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

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 (1 = appeal accepted, 0 = rejected): 0

Explanation:
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.