Article Chairman Sub-Letting
Article Chairman Sub-Letting
Article Chairman Sub-Letting
on
SUB-LETTING
By: Justice S.U.Khan
Chairman, JTRI
JTRI Auditorium
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SUB-LETTING
Index
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INTRODUCTION
Under U.P. Rent Control Act if tenant allows the building or part
thereof to be occupied by non-family member he is deemed to have sub-
let the building or the part [Section 12(1)(b) and 25 Explanation (i)]. In
case of non-residential building admitting a non-family member as
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partner in the business amounts to sub-letting. [Section 12(2) and 25(2)
Explanation (i)]. Family member means spouse, male lineal descendants
and specified parents/ grant parents, daughters/granddaughters
[Section 3(g)].
Under Delhi, Rajasthan and West Bengal Rent Control Acts the
words used are sub-letting, assignment or parting with the possession.
In some authorities, parting with possession has been held to be distinct
from sub-letting. However, in this context parting with possession is not
distinct from sub-letting, it is in fact a facet of sub-letting rather a mode
of proving the same. The words „allow to occupy‟ used under U.P. Rent
Control Act mean the same thing as „parting with possession‟, the words
used in the above Acts. Both denote exclusive possession of alleged sub-
tenant. However, every type of presence in or permissive user of tenanted
accommodation by third party does not amount to his exclusive
possession.
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ground, and during pendency thereof sub-letting takes place, it may also
be set forth as a ground of eviction in that very suit by amending the
plaint.
1. RELEVANT PROVISIONS
T.P. Act:
Section 105:
“A lease of immovable property is a transfer of right to enjoy such
property made for a certain time expressed or implied or in
perpetuity, in consideration of a price paid or promised, or of money,
share of crops, service or any other thing of value, to be rendered
periodically on or specified occasions to the transferor by the
transferee, who accepts the transfer on such terms.”
Section 108(j):
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“The lessee may transfer absolutely or by way of mortgage or
sub-lease the whole or any part of his interest in the property, and
any transferee of such interest or part may again transfer it. The
lessee shall not by reason only of such transfer, cease to be
subject to any of the liabilities.
S. 20(2)
(a) to (d)………
(f), (g)……….
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“Section 21 (1) Explanation– in the case of a residential building:-
(i) where the tenant or any member of his family (who has
been normally residing with or is wholly dependent on
him) has built or has otherwise acquired in a vacant state
or has got vacated after acquisition a residential building
in the same city, municipality, notified area or town area,
no objection by the tenant against an application under
this sub-section shall be entertained;
Note- For the purposes of this clause a person shall be
deemed to have otherwise acquired a building, if he is
occupying a public building for residential purposes as a
tenant, allottee or licensee.”
`S. 25:
(2) the tenant may, with the permission in writing of the landlord
and or the District Magistrate, sub-let a part of the building.
(i) Where the tenant ceases, within the meaning of clause (b) of sub-
section (1) of sub-section (2) of Section 12, to occupy the building
or any part thereof, he shall be deemed to have sub-let that
building or part;
(ii) Lodging a person in a hotel or a lodging house shall not amount to
sub-letting. ”
7
2. BEFORE COMMENCEMENT OF ACT AND DISCONTINUANCE:
8
Allahabad High Court reported in Mangi Lal v. ADJ, 1980 ARC
55, it has been held that the words „has bult‟ or „has otherwise
acquired‟ used in Explanation (i) to section 21 (1) and the words
„builds‟ or „otherwise acquires‟ used in Section 12(3) of U.P.R.C.
Act are retrospective and will include acquisition (or building) of
another accommodation by the tenant before the applicability of
the Act on the tenanted building and it will become vacant.
Accordingly even if sub-letting in any form as defined under the
Act takes place before the Act applied on the tenanted building
(during continuance of exemption period), the tenant would be
liable to eviction on the ground of sub-letting after the Act
applies to the building. (See also synopsis 4, „Inception and
Continuance of vacancy‟ of the chapter „Vacancy, Release and
Allotment.)
9
with possession) in the absence of written permission of the
landlord. Same view has been taken in Duli Chand25 and
Vaishakhi Ram61 under Delhi Rent Control Act. In Hiralal
Kapoor14, also under Delhi R.C. Act, part of rent had been paid
through cheque by a registered society of which tenant was
secretary, still it was held that such acceptance of rent did not
mean that tenancy was created in favour of society with the
concurrence of landlord. In this case tenant had argued that
after few years of tenancy in his favour, a fresh tenancy of part
of the tenanted accommodation had been created in favour of
the society with the concurrence of landlord. However in Hem
Chand46, also under Delhi R.C. Act, relief of possession was
denied to the landlord on the ground that he had admitted that
some sub tenants had been inducted with his consent. It is only
a half page judgment. It does not say written consent but by
reading the whole judgment it appears that for 6 out of 8 sub-
tenants there was written consent hence those 6 sub-tenants
were not directed to be evicted. (For further discussion of this
judgment see Synopsis 7C)
In Shanti Lal23,(under West Bengal R.C. Act) landlord had
permitted in writing (through lease deed) to sublet, still it was
held that written permission of the landlord before sub-letting of
each portion of the tenanted accommodation to different
subtenants indicating their names was essential and in the
absence of such specific written permission, general written
permission was meaningless and tenant was liable to eviction
on the ground of sub-letting. In Shalimar13, under Delhi R.C.
Act, also it has been held in para 7 that the consent must be to
10
the specific sub-letting. In Pulin Bihari26, Silver Line37 and
Biswanath Poddar45 ( under West Bengal Rent Control Act) also it
has been held that written permission of landlord is essential
and landlord shall also be notified and in the absence of either
of these, mere acceptance of rent and knowledge of sub-letting
by the landlord does not amount to waiver. In Biswanath
Poddar45 it has also been held that written deed between tenant
and sub tenant recording that landlord had permitted sub-letting
is not binding upon landlord and is meaningless. West Bengal Rent
Control Act, unlike R.C. Acts of other State, is subject to the
contract to the contrary. Still in Biswanath Poddar45 relying upon
Shanti Lal23 and Silverline37 it was held that even if there is some
oral permission of landlord for sub-letting it is meaningless (paras
14 and 15).
In Gurdial Singh48 (under Panjab R.C. Act) also it has been
held that oral permission for sub-letting is of no value (Para 12).
Under Kerala R.C. Act „Consent of the landlord‟ is not required to
be in writing. However in P. John Chandy49 interpreting the said
provision it has been held that “But inaction in every case does not
necessarily lead to an inference of implied consent or acquiescence”
(para 9). In that case sub-tenancies of different portions were
continuing for 8 to 11 years before initiation of eviction proceeding
still eviction was ordered.
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5. HOW TO BE PROVED
12
Mahendra Saree53 (Para 16), Joginder Singh55 (paras 13 to 23),
Vaishakhi Ram61 (para 11) Nirmal Kanta62 (para 12), Shashi Jain63 (para
19) Celina Coelho64 [(para 28(i)(v)(vi)] Vinay Kishore65 (paras 17 to 19) and
S.F. Engineer66 (paras 16 to 22). In the last two authorities most of the
earlier authorities have been considered.
13
In Bharat Sales36, the leading authority on the point, it was
mentioned in para 3 that the only point argued was that payment of rent
by subtenant to the tenant had not been proved. Thereafter in para 4 it
was held as follows:-
14
evidence and the Court is permitted to draw its own inference upon
the fact of the case proved at the trial, including the delivery of
exclusive possession to infer that the premises were sub-let.”
In the said case, it was argued that in United Bank of India29 it had
been held that payment of rent must be proved by direct affirmative
evidence, however, the contention was rejected holding that in the said
authority no such thing had been held (para 9). In United Bank of
India29, para 23 of Rajbir Kaur17 was quoted in para 6 holding that sub-
tenancy is created in clandestine manner and in most of the cases,
exclusive possession of someone else gives rise to the presumption of
monetary consideration and sub-letting.
15
B. Exclusive Possession or Permissive user:
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described as licence fees. The deed if executed is obviously drafted in a
claver manner. The landlord not being a party to the deed is not bound
by its recitals. In such cases also nature and quality of possession of the
alleged sub-tenant is decisive vide Associated Hotels2 and Rajbir Kaur17
(Paras 10 to 13) (See also sub-synopsis D)
Under Delhi Rent Control Act, 1958, one of the grounds for eviction
of tenant is provided under Section 14(1)(b) in the following manner.
Same view was taken in Duli Chand25 (para 2), relying upon Jagan
Nath16 in para 3.
Section 13 (1) (e) of Rajasthan Rent Control Act and section 13(1)(a)
of West Bengal Rent Control Act are almost pari materia with Section
14(1)(b) of Delhi Rent Control Act. Similar view has also been taken in
17
respect of Rajasthan Rent Control Act in Roop Chand holding in para 8
as follows:-
18
It is submitted that in case of possession of spouse and children
there is no question of any sub-letting. To hold otherwise will be against
common sense. In Krishnawati4, a judgment by three judges, under Delhi
Rent Control Act, it was found that a lady had taken the shop on rent
and the man who was residing with her as husband was, since inception
of tenancy, running the business from the tenanted shop with occasional
help of the lady tenant. The Supreme Court reversing the judgment of the
High Court firstly held that whether both were legally married or not
could not be decided in eviction proceedings. Regarding sub-letting it was
held in para 5 as follows:
“If two persons live together in a house as husband and wife and
one of them who owns the house allows the other to carry on
business in a part of it, it will be in the absence of any other
evidence a rash inference to draw that the owner has let out that
part of the premises and that is what the learned single judge has
done in the present case.”
“The basic facts in the present case were (1) the appellant
and Sohan Singh were living as husband and wife to the
knowledge of the respondent; (2) the appellant took the lease of
the shop premises from the respondent in 1959; (3) from the time
of the letting a Chemist‟s business was carried on in the shop by
Sohan Singh with the occasional help of the appellant. The
question to be determined was whether in the above
circumstances it was likely that the appellant had sub-let the
premises to Sohan Singh. The negative answer given to it by the
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Rent Courts is merely the factual commonsense inference which
did not call for the application of any principle of law.”
Similarly in Jagan Nath16 the tenant had retired from business and
the same was thereafter run by his sons. It was held after referring to
Krishnawati4 that it did not amount to sub-letting. However, in para 6 it
was held as follows:-
20
As far as Duli Chand25 is concerned, in this case the natural son of
the tenant was exclusively running the business from the tenanted shop.
The son had been given in adoption to another person but the legalities
of adoption were not complete. In view of this it was held that sub-letting
came into existence.
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parting with possession /ceasing to occupy/sub-letting, vide Bhairab15
and S.A. Vengadamma35 (in each of these cases bother of the tenant
alone was residing) and Kailashbhai56 (cousin of tenant‟s late husband
alone was residing). Ganesh Trivedi47 and S.A. Vengadamma35 are under
U.P. and Karnataka Rent Control Acts respectively each of which defines
family which does not include brother.
Resham Singh42 had special feature of its own. The tenant of the
shop was involved in a criminal case and was absconding. In his absence
his brother was looking after the business carried out from the tenanted
shop. It was held not to be sub-letting.
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E. Specific Instances(Brief Facts)
In Rajbir Kaur17, under East Punjab Rent Control Act, part of the
tenanted commercial accommodation had been given by the tenant to
an ice-cream vendor. It was held that it amounted to sub-letting of the
entire premises.
In Duli Chand25, under Delhi Rent Control Act, even though son of
the tenant was running the business, still it was held that the tenant
had parted with the possession to the son, hence, he was liable to
eviction under Section 14(1) (b) of Delhi Rent Control Act. In this case
some evidence had been adduced to show that the son had been given
in adoption to another family. Even though adoption was not fully
proved still Supreme Court held that the said evidence was relevant and
sufficient to hold that there was no joint Hindu family in between the
tenant and his natural son. Jagan Nath16, supra (previous sub-synopsis)
was distinguished on the ground that in the said case tenant had a right
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to displace the son. In Duli Chand25, it was further found that the tenant
along with his younger son was working at another shop.
In Jagdish Prasad7, under U.P. Rent Control Act, it was held that
mere presence of another person at the shop did not amount to sub-
letting as the said person could be customer, agent, friend etc. In this
case the landlord had taken photograph of a stranger at the tenanted
shop and the photograph was main rather sole evidence of sub-letting
adduced by the landlord.
In United Bank of India29, under West Bengal Rent Control Act, the
bank was tenant and its management had given a portion of the
tenanted accommodation to its union. It was held that the bank retained
control over the same, hence, it could not be said that exclusive
possession had been given to the union.
In Dev Kumar32, under East Punjab Rent Control Act, it was found
that in the tenanted accommodation, the tenant was carrying on his
business and the alleged subtenant firm was also carrying its business,
hence, it was not sub-letting.
synopsis 6B.
A. Company:
26
If all the partners of a firm constitute a company and the business
carried out from a tenanted accommodation earlier by the firm is done by
the company from the same premises then it does not amount to sub-
letting as the company is only an alter ego of the firm vide M/s Madras
Bangalore Transport Company9 (3 judges). However, in case of conversion
of partnership into company if all the directors of the company were not
partners of the firm then it amounts to sub-letting vide Sait Nagjee57.
27
If a company occupies a building which was earlier in occupation of
an unregistered society as licencee/tenant then unless it is shown that
all the members of the unregistered body became members of the
company, the company cannot claim to be successor of the former in
respect of licence / tenancy of the building vide Electrical Cables38.
B. Firm:
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of the partners of the original firm which took the premises on rent,
hence, it was not a case of sub-letting. In Dev Kumar32, it was found that
the tenant was carrying on his own business from the accommodation in
dispute and along with that the alleged subtenant firm was also carrying
on its business, hence, it did not amount to sub-letting.
29
wife of one of the brothers and a cousin were partners which did not
amount to sub-letting as tenant had not disassociated with new business
and no stranger was partner in the newly created firm.
C. Society:
In Janki Devi27 building was let out to the appellant Janki Devi to
run school. The school which was established there was run by a
registered society of which Janki Devi the tenant was secretary. It was
argued on behalf of the tenant that she retained juridical possession of
the premises. The Supreme Court rejected the contention and held the
sub-letting to be proved. It found that under the Rules and Regulations
of the Society managing body, consisting of seven members, was to be
elected by the general body every year and managing body elected
Secretary from amongst its members. Accordingly it was held that legal
30
possession did not remain with the tenant. Shalimar13, Madras
Bangalore Transport Co9. and Helper Girdhar Bhai11 were distinguished.
D. Club:
31
In para 13 of Ram Saran33 it was mentioned that in Shalimar13
“tenant allowed a club registered under the Companies Act to carry on its
activities in a major portion of the tenanted premises. The tenant himself
was also a member of the said club…….”. The statement is not correct as
in Shalimar13 no club was sub-tenant. In fact club which was a company
was sub tenant in Roop Chand20 which had been noticed in para 12 of
Ram Saran33.
7. MISCELLANEOUS
A. Service as Rent:
33
had to be evicted from the whole building. (See also synopsis 5D of
Bonafide need chapter). Similarly in Habibun Nisa43, under the same Act
(Tamil Nadu) it was held (after placing reliance upon S. Sanyal1) that in
case of denial of title of landlord in respect of part of tenanted
accommodation, tenant is to be evicted from the entire tenanted
accommodation not only the part, as under Tamil Nadu Rent Control Act
splitting of tenancy is not permissible. Accordingly in case of sub-letting
of part of accommodation, eviction is to be ordered of the tenant
(including sub-tenant) from the whole building vide Associated Hotels2,
Rajbir Kaur17, Harish Tandon30 and Vaishakhi Ram61.
“….It appears from the pleadings that in the eviction petition the
landlord stated that out of 8 sub-tenants, six sub- tenants were
inducted into possession of different portions with his consent. If
that be so, neither the tenants nor the sub-tenants could have
been ordered to be evicted merely because one of the sub-tenants
was inducted into possession of a portion of tenanted premises
without the consent of the landlord…...”
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that also from the whole building. In Dev Kumar32, under East Punjab
Rent Control Act it was found that the tenant, in the tenanted shop, was
carrying on his own independent business as well as transacting the
business of another firm, the alleged sub-tenant, as commission agent.
The Supreme Court after placing reliance upon interalia Rajbir Kaur17,
under the same R.C. Act held that lit did not amount to parting with
exclusive possession and sub-letting. However thereafter in para 11 it
was observed as follows:
“At the most, the conclusion can be that while the tenant
was continuing his own business as well as a business of
Commission Agent of M/s Ram Saran Bhola Nath, the respondent
nos. 2 to 4 have also been permitted to continue their business in
the name of Ram Saran Rattan Chand. But that does not
establish either the exclusive possession of respondents 2 to 4 or
that the tenant has parted with his possession. The exclusive
possession of the premises being the first criteria for establishing
subletting and the same not being established, the conclusion of
the High Court about subletting is vitiated.”
D. Pleading:
In Virendra Kashinath41 through amendment following para was
added in the plaint by the land lord.
35
“The plaintiffs say that pending the suit the defendants
have or any one of them has inducted in the suit premises
defendants no. 4 and 5 unlawfully”
36
technically. The true test, as has been repeatedly said, is to see
whether the other side has been taken by surprise or prejudiced.”
37
“………As has been held by this Court, the issue of sub-
letting can be established on the basis of legitimate inference
drawn by a court. In P. John Chandy and Co. (P) Ltd. v. John P.
Thomas, AIR 2002 SC 2057 : (2002) 5 SCC 90, 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 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……”
38
The Supreme Court in United Bank29 (paras 4 &5) has held that
the provision applies to the residential as well as non-residential
premises.
40
36. M/s Bharat Sales v. L.I.C. AIR 1998 SC 1240
37. Silverline Forum Pvt. Ltd. v. Rajiv Trust, AIR 1998 SC 1754 (3
Judges)
38. Electrical Cable Development Association v. Arun 1998 (5) SCC 396
39. Kala v. Madho Prasad Vaidya, AIR 1998 SC 2773
40. M. Kasam Haji Gulam Bhai v. Bakerali Fatehali AIR 1998 SC 3214
41. Virendra Kashinath Ravat v. Vinayak N. Joshi, AIR 1999 SC 162
42. Resham Singh v. Raghbir Singh AIR 1999 SC 3087
43. Habibunnisa Begum V. G.D. Chettiar, AIR 2000 SC 152
44. Shama Prashant Raje v. Ganpatrao AIR 2000 SC 3094
45. Biswanath Poddar v. Archana Poddar, AIR 2001 SC 2849
46. Hem chand v. Hari Kishan Rastogi AIR 2001 SC 3975
47. Ganesh Trivedi v. Sundar Devi AIR 2002 SC 676
48. Gurdial Singh v. Raj Kumar Aneja AIR 2002 SC 1003
49. P. John Chandy & Co. v. John P. Thomas AIR 2002 SC 2057
50. G.K. Bhatnagar v. Abdul Alim 2002 (9) SCC 516
51. Imdad Ali v. Keshav Chand AIR 2003 SC 1863 (3 judges)
52. Parvinder Singh v. Renu Gautam AIR 2004 SC 2299
53. M/s Mahindra Saree Emporium v. G.V. Srinivasa Murthy AIR 2004
SC 4289
54. Singer India Ltd. v. Chander Mohan Chadha AIR 2004 SC 4368
55. Joginder Singh Sodhi v. Amar Kaur 2005 (1) SCC 31
56. Kailasbhai S. Tiwari v. Jostna Laxmidas Pujari AIR 2006 SC 741
57. M/s Sait Nagjee Purushottam v. Vimalbai Prabhulal AIR 2006 SC
770
58. Gurbachan Singh v. Ram Niwas AIR 2006 SC 2204
59. Amar Nath Agarwalla v. Dhilon Transport Agency AIR 2007 SC
2402
41
60. Santosh Ajit Sachdeva v. Anoopi Shahani AIR 2007 SC 3231
61. Vaishakhi Ram v. Sanjeev Kumar Bhatiani AIR 2008 SC 1585
62. Smt. Nirmala Kanta v. Ashok Kumar, AIR 2008 SC 1785
63. Shashi Jain v. Tarsem Lal, AIR 2009 SC 2617
64. Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar, AIR 2010
SC 603
65. Vinaykishore Punamchand Mundhada v. Bhumi Kalpatru 2010 (9)
SCC 129
66. S.F. Engineer v. Metal Box India Ltd. AIR 2014 SC 2189
67. Hindustan Petroleum Corporation Ltd. v. Dilbahar Singh, AIR 2014
SC 3708 (C.B.)
68. Sri Sidhharth Viyas v. Ravi Nath Misra, AIR 2015 SC 434
69. Boorugu Mahadev & Sons v. Sirigiri Narasing Rao, AIR 2016 SC
433
70. Tmt. Kasthuri Radhakrishan v. M. Chinniyan, AIR 2016 SC 609
42