Trade Link Limited and Another vs Varinder Kumar and Others

Mahesh Grover, J.—This revision petition is directed against judgments dated 27.1.2006 and 8.12.2007 passed respectively by the Rent

Controller, Chandigarh and the Appellate Authority, Chandigarh, whereby the application moved by landlord-Respondent Nos. 1 to 3 u/s 13 of

the East Punjab Urban Rent Restriction Act, 1949 (for short, ''the Act'') for ejectment of the tenant-Petitioners from ground-floor of S.C.O. No.

19, Sector 26, Chandigarh, (hereinafter described as ''the demised premises'') on the ground of sub-letting was accepted and the appeal of the

latter was dismissed.

The tenancy in favour of the Petitioners was created in the year 1977 at a monthly rent of Rs. 3600/- which was subsequently increased to Rs.

4000/-. Om Parkash, father of Respondent Nos. 1 & 3 and husband of Respondent No. 2, was the original landlord, who died in the year 1987.

In 1983, a notice was served upon the Petitioners which is on record as Exhibit RW2/A informing them that the tenancy stood terminated for the

reason that the premises had been sub-let to M/s Mohan Meakin Ltd. Subsequent to the death of Om Parkash, Sat Pal, one of the co-owners of

the demised premises, modified the terms of the tenancy which is reflected from Exhibit RW4/C in the year 1988 and permitted the Petitioners to

operate from back portion of the demises premises while M/s Mohan Meakin Ltd. was allowed to use the front portion.

In the year 1997, Respondent No. 1 to 3 initiated ejectment proceedings against the Petitioners on the ground of subletting.

The Petitioners resisted the prayer of Respondent Nnos. 1 to 3 by pleading that there could not have been any subletting as the arrangement

was made by Sat Pal, one of the co-owners, who permitted the use of the demised premises by M/s Mohan Meakin Ltd. It was further pleaded

that the Petitioners have a number of sister concerns including M/s Mohan Meakin Ltd. and in such an eventuality, there was no subletting.

The Rent Controller as well as the Appellate Authority negated the plea of the Petitioners and ordered their ejectment, resulting in the filing of

the instant petition.

Learned Counsel for the Petitioners contended that Respondent Nos. 1 to 3 failed to discharge the Onus of proving the willful parting of

possession of the demised premises by the Petitioners for valuable consideration, which is an essential ingredient of subletting and, therefore, the

impugned judgments are liable to be set aside.

It was next contended by the learned Counsel for the Petitioners that Respondent Nos. 1 to 3 failed to prove by bringing on record any cogent

evidence qua the aspect of sub-letting and even if their best case that Petitioner-M/s Trade Link Limited has stopped operating from the demised

premises and has not transacted any business in the last many years, is taken as correct, then it can, at best, be treated as cessation of occupation

which ground was never pleaded and set up, but it does not amount to subletting.

It was submitted that Petitioner-M/s Trade Link Limited is a public limited company and has many sister concerns and is carrying on its business

from the demised premises. It was further submitted that the onus to prove subletting was on the landlords alone and they have failed to discharge

the same.

Learned Counsel for the Petitioners then submitted that the mala fides on the part of Respondent Nos. 1 to 3 is evident from the fact that Sat

Pal, one of the co-owners, who had negotiated with the Petitioners at the time of change of terms of tenancy, was impleaded as proforma

Respondent in the ejectment application and he was never examined as a witness.

The next contention of the learned Counsel for the Petitioners is that the alleged sub-tenant was a necessary party to be impleaded in the

ejectment application and since Respondent Nos. 1 to 3 did not do so, the proceedings stood vitiated on that ground.

Lastly, it was argued by the learned Counsel for the Petitioners that the authorities below have gone wrong in drawing an adverse inference that

the Petitioners have failed to produce records regarding their business activities for the reason that the official witness, who was sought to be

produced by them and who was also bound down by the Rent Controller, failed to do so and in such an eventuality, they could not be held liable

for the same because it was the duty of the Court to carry the process forward to its logical end to examine the said witness.

In support of his contentions/submissions, he placed reliance on Dev Dutt Verma v. Ajit Singh and Ors. 1965 C.L.J. 341 Dipak Banerjee Vs.

Lilabati Chakraborty, ; Jagan Nath (Deceased) through his Legal Representatives v. Chandar Bhan and Ors. 1988(1) R.C.R. 629; Kishan Lal Vig

v. Shri Sunder Lal and Anr. 1988(1) RCR 580 Pala Ram and Another Vs. Om Dutt, ; Ram Dhan Sharma Vs. Shri Bishan Sarup Mittal and

Another, ; Dev Kumar (Died) through LRs. Vs. Smt. Swaran Lata and others, , Mahendra Saree Emporium v. G.V. Srinivasa Murthy, 2004(2)

RCR 286 (S.C.) and Anil Kumar v. Sita Devi and Anr. 2006(2) RCR 417

On the other hand, learned Counsel for Respondent Nos. 1 to 3 argued that the onus to prove the parting of possession by the Petitioners

stood adequately discharged and that in the cases of sub-letting, the strict proof is not required because it is always a secret arrangement between

tenant and sub-tenant. He then argued that Respondent Nos. 1 to 3 had adduced sufficient evidence to establish that the Petitioners had ceased to

transact business from the demised premises and M/s Mohan Meakin Limited was in possession thereof from where it was doing business because

they had admitted in their written statement that the latter was operating from the demised premises and in the absence of any written consent by

the landlords, this had to be taken as an admission under Order 8 Rule 5 of the Code of CPC and thus, invited eviction straightaway on the ground

of subletting. It was submitted that the Petitioners could not prove from any material on record that M/s Mohan Meakin Limited was their sister

concern. It was further submitted that the Petitioners had nowhere pleaded in their written statement that they were in possession of the demised

premises and not M/s Mohan Meakin Limited even though Respondent Nos. 1 to 3 had pleaded a positive case to that effect.

Learned Counsel for the Respondent Nos. 1 to 3 then argued that the Petitioners pleaded that M/s Trade Link Limited was a public limited

company, but there is no evidence on record to show that it was functional because the witnesses who were produced from the Taxation

Department categorically deposed that M/s Trade Link Limited had not filed any returns even though the returns submitted by M/s Mohan Meakin

Limited were produced.

It was next argued that the Petitioners had no leg to stand on for the reason that the ejectment application was being contested by one Mr.

S.K. Kochar, but he could not plead and prove whether he was their authorised representative or was their employee. Learned Counsel for

Respondent Nos. 1 to 3, thus, submitted that this was fatal to the case of the Petitioners because it was pleaded to be a public limited company

and in the absence of authorisation, the written statement could not be treated as valid written statement in the eyes of law and even the subsequent

evidence that was produced, stood vitiated on this score alone. Reference was made to the statements of the witnesses, who were produced by

the Petitioners, namely, RW1-Raj Kumar, RW2-Shri Adish Gupta, Advocate, RW3-S.K. Kochar and RW4-Rajinder Kumar, to say that RW4-

Rajinder Kumar, a Clerk from the Taxation Department of Chandigarh Administration had clearly deposed that the Petitioners had not filed any

return and that Mr, Kochar was not even authorised to file a written statement or make a statement on their behalf and further that the plea of the

Petitioners that this witness had been bound down, but not examined further by the Court is also not tenable because on 22.1.2004, further cross-

examination of the said witness had to be deferred because he had not brought the complete record and thereafter, his bailable warrants were

ordered to be issued, but in the meantime, the Petitioners had moved an application for amendment of the written statement which was accepted.

Further reference was made to the order dated 23.9.2005 of the Rent Controller whereby the evidence of the Petitioners was closed by the order

of the Court. Order dated 23.12.2005 passed by the Rent Controller was also referred to vide which the Application for additional evidence made

on behalf of the Petitioners was declined and it was also mentioned therein that the Petitioners had failed to file process fee and warrants fee. It

was submitted that the Petitioners did not file any revision against the aforesaid orders and thereby sealing the fate of further cross-examination of

RW4 and, thus, it does not lie in the mouth of the Petitioners to rake up this plea at this stage.

Learned Counsel for Respondent Nos. 1 to 3, lastly, contended that the sub-tenant was not a necessary party and, therefore, it did not affect

the eviction petition.

Lastly, it was contended that the mere silence of the landlord for a long period qua the subletting would not amount to acquiescence or waiver

of right of the landlord to seek eviction of the tenant on that ground.

In support of his contentions/submissions, learned Counsel for Respondent Nos. 1 to 3 placed reliance on the following judgments:

Parkash Chand v. Shri Muni Lal and Ors. 1979(1) R.C.R. 90

Lajwanti and Another Vs. Daulat Ram,

Lohia Properties (P) Ltd v. Atmaram Kumar 1994(1) CCC 4 (S.C.);

Life Insurance Corporation of India v. Bharat (Sales) Ltd. 1995(1) R.C.R. 422

Ram Saran v. Payare Lal and Anr. 1996(1) RCR 212

Chaudhary Ram Vs. Liba Sood and Others, ;

Rajbir Kaur v. Joginder Associates Architect 1999 (1) RCR 229

Iswar Bhai C. Patel @ Bachu Bhai Patel v. Harihar Behera and Anr. 1999(2) CCC 1

P. John Chandy and Company (P) Ltd. Vs. John P. Thomas, ;

Sushil Kumar Vs. Rakesh Kumar, ;

Reema Rani Vs. Gurmukh Singh and Another, ;

Balvant N. Viswamitra and Others Vs. Yadav Sadashiv Mule (dead) through Lrs. and Others, ;

13 Ram Kishan Vs. Moti Ram and Another, ;and

Ms. Celina Coelho Pereira and Ors. v. Ulhas Mahabaleshwar Kholkar and Ors. 2009(2) R.C.R.456 .

I have thoughtfully considered rival contentions/submissions and have gone through the impugned judgments, as also the whole record.

Section 13(2)(ii)(a) of the Act gives right to a landlord to seek eviction of a tenant on the ground of sub-letting. It reads as under-

Eviction of tenants.-

(1) xx xx xx xx

(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf. If the Controller, after giving the tenant a

reasonable opportunity of showing cause against the applicant, is satisfied -

(i) xx xx xx xx xx xx xx

(ii) that the tenant has after the commencement of this Act without the written consent of the landlord-

(a) transferred his right under the lease or sublet the entire building or rented land or any portion thereof; or

(b) xx xx xx xx xx xx xx

(iii) to (v) xx xx xx xx xx xx xx xx the Controller may make an order directing the tenant to put the landlord in possession of the building or rented

land and if the Controller is not so satisfied he shall make an order rejecting the application.

Provided that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building or rented land and may

extend such time so as not to exceed three months in the aggregate.

In view of the above extracted provisions, two facts are essential to constitute subletting, i.e., (i) parting of possession of the tenanted premises

by the tenant, and (ii) it has been done without the written consent of the landlord.

In my opinion, while considering the subletting, it is also to be kept in mind that such an arrangement is clandestine in nature between the tenant

and the sub-tenant and the landlord, though the owner of the property, is stranger to the same. It is, thus, to be viewed in that perspective where

the landlord''s authentication of such an arrangement is severely handicapped. The Courts are, thus, required to examine it from that angle and

acknowledge such handicap of the landlord. It is ostensibly with this reason that the following observations were made by this Court in Parkash

Chand v. Shri Muni Lal and Ors. (supra):

For holding as to whether the landlord had succeeded in proving his allegation of subletting against the tenant, he is only expected to place on

record circumstances from which an inference of subletting can be drawn. It has been more than often held that the landlord is a stranger to the

agreement of subletting between the tenant and sub-lessees and in that state of affairs it is not possible for the landlord to produce the lease deed

between these parties or even oral evidence to testify that the sublease was created in the presence of some witnesses. The Court is only required

to be guided like a prudent person, keeping always in mind the ordinary course of human conduct for deciding as to whether the premises had

been sublet or not. The further rule in this behalf is that if the landlord is able to show that some person other than the tenant is in occupation of the

demised premises which is not being used by the tenant himself for a long time, the landlord must be deemed to have discharged his onus and ball

shifts to the court of the tenant to explain the aforesaid circumstances.

It cannot be disputed that in order to prove the subletting the creation of an interest in the lease hold rights is a sine quo non. Though exclusive

possession- is one of the strong circumstances to show an interest of the transferee in the demised premises and in a given circumstance sub-

tenancy may be interfered to assumed, yet, it itself does not show that any legal rights had been created. It may shift the onus of '' proof. It may be

one of the strong circumstances to be taken into consideration, but that by itself is not sufficient. The tenancy laws are for the protection of the

tenants. The burden of proof with respect to sub-letting continues to be on the landlord. The burden may be very light and in particular facts and

circumstances of a case may stand discharged by a statement on oath by the landlord alone. It is only when the onus shifts that the tenant is

required to explain the nature of possession of the person other than the tenant.

In Life Insurance Corporation of India v. Bharat (Sales) Ltd (supra), while dealing with a case of subletting, a learned Single Judge of Delhi

High Court observed in paragraph 6 of the judgment as under:

The other principle of law well-established by a catena of decisions, which it is not necessary to refer, is that direct evidence can rarely be

expected to prove subletting or parting with possession. The Plaintiff landlord may rely on circumstances which may lead to an inference of the

premises or part thereof having been sub-let or parted with possession by the tenant. The initial onus of proving availability of such a ground lies on

the landlord. The onus is discharged by the Plaintiff having brought material on record prima facie leading to the inference above said. It is then for

the tenant to bring on record the facts within his exclusive knowledge as would rebut the inference raised in favour of the landlord.

Their Lordships of the Supreme Court in Ms. Celina Coelho Pereira and Ors. v. Ulhas Mahabaleshwar Kholkar and Ors. (supra) dealt with a

case which arose from the proceedings initiated under Goa, Daman & Diu Buildings (Lease, Rent & Eviction) Act, 1968 on the ground of

subletting and change of user. After noticing a number of judgments on the subject including the judgments in Jagan Nath (Deceased) through his.

Legal Representatives v. Chandar Bhan and Ors. (supra) and Mahendra Saree Emporium v. G.V. Srinivasa Murthy (supra) relied upon by the

learned Counsel for the Petitioners, the legal position was summed up as under:

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

(i)In order to prove mischief of subletting 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 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 subletting.

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 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

subletting or parting with possession in tenancy premises by the tenant in favour of a third person.

(iv) If 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 subletting is on 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 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 landlord would stand discharged by adducing prima facie proof of the fact that a party other than tenant

was in exclusive possession of the premises. A presumption of subletting may then be raised and would amount to proof unless rebutted.

If the facts and evidence in the instant case are evaluated in the light of the above mentioned proposition of law, then it transpires that the

Petitioners have not denied that M/s Mohan Meakin Limited is in occupation of the demised premises, but it has been pleaded that this was a

permissible arrangement at the behest of one of the owners, i.e., Sat Pal, as is evident from Exhibit RW4/C. Thus, the case of the Petitioners is that

this amounted to tacit consent of the landlords which defies the essence of subletting. It has been contended on behalf of the Petitioners that Sat

Pal, the co-owner, was the person, who had negotiated such an arrangement and that despite the fact-that he was impleaded as a proforma

Respondent, he chose not to put in appearance which shows the collusion between him and Respondent Nos. 1 to 3 in order to cook up a plea of

subletting. However, there is no denial by the Petitioners to the fact that originally the tenancy was created in the name of M/s Trade Link Limited.

It is now to be seen as to whether the Petitioners were in possession of the tenanted premises or that they had transferred exclusive possession

in favour of M/s Mohan Meakin Limited at some stage after the creation of tenancy in their favour.

There is over-whelming evidence on record to show that the Petitioners are no longer in business. Even though, it has been pleaded by the

Petitioners that M/s Trade Link Limited is a public limited company, but nothing has been placed on the file to prove this fact which could reflect

the continuance of its existence or continuance of its business activities.

Concededly, RW4-Rajinder Kumar, an official from the Excise and Taxation Department of Union Territory, Chandigarh, who was produced

by the Petitioners themselves, stated in his cross-examination that as per the record, the Respondent, i.e., M/s Trade Link Limited had filed sales

tax returns uptil the year 1985.

The first notice (Exhibit RW2/A) was issued to the Petitioners at the behest of the owners through their general attorney, Shri Om Parkash, for

eviction on 6.9.1983 on the ground of subletting, as also on the ground of impairment in the value and utility of the demises premises as well as

violation of the terms and conditions of the tenancy. There is no reason to doubt the aforesaid document and merely because Shri Adish Gupta,

Advocate through whom it was issued, deposed while appearing as RW2 that he had no record of the same, would not imply that the notice had

not been issued as it is hardly expected from a lawyer to retain the copies of the legal notices issued by him on behalf of some clients for as long as

ten years, i.e., at the time when he was examined in the year 2003.

The contention that parting of possession of the demised premises by the Petitioners has not been proved, is devoid of any merit because of

the categoric and clear admission by them when they pleaded that M/s Mohan Meakin Limited was in possession thereof. To prove otherwise, the

Petitioners were required to plead and prove that they were in continuous possession of the demised premises or that the new arrangement came

into existence in 1987 with due negotiations with Sat Pal, one of the co-owners. The Petitioners have also failed to establish any collusion between

Respondent Nos. 1 to 3 and Sat Pal. Even if the contents of Exhibit RW4/C are stretched to the maximum, and if accepted in entirety, the same

reveal the mind-set of the landlord when it was written that there was no objection if the company continues to do its business through its agents

and sister companies and accommodate in the demised premises its sister concern Mohan Meakin Ltd. etc., but the Petitioners were no where

permitted to put M/s Mohan Meakin Limited in exclusive use of the demised premises.

It is also clear from the record that even though the Petitioners had sufficient opportunity to bring on record some material which could

establish the existence of M/s Trade Link Limited in the demised premises and its continuance in business, but various interim orders passed by the

Rent Controller revealed that they did not do so by producing any independent witness. In so far as the non-examination of RW4 despite the fact

that he was bound down and was ordered to be summoned through bailable warrants, is concerned, it is evident from the perusal of order dated

23.9.2005 passed by the Rent Controller that the Petitioners were granted as many as twenty effective opportunities to produce their evidence and

their counsel had stated when the last opportunity was given, that if they failed to produce any witness, their evidence be deemed to have been

closed. Thus, it will be presumed that they had abandoned their efforts to produce any independent material to show the existence of M/s Trade

Link Limited in the demised premises and their admission that M/s Mohan Meakin Limited was operating from there has to be viewed as a

categoric proof of parting of possession of the demised premises without the written consent of the landlord.

The contention of the learned Counsel for the Petitioners that the ejectment application was not maintainable in the absence of the alleged sub-

tenant is also not tenable as in my considered view, the subtenant is not a necessary party although he might be in possession of the demised

premises because a landlord is dominus litus and if he has not impleaded a person as party, he cannot be compelled to fight litigation against him.

For this view, I am fortified by the observation made in Reema Rani v. Gurmukh Singh and Anr. (supra) and Balvant N. Viswamitra and Ors. v.

Yadav Sadashiv Mule (dead) through L.Rs. and Ors. (supra).

That contention that was raised by learned Counsel for Respondent Nos. 1 to 3 while placing reliance on the judgments reported as Rajbir

Kaur v. Joginder Associates (supra) and P. John Chandy and Co. (P) Ltd. v. John P. Thomas (supra) that mere silence of the landlord for a long

period not to initiate proceedings on the ground of subletting would not amount to acquiescence and waiver of right, does not require any

discussion because learned Counsel for the Petitioners stated that he was not, at all, raising such a plea.

Accordingly, in view of the fact that the Petitioners have failed to demonstrate that M/s Trade Link Limited is transacting any business, as also

the fact that they have failed to show their exclusive possession or their existence in the tenanted premises, I am of the opinion that subletting of

demised premises is adequately proved in favour of M/s Mohan Meakin Limited as Respondent Nos. 1 to 3 have been able to prima facie

establish the ingredients of subletting.

There is, thus, no infirmity or illegality in the impugned judgments and the revision petition is dismissed being devoid of any merit.

However, the Petitioners are allowed six months'' time to hand over the physical vacant possession of the demised premises to the landlords

subject to their furnishing of an undertaking within three weeks from today before the Rent Controller in the following terms:

That they shall hand over physical vacant possession of the demised premises to the landlords on or before 20.3.2011.

That they shall pay all arrears of rent up to date to the landlords within two months.

That they shall continue to make payment of rent at the agreed rate till the physical vacant possession of the demised premises is handed over to

the landlords.

That they shall not commit any default in payment of arrears of rent or the monthly rent and that even a single default will disentitle them to the

benefit of this order.

That if the arrears of rent or the monthly rent is not paid as aforesaid, the landlords shall be entitled to execute the eviction order forthwith.

That the physical vacant possession of the demised premises shall be handed over to the landlords in the condition as it is.

That if they make an attempt to deviate from the undertaking, the landlords shall be entitled to apprise the Rent Controller, who shall proceed to

get the demised premises vacated and to hand over the physical vacant possession thereof to them by granting police assistance.