Case: Shalimar Tar Products Ltd Vs. H.C. Sharma & Ors

Sabyasachi Mukharji, J. 1. This is an appeal by special leave directed against the Judgment and order of the High Court of Delhi dated the 21st September, 1973 in Second Appeal No. 294/72. The High Court dismissed the Second Appeal of the appellant and confirmed the decision of the Rent Control Tribunal and ordered eviction. Before the High Court three contentions were urged namely: 1. The petition for eviction was not maintainable in the absence of a notice to quit while determining the tenancy, 2. There was no sub-letting or parting of possession by the appellant-tenant in favour of R.C. Abrol & Company Pvt. Ltd., 3. If there was such sub-letting, it had been made with the written consent of the landlord so was not actionable. 2. The Rent Control Tribunal confirmed the findings against the appellant in all the three contentions and the High Court also affirmed the findings of the Rent Control Tribunal. We must note that no contention was raised before us as far as point No. 1, namely notice was not served. The only contention before us was that there was no sub-letting or parting of the posses-sion by the appellant-tenant in favour of R.C. Abrol & Company Pvt. Ltd. and secondly it was urged that if there was sub-letting that had been made with the written consent of the landlord. The Clause 14 of the lease deed in the instant case which provides, inter alia, the terms and conditions is as follows: Clause 14—That the lessee undertakes not to sub-let the premises to any other party without the written permission of the lessor, and that the lessees contractors M/s R.C. Abrol & Co. will share the premises with the permission of the lessor. 3. This is in consonance also with the provisions of Section 14(1)(b) of the Delhi Rent Control Act, 1958 (hereinafter called the Act) and Sub-sections (2) and (3) of Section 16 of the Act. The first question, therefore, is whether there was any sub-letting and secondly if so was the same with the consent in writing of the landlord. All these questions are essentially question of facts and were held against the appellant by the Rent Control Tribunal which was the final Court of facts, applying the correct propositions of law. This conclusion has been affirmed by the High Court. Before us it was pointed out by Sree Shankar Ghosh, learned Counsel for the appellant, that it was not necessary that the consent to sub-letting should be in writing and what he contended was that it was necessary to have the consent and the manner of proving consent was provided in writing. In other words, he contended that the provision which required that the consent should be in writing meant if was mandatory so far as it enjoined consent but it was directory so far as it said that such consent should be in writing. Apart from the statute in this case, we find it difficult to accept this argument in view of the specific clause in the statute hereinbefore. In South Asia Industries Private Ltd. v. S. Sarup Singh and Others (A.I.R. 1966 S.C. 346) Justice A.K. Sarkar as the learned Chief Justice then was, observed that the object of interpreting a statute was to ascertain the intention of the Legislature in enacting it. An interpretation defeating the object of a statute is, therefore, not permissible. 4. In paragraph 11 of the judgment at page 350 the learned Judge observed as follows : I notice that the lease gave no express right to the lessee to assign with or without the consent of the lessor. The lessee no doubt had that right under the Transfer of Property Act. It may be that under the clause the lessees assignee would be included in the expression lessee as used in the lease; that is the entire effect of the clause. But this would be so whether the lessor had consented to the assignment or not. Therefore, this clause does not tead to the conclusion that the lessor had consented to the assign-ment. It is of no assistance in the present case. I am also inclined to the view that the consent contemplated by Section 14(1) proviso (b) is a direct consent to a contemplated assignment to a particular assignee. See Regional Properties Ltd. v. Frankenschwerth, (1951 1 All ER 178). Clearly the clause in the case relied upon could not be a consent of this kind. 5. It is true that Justice R.S. Bachawat had expressed the view that the consent could be general or special but in the case before the Court there was no conduct which showed that there was consent by the general words of the clause in the deed. We are of the opinion on reading of the different provisions that the consent enjoined by bargain between the parties in this case must be in writing and must be to the specific sub-letting. 6. That was the view of the Delhi High Court in Raja Ram Goyal v. Ashok Kumar and Others (1975 All India Rent Control Journal 534). In Kartar Singh v. Shri Vijay Kumar and Another (1978 All India Rent Control Journal 264) the High Court of Punjab & Haryana has also expressed similar view. In the case of M/s Delhi Vanaspati Syndicate, Delhi v. M/s Bhagwan Dass Faqir Chand (A.I.R. 1972 Delhi 17) Khanna, C.J. as he then was of the Delhi High Court observed at page 19 of the report: Section 16 of the Act of 1958 holds the key to the interpreta-tion of provisions of Clause (b) of Sub-section (1) of Section 14 of this Act as well as of Clause (b) of Sub-section (1) of Section 13 of the Act of 1952. It deals with restrictions on sub-letting. Sub-section (1) of Section 16 makes sub-letting lawful though it was without the consent of the landlord provided that the sub-letting has taken place before 9th day of June, 1952 and the sub-tenant is in occupation of the premises at the time when the Act of 1958 came into force. Sub-section (2) of Section 16 reiterates the provisions of Clause (b) of Sub-section (1) of Section 13 of the Act of 1952 and lays down that the sub-letting after 9th day of June, 1952 without obtaining the consent in writing of the landlord shall not be deemed to be lawful. It does not say that the requisite consent should be obtainedbefore sub-letting the premises and the consent obtained after sub-letting will not enure for the benefit of the tenant. However, Sub-section (3) of Section 16 prohibits sub-letting of the premises after commencement of Act of 1958 without the previous consent in writing of the landlord. The use of word previous in this Sub-section shows that where it was the intention of the Legislature that the consent in writing should be obtained before sub-letting, it said so specifically. The absence of the word Previous in Sub-section (2) shows that it was not the intention of the Legislature that the consent in writing could be obtained before sub-letting. Before the Act of 1952 a tenant could successfully show acquiescence of the landlord in sub-letting to escape forfeiture of tenancy. Since the absence of consent in writing by a landlord for sub-letting gave rise to unnecessary litigation between a landlord and a tenant the Act of 1952 required the consent of the landlord in writing after its commencement. The purpose seemed to be that the consent of the landlord evidenced by ax writing would cut out litigation on this ground. After all a landlord could always agree to sub-letting either before or after sub-letting of the premises. For that reason no condition was laid down that such consent should be obtained before sub-letting the premises. 7. We are in agreement with this approach to the interpretation and it is in consonance with the view expressed by this Court earlier as mentioned hereinbefore. In the aforesaid view of the matter we are of the opinion that it was necessary for the tenant to obtain the consent in writing to sub-letting the premises. The mere permission or acquiescence will not do. The consent must be to the specific sub-letting and must be in writing. Indeed there was no implied permission also here. Our attention was drawn to the fact that the landlord had written letter to the tenant and the landlord objected to the sub-letting, the moment he realised the situation. 8. In that view of the matter we are clearly of the opinion that in this case there was no consent in writing on the part of landlord to such sub-letting. 9. Dr. Shankar Ghosh tried to state that in view of the fact that the key of the premises was stated to be in the custody of the tenant, there was no sub-letting. It was the mere user, it was urged. It is difficult to accept this contention. The case of sub-letting was accepted as has been found by all the Courts in this case. 10. Our attention was drawn to the certain observations on the ques-tion of directory/mandatory nature of the requirement that consent should be in writing. 11. Reliance was placed on the observations of Craies Statute Law 7th Edition 261 wherein in the election case requirement that ballot paper had to be kept in a particular manner was considered to be directory and similarly it was submitted in this case the requirement of the consent be in writing should be construed to be directory. It was urged that the conduct of the parties indicated that there was no breach of the covenant. We are unable to agree. Here the situation is clearly different. Here the requirement of consent to be in writing was to serve a public purpose, i.e., to avoid dispute as to whether there was consent or not. 12. Reliance was also placed on the observations of Maxwell in the Interpretation of Statutes 12th Edition at page 328 on the question of waiver: 13. Everyone has a right to waive and to agree to waive the advantage of a law made solely for the benefit and protection of the individual in his individual capacity. We are, however, in this case unable to agree. Firstly, in this case there was no case of waiver. Waiver is a question of fact which has to be tested by facts and evidence. There was no conscious relinquishment of the advantage of any statute. No Court has gone into this fact. It does not seem to have been urged before the High Court also. Apart from this in requirement of the statute which is in the public interest there cannot be any question of waiver of a right, dealing with the rights of the tenants or the landlord. In Chaplin v. Smith, (1926 1 Kings Bench Divi-sion 198), it was held that physical possession was not sufficient, there must be legal possession. 14. The question was whether there was any consent in writing in this case. We have noticed Clause 14 of the lease deed states that the lessee will not sub-let the premises or any part to any party without the written permission of the lessor except that the lessees Contractors M/s R.C. Abrol & Co. Pvt. Ltd. will share the premises with the permission of the lessor. So the permission of the lessor was there but the purpose was of the sharing with M/s R C. Abrol & Co. Pvt. Ltd. was not of leasing the premises to any other entity. For the purpose of this, it is suffice for us to state that Clause 14 as enjoined did give permission of leasing the premises to M/s R.C. Abrol & Co. Pvt. Ltd. which was a different entity. 15. Dealing with this contention the High Court observed in its judgment that the company had been incorporated some time in 1957 after the commencement of the tenancy. Company was a distinct legal entity. It appears in this case that the company was composed of the different persons. The High Court noted that there was never any consent in writing of the landlord to sub-letting the premises to the incorporated company. The permis-sion must have been in writing and specific in the words of Justice Sarkar in South Asia Industries Private Ltd. v. Sarup Singh and Others (Supra). 16. In the case of Mehta Jagjivan Vanechand v. Doshi Vanechand (A.I.R. 1972 Gujarat 6), Justice Thakkar as he then was of the Gujarat High Court observed at page 8 of the report: A similar question was raised before the Madras High Court in Gundalpalli Rangamannar Chetty v. Desu Rangiah A.I.R. 1954 Madras 182. A reference was made to Jackson v. Simons (1923). 1 Ch. 373, and the distinction drawn between physical possession and legal possession in that decision was taken into account in rejecting the contention of the landlord that there was a sub-letting, or assignment. It has been observed by the Madras High Court in paragraph (5) of the said decision as under: In Jackson v. Simons, (1923) 1 Ch. 373 (B) the question was whether the tenant broke a similar covenant. The defendant who was the tenant, without the plaintiffs consent or knowledge agreed for the sum of Rs. 7 per week to allow the proprietor of a night club carried on in a basement beneath the shop to the front part of the shop between the hours of 10.30.P.M. and 2 A.M. for the sale of tickets of admission to the club Romer J. held that the arrangement conferred to estate or interest in the demised premises but was a mere privilege or licence to use portion thereof, the defen-dant retaining the legal possession of the whole and did not, therefore, constitute a breach of the covenants not the assign, underlet or part with the demised premises or any part thereof. The Madras High Court also relied on an observation made by Scrution LJ. in Chaplin v. Smith, (1926) 1 KB 198, at p. 211, wherein it was observed : He did not assign ; nor did he underlet. He was constantly on the premises himself and kept the key of them. He did business of his own as well as business of the company. In my view he allowed the company to use the premises while he himself remained in possession of them. Reliance was also placed on the Treatise of Foa on Landlord and Tenant, Edn. at page 323, where the low on the subject has been summarised in the following words: The mere act of the letting other persons into possession by the tenant, and permitting them to use premises for their own purposes, is not so long as he retains the legal possession himself, a breach of the covenant. After considering all these decisions, the High Court of Madras extracted the following principles and came to the conclusion that a mere taking in of partners did not amount to transferring of possession and did not constitute assign-ment or subletting. Says the Madras High Court: It is clear from the aforesaid decisions that there cannot be a sub-letting unless the lessee parted with legal possession. The mere fact that another is allowed to use the premises while the lessee retains the legal possession is not enough to create a sub-lease. Section 105 of the Transfer of Property Act defines a lease of immov-able property as to transfer of right to enjoy such property. There-fore, to create a lease of sub-lease a right to exclusive possession and enjoyment of the property should be conferred on another. In the present case the exclusive possession of the premises was not given to the second respondent. The first respondent continued to be the lessee, though in regard to the business carried on in the premises he had taken in other partners. The partners are not given any exclusive possession of the premises on a part thereof. The first respondent continues to be in possession subject to the liability to pay rent to his landlord. The partnership deed also, as I have already stated, dose not confer any such right in the premises on the other partners. I, therefore, hold in the circumstances of the case the first respondent did not sublet the premises to the second respondent, and, therefore, he is not liable to be evicted under the provisions of Act No. 25 of 1949. The view taken by me is reinforced by the opinion expressed by the Madras High Court in the aforesaid decision. A similar view has also been taken by Saurashtra High Court in Karsandas Ramji v. Karsanji Kalyanji, AIR 1953 Sau. at 113 pp. 114 and 115. In my opinion, it is therefore clear that there has been no assignment or subletting in favour of the partners of the firm by the tenant so as to attract the Bar of Section 13(1)(e) of the Rent Act. The view taken by the lower Court is correct and no exception can be taken thereto. 17. There is no dispute in the legal proposition that there must be part-ing of the legal possession. Parting of the legal possession means possession with the right to include and also right to exclude others. That is, in our opinion, is the matter of fact. In this case, it has been found that there was aright of possession in favour of the sub-lessee R.C. Abrol & Co. Pvt.Ltd. and right to exclude indeed as it appears from the narration of the fact that the company has gone into liquidation and the official liquidator has taken possession of the premises on behalf of the liquidator and that must be on the basis that it was the asset belonging to the company. In the aforesaid view of the matter we are unable to accept this proposition that there was no sub-letting. 18. Dr. Shankar Ghosh drew our attention to the observations of the High Court of Delhi in the following three cases: Vishwa Nath and Anr. v. Chaman Lal Khanna & Others (1975 All India Rent Control Journal 514); Shri Gurdial Singh v. Stiri Brij Kishore & Others (6 1970 Delhi Law Times 592) ; M/s Reliable Finance Corporation (P) Ltd. v. M/s Clearing House and Agencies Private Ltd. & Ors. (1984(2) Rent Control Reporter 449); Madras Bangalore Transport Co. (West) v. Inder Singh and Others (1986 3 SCC 62 ). 19. He contended that in the light of the aforesaid authorities in this case, there was no parting of legal possession in favour of the sub-lessee. We are unable to accept this position. In the instant case, exclusive possession was given to the sub-lessee and the tenant had transferred the right to possess in that portion. It is clear that sub-letting was done without the consent in writing of the landlord. If that is so, there was inevitably breach of the covenant.

Decision reasoning: 0[ds]5. It is true that Justice R.S. Bachawat had expressed the view that the consent could be general or special but in the case before the Court there was no conduct which showed that there was consent by the general words of the clause in the deed. We are of the opinion on reading of the different provisions that the consent enjoined by bargain between the parties in this case must be in writing and must be to the specific sub-letting7. We are in agreement with this approach to the interpretation and it is in consonance with the view expressed by this Court earlier as mentioned hereinbefore. In the aforesaid view of the matter we are of the opinion that it was necessary for the tenant to obtain the consent in writing to sub-letting the premises. The mere permission or acquiescence will not do. The consent must be to the specific sub-letting and must be in writing. Indeed there was no implied permission also here. Our attention was drawn to the fact that the landlord had written letter to the tenant and the landlord objected to the sub-letting, the moment he realised the situation8. In that view of the matter we are clearly of the opinion that in this case there was no consent in writing on the part of landlord to such sub-letting9. Dr. Shankar Ghosh tried to state that in view of the fact that the key of the premises was stated to be in the custody of the tenant, there was no sub-letting. It was the mere user, it was urged. It is difficult to accept this contention. The case of sub-letting was accepted as has been found by all the Courts in this case10. Our attention was drawn to the certain observations on the ques-tion of directory/mandatory nature of the requirement that consent should be in writing17. There is no dispute in the legal proposition that there must be part-ing of the legal possession. Parting of the legal possession means possession with the right to include and also right to exclude others. That is, in our opinion, is the matter of fact. In this case, it has been found that there was aright of possession in favour of the sub-lessee R.C. Abrol & Co. Pvt.Ltd. and right to exclude indeed as it appears from the narration of the fact that the company has gone into liquidation and the official liquidator has taken possession of the premises on behalf of the liquidator and that must be on the basis that it was the asset belonging to the company. In the aforesaid view of the matter we are unable to accept this proposition that there was no sub-letting.