M/S S.F.ENGINEER Vs METAL BOX INDIA LTD.
Bench: ANIL R. DAVE,DIPAK MISRA
Case number: C.A. No.-004189-004189 / 2014
Diary number: 31921 / 2010
Advocates: JATIN ZAVERI Vs
INDRA SAWHNEY
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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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