Case: Board Of Trustees Of The Port Of Mumbai Vs. M/S Byramjee Jeejeebhoy P.Ltd

3. The plaintiff respondent no.1 filed a suit in the court of Small Causes at Bombay registered as RAE suit no.83/197 of 1993, seeking inter alia a decree of eviction, against the defendants from the suit land admeasuring about 3273.394 square yards, situated at Santacruz Estate, Mazgaon, Bombay. According to the plaintiff-respondent no.1, the suit land was given to defendant no.1 on lease for 999 (nine hundred and ninety nine) years by the plaintiffs predecessors-in-interest under a registered lease deed dated May 10, 18861. In terms of the lease deed, defendant no.1, the lessee had the right to renewal but it had no right to assign the leased out land to any third party. As a matter of fact, there was an express prohibition against assignment in clause 4 of the lease deed which is asThat they the said Trustees their successors or assigns will not (subject never the less as hereinafter mentioned) assign the said premises or any part thereof without the licence in writing of the lessors their heirs executors administrators assigns firstonly exception to the above prohibition was the right given to the lessee to part with and dedicate some portions, up to a specified limit, from the aggregate of the lands covered by the lease for public roads and ways with the consent of the lessors. But in that case the lessors agreed to give such consent upon the reasonable applications of the lessee from time to time and within the limit (prescribed under the lease).]4. The plaintiffs sought eviction of the defendants on grounds of breach of the terms and conditions of the lease dated May 10, 1886, mainly the condition against assignment of any portion of the lease hold land to any 1 As a result of acquisition of a part of the leasehold lands and for other reasons, the 1886 lease was followed by subsequent leases in which the area of the lease hold lands was considerably reduced. But the stipulation against assignment on which the case of the plaintiff-respondent is based remained unaltered. In the pleadings of the parties and the judgments of the courts the reference is made to the above quoted clause in the 1886 deed. It is, therefore, unnecessary to go into the details of the subsequent leases.third party. In paragraph 4 of the plaint as it was originally filed it was stated that the defendant had committed breach of several terms and conditions of the lease and had unlawfully and illegally parted with the possession of the lease hold property without any licence in writing from the lessor. It was further stated that by an advocates notice dated December 7, 1991 the plaintiff had put on record the several acts of omission and commission by the defendant that were in breach of the terms and conditions of the lease and for that reason had determined and forfeited the lease. Despite the notice the defendant did not remedy but persisted in the breach of the terms and conditions of the lease. It had, therefore, lost the protection of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short "the Bombay Rent Act") and had made itself liable to quit the suit premises and hand over its vacant, peaceful possession to the plaintiff. It was further alleged in paragraph 7 of the plaint that in consideration of a large sum as rent/compensation the defendant had created sub-leases in favour of sub-lessees/tenants and had unlawfully, clandestinely and surreptitiously parted with possession of the lease-hold land in favour of the sub-lessees/tenants. In the transaction, the lessee, defendant no.1, had made huge profits. It was, therefore, liable to eviction for committing breach of the covenant in the lease deed of May 10, 1886. In paragraph 9 of the plaint, injunction was sought against the defendant restraining it from sub-letting and/or parting with the possession of the suit land in any manner whatsoever and in that connection it was once again stated that the defendant had no right to assign any part of the suit land without the licence in writing of the lessors. In paragraph 12 of the plaint it was stated that the suit was for recovery of possession of the suit land to which the Bombay Act, 1947 was applicable and the claim of the plaintiff fell within section 28 of the Act. Hence, the court of Small Causes, Bombay, had the exclusive jurisdiction to try the suit.5. Later on, after the sub-lessee was joined in as the second defendant, paragraph 7A and 7B were added by an amendment in the plaint. In paragraph 7A, reiterating the earlier allegation it was said that in respect of the suit land, defendant no.1 had unlawfully created sub-lease in favour of defendant no.2 and had wrongfully inducted defendant no.2 into the suit land. Defendant no.1 had thereby committed breach of the lease and had also violated the provisions of the Transfer of Property Act, and also the terms of tenancy. In paragraph 7B it was submitted that the plaintiff was entitled to a decree of eviction against defendant no.1 as it had unlawfully created sub-lease and/or given sub-tenancy and/or transferred its interest in the suit land to defendant no.2 and defendant no.2 was equally liable to be evicted and would be equally bound by the decree as it had no independent right, title or interest in the suit land and it had been unlawfully and illegally inducted into the suit land.6. Defendant no.1 in its written statement, denied having committed any breach of the terms and conditions of the lease deed dated May 10, 1886. The defendant denied that it had unlawfully and illegally parted with possession of the property in breach of the covenant in the lease deed and/or in the manner as alleged by the plaintiff. In paragraph 14 of the written statement it was stated that the advocates notice sent to the defendant at the instance of the plaintiff was quite invalid. In different paragraphs of the notice, the area of the lease hold lands was stated differently. The notice gave wrong description of the lease hold property; it was vague, unintelligible and suffered from serious legal and factual infirmities. It was not possible to act upon it or to even give any proper reply to it. On account of its vagueness it was not possible for the defendant to know what was the breach alleged and whether it was capable of being remedied in terms of section 114-A of the Transfer of Property Act. The defendant denied that it had either surreptitiously or clandestinely parted with possession by creating sub-lease in respect of the leasehold land in favour of a third party in the manner as alleged by the plaintiff. The defendant further denied having demanded huge rent/compensation from the alleged sub-lessees in respect of the building and the suit land, making huge profits. The defendant denied any breach of clause 4 of the lease deed. According to the defendant, clause 4 of the lease deed enjoined against assignment. There was no covenant in the lease deed prohibiting sub-lease. The defendant stated that it had not "assigned" the premises or any part thereof as alleged by the plaintiff and had not committed any breach of clause 4 of the lease deed. The plaintiffs allegation was based on a misreading and misinterpretation of clause 4 of the lease deed. Reiterating that there was no assignment of the leasehold interest the defendant once again denied that it had committed any breach of clause 4 of the deed in the manner as alleged by the plaintiff. The defendant further stated that the plaint nowhere stated when or in whose favour the alleged breach was committed. The allegations made by the plaintiff were imaginary and fanciful, the averments in the plaint were quite vague and devoid of particulars and did not disclose the precise breach of the lease of which it was being accused. .7. After the impleadment of defendant no.2 in the suit, defendant no.1 filed an additional written statement. In paragraph 3 of the additional written statement, it took the plea that defendant no.2 was neither a necessary party nor a proper party to be joined in the suit and its addition had made the suit liable to be dismissed for misjoinder of parties. In paragraph 4, in answer to paragraph 7A of the plaint, defendant no.1 denied that the sub-lease in respect of the suit land was created unlawfully in favour of defendant no.2. It further denied that there was any breach of the lease or any violation of the provisions of the Transfer of Property Act. The defendant stated that no agreement of terms of tenancy was executed and hence, there was no question of violation of any terms of tenancy as alleged by the plaintiff. In paragraph 5 of the additional written statement, in answer to paragraph 7B of the plaint, defendant no.1 denied that it had illegally and unlawfully created sub-lease and/or given sub-tenancy and/or transferred its interest in the suit land to defendant no.2. It denied that defendant no.2 was an unlawful and illegal sub-lessee/licensee.8. Defendant No.2, M/s WBC Company, in its written statement took the plea that the plaintiffs suit was barred by limitation and it was further liable to be dismissed because the plaintiff had not set out any cause of action against defendant no.2. The second defendant denied that the sub-lease created by defendant no.1 in its favour was unlawful or in breach of the lease or in violation of the provisions of the Transfer of Property Act and the terms of tenancy. The main thrust of the case of the second defendant, however, was that it had been in physical possession of the suit premises for several years prior to 1963 and this fact was fully within the knowledge of the plaintiff. The second defendant stated that in October, 1977 the suit premises was inspected by a representative of the plaintiff along with an architect and even at that time, the answering defendant was found to be in physical possession of the suit premises and the fact was acknowledged in a letter of November 7, 1977, written at the instance of the plaintiff. The plaintiff was, therefore, fully aware that defendant no.2 was in occupation of the suit premises long before the filing of the suit. The suit was, thus, clearly barred by limitation. Giving reply to the statement made in paragraph 9 of the written statement the second defendant denied that the plaintiff was entitled to a decree of eviction against defendant no.1 for inducting the answering defendant as a sub-lessee/sub-tenant into the suit land. The second defendant denied that it was an unlawful and illegal sub-lessee/licensee/inductee and it had no independent right, title or interest in the suit land and hence, it too would be bound by the decree against defendant no.1. In this connection, the second defendant further stated that by a registered lease deed dated June 17, 1978 executed by defendant no.1 an area of 4596.47sq.mts. (that included the suit land together with building(s) standing thereon) had been demised in its favour. The sub-lease was for the term of 20 years 8 months and 14 days commencing from June 15, 1964 with the clear acknowledgement that the sub-lessee (defendant no.2) was in occupation and possession of the demised property from that date. The second defendant further stated that even before the filing of the plaintiffs suit, defendant no.1 had filed L.E. & C. suit no.271/309 of 1987 seeking its eviction from the demised premises and the suit was pending before the same court, i.e. the court of Small Causes, Bombay. In paragraph 11 of the written statement, in answer to paragraph 12 of the plaint, defendant no.2 (quite strangely!) denied that the suit was between the landlord and tenant, relating to the possession of the suit land to which the Bombay Rent Act was applicable.9. On the basis of the pleadings of the parties, the trial court framed as many as 12 issues and later on, 3 additional issues. But of relevance for the present are issues 4, 5 and 7 which are as under:4. Whether the plaintiffs prove that, the defendants have committed breaches of terms and conditions of lease as alleged in para 4 (a) to (d) of the plaint?5. Whether the plaintiffs prove that that they have validly determined and forfeited the lease by a notice dated 7th December 1991?7. Whether the defendants prove that the suit is barred by law of limitation?Of the three additional issues, additional issue no.1 was allied to issue no.4 and additional issue no.3 to issue no.7 as quoted above. Additional issue no.2 which was independent of the earlier issues was asWhether the defendant no.2 is bound by decree against the defendant no.The trial court answered issue nos.4 and 5 and additional issue nos.1 and 2 in the affirmative. And issue no.7 and additional issue no.3 in the negative.11. Discussing the question of breach of the terms and conditions of the lease deed dated May 10, 1886 by defendant no.1, the trial court held that the plaintiff had failed to establish the breach of any other term of the lease but had successfully proved the breach of the covenant against assignment of the leasehold property to a third party. The trial court pointed out, that under clause 4 of the lease deed defendant no.1 was not supposed to part with possession of the leasehold or to induct any third person into the suit property unless it obtained a licence in writing from the lessor, the plaintiff. There was no material to show that it had obtained any licence from the plaintiff before parting with possession of the leasehold in favour of defendant no.2, the sub-lessee. The trial court found it was undeniable that defendant no.1 had inducted defendant no.2 into the suit premises by executing a sub-lease on June 17, 1978 for a term of 20 years 8 months and 14 days. The only plea raised on behalf of the defendants was that defendant no.2 was inducted over the suit premises in full knowledge of the plaintiff and defendant no.2 was in possession of and hence, it could not be said that the induction of defendant no.2 into the suit premises was illegal. The trial court also observed that for inducting defendant no.2 into the suit premises, defendant no.1 had charged compensation higher than the rent/compensation it paid to the plaintiff. The act of defendant no.1 was, therefore, undoubtedly, contrary to clause 4 of the original lease deed and defendant no.1 was guilty of committing breach of the covenant as contained in clause 4 of the lease deed. The trial court also upheld the validity of the notice issued by the plaintiff to defendant no.1 determining and forfeiting the lease. It further held that the transaction between the plaintiff and defendant no.1 was covered by the provisions of the Transfer of Property Act and, therefore, by no stretch of imagination the suit could be said to be barred by limitation. Dealing with the question of the decree being binding on defendant no.2, the trial court observed that once it was held that the sub-lease created in favour of defendant no.2 was unlawful and illegal, the decree of eviction passed against the lessee would fully bind the sub-lessee. The trial court decreed the suit by judgment and order dated June 12, 2002.12. Against the judgment and order passed by the trial court, both defendant nos. 1 and 2 filed their separate appeals (no.741 and 742 of 2002 respectively). The appellate court formulated a number of points for its consideration of which point no.2 related to the breach of the terms and conditions of the lease by defendant no.1 and point nos.4 and 5 related to the protection that might be available to defendant no.2 under section 15(1) of the Bombay Rent Act, 1947 and whether defendant no.2 would be bound by the decree of eviction passed against defendant no.1. Dealing with the breach of the terms of the tenancy by defendant no.1, the appeal court held the evidence on record showed that there was no written permission from the plaintiff to defendant no.1 for sub-letting the lease hold in favour of defendant no.2 in the year 1978. The appellate court observed that on behalf of the defendants, it was sought to be shown that defendant no.2 was in possession of the premises from before February 1, 1973, and, therefore, they were protected by the provisions of Bombay Rent Act, 1947. It went to the extent of saying that the evidence on record showed that the possession of the suit premises by defendant no.2 from before February 1, 1973 was admitted but since the premises belonged to defendant no.1 which was a Local Authority, the protection envisaged under the Bombay Rent Act, 1947 was not available to defendant no.2 and it, therefore, could not claim protection under section 15(2) of the Act. In this connection, the appellate court said ason record shows that the fact of possession of the Defendant No.2 in the premises prior to 1.2.1973 is admitted but when the premises belongs to the local authority i.e. the Defendant No.1 and Defendant No.2 is the lessee of the Defendant No.1, the provisions of the Bombay Rent Act, 1947 will not be applicable and, therefore, the Defendant No.2 are not entitled for protection of amendment of 1987 in Sec.15(2) of the Act. There is no dispute about the legal position that amended section 15(2) gives protection to the unlawful occupant who were in possession on 1.2.1973 but when the provisions of the said Act are not applicable to the sub-lease between the Defendant No.1 and 2, there is no question of giving protection of the amended provisions of the Bombay Rent Act. When it is admitted that the premises are sub-let by Defendant No.1 to Defendant No.2 in the year 1978 and it is also admitted that there is no written permission granted by the Plaintiffs for sub-letting, it is clear cut breach of the terms and conditions of the lease agreement. After careful scrutiny of the evidence on record, we are of the view that Plaintiffs established sub-letting by Defendant No.1 to Defendant No.2 in the year 1978 without prior permission in writing and, therefore, the Plaintiffs are entitled for a decree on the ground of breach of terms and conditions of thelight of its findings, the appellate court dismissed both the appeals by judgment and order dated 31st March and April 1, 2004.13. Both, defendants 1 and 2 sought to challenge the orders passed by the Small Causes Court by filing civil revisions before the Bombay High Court. The two civil revisions were dealt with separately in the High Court. The civil revision filed by defendant no.1 (no.183 of 2007) was first dismissed by a reasoned order dated April 17, 2008 and later on the civil revision filed by defendant no.2 (no.21 of 2009) by order date October 29, 2010, primarily following the order passed in the case of the first defendant.14. In the case of the first defendant, the High Court affirmed the findings of the courts below that the execution of the sub-lease by defendant no 1 in favour of defendant no.2 without obtaining the permission in writing from the plaintiff was in breach of clause 4 of the lease deed. The High Court also dealt with the plea of defendant no.1 based on section 114A of Transfer of Property Act, and held that the provision had no application to a case of sub-letting or under letting. It further held that the suit filed by defendant no.1 for the eviction of defendant no.2 would not remedy the breach committed by it, more so as at the time of hearing of the Civil Revision the suit still remained pending. On these findings, the High Court dismissed the civil revision.

Court's reasoning:
25. We find no force in this submission. Section 15(2), apart from others uses the expression `transfer of interest in any other manner. It is sufficiently wide to include even an oral arrangement pursuant to which the sub-lessee might enter upon the land and continue in its possession. We have no manner of doubt that the initial induction of defendant no.2 on the suit land was covered by section 15(2) of the Act.Section 22 provided for the landlord to have full information concerning the sub-lessee/licensee who might be in occupation of the demised premises on February 1, 1973, including the rent charged from him by the tenant. The provisions of section 22 clearly suggest that after the cut off date, i.e., February 1, 1973 there should be no material change, to the detriment of the landlord in the terms and conditions on which the sub-tenant was in possession of the demised premises on that date and in case after that date, any material change is brought about in the status of the sub-tenant, to the prejudice of the landlord that might not have the protection of section 15(2) but may come within the mischief of section 13(1)(e). And hence, the point raised by Mr. Sundaram appears to be theoretically correct. But in the facts of the case the point does not seem to arise. Mr. Parag Tripathi, learned Additional Solicitor General, appearing for the Mumbai Port Trust, rightly submitted that in pith and substance the sub-lease deed of 1978, was simply a formalization and continuation of the arrangement as existing between the defendants prior to February 1, 1973. There was no material change in the status of defendant no.2 or in the terms and conditions on which it was in possession of the suit land on February 1, 1973 or in the inter se relationship between the two defendants. The execution of the sub- lease on June 17, 1978 by defendant no.1 in favour defendant no.2 would not, therefore, militate against the protection offered by section 15(2) of the Act. The execution of the lease would not constitute a ground for eviction against defendant no.1 in terms of section 13(1)(e) of the Act.29. In light of the discussion made above, we find that the judgments and orders passed by the High Court and the two courts below are quite unsustainable. We, accordingly, set aside the judgments and orders passed by the High Court and the court of Small Causes and dismiss the suit filed by the plaintiff-respondent no.1.