Holding

Acceptance of rent by the landlord does not create a valid sub‑tenancy; without the landlord's written consent under Section 14, the tenant's surrender of possession to the registered society constitutes unauthorised sub‑letting, and the landlord is not estopped from eviction.

Summary

The landlord, Ram Saran, let a shop to a tenant who later formed a registered society, Mahavir Gram Udyog Samiti, comprising himself and his family, and began paying rent through the society as its President. The landlord sought eviction under Section 14 of the Himachal Pradesh Urban Rent Control Act, 1971, alleging unauthorised sub‑letting, while the tenant claimed estoppel because the landlord had accepted rent from the society. The Rent Controller found a sub‑letting and ordered eviction; the Appellate Authority and the High Court reversed, holding the tenant retained control. The Supreme Court held that acceptance of rent does not create a sub‑tenancy, that a tenant’s unilateral surrender of possession to a distinct legal entity without the landlord’s written consent violates Section 14, and that the landlord is not estopped. Consequently, the eviction order was affirmed.

Issues considered

Whether the formation of a registered society and payment of rent by it amounts to sub‑letting requiring the landlord's written consent under Section 14 of the Himachal Pradesh Urban Rent Control Act, 1971.
Whether the landlord is estopped from seeking eviction due to his acceptance of rent from the society.
Whether a tenant's unilateral surrender of possession to a distinct legal entity creates a new tenancy binding the landlord.
Whether the special provisions of the Rent Control Act override the general law of tenancy in this context.

Legislation cited

Societies Registration Act, 1860

Subjects

sub‑lettingrent controlestoppelSection 14registered societytenancyevictionspecial statute

Judgment

RAM SARAN A
v.
PYARE LAL AND ANR.

JANUARY 16, 1996

[G. RAY AND G.T. NANAYATI, JJ.] B

H.P. Urbo R, "ntrol Act, 1971 : Section 14.

Sub-letting-.\'hop let out to tenant in personal capacity-Tenant carry-
ing onfarni(v business-Sllbsequent(v tenant.forming a registered society com-
prising of hilnse~f and.fan1ily 1nembers-Society carrying on diverse activities
c
but notfmni(v business ~{tenant-Rent paid by Society thrm1gh President-Held
in the circu1nsta1zces tenant surrendered his right of tenancy a1Ul possession in
.favour qf society--Held acceptance qf rent tendered by tenant in the name qf
Society does not create a 11eiv le1ta11cy--Landlnrd held entitled to eviction order
011 the ground ~f sub-letting. D
.,, Tena11t--Unilateral action of surrendering tenancy in favour of third
party by delivering possession-field does not create a new tenancy--Landlord
not bound by such a tenancy.

Estoppel-Not applicable URainsl statute. E
The appellant-landlord filed an application under section 14 of the
Himachal Pradesh Urban Rent Control Act, 1971 for eviction of the
respondent-tenant and his sub-tenant, His case was that he let out his shop
room to respondent No, I who had been carrying on business of soap in
the name and style of Ashoka Jain Industry, However, without appellant's F
written consent the tenant created sub-tenancy in favour of respondent
No, 2 viz, Mahavir Gram Udyog Samiti in violation of Section 14 of the
Act, The tenant contested the case by stating that he was still carrying on
the soap business in the said premises but had only changed the nomen-
clature of the firm from Ashoka Jain Industry to Mahavir Gram Udyog G
Samiti by forming a registered society comprising of himself and his family
members, Being fully aware of the said fact the landlord had been
accepting rent from the said Samiti and therefore he was estopped from
seeking eviction.

The Rent Controller passed an eviction order against the respond- H
501
502 SUPREME COURT REPORTS [1996] 1 S.C.R.
A ents holding that (i) the tenant had no exclusive control of the suit
premises as he had parted with possession of the same in favour of the ~
Samiti which was a distinct legal entity not representing Ashoka Jain .(Ill
Industry; (ii) in terms of the Memorandum of Association ·of the said
society the samiti could not only include new members but also could
remove from membership any existing member as a result of which
B
respondent no. 1, who was then a member of the said registered society,
could also be renioved from the said society; and (iii) the rent was paid
by tenant from the funds of the society in his capacity as President and
not on his behalf or on behalf of Ashoka Jain Industry. •
C The Appellate Authority reversed the decision of Rent Controller
and dismissed the landlord's suit holding that although the society had
been carrying on its business activities in the snit premises it could not be
held that the tenant had lost control and possession over the premises in
question. Hence, the case of sub-letting could not be accepted. A Revision
petition filed by the land lord was dismissed by the High Court.
D
In appeal to this court it was contended for the appellant-landlord
that: (i) the Appellate Authority and the High Court erred in proceeding
...
on the footing that the tenant himself being President of the society was
controlling the affairs of the society and hence he had not parted with
possession of the shop room; (ii) the very fact that a distinct entity had
E
been possessing the shop room and carrying on its activities in the said
shop room makes it abundantly clear that the tenant had parted with
possession of the snit shop in favour of the society; and (iii) not only
possession of the suit shop had been handed over to the said registered
'
society but also the rent was paid by respondent No. 1 in his capacity as
F President from out of the funds of the society.

Allowing the appeal and setting aside the impugned order of the
High Conrt, this Court

HELD : 1. The eviction order passed by the Rent Controller is af-
G firmed. The Rent Controller has rightly indicated that from the Memoran-
dum of Association of the said registered society, which has been exhibited
in the eviction case, it clearly transpires that any member may be removed
and new members may be taken in the society by decision of 2/3rd majority
of members. It is, therefore, not unlikely that in course of time, respondent
H No. 1 or their family members may not be members of the said registered
I
i
RAM SARAN v. PYARE LAL 503
society and such society may be run by a completely different group of A
persons. It is, therefore, immaterial whether at the time of trial of the evic-
tion proceedings, respondent no. 1 had been controlling the affairs of the
said registered society in his capacity as its President. [514-D-F]

2. Respondent No. 1 has clearly stated in the written statement that
the firm Ashoka Jain Industries was changed to a registered society and B
the said registered society is carrying on its activities in the shop room by
.. asserting its status as a tenant. The aciivities of the registered society
cannot be held to be personal activities of respondent No. l or the alleged
• partnership business of the firm Ashoka Jain Industries. Even if it is
assumed on the face value of the assertion of respondent no. 1 that he is c
also carrying on his soap business in the disputed premises, in the context
of the written statement of respondent no. l, it only follows that the said
registered society is possessing the tenanted premises by asserting its
independent status as tenant by tendering rent in its name through its
President and the said society in a portion of the tenanted premises for
D
' carrying on his personal business of soap. In any event, it is quite evident
.... ,, from the case made out by respondent no. 1 in the written statement that
he had surrendered his right of tenancy in favour of the registered society
and had delivered exclusive possession of the tenanted premises in favour
of the said registered society which was occupying the same by asserting
a right of tenancy. Hence, a case of lease without the written consent of E
landlord as required under Section 14 of the Rent Act for creating a valid
assignment of sub-tenancy has been clearly established. Unfortunately,
~
such position in law which is apparent from the case made out by
• respondent no. 1 has been lost sight of both by the Appellate Authority
and by the High Court. [515-C-G]
F
Roop Chand v. Gopi Chand The/a, [1989] 2 SCC 383; Mis Shalimar
Tar Products Ltd. v. H.C. Sharma, AIR (1988) SC 145; A.S. Sulochana v. G.
Dharmalingam, (1987) l RCC 213 and Dipak Banerjee v. Lilabati Chakraborty,
[1987] 1 sec 161, referred to.

Madras Bangalore Transport Co. v. lnder Sen, [1986] 3 SCC 62 and
G
Vishwanath v. Chaman Lal, AIR (1975) Delhi 117, held inapplicable.

3. By a unilateral action of the tenant is surrendering his right of
tenancy in favour of third party by delivering possession of the tenanted
premises to the said third party, no new tenancy is created which may H
A
504 SUPREME COURT REPORTS [1996] l S.C.R.
legally bind the landlord. By mere acceptance of rent of the tenanted
'
\

premises tendered by the tenant in the name of the registered society,
neither a new tenancy nor a valid sub-tenancy in favour of the said
registered society has been created. In this case the tenancy of respondent
no. 1 had not been surrendered and such surrender of tenancy has not
been accepted by the landlord. (516-B-C]
B
4. The Rent Act is a special statute governing and regulating tenancy
and sub-tenancy. Such provisions in the special statute supersede the
general law of tenancy if the provisions of the special statute are incom-
patible with the general law of tenancy. Under Section 14 of the Rent Act,
C mere knowledge of the landlord about occupation of the tenanted premises
"by the said registered society and acceptance of rent for the tenanted
premises tendered by the tenant in the name of the registered society, will
not create a sub-tenancy unless induction of a sub-tenant is made with the
written consent of the landlord. It is nobody's case that the landlord had
given any written consent for induction of sub-tenant. There is no estoppel
D against statute. Hence, even if the landlord has accepted payment of rent
of the disputed premises from the said society, such acceptance of rent will
not constitute legal and valid sub tenancy in favour of the registered
society. Consequently, landlord will not be estopped from claiming eviction
of unauthorised sub-tenant along with the tenant for indulging in induct-
E ing sub-tenant without lawful authority. [516-F-H; 517-A]

Hiralal Kapur v. Prabhu Choudhury, (1988] 2 SCC 172, referred on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2028 of 1996.
•
F From the Judgment and Order dated 23.6.92 of the Himachal Pradesh
High Court in C.R. No. 134 of 1990.

Ashwani Kumar, Ms. Ruchi Gaur and R.N. Keshwani for the appellant.

Gopal Narayan Agarwal, Ms. Aiysha Khatri and Mr. Prarnod Dayal for
the Respondents.
G
The Judgment of the Court was delivered by

G.N. RAY, J. Leave granted. Heard learned counsel for the parties.

This appeal is directed against the judgment dated 23.6.1992 passed by
H a Single Bench of the Himachal Pradesh High Court in C.R. No. 134 of 1992
I RAM SARAN v. PYARE LAL [G.N. RAY, J.] 505
arising out of judgment dated 16.5.1990 passed by the Appellate Authority A
(II), Solan in Rent Appeal No. 5 NL/14 of 1990/1988 reversing the order of
eviction dated 30.9.1988 passed by the Rent Controller, Nalagarh in Case No.
612 of 1986.

The relevant facts concerning this appeal may be stated as hereunder.
The shop room appertaining to Khewat-Khatanni No. Min. 354/498, Khasra B
No. 734, in Main Bazar, _Nalagarh town is owned by the appellant landlord.
.. The appellant let out the said shop room to respondent No. 1 on 15.7.1973 for
a monthly rental at Rs. 140 excluding water and electric charges. The said
• respondent No. 1 had been carrying on-business of soap in the name of style
of Ashoka Jain Industry. The landlord filed an application under Section 14 c
of the Himachal Pradesh Urban Rent Control Act (hereinafter referred to as
the Rent Act) for eviction of respondent No. 1 and his sub-tenant respondent
No. 2 Mahavir Gram Udyog Samiti, a society registered under the Societies
Registration Act in 1977 on the grounds of arrears of rent and for sub letting
the said premises to respondent No. 2 without consent of the landlord. It was
D
' al;o contended that the landlord required the suit premises for carrying out
• ,,, business with the help of landlord's son.

The respondent tenant denied the material allegations of the landlord.
According to respondent tenant, the shop room had not been sublet. But the
name of the firm Ashoka Jain Industry had been changed to Mahavir Gram E
Udyog Samiti. Such Samiti is a registered society, registered on 10.2. 1977
comprising the tenant and his family members. There had not been any change

...'
in the business which the tenant had been carrying in the name of Ashoka Jain
Industry. The landlord being fully aware of the said fact had been accepting
rent from the said Mahavir Gram Udyog Samiti. Accordingly, the landlord
F
was estopped from seeking eviction on the ground of subletting. The other
grounds for eviction were also denied by the tenant respondent.

The learned Rent Controller, Nalagarh in Rent Case No. 6/2 of 1986
inter alia came to the finding that the tenant respondent No. 1 had parted with
the possession of the said shop room in favour of the said registered society G
namely Mahavir Gram Udyog Samiti and the said samiti was a distinct legal
entity which could sue and be sued in its own name. The learned Rent
Contrpller had also indicated that on scrutiny of the memorandum of associa-
tion of the said society (Ext. II A), it was revealed that the samiti could include
new members and any existing member could be removed from the member- H
506 SUPREME CO\.:RT REPORTS [1996] l S.C.R.
\
A ship of the society by 2/3rd of the majority of general members. Accordingly,
the respondent No. l who was then a member of the said registered society
could also be removed from the said society. The learned Rent Controller
further held that the tenant respondent No. l had no exclusive control and
possession of the suit premises which was being occupied by the said
B registered society.

The tenant respondent No. l was also not in a pos1Don to recover
possession of the said shop room from the said registered society. The said
registered society being a distinct legal entity did not represent the Ashoka Jain
Industries belonging exclusively to the Respondent No. I and his son stated
C to be a partner of the said firm. The Rent Controller had also found that the
tenant respondent No. l had also not been paying rent on his behalf or on
behalf of Ashoka Jain Industries but on his own admission, he was paying rent
from the funds of registered society in his capacity as President of the said
registered society. As no lawful sub··tenancy could be created under Section
D 14 of the Rent Act without written consent of the landlord, the payment of rent
by respondent No. l as President of the said registered society had not created
any legal subtenancy in favour of the said registered society. The learned Rent
Controller, therefore, on a finding that the tenant respondent No. l having
" .
sublet the said shop room in favour of a distinct legal entity which had been
carrying on its business activities in the said premises, was liable not be
E evicted, passed the order of eviction against the defendants. The other grounds
for eviction were, however, answered in the negative by the learned Rent
Controller.

The tenant respondent No. I preferred an appeal before the Appellate
p Authority at Solan against the decision of the Rent <;:ontroller. The learned
appellate Authority however reversed the decision of the learned Rent Con-
troller and dismissed the eviction suit on the finding that the respondent No.
I tenant, in order to serve villagers by promoting village industries, Khadi,
basic education, agriculture, breeding of cows and bulls village sanitation etc.
had constituted the said society namely Gram Udyog Sarniti in which he was
G member of the governing body of the society and also its President along with
other members of his family as the members of the said society. The case of
the said tenant was that he was carrying on the business of soap in the suit
premises. Jn the said facts, even if the said samiti was carrying on its various
activities in the said premises the original tenant being in effective control of
H the affairs of the said samiti, it could not be held that he had let out the
)
RAM SARAN v. PYARE LAL [G.N. RAY, J.] 507
premises in favour of the said society. Hence, decree for eviction on the A
ground of sub-letting was not justified.

The landlord appellant thereafter moved the Himachal Pradesh High
Court under Section 21(5) of the Rent Act. The High Court by impugned
judgment has dismissed the revisional application. The Single Bench of the
High Court has indicated that the Appellate Authority held that in order to B
serve villagers ofNalagarh area, the tenant had constituted a registered society
with himself and his family members as the members of the said registered
society and the tenant had retained control over the functioning of the said
society in which he was President. In the aforesaid facts, although the said
society had been carrying on its business ac!ivities in the said premises it C
could not be held that the tenant had lost control and possession over the
premises in question. Hence, the case of sub-letting by the tenant respondent
No. 1 in favour of the said registered society cannot be accepted. Being
aggrieved by the decision of the High Court the landlord appellant moved this
Court by filing a special leave petition. D
The learned counsel for the appellant landlord has contended that it is
an admitted position that the disputed shop room was let out to respondent No.
I tenant in 1972. In the said shop room he was running business of soap in
the name and style of Ashoka Jain Industries. According to respondent no. 1
himself the said business in the name of Ashoka Jain Industries is being run E
by him with the help of one of his son as a partner. It is also an admitted
position that in 1977 a society, in the name of Mahavir Gram Udyog Samiti,
' was formed and the said samiti was registered under the Societies Registration
Act, 1977. The sai<) registered society, according to respondent No. 1 was
formed for various beneficial activities of the rural people in the locality F
namely for promoting Khadi activities, village industries, basic education,
agriculture., breeding of cows and bulls. The said registered samiti is
compromised of a number of members and the respondent No. 1 is also a
member of the registered society. It is also an admitted position that the said
registered society has been carrying on its various activities from the shop
room. It has also transpired from the deposition of respondent No. 1 that he
G
happens to be the President of the said registered society and that he is paying
rent of the shop room in his capacity as President of the Samiti and such
payment of rent of the shop room is being made from the fund of the samiti.
As a matter of fact, the respondent No. 1 has sought to raise a plea of estoppel
against the landlord by contending that as the landlord accepted payment of H
508 SUPREME COURT REPORTS [1996] l S.C.R.
A rent by the said samiti through its President, the landlord is estopped from
seeking eviction on the score of unauthorised sub-letting of the shop room.

The learned counsel for the appellant has submitted that the Memoran-
dum of Association of the said registered society has been exhibited in the
eviction proceedings and the learned Rent Controller on scrutiny of the said
B Memorandum has come to a specific finding that in terms of the Memoran-
dum, any member of the society may be removed by 2/3rd majority of the
members of the society. Such society can also admit other members in the
society. Noticing such facts, the learned Rent Controller has rightly held that
the registered society is not only a distinct legal entity which can sue and be
C sued but the said distinct legal entity is in possession of the shop room and
carrying on its activities therefrom. The learned counsel has submitted that it
is immaterial whether the tenant respondent No. I happens to be its President
at the moment and the members of the said society are members of his family.
The president and members of the registered society are not owners of the said
D firm Ashoka Jain Industries. The assets of the said registered society, under
the Jaw do not also belong to its President or the members of the society. It
is quite possible that the President and the other members may be removed and
new members may be admitted in the said registered society. In such facts, the
Appellate Authority and the High Court erred in proceeding on the footing that
the respondent No. I himself being President of the said registered society was
E controlling the affairs of the society and hence he had not parted with
possession of the shop room.

The learned counsel for the appellant has further contended that the
Respondent No. I has sought to make out a case as pleaded in the written
F statement that the name of Ashoka Jain Industries has been changed to
Mahavir Gram Udyog Samiti and the said Sarniti with more members of the
family are carrying on the old business of Ashoka Jain Industries. Such case
of the Respondent No. I has been established to be false because Mahavir
Gram Udyog Samiti is a different legal entity and en the face of the admission
of the tenant respondent No. I, the said registered society is connected with
G diverse activities for the alleged welfare of rural population and the same is
not carrying the personal business of the respondent No. I. i..
The learned counsel has submitted that the very fact that a distinct legal
entity has been possessing the shop room and carrying on its activities in the
H said shop room makes it abundantly clear that the respondent No. I has parted
RAM SARAN v. PYARE LAL [G.N. RAY. J.] 509

-
with possession of the said shop room in favour of the said registered society. A
It has been submitted by the learned counsel for the appellant that not only
such possession of the shop room has been handed over to the said registered
society but the respondent No. ), on his own admission, is not paying rent for
the shop room but the sub-lessee is paying rent through its President. Hence,
a case of sub-lease which is admittedly without written consent of the landlord, B
has been clearly established.

In this connection, the learned counsel for the appellant has referred to
the decision of this Court in Roop Chand v. Gopi Chand Thela, [1989] 2 SCC
383. In the said case, a club registered under the Companies Act had been in
possession of the substantial portion of the shop room and had been carrying C
on its activities. The tenant was also in possession of a part of the said
premises. The Courts below held that the tenant was not in exclusive
possession of the said premises but had parted with possession in respect of
a substantial portion of the same in favour of the club. Hence, even if sub-
lease on payment of rent could not be established, such parting of exclusive D
possession would amount sub-lease within the meaning of section 13(l)(e) of
~ Rajasthan Premises (Control of Rent and Eviction) Act. This Court has upheld
such finding of the courts below by indicating that clause (e) of Section 13(1)
of the said Act provides that a tenant would render himself liable for eviction
if he has assigned, sub-let or otherwise parted with the possession of the whole
or any part of the premises without the permission of the landlord.
E

The learned counsel has also referred to another decision of this Coun
, in Mis Shalimar Tar Products Ltd. v. H.C. Sharma, AIR (1988) SC 145. In
.. that case question of sob-letting under Delhi Rent Control Act came up for
consideration. In that case, the tenant allowed a club registered under the F
Companies Act to carry on its activities in a major portion of the tenanted
premises. The tenant himself was also a member of the said club and according
to tenant he has also carried on his business from a portion of the tenanted
premises. The courts below held that by parting with possession exclusively
in favour of the said club in a major portion of the said premises, a sub-lease
G
was constituted in favour of the club. Accordingly, decree of eviction was
passed. The High Court also upheld such finding. It has been indicated by this
Court that parting of possession is an important incidence of sub-lease. Parting
of legal possession means possession with the right to include and also right
to exclude others. It has been held by this Court that in the context of
exclusive possession of substantial portion of tenanted premises by the club H
510 SUPREME COURT REPORTS [1996] l S.C.R.
A which had carried on its own activities, the finding of the courts below that
a case of sub-lease was made out, is wholly justified. The learned counsel for
the arpellant ha~ submitted that even if it is assumed that the tenant respondent
No. had really carried on his soap business in a portion of the suit premises,
the admitted fact remains that a distinct legal entity namely a registered society
B had been given exclusive possession of a portion of the tenanted premises for
carrying on its diverse activities and such registered society admittedly had
been claiming an independent right to hold the disputed premises as tenant by
paying rent for the said premises through its President. Hence, the finding by "
the Rent controller that the tenant had sub-let the said premises is wholly ~
justified and the decision of this Court in Shalimar's case (supra) is applicable
c in all fours. The learned counsel has submitted that the impugned order should
be set aside by affirming the order of eviction passed by the Rent Controller.

The learned counsel for the respondent has however refuted the conten-
tions of the learned counsel for the appellant. It has been contended by the
D learned counsel that the tenant respondent No. I has not parted with possession
of the suit premises in favour of Mahavir Gram Udyog Samiti. The case of
the tenant is that the tenant is still carrying on the business of soap in the said
premises but in his anxiety to ensure service to the rural population of the
locality he had formed a registered society some time in 1977 with himself and
his family members for undertaking various beneficial activities for the rural
E population. There has not been any assignment of the tenanted premises or any
part thereof to the said society. There has not been any payment of rent by the
said society to the respondent No. I tenant. As a matter of fact the activities
of the firm are now being discharged by the said society in a bigger way with
additional members of the family. The tenant being the President of the said
F society is controlling the affairs of the said society. Even if it assumed that the
said society being a distinct legal identity, its possession can not be held to
be the possession of the tenant respondent No. I. despite his being President of
the said society, in the absence of any evidence as to letting out any portion
of the said premises to the society on acceptance of rent, it should be held that
G the said society is in permissive possession of the said premises. As the tenant
has not parted with possession of the said premises or any portion thereof by
allowing the said society to possess the same in exclusion of the respondent
No. I, no case of sub-tenancy can be made out. Accordingly, the Appellate
Authority has rightly held that the case of sub-tenancy can not be accepted.
Such finding of the Appellate Authority being wholly justified in the facts of
H
/
i
RAM SARAN v. PYARE LAL [G.N. RAY, J.] 51 I
the case, has been upheld by the High Court. A
The learned counsel for the respondent has submitted that the landlord
has not discharged the onus to prove sub-tenancy. The landlord has adjoining
shops and one of such shops is in his possession. Such fact has been admitted
by the land lord in his deposition. The registered samiti was formed in 1977
and the said Samiti had been carrying on its activities openly in the said shop B
room. The landlord has also been accepting ren.t from the said Mahavir Gram
Udyog Samiti through respondent No. I who is the president of the said samiti.
In the aforesaid circumstances, the landlord with full knowledge has allowed
the said samiti to remain in possession of the suit premises and having
acknowledged the possession in the said samiti, has allowed the said samiti C
to pay rent of the said premises in its name through respondent No. I . A
decision of this Court in A.S. Sulochana v. C. Dharmalingam, (1987) I RCC
213 has been referred to by the learned counsel. This Court has indicated in
the said case that if a sub-tenant has remained in possession openly for 18
' years and if the landlord has not taken any objection for such long possession D
as sub-tenant, it would give rise to inference that the said tenancy was not
unlawful and the tenant should not be evicted on the ground of sub-letting. The
learned counsel has submitted that the said samiti after being formed has been
occupying the tenanted premises and has been carrying on its diverse
activities. The landlord with knowledge of such activities of the samiti has not
raised any objection for a number of years and only in 1986 the eviction suit
E
was instituted by him. In the aforesaid facts, such long possession openly by
the said samiti will raise a reasonable inference that the sub-tenancy is not
unlawful.

The learned counsel for the respondent has also contended that the p
respondent No. 1 was inducted as a tenant and the said tenant had been
carrying on business in the name and style of Ashoka Jain industries with a
son as partner. The said partnership firm ha<l only changed its nomenclature
by forming a registered society in the name of Mahavir Gram Udyog Samiti.
Since the activities of the firm were being carried in a new form, it should be
held that for all practical purposes, the old firm of the tenant was there and
G
there has not been any sub-letting simply because form of the legal entity and
the name were changed. In support of such contention, reliance has been
placed on a decision of this Court in Madras Bangalore Tra1Mpor1 Company
v. Inder Sen, [I 986] 3 SCC 62. In the said case, a partnership firm was
carrying on business of transport as a tenant in the disputed premises. In order H
512 SUPREME COURT REPORTS [1996] l S.C.R.
A · lo circumvent a ban on the partners lo operate transport business in a particular
area, a private limited company was formed with the partners as Directors of
the said company. The firm was appointed as Agent of the Company and the
company was appointed as agent of the firm. The firm allowed the said
company to operate from the tenanted premises along with it. Both the
B company and the firm had their sign boards at the premises and both of them
were registered under the Shop and Establishment Act as having their offices
in the disputed premises. In the aforesaid peculiar facts, this court has held that
there was no sub-letting, assignment or parting with possession of the premises
in question by the firm to the Limited Company. This Court has held that in
the facts of. that case, the firm continued to be in possession of the premises
c even after the Private Limited Company came into existence. The firm never
effaced themselves. The firm allowed the said Private Limited Company to
function from the same premises but the Private limited Company though a
separate legal entity was in fact a creation of the partners of the firm and was
the very image of the firm. The Limited Company and the Partnership firm
D were two only in name but one for practical purposes, there was substantial
identity between the Limited Company and the partnership firm. As such, even
though the firm and the Company were distinct legal entities, there was no
sub~letting or assignn1ent etc. In our view, the decision in Madras Bangalore
Transport Co1npany's case has no application in the facts of this case. The
E Ashoka Jain Industries and Mahavir Gram Udyog Samiti are not only two
separate legal entities, their composition are different and nature of activities
are also not the same. The Ashoka Jain Industries is concerned with soap
business but admittedly the samiti is concerned with various diverse activities
including breeding of cows and bulls. The firm is also not the agent of the
F society and vice versa. The society can not be held to be a creation of the said
firm or image of the said firm. Moreover in the written statement, it has been
specifically averred that the society and not the firm was paying rent through
its President for the suit pre1nises.

The learned counsel for the respondent has also referred to decisions in
G Vishwanath v. Chaman Lal, AIR (1975) Delhi 117, since referred to with
approval in the decision of this Court in Madras BanRalore Transport
Company's case (supra). In Vishwanath's case, Vishwanath took tenancy and
was carrying on business in the name of Mis. Interacts International Advertis-
ing Agency Pvt. Ltd. The tenant converted his firm as Interacts Advertising Pvt
H Ltd. and landlord issued rent receipts in the name of the Interacts Advertise-
RAM SARAN v. PYARE LAL [G.N. RAY, J.] 513
ment Pvt. Ltd. In such circumstances High Court negatived the finding of Rent A
Controller ·that the tenant had sublet the premises. The learned counsel has also
relied on the decision in Mis. Associated Tube well Ltd. 's case ( 1984) 2 (Rent
Control Report 449) by contending that the said decision was approved in
Madras Bangalore Transport company's case (supra). In Mh. Associated Tube
Well Ltd. Company's case, the said Mis. Associated Tube Wells Ltd. took out B
tenancy with a right to sublet. The sub-letting was in favour of Mis. Clearing
House and Agencies Pvt. Ltd. The original tenant surrendered its tenancy and
~ as such direct relationship of landlord and tenant was created after such
;., surrendering of tenancy. In such circumstances, the case of sub-letting as
alleged by the landlord was disallowed. In our view, both the said decisions
have no application in the facts of this case. In Vishwanath's case only the
c
name of the business was changed and in the second case, there was a
provision for sub-letting and original tenant having surrendered, by payment
and acceptance of rent between the landlord and sub-tenant a new tenancy
directly in favour of the sub-tenant was created.
D
The learned counsel for the respondent has submitted that in order to
establish sub-tenancy, exclusive possession of the alleged sub-tenant with
tenant retaining no control of the premises should be established. The other
ingredient of sub-tenancy is that right to occupy the premises must be in lieu
of payment of some compensation or rent. In support of the said contentions, E
reliance was made to the decision of this Court in Dipak Banerjee V. ?ilabtiti
Chakraborty, [1987] 1 SCC 161. The learned counsel has submiued that the
respondent No. 1 has retained possession of the premises wherein he carries
on the business of soap and he has not parted with possession on acceptance
of any consideration from the said samiti. Hence, no case of sub-tenancy can
be lawfully held against the respondent. He has submitted that in the aforesaid
F
facts, the appeal should be dismissed with cost.

After giving careful consideration of the facts and circumstances of the
case and the submissions made by the learned counsel for the parties it appears
to us that the respondent No. 1 took out the tenancy of the shop room in his G
personal capacity in July 1973 and he had been carrying on business of soap
in the name and style of Ashoka Jain Industries. It is the case of the respondent
No. 1 that one of his sons also became partner of the said firm Ashoka Jain
Industries. Later on in the year 1977, a society in the name in Mahavir Gram
Udyog Sarniti was formed and registered under the Societies Registration Act. H
514 SUPREME COURT REPORTS [ 1996] I S.C.R.
A Such society, according to case of respondent No. I, comprises of a number
of members drawn from the family of the respondent No. I and including
himself. Admittedly, such society has been formed not for carrying on the said
family business of the Respondent No. I but for alleged diverse activities
alleged to be beneficial for the rural population in the locality namely Khadi
B activities, agriculture, breeding of cows and bulls etc. etc.

It is an admitted position that the said registered society has been
carrying on it diverse activities in the said shop room. At the relevant time,
respondent No. I was the President of the said registered society and therefore .~

had occasion to control and regulate the activities of the said society . It
c appears that the aforesaid fact of regulating the activities of the said society
by the respondent No. I in his capacity as the President of the said society,
has weighed with the learned Appellate Authority in coming to the finding that
the said respondent No. 1 had retained his possession of the said shop room.
But, in our view, the Appellate Authority has failed to notice that the registered
D society is a distinct legal entity. Its assets and liabilities belong to the said
society which con sue and be sued in its name. The learned Rent Controller
has rightly indicated that from the memorandum of association of the said
registered society, which has been exhibited in the eviction case, it clearly
transpires that any member may be removed and new members may be taken
E in the society by the decision of 2/3rd majority of members. It is, therefore,
not unlikely that in course of time, the respondent No.I or their family
members may not be members of the said registered society and such society
may be run by a completely different group of persons. It is therefore
immaterial whether at the time of trial of the eviction proceedings, the '
respondent No. I had been controlling the affairs of the said registered society
F
in his capacity as its President.

It may be indicated here that it is not the case of the respondent No.
that the said registered society was allowed to possess the tenanted premises
for carrying on its diverse activities only as a licencee of the respondent No.
G I or of the said firm Ashoka Jain Industries. On the contrary, the specific case
made out by the respondent No. I in his written statement is that the firm
Ashoka Jain Industries has been changed to the registered society in the name )
of Mahavir Gram Udyog Samiti and the said society is occupying the tenanted
premises and carrying on its various activities from the said premises by
H asserting its independent right as a tenant. As a matter of fact, the respondent
RAM SARAN" PYARE LAL [G.N. RAY, J.] 515
No. I has averred in the written statement that the said registered society has A
- been paying rent for the tenanted premises not on behalf of the respondent No.
1 or the said Ashoka Jain Industries but on its own behalf through its President,
namely, the respondent No. I. On account of such assertion of independent
status of tenancy by the said registered society, a case was sought to be made
out by the respondent No. I that the landlord having accepted rent tendered B
in the name of the said registered society is estopped from seeking eviction
of the respondent No. 1 and the said society on the ground of sub-letting.

It appears to us that the respondent No. I in an attempt to show that he
had not completely parted with possession of the said shop room in favour of
the registered society also stated that he had been. carrying on his shop C
business in the said premises. Such Case, in our view, should not be accepted.
The Respondent No. I has clearly stated in the written statement that the firm
Ashoka Jain Industries was changed to a registered society and the said
registered society is carrying on its activities in the shop room by asserting its
status as a tenant. The activities of the registered society can not be held to D
be personal activities of the respondent No. 1 or the alleged partnership
business of the firm Ashoka Jain Industries. Even if it is assu1ned on the face
value of the assertion of the respondent No. I that he is also carrying on his
shop business in the disputed premises, in the context of the written statement
of the respondent No. 1, it only follows that the said registered society is
possessing the tenanted premises by asserting its independent status as tenant E
by tendering rent in its own name through its President and the said respondent
No. 1 is in permissive possession under the said society in a portion of the
tenanted premises for carrying on his personal business of soap. In any event,
it is quite evident from the case made out by the respondent No. I in the
written statement that he has surrendered his right of tenancy in favour of the F
registered society and has delivered exclusive possession of the tenanted
premises in favour of the said registered society which is occupying the same
by asserting a right of tenancy. Hence, a case of lease without the written
consent of landlord as required under Section I 4 of the Rent Act for creating
a valid assignment of sub-tenancy has been clearly established. Unfortunately,
G
such position in law which is apparent from the case made out by the
respondent No. I has been lost sight of both by the learned Appellate
Authority and by the High Court.

So far as payment of rent by respondent No. I qua President of the said
registered society and acceptance of such rent tendered on behalf of. the H
516 SUPREME COURT REPORTS [1996} 1 S.C.R.
A re~stered society by the landlord with knowledge of the possession of the
shop room by the said society are concerned, it may be stated that the tenancy
of respondent No. 1 had not been surrendered and such surrender of tenancy
has not been accepted by the landlord. If upon accepting the surrender of
tenancy of the said tenant, occupation of a new tenant is acknowledged by the
B landlord by accepting payment of rent from the new tenant, then by such
payment and acceptance of rent between the tenant and landlord, a new
tenancy may be created. By a unilateral action of the tenant of surrendering
his right of tenancy in favour of a third party by delivering possession of the
tenanted premises to the said third party, no new tenancy is created which may
legally bind the landlord. By mere.acceptance of rent for the tenanted premises
c tendered by the tenant in the name of the registered society, neither a new
tenancy or a valid sub-tenancy in favour of the said registered society has
been created. In this connection, reference may be made to a decision of this
Court in Hiralal Kapur v. Prabhu Choudhury, [1988} 2 SCC 172. In the said
case rent was paid by two cheques, one drawn by the tenant himself for a part
D of the rent, the other was drawn by the sub-tenant for the remaining part of
the rent. It has been held by this Court that the landlord was entitled to rent
(Rs. 600 p.m.) and so long he got this amount, it was immaterial for him
whether the amount was paid in lumpsum or by one cheque or more than one
cheque and who the makers of the cheque were. In that case, a number of
E cheques given to the landlord were returned dishonoured and the landlord
wrote to the tenant in which he specifically referred that five cheques were
given by the sub-lessee. Even then, it has been held by this Court that such
fact will.not improve tenant's position at all for it only evidences the fact that
the landlord was receiving the cheque issued in the name of the sub-lessee in
F discharge of the teoant's obligation to pay rent for the tenanted premises.

The Rent Act is a special statute governing and regulating tenancy and
sub-tenancy. Such provisions in the special statute supersede the general law
of tenancy if the provisions of the special statute are incompatible with the
general law of tenancy. Under Section 14 of the Rent Act, mere knowledg'e
G of the landlord about occupation of the tenanted premises by the said
registered society and acceptance of rent for the tenanted premises tendered
by the tenant in the name of the registered society, will not create a sub tenancy
unless induction of a sub-tenant is made with the written consent of the
landlord. It is nobody's case that the landlord has given any written consent
H for induction of sub-tenant. There is no estoppel against statute. Hence, even
RAM SARAN v. PYARE LAL [G.N. RAY, J.] 517
if the landlord has accepted payment of rent for the disputed premises from A
the said society, such acceptance of rent will not constitute legal and valid sub-
tenancy in favour of the registered society. Consequently, landlord will not be
estopped from claiming eviction of unauthorised sub tenant along with the
tenant for indulging in inducting s4b-tenant without lawful authority.

We, therefore, allow this appeal and set aside the impugned order of the B
High Court and affirm the order of _eviction passed against the respondent by
the learned Rent Controller, Nalagarh in case No. 6/2 of 1986. As the eviction
case is pending for a long time, it is directed that the execution proceedings
should be expedited. There will be, however, no order as to cost in this appeal.

T.N.A. Appeal allowed.
c

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