A tenant is not allowed to subletting the property without the consent of the owner

Kritika Pandey | Maharaja Sayajirao University of Baroda | 11th January 2020

A.Mahalakshmi Vs. Bala Venkatram through Lr & Anr., C.A. NO. 9443
of 2019

Facts:

• The owner of the suit premises had executed a power of attorney in the name of the appellant. By way of rental agreement the appellant let out the premises to respondent-1 for running ‘Best Mark SuperMarket’on a monthly rent​. An advance amount was paid by way of security. The rent was payable on the 7th day of every month. The appellant filed an eviction suit on the ground of sub​letting and arrears of rent against the respondents and another. Under Sections 10(2)(i), 10(2)(ii)(a)(b) and 10(2)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (hereinafter referred to as the Act).
• According to the appellant, upon default in payment of rent and noticing a change in the name as well as ownership of the shop in the tenanted premises from ‘Best Mark SuperMarket’ to ‘Amutham SuperMarket’. She made enquiries and discovered that there was a change of hand from respondent-1 to respondent-2. And it was a gross breach of the rent agreement.
• According to the appellant, the sub​letting was evident from the Certificate of Registration, Government of Tamil Nadu, Commercial Tax Department. Therefore, the appellant issued a legal notice to the respondent. And called upon him to collect balance amount from the advance payment deposited, after adjusting the arrears of rent and handover possession of the tenanted premises within 15 days.
• According to the respondents they were running ‘Amutham SuperMarket’ in the suit property. According to them, there were many branches viz., ‘Amutham Jewellery, Amutham Foods, Amutham Electronics, Amutham Textiles etc. According to the original tenant since the respondents refused to give the business in the name of the appellant, she filed eviction petition with an ulterior motive.
• The Rent Control Appellate Authority passed the eviction decree on the ground of sub​letting only. And, dismissed the petition filed under Section 10(2)(iii) of the Act.
• The High Court has set aside the eviction order passed by the Rent Control Appellate Authority.

Appellant Contention:

• The High Court has committed a grave error in quashing and setting aside the eviction decree on the ground of sub​letting.
• All the ingredients of subletting are established and proved by the appellant, such as, parting with possession of the tenancy in favour of respondent-2 with exclusive rights of possession and that such parting with possession has been done without the consent of the appellant, the appellant filed an eviction petition.
• There were ample evidence on record, such as, sales tax certificate, licence of the shop which stood in the name of original respondent-2 which establish and prove the sub​letting by the respondent-1 in favour of respondent-2.

Respondent Contention:

• As the appellant is not the owner of the suit premises and is only a power of attorney, the eviction petition itself is not maintainable.
• Even in the evidence of the appellant, it has come on record that respondent-1 and respondent-2 were running the shop as partners. Therefore, there is no question of sub​letting.

Issue:

Whether the High Court is justified in setting aside the eviction decree on the ground of sub​letting?For this the court relied on Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar, (2010) where principles were laid down as:

• Inducting a partner or partners in business or profession by the tenant doesn’t amount to subletting. However, if the tenant, enters such partnership only to conceal the fact of sub-letting, then the court may “tear the veil of partnership” to find the real nature of their transaction.
• Any existence of a deed or partnership between tenant and alleged sub-tenant cannot preclude the landlord from making out a case against the tenant.
• A tenant cannot be said to have parted with possession if he is actively associated with the partnership business and retains control over the tenancy premises with him, maybe along with partners.
• The initial burden of proving subletting is on the landlord. However, once the landlord can establish that a third party is in exclusive possession of the rented premises, then the onus of proving the nature of such an occupation by the third party will be on the tenant; or, the tenant will have to prove that he continues to hold legal possession of the rented property.

Held:

As the rental agreement was between the appellant and respondent-1 the appellant hold the status of landlady. Therefore, the eviction petition of the appellant would be maintainable.
Respondent no.1 has come out with a case of partnership only to get out from the allegation of sub​letting. The exclusive possession of the suit premises is with respondent-2. Respondent-2 is running the business in the suit premises as an owner. Sales Tax Certificate and the licence are in the name of respondent-2. Under the circumstances, a clear case of sub​letting has been made out. The impugned judgment and order passed by the High Court is set aside and the judgment and decree passed by the Rent Control Appellate Authority is restored.