Case: Ram Saran Vs. Pyare Lal

3. The relevant facts concerning this appeal may be stated as hereunder. The shop room appertaining to khewat-khatanni No. Min. 354/498, Khasra No. 734, in Main Bazar, Nalagarh town is owned by the appellant-landlord. The appellant let out the said shop room to respondent No.1 on 15-7-1973 for a monthly rental at Rs.140/- excluding water and electric charges. The said respondent No.1 had been carrying on business of soap in the name of style of Ashoka Jain Industry. The landlord filed an application under Section 14 of the Himachal Pradesh Urban Rent Control Act (hereinafter referred to as the Rent Act) for eviction of respondent No.1 and his sub-tenant respondent No.2, Mahavir Gram Udyog Samiti, a society registered under the Societies Registration Act in 1977 on the grounds of arrears of rent and sub letting the said premises to respondent No.2 without consent of the landlord. It was also contended that the landlord required the suit premises for carrying out business with the help of land- lords son.4. The respondent tenant denied the material allegations of the landlord. According to respondent tenant, the shop room had not been sublet. But the name of the firm Ashoka Jain Industry had been changed to Mahavir Gram Udyog Samiti. Such Samiti is a registered society, registered on 10-2-1977 comprising the tenant and his family members. There had not been any change in the business which the tenant had been carrying in the name of Ashoka Jain Industry. The landlord being fully aware of the said fact had been accepting rent from the said Mahavir Gram Udyog Samiti. Accordingly, the landlord was estopped from seeking eviction on the ground of subletting. The other grounds for eviction were also denied by the tenant respondent.5. The learned Rent Controller, Nalagarh in Rent Case No. 6/2 of 1986 inter alia came to the finding that the tenant respondent No.1 had parted with the possession of the said shop room in favour of the said registered society namely Mahavir Gram Udyog Samiti and the said samiti was a distinct legal entity which could sue and be sued in its own name. The learned Rent Controller had also indicated that on scrutiny of the memorandum of association of the said society (Ext.1/A), it was revealed that the samiti could include new members and any existing member could be removed from the memorandum of the society by 2/3rd of the majority of general members. Accordingly, the respondent No.1 who was then a member of the said registered society could also be removed from the said registered society. The learned Rent Controller further held that the tenant respondent No.1 had no exclusive control and possession of the suit premises which was being occupied by the said registered society.6. The tenant respondent No.1 was also not in a position to recover possession of the said shop room from the said registered society. The said registered society being a distinct legal entity did not represent the Ashoka Jain Industries belonging exclusively to the respondent No.1 and his son stated to be a partner of the said firm. The Rent Controller had also found that the tenant respondent No.1 had also not been paying rent on his behalf or on behalf of Ashoka Jain Industries put on his own admission, he was paying rents from the funds of registered society in his capacity as President of the said registered society. As no lawful sub-tenancy could be created under Section 14 of the Rent Act without written consent of the landlord, the payment of rent by respondent No.1 as President of the said registered society had not created any legal subtenancy in favour of the said registered society. The learned Rent Controller, therefore on a finding that the tenant respondent No.1 having sublet the said shop room in favour of a distinct legal entity which had been carrying on its business activities in the said premises, was liable to be evicted, passed the order of eviction against the defendants. The other grounds for eviction were, however, answered in the negative by the learned Rent Controller.7. The tenant respondent No.1 preferred in appeal before the Appellate Authority at Solan against the decision of the Rent Controller. The learned Appellate Authority however reversed the decision of the learned Rent Controller and dismissed the eviction suit on the finding that the respondent No.1 tenant, in order to serve villagers by promoting village industries, khadi, basic education, agriculture, breeding of cows and bulls, village sanitation etc. had constituted the said society namely Gram Udyog Samiti in which he was member of the governing body of the society and also its President along with other members of his family as the members of the said society. The case of the said tenant was that he was carrying on the business of soap in the suit premises. In the said facts, even if the said Samiti was carrying on its various activities in the said premises. The original tenant being in effective control of the affairs of the said samiti, it could not be held that he had let out the premises in favour of the said society. Hence, decree for eviction on the ground of sub-letting was not justified.8. The landlord appellant thereafter moved the Himachal Pradesh High Court under Section 21(5) of the Rent Act. The High Court by impugned Judgment has dismissed the revisional application. The Single Bench of the High Court has indicated that the Appellate Authority held that in order to serve villagers of Nalagarh area, the tenant had constituted a registered society with himself and his family members as the members or the said registered society and the tenant had retained control over the functioning of the said society in which he was President. In the aforesaid facts, although the said society had been carrying on its business activities in the said premises it could not be held that the tenant had lost control and possession over the premises in question. Hence, the case of sub-letting by tenant respondent No.1 in favour of the said registered society cannot be accepted. Being aggrieved by the decision of the High Court the landlord appellant moved this Court by filing a special leave petition.

Court's reasoning:
20. After giving careful consideration of the facts and circumstances of the case and the submissions made by the learned counsel for the parties it appears to us that the respondent No.1 took out the tenancy of the shop room in his personal capacity in July 1973 and he had been carrying on business of soap in the name and style of Ashoka Jain Industries. It is the case of the respondent No.1 that one of his sons also became partner of the said firm Ashoka Jain Industries. Later on, in the year 1977, a society in the name Mahavir Gram Udyog Samiti was formed and registered under the Societies Registration Act. Such society, according to case of respondent No.1 comprises of a number of members drawn from the family of the respondent No.1 and including himself. Admittedly, such society has been formed not for carrying on the said family business of the respondent No.1 but for alleged diverse activities alleged to be beneficial for the rural population in the locality namely khadi activities, agriculture, breeding of cows and bulls etc. etc.21. It is an admitted position that the said registered society has been carrying on its diverse activities in the said shop room. At the relevant time, respondent No.1 was the President of the said registered society and therefore had occasion to control and regulate the activities of the said society. It appears that the aforesaid fact of regulating the activities of the said society by the respondent No.1 in his capacity as the President of the said society, has weighed with the learned Appellate Authority in coming to the finding that the said respondent No.1 had retained his possession of the said shop room. But, in our view, the Appellate Authority has failed to notice that the registered society is a distinct legal entity, its assets and liabilities belong to the said society which can sue and be sued in its name. The learned Rent Controller has rightly indicated that from the memorandum of association of the said registered society, which has been exhibited in the eviction case, it clearly transpires that any member may be removed and new members may be taken in the society by the decision of 2/3rd majority of members. It is, therefore, not unlikely that in course of time, the respondent No.1 or their family members may not be members of the said registered society and such society may be run by a completely different group of persons. It is therefore immaterial whether at the time of trial of the eviction proceedings, the respondent No.1 had been controlling the affairs of the said registered society in his capacity as its President.22. It may be indicated here that it is not the case of the respondent No.1 that the said registered society has allowed to possess the tenanted premises for carrying on its diverse activities only as a licencee of the respondent No.1 or of the said firm Ashoka Jain Industries. On the contrary, the specific case made out by the respondent No.1 in his written statement is that the firm Ashoka Jain Industries has been changed to the registered society in the name of Mahavir Gram Udyog Samiti and the said society is occupying the tenanted premises and carrying on its various activities from the said premises by asserting its independent right as a tenant. As a matter of fact, the respondent No.1 has averred in the written statement that the said registered society has been paying rent for the tenanted premises not on behalf of the respondent No.1 or the said Ashoka Jain Industries but on its own behalf through its President, namely the respondent No.1. On account of such assertion of independent status of tenancy by the said registered society, a case was sought to be made out by the respondent No.1 that the landlord having accepted rent tendered in the name of the said registered society is estopped from seeking eviction of the respondent No.1 and the said society on the ground of sub-letting.23. It appears to us that the respondent No.1 in an attempt to show that he had completely parted with possession of the said shop room in favour of the registered society also stated that he had been carrying on his soap business in the said premises. Such case, in our view, should not be accepted. The respondent No.1 has clearly stated in the written statement that the firm Ashoka Jain Industries was changed to a registered society and the said registered society is carrying on its activities in the shop room by asserting its status as a tenant. The activities of the registered society cannot be held to be personal activities of the respondent No.1 or the alleged partnership business of the firm Ashoka Jain Industries. Even if it is assumed on the face value of the assertion of the respondent No.1 that he is also carrying on his soap business in the disputed premises, in the context of the written statement of the respondent No.1, it only follows that the said registered society is possessing the tenanted premises by asserting its independent status as tenant by tendering rent in its own name through its President and the said respondent No.1 is in permissive possession under the said society in a portion of the tenanted premises for carrying on his personal business of soap. In any event, it is quite evident from the case made out by the respondent No.1 in the written statement that he has surrendered his right of tenancy in favour of the registered society and has delivered exclusive possession of the tenanted premises in favour of the said registered society which is occupying the same by asserting a right of tenancy. Hence, a case of lease without the written consent of landlord as required under Section 14 of the Rent Act for creating a valid assignment of sub-tenancy has been clearly established. Unfortunately, such position in law which is apparent from the case made out by the respondent No.1 has been lost sight of both by the learned Appellate Authority and by the High Court.24. So far as payment of rent by respondent No.1 qua President of the said registered society and acceptance of such rent tendered on behalf of the registered society by the landlord with knowledge of the possession of the said shop room by the said society are concerned, it may be stated that the tenancy of respondent No.1 had not been surrendered and such surrender of tenancy has not been accepted by the landlord. If upon accepting the surrender of tenancy of the said tenant, occupation of a new tenant is acknowledged by the landlord by accepting payment of rent from the new tenant, they by such payment and acceptance of rent between the tenant and landlord, a new tenancy may be created. By a unilateral action of the tenant of surrendering his right of tenancy in favour of a third party by delivering possession of the tenanted premises to the said third party, no new tenancy is created which may legally bind the landlord. By mere acceptance of rent for the tenanted premises tendered by the tenant in the name of the registered society, neither a new tenancy or a valid sub-tenancy in favour of the said registered society has been created. In this connection, reference may be made to a decision of this Court in Hiralal Kapur v. Prabhu Choudhury, 1988(2) SCC 172. In the said case rent was paid by two cheques, one drawn by the tenant himself for a part of the rent, the other was drawn by the sub-tenant for the remaining part of the rent. It has been held by this Court that the landlord was entitled to rent (Rs.600/- p.m.) and so long he got this amount, it was immaterial for him whether the amount was paid in lump sum or by one cheque or more than one cheque and who the makers of the cheque were. In that case, a number of cheques given to the landlord were returned dishonoured and the landlord wrote to the tenant in which he specifically referred that five cheques were given by the sublessee. Even then, it has been held by this Court that such fact will not improve tenants position at all for it only evidences the fact that the landlord was receiving the cheque issued in the name of the sub-lessee in discharge of the tenants obligation to pay rent for the tenanted premises.25. The Rent Act is a special statute governing and regulating tenancy and sub-tenancy. Such provisions in the special statute supersede the general law of tenancy if the provisions of the special statute are incompatible with the general law of tenancy. Under Section 14 of the Rent Act, mere knowledge of the landlord about occupation of the tenanted premises by the said registered society and acceptance of rent for the tenanted premises tendered by the tenant in the name of the registered society, will not create a sub-tenancy unless induction of a sub-tenant is made with the written consent of the landlord. It is nobodys case that the landlord has given any written consent for induction of sub-tenant. There is no estoppel against statute. Hence, even if the landlord has accepted payment of rent for the disputed premises from the said society, such acceptance of rent will not constitute legal and valid sub-tenancy in favour of the registered society. Consequently, landlord will not be estopped from claiming eviction of unauthorised sub-tenant along with the tenant for indulging in inducting sub-tenant without lawful authority.