Kumbhar Kurji Gokalbhai vs Memon Haji Ali Since Decd through Heirs

N.V. Anjaria, J.—The present Revision Application is preferred by the original tenant-original defendant No. 1 invoking powers of this Court u/s 29(2) of the Bombay Rents, Hotel Lodging House Rates Control Act, 1947 (hereinafter referred to as ''the Act'' for short). The Revision is directed against judgment and order dated 07th May, 2007 in Regular Civil Appeal No. 28 of 1992 passed by learned Principal District Judge, Porbandar, whereby the learned Judge confirmed judgment and decree dated 01st May, 1992 of learned Civil Judge (S.D.), Porbandar in Regular Civil Suit No. 193 of 1983. The Trial Court decreed the landlord''s suit for eviction u/s 13(1)(e) of the Act. The profile of facts may be outlined.

The plaintiffs were the owners of the shop situated in the main bazaar of Ranavav town. The shop was let out to the father of the defendant on a monthly rent of Rs. 10/- and the said tenant was doing the business of Pan Bidi in that shop. After death of the tenant, his heirs-the present defendant continued to occupy the premises. The plaintiff instituted the aforesaid suit against the defendant praying for decree of eviction. Rent for the period from 01st April, 1983 to 31st August, 1983 claimed as due. The eviction was sought on the ground that the defendant had sublet or transferred in any other manner the suit shop to one Ramniklal Karsandas and that said karsandas was running a provision store in the suit shop. Notice dated 22nd July, 1983 was issued by the landlord, which was served on the tenant on 26th August, 1983. The tenant was called upon to vacate and hand over the possession of the suit premises on or before 31st August, 1983. As the instruction of the said notice (Exh. 34) was not complied with, the landlord instituted the suit.

2.1 By filing written statement at Exhibit 12 the suit was contested by the defendants. They contended that the suit shop was given by Memon Haji Ali-the father of the plaintiffs and further contended that after death of their father-original tenant, they got joint tenancy rights in the premises. It was stated thereafter that on 20th May, 1983, defendant No. 2 and other members relinquished their tenancy rights in the suit shop in favour of defendant No. 1 by making agreement dated 20th May, 1983 (Exh. 51). It was contended that the tenancy rights came to be transferred to defendant No. 1 who became tenant u/s 5(11)(c)(ii) of the Bombay Rent Act.

2.2 As regards the ground of subletting u/s 13(1)(e) pleaded by the landlord, the defendants denied the same and contended that there was no act of subletting but defendant No. 1 had entered into a partnership with I said Ramniklal Karsandas for carrying on business of provision store under the name of M/s. Ramniklal Karsandas & Co. It was contended that the Partnership Deed dated 27th May, 1983 (Exh. 52) created valid and legal relationship. The Trial Court after framing issues at Exhibit 13, took view that on the basis of evidence adduced before it that the partnership was a cloak and under the banner of partnership, there was an illegal transfer and assignment. The Trial Court noted various aspects with reference to the agreement of partnership (Exh. 52) to come to the aforesaid conclusion. Consequently, suit of the plaintiffs was decreed. The lower appellate court endorsed to the findings of the Trial Court, and confirmed the decree passed.

Learned advocate Mr.Divyesh Sejpal for the applicants-tenants submitted that the aspect weighed with the lower appellate court was that the defendant had only 10% share in the profit and loss of the partnership business and he was observed not to be aware of the affairs of the firm. The said ground however, according to him, could not raise presumption of subletting as there was a valid partnership deed executed between the parties. It was submitted that once there was arrangement of partnership, which was by way of registered deed, the condition regarding profit sharing could not be a reason to hold that the partnership was not genuine. It was submitted that it was for the partners to decide the ratio of profit sharing and if the defendant No. 1 was given 10% share only, there was nothing unusual in it. Learned advocate for the applicants also took the Court through the reasoning of the Trial Court, to submit that it was entirely misconceived to view to take exception by the Trial Court of the fact that partnership business was started before the date of the execution of the partnership deed. He submitted that the deed was prepared on 27th May, 1983 but the business was started a day before as stated in the deed itself, which was in no way impermissible.

3.1 Learned advocate for the applicant relied on decision of the Apex Court in Helper Girdharbhai Vs. Saiyed Mohmad Mirasaheb Kadri and Others, , wherein it was held that a tenant becoming a partner in a partnership firm and allowing the firm to carry on business in the demised premises while himself retaining the legal possession thereof, could not be said to have been sublet. Learned advocate emphasized that the ratio of said decision was fully applicable to the facts of the present case.

3.2 Learned advocate Mr.E.E. Saiyed for the respondents-original plaintiffs submitted that mere fact that a partnership was formed, was no ground to contend that there was no subletting. He emphasised that eventhough partnership was formed, it was sham and it was rightly termed as "colourable" by the lower appellate court. He submitted that ingredients of subletting were evident even as name of partnership was given to it. It was submitted that the evidence on record showed that the defendant was not aware about the facts relating to execution of the Deed and was not knowing about the books of accounts or the affairs of the partnership. He submitted that the Courts below were right in concluding that under guise of partnership there was a transfer of interest in the premises in favour of said Ramniklal Karsandas. It was submitted that the tenant had handed over the possession and control of the suit shop to said Ramniklal.

3.3 Learned advocate for the respondents relied on decision of Punjab and Haryana High Court in Tek Chand and Another Vs. Keshav Dayal and Another, to submit that like in the case on hand, in that decision also the defence of the tenant against subletting was that there was a partnership deed, but no accounts were produced, and the court held it to be the case of subletting. Next decision in Ramji Lal alias Ramji Dass and Another Vs. Smt. Naurati Devi, was relied on wherein the partnership was held to be a camouflage, it was found that the tenant was running the shop separately and the partner was running the demised shop. Yet another decision in Ajit Singh and Others Vs. Kamal Kishore and Others, was relied on where except partnership deed no other evidence such as books of accounts, was produced and it was held that the tenant failed to discharge his burden. Further decision in Darshna Devi v. Raj Singh [ 1997(2) RCR 170 (P&H) ] was referred to where the extent of contribution and the sharing ratio were not indicated. From a Delhi High Court decision in Ram Sarup Vs. Brahma Devi and Others, it was highlighted that the tenant had in that case only gave his name to the partnership, but he himself was doing business at some other place. Lastly learned advocate relied on decision of this Court in Kusumben V. Amratlal v. Shrenikbhai Kasturbhai [ 1998 (2) RCR 574 (Guj)] wherein, it was submitted, this Court did not accept ground of partnership as no account books were produced. Learned advocate submitted also that when both the Courts had taken same view on the basis of evidence after appreciation thereof, this Court may not exercise its revisional powers u/s 29(2) of the Act.

It is quite true that creation of a genuine partnership by the tenant and carrying on the business in the rented premises by forming such arrangement, would not amount to subletting. It is also an acceptable proposition that a partnership validly created would provide a good defence to the ground of subletting u/s 13(1)(e) of the Act. In Helper Girdharbhai (supra) the Supreme Court observed that whether a genuine partnership existed of which the tenant claiming to be a partner was a mixed question of law and fact. In that decision the Apex Court held that in a case where tenant becomes a partner of a partnership firm and allows the firm to carry on business in the demised premises while he himself retains legal possession thereof, the act of the tenant would not amount to subletting. It was held that whether there is genuine partnership or not must be judged in the facts of each case.

4.1 Few other decisions on the point may also be usefully noticed. In Nirmal Kanta (Dead) through Lrs. Vs. Ashok Kumar and Another, the Apex Court held thus,

What constitutes sub-letting has repeatedly fallen for the consideration of this Court in various cases and it is now well established that a sub-tenancy of a sub-letting comes into existence when the tenant inducts a third-party stranger to the landlord into the tenanted accommodation and parts with possession thereof wholly or in part in favour of such third party and puts him in exclusive possession thereof. The lessor and/or a landlord has to prove such allegation by seeking eviction of a lessee or tenant producing proper evidence to that effect.....

4.2 In Vaishakhi Ram and Others Vs. Sanjeev Kumar Bhatiani, on the context of the provisions of the Delhi Rent Control Act, the Supreme Court reiterated that ingredients which must be satisfied for subletting are, (i) the tenant has sublet or assign or parted with the possession of the whole or part of the premises; (ii) such subletting or assignment has been done without obtaining the consent in writing of the landlord.

4.3 In Parvinder Singh Vs. Renu Gautam and Others, it was observed by the Apex Court that to defeat the provisions of law a device at times is adopted by the tenants and sub-tenants of bringing into existence a deed of partnership which gives the relationship of tenant and sub-tenant an outward appearance of partnership while in effect what has come into existence is the sub-tenancy or parting with possession camouflaged under the cloak of partnership.

4.4 In Parvinder Sing (supra) the Court discussed the working of law as under:

... a mere entering into partnership may not provide a ground for eviction by running into conflict with prohibition against sub-letting or parting with possession. This is a general statement of law which ought to be read in the light of the lease agreement and the law governing the tenancy. There are cases wherein the tenant sub-lets the premises or parts with possession in defiance of the terms of lease or the rent control legislation and in order to save himself from the peril of eviction brings into existence, a deed of partnership between him and his sub-lessee to act as a cloak on the reality of the transaction. The existence of deed of partnership between the tenant and the alleged sub-tenant would not preclude the landlord from brining on record material and circumstances, by adducing evidence or by means of cross-examination, making out a case of subtenant in favour of a third person. The rule as to exclusion of oral by documentary evidence governs the parties to the deed in writing. A stranger to the document is not bound by the terms of the document and is, therefore, not excluded from demonstrating the untrue or collusive nature of document or the fraudulent or illegal/purpose for which it was brought into being. An enquiry into reality of transaction is not excluded merely by availability of writing reciting the transaction.

4.5 In a particular case, whether the partnership was a sub-tenancy in disguise would have to be seen from the conjoint effect of stipulations and conditions in the partnership agreement and the relavant evidence throwing light on the essentials of sub-letting. The conditions of the partnership as totally emerging from the agreement informed by the other attendant circumstances and the evidence on record relating to the ingredients of Section 13(1)(e) would determine the real character of the partnership.

4.6 Hon''ble the Supreme Court in Ms. Celina Coelho Pereira and Others Vs. Ulhas Mahabaleshwar Kholkar and Others, laid down the following principles with regard to the aspect of partnership as a defence to the ground of subletting,

The legal position that emerges from the aforesaid decisions can be summarised thus:

(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) Inducting a partner or partners in the business or profession by a tenant by itself does not amount to sub-letting. However, if the purpose of such partnership is ostensible and a deed of partnership is drawn to conceal the real transaction of sub-letting, the court may tear the veil of partnership to find out the real nature of transaction entered into by the tenant.

(iii) The existence of deed of partnership between the tenant and alleged sub-tenant or ostensible transaction in any other form would not preclude the landlord from bringing on record material and circumstances, by adducing evidence or by means of cross-examination, making out a case of sub-letting or parting with possession in tenancy premises by the tenant in favour of a third person.

(iv) If the tenant is actively associated with the partnership business and retains the control over the tenancy premises with him, may be along with partners, the tenant may not be said to have parted with possession.

(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.

(vi) In other words, initial burden lying on the landlord would stand discharged by adducing prima facie proof of the fact that a party other than the tenant was in exclusive possession of the premises. A presumption of sub-letting may then be raised and would amount to proof unless rebutted.

Adverting now to the facts of the case, in the suit shop, the tenant was originally doing business of Pan Bidi. The said business was changed to one of selling provisions. Between the tenant-defendant No. 1-Kurji Gokaldas and one Ramniklal Karsandas, an agreement of partnership dated 27th May, 1983 was entered into wherein it was decided to start the provision store to sell food grains, sugar, oil and other miscellaneous household provisions. It was agreed that original business of selling Bidis carried on by the tenant could be changed and converted to a business of the firm in the name of M/s. Ramniklal Karsandas & Co. One of the conditions was that any of the partners intending to retire from the partnership would have to give a one month''s notice in advance. It was agreed that the heirs of the partners would be inducted to partnership with mutual consent. As far as the sharing of the partners was concerned, it was agreed that Ramniklal Karsandas would have 90% share whereas the applicant would have 10% share in the profits/losses of the firm.

5.1 The evidence on record was analysed, discussed and appreciated by the courts below. Several aspects emerged, as were noted by the courts below. The plaintiff examining himself (Exh. 33) stated that Ramniklal was doing business of provision Stores in the rented premises, whereas the tenant was running pan-bidi business at his uncle''s place in the name and style of Ramdoot Pan House. The evidence of PW-1 Abubakar (Exh. 48), who was having his barber''s shop since more than two decades opposite the suit shop stood in support when he testified to state that sine 1 1/2 to 2 years, Ramniklal was running the business and the tenant had started his pan-bidi shop at uncle''s place. According to him one Ashok and one Pravin-being the sons of said Ramniklal were used to sit at the shop, and the defendant not was seen sitting there. One of the person who was a customer (Exh. 124) deposed to say that Ramniklal used to sit there selling various items. Copies of bills and cash-money stated to be in Ramniklal''s handwriting were on record. These aspects suggested that said Ramniklal was in charge of business to the exclusion of the tenant. Nothing convincingly came out from the evidence that tenant was participating in the firm''s business much less actively. On the contrary, it was suggested that he had shifted his pan-bidi dealings, being the original business carried on in the suit shop, to a place elsewhere.

5.2 Defendant-tenant''s own evidence (Exh. 40) only worsened the case for him. His was a blissful ignorance about partnership deed being prepared and the agreement executed. According to him his advocate prepared the partnership deed (Exh. 52); he did not know who purchased stamp paper he was unaware of the capital invested in the firm by the said Ramniklal; he did not know what was the daily turnover and collection; had not seen the accounts of the firm. He admitted that all these were being handled by Ramniklal. Said Ramniklal was examined at Exh. 55, who stated inter alia that initially he invested the capital of Rs. 25,000/- and Rs. 2,000/- was given by the applicant.

5.3 True it may be that the percentage of sharing in the partnership business is not the sole yardstick to decide on the genuineness of the partnership. All these aspects lifted the veil of the partnership, and suggested that the tenant had virtually divested of control over the suit shop and under the clock of partnership, had transferred exclusive possession of and rights in the premises in favour of said Ramniklal Karsandas. Considering the above aspects of the matter and the circumstances coming from the evidence led by the parties read with the total effect of the conditions of partitioning deed (Exh. 52), it is to be held that the partnership business was only a device. The tenant had no active and effective participation in the firm so as to relegate the control and the premises and exclusive possession in favour of the third party, partner. The said partner was able to exercise his own right in the business and using the premises exclusively. The ingredients of Section 13(1)(e) were satisfied and were proved on the basis of evidence on record.

5.4 When on the basis of above evidence, the Courts below having held that the tenant had exclusively parted with possession and the retention of tenancy rights by him could not be inferred in the facts of the case the aspect that the tenant was paid his share at the year end on Diwali would only be a consideration received by the tenant. In any case, the facts and circumstances and the evidence on record, established that there was an illegal transfer or assignment of interest in the rented premises.

5.5 The above features emerging from the evidence on record lead to an unfailing conclusion that the tenant had desisted from associating himself in the partnership business. When there was no active participation shown of the tenant in the business of the firm, it was one of the consideration to infer that he had given up his control. In the suit shop the sub-tenant and his two sons used to sit to do the business. The tenant was not aware of the affairs of the daily business in the provision store and was not abreast of the happenings in the business. It amounted to divesting himself of legal possession and parting with the exclusive possession of the suit shop to the third party partner.

5.6 Parvinder Singh (supra) pertinently observed,

If the tenant is actively associated with the partnership business and retains the use and control over the tenancy premises with him, maybe along with the partners, the tenant may not be said to have parted with possession. However, if the user and control of the tenancy premises has been parted with and deed of partnership has been drawn up as an indirect method of collecting the consideration for creation of sub-tenancy or for providing a cloak or cover to conceal a transaction not permitted by law, the court is not estopped from tearing the veil of partnership and finding out the real nature of transaction entered into between the tenant and the alleged sub-tenant.

5.7 At this stage, conditions relating to the partnership business coming out from Exhibit 52 may be revisited. The Partnership was started with effect from 26th May, 1983 to do the business of selling foodgrains and other provisions, and it was decided that amongst the two partners, partner No. 2 was a tenant as originally his deceased father had taken the premises on rent and thereafter partner No. 2 was in possession. The name of the partnership firm was agreed to be M/s. Ramniklal Karsandas & Co. and it was agreed further that the name could be changed and any number of branches could be opened. As regards capital contribution, the condition was that it would be by mutual understanding. Ramniklal Karsandas was partner No. 1 who was given 90% share in the profit sharing whereas the tenant-partner No. 2 was given 10% share in the profit and loss. Withdrawal was permitted. It was further stipulated that the partnership firm could be run by both the partners jointly or by one of them. It was further provided that any of the partners wanting to retire from the partnership may do so after giving one month''s notice in writing in advance. It was stipulated that the partnership may be continued or could be closed after either of the partner and further it was stipulated that heirs of either of the partners could be inducted in the business.

The conditions in the partnership deed attentively considered which ought to be defining and decisive condition was conspicuous by its absence. It was a reinforcing aspect to the position emerging from other evidence highlighted above. When tenant enters into partnership, his intention to continue and retain the tenancy rights in respect of the premises being used for the partnership business, may be judged by his conduct and other criteria, which may find revelation in the agreement of partnership. As far as Exhibit 52 is concerned, on a closure reading thereof, a condition regarding retention of tenancy rights by the defendant-tenant was not found. Even if the tenant was to do business in the suit premises with another person by creating a partnership, in such arrangement, it was pre-requisite that the tenancy rights in the premises were retained by the tenant. Retention of tenancy rights was to be crucial for judging the intention of the tenant, and also whether had kept with him legal possession of the premises. In order that there is no subletting and/or there is no illegal assignment or transfer in the premises, essential it was that the tenant had retained his rights as tenant therein. There has to be an intention to reserve and retain tenancy on part of the tenant. When the partnership business was created and said was raised as defence to counter the ground of subletting, the intention of the tenant for retaining his tenancy and retaining legal possession was to primarily stem from the recitals in the partnership deed.

6.1 In a partnership agreement wherein the tenant of the premises to be used for partnership business is one of the partners, and the partnership deed not reserving by way of express condition, the tenancy in the premises for the tenant partner, then in such case and such circumstance, it would be difficult to hold that the tenant had not parted with legal possession in favour of the other partner-third party. Though it is a strong signaling condition it is not invariably suggested that absence of such stipulation would in all cases render the partnership a sham arrangement and sub-tenancy would have to be necessarily inferred, as in a given case the other circumstances may strongly lead inference of a genuine partnership. But as obtained in the present case, the absence of stipulation that the tenant was retaining his tenancy right in the premises was further feeded by the evidence on record. More particularly given the context that this important recital and condition being not found in the terms of the partnership deed and the other conditions of the partnership agreement read conjointly had led the courts to draw a conclusion that there was a transfer/assignment of interest in the suit shop, it could hardly be faulted.

Both the Courts below recorded concurrent finding that partnership was not real one but was a device and it amounted to subletting and parting of exclusive possession. The powers of this Court while examining those concurrent findings have to be guided by the well settled principles regarding the scope of revisional powers u/s 29(2) of the Act. These principles are highlighted in Patel Valmik Himatlal and Others Vs. Patel Mohanlal Muljibhai (Dead) Through L.Rs., , as also laid down elaborately in Helper Girdharbhai (supra). The powers u/s 29(2) of the Act do not extend to re-examination of or re-appreciation of evidence. They are exercisable only to see that the Courts below have acted within the bounds of law and the decision does not suffer from excess of jurisdiction or material irregularity justice. Even if second view could be plausible or possible the High Court would not substitute it unless the findings are perverse. Such is not the case at all in the present matter.

Consequently, judgment and order dated 07th May, 2007 I of learned Principal District Judge, Porbandar dismissing the appeal and confirming the judgment and decree passed by the Trial Court holding the plaintiffs to entitle to recover the possession of the suit shop and consequently directing the defendant No. 1 to handing over the possession is maintained. Other part of the directions in the impugned judgment and order of the lower appellate court is not touched; except the modification that the date mentioned by the lower appellate court for handing over the possession of the disputed shop, which was 30th June, 2007, shall stand substituted to 31st December, 2013.

The Revision Application stands dismissed. Registry shall send back the Record and Proceedings.