Case: M/S S.F.Engineer Vs. Metal Box India Ltd

4. The case of the plaintiff in the court below was that the defendant No. 1 was a tenant under the plaintiff on a consolidated monthly rent of Rs.1075/-. The premises, as set forth in the plaint, was let out to the defendant No. 1 exclusively for the purpose of providing residential accommodation to its executive staff and not for any other purpose. Though the defendant No. 2 had no right to remain in possession of the flat No. 201, yet the employer company unlawfully sublet the said flat to him. The plaintiff vide notice dated 19.1.1989 terminated the tenancy of defendant No. 1. The said notice was replied to by the defendant No. 1 through its advocate on 13.2.1989 denying the assertions made in the notice. This compelled the plaintiff to initiate the civil action for eviction of the defendants from the suit premises on the ground of subletting, bona fide requirement and non-user for the purpose for which it was let out.5. The defendant No. 1 filed its written statement and denied the averments in the plaint. Its affirmative stand was, it had not breached the conditions in using the suit premises for the purpose of which the same was let out for continuous period of six months preceding the date of the suit without reasonable cause and the suit premises had been illegally and wrongfully occupied by the defendant No. 2 against the will of defendant No. 1 by remaining in flat No. 201. As far as flat No. 204 was concerned, the stand of the defendant No. 1 was that it was in occupation of the staff, General Manager, officers and executives of the Company. The claim of bona fide requirement was seriously disputed on many a ground. It was the further case of defendant No.1 that the defendant No. 2, as an officer of defendant No. 1 was allotted flat No. 201 as a part of his service amenities under the terms and conditions stipulated in agreement dated 11.5.1982. On 27.5.1988 the defendant No. 1 was declared a sick company by the Board for Industrial and Financial Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provision) Act, 1985 and thereafter on 11.2.1989 the defendant No. 2 resigned from his post which was accepted by the defendant No. 1. The defendant No. 2 continued to occupy the premises and the employer withheld his provident fund dues for which the Commissioner of Provident Fund on 19.10.1993 issued a notice to defendant No. 1. At that juncture, the defendant No. 1 filed writ petition No. 2134 of 1993 before the High Court against the Regional Provident Fund Commissioner and the defendant No. 2 for settlement of dues of the defendant No. 2 and for handing over vacant possession of the premises. The defendant No. 1 also filed a criminal complaint under Section 630 of the Companies Act, 1956 which was dismissed for non-prosecution. These asseverations were made to demolish the ground of subletting as asserted by the plaintiff and, eventually, the dismissal of the suit was sought.6. The defendant No. 2 filed his separate written statement stating, inter alia, that he was not concerned with flat No. 204 and garage No. 8 and he was a statutory tenant in respect of flat No. 201 and he had been in long continuous use and occupation of the suit premises, i.e., flat No. 201 and garage No. 7. It was his further stand that he was not unlawfully occupying the suit premises because he was allowed to use the suit premises as an employee of the defendant No. 1 and hence, he was occupying the part of the suit premises as a lawful sub-tenant with the consent and knowledge of the plaintiff.7. The trial Judge initially framed the following issues:Whether the plaintiffs prove that the suit premises have not been used by the defendants without reasonable cause for the purpose for which they were let for a continuous period of 6 months immediately preceding the date of the suit?2) Whether the plaintiffs prove that they required the suit premises reasonably and bonafide for their own use and occupation?3) To whom greater hardship would be caused by passing the decree than by refusing to pass it?4) Whether the plaintiffs are entitled to recover the possession of the suit premises from the defendants?5) What decree, order andthereafter framed the following additionalplaintiffs prove that the defendant No. 1 unlawfully sub-let the part of the suit premises to defendant no.On consideration of the evidence brought on record the Small Causes court came to hold that the plaintiff had failed to prove that it required the suit premises reasonably and bona fide for his use and occupation and also it had not been proven that greater hardship would be caused to the plaintiff. Accordingly, the issue Nos. 2 and 3 were answered in the negative. As far as issue No. 1 was concerned, i.e. non-user for a period of six months for the purpose it was let out which is a ground under Section 13(1)(k) of the Bombay Rent Act, 1947 (for short, the learned trial Judge came to hold that the plea of non-user in respect of flat No. 204 was not established but the said plea had been proven as far as flat No. 201 was concerned but, regard being had to the language used in the provision enshrined under Section 13(1)(k) of the Act to the effect that when a part of the tenanted premises was not in use of the tenant, the said provision would not be applicable and, accordingly, he answered the said issue against the plaintiff. While dealing with the additional issue the learned trial Judge referred to Section 13(1)(e) of the Act and came to hold that no case of unlawful subletting had been made out in respect of flat No. 204 and one garage, but, as far as flat No. 201 and another garage are concerned, plea of subletting stood established. To arrive at the same conclusion he took note of the fact that the use and occupation of defendant No. 2 on the said part of the suit premises before 12.2.1989 was on the basis of agreement Exh. 5A which showed that the defendant No. 2 was in use and occupation of flat No. 201 and garage No. 7 as licencee of his employer-defendant No.1 and thereafter from 12.2.1989 on ceasing to be in service of the defendant No. 1, the use and occupation of defendant No.2 in respect of the said premises could neither be considered as legal nor could it be protected under any provision of law. Thereafter, he considered the rival submissions and referred to clause 13 of the agreement dated 11.5.1982, Exh. 5A, the factum of resignation by the defendant No. 2 and acceptance thereof by the defendant No. 1, the liability on the part of defendant No. 1 to take appropriate legal steps to evict the defendant No. 2 from the said part of the suit premises within a reasonable time, the silence maintained by the defendant No. 1, the dismissal of the criminal proceeding instituted under Section 630 of the Companies Act for non- prosecution and filing of another criminal proceeding only in 2003, the use and occupation of the defendant No. 2 at the behest of the defendant No.1, the retention of provident fund by the defendant No. 1 of the defendant No. 2, the stand of the defendant No. 2 that he was in lawful occupation as a sub-tenant, the admission of the sole witness of the defendant No.1 to the effect that the defendant No.2 was in possession as a sub-tenant, and ultimately came to hold that the plaintiff had been able to establish that the defendant No. 1 had unlawfully sublet a part of the suit premises, i.e., flat No. 201 and garage No. 7 and, accordingly, directed that the defendant Nos. 1 and 2 jointly and severally to deliver the vacant possession of the suit premises, i.e., flat Nos. 201 and 204 along with garage Nos. 7 and 8.9. On an appeal being preferred the Division Bench of the appellate court basically posed two questions, namely, (i) whether the suit premises, more particularly, flat No. 201 was illegally sublet by the defendant No. 1 to the defendant No. 2; and (ii) whether the flat Nos. 201 and 204 were not used for the purpose for which they were let out for more than 6 months without sufficient reason.10. The appellate court answered the question No. 2 in the negative. As far as question No. 1 is concerned, the appellate court took note of the admission of the witness of the defendant No. 1, the inaction on the part of the plaintiff to take steps for eviction against defendant No.2 and proceeded to deal with the contours of Section 13(1)(e) of the Act and in that context opined thus:covers different aspects under the heading of subletting, it is not mere subletting, it includes assignment or creating third party interest. Non user of the premises in possession of defendant No.2 by the defendant No. 1 is clear. Defendant No. 2 already found to be not in service after his resignation. With a gap of about three or four years, litigation is started by the defendant No. 1 that too on the count of arrears of provident fund. No substantial suit for seeking possession was filed immediately and act continued on that day. Aspect of subletting has its own importance. We find evidence of defendantwitness is clear in itself. Ld. Trial Court arrived at the conclusion that this aspect attracts section 13(1)(e) of Rent Act. We find said aspect required to be accepted.Being of this opinion, it affirmed the view expressed by the learned trial Judge and upheld the judgment and decree passed against the defendants.12. The non-success compelled the defendant No. 1 to invoke the civil revisional jurisdiction of the High Court. The learned single Judge referred to the filing of the writ petition with regard to the provident fund dues, appeal by way of special leave preferred by the defendant No. 1 and the ultimate settlement arrived at between the two defendants on 4.4.2007, the stand of the defendant No. 1 that there was no consensus between it and the defendant No. 2 allowing to occupy the premises after he ceased to be inemployment and later to initiate action to evict him, and thereafter referred to the decisions in Bharat Sales Ltd. v. Life Insurance Corporation of India [(1998) 3 SCC 1] , Joginder Singh Sodhi v. Amar Kaur [(2005) 1 SCC 31]  and Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh [(1968) 2 SCR 548]  and took note of certain facts, namely, (i) defendant No. 2 was inducted as a licencee under a licence agreement which was produced before the Courts; (ii) after cessation of his employment defendant No. 2 continued to occupy the premises; (iii) applicant had filed a suit for recovery of overstayal charges and, eventually, was allowed to recover a sum of Rs.4,17,000/- in terms of order of the Court dated 15.3.2007, in Civil Appeal No. 2425 of 2007; (iv) applicant had vacated the premises on 4.4.2007 in terms of the settlement; and (v) applicant was a sick company and not in a position to receive any clandestine payment and concluded thus:facts are so glaring, as are the attempts of applicant to get rid of respondent No. 2 that it would be inconsistent with any clandestine agreement of sub-letting. True finding of facts by the courts below may be respected. But the conclusions drawn about a jural relationship was thoroughly unwarranted and runs in conflict with the very requirement of a consensus. Therefore, the decree of eviction on the ground of sub-letting passed by the trial court and maintained upon appeal by the appellate bench cannot at all be

Court's reasoning:
23. We have referred to the aforesaid decisions only to reaffirm the proposition that the Court under certain circumstances can draw its own inference on the basis of materials brought at the trial to arrive at the conclusion that there has been parting with the legal possession and acceptance of monetary consideration either in cash or in kind or having some kind of arrangement. The aforesaid authorities make it further spectacularly clear that the transaction of subletting can be proved by legitimate inference though the burden is on the person seeking eviction. The materials brought out in evidence can be gathered together for arriving at the conclusion that a plea of subletting is established. The constructive possession of the tenant by retention of control like in Cooks and Kelvey Properties (P) Limited (supra) would not make it parting with possession as it has to be parting with legal possession. Sometimes emphasis has been laid on the fact that the sub-tenancy is created in a clandestine manner and there may not be direct proof on the part of a landlord to prove it but definitely it can bring materials on record from which such inference can be drawn.Coming to the case at hand, on a studied scrutiny of the evidence it is quite vivid that an agreement was entered into by the landlord and the tenant in respect of the premises with the stipulation that it would be used only for providing the residential accommodation of the executive staff and not for any other purpose.26. On a close perusal of the assertions made by the defendant No. 2 it is luminous that he was allowed to occupy the premises as an executive by the company and thereafter as his dues could not be paid to him, he remained in occupation and also tried to become the owner of the premises. True it is, the defendant No. 1 did not initiate action at an early stage but in 1993 when the Provident Fund Commissioner made a demand, it moved the writ court and ultimately the matter was settled before thisThus, handing over of the possession of the premises to the defendant No. 2 is in accord with the terms and conditions of the agreement entered between the landlord and the tenant and, therefore, the entry of the defendant No. 2 into the premises is legal. The trial court as well as the appellate court has drawn inference that after the defendant No.2, the employee, resigned from service and remained in occupation while he was not entitled to, the defendant No. 1 did not take any steps to get back the possession and the proceedings initiated under the Companies Act were dismissed for non- prosecution and at a belated stage only a suit for recovery of occupational charges was instituted. The emphasis is on the inaction on the part of the defendant No. 1 to institute a suit for eviction. Such inaction would not by itself persuade a court to come to the conclusion that the sub-letting was proved. Nothing has been brought on record by way of documentary or oral evidence to suggest that there was any kind of arrangement between the defendant No. 1 and the defendant No. 2. The written statement which has been filed by the defendant No.2, in fact, is a series of self serving assertions for his own benefit. His stand would show that non-payment of provident fund and gratuity and other retiral dues amounted to consideration or a kind of arrangement. That apart, he has claimed himself to become a tenant under the landlord and also had put an aspirational asseveration that he had negotiated with the landlord to purchase the property to become the owner. The High Court has noted that the tenant, defendant No.1, was a sick company under the SICA and could not have received any money in a clandestine manner. Be that as it may, withholding of retiral dues cannot be considered as a consideration or any kind of arrangement. The settlement before this Court shows that the defendant No. 2 had paid the amount for overstaying in the premises in question and the deposited amount with the High Court was required to be paid towards the dues of the defendant No. 2 after deducting overstayal charges. Mr. Sundaram, learned senior counsel for the appellant, has contended that the settlement before this Court was between the defendant No.1 and the defendant No. 2 to which the landlord was not a party and hence, it cannot have any effect on the issue of sub-letting. True it is, it is a settlement between the defendant No. 1 and defendant No.2, but it is a settlement between an employer and an erstwhile employee and, therefore, the landlord had no role. We have noted the settlement only to show that barring withholding of the retiral dues the employer had not received any thing either in cash or in kind or otherwise from the defendant No. 2 and hence, under these circumstances, it is extremely difficult to hold that the factum of sub-letting has been established.