Holding

A tenant who is a partner in a firm cannot invoke Section 53‑A to prevent eviction, and the landlord’s later bona‑fide need for occupation is not eclipsed by an earlier agreement to sell.

Summary

The landlord sought eviction of a long‑term tenant under Section 21(1) of the Karnataka Rent Control Act, claiming bona‑fide need for occupation and rent arrears. The tenant argued that the landlord had entered into a sale agreement with a partnership firm of which the tenant was a partner, invoking Section 53‑A of the Transfer of Property Act to bar eviction and contending that the agreement nullified the landlord's claim of bona‑fide need. The Supreme Court held that the tenant could not rely on Section 53‑A because he was not a transferee under the sale agreement and his individual tenancy right remained separate from the partnership’s assets. Even assuming partnership, a partner cannot claim the firm’s rights individually. The Court further observed that the landlord’s need for occupation arose only years after the sale agreement, so the earlier willingness to sell did not eclipse his bona‑fide need. Consequently, the appeal was dismissed and the eviction order upheld, with a six‑month vacating period granted on condition of an unconditional undertaking.

Issues considered

The applicability of Section 53‑A of the Transfer of Property Act to a tenant who is a partner in a firm that entered into a sale agreement for the premises.
Whether a partner's individual tenancy right merges into the partnership’s property rights under the Indian Partnership Act.
Whether the landlord's earlier agreement to sell the premises precludes his claim of bona‑fide need for occupation under Section 21(1) of the Karnataka Rent Control Act.

Legislation cited

Indian Partnership Act, 1932s. 14
Karnataka Rent Control Act, 1961s. 21(1)
Transfer of Property Act, 1882s. 53-A

Subjects

evictionbona fide needSection 53Atenancy rightspartnershipTransfer of Property ActKarnataka Rent Control Actspecific performance

Judgment

SHASHI KAPILA A
v.
R.P.ASHWIN

NOVEMBER 8, 2001

[K.T. THOMAS AND S.N. VARIAVA, JJ.] B

Transfer of Property Act, 1882 :

Section 53-A-Eviction-Eviction petition-Bona fide requirement-
Landlord entered into an agreement for sale of suit premises with a partnership
firm of which the tenant was a partner-Subsequently, landlord resisted the suit c
for specific peiformance of the agreement-Held, if the landlord himself wanted
his rights in the suit premises to be alienated, the bona fide need of the landlord
can get eclipsed. But in this case the need of the landlord for occupying the suit
premises arose long after the date of agreement-The landlord, therefore,
cannot be pre-empted from evicting the tenant on the ground that he was willing D
to sell the suit premises-Hence the tenant cannot lay any claim on the strength
of Section 53-A-Rent and Eviction-Karnataka Rent Control Act, 1961-S.
21(1 ).

Indian Partnership Act, 1932 :
E
Eviction-Eviction petition-Bona fide requirement-Tenant inducted
into suit premises even before formation of partnership firm-Such tenancy
rights not thrown into the hotchpots of firm-Held, in such a situation the
tenancy right of the tenant is a right available to the tenant individually over
which the partnership has no claim.
F
The respondent-landlord applied for an order of eviction of the
appellant-tenant under Section 21(1) of the Kamataka Rent Control Act
on the ground of bona fide need of the suit premises for the respondent's
own occupation. The trial court allowed the application. The High Court
dismissed the appeal filed by the respondent. Hence this appeal. G
On behalf of the appellant it was contended that the respondent had
entered into an agreement with a firm of which the appellant was one of
the partners' to sell the suit premises and, therefore, the appellant could
lawfully resist the eviction on the strength of Section 53-A of the Transfer
of Property Act, 1872; and that the said agreement was enough to nullify H
217
218 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A the bona jides or the claim of the respondent that he required the suit
premises for his own occupation.

Dismissing the appeal, the Court

HELD : 1. Section 53-A of the Transrer or Property Act, 1882 applies
B to a person who contracts to transrer immovable property in writing. H the
proposed transferee in the agreement has taken possession of the property,
or he continues in possession thereof being already in possession, in part
performance of the contract and has done done some act in rurtherance of
the contract, and transferee has performed or is willing to perform his
C part of the contract, the transferor shall be debarred from enforcing any
right in respect or the property. [221-B-C]

2.1. A partnership firm is an association of persons. But in spite of
that unity between themselves, every partner can have his own separate
existence from the firm. Any right, which a partner bas over any property,
D other than the partnership property, would remain bis individual asset.
The mere ract that the particular person has chosen to include bim~elf as a
partner of a firm will not result in incorporation or all bis individual
properties as the assets of the partnership. [221-F]

2.2. Admittedly, the appellant was a tenant of the building even
E earlier than the formation of the firm. In such a situation the tenancy right
of the appellant in respect of the building is a separate right available to
the appellant individually over which the partnership bas no claim. The
appellant never contended that be had offered the suit property as an asset
or the partnership firm. Nor did the firm at any time claim that the
F appellant threw the tenancy right over the building into the hotchpots or
the partnership at any time. On the contrary, the agreement bas taken care
that the building is in the personal possession of the appellant. [222-A-B]

3. Even assuming that the appellant was a partner of the firm it is
legally impermissible for him to individually claim all the rights of the
G firm. Nor can he project himself as a transferee under the agreement.
Thus, the appellant cannot Ia;· any claim on the strength of Section 53-A
of the Transrer of Property Act, even assuming that the agreement is still
binding on the parties thereto. [221-E; 222-G]

H 4. The bona jides need of the landlord's could possibly get eclipsed
SHASHI KAPILA v. R.P. ASHWIN [THOMAS, J.] 219
if the landlord himself wanted his rights in the building to be alienated to A
other persons. But the respondent-landlord resisted the suit for specific
performance of the agreement filed by the appellant-tenant. This stand of
the respondent was proclaimed long before he launched the present litiga-
tion for eviction of the appellant on the ground of his need to occupy the
building. This indicates that the need of the landlord for occupying the suit
B
building arose only long after the date of agreement. Therefore, he cannot
be pre-empted from claiming the relief merely on the ground that some
years prior to it he was willing to sell the building. Hence, it is not possible
to agree with the contention of the appellant that the landlord can be non-
suited on the basis of the afore-mentioned agreement. [223-A; F-G)
c
P. Veerappa v. M.P. Mohammad Amanulla, (1996) 1 SCC 415, held
inapplicable.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7791 of2001.

From the Judgment and Order dated 16.12.99 of the Karnataka High D
Court in H.R.R.P. No. 1532 of 1998.

Sudhir Chandra and Parijat Sinha for the Appellant.

Khwairakparn Nobin Singh for the Respondent.
E
The Judgment of the Court was delivered by

THOMAS, J. Leave granted.

The tenant of a residential building, situate at Jayarnahal Extension,
Bangalore who has been occupying it for nearly quarter of a century is now F
at the peril of being evacuated therefrom by his landlord. To resist the action
launched by the landlord for evicting the tenant he has adopted a defence that
his continuation in the building from April 1986 onwards was under a separate
jural linkage on account of an agreement of sale executed by the landlord. But
the said line of resistance did not succeed thus far. The partial relief he secured G
from the High Court, as per the impugned order, was not enough to thwart the
impending eviction hence the tenant has filed the appeal by special leave.

The respondent landlord applied for an order of eviction of the appellant
on two grounds envisaged under Section 21(1) of the Karnataka Rent Control
Act. One was on the allegation that the tenant defaulted paying rent of the H
220 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A building for a few months and the other was that the landlord himself requires
the building bona fide for his own occupation. Though the Rent Control Court .
(the Court of Small Causes Judge, Bangalore) granted the order of eviction on
both grounds the High Court, in revision, restricted the order to the ground of
bona fide need of the landlord.

B According to the appellant, the landlord had entered into an agreement
on 17.4.1986 with a firm by name Mis Shiva and Co. of which the appellant
is one of the partners as per which the landlord had agreed to sell the building
for a sale consideration of Rupees twelve lacs, within three months of the said
date, and a sum of Rupees one lac had already been received by the landlord
c as advance amount. On the strength of the said agreement appellant sought to
non-suit the landlord.

The Rent Control Court did not accept the above contention. The court
found that the landlord made out both the grounds and hence the order of
eviction was passed. The High Court concurred with the Rent Control Court
D in respect of the ground of bona fide need of the landlord. The following is
what the learned single judge of the High Court has stated about it:

'The contention of the learned counsel for the petitioner that he is in
permissive possession as an agreement holder and not as a tenant is
difficult to accept. He has produced Ex.R. l, a copy of the sale agree-
E ment which shows that the respondent-landlord has entered into an
agreement with a firm represented by Mr. Yati Kumar. There is no
evidence on record to show that the present petitioner is a part of
Mis. Shiva and Co. The lease agreement produced by the parties in
those proceedings disclosed that the premises had been taken on lease
F by the petitioner himself and not by the company. I have perused the
terms and conditions of the sale agreement. There is no term or
agreement between the parties recognising the present petitioner as an
agreement holder and not as a tenant and therefore it is difficult to
accept his submission that the petitioner is no longer a tenant of the
petition premises."
G
Sri Sudhir Chandra, learned Senior Counsel adopted a twin contention
on the basis of the agreement dated 17.4.1986. First is that the appellant can
lawfully resist the eviction of the landlord on the strength of Section 53A of
the Transfer of Property Act. Second is that the said'agreement is enough to
H nullify the bona fides of the claim of the landlord that he requires the building
SHASHI KAPILA v. R.P. ASHWIN [THOMAS, J.] 221
for his own occupation. According to the learned Senior Counsel the agreement A
. reflects the intention of the landlord to part with his rights in the building and
hence the ground urged for eviction is inconsistent with the desire limned in
the agreement.

While dealing with the first contention, a reference has to be made to
B
Section 53A of the Transfer of Property Act. It applies to a person who
contracts to transfer immovable property in writing. If the proposed transferee
in the agreement has taken possession of the property, or he continues in
possession thereof being already in possession, in part performance of the
contract and has done some act in furtherance of the contract, and transferee
has performed or is willing to perform his part of the contract, the transferor c
shall be debarred from enforcing any right in respect of the property. This is
the kernel of the principle incorporated in Section 53A of the Transfer of
Property Act.

The agreement dated 17.4.1986 was between the respondent landlord on D
the one part and Mis Shiva and Co. on the other part. The hurdle which the
appellant has to surmount initially was to show that he was a partner of the firm
Mis Shiva and Co. We will assume, for the present, that he was a partner and
hence for all practical purposes he could also represent the firm. Of course, the
agreement is totally silent of the fact that appellant was partner of Mis Shiva
E
and Co. Even assuming that he was a partner thereof it is legally impermissible
for him to individually claim all the rights of the firm. Nor can he project
himself as a transferee under the agreement.

A partnership firm is an association of persons. But in spite of that unity
between thei:iselves, every partner can have his own separate existence from F
the firm. Any right which a partner has over any property, other than the
partnership property, would remain as his individual asset. The mere fact that
the particular person has chosen to include himself as a partner of a firm will
not result in incorporation of all his individual properties as the assets of the
partnership. Section 14·of the Indian Partnership Act 1932 says: "Subject to G
contract between the partners, the property of the firm includes all property and
rights and interests in µroperty originally brought into the stock of the firm, or
acquired, by purchase or otherwise, by or for the firm, or for the purposes and
in the course of the business of the firm, and includes also the goodwill of the
business."
H
222 SUPREME COUITT REPORTS [2001} SUPP. 5 S.C.R.
A Here it is an admitted fact that appellant was a tenant of the building even
earlier than the formation of the firm Mis Shiva and Co. In such a situation the
tenancy right of the appellant in respect of the building is a separate right ,
available to the appellant individually over which the partnership has no claim.
Appellant never contended that he had offered the suit property as an asset of
the partnership firm. Nor did the firm at any time claim that appellant threw
B
the tenancy right over the building into the hotchpot of the partnership at any
time. On the contrary, the agreement ha' taken care that the building is in the
personal possession of the appellant. The following recital in the agreement
would bear testimony for it:

c "The purchaser is aware that the tenant is in possession of the said
premises and after the purchaser he must obtain the possession of the
said premises in due course at his own cost and responsibilities. The
seller does not hold himself responsible in any way to get him vacant
possession. In fact, the purchaser has agreed to take up this responsi-
bility."
D
Even that apart, when a suit was filed by Mis Shiva and Co. for specific
performance of the agreement dated 17.4.1986 the firm made it abundantly
clear in the plaint itself that appellant's right in the building as a tenant is in
his personal capacity and not as a partner of the firm. The relevant portion of
the plaint is extracted below:
E
"The suit schedule property, at the time of agreement of sale, was in
the occupation of Mr. Shashi Kapila in his personal capacity. Hence
it is agreed that the defendant would not be responsible to place the
plaintiff in vacant possession of the suit property and the plaintiff
F agreed for the same. The suit schedule property continues to be ten-
anted by Mr. Shahi Kapila in his personal capacity who is also one !he
partners of the plaintiffs firm."

(Mr. Shashi Kapila, mentioned in the above portion, is the appellant in this
case).
G
Thus the appellant cannot lay any claim on the strength of Section 53A
of the Transfer of Property Act, even assuming that the agreement is still
binding on the parties thereto.

The second limb of the contention is that when the landlord himself had .
H agreed to transfer his rights to others, such a stance is negatory to his claim
SHASHI KAPILA v. R.P. ASHWIN [THOMAS, J.] 223
that he genuinely needs the building for his own occupation. At the first blush A
the argument appeared forceful because the bona .fides of the landlord's need
could possibly get eclipsed when the landlord himself wanted his rights in the
building to be alienated to other persons. But when we delved into the matter
we found that genuineness of the landlord's need remains unimpaired despite
his earlier inclination to sell the building. We shall now state the reasons.
B
We pointed out above that the agreement to sell was executed on 17.4.1986.
Ir has been stipulated therein that the sale deed should be executed and reg·
istered within three months from the said date. It is the admitted case that the
sale deed was nut executed within that time. The landlord filed a petition for
eviction only 6 years thereafter. In the petition for eviction he has stated that c
he was residing at Mysore and he shifted his residence to Bangalore and has
been staying in a temporary accommodation as the building belonging 10
another person was given for his occupation. He further said that he is unable
to continue in the said building for various reasons. It is not disputed that ti· c
landlord is now residing in the building belonging to somebody else.
D
Mis. Shiva & Co. had filed a suit in 1986 for specific performance of
the agreement. The said suit was vehemently resis~ed by the landlord. At some
point of time the said suit was withdrawn by the firm and later in 1989 the same
firm filed a second suit for specific performance of the agreement dated
17.4.1986. Landlord opposed the second suit also on all grounds. He con- E
tended, inter alia, that the agreement itself could not be acted on as he was
deceived by Mr. Yati Kumar who represented the firm and it was never
disclosed to the landlord that the appellant was a partner of that firm. At any
rate, it was clear beyond doubt that the landlord was totally opposed to the
performance of the terms of the agreement dated 17.4.1986. That stand of the F
landlord was proclaimed long before he launched the present litigation for
eviction of the appellant on the ground of his need to occupy the building. The
above developments would indicate that the need of the landlord for occupying
the suit building arose only long after 17.4.1986. Therefore, he cannot be
preempted from claiming the relief merely on the ground that six years prior
to it he was willing to sell the building. Hence, we are unable to agree with G
the contention of the appellant that the landlord can be non-suited on the basis
of the aforeMmentioned agreement.

Learned senior counsel for the appellant relied on the decision of this
Court in P. Veerappa v. M.A. Mohammad Amanulla, [1996] l SCC 415 in H
224 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A support of his contention that the agreement would foreclose the landlord's
claim that he needs the building bona fide for his own use. The following
passage in the judgment is enough to show that the said decision is of no use
to the appellant:

"So long as the agreement subsists, it is settled law that the lesser right
B of tenancy stood merged with larger rights accrued under the agree-
ment. But unfortunately in the compromise itself it was recognised that
the appellant was to pay arrears of rent till the date of compromise. In
other words, the appellant recognised the reversion to his pre-existing
rights as tenant up to the date of the compromise. In other words,
c subject to compliance of the terus of the contract, his tenancy rights
continued. The terms have not been complied with and the agreement
came to an end. Thereby, the appellant's pre-existing rights as a tenant
stood revived and the appellant and the respondent were bound by the
relationship of landlord and tenant."

D We do not find any merit in any of the contentions of the appellant and
hence we dismiss this appeal. However, time for vacating the building would
stand extended by six months from today on condition that appellant gives an
. unconditional undertaking in this Court in the form of an affidavit, within three
weeks, that he would vacate the building and put the landlord in possession
thereof on or before the expiry of six months from today. If the said undertak-
E
ing is not furnished within the time mentbned aboye, appellant will forfeit the
benefit for extension of time to vacate. Appeal is thus disposed of.

v.s.s. Appeal disposed of.

:).