Summary
Landlords of hotel premises at Pune sued their tenant for eviction under Section 13(1)(e) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, alleging that he had assigned his hotel business and parted with possession to a third party. The trial court and the appellate court decreed eviction, but the Bombay High Court reversed, holding that the proviso to Section 15(1) permitted transfer and that a partnership with the third party was not sub-letting. The Supreme Court restored the decree: the proviso applies only where the State Government has notified permission, which was nobody's case; the lease expressly barred assignment; and the tenant's admitted execution of an assignment agreement for Rs. 2 lakhs with receipt of earnest money itself completed the breach, so the later failure of the assignee's specific performance suit was irrelevant.
Issues
- Whether a tenant who executed an agreement assigning his business in the leased premises to a third party for consideration, in breach of an express lease condition, incurred eviction under Section 13(1)(e) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, notwithstanding that the assignee's suit for specific performance later failed.
- Whether the proviso to Section 15(1) of the 1947 Act permits a tenant to transfer his interest in the absence of a State Government notification.
Provisions considered
- Section 13(1)(e), Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947A landlord is entitled to recover possession where the tenant has unlawfully sub-let or assigned or transferred in any other manner his interest in the premises; the admitted assignment agreement established such a transfer. (¶¶ 20, 22, 23)
- Section 15(1) and proviso, Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947Subject to a contract to the contrary, a tenant cannot sub-let, assign or transfer his interest; the proviso only empowers the State Government by gazette notification to permit transfers in an area, and no such notification was shown, so the High Court's reliance on the proviso was wholly misconceived. (¶¶ 13, 20)
- Section 105, Transfer of Property Act, 1882Following Mahendra Saree Emporium, a sub-lease implies the tenant parting with the right to enjoy the property; the wide phraseology of sub-letting embraces assignment or transfer in any other manner of the lessee's interest. (¶ 19)
Held
- The principle in Parvinder Singh and Mahendra Saree Emporium, that a genuine partnership in which the tenant remains actively associated and retains control is not sub-letting, has no application where the tenant went beyond a partnership deed and admittedly executed an assignment agreement transferring his hotel business for Rs. 2 lakhs and received Rs. 50,000 as earnest money; execution of that document itself completed the breach of the lease condition and the statutory mandate. (¶¶ 18, 19, 21, 22)
- The subsequent dismissal of the assignee's suit for specific performance, to which the landlords were not parties and whose judgment was not placed on record in time, is of no relevance or consequence; the High Court lost sight of the tenant's admission of the assignment agreement, which settled the question. (¶¶ 15, 22, 23)
Result
Appeals and applications allowed; Bombay High Court judgments dated 03.12.2008 and 09.09.2009 set aside; trial court decree of eviction as affirmed by the appellate court restored; legal representatives of the deceased tenant to hand over vacant possession within two months, failing which the appellants may execute the decree; no order as to costs.