Holding

Assignees from sub‑lessees are not lawful sub‑tenants and therefore cannot claim protection under sections 14 and 15 of the Bombay Rents Act.

Summary

The case concerned an 11,000 sq.ft. property originally mortgaged and then leased with a clause permitting sub‑leasing. The original lessee sub‑leased the land to two sub‑lessees, who constructed shops, further assigned their interests to other parties, and eventually the assignees sought protection under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The Supreme Court examined whether these assignees, being derived from sub‑lessees, could claim the statutory protection of sections 14 and 15, which apply only to lawful sub‑tenants. Relying on the principle that a sub‑tenant cannot create a further sub‑tenancy and that the original lessee and sub‑lessees were not before the court, the Court held that the assignees were not lawful sub‑tenants and thus could not invoke the Act. Consequently, the appeal was dismissed with no order as to costs.

Issues considered

Can assignees from sub‑lessees claim protection under sections 14 and 15 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947?
Does the doctrine that a sub‑tenant cannot create a further sub‑tenancy preclude the application of the Act to subsequent assignees?

Legislation cited

Bombay Rents, Hotel and Lodging House Rates Control Act, 1947s. 14, s. 15
Court of Wards Act
Transfer of Property Act, 1882s. 108

Subjects

tenancysub‑leaseassignmentstatutory protectionBombay Rents Actsub‑tenancy doctrineTransfer of Property Acteviction

Judgment

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'

A SMT. SHANTI BAI AND OTHERS
v. L

DINKAR BALKRISHNA. VAIDYA AND ORS.

MARCH 2, 1994

B [S. MOHAN AND M.K. MUKHERJEE, JJ.]

Tenancy laws:

Bombay Rents, Hotel and Lodging House Rates ControlAc41947-Sec-
C tions 14 and 15-Held, protection for available to assignees of sub-lessee~
Protection available only to lawful sub-lessee~Sub-le:;see cannot create fur-
ther sub-lease-Transfer of PropeTty Act, 1882-Section 108(j).

The suit property , an extent of 11,000 sq.ft. of land which was owned
by one T was mortgaged by him to D in 1947 and subsequently leased out
D by T in favour of S in 1948. Under the lease deed the purpose was
mentioned as for residence and shops and the lessee was authorised to
sub- lease. There was also no prohibition against assignment. In 1949 the ,
lessee sub-leased the property by a registered deed to defendants 2 and 3,
who constructed fourteen shops on a portion of the land sub-let to them
E and let them out to several persons, who in tum assigned their interest to
different persons. An extent of 4000 sq. ft. was sub-let by defendants 2 &
3 to S B, and se,·en shops were also sold by them to SB. On 6.U.1952
defendants 2 &3 flSsigned their rights, title and interest in respect of the
land in favour of Defendants 6, 7 & 8.

F In 1952 the mortgagee D filed a suit for enforcement of the mortgage
which was decreed. The mortgagee himself purchased the suit land in the
auction. The sale was confirmed and symbolical possession was delivered
to him.

In the meantime the Nazir of the Court was appointed as guardian
G under the Court of Wards Act since the mortgagee was declared a lunatic.
The Nazir filed a suit for recovery of a possession and arrears of rent (Civil
Sult No. 1142 or 1965) since his demand for rent from the original lessee
was not complied with. A ground of sub letting was also added. The suit
was d~reed but the decree of the trial court was revised in appeal. The
H writ petition filed by the mortgagee-purchaser D under Article 227 or the
296
SMT. SHANTI v. D.B. VAIDYA 297

Constitution of India was allowed by the Bombay High Court. The assig- A
nees from the original sub lessee appealed to this Court by special leave,
claiming the protection of the Bombay Rents, Hotel and Lodging House
IW.tes Control Act, 1947 as sub lessees.

Dismissing the appeal, this Court
B
HELD: 1. The appellants who are assignees from the sub- lessees
cannot claim protection as sub-lessees. The original lessee and sub-lessees
are not before the court. It is well settled that in such circumstances that
a sub-tenant cannot create further sub-tenancy. (301-F]

Jai Singh Morlllji & Ors. v. M/s. Sovani Pvt. Ltd. & Ors., (1973] 2 SCR C
603, applied.

2. There is no scope for application of section 15 of the Bombay Rent
Control Acl Though the parties are afforded liberty to contact out of the
section, it is only a lawful sub tenant who could claim protection. If In law D
they are not sub-tenants of the original lessor, this sections totally in-
" applicable. [301-G)

3. Sect!on 14 is also Inapplicable. For the application of section 14,
there must be a lawful sub-tenacy. This is not so here. The occupants were
not lawfully inducted as sub-tenants either prior to 1959 or 1973 (the E
relevant years for the applicability of sections 14 and 15). (301-H, 302-A]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2006 of
1981. ..
· From the Judgment and Order dated 15.7.80 of the Bombay High
F
Court in S.C. Application No.242 of 1973.

UR. Lalit, V.N. Ganpule and B. Sangal for the Appellants.

S.K. Dholakia, U .Bhagat and V.B. Joshi for the Respondent No. 10- G
15.

V .A. Bobde, V.D. Khanna, A.M. Khanwilkar, P.H. Parekh and J.S.
Wad for the Respondents.

The Judgment of the Court was delivered by H
'
298 SUPREME COURT REPORTS [1994)2 S.C:R.

A MOHAN, J, The short facts leading to this civil appeal are as under:
The suit property was originally owned by Trimbak Hari Awate. He
executed a simple mortgage oii 28.4.1947 to an extent of 11,000 square feet
which represent the entire property for a sum of Rs.20,000 in favour of
Dinkar S. Vaidya. On or about 7.7,1948, Awate executed a lease-deed in
B favour of Shankar Goru~i Gore. The purpose mentioned in the lease-deed
was residence and shops. Under the lease-deed, the lessee was authorised
to sub-lesase. The period of lease was 25 years. The annual rent was
Rs.1,500 payable monthly at the rate of Rs.125. There was no prohibition r
from the assignment in the said lease.
c On 17.2.1949, Shankar Godaji Gore,the lessee excuted a registered
sub-lease in respect of entire land in favour of two persons Sulochanabai
Thakur andKrishnabaiSarde, original defendants No.2 & 3. The sub-lease
was for a period of 99 years and 9 months. The monthly rent was fixed at
Rs. 50. Defendants 2 & 3, the sub-lessees constructed fourteen shops on a
D portion of tlie land sub let to them. These shops were let out for rent to
several persons. They in their turn assigned their interest to different
persons. On 7.11.1949, an area of 4,00 sq. ft. was sub-let by defendants nos.
2 & 3 in favour of Sardar Biwalkar on a rent of Rs. 135 p.m. for a period
of 67 years. On the same day of the lease, defendants 2 & 3 sold seven out
E of fourteen shops to Biwalkar. On 6.12.1952, defendants 2 & 3 assigned all
their rights, title and intere~t in respect of the suit land in favour of
Bayajabai Ganpat Gore, Sundarabai Babasaheb Gore and Yashodabai
• Balasaheb Gore, defendants 6, 7 and 8 respectively.

In 1952, Dinkar Balkrishna Vaidya, the mortgagee filed a suit being
F Special Civil Suit No. 89 of 1952 for enforcement of mortgage. In that suit,
mortgagor Awate and defendant No.l to 4 were made party-defendants.
That suit was decreed. In execution of the final decree in the auction the
mortgagee Dinkar Balkrishn~ Vaidya himself came to purchase the suit
land measuring about 1.000 sq. ft. The sale was confirmed on 19.12.57.
G Symbolical possession was granted on 2.3.1960. It appears that during the
pendency of the suit, mortgagee was declared a lunatic. Therefore, Nazir
of the Court was appointed as guardian and the property was taken
possession of by the Nazir under the provisions of Court of Wards Act.

The Nazir filed Regular Civil Suit No. 1142 of 1965 in the Small
H Causes Court, Poona for recovery of possession and arrears of rent since
SMT.SHAN'I1 v. D.B.VAIDYA (MOHAN,J.] 299

his demand for rent from Shankar Godaji Gore was not complied with. A
Shankar Godaji Gore assigned his right, title and interest in the shop
premises to defendant Nos. 19 and 20. Likewise, ori 27.8.63 defendant No.
5 assigned his right, title and interest in the shop in favour of defendant
No. 21. Therefore, another ground of sub-letting was also added. That suit
was decreed on 27.11.68, Aggrieved by the said jugdment, Civil Appeal B
Nos. 279, 354 and 265 of 1969 were preferred against the same. Civil
Appeal Nos. 279 and 354 of 1%9 came to be allowed while Civil Appeal
No. 265 of 1%9 was dismissed for non-prosecution. Thereupon, the first
respondent moved the High Court under Article 227 of the Constitution
of India. That was numbered as Special Civil Application No. 242 of 1973.
By the impugned order dated 15.7.1980, that came to be allowed. Hence, C
tho present civil appeal.

The learned counsel for the appellants Shri U. R. Lalit after taking
us through the relevant provisions of the Bombay Rents, Hotel and Lodg-
ing flouse Rates Control Act, 1947 (hereinafter referred to as 'the Act'} D "
submitts that the lease-deed in favour _pf Shankar Godai Gore specially
enabled him to sub-let. Under the lease-deed dated 7.7.1948, Awate the
original owner permitted the lessee Shankar Godaji Gore to constrnct
therein and give the said building or any portion thereof to any person on
lease rent and he could take the income derived therefrom. Therefore,
there was clear enablement to sub-lease. E

Under the Transfer of Property Act, there is no bar for a lessee to
sub-lease. In such a case that right or interest could be assigned in favour
of third party. That was what was done by the lease-deed dated 17.2.1949.
The sub-lessees constructed the building and let out a few and assigned F
their rights in favour of other defendants. It the sub-lessees continued in
possession prior to 21.5.1959, they would been entitled to the statutory
protection because prior to 1959, if there was sub-letting, the landlord
could not proceed to evict. Section 15 of the Act barring sub-lesseescame
into force only by amendment Act 49 of 1959, that too, subject to the G
contract to the contrary. Here is a case of a contrary contract. Under these
circumstance the ruling reported in Sardar Total Singh v. Mis Gold Field
Leather Works, Bombay, (1985] 2 SCR 563 would squarely apply. No
eviction was possible under Section 13{1}(e) of the Act because it must be
an unlawful sub-letting. Therefore, there is total protection both under
1959 Act and 1973 Act. H
300 SUPREME COURT REPORTS [1994] 2 S.C.R.

A There is no warrant to hold that first defendant has unlawfully '-
sub-let. In any event, if defendant Nos. 2 and 3 are sub-tenants in accord-
ance with Section 14 of the Act, unless special sub- tenancy is determined,
no eviction is possible.

Mr. S.K Dholakia, learned counsel for the respondent Nos. 24, 26
B and 27 supporting this argument submits that there is privily of contract
between the original lessor and the occupant. The predecessor of the
original lessor had authorised the defendant No. 1 to build the superstruc-
ture. Defendant No. 1 had absolute right to transfer his interest and having
transferred his right of construction to defendant Nos. 2 and 3, the
C construction was made by defendant Nos. 2 and 3 lawfully and binding on
the original lessee as he had not made any cotract to the contrary. The
occupants were inducted lawfully as tenants of the superstructilre before
1959 or 1973 and therefore are eligible to the protection available under
Sections 14 and 15 of the Act. Even on equity, they are entitled to a
decision in their favour. It has been noted by the High Court that some of
D the occupants are tailors, laundrymen etc. and their livelihood is dependant
on these premises. The eviction will entail severe hardship.

Mr. VA. Bobde, learned. counsel for the respondents submits, np
doubt under the original lease date 7.7.1948, a permission had been given
E to Gore to construct but he never constructed. He created a sub-lease in
favour of defendant Nos. 2 and 3. It was the sub-lessees who had put up
this building. In relation to the demised property there was no privily of
contract between the original lessor and the contesting defendents. Defen-
dants 2 and 3 constructed 14 shops and assigned their right in favour of
defendant Nos. 6, 7 and 8. How can these occupants claim the right as
F sub-tenancy ? Jai Singh Mormji and Ors. v. Mis Sovani Pvt. Ltd and Ors.,
[J973] 2 SCR 603 clearly lays down that no further sub-lease is possible.
That would squarely apply to the facts of the present case. The reliance
placed on Tota Singh's case (supra) is not correct, In any event, Section 14
docs not take within it assignments and transfers.
G
The short question that arises for our consideration in this case is,
whether the occupants, the present appellants who are the assignees from
defendant Nos. 2 and 3 can claim the protection of the Act as sub-lessees.
(

The original lease-deed date 7.7.1948, between Awate and Gore
H states in clause 2 sub-clause (1) and (3) as follows:
SMT.SHANTI v. D.B.VAIDYA [MOHAN,J.] 301

"2{1)I have taken the said land on rent for the period of 25 years A
from the date 7.7.1948 and have taken the same in my possession
this day.

xxxxx xxxxx xxxxx xxxxx

2(3) The land is vacant and I shall construct buildings therein as
B
per my wishes and I shall give the said building on any portion
thereof to any person on lease rent and I shall take the income
derived therefrom."

Admittedly Gore did not put up any construction. However, reliance C
is placed on Clause 2 sub-clause {3) extracted above to ?Jrge that he had a
right of sub-lease because he could build and let it out in favour of any one
he liked. In our considered opinion the permission to construct means
·nothing more than an emphasis of the manner of enjoyment of the proper-
ty. Even then as stated above, Gore never constructed. He leased-out the D.
property in favour of defendant Nos. 2 and 3 by lease-deed dated 17.2.1949.
Under clause 2 sub-clause (d), it is stated as follows:

"The said land is vacant. We shall construct structures thereon as
per our wishes and we shall give the said building or any portion
thereof on sub-lease to any person and we shall take the income E
derived therefrom. We shall obtain the permission required for the
said construction. In case your signature or consent is required in
that matter, you are to give the same."

These sub-lessees (defendant Nos. 2 and 3) assigned their rights in F
favour of defendant Nos. 6, 7 and 8 and others who are the appellants.
How can they claim protection as sub-lessees? The important point to note
here is that the original lessee Gore, defendant Nos. 2 and 3 sub-lessees
are no longer before us. They have not filed the appeal. In these cir,
cumstances, the principle applicable to this case is as stated in /ai Singh G
Morarji & Ors. case (supra) that a sub-tenant cannot create further sub-
tenancy. Therefore, we are totally unable to see any scope for application
of Section 15 of the Act. The parties are afforded liberty to contract out
of the Section. Even then it is only a sub-tenant who could claim protection.
If jn law, they are not sub-tenants of the original lessor, this Section is
totally Inapplicable. H
302 SUPREME COURT REPORTS [1994) 2 S.C.R.
.....
A Again for the application of Section 14, there must be a lawful
sub-tenancy. That is not so here. The occuants were not lawfully inducted
into possession as sub-tenants either prior to 1959 or ~973. Therefore, we
are unable to accept the contention urged by Mr. U.R. Lalit and Mr.S.K..
Dholakia, learned counsels. Hence, that Section is also inapplicable

B Weighing the equitable considerations, the Civil Appeal was ad-
journed or effecting a compromise. But the parties have not done so.
T
Therefore, we are unable to grant any relief on that score. The Civil Appeal
will stand dismissed. However, there shall be no order as to costs.

R.R. Appeal dismissed.