V. P. VARID v. KAMALAM — 1985 DIGILAW 311 (KER)

Judgment :- 1. Counter petitioners 6 and 7 in O.P. (R.C.) No. 194 of 1976 on the file of the Rent Control Court, Kozhikode, are the petitioners in this Civil Revision Petition. 2. Respondents 1 to 7 before this Court are the legal heirs of the original landlord, the petitioner before the Rent Control Court. Respondents 8 to 12 herein are respondents 1 to 5 before the Rent Control Court. They are the legal heirs of one Peter who had taken the petition-schedule building on rent under a lease deed dated 1-6-1961. 3. I am referring to the parties as they are arrayed in the O.P. The landlord sought recovery of the building on the ground of arrears of rent and sub-lease. According to him the tenancy right which had devolved upon the legal heirs of Peter had been transferred to respondents 6 and 7. The Rent Control Court by order dated 14-2-1977 allowed the eviction on the ground of arrears of rent as also on the ground of sub-lease. Respondents 6 and 7 challenged that finding before the Appellate Authority, Kozhikode, in C.M.A. No. 51 of 1977. The Appellate Authority relying on the decision reported in Commr, of I.T v. Juggilal (AIR. 1967 S.C. 401) found against sub-lease and ordered eviction only on the ground of arrears of rent. The landlord took up the matter in revision before the District Court, Kozhikode, in R.C.R P. No. 116 of 1979. During the pendency of that revision petition the landlord passed away and his legal representatives were impleaded. The learned District Judge by his order dated 17-2-1981 allowed eviction on the ground of sub-lease as well. This order is under challenge in this Civil Revision Petition. 4. The landlord leased out the premises to Sri C.M. Peter on 1-6-1961. Ext. A-1 is the rent deed executed by Sri Peter. The monthly rent fixed therein is Rs. 45/-. The rent deed contains specific provisions preventing the tenant from transferring the premises to any other person without prior sanction from the landlord. While the tenant was in possession of the premises he entered into a partnership with the 6th respondent. The deed of partnership is marked in this case as Ext. B-21. In that partnership deed Sri Peter was the second partner. While the tenant was in possession of the premises he entered into a partnership with the 6th respondent. The deed of partnership is marked in this case as Ext. B-21. In that partnership deed Sri Peter was the second partner. As per the deed of partnership the second partner as working partner and manager is to conduct and manage all the business of the firm. While the partnership was so carrying on the business in the premises, Sri Peter expired on 26-10-1974. Thereafter the 6th respondent carried on the business in the premises with the help of his brother, the 7th respondent. The landlord then filed this petition before the Rent Control Court for recovery of the premises on the ground of arrears of rent and sub-lease. 5. Respondents 6 and 7 opposed the petition contending that by the formation of the partnership the tenanted premises has become the asset of the partnership, that on the death of Sri Peter the partnership dissolved, that the assets of the partnership have been taken over by the 6th respondent, and that such taking over of the assets by the 6th respondent will not amount to transfer of possession. Therefore, the petition for recovery under S.11(4) (i) of the Kerala Buildings (Lease and Rent Control) Act (hereinafter referred to as the Act) is not maintainable. 6. It is common case that the building was taken on rent by Sri Peter under Ext. A-1 lease deed. While enjoying the premises as per the terms of that deed, Sri Peter entered into a partnership with the 6th respondent. The partnership deed is Ext. B-21. The business in the premises was being carried on by Sri Peter in accordance with the terms contained in Ext. B-21. During that period possession and control of the premises were with Peter. Even though the business carried on in the premises belonged to the partnership, Sri Peter continued to have control over the premises. There was no transfer of possession from Peter to the partnership of which he himself was the managing partner. On 26-10-1974 Peter passed away. Thereafter the business was entirely taken over by the 6th respondent. Clause.11 of Ext. Even though the business carried on in the premises belonged to the partnership, Sri Peter continued to have control over the premises. There was no transfer of possession from Peter to the partnership of which he himself was the managing partner. On 26-10-1974 Peter passed away. Thereafter the business was entirely taken over by the 6th respondent. Clause.11 of Ext. B-21 provides: "In the event of death of the second Partner, the Firm shall be dissolved and that all the assets and properties of the Firm including its good-will shall belong to and vest in the First Partner as his own property and business and that the First Partner shall pay to the nominee of the Second Partner or his legal heir or heirs when no nominee is appointed, any credit or credits due to or standing in the name of the Second Partner together with interest, if any, due or accrued and the share of net profit, less portion of net loss and any dues from him as shown by the books and accounts of the Firm." This shows that the legal heirs of Peter had not obtained any interest in the business belonging to the partnership. The entire business devolved on the 6th respondent 7. Learned counsel appearing for the revision petitioners (respondents 6 and 7 before the Rent Control Court) argues that when Peter joined the partnership, the tenancy right of Peter became the asset of the partnership, that on the death of Peter the partnership dissolved, that on such dissolution the asset was taken over by the 6th respondent, that such taking over will not be a transfer of the asset by one partner to another, that devolution of the tenanted premises on the 6th respondent will not be an objectionable transfer falling within S.11(4) (i) of the Act and that the order passed by the District Court ordering eviction is not tenable. Learned counsel relied on the decisions reported in I. T. Commr., M.P. v. Dewas Cine Corpn (AIR. 1968 SC. 676), I.T. Commr., U P. v. Sankey Lal (AIR 1971 S C. 2270) and Malabar Fisheries Co. v. I.T Commr, Kerala (AIR. 1980 SC. 176) in support of his contention that the assets taken over by the partners on dissolution of a partnership will not amount to transfer of assets. 1968 SC. 676), I.T. Commr., U P. v. Sankey Lal (AIR 1971 S C. 2270) and Malabar Fisheries Co. v. I.T Commr, Kerala (AIR. 1980 SC. 176) in support of his contention that the assets taken over by the partners on dissolution of a partnership will not amount to transfer of assets. The statement of law that assets divided between the partners at the time of dissolution of a partnership will not amount to a transfer as between the partners is not open to dispute. The question involved in this case is regarding the devolution of the tenancy right on the dissolution of the partnership, and whether the tenancy which was granted to Peter has devolved upon the 6th respondent without offending the provisions contained in S.11(4) (i) of the Act. 8. The tenancy created under Ext. A-1 was one between the landlord and Sri Peter. When Peter entered into the partnership and started business of the partnership in the tenanted premises, the arrangement entered into was between Peter and the 6th respondent. The landlord was never a consenting party to this arrangement. There is nothing in evidence to show that the landlord had accepted the partnership arrangement. During the lifetime of Peter he was conducting the business and managing all the affairs of the firm. During that period there was no transfer of possession of tenancy in favour of another, because the tenant himself was a partner. When the tenant ceased to exist, the tenancy right was taken over by the 6th respondent. This taking over of the premises by the 6th respondent can only be by a transfer from the original tenant as far as the landlord is concerned. In other words, this change of possession is one falling within the mischief of S. H (4) (i) of the Act. 9. In the decision in Jacob v. Jacob (1977 KLT. 224) Janaki Amnia, J., observed: "Granting of permission to the firm to conduct business in the building does not amount to transfer of exclusive possession by the respondent to another person. This is so, so long as the respondent continues to remain a partner of the firm. The position may be different when he retires from the firm and severes therewith." In Jameela v. Moosa (1981 KLT. This is so, so long as the respondent continues to remain a partner of the firm. The position may be different when he retires from the firm and severes therewith." In Jameela v. Moosa (1981 KLT. 791) at page 796 M.P. Menon, J. observed: "The law reports contain many decisions where Courts have refused to evict tenants on the ground of sub-letting or transfer of possession where they had admittedly formed partnerships after the letting. In my opinion the proper approach would be not to generalise and lay down theories in the abstract, but to tackle the facts of each case and see how they operate. If the question arises under S.11(3), the attempt should be to find out whether the partnership set up by the landlord is one where he could really occupy the premises himself; and if it arises under S.11(4)(i), the attempt again should be to find out whether the tentant's partnership is one where he effectively continues to occupy the premises notwithstanding the formation of the partnership." I am in respectful agreement with the views expressed in the passages quoted earlier 10. On the death of Peter, the tenant, the business was taken over by the 6th respondent, the 6th respondent getting absolute control and possession over premises. This offends the provisions contained in S.11(4) (i) of the Act. If the argument advanced by counsel that the devolution of the tenancy got on the 6th respondent as a result of the dissolution of the partnership and that would not amount to a transfer is accepted, it would give an easy hand to those tenants who would desire to create a sub-lease or transfer possession to circumvent the statutory provision contained in S.11(4) (i) of the Act. Such of those tenants can easily create a partnership with potential sub-leases for a very short period and incorporate a recital in the deed of partnership that on dissolution of the partnership the tenancy right will vest in the other partner who was not a tenant. Such a procedure cannot be recognised to defeat the provisions of the statute. In view of what has been stated above I find no merit in this Civil Revision Petition. The order passed by the learned District Judge in R.C.R.P.116 of 1979 is confirmed. Such a procedure cannot be recognised to defeat the provisions of the statute. In view of what has been stated above I find no merit in this Civil Revision Petition. The order passed by the learned District Judge in R.C.R.P.116 of 1979 is confirmed. I direct respondents 6 and 7 in the Rent Control Court to put the landlord in possession of the petition-schedule building within a month from today. The result, therefore, is that the C.R.P. is dismissed as stated above with costs to the contesting respondents. Dismissed.