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1958 DIGILAW 224 (ALL)

Puran Chand v. Rent Control and Eviction Officer

1958-09-02

S.S.DHAVAN

body1958
JUDGMENT S. S. Dhavan, J. - This is a petition under Article 226 of the Constitution impugning the legality of an order of the Rent Control and Eviction Officer, Kanpur dated 7-11-1955 allotting certain premises to Jagdish Prasad respondent no. 2 and also of an order passed by the same officer under Sec. 7-A (iii) handing over possession of the aforesaid premises with police aid to the allottee. The petitioner states in his affidavit that since 1944 he has been the tenant of the accommodation consisting of a shop and a godown situate in premise no. 81199 Cooperganj, Kanpur. Uptil 1952 the petitioner carried on a business in the name and style of Chandra Oil Factory in which his younger brother was his partner. The rent was paid by the petitioner who was the real tenant although receipts were issued in the name of Chandra Oil Factory. In 1952 this business was closed and the petitioner commenced a new business of commission agents in the name and style of Durga Prasad Kashi Ram. The rent receipts however continued to be issued in the name of Chandra Oil Factory and the rent paid by the petitioner. The accommodation consists of a shop and a godown but there is a single tenancy carrying a monthly rental of Rs. 47|8/-. 2. The petitioner alleges that Jagdish Prasad respondent no. 2 in collusion with a clerk of the landlord fraudulently represented before the Rent Control and Eviction Officer that the godown had fallen vacant. On enquiry the inspector made a report that the godown was under the tenancy of the Chandra Oil Factory and that it was found locked at the time of the enquiry and had been so for the last six months. On the faith of the fraudulent representations of Jagdish Prasad the Rent Control Officer passed an order allotting the premises to him in these terms: "Landlord's representative says that the old tenant has left. It is in a dilapidated condition. The applicant says that he will get it repaired if allotted to him. Allotted. Sd. S.P. Sharma . . . . 7-11-1956." 3. The petitioner alleges that the allotment was made without any notice to him and that he had no knowledge of it. It is in a dilapidated condition. The applicant says that he will get it repaired if allotted to him. Allotted. Sd. S.P. Sharma . . . . 7-11-1956." 3. The petitioner alleges that the allotment was made without any notice to him and that he had no knowledge of it. He further complains that even after the allotment no notice under Sec. 7-A of the Rent Control and Eviction Act was served on him nor did he have any knowledge of the proceedings under that section, but after the possession had been delivered to the allottee Jagdish Prasad he discovered that his lock had disappeared from the godown and had been replaced by another. He immediately lodged a report with the police and also inspected the file in the office of the Rent Control Officer. He then discovered that Jagdish Prasad respondent no. 2 had obtained allotment in his favour by making fraudulent representations and also obtained possession through Police Aid. On 7-4-1956 the petitioner filed his objections before the Rent Control Officer praying for setting aside of the allotment order but that officer rejected the application in these words: "Parties present. I do not see any force in the representation of Pooran Chand which is rejected. If he feels aggrieved he can go up in revision. Papers filed. Sd. S. P. Sharma." 4. Aggrieved by the order of the Rent Control Officer the petitioner has come to this Court and prays for the quashing of these orders. 5. The petition is opposed by the allottee Jagdish Prasad who has filed a counter affidavit sworn by himself. In this it is admitted that the tenant of the shop was the "Chandra Oil Factory." The respondents case is that when the petitioner closed down the oil business in 1952 the shop became automatically vacant. According to him the petitioner kept the godown under lock and key with the object of pretending that the shop was still under the occupation of Chandra Oil Factory. He further contends that the new firm Durga Prasad Kashi Ram was never a tenant of the disputed shop and the petitioner had no right to take over the tenancy of the Chandra Oil Factory. 6. He further contends that the new firm Durga Prasad Kashi Ram was never a tenant of the disputed shop and the petitioner had no right to take over the tenancy of the Chandra Oil Factory. 6. The respondent does not deny the omission to serve any notice under Sec. 7-A on the petitioner but he contends that the petitioner's brother Durga Prasad lives a few yards away from the disputed shop and was present when the lock was broken open with police aid. He also contends that the petitioner was not entitled to receive a notice of the proceedings under Sec. 7-A as the tenancy was in the name of Chandra Oil Factory which had ceased to exist. No counter affidavit has been filed by the Rent Control Officer, Kanpur who does not oppose the petition. 7. The petitioner has established the fact that he was carrying on the business in the name and style of Chandra Oil Factory in the premises in dispute uptil 1952. The entire case of the respondent Jagdish Prasad is founded on the legal proposition that the Chandra Oil Factory was the tenant and not the petitioner. It was contended by the learned counsel for the respondent that the firm was an entity distinct from the petitioner and that after the firm had closed down its business in 1952 the tenancy came to an end automatically. Therefore the premises became vacant in 1952 and the Rent Control Officer had the power to allot them. 8. The case of the respondent is summarised in paragraphs 3, 4, 5 and 6 of his counter-affidavit. He says that the original tenant was the Chandra Oil Factory. It closed its business in 1952. After this the premises in dispute remained vacant but the petitioner kept it locked to give the wrong impression that the shop was still in the occupation of the Chandra Oil Factory. The petitioner surreptitiously stepped into the shoes of the previous tenant-the Factory-and claimed to be the tenant of the shop. But he was never a tenant. He could not substitute himself for the Chandra Oil Factory without a valid allotment order. After the closing down of the oil business, the previous tenant "liquidated" itself. It ceased to exist in the eyes of the law and the shop became automatically vacant. But he was never a tenant. He could not substitute himself for the Chandra Oil Factory without a valid allotment order. After the closing down of the oil business, the previous tenant "liquidated" itself. It ceased to exist in the eyes of the law and the shop became automatically vacant. This in brief is the summary of the respondents as to how the accommodation became vacant. 9. The entire argument of the respondent is based on a misconception of the entity described as "The Chandra Oil Factory," which in turn has led him to advance a number of erroneous propositions. He has assumed that the Chandra Oil Factor), was the tenant. He has therefore assumed that this tenant somehow disappeared when the business was closed down. He has consequently assumed that on the stoppage of business, the premises became automatically vacant. 10. These are wrong and fallacious assumptions. There was no such person as the Chandra Oil Factory which was, or ever could be, capable of entering into a contract or becoming a tenant. A tenancy is created by agreement between two or more persons. A person may be a living person or an artificial one like a company or corporation created by Statute. But it is settled law that a firm does not have the legal status of a person. It is merely convenient name or label for the person or persons who own it. The firm as such is incapable of making a contract or becoming a tenant. The statement that a firm became the tenant or secured a contract is a layman's way of describing the real legal relation namely, that the partners of the firm became tenants or entered into a contract. 11. The Chandra Oil Factory was not a legal person. It could not be a tenant in law and the tenancy could not legally be in its name. The respondent's statement that the Chandra Oil Factory was the tenant means in law that its proprietor was the tenant. 12. The closing down of the business by a firm does not mean that the firm "liquidates" itself. Nor does it mean that the premises in which the business was carried on become "automatically vacant," any more than that a lawyer's or doctor's premises become automatically vacant when he discontinues practice. 12. The closing down of the business by a firm does not mean that the firm "liquidates" itself. Nor does it mean that the premises in which the business was carried on become "automatically vacant," any more than that a lawyer's or doctor's premises become automatically vacant when he discontinues practice. Under Sec. 7 of the U. P. (Temporary) Control of Rent and Eviction Act an accommodation falls vacant in any of the following circumstances:- (i) if the landlord ceases to occupy it, or (ii) if the tenant vacates it, or (iii) if the tenant otherwise ceases to occupy it, or (iv) if the tenancy is terminated, or (v) if the tenancy is released from requisition, or (vi) in any other manner, whatsoever. The last clause shows that the definition of a vacancy has been made as wide as possible. The legislature in their anxiety to prevent fraudulent evasions of governmental control of letting by unscrupulous landlords and tenants thought fit to plug every possible hole in the Statute through which collusive leakages could occur. The result has been to place a very wide power in the hand of a single individual the District Magistrate who can by execution decide whether any accommodation has fallen vacant or not. A tenant in lawful occupation and using the accommodation in a legitimate manner may be served with an order to quit the premises as a result of an allotment order fraudulently obtained by a scheming rival who had a covetous eye on his tenancy. It is true that a tenant in such a situation is not altogether without protection. He has the right under Sec. 7 A (2) to appear before the Rent Control and Eviction Officer and show that the allotment order was not duly passed. But he has to wait till the danger of eviction is on him. There is no provision in the Act giving a tenant in occupation the right to appear and prevent such an order being passed. He has no right to appeal against the order which degrades him from a tenant to a trespasser. He must wait till he received a notice of eviction. This is a notable omission or lacuna in the Act. The tenancy right of a tenant include the right to enjoy the quiet possession, use and occupation of his accommodation. This is a fundamental right guaranteed by the Constitution. He must wait till he received a notice of eviction. This is a notable omission or lacuna in the Act. The tenancy right of a tenant include the right to enjoy the quiet possession, use and occupation of his accommodation. This is a fundamental right guaranteed by the Constitution. The question may arise in a future case whether a Statute which enables the District Magistrate to dispose of, by executive order, an accommodation in lawful possession of a tenant without giving him an opportunity of hearing, is constitutional. In the case of Rameshwar Prasad v. District Magistrate, A.I.R. 1954 Allahabad 144 it was held by a Division Bench of this Court that a man must not be deprived of his property without being given the opportunity of being heard. It is one thing to pass an order directing the landlord to let accommodation which is vacant: it is quite another matter to pass an allotment order in respect of accommodation which is in the lawful occupation of a tenant behind his back. It is not necessary for me to decide this point as I am of the view that the order of allotment was without jurisdiction for another reason. 13. No allotment order can be passed in respect of an accommodation unless it has fallen vacant or is about to fall vacant. A vacancy, actual or imminent, is a condition precedent to the exercise of the power to pass an order of allotment. An order allotting premises which are neither vacant nor about to fall vacant is without jurisdiction. 14. As stated above, the Statute prescribes the circumstances in which a vacancy may occur. The sixth or last circumstance is covered by the phrase, in any manner whatsoever. In view of the vide definition of vacancy preceding it, this phrase has to be interpreted to have a meaning ejusdem generis it does not create any fresh circumstance unconnected with those specified before it. The relevant words applicable to the present case are those which provide that an accommodation falls vacant by "the tenant vacating it or otherwise ceasing to occupy it or by termination of a tenancy." When does a tenant vacate the accommodation or cease to occupy it? Discontinuance of physical possession is not a conclusive test. The relevant words applicable to the present case are those which provide that an accommodation falls vacant by "the tenant vacating it or otherwise ceasing to occupy it or by termination of a tenancy." When does a tenant vacate the accommodation or cease to occupy it? Discontinuance of physical possession is not a conclusive test. A tenant may lock up the accommodation before leaving town on business, or on a long vacation abroad; he may even hire a chokidar or request a friend to live in the premises as a caretaker in his absence. In all such arrangements, there is no intention to transfer possession of the accommodation. 15. In my view, a tenant vacates the accommodation or ceases to occupy it only when he transfers possession to another or surrenders it to the landlord with intention to transfer or surrender it, as the case may be. The existence of an intention to transfer or surrender possession is crucial. 16. A tenancy may also terminate even without surrender of possession, if the tenant renounces it, or by the operation of law for example if the tenant writes to the landlord that he has decided to quit, or if a particular type of tenancy is declared illegal by Statute. Whether an accommodation fell vacant or not depends upon the particular circumstances of that case. The Court or the tribunal will ascertain the real intention of the tenant and the nature of the arrangement made by him. In the present case, there was no intention to transfer possession and no transfer took place. Nor was there any renunciation of tenancy nor its termination by the operation of the law. The petitioner had the intention to remain, and did remain a tenant in occupation at all material time. 17. A tenant has the right to make use of the accommodation rented by him in any lawful manner. He may start a business and close it down, and start a fresh business. None of these changing activities can have the effect of terminating his tenancy or making the accommodation vacant. Furthermore, a tenant has the right to start a business in his premises in partnership with another. Provided that the partnership is a genuine transaction and not a cloak to conceal a transfer of possession of the premises to a bogus "partner" in consideration of payment of an illegal premium or rent. 18. Furthermore, a tenant has the right to start a business in his premises in partnership with another. Provided that the partnership is a genuine transaction and not a cloak to conceal a transfer of possession of the premises to a bogus "partner" in consideration of payment of an illegal premium or rent. 18. Two types of cases come up from time to time before this Court in which the action of a tenant in starting a partnership business in the premises occupied by him is challenged. First, there are cases in which there is no real intention to create a relation of partnership and the notice is to sub-let the premises to a person who is fraudulently described as a "partner". Usually a contract of partner-ship is executed to disguise the real nature of the transaction. In such a case, the Rent Control and Eviction Officer has the power to tear of the mask and examine the real face of the deal behind it. He may hold that what is described as "partnership" is really a transfer of possession by the occupier of the premises and that, therefore, the accommodation has become vacant. These are really cases of fraud in which there never was any partnership. Recently, in the case of Haji Abdul Shakoor v. Rent Control and Eviction Officer, Kanpur, W.P. no. 2622 of 1956, D/d. 14.8.1958 this Court had to examine the legality of an order passed by the Rent Control and Eviction Officer in which he had held that the landlord, under the cover of a partnership deed, had transferred possession of godown to a tenant for a rental of Rs. 4000/-. per mensem (described in the deed of partnership as the landlord's share of 'profit') this Court held that there was in fact no partnership but an illegal letting disguised as a partnership and upheld the finding of the Rent Control and Eviction Officer that the landlord had ceased to occupy the accommodation. But in the second type of cases, the owner or occupier of premises enters into a genuine agreement of partnership. There is a real intention to create the relation of partnership. The agreement is acted upon and a bona fide business is set up on the premises. The present case belongs to this type. But in the second type of cases, the owner or occupier of premises enters into a genuine agreement of partnership. There is a real intention to create the relation of partnership. The agreement is acted upon and a bona fide business is set up on the premises. The present case belongs to this type. In such a case, the occupier of the premises does not by the mere act of setting up on the premises a business in partnership with others, cease to occupy them. Nor does the commencement or closing down of the business render the accommodation automatically vacant there is no transfer of possession and no vacancy in the present case. Under the law of partnership every partner is the agent of all the other partners. The possession of one is on behalf of all the others. A person does not transfer possession of his premises or cease to occupy them when he sets up in them a business in partnership with others. Nor does he cease to occupy them if he clos-es down his existing business and starts a new one in partnership with the old or new partners. Throughout these changing activities he has been in occupation of the premises and making a lawful and legitimate use of them. There has been no transfer of possession. Nor does the accommodation automatically fall vacant if the tenant closes down one business but does not start another for some time. If he continues to be in occupation of the premises, the mere closing down of his business creates no vacancy. 19. As stated earlier, a tenant has the right to start and run any lawful business in the premises occupied by him. what he can do alone, he can also do in partnership with other. He has the right to admit a partner in an existing business or start a new one in partnership with others. These rights are inherent in, and flow from, a tenant's fundamental right to occupy and enjoy the use of his premises in any legitimate manner. There is nothing in the U. P. (Temporary) Control of Rent and Eviction Act suggesting that a tenant cannot start a bona fide business in the premises in partnership with others. 20. These rights are inherent in, and flow from, a tenant's fundamental right to occupy and enjoy the use of his premises in any legitimate manner. There is nothing in the U. P. (Temporary) Control of Rent and Eviction Act suggesting that a tenant cannot start a bona fide business in the premises in partnership with others. 20. Thus the submission of the Respondent No. 2 that the premises in dispute were in the tenancy and occupation of the Chandra Oil Factory has no meaning in law. The petitioner has stated that he was the real tenant although the receipts were issued in the name of Messrs Chandra Oil Factory. This statement has not been controverted. It is not necessary for me to decide whether the petitioner was the sole tenant or tenant jointly with his brother. In either case he was a tenant of the premises. 21. The petitioner has also established the fact that in 1952 he discontinued the old business and started a new business of commission agents in the same premises. But the landlord continued to issue rent receipts in the name of the Chandra Oil Factory. These facts have not been controverted. 22. In his application before the Rent Control Officer the petitioner brought all these facts to the notice of that officer. He submitted that there has been no vacancy and that he had merely changed his business in 1952. It is well settled that the jurisdiction of the Rent Control Officer to allot an accommodation depends upon its being vacant. He has no jurisdiction to allot any premises which are not vacant. In the present case the petitioner has established the fact that the godown was not vacant on the date when the allotment order was passed. His allegations have not been controverted. 23. He has also established that no notice of the proceedings under Sec. 7-A were served on him. Under Sub-Sec. (1) of that section the Rent Control and Eviction Officer must, before evicting any person whom he suspects of being in unauthorised occupation of any accommodation, call upon him to show cause why he should not be evicted. He must give him an opportunity to appear before him and satisfy him that the allotment order was not duly passed and that he is entitled to remain in occupation of the accommodation. He must give him an opportunity to appear before him and satisfy him that the allotment order was not duly passed and that he is entitled to remain in occupation of the accommodation. In this case the petitioner has been deprived of the opportunity of saying to the Rent Control and Eviction Officer that his allotment order was without jurisdiction as there was no vacancy at the time when the order was passed. The entire proceedings culminating in the use of the police force under Sec. 7-A (iii) are without jurisdiction. 24. I therefore quash the order of the Rent Control and Eviction Officer dated 7-11-1955 allotting the premises to jagdish Prasad respondent no. 2, as also the entire proceedings under Sec. 7-A culminating in the use of police force against the petitioner on the 14th February, 1956. The petitioner is entitled to be put back in possession if he has lost it.