Holding

A sub‑tenancy arises only when the tenant parts with exclusive possession of the premises for consideration; here the tenant retained exclusive possession, so the arrangement was a licence, not a sub‑letting.

Summary

The landlord filed an eviction petition under Section 13 of the East Punjab Rent Restriction Act, 1949, alleging that the tenant had sub-let part of a shop to a tailor. The Rent Controller dismissed the petition, the Appellate Authority reversed that decision, and the High Court reinstated the dismissal, holding that the tailor was only a licensee. On appeal, the Supreme Court examined whether the tenant had partied with exclusive possession of any portion of the premises, which is a requisite for sub‑letting. Relying on precedents, the Court held that the tenant retained exclusive possession of the whole shop and merely allowed the tailor to assist in his cloth business, which did not constitute a transfer of exclusive possession. Consequently, no sub‑tenancy was established and the landlord’s ground for eviction failed. The appeal was dismissed.

Issues considered

Whether the tenant's arrangement with a tailor amounted to sub‑letting under Section 13 of the East Punjab Rent Restriction Act, 1949.
Whether exclusive possession of any part of the demised premises was transferred to the tailor.
Whether the landlord discharged the burden of proving a sub‑tenancy.

Subjects

sub‑lettingexclusive possessionlicencerent controlevictionEast Punjab Rent Restriction Actlandlord‑tenant

Judgment

[2008] 5 S.C.R. 588
~·

A NIRMAL KANTA (DEAD) THROUGH LRS.
v.
ASHOK KUMAR & ANR.
(Civil Appeal No. 7160 of 2005)
MARCH 28, 2008.
B
[C.K.THAKKER AND ALTAMAS KABIR]

Rent Control and Eviction:
East Punjab Rent Restriction Act, 1949 - S.13 - Eviction
c - Subletting - Tenant running cloth business in tenanted shop
- Permitting tailor to sit in part of the shop with his sewing
machine - Eviction of tenant sought on ground of sub-Jetting
- Held: Main ingredient of sub-letting that tenant has parted
with .exclusive possession has not been established - Tailor
D only assisting tenant in his cloth business by helping
customers to assess amount of cloth required for their .
particular purposes - Such activity did not give exclusive
possession for that part of shop from where he was operating
and where his sewing machine was affixed - Tailor merely a
E licencee.
The appellants-landlord filed a petition for eviction
from the suit shop. On the ground of subletting and on
other grounds. Rent Controller dismissed the petition. The
appellate authority allowed the appeal filed by landlord.
F The revision by tenant before the High Court was allowed
,I..,.
on the finding that by permitting a tailor even on payment,
to sit in a part of the shop-room with his sewing machine
while. retaining his possession and rights as tenant over
the premises leased to him, the respondent no.1/tenant
G did not create a sub-lease and the tailor could at best be
called a licence. Hence the present appeal.
Dismissing the appeal, the Court ·\
-
HELD: 1. A sub-tenancy or a sub-letting comes into
H 588
NIRMAL KANTA (DEAD) THROUGH LRS. v. ASHOK 589
KUMAR & ANR.

existence when the tenant inducts a third party/stranger A
to the landlord into the tenanted accommodation and
parts with possession thereof wholly or in part in favour
of such third party and puts him in exclusive possession
thereof. The lessor and/or a landlord seeking eviction of
. a lessee or tenant alleging creation of a sub-tenancy has B
to prove such allegation by producing proper evidence
to that effect. Once it is proved that the lessee and/or
tenant has parted with exclusive possession of the
demised premises for a monetary consideration, the
creation of a sub-tenancy and/or the allegation of sub- C
letting stands established. [Para 15) [595-G; 596-A, B)
2. The arrangement regarding the creation of a sub-
tenancy or grant of a sub-lease without the permission of
the landlord has obviously to be done behind the scene
to prevent the landlord from coming to learn of such D
arrangement and it is only after the landlord finds that
stranger or a third party, other than the tenant, was
occupying the tenanted premises, does he become aware
of the creation of such sub-tenancy or granting of such
sub-lease. In the instant case, from the report of the Local E
Commissioner it stands established that the respondent
No.2, was, in fact, operating a feet-driven sewing machine
from inside the shop-room comprising the tenanted
premises. The same has been interpreted in different
ways by the Rent Controller, the Appellate Authority and F
thereafter by the High Court. From the evidence, it appears
that the respondent No.2 had been accommodated by the
respondent No.1 to assist him in his cloth business by
helping customers to assess the amount of cloth required
for their particular purposes. The said activity did not give G
the respondent No.2 exclusive possession for that part
of the shop room from where he was operating and where
his sewing machine had been affixed. The aforesaid issue
has been correctly decided both by the Rent Controller
as also the High Court. The Appellate Authority has mis-
H
590 SUPREME COURT REPORTS [2008] 5 S.C.R.

A construed the principles relating to parting with exclusive .,.. .....,.
poss;ession which is one of the key ingredients for arriving
at a finding regarding the creation of a sub-tenancy or
grant of a sub-lease. Since from the report of the Local
Commissioner it only appears that the respondent No.2
B was operating from a portion of the shop-room, it is quite
clear that the respondent No.1 had not parted with
exclusive possession of the tenanted premises as had
been found both by the Rent Controller and the High
Court. The main ingredient of the creation of a sub-
c tenancy and/or grant of a sub-lease not having been
established, it may at best be said that the respondent
~
No.2 was a licensee under respondent No.1 which would
not entitle the appellant-landlord to obtain a decree for
eviction against the respondent No.1-tenant on the ground
of sub-letting. [Para 16] [596-C, D, E, F, G; 597-A, B, C]
D
Delhi Stationers and Printers v Rajendra Kumar (1990)
2 SCC 331; Bharat Sa/es Limited v. Life Insurance Corporation
of India (1998) 3 SCC 1; Joginder Singh Sodhi v Amar Kaur
•
,(2005) 1 sec 31 - referred to.
E CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7160 of 2005.
From the final Judgment and Order dated 07.01.2002 of
the High Court of Punjab and Haryana at Chandigarh in Civil
F Revision No. 2250 of 1984.
Tilak Raj Bhandari, In Person.
)I. •
Pramod B. Agarwala, Parveena Gautam and Nitin Kant
Setia for the Respondents.
G The Judgment of the Court was delivered by
ALTAMAS KABIR, J. 1. This appeal by special leave is
directed against the judgment and order dated ?1h January, 2002,
passed by the High Court of Punjab & Haryana at Chandigarh
in Civil Revision No. 2250 of 1984 filed under Section 15 of the
H
NIRMAL KANTA (DEAD) THROUGH LRS. v. ASHOK 591
KUMAR & ANR. [ALTAMAS KABIR, J.)

East Punjab Rent Restriction Act, 1949, (hereinafter called "the A
1949 Act"). By the said judgment, the High Court set aside the
order dated 25th October, 1983, passed by the Appellate
Authority and restored the order dated 13th August, 1983,
passed by the Rent Controller dismissing the appellant-landlords'
petition for eviction of the respondents under Section 13 of the B
1949 Act. The facts relating to the filing of the eviction petition
are set out in brief hereinbelow.
2. One Smt. Nirmal Kanta, wife of Shri T.R.Bhandari, filed
the above-mentioned petition under Section 13 of the 1949 Act
seeking ejectment of the respondents herein from the shop- c
room in question. Ejectment was sought on the ground that the
tenant had not paid the rents for the tenanted shop-room from
2nd March, 1982, till 15th June, 1982, when the eviction petition
was filed. It was also alleged that the conduct of the tenant was
a constant nuisance not only to the landlord but also to the D
neighbours as well and that the landlord wanted to construct a
\)~ first floor on the demised premises, which was being obstructed
by the tenant. A separate groL:Jnd as to creation of sub-tenancy
was also pleaded along with some other grounds relating to
installation of electric meter and an attempt being made by the E
tenant to establish his own title to the suit property. The Rent
Controller dismissed the application on 13.8.1983 and against
such order of dismissal of his petition the appellant filed an
appeal before the Appellate Authority. The Appellate Authority
allowed the appeal and set aside the order of the Rent Controller F
by its judgment dated 14th June, 1984. The tenant, the
h .A respondent No.1 herein, was directed to put the landlord/
appellant in possession of the tenanted premises within three
months. The respondent No.1 /tenant filed Civil Revision No.
2250 of 1984 before the High Court against the order of the G
Appellate Authority and the same was allowed on the finding
that by allowing a tailor, even on payment, to sit in a part of the
shop-room with his sewing machine, while retaining his
possession and rights as a tenant over the premises leased to

"" him, the respondent No.1 /tenant did not create a sub-lease and
H
\
592 SUPREME COURT REPORTS [2008] 5 S. C.R.

A the tailor could at best be said to be a licensee. The High Court y·
held that the appellant landlord had failed to discharge his burden ~

that there was a sub-letting of the demised premises.
3. None of the other grounds appear to have been urged
on behalf of the appellant-landlord before the High Court, which
B set aside the judgment of the Appellate Authority only on the
ground of alleged sub-letting. It is against the said order of the
High Court that the present Special Leave Petition has been
filed.

c 4. At this juncture, it may be mentioned that the sole
petitioner before the Rent Controller died during the pendency
of this appeal and she was substituted by her legal heirs in the
appeal. The appellant No.1, Tilak Raj Bhandari, the husband of
the deceased Nirmal Kanta, who is an advocate, has appeared
in person in support of the appeal.
D
.......__
5. He urged that the High Court had erred in reversing the
well-considered judgment and order of the Appellate Authority
on a wrong understanding of the law relating to creation of sub-
tenancies by holding that even if it was established that the
E respondent No.1-tenant had allowed the respondent No.2, a
~

-
tailor, to sit inside a part of the demised premises with his sewing
machine for the purpose of stitching, the same would not amount
to creation of a sub-tenancy or a sub-lease. It was urged that by
allowing the respondent No.2 to use a portion of the demised
F premises, the respondent No.1, had parted with the exclusive
possession of the said portion of the demised premises,
thereby, in fact, creating a sub-tenancv AA

6. The appellant No.1 urged that during the hearing of the
application filed before the Rent Controller under Section 13 of
G the 1949 Act, the Rent Controller had appointed a Local
Commissioner on 15th June, 1982, to visit the locale and to
report the factual position regarding the use of the portion of the
demised premises by Lachman Singh working as a tailor and
as to whether, he had affixed his sewing machine, plied by feet, ~
>

H on the floor at a particular point in the site plan. It was pointed
NIRMAL KANTA (DEAD) THROUGH LRS. v. ASHOK 593
KUMAR & ANR. [ALTAMAS KABIR, J.]
;.~

out that the Local Commissioner had reported that on his A
inspection in the presence of the parties, he found that the tailor
Master Lachman Singh was operating as a tailor from the point
shown in the site plan of the shop-room and that he had got a
sewing machine plied by feet fixed to the said spot.
7. The appellant No.1 submitted that the report of the local 8
commissioner had been wrongly interpreted by the High Court,
inasmuch as, it amply proved that a portion of the shop-room
had been sublet to Lachhman Singh. He also submitted that the
Appellate Authority had correctly held that the respondent-tenant
was liable to be evicted on account of such sub-letting and the c
High Court had erred in reversing the said finding upon holding
that the fact that the alleged sub-tenant was found sitting inside
the shop-room would not alone establish the sub-tenancy and
that if any person sits in the shop-room for augmentation of the
... business of the tenant the plea of sub-tenancy could not be D
-+ accepted. The High Court further observed that the Rent
Controller had arrived at the correct finding that at best
Lachman Singh was a licensee under the tenant and not a
sub-tenant as alleged by the appellant herein. The appellant
submitted that the judgment of the High Court was contrary E
to the law relating to licence and sub-tenancy and was liable to
be set aside and that of the Appellate Authority was liable to be
restored.
8. On behalf of the respondents it was contended that in
order to constitute a sub-tenancy, one of the basic ingredients F
> .->.
is that the tenant was required to part with poss~ssion of the
whole premises let out to him and that by allowing a person to
sit in a portion of the shop-room even if on payment of rent do
not amount to sub-letting but at best could have created a licence.
It was urged that from the evidence on record it would be amply G
clear that the respondent No.1 had not parted with exclusive
,. 'j.
possession of the shop-room and had only allowed the alleged
sub-tenant to operate his sewing-machine from a portion of the
shop-room and that too for the purpose of assisting the
respondent No.1 in his cloth business. H
594 SUPREME COURT REPORTS (2008] 5 S.C.R.

y·
A 9. It was submitted that Lachhman Singh, the alleged sub-
tenant, had been allowed to sit in the shop-room to facilitate
customers in taking measurements for the purpose of buying
cloth and as a master tailor, Lachhman Sing h's job was to assist
the customer to assess the amount of cloth required for a
B particular purpose.
10. It was urged that even if the report of the local
commissioner showed that a sewing-machine had been affixed
to the floor in a portion of the shop-room, that was not in the
nature of a sub-tenancy as alleged on behalf of the appellant,
c but in order to assist the respondent No.1 in his business. It
was submitted that the Rent Controller, asalso the High Court,
had very correctly assessed the situation in holding that at best
it could be said that a licence had been created by the
respondent No.1 in favour of Lachman Singh in that portion of
D the shop-room where the sewing-machine had been affixed and ,
from where Lachman Singh was operating. 1-
11. In support of his submission learned counsel firstly
relied upon the decision of this Court in Delhi Stationers and
Printers vs. Rajendra Kumar [(1990) 2 SCC 331] wherein the
E
meaning of sub-letting had been explained to mean transfer of
an exclusive right to enjoy the property in favour of a third party
in lieu of payment of some compensation or rent. It was observed
that parting with legal possession meant parting with possession
with the right to include and to exclude others and that mere
F occupation is not sufficient to infer either sub-tenancy or parting
~
with possession.
12. Reliance was also placed on the decision of this Court
in Bharat Sales Limited v. Life Insurance Corporation of India
G [(1998) 3 sec 1] in which it was held that sub-tenancy or sub-
letting comes into existence when the tenant gives up possession
of the tenanted accommodation wholly or in part and puts
another person in exclusive possession thereof in such process. -t'
..
Rather, the scene is enacted behind the back of the landlord,
H concealing the overt acts and transferring possession
NIRMAL KANTA (DEAD) THROUGH LRS. v. ASHOK 595
KUMAR & ANR. (ALTAMAS KABIR, J.)

......, clandestinely to a person who is an utter stranger to the landlord. A
It was further observed that it is the actual, physical and exclusive
possession of that person, 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. 8
13. The learned counsel for the respondent also referred
... to the decision of this Court in Joginder Singh Sodhi vs. Amar
Kaur [ (2005) 1 SCC 3.1], in which, while dismissing the special
leave petition filed by the landlord this Court observed that as
far as sub-letting was concerned, two ingredients, namely, c
parting with possession and monetary consideration therefor
have to be established. It was submitted that neither of the two
ingredients had been proved in the instant case and all that was
relied upon by the Appellate Authority was the report of the local
commissioner which indicated that Lachhman Singh was D
operating from a portion of the shop-room where he had fixed a
'
feet-driven sewing machine. Regarding parting with exclusive
-t
possession learned counsel submitted that the respondent No.1
was always in possession of the entire shop-room and the key
of the shop-room was retained by him and till he opened the E
shop-room no one had access thereto. Various other decisions
were also referred to on behalf of the respondents, which need
not detain us.
.
14. The learned counsel submitted that there was no merit
in the appeal and both the Rent Controller and the High Court F
had correctly dismissed the eviction petition filed by the appellant/
) _J landlord.
15. What constitutes sub-letting has repeatedly fallen for
the consideration of this Court in various cases and it is now
G
well-established that a sub-tenancy or a sub-letting comes into
existence when the tenant inducts a third party/stranger to the
landlord into the tenanted accommodation and parts with
---"" possession thereof wholly or in part in favour of such third party
i-- and puts him in exclusive possession thereof. The lessor and/
H
596 SUPREME COURT REPORTS [2008] 5 S.C.R.

A or a landlord seeking eviction of a lessee or tenant alleging )- .
creation of a sub-tenancy has to prove such allegation by
producing proper evidence to that effect. Once it is proved that
the lessee and/or tenant has parted with exclusive possession
of the demised premises for a monetary consideration, the
B creation of a sub-tenancy and/or the allegation of sub-letting
stands established.
16. All the different cases cited on behalf of the parties are
ad-idem on this interpretation of the law relating to the creation
of a sub-tenancy or sub-letting. As was observed by this Court
C in the case of Bharat Sales Limited (supra) the arrangement
regarding the creation of a sub-tenancy or grant of a sub-lease
without the permission of the landlord has obviously to be done
behind the scene to prevent the landlord from coming to learn
of such arrangement and it is only after the landlord finds that
D stranger or a third party, other than the tenant, was occupying
the tenanted premises, does he become aware of the creation
of such sub-tenancy or granting of such sub-lease. In the instant +
case, from the report of the Local Commissioner appointed by
the Court it stands established that the respondent No.2,
E Lachhman Singh, was, in fact, operating a feet-driven sewing
machine from inside the shop-room comprising the tenanted
premises. The same has been interpreted in different ways by
the Rent Controller, the Appellate Authority and thereafter by the
High Court. From the evidence that has come on record, it
F appears that the respondent No.2 had been accommodated
by the respondent No.1 to assist him in his cloth business by
helping customers to assess the amount of cloth required for
their particular purposes. The said activity did not give the
respondent No.2 exclusive possession for that part of the shop
room from where he was operating and where his sewing
G machine had been affixed. The aforesaid issue has been
correctly decided both by the Rent Controller as also the High
Court. In our view, the learned Appellate Authority has mis-
construed the principles relating to parting with exclusive
possession which is one of the key ingredients for arriving at a
H
NIRMAL KANTA (DEAD) THROUGH LRS. v. ASHOK 597
KUMAR & ANR. [AlTAMAS KABIR, J.]

- -f finding regarding the creation of a sub-tenancy or grant of a A
sub-lease. Since from the report of the Local Commissioner it
only appears that the respondent No.2 was operating from a
portion of the shop-room, it is quite clear that the respondent
No.1 had not parted with exclusive possession of the tenanted
premises as had been found both by the Rent Controller and B
the High Court. The main ingredient of the creation of a sub-
tenancy and/or grant of a sub-lease not having been established,
it may at best be said that the respondent No.2 was a licensee
under respondent No.1 which would not entitle the appellant-
landlord to obtain a decree for eviction against the respondent C
No.1-tenant on the ground of sub-letting.
17. Since none of the other points appear to have been
urged before either the Appellate Authority or the High Court,
we are not called upon to deal with the same.
D
18. The appeal accordingly fails and is dismissed.
-+ 19. There will be no order as to costs.
D.G. Appeal dismissed .

. '~