Holding

Sub‑letting is established by the tenant’s parting with exclusive possession to another person, and proof of monetary consideration is not required; the court may infer sub‑letting from exclusive possession.

Summary

The landlord, Life Insurance Corporation of India, sought eviction of the tenant, Mis Bharat Sales Ltd., under Section 14(1)(b) of the Delhi Rent Control Act, 1958 on the ground of sub‑letting. The Additional Rent Controller, the Rent Control Tribunal and the Delhi High Court all held that the tenant had sub‑let the premises. The tenant challenged the finding, arguing that proof of payment of rent or other consideration by the sub‑tenant was essential to establish sub‑letting. The Supreme Court held that sub‑letting is deemed to exist when the tenant parts with actual, physical and exclusive possession to another person, and that the court may infer the existence of monetary consideration from the fact of exclusive possession; direct proof of payment is not required. Consequently, the petition was dismissed, though the Court granted the tenant time to vacate the premises.

Issues considered

Whether proof of payment of rent or other consideration is necessary to establish sub‑letting for eviction under Section 14(1)(b) of the Delhi Rent Control Act, 1958.

Legislation cited

Delhi Rent Control Act, 1958s. 14(1)(b)
Transfer of Property Acts. 105

Subjects

sub‑lettingevictionrent controlexclusive possessionconsiderationDelhi Rent Control Act

Judgment

MIS BHARAT SALES LTD. A
v.
·y LIFE INSURANCE CORPORATION OF INDIA

FEBRUARY 5, 1998

[S. SAGHIR AHMAD AND G.B. PATTANAIK, JJ.] B

Rent Control and Eviction.

Delhi Rent Control Act, 1958: Section 14(J)(b).

Subleting-Coming into existence of-Proof-Tanant parted with
c
actual, physical and exclusive possession to a third person behind the back
of the landlord-Held: Such parting with possession indicates subleting
which is a ground for eviction-Proof of payment of rent or monetary
consideration by the sub-tenant to the tenant not necessary to prove
subletting. D
The respondent-landlord filed a petition under Section 14(1)(b) of the
Delhi Rent Control Act, 1958 for eviction of the petitioner-tenant on the
ground of subletting. The Additional Rent Controller allowed this petition as
it was established that the petitioner had sublet the premises in question.
The Rent Control Tribunal allowed the appeal filed by the petitioner. The E
High Court remanded the case to the Tribunal for re-hearing the appeal. The
Tribunal dismissed the appeal filed by the petitioner and upheld the finding
recorded by the Additional Rent Controller. The High Court dismissed the
Second Appeal filed by the petitioner. Hence this Special Leave Petition.

-
-"'
1
On behalf of the petitioner it was contended that unless payment of
consideration was established as a fact between the tanant and the sub-
tenant, the eviction petition under Section 14(1)(b) of the Act could not be
F

allowed
Dismissing the petition, this Court
HELD : 1. Sub-tenancy or subletting comes into existence when the G
tenant gives up possession of the tenanted accommodation, wholly or in part,
and puts another person in exclusive possession thereof. This arrangement
comes about obviously under a mutual agreement or understanding between
the tenant and the person to whom the possession is so delivered. In this
process, the landlord is kept out of the scene. Rather, the scene is enacted
behind the back of the landlord, concealing the overt acts and transferring H
711
712 SUPREME COURT REPORTS [1998] l S.C.R.

A possession clandestinely to a person who is an utter stranger to the landlord,
in the sense that the landlord had not let out the premises to that person nor
had he allowed or consented to his entering into possession over the· dismissed
property. It is the actual, physical and exclusive 11ossession of that person,
instead of the tenant, which ultimately reveals of the landlord that the tenant
to whom the property was let out has put some other person into possession
B of that property. In such a situation, it would be difficult for the landlord to
11rove, by direct evidence, the contract or agreement or understanding between
the tenant and the sub-tenant. It would also be difficult for the landlord to
prove, by direct evidence, that the person to whom the property had been
sublet had paid monetary consideration to the tenant. Payment of rent,
C undoubtedly, is an essential element of lease or sub-lease. It may be paid in
case or in kind or may have been paid or promised to be paid. It may have
been paid in lump sum in advance covering the period for which the premises
is let out or sublet or it may have been paid or promi~ed to be paid periodically.
Since payment of rent at monetary consideration may have been made secretly,
the law does not require such payment to be proved by affirmative evidence
D and the court is permitted to draw its own inference upon the facts of the
case proved at the trial, including the delivery of exclusive possession to
infer that the premises were sublet. [713-F-H; 714-A-C]

Rajbir Kaur'v. S Chokesiri & Co., [1989] 1 SCC 19 and United Bank
E of India v. Cooks and Kelvey Properties, (P) Ltd., [1994] 5 SCC 9, relied
on.
,.
Delhi Stationers & Printing v. Rajendra Kumar, [1990] 2 SCC 331;
Jagan Nath v. Chander Bhan & Ors., [1988] 3 SCC 57; Smt. Krishanvati v.
Hans Raj, [1974] 1 SCC 298 and Gopal Saran v. Satyanarayana, (1989] 3
F sec 56, held inapplicable.
CIVIL APPELLATE JURISDICTION: Special Leave Petition (C) No. y' -
1412of1998.

From the Judgment and Order dated 3.12.97 of the Delhi High Court in
G S.A.0. No. 48of1997.
M.L. Verma, Naresh Thanai and Rajeev Sharma for the Petitioner.

The Judgment·of the Court was delivered by

S. SAGHIR AHMAD, J. Indefatigable stamina to litigate has been
H exhibited by the parties in this case in which proceedings started on 5.2.1965
BHARAT SALES LTD. v. L.J.C. OF INDIA [S. SAGHIR AHMAD, J.] 713
•·
when the respondent, as landlord of the premises in question, filed a petition A
--r under Section 14(1) (b) of the Delhi Rent Control Act for the eviction of the
petitioner on the ground of subletting. This application was allowed on 29th .
August, 1974 by the Addi. Rent Controller and the petitioner was directed to
be evicted as it was established on record that the premises had been sublet
by the petitioner in contravention of the prohibitory provisions of the Act.
B
':(
2. The petitioner challenged the judgment of the Rent Controller in an
appeal filed before the Rent Control Tribunal which was allowed on 3rd march,
I 978 and the eviction order was set aside. The respondent-landlord approached
the Delhi High Court in second appeal (SAO No. 217 of 1978) which was
allowed on 26th September, 1994 and the case was remanded to the Tribm1al
to re-hear th~ appeal. The Rent Control Tribunal dismissed the appeal of the
c
petitioner by judgment dated 7.7.1997 and the finding recorded earlier by the
Addi. Rent Controller that the premises had been sublet was upheld. The
petitioner, thereafter, filed S.A. No. 48 of I 997 in the Delhi High Court which
was dismissed on 3.12.1997. Now the matter is before us. Just as every batifo
.l has a D-Day, so also this long litigative battle must come to an end today . D

3. The only contention raised before us in this Special Leave Petition
is that the finding recorded by the Rent Controller as also the Rent Control
Appellate Tribunal, Delhi, on. the question of subletting is erroneous as they
have not recorded a positive finding that there was payment of consideration
b.y the so-called sub-tenants to the petitioner for parting with the part of
E
possession of the disputed premises. It is contended that unless payment of
consideration was established ·as a fact between the tenant and the sub-
tenant, the eviction petition under section 14(1) (b) of the Delhi Rent Control
,_ Act cannot be allowed. We are not impressed by the argument.

~·
F
'( 4. Sub-tenancy or subletting comes into existence when the tenant
gives up possesion of the tenanted accommodation, wholly or in part, and
puts another person in exclusive possession thereof. This arrangement comes
about obviously under a mutual agreement of understanding between the
tenant and the person to whom the possession is so delivered. In this
process, the landlord is kept out of the scene. Rather, the scene is enacted G
y behind the back of the .landlord, concealing the overtacts and transferring
possession clandestinely to a person who is an utter stranger to the landlord,
in the sense that the landlord had not let out the premises to that person nor
had he allowed or consented to his entering into possession over the demised
property. It is the actual, physical and exclusive possession of that person, H
714 SUPREME COURT REPORTS [1998] 1 S.C.R.

A instead of the tenant, which ultimately reveals to the landlord that the tenant
to whom the property was let out has put some other person into possession
of that property. In such a situation, it would be difficult for the landlord to
prove, by direct evidence, the contract or agreement or understanding between
the tenant and the sub-tenant. It would also be difficult for the landlord to
prove, by direct evidence, that the person to whom the property had been
B sublet had paid monetary consideration to the tenant. Payment of rent,
undoubtedly, is an essential eleme'lt of lease or sub-lease. It may be paid in
cash or in kind or may have been paid or promised to be paid. It may have
been paid in lump-sum in advance covering the period for which the premises
is let out or sublet or it may have been paid or promised to be paid periodically.
C Since payment of rent or monetary consideration may have been made secretly,
the law does not require such payment to be proved by affirmative evidence
and the court is penn itted to draw its own inference upon the facts of the case
proved at the trial, including the delivery of exclusive possession to infer that
the premises were sublet.

D
5. In Rajbir Kaur v. S. Chokesiri & Co., [1989] I SCC 19, it was held
that it was not necessary for the landlord in every case to prove payment of
consideration. It was laid down that if exclusive possession was established,
it would not be impermissible for the Court to draw an inference that the
transaction was entered into with the monetary consideration in mind. The
E Court further observed that transactions of subletting in the guise of licences
are in their very nature clandestine arrangements between the tenant and the
sub-tenant and there cannot be furnished direct evidence in every case. It will
be noticed that in this case it was established as a fact that the tenant had
parted with a part of the demised premises in favour of an ice-cream vendor

F who was in exclusive possession of that part of the premises and, therefore,
the Court drew an inference that the transaction must have been entered into
.-
for monetary consideration. This decision has since been followed in many
cases, as for example, United Bank of India v. Cooks and Kelvey Properties
(p) Ltd, [ 1994] 5 sec 9, upon which, as we shall presently see, reliance has
been placed by the petitioner also.
G
6. Learned counsel for the peti.tioner drew our attention to a decision
of this Court in Delhi Stationers & Printers v. Rajendra Kumar, [1990] 2 SCC
331, where the tenant was found to have allowed his relative (brother-in-law)
to Jive with him and to use his kitchen and latrine. This was not treated as
H subletting or parting with possession. Consequently, it is of no aid to petitioner.
' '·
BHARATSALESLID. v. L.I.C.OFINDIA [S.SAGHIRAHMAD,J.) 715

-r 7. The case ofJagan Nath v. Chander Bhan & Ors., [1988] 3 SCC 57 A
is also distinguishable on facts as in that case it was found that the father
" was canying on business with his sons and the family was joint Hindu family
and, therefore, it was difficult to presume that the father had parted with
possession to attract the mischief of Section 14(l)(b) of the Act. Reliance for
this purpose was placed on an earlier decision of this Court in Smt. Krishnavati
x v. Hans Raj, [1974] I SCC 289, in which two persons lived in a house as B
husband and wife and one of them who was the tenant of the premises
allowed the other to cany on business in a part of it. The contention that it
amounted to subletting was rejected and it was observed that it would be a
rash inference to draw that the husband had sublet the house to the wife.

8. In another case, namely, Gopal Saran v. Satyanarayana, [1989] 3
c
sec 56, which was cited by the counsel for the petitioner, it was held that
the question whether there is a tenancy or licence or parting with possession
in a particular case, would depend upon the quality of occupation given to
""' the licencee or the transferee. It was held on facts that where the tenant had
J.._ allowed the advertisement board of another company to be fixed on the D
terrace of the shop, he cannot be said to have sublet the premises within the
meaning of Section 13(l)(e) of the Rajasthan Premises (Control of Rent &
Eviction) Act, 1950.

9. Learned counsel for the petitioner placed strong reliance upon the
decision of this Court in United Bank ofIndia v. Cooks and Ke Ivey Properties E
(P.) Limited, [1994] 5 SCC 9, in which it was indicated that "the meaning of
transfer of a right to enjoy the property for consideration envisaged under
Section 105 of the Transfer of Property Act, postulates that a tenant who
--:.}.: transfers of assigns his right in the tenancy or any part thereof in whole or
~·
in pan held by him without the previous consent in writing creates a sub- F
1 tenancy." This case also does not help the petitioner as it was found as a
fact that although the bank (appellant) had inducted the trade union into the
premises, the bank had not received any monetary consideration and the
union was only permitted to use the property for its trade union activities.
It was also found that the bank had retained its power to call upon the union
to vacate the p~emises at any time. The bank had been maintaining the G
~
premises at its own expenses and was also paying the electricity charges
consumed by the trade union. It was also found that the bank retained its
control over the trade union whose membership was confined only to the
employees of the bank. The possession of the union was held to be
"constructive possession" for and on behalf of the bank. Reliance was placed H
716 SUPREME COURT REPORTS [199~] l S.C.R.

A on the obseivation that " the existence of consideration, an ingredient of
subletting, had not been present to hold that there was subletting." In the
background of the facts of the case, this obseivation does not purport to lay
down that in every case payment of consideration must be established by the
landlord to prove subletting by the tenant.

B 10. The Rent Controller as also the Rent Control Appellate Tribunal
have found it as a fact that the petitioner had sublet the premises. This
finding was accepted by the High Court and was not interfered with on the
ground that was no infinnity of illegality in the judgment.

11. For the reasons stated above, we find no merit in this Special Leave
C petition which is dismissed. However, having regard to the facts of the case,
we allow the petitioner, on its request, time till 3 lst July, 1998 to vacate the
premises on furnishfag usual undertaking in this Court within two weeks from
today so that fresh legal battle for execution may not start as the blood seems
to be still hot and stamina endless.
D
v.s.s. Petition dismissed.

.-
..,....