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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4189 OF 2014 (Arising out of SLP (Civil) No. 29888 of 2010)

M/s. S.F. Engineer ... Appellant

Versus

Metal Box India Ltd. and Anr.        ...Respondents

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. This appeal, by special leave, by the landlord arises  

out of and is directed against the judgment and order  

dated 12.8.2010 of the Bombay High Court passed in  

Civil Revision Application No. 355 of 2010, allowing  

the respondent-tenants’ appeal and – in reversal of  

the concurrent findings of the courts below that there  

was  an  unauthorized  subletting  –  dismissing

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appellant’s application under 13(1)(e) of the Bombay  

Rent Act, 1947 for an order for grant of possession.

3. The  appellant-plaintiff,  owner  of  the  suit  premises,  

i.e.,  Flat  Nos.  201 and 204 on second floor  of  the  

building known as “Marlow” and two garages Nos. 7  

and 8 on the ground floor of the suit building situate  

at  62-B,  Pochkhanwala  Road,  Worli,  Mumbai,  

instituted RAE No. 45/84 of 1997 for eviction of the  

first  respondent  (defendant  No.  1)  and  its  former  

employee, the respondent No. 2 (defendant No. 2).  

For the sake of convenience, the parties hereinafter  

shall be referred to as per the rank in the suit.

4. The case of the plaintiff in the court below was that  

the defendant No. 1 was a tenant under the plaintiff  

on  a  consolidated  monthly  rent  of  Rs.1075/-.   The  

premises, as set forth in the plaint, was let out to the  

defendant  No.  1  exclusively  for  the  purpose  of  

providing residential accommodation to its executive  

staff  and  not  for  any  other  purpose.   Though  the  

defendant No. 2 had no right to remain in possession  

of  the  flat  No.  201,  yet  the  employer  company  

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unlawfully sublet the said flat to him.  The plaintiff  

vide notice dated 19.1.1989 terminated the tenancy  

of defendant No. 1.  The said notice was replied to by  

the  defendant  No.  1  through  its  advocate  on  

13.2.1989 denying the assertions made in the notice.  

This compelled the plaintiff to initiate the civil action  

for eviction of the defendants from the suit premises  

on the ground of subletting, bona fide requirement  

and non-user for the purpose for which it was let out.

5. The defendant No. 1 filed its written statement and  

denied the averments in the plaint.   Its affirmative  

stand  was,  it  had  not  breached  the  conditions  in  

using the suit premises for the purpose of which the  

same was let out for continuous period of six months  

preceding  the  date  of  the  suit  without  reasonable  

cause and the suit premises had been illegally and  

wrongfully occupied by the defendant No. 2 against  

the will of defendant No. 1 by remaining in flat No.  

201.  As far as flat No. 204 was concerned, the stand  

of the defendant No. 1 was that it was in occupation  

of the staff, General Manager, officers and executives  

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of the Company.  The claim of bona fide requirement  

was seriously disputed on many a ground.  It was the  

further  case  of  defendant  No.1  that  the  defendant  

No. 2, as an officer of defendant No. 1 was allotted  

flat No. 201 as a part of his service amenities under  

the  terms  and  conditions  stipulated  in  agreement  

dated 11.5.1982.  On 27.5.1988 the defendant No. 1  

was  declared  a  sick  company  by  the  Board  for  

Industrial and Financial Reconstruction (BIFR) under  

the  provisions  of  the  Sick  Industrial  Companies  

(Special  Provision)  Act,  1985  and  thereafter  on  

11.2.1989 the defendant No. 2 resigned from his post  

which was accepted by the defendant No.  1.   The  

defendant No.  2 continued to occupy the premises  

and the employer withheld his provident fund dues  

for  which  the  Commissioner  of  Provident  Fund  on  

19.10.1993 issued a notice to defendant No. 1.  At  

that juncture, the defendant No. 1 filed writ petition  

No. 2134 of 1993 before the High Court against the  

Regional  Provident  Fund  Commissioner  and  the  

defendant  No.  2  for  settlement  of  dues  of  the  

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defendant  No.  2  and  for  handing  over  vacant  

possession  of  the  premises.   The  defendant  No.  1  

also filed a criminal complaint under Section 630 of  

the  Companies  Act,  1956 which  was  dismissed for  

non-prosecution.  These asseverations were made to  

demolish the ground of subletting as asserted by the  

plaintiff and, eventually, the dismissal of the suit was  

sought.   

6. The  defendant  No.  2  filed  his  separate  written  

statement  stating,  inter  alia,  that  he  was  not  

concerned with flat No. 204 and garage No. 8 and he  

was a statutory tenant in respect of flat No. 201 and  

he had been in long continuous use and occupation  

of the suit premises, i.e., flat No. 201 and garage No.  

7.  It was his further stand that he was not unlawfully  

occupying the suit premises because he was allowed  

to  use  the  suit  premises  as  an  employee  of  the  

defendant No.  1 and hence,  he was occupying the  

part of the suit premises as a lawful sub-tenant with  

the consent and knowledge of the plaintiff.

7. The trial Judge initially framed the following issues: -

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“(1) Whether the plaintiffs prove that the suit  premises  have  not  been  used  by  the  defendants  without  reasonable  cause  for  the purpose for which they were let for a  continuous  period  of  6  months  immediately  preceding  the  date  of  the  suit?

(2) Whether  the  plaintiffs  prove  that  they  required  the  suit  premises  reasonably  and  bonafide for their own use and occupation?

(3) To  whom  greater  hardship  would  be  caused  by  passing  the  decree  than  by  refusing to pass it?

(4) Whether  the  plaintiffs  are  entitled  to  recover the possession of the suit premises  from the defendants?

(5) What decree, order and costs?”

And thereafter framed the following additional issue:-

“Do  plaintiffs  prove that  the  defendant  No.  1  unlawfully sub-let the part of the suit premises  to defendant no. 2?”

8. On consideration of the evidence brought on record  

the Small Causes court came to hold that the plaintiff  

had failed to prove that it required the suit premises  

reasonably and bona fide for his use and occupation  

and also it had not been proven that greater hardship  

would  be caused to  the plaintiff.   Accordingly,  the  

issue Nos. 2 and 3 were answered in the negative.  

As far as issue No. 1 was concerned, i.e. non-user for  

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a period of six months for the purpose it was let out  

which  is  a  ground  under  Section  13(1)(k)  of  the  

Bombay  Rent  Act,  1947  (for  short  “the  Act”),  the  

learned trial Judge came to hold that the plea of non-

user in respect of flat No. 204 was not established  

but the said plea had been proven as far as flat No.  

201  was  concerned  but,  regard  being  had  to  the  

language  used  in  the  provision  enshrined  under  

Section 13(1)(k) of the Act to the effect that when a  

part of the tenanted premises was not in use of the  

tenant,  the  said  provision  would  not  be  applicable  

and, accordingly, he answered the said issue against  

the plaintiff.  While dealing with the additional issue  

the learned trial Judge referred to Section 13(1)(e) of  

the Act and came to hold that no case of unlawful  

subletting had been made out in respect of flat No.  

204 and one garage, but, as far as flat No. 201 and  

another  garage  are  concerned,   plea  of  subletting  

stood established.  To arrive at the same conclusion  

he took note of the fact that the use and occupation  

of  defendant  No.  2  on  the  said  part  of  the  suit  

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premises  before  12.2.1989  was  on  the  basis  of  

agreement Exh. 5A which showed that the defendant  

No. 2 was in use and occupation of flat No. 201 and  

garage No. 7 as licencee of his employer-defendant  

No.1 and thereafter from 12.2.1989 on ceasing to be  

in  service  of  the  defendant  No.  1,  the  use  and  

occupation of defendant No.2 in respect of the said  

premises  could  neither  be  considered  as  legal  nor  

could  it  be  protected  under  any  provision  of  law.  

Thereafter, he considered the rival submissions and  

referred  to  clause  13  of  the  agreement  dated  

11.5.1982, Exh. 5A, the factum of resignation by the  

defendant  No.  2  and  acceptance  thereof  by  the  

defendant No. 1, the liability on the part of defendant  

No.  1  to  take  appropriate  legal  steps  to  evict  the  

defendant  No.  2  from  the  said  part  of  the  suit  

premises  within  a  reasonable  time,  the  silence  

maintained by the defendant No. 1, the dismissal of  

the criminal proceeding instituted under Section 630  

of the Companies Act for non-prosecution and filing  

of another criminal proceeding only in 2003, the use  

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and occupation of the defendant No. 2 at the behest  

of  the  defendant  No.1,  the  retention  of  provident  

fund by the defendant No. 1 of the defendant No. 2,  

the  stand  of  the  defendant  No.  2  that  he  was  in  

lawful occupation as a sub-tenant, the admission of  

the sole witness of the defendant No.1 to the effect  

that the defendant No.2 was in possession as a sub-

tenant, and ultimately came to hold that the plaintiff  

had been able to establish that the defendant No. 1  

had unlawfully sublet a part of the suit premises, i.e.,  

flat  No.  201  and  garage  No.  7  and,  accordingly,  

directed that the defendant Nos. 1 and 2 jointly and  

severally to deliver the vacant possession of the suit  

premises,  i.e.,  flat  Nos.  201  and  204  along  with  

garage Nos. 7 and 8.

9. On an appeal being preferred the Division Bench of  

the  appellate  court  basically  posed  two  questions,  

namely,  (i)  whether  the  suit  premises,  more  

particularly, flat No. 201 was illegally sublet by the  

defendant  No.  1  to  the  defendant  No.  2;  and  (ii)  

whether the flat Nos. 201 and 204 were not used for  

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the purpose for which they were let out for more than  

6 months without sufficient reason.

10. The appellate court answered the question No. 2 in  

the negative.  As far as question No. 1 is concerned,  

the appellate court took note of the admission of the  

witness of the defendant No. 1, the inaction on the  

part of the plaintiff to take steps for eviction against  

defendant  No.2  and   proceeded  to  deal  with  the  

contours of Section 13(1)(e) of the Act and in that  

context opined thus: -

“It covers different aspects under the heading  of  subletting,  it  is  not  mere  subletting,  it  includes  assignment  or  creating  third  party  interest.   Non  user  of  the  premises  in  possession of defendant No.2 by the defendant  No. 1 is clear.  Defendant No. 2 already found to  be not in service after his resignation.  With a  gap of  about  three  or  four  years,  litigation  is  started by the defendant No. 1 that too on the  count  of  arrears  of  provident  fund.   No  substantial suit for seeking possession was filed  immediately  and  act  continued  on  that  day.  Aspect  of  subletting  has  its  own  importance.  We find evidence of defendant No.1’s witness is  clear  in  itself.   Ld.  Trial  Court  arrived  at  the  conclusion  that  this  aspect  attracts  section  13(1)(e)  of  Rent  Act.   We  find  said  aspect  required to be accepted.”

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11. Being of this opinion, it affirmed the view expressed  

by the learned trial Judge and upheld the judgment  

and decree passed against the defendants.

12. The non-success compelled the defendant No.  1 to  

invoke  the  civil  revisional  jurisdiction  of  the  High  

Court.  The learned single Judge referred to the filing  

of the writ petition with regard to the provident fund  

dues, appeal by way of special leave preferred by the  

defendant No. 1 and the ultimate settlement arrived  

at  between  the  two  defendants  on  4.4.2007,  the  

stand  of  the  defendant  No.  1  that  there  was  no  

consensus  between  it  and  the  defendant  No.  2  

allowing to occupy the premises after he ceased to  

be  in  Company’s  employment  and  later  to  initiate  

action  to  evict  him,  and thereafter  referred  to  the  

decisions in  Bharat Sales Ltd.  v.  Life Insurance  

Corporation of India1,  Joginder Singh Sodhi  v.  

Amar Kaur2 and Associated Hotels of India Ltd.  

v.  S.B.  Sardar  Ranjit  Singh3 and  took  note  of  

certain  facts,  namely,  (i)  defendant  No.  2  was  1 (1998) 3 SCC 1 2 (2005) 1 SCC 31 3 (1968) 2 SCR 548

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inducted  as  a  licencee  under  a  licence  agreement  

which  was  produced  before  the  Courts;  (ii)  after  

cessation  of  his  employment  defendant  No.  2  

continued to occupy the premises; (iii) applicant had  

filed a suit for  recovery of overstayal  charges and,  

eventually,  was  allowed  to  recover  a  sum  of  

Rs.4,17,000/-  in  terms of  order  of  the  Court  dated  

15.3.2007,  in  Civil  Appeal  No.  2425  of  2007;  (iv)  

applicant had vacated the premises on 4.4.2007 in  

terms of the settlement; and (v) applicant was a sick  

company  and  not  in  a  position  to  receive  any  

clandestine payment and concluded thus: -

“These facts are so glaring, as are the attempts  of applicant to get rid of respondent No. 2 that  it  would  be  inconsistent  with  any  clandestine  agreement of sub-letting.  True finding of facts  by the courts below may be respected.  But the  conclusions drawn about a jural relationship was  thoroughly  unwarranted  and  runs  in  conflict  with  the  very  requirement  of  a  consensus.  Therefore, the decree of eviction on the ground  of  sub-letting  passed  by  the  trial  court  and  maintained upon appeal by the appellate bench  cannot at all be sustained.”  

13. Criticizing  the  judgment  and  order  passed  by  the  

learned single Judge, learned senior counsel for the  

appellant submitted that though the defendant No. 2,  

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the  employee,  retired  from  service,  yet  the  

defendant No. 1, employer, did not take any steps for  

a period of more than four years from February, 1989  

till  October,  1993  and  allowed  the  complaint  filed  

under  Section  630  of  the  Companies  Act  to  be  

dismissed for  non-prosecution and was constrained  

to prefer the writ petition challenging the direction of  

the  Regional  Provident  Fund  Commissioner  only  

when  it  faced  a  statutory  consequence  and  these  

circumstances go a long way to establish its conduct  

of tacit acceptance of the position of defendant No. 2  

as  a sub-tenant.   He has also highlighted that  the  

defendant  No.  1  filed  the  second  complaint  under  

Section 630 of  the  Companies  Act  after  a  span of  

seven  years  and  filed  the  summary  suit  under  

Section  37,  CPC  only  for  recovery  of  occupation  

charges and not for eviction after fourteen years of  

the resignation of the defendant No.2 from service of  

the  defendant  No.1  which  ultimately  resulted  in  a  

settlement  before  this  Court,  and  these  aspects,  

considered  cumulatively,  do  clearly  show  that  in  

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effect  the defendant  No.  1,  tenant,  had sublet  the  

premises in question and the High Court has fallen  

into grave error in overturning the finding based on  

legitimate  inferences  in  exercise  of  revisional  

jurisdiction  which  is  a  limited  one.  It  is  his  further  

submission that the finding recorded by the learned  

trial  Judge  and  concurrence  given  to  the  same  in  

appeal establish two aspects, namely, the defendant  

No.  2  was allowed to  remain in  exclusive use  and  

occupation  of  the  premises;  and  that  there  was  

involvement  of  consideration  inasmuch  as  the  

employer withheld the provident fund to appropriate  

the same towards the occupational charges and the  

arrangement is obvious.  The learned senior counsel  

would  also  contend  that  the  sole  witness  of  

defendant  No.  1  has  categorically  admitted  that  

defendant No. 2 is an unlawful sub-tenant and after  

such an admission any stand to the contrary has to  

be treated as paving the path of tergiversation.  He  

has also laid immense emphasis on the fact that the  

defendant No. 2 in his written statement has clearly  

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admitted that he was a sub-tenant with the consent  

of the landlord,  but the factum of consent has not  

been proven.

14. Mr.  Ganesh,  learned  senior  counsel,  per  contra,  in  

support  of  the  decision  of  the  High  Court  would  

contend  that  necessary  ingredients  of  subletting  

have  not  been  fulfilled  and  when  the  reasonings  

ascribed by the trial court and the appellate court are  

absolutely on the basis of perverse consideration of  

the materials brought on record, it was obligatory on  

the  part  of  the  High  Court  to  rectify  the  same  in  

supervisory  jurisdiction and that  having been done  

the impugned order is absolutely flawless and totally  

infallible.  It is put forth by him that reliance on some  

evidence and the stand and stance of the defendant  

No. 2 who had an axe to grind against the defendant  

No. 1 and further had an ambitious motive to get the  

flat from the plaintiff on ownership basis would not  

establish  the  plea  of  subletting.   It  is  further  

contended  that  the  defendant  No.  1  had  taken  

appropriate steps at the relevant time to prosecute  

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the defendant No. 2 under various laws and hence, it  

is  inapposite to say that there was a tacit consent  

allowing the employee to occupy the premises.  In  

any  case,  submits  Mr.  Ganesh,  that  withholding  of  

provident  fund  dues  or  settlement  as  regards  the  

same before this Court would not make out a case of  

subletting as proponed by the plaintiff-appellant.

15. To appreciate the revalised submissions raised at the  

Bar  it  is  first  necessary  to  have  a  survey  of  

authorities of this Court which state the position of  

law as to how subletting of a premises alleged by a  

landlord are to be established.   

16. In  Smt.  Rajbir  Kaur  and  another  v.  M/s.  S.  

Chokesiri and Co.4, after referring to the decision in  

Dipak  Banerjee  v.  Smt.  Lilabati  Chakraborty5  

and other decisions the Court opined that if exclusive  

possession  is  established,  and  the  version  of  the  

respondent as to the particulars and the incidents of  

the transaction is found acceptable in the particular  

facts and circumstances of the case, it may not be  4 (1989) 1 SCC 19 5 (1987) 4 SCC 161

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impermissible for the court to draw an inference that  

the  transaction  was  entered  into  with  monetary  

consideration in mind. It has been further observed  

that such transactions of subletting in the guise of  

licences  are  in  their  very  nature,  clandestine  

arrangements between the tenant and the subtenant  

and there cannot be direct evidence got and it is not,  

unoften,  a  matter  for  legitimate  inference.  Dealing  

with the issue of burden it held that: -

“The  burden  of  making  good  a  case  of  subletting is, of course, on the appellants. The  burden  of  establishing  facts  and  contentions  which support the party’s case is on the party  who takes the risk of non-persuasion. If at the  conclusion  of  the  trial,  a  party  has  failed  to  establish these to the appropriate standard, he  will  lose.  Though  the  burden  of  proof  as  a  matter  of  law  remains  constant  throughout  a  trial, the evidential burden which rests initially  upon  a  party  bearing  the  legal  burden,  shifts  according  as  the  weight  of  the  evidence  adduced by the party during the trial.”

17. In  this  context,  reference  to  a  two-Judge  Bench  

decision in Bhairab Chandra Nandan v. Ranadhir  

Chandra Dutta6 would be apposite.  In the said case  

the  tenant  had  permanently  shifted  his  residence  

elsewhere  leaving  the  rooms  completely  to  his  

6 (1988) 1 SCC 383

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brother  for  his  occupation  without  obtaining  the  

landlord’s  permission.   In  that  context,  the  Court  

observed thus: -  

“5. Now coming to the question of sub-letting,  once again we find that the courts below had  adequate  material  to  conclude  that  the  respondent had sub-let the premises, albeit to  his own brother and quit the place and the sub- letting was without the consent of the appellant.  Admittedly,  the  respondent  was  living  elsewhere  and it  is  his  brother  Manadhir  who  was in occupation of the rooms taken on lease  by the respondent.  The High Court  has  taken  the view that because Manadhir is the brother  of the respondent, he will only be a licensee and  not a sub-tenant. There is absolutely no warrant  for this reasoning. It is not as if the respondent  is  still  occupying  the  rooms  and  he  has  permitted his brother also to reside with him in  the rooms. On the contrary, the respondent has  permanently  shifted  his  residence  to  another  place  and  left  the  rooms  completely  to  his  brother for his occupation without obtaining the  consent of the appellant. There is therefore no  question of the respondent’s brother being only  a licensee and not a sub-tenant.”

18. In  M/s.  Shalimar  Tar  Products  Ltd.  v.  H.C.  

Sharma and others7, while dealing with parting of  

legal possession, the two-Judge Bench observed that  

there is no dispute in the legal proposition that there  

must be parting of the legal  possession. Parting to  

7 (1988) 1 SCC 70

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the legal possession means possession with the right  

to include and also right to exclude others.  

19. In  United  Bank  of  India  v.  Cooks  and  Kelvey  

Properties (P) Limited8 the question arose whether  

the  appellant-Bank had sublet  the  premises  to  the  

union.  This Court set aside the order of eviction on  

the ground that : -

“....though the appellant had inducted the trade  union  into  the  premises  for  carrying  on  the  trade union activities, the bank has not received  any  monetary  consideration  from  the  trade  union, which was permitted to use and enjoy it  for its trade union activities. It is elicited in the  cross-examination of the President of the trade  union that the bank had retained its power to  call  upon the union to vacate the premises at  any  time and they  had undertaken to  vacate  the  premises.  It  is  also  elicited  in  the  cross- examination  that  the  bank  has  been  maintaining the premises at its  own expenses  and  also  paying  the  electricity  charges  consumed  by  the  trade  union  for  using  the  demised premises. Under these circumstances,  the inference that  could be drawn is  that  the  appellant  had retained its  legal  control  of  the  possession and let  the  trade union  to  occupy  the  premises  for  its  trade  union  activities.  Therefore,  the  only  conclusion  that  could  be  reached is that though exclusive possession of  the demised premises was given to the trade  union,  the possession  must  be  deemed to  be  constructive possession held by it on behalf of  the bank for using the premises for trade union  

8 (1994) 5 SCC 9

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activities  so  long  as  the  union  used  the  premises  for  trade  union  activities.  The  bank  retains its control over the trade union whose  membership is only confined to the employees  of  the  bank.  Under  these  circumstances,  the  inevitable conclusion is, that there is no transfer  of  right  to  enjoy  the  premises  by  the  trade  union exclusively, for consideration.”

20. In this context we may fruitfully refer to the decision  

in Joginder Singh Sodhi (supra) wherein the Court,  

dealing with the concept of subletting, has observed  

that to establish a plea of subletting two ingredients,  

namely,  parting  with  possession  and  monetary  

consideration, therefor have to be established.  In the  

said case reliance was placed on  Shama Prashant  

Raje v. Ganpatrao9 and Smt. Rajbir Kaur (supra).  

The Court also extensively referred to the principle  

stated in Bharat Sales Ltd.  (supra) wherein it has  

been observed that it would also be difficult for the  

landlord to prove, by direct evidence, that the person  

to  whom  the  property  had  been  sub-let  had  paid  

monetary  consideration  to  the  tenant.   Though  

payment  of  rent,  undoubtedly,  is  an  essential  

element of lease or sub-lease, yet it may be paid in  

9 (2000) 7 SCC 522

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cash or in kind or may have been paid or promised to  

be paid, or it  may have been paid in lump sum in  

advance covering the period for which the premises  

is  let  out  or  sub-let  or  it  may  have  been  paid  or  

promised to be paid periodically.  The Court further  

observed  that  since  payment  of  rent  or  monetary  

consideration may have been made secretly, the law  

does  not  require  such  payment  to  be  proved  by  

affirmative  evidence  and  the  court  is  permitted  to  

draw its  own inference upon the facts  of  the case  

proved at the trial, including the delivery of exclusive  

possession to infer that the premises were sub-let.

21. In this regard reference to  Celina Coelho Pereira  

(Ms)  and  others  v.  Ulhas  Mahabaleshwar  

Kholkar and others10 would be pertinent.   In the  

said  case  a  two-Judge  Bench,  after  referring  to  

number  of  authorities  and  the  rent  legislation,  

summarized  the  legal  position  relating  to  issue  of  

sub-letting  or  creation  of  sub-tenancy.   The  two  

10 (2010) 1 SCC 217

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aspects which are of relevance to the present case  

are:

“(i) In order to prove mischief of sub-letting as  a ground for  eviction under rent control  laws,  two ingredients have to be established.   (one  parting with possession of tenancy or part of it  by  the  tenant  in  favour  of  a  third  party  with  exclusive  right  of  possession,  and  (two)  that  such  parting  with  possession  has  been  done  without the consent of the landlord and in lieu  of compensation or rent.

(ii), (iii) & (iv) ………

(v) Initial  burden of proving sub-letting is  on  the landlord but once he is able to establish that  a third party is in exclusive possession of the  premises  and  that  tenant  has  no  legal  possession of the tenanted premises, the onus  shifts  to  the  tenant  to  prove  the  nature  of  occupation  of  such  third  party  and  that  he  (tenant)  continues to  hold  legal  possession in  tenancy premises.”

22. In  Vinaykishore  Punamchand  Mundhada  and  

another v. Shri Bhumi Kalpataru and others11 it  

has been held that it is well settled that sub-tenancy  

or sub-letting comes into existence when the tenant  

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  

11 (2010) 9 SCC 129

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landlord  is  kept  out  of  the  scene  rather,  such  

arrangement  whereby  and  whereunder  the  

possession is  parted away by the tenant is  always  

clandestine  and  such  arrangements  takes  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  and  that  the  tenant  has  put  some  other  

person into possession of the tenanted property.  It  

has  been  further  observed  that  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 and  

such  an  arrangement  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 enquiry.

23. We have referred to the aforesaid decisions only to  

reaffirm the proposition that the Court under certain  

circumstances  can  draw  its  own  inference  on  the  

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basis of materials brought at the trial to arrive at the  

conclusion that there has been parting with the legal  

possession  and  acceptance  of  monetary  

consideration either in cash or in kind or having some  

kind of arrangement.  The aforesaid authorities make  

it further spectacularly clear that the transaction of  

subletting  can  be  proved  by  legitimate  inference  

though the burden is on the person seeking eviction.  

The  materials  brought  out  in  evidence  can  be  

gathered together for arriving at the conclusion that  

a plea of subletting is established.  The constructive  

possession of the tenant by retention of control like  

in  Cooks  and  Kelvey  Properties  (P)  Limited  

(supra) would not make it parting with possession as  

it  has  to  be  parting  with  legal  possession.  

Sometimes emphasis has been laid on the fact that  

the sub-tenancy is created in a clandestine manner  

and there may not be direct proof on the part of a  

landlord  to  prove  it  but  definitely  it  can  bring  

materials on record from which such inference can be  

drawn.  

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24. Coming to the case at hand, on a studied scrutiny of  

the evidence it is quite vivid that an agreement was  

entered  into  by  the  landlord  and  the  tenant  in  

respect of  the premises with the stipulation that it  

would  be  used  only  for  providing  the  residential  

accommodation of the executive staff and not for any  

other purpose.  It is not in dispute that the defendant  

No.  2 was a member of the executive and he was  

provided  the  premises  as  a  part  of  the  amenities  

towards his perquisites.  As the company sustained  

loss and was declared sick under SICA, the defendant  

No. 2 resigned from his post on 11.1.1989 and the  

defendant No. 1 accepted the same.  As is evincible,  

the  plaintiff  had  terminated  the  tenancy  on  

19.1.1989.   Submission  of  Mr.  Sundaram,  learned  

senior counsel,  is  that though the defendant No.  2  

resigned from service and there was termination of  

tenancy,  yet  the  defendant  chose not  to  take  any  

steps  for  evicting  the  defendant  No.  2  from  the  

premises in question.  He has also highlighted on the  

factum that the application under Section 630 of the  

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Companies Act, 1956 for seeking possession of the  

premises was filed after the notice for eviction was  

issued and the same was allowed to be dismissed for  

non-prosecution.  It  has also come out in evidence  

that  only  after  a  proceeding  was  initiated  by  the  

Regional  Provident  Fund  Commissioner,  the  

defendant  No.  1  filed  the  writ  petition  and  the  

controversy ended by way of settlement before this  

Court in an appeal.  The summary suit was filed only  

for recovery of occupational charges after a span of  

14 years wherein a decree was obtained.  That apart,  

learned senior counsel has drawn our attention to the  

stand and stance put forth by the defendant No. 2  

claiming himself as a sub-tenant.  He has also, as has  

been stated earlier, referred to the admission of the  

witness cited by the defendant No. 1.  It is apt to note  

here  that  from  the  aforesaid  circumstances  the  

learned trial Judge as well as the appellate court has  

drawn inferences to come to the conclusion that the  

defendant No. 2 was an unlawful sub-tenant thereby  

attracting  the  frown of  Section  13(1)(e)  of  the  Act  

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justifying the eviction.   Mr.  Ganesh,  learned senior  

counsel, submitted that mere procrastination on the  

part of the defendant No. 1 to take steps cannot be  

treated to have given rise to the legitimate inference  

to come to a conclusion that there was sub-letting in  

view of  the authorities  of  this  Court.   He has also  

drawn inspiration from some parts of the assertions  

made  by  the  defendant  No.  2  in  the  written  

statement.  To bolster the stand, he has pointed out  

that the defendant No.2 has clearly admitted that his  

possession was as sub-tenant as his entry was legal  

and further he had claimed that he had entered into  

negotiation with the plaintiff to become a tenant and  

thereafter to acquire ownership.

25. The facts being admitted, it really requires whether  

the  High  Court  was  justified  in  unsettling  the  

conclusion arrived at by the courts below by taking  

note of certain factors into consideration. As we have  

stated earlier, the learned trial Judge has applied the  

principle  of  legitimate  inference  which  has  been  

given the stamp of approval by the learned appellate  

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Judge.   The  basic  question  that  emerges  for  

consideration  is  whether  in  the  obtaining  factual  

matrix  the  principle  of  legitimate  inference  could  

have been invoked to come to a conclusion that the  

defendant No. 2 had been inducted as a sub-tenant.  

It  is  settled in law that the requisite conditions for  

establishing the factum of sub-letting are – parting of  

legal  possession,  and  availing  of  monetary  

consideration which can be in cash or kind and which  

fact may not be required to be directly proven by the  

landlord in all circumstances.  As is perceptible, the  

defendant  No.  2  was  given  possession  by  the  

defendant No.1 as an executive of the company.  It  

was made available to him under the conditions of  

service and such provision was in consonance with  

the agreement entered into by the landlord and the  

tenant,  i.e.,  the  plaintiff  and  the  defendant  No.1.  

Submission  of  the  learned  senior  counsel  for  the  

appellant, as is clear, is founded on inference made  

by the learned trial  Judge that  the provident fund,  

gratuity and other dues of the defendant No. 2 were  

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withheld in lieu of allowing the defendant No. 2 for  

such occupation.  The aforesaid foundation needs to  

be tested.  For the said purpose it is essential to refer  

to the stand put forth in the written statement by the  

defendant  No.  2  which  has  been  emphatically  

referred to by Mr. Sundaram: -

“This defendant submits that this defendant is  occupying  the  suit  premises  as  a  lawful  sub- tenant,  sub  tenancy  having  been  created  in  favour  of  this  Defendant  with  the  knowledge  and consent of the plaintiffs.”   

Thereafter,  the stand of  the defendant No.  2 is  as  

follows: -

“In  February,  1988,  there  was  a  lock-out  in  defendant  No.  1  company.   The  financial  position of defendant No. 1 deteriorated.  The  defendant No. 1 was not even able to fulfill their  minimum and urgent  financial  obligations and  commitments.   Since  there  was  no  scope  of  future progress with the defendant No. 1,  this  defendant  resigned  from  the  employment  of  Defendant  No.  1  in  January,  1989  on  the  understanding that he will  continue to occupy  the flat No. 201 and Garage No. 7 as Defendant  No. 1 had no more use for the same and also  the dues were still not settled.  The defendant  No. 1 was not even able to pay this defendant’s  dues like Provident Fund, Gratuity, Leave Salary  etc.   The defendant No.  1 was not  even in  a  position  to  pay  rent  in  respect  of  the  suit  premises as also other outgoings in respect of  the  suit  premises  as  also  other  outgoings  incurred by the Marlow Residents Association.  At  the  request  of  the  Defendant  No.1,  this  

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defendant continued to use and occupy the suit  premises.”   

Mr.  Ganesh,  learned senior counsel  has also drawn  

immense  inspiration  from  the  written  statement.   The  

relevant part on which emphasis is put is as follows: -

“This  defendant  thereafter  approached  the  Plaintiffs’ office to tender the rent in respect of  part of suit premises.  However, this defendant  was  told  and  assured by  the  plaintiffs  that  as  soon as the plaintiffs would be able to settle with  the  Defendant  No.1,  they  would  accept  the  entire arrears of rent proportionately, i.e. rent of  Flat  No.  201  and  Garage  No.  7  from  this  defendant.  Till 1994 and even till date, neither  the plaintiffs nor the defendant no.2 has settled  the accounts to enable this defendant to pay the  rent  in  respect  of  the  suit  premises  to  the  plaintiffs.”  

xxx xxx xxx  The defendant No. 1 has been declared as a  sick unit by BIFR.  The Defendant No. 1 is now  acting  in  collusion  with  the  Plaintiffs.   The  plaintiffs and the defendant No. 1 are acting in  collusion  and  falsely  denying  rights  of  this  defendant  in  respect  of  Flat  No.  201.   This  defendant is ready and willing to pay the rent in  respect of the suit premises to the Plaintiffs.  

The  residents  of  Marlow  Building  formed  Marlow Residents’ Welfare Fund.  This defendant  has  also  contributed  towards  the  said  Welfare  Fund  since  its  inception  and  continues  to  contribute like any other member including the  Plaintiffs  who  is  also  a  member.   The  said  Welfare Fund has also carried out major repairs  of the building.  This defendant has contributed  his share towards major repair  of  the building.  These facts are known to the plaintiffs.”

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26. On a  close  perusal  of  the  assertions  made by  the  

defendant No. 2 it is luminous that he was allowed to  

occupy the premises as an executive by the company  

and thereafter as his dues could not be paid to him,  

he remained in occupation and also tried to become  

the owner of the premises.  True it is, the defendant  

No. 1 did not initiate action at an early stage but in  

1993 when the Provident Fund Commissioner made a  

demand, it moved the writ court and ultimately the  

matter was settled before this Court.  The terms of  

the  settlement  in  CA  No.   1425  of  2007  are  

reproduced hereinbelow: -

“(i) The respondent shall pay to the appellant  a sum of Rs. 3,24,000/- (Three Lakhs and  Twenty  Four  Thousand  only)  in  full  and  final settlement of the amount payable by  the  respondent  for  overstaying  in  the  premises in question.

(ii) A sum of Rs.4,17,000 (Rupees Four Lakhs  and Seventeen Thousand only)  has  been  deposited  by  the  appellant  in  the  High  Court  of  Bombay  in  Writ  Petition  No.  2134/1993.   The  said  amount  of  Rs.4,17,000/-  together  with  interest  that  may  have  accrued  thereon,  after  deducting  the  amount  of  Rs.  3,24,000/-  shall be paid to the respondent.  The sum  of  Rs.3,23,000/-  shall  be  paid  to  the  appellant.

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(iii) The  respondent  shall  handover  vacant  possession of the premises in question to  the  appellant  on  a  date  and  time  to  be  fixed  by  the  senior  Prothonotary  of  the  High Court of Bombay in the presence of a  representative of the Senior Prothonotary  who shall record a memorandum signed by  the respondent and a representative of the  appellant.  The possession shall be handed  over  by  the  respondent  to  the  appellant  within a period of three weeks from today.  The  amount  payable  to  the  respondent  shall be handed over to him forthwith, or  soon after the possession of the premises  in  question  is  handed  over  to  the  appellant.

(iv) The parties agree that Summary Suit No.  947/2004 pending before the High Court of  Bombay;  Complaint  Case No.1195/S/2003  pending  before  the  Metropolitan  Magistrate,  Dadar,  Bombay  which  is  challenged  before  the  High  Court  of  Bombay  in  Criminal  Writ  Petition  No.  2514/2006  and  Writ  Petition  No.  2134/1993 shall  be withdrawn by moving  appropriate  applications  by  the  party  concerned.   Two suits,  namely,  RAE Suit  No.  45/1984  pending  before  the  Small  Causes  Court,  Bombay  giving  rise  to  Appeal  No.  372/2005  and  TE&R Suit  No.  153/165 of 2001 pending before the Small  Causes  Court,  Bombay  which  have  been  filed  by  the  landlord  of  the  premises  in  question shall  continue and the appellant  herein  may  contest  the  same,  if  so  advised.  So far as the respondent herein is  concerned, he shall stand absolved of any  liability  in  the  said  wo  suits  before  the  Small Causes Court.”

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27. We have referred to the written statement in extenso  

and the terms that have been recorded by this Court  

solely  for  the  purpose  of  appreciating  the  plea  

whether creation of sub-tenancy by the landlord has  

really been established.  The thrust of the matter is  

whether the trial court and the appellate court have  

correctly arrived at the conclusion of sub-letting on  

the foundation of legitimate inference from the facts  

proven.  As is evincible, the defendant No. 2 was put  

in possession by the defendant No. 1 while he was in  

service.   There  was  an  agreement  between  the  

defendant No. 2 and the defendant No. 1 which has  

been brought on record.  The agreement of tenancy  

between the plaintiff and the defendant No. 1 is not  

disputed and one of the stipulations in the agreement  

is  that the tenant has been given the premises on  

lease for the purpose of occupation of its executive  

staff.   Thus,  handing over of the possession of the  

premises to the defendant No. 2 is in accord with the  

terms  and  conditions  of  the  agreement  entered  

between the landlord and the tenant and, therefore,  

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the entry of the defendant No. 2 into the premises is  

legal.  The trial court as well as the appellate court  

has drawn inference that after the defendant No.2,  

the employee, resigned from service and remained in  

occupation  while  he  was  not  entitled  to,  the  

defendant No. 1 did not take any steps to get back  

the possession and the proceedings initiated under  

the  Companies  Act  were  dismissed  for  non-

prosecution and at  a  belated stage only  a  suit  for  

recovery of occupational charges was instituted.  The  

emphasis  is  on  the  inaction  on  the  part  of  the  

defendant No. 1 to institute a suit for eviction.  Such  

inaction would not by itself persuade a court to come  

to  the  conclusion  that  the  sub-letting  was  proved.  

Nothing  has  been  brought  on  record  by  way  of  

documentary or oral evidence to suggest that there  

was any kind of arrangement between the defendant  

No.  1  and  the  defendant  No.  2.   The  written  

statement  which  has  been  filed  by  the  defendant  

No.2, in fact, is a series of self serving assertions for  

his  own  benefit.   His  stand  would  show  that  non-

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payment  of  provident  fund  and  gratuity  and  other  

retiral dues amounted to consideration or a kind of  

arrangement.  That apart, he has claimed himself to  

become a tenant under the landlord and also had put  

an aspirational asseveration that he had negotiated  

with the landlord to purchase the property to become  

the owner.  The High Court has noted that the tenant,  

defendant No.1, was a sick company under the SICA  

and  could  not  have  received  any  money  in  a  

clandestine manner.  Be that as it may, withholding  

of  retiral  dues  cannot  be  considered  as  a  

consideration  or  any  kind  of  arrangement.   The  

settlement  before  this  Court  shows  that  the  

defendant No. 2 had paid the amount for overstaying  

in  the  premises  in  question  and  the  deposited  

amount with the High Court was required to be paid  

towards  the  dues  of  the  defendant  No.  2  after  

deducting  overstayal  charges.   Mr.  Sundaram,  

learned  senior  counsel  for  the  appellant,  has  

contended that the settlement before this Court was  

between the defendant No.1 and the defendant No. 2  

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to which the landlord was not a party and hence, it  

cannot have any effect on the issue of sub-letting.  

True it is, it is a settlement between the defendant  

No.  1  and  defendant  No.2,  but  it  is  a  settlement  

between  an  employer  and  an  erstwhile  employee  

and, therefore, the landlord had no role.  We have  

noted  the  settlement  only  to  show  that  barring  

withholding of the retiral dues the employer had not  

received  any  thing  either  in  cash  or  in  kind  or  

otherwise from the defendant No. 2 and hence, under  

these circumstances, it is extremely difficult to hold  

that the factum of sub-letting has been established.

28. At  this  juncture,  we  are  obliged  to  deal  with  the  

submission of Mr. Sundaram, learned senior counsel  

for the appellant, that the High Court in exercise of  

its  civil  revisional  jurisdiction  could  not  have  

dislodged  the  concurrent  findings  of  the  courts  

below.  We have been commended to an authority in  

Renuka  Das  v.  Maya  Ganguly  and  another12  

wherein it has been opined that it is well settled that  

12 (2009) 9 SCC 413

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the High Court, in revision, is not entitled to interfere  

with  the  findings  of  the  appellate  court,  until  and  

unless it is found that such findings are perverse and  

arbitrary.  There cannot be any cavil  over the said  

proposition of law.  But in the present case, as we  

notice, the trial court as well as the appellate court  

has  reached  their  conclusions  on  the  basis  of  

inferences.  As has been held by this Court, the issue  

of  subletting  can  be  established  on  the  basis  of  

legitimate inference drawn by a court.   In  P. John  

Chandy and Co.  (P)  Ltd.  v.  John P.  Thomas13,  

while  dealing  with  a  controversy  under  the  rent  

legislation arising under the Kerala Buildings (Lease  

and Rent Control) Act, 1965, it has been ruled that  

drawing inference from the facts established is not  

purely  a  question  of  fact.   In  fact,  it  is  always  

considered to be a point of law insofar as it relates to  

inferences  to  be  drawn  from  finding  of  fact.   We  

entirely  agree  with  the  aforesaid  view.   When  

inferences drawn do not clearly flow from facts and  

are not legally legitimate, any conclusion arrived at  13 (2002) 5 SCC 90

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on  that  basis  becomes  absolutely  legally  fallible.  

Therefore, it cannot be said that the High Court has  

erred  in  exercise  of  its  revisional  jurisdiction  by  

substituting  the  finding  of  fact  which  has  been  

arrived at by the courts below.  Therefore, we have  

no hesitation in holding that the High Court has not  

committed any illegality in its exercise of revisional  

jurisdiction  under  the  obtaining  facts  and  

circumstances.

29. Consequently, we do not perceive any merit in this  

appeal and, accordingly, the same stands dismissed  

without any order as to costs.

…..…………………………….J.                                                              [Anil R. Dave]

……………..………………….J. [Dipak Misra]

New Delhi; March 28, 2014.

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