who is innocent of the rent law offence. It being a penal provision
            in the sense that it visits the violator with the punishment of eviction,
            it must be strictly construed."

          A.S. Sulochana 's case came up for the consideration of a three-Judge
    Bench of this Court in Imdad Ali v. Keshav Chand and Ors., [2003] 4 SCC
B   635, though in the context of dealing with a ground for eviction under a local
    rent control law of Madhya Pradesh. A.S. Sulochana's case was distinguished
    and also adversely commented upon. The Court felt that in A.S. Sulochana's
    case the Division Bench was influenced by the opening clause of the relevant
    provision in Tamil Nadu Act which begins with "a landlord who seeks to evict
C   his tenant" so as to hold that the facts constituting the ground for eviction
    should be referable to the present tenant and not to his predecessor who had
    already died. The Court further held in lmdad Ali's case :-

           "It matters not whether such default is made by the original tenant or
           by his successor inasmuch as the successor-in-interest of the original
D          tenant continues to be a tenant within the meaning of the provisions
           thereof. By reason .of death of the original tenant, a new tenancy is
           not created. A successor-in-interest of a tenant holds his· tenancy
           right subject to rights and obligations of his predecessor. He does
           not and cannot claim a higher right than his predecessor. It is now
           well settled that a person by reason of inheritance or assignment does
E          not derive any better title than his predecessor, and, thus, the right
           which the original tenant did not possess, cannot be passed on to his
           successor."

          In lmdad Ali's case, the three-Judge Bench opined that the law laid
    down in A.S. Sulochana 's case was not applicable for interpreting a provision
F   in M.P. Accommodation Control Act, 1961. The Bench also said, "We do not
    subscribe to the general observations made in A.S. Sulochana's case and to
    the said ,~xtent it cannot be held to have laid down a good law and is
    overruled accordingly".

          The relevant provision of the 'H.P. Act reads as under :-
G
           "14.(1) xxx xxx xxx

               (2) A landlord who seeks to evict his tenant, shall apply to the
           Controller for a direction in that behalf. If the controller, after giving
           the tenant a reasonable opportunity of showing cause against the
H

                                                       0
             PARVINDER SINGH v. RENU GAUTAM [LAHOTI, J.]                      615

        applicant, is satisfied -                                                      A
          xxx      xxx      xxx

            (ii) that the tenant has after the commencement of this Act without
        the written consent of the landlord -

            {a) transferred his rights under the lease or sublet the entire
                                                                                       B
        building or rented land or any portion thereof, or

          xxx       xxx         xxx

        the Controller may make an order directing the tenant to put the
        landlord in possession of the building or rented land and if the               C,
        .Controller is not so satisfied, he shall make an order rejecting the
         application:

           xxx       xxx            xxx"

      Tenancy is a heritable right unless a legal bar operating against heritability   D
is shown to exist. Thus, the one who inherits tenancy rights, also inherits
the obligations incurred by the deceased tenant alongwith the rights which
he had. It is difficult to accept a proposition that on death of the tenant his
heirs inherit only rights and not obligations. If that be so, then the heirs
would not be liable to pay any arrears of rent which were not paid by the              E
deceased-tenant.

      The judgments of the Controller, the appellate authority and the High
Court which proceed on A.S. Sulochana 's case, cannot now be sustained and
deserve to be set aside.
                                                                                       F
       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 subletting 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 premises but not his transferee .inducted into
possession of the premises, in breach of the contract or the law, which act            G
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         H
    616                    SUPREME COURT REPORTS [2004] SUPP. 1 S.C.R.

A 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 sublet 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,
    may be along with the partners, the tenant may not be said to have parted
B   with possession. However, if the use 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 the transaction not pennitted by law,
    the Court is not estopped from tearing the veil of partnership and finding out
C   the real nature of transaction entered into between the tenant and the alleged
    sub-tenant.

         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
D 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
   pr~mises. So long as the 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 subletting or parting
E 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 sublets the p~emises or parts with possession
   in defiance of the tenns of lease or the rent control legislation arid 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
F 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 otit a case of sub-letting or parting with possession
 · or interest in tenancy premises by tenant in favour. of a third person. The
   rule as to exclusion of oral by documentary evidence governs the parties to
G 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
H v. Vedathanni, AIR (1936) PC 70 is an authority for the proposition that oral
             PARVINDER SINGH v. RENU GAUTAM [LAHOTI, J.]                    617
evidence in departure from the terms of a written deed is admissible to show A
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 tenant in favour 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.                                     'B
      Shri Gourab Banerjee, the learned senior counsel for the appellant,
submitted that all the relevant evidence and material are available on record
and both the parties have adduced the necessary evidence. All that is
needed to be done is its appreciation and to draw inferences. In such              C
circumstances and keeping in view the period of time for which the proceedings
have already remained pending, we deem it proper to remand the matter to
the appellate authority for hearing and decision afresh.

       Accordingly, the appeals are allowed. The judgments of the High Court
and the Appellate Authority are set aside. The case is remanded to the             D
Appellate Authority to hear and decide the appeal afresh after hearing the
parties and to record a finding on the availability of ground for eviction under
Section 14(2) of H.P. Urban Rent Control Act, 1987 and then decide the appeal
finally. The costs shall abide the result.

v.s.s.                                                       Appeals allowed.      E