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2004 DIGILAW 413 (KER)

Kottillil Muhammedkutty Haji v. Athanickal Sarada

2004-08-24

J.M.JAMES, K.S.RADHAKRISHNAN

body2004
Judgment :- Radhakrishnan, J. Landlords are the revision petitioners. Rent Control Petition was filed under Sections 11 (2)(b), 11 (4)(i) and 11 (4) (ii) of Act 2 of 1965. Petition was dismissed on all the grounds except under Section 11(2) (b). Landlords preferred appeal before the Appellate Authority which was dismissed and hence this revision. 2. Landlords took out notice as ordered by this court. First respondent accepted the notice but nobody appeared. Notice to other respondents was taken out but could not be served. Notice was again taken out through the District Court but was returned with the endorsement “not known”. Petitioners’ contention is that first respondent transferred his rights to the second respondent and another portion to third respondent. Before the Rent Control Court though notice was taken out to all the respondents, notices sent to respondents 2 and 4 to 9 were returned stating “not known”. Respondents 2 and 4 to 8 were set ex parte. Landlords also took out notice in the rent control petition to respondents 4 to 9 by publication, but only first and third respondents appeared and contested. In any view, under Section 21 of the Kerala Rent Act an order of eviction passed against the tenant shall be binding on all the sub tenants whether they are parties to the proceedings or not. 3. Tenanted premises is a two storeyed building. It was rented out to the first respondent by way of registered kooli kychit No.1 of 1953 dated 18.1.1953. There was a specific condition in the said kychit that the first respondent shall not sublease the property or effect any repairs without the consent of the landlord. Contrary to the stipulations in the deed, first respondent made some repairs in the premises. There was only on room in the upstair portion which the first respondent separated into several rooms and put up doors for each of the rooms. Likewise in the ground floor first respondent had put up another room and provided a new entrance to that newly constructed room. Consequently value and utility of the building was reduced materially and permanently. Further first respondent after separating the ground floor into two rooms, one was subleased to the second respondent for conducting a soda business and another portion was subleased to third respondent for conducting tea shop business. Consequently value and utility of the building was reduced materially and permanently. Further first respondent after separating the ground floor into two rooms, one was subleased to the second respondent for conducting a soda business and another portion was subleased to third respondent for conducting tea shop business. Further the upstair portion was subleased to the other respondents by the first respondent. Resultantly first respondent is not in possession of any of the rooms as mentioned in the kychit. Stating all these facts petitioners demanded vacant possession of the petition schedule premises. First respondent did not accede to the request of the petitioners. Petitioners then sent a lawyer notice to which first respondent did not respond. Hence the rent control petition was filed under Sections 11 (2)(b), 11(4)(i) and 11(4)(ii) of Act 2 of 1965. 4. First respondent filed counter statement stating that there is arrears of rent. Further it is also stated that the first respondent is not acting against the terms and conditions of the lease and has not effected repairs of material alternation. Upstair portion of the property was divided for the purpose of conducting business in the lower portion. Further it was stated that upstair portion was divided by wooden planks and the employees of the first respondent are occupying those rooms. Partition effected in the upstair portion could be removed at any time. Due to the temporary alterations, according has not been diminished. Further it was stated that in the tea shop, first respondent’s sister’s son Rajendran was helping the first respondent. Later he started conducting a soda business there and was also supervising the tea business conducted in the petition schedule premises. Later Vasu, the third respondent started helping the first respondent in the business. Ninth respondent was only an employee of the first respondent. Some of them are staying in the tenanted portion and therefore there is no sublease of the premises. First respondent wanted the petition to be dismissed. 5. Third respondent filed separate counter statement. It is stated that third respondent was helping the business in the petition schedule property. On the side of the landlords fifth petitioner was examined as P.W.1 Ext.A1 was marked. On the side of the respondents, first respondent was examined as R.W.1 and third respondent was examined as R.W.2. Commission was taken out and the commissioner was examined as C.W.1. It is stated that third respondent was helping the business in the petition schedule property. On the side of the landlords fifth petitioner was examined as P.W.1 Ext.A1 was marked. On the side of the respondents, first respondent was examined as R.W.1 and third respondent was examined as R.W.2. Commission was taken out and the commissioner was examined as C.W.1. Ext.C1 is the commission report and Ext.C2 is the plan. 6. We may first examine the ground urged under Section 11(4)(i) of the Act. It is well settled that the initial burden to establish the sub tenancy is on the landlord. Registered kychit No.1 of 1953 evidences the landlord – tenant relationship and the first respondent Sarada is the tenant. Petitioner has specifically stated in the petition that after the partition of the ground floor into two one was subleased to the second respondent for conducting a soda business and the other portion to the third respondent for conducting a tea shop. This was without the knowledge and consent of the landlord. At the time of lease the petition schedule building was a two storeyed building and the first floor of the building was a hall and the ground floor was used by the first respondent as hotel. First respondent after partitioning the ground floor made several rooms in the upstair portion and allowed third respondent to occupy the premises. Landlord’s specific case is that first respondent has parted with possession and has no control over the tenanted premises. Third respondent is in control of the ground floor and other respondents are occupying the upstair portion. Commission was taken out and the commissioner has stated in his report that the upstair portion of the building was separated into small rooms with wooden planks / wooden screen. First respondent was examined as R.W.1. She stated that being a small tea shop she is not maintaining ledger of labourers. Third respondent was examined as R.W.2 who deposed that he was an employee of the first respondent and he is no more an employee. R.W.1 stated in his deposition that upstair portion of the tenanted premises is occupied by her employees. Commission report has also stated about the presence of a small name board of one Uthaman, affixed in front of one room situated upstairs. R.W.1 stated in his deposition that upstair portion of the tenanted premises is occupied by her employees. Commission report has also stated about the presence of a small name board of one Uthaman, affixed in front of one room situated upstairs. Further commissioner found that third respondent was actually present in the hotel and that he was found in the seat of the cashier. 7. We are of the view, petitioners have discharge the burden that the first respondent has parted with the possession to respondents 2 to 9. Going by the registered kychit landlord-tenant relation in only with the first respondent. Onus is on the first respondent to establish the jural relationship between her and respondents 2 to 9. Presence of third respondent in the premises is admitted. Petitioner’s specific case is that tenanted portion was leased out by the first respondent to various persons. First respondent has stated that she was conducting a hotel in the tenanted premises. If she was conducting the hotel in the premises she should have produced licence issued by the licensing authority and other documents to substantiate her contention. She could have also produced ledger and relevant documents to show that she has employees in the hotel and they are housed in the upstair portion of the building. On the other hand, R.W.1 admitted that licence in respect of the hotel stands in the name of one Rajendran, son of the first respondent’s sister. It is pertinent to note that first respondent’s husband is no more and had no children and there is nobody to inherit the tenancy rights. So far as the first respondent is concerned her explanation is that since she is an old lady licence was taken in the name of Rajendran. Further R.W.1 also stated that subsequently Rajendran left and third respondent used to assist her. When commissioner inspected the premises he found the presence of third respondent sitting in the seat of the cashier. Burden is on the first respondent to establish the jural relationship between the first respondent and third respondent. We have indicated that though notice was sent from this court and notice was received, there is no appearance for the first respondent. 8. The Rent Control Court and the Appellate Authority have clearly misunderstood the scope and ambit of Section 11(4)(i) of the Act. We have indicated that though notice was sent from this court and notice was received, there is no appearance for the first respondent. 8. The Rent Control Court and the Appellate Authority have clearly misunderstood the scope and ambit of Section 11(4)(i) of the Act. The Rent Control Court and the Appellate Authority had wrongly cast the burden on the landlords stating that the petitioners-landlords have not proved the parting of legal possession to the sublessees. We may quote the reasoning of the rent Control Court in his own words: “Anyway the petitioners have not produced any documents to show that the first respondent parted legal possession to the other respondents and the other respondents are in possession of the property as sub lessees. No evidence was adduced by the petitioners regarding that the other respondents were paying rent to the first respondent… Further she has no idea about the employees in the shop. Being a lady she used to present in the tea shop in rare occasions. The petitioners are not proved that the first respondent parted the possession to the other respondents and taking enhanced rent from other respondents.” Reasoning of the Appellate Authority is more disturbing. The Appellate Authority stated as follows: “Therefore, the fact that the third respondent was found in the premises conducting the hotel business does not rouse any presumption that the first respondent had parted with possession of the tenanted premises to the third respondent. Merely from the presence of a person other than the tenant in the shop, subletting cannot be presumed…… Hence simply because hotel licence was obtained in the name of Rajendran in the circumstances mentioned above, it will not lead to any inference that the tenanted premises was sublet to Rajendran or any “other person. In these circumstances, the fact that accounts were not maintained and that workers were not registered before the Labour Officer also cannot lead to a conclusion that RW-1 was not in possession of the premises…. It has already been found that there was no transfer of possession of the building or any portion thereof. If there had been a transfer of possession of the premises by the tenant then the terms and conditions under which such a transfer was made will be known only to the transferor and the transferee and not to the landlord. It has already been found that there was no transfer of possession of the building or any portion thereof. If there had been a transfer of possession of the premises by the tenant then the terms and conditions under which such a transfer was made will be known only to the transferor and the transferee and not to the landlord. It is only in such a case the tenant would be liable to establish the jural relationship as obtained between him and his transferee. But here there is nothing to show that there was any transfer of possession of the tenanted building or any portion thereof.” In our view, there is a complete misreading of the evidence and total lack of knowledge of the provisions of law and consequently the Rent Control Court and the Appellate Authority came to an erroneous conclusion. The wrong application of legal provisions by the Rent Control Court and the Appellate Authority has caused considerable prejudice to the petitioner. Once again we may impress upon the Rent Control Court and Appellate Authority the scope and ambit of Section 11(iv)(i) which we extract below for easy reference. (4) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building- (i) if the tenant after the commencement of this Act, without the consent of the landlord, transfers his right under the lease or sublets the entire building or any portion thereof is the lease does not confer on him any right to do so. Provided that an application under this clause shall not be made for the first time in respect of one and the same tenancy unless the landlord has sent a registered notice to the tenant intimating the contravention of the said condition of the lease and the tenant has failed to terminate the transfer or the sublease, as the case may be, within thirty days of the receipt of the notice or the refusal thereof. Section 11(4)(i) contemplates two situations; one is the tenant’s unauthorized transferring his right under the lease without the consent of the landlord and the other tenant’s unauthorized subletting of the premises without the consent of the landlord. 9. Distinction between unauthorised subletting and unauthorised transfer of right has to be borne in mind. Section 11(4)(i) contemplates two situations; one is the tenant’s unauthorized transferring his right under the lease without the consent of the landlord and the other tenant’s unauthorized subletting of the premises without the consent of the landlord. 9. Distinction between unauthorised subletting and unauthorised transfer of right has to be borne in mind. Under the general law, tenant can as an ordinary incident of the estate granted to him both assign his term and create sublease unless there is any covenant restricting the lessee’s right. Under Section 108(j) of the Transfer of Property Act, the lessee ma transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease. Law is settled that in the absence of any statutory bar prohibiting creation of sub tenancy, contract of sub tenancy is valid. In spite of the rule contained in Section 108(i) and (j) of the Transfer of Property Act, it is open to the parties to covenant against such alienation and a sublease given in contravention of such covenant is invalid as between the original lessor and the lesses, though it is valid as between the original lessee and the sub lessee. 10. The landlord when leases out a premises to the tenant gives exclusive possession, at the same time retains the reversionary right to himself. Reversionary right is usually an estate in possession and usually gives the right to receive rent. The landlord thereby makes a grant of an estate or interest in the tenant which is less than his own. On leasing out the premises to the tenant there is a privity of contract between the landlord and the tenant. But when tenant assigns his interest to a sublessee with the consent of the landlord between the landlord and the assignee tenant there will be a privity of estate and no privity of contract. When reversion is assigned there will be privity of estate between the assignee and the tenant. In the case of sublease the right of reversion of interest in the premises would always remain with the tenant, while in the case of transfer of right lessee conveys his entire right to sublessee. When reversion is assigned there will be privity of estate between the assignee and the tenant. In the case of sublease the right of reversion of interest in the premises would always remain with the tenant, while in the case of transfer of right lessee conveys his entire right to sublessee. Therefore as between the lessor and the lessee, the lessee continues to remain liable in respect of all his covenants by reason of privity of contract. Where the grantee of a lease transfers the whole of his term to the sub grantee on terms similar to those of the original lease, such transfer operates by way of sub-demise and not by way of assignment. The distinction between sublease and an assignment is that in a sub lease the whole or any part of the lessee’s interest can be transferred while in an assignment the whole of the lessee’s interest must be transferred. There is no privity of contract between the lessee and the head landlord. 11. We may in this connection refer to the decision of this court in Gopi v. Raghavan (2003 (3) KLT Sh. Notes 114) wherein this court took the view that both clause (i) of sub section (4) of Section 11 as well as the proviso thereto will clearly indicate that the Kerala Statute contemplates eviction in situations where the tenant unauthorisedly transfers his right under the lease without the landlord’s consent even when the transfer does not amount to subletting. Section 11 of the Act starts with a non obstante clause which clearly indicates that even if any other law allows subletting, subletting would be unlawful. When we apply the law to the facts of this case, this is not a case of subletting but a case of transfer of leasehold right. First respondent has conferred his entire rights to the sublessee. First respondent has assigned whole of interest in the property to third respondent. 12. The landlord-tenant relationship between the petitioners and the first respondent is admitted which is also evidenced b registered kychit dated 18.1.1953. There is no appearance on behalf of the first respondent tenant. Facts would demonstrably show first respondent has parted with possession and third respondent is in control of the premises, possibly upstair portion with other respondents. This is not a case of unauthorised subletting but unauthorised transfer of interest under the lease. There is no appearance on behalf of the first respondent tenant. Facts would demonstrably show first respondent has parted with possession and third respondent is in control of the premises, possibly upstair portion with other respondents. This is not a case of unauthorised subletting but unauthorised transfer of interest under the lease. No evidence was adduced by the first respondent before the court below to establish that first respondent is still conducting the hotel. No licence was produced. No register was produced to show that third respondent was her employee. No register was produced to show other persons occupying the first floor are the employees of the first respondent. There is no explanation whatsoever given by the respondent to show the jural relationship between the first respondent, third respondent and others. Rent Control Court and the Appellate Authority have made an erroneous approach casting the burden on the landlord to show that the first respondent has parted with legal possession which is not a burden to be discharged b the landlord. We fail to see from where Rent Control Court and the Appellate Authority have advocated this principle, totally alien to plea under Section 11(4)(i). 13. The revision petitioner – landlord has filed I.A. 1789 of 2004 before this court for accepting certain documents to establish the transfer of leasehold right by the first respondent to third respondent. Document No.3 produced is an agreement executed between the third respondent and one Baby for the conduct of a hotel by name “New Prabha Restaurant”. The agreement is dated 25.10.1999. Disputes arose between Baby and the third respondent and Baby filed O.S.No.659 of 1999 for an injunction against forcible eviction. Objection was filed on 13.10.2000 by the third respondent wherein he has admitted that he has let out the building to Baby. This would show that sublease has further subleased to another person. Commission was taken out in that case. Document No.4 is the commission report which would show that there was a further assignment by the sublessee who is conducting a hotel by name Hotel New Prabha. The above documents would show that third respondent was the sublessee who has further subleased the premises to one Baby. The order of the courts below, in our view, is absolutely perverse, illegal and irregular. There is clear misreading of the evidence and lack of knowledge about the provisions of law. The above documents would show that third respondent was the sublessee who has further subleased the premises to one Baby. The order of the courts below, in our view, is absolutely perverse, illegal and irregular. There is clear misreading of the evidence and lack of knowledge about the provisions of law. This is eminently a fit case where this court in exercise of its power under section 20 of the Act should set aside the finding of the Rent Control Court and the Appellate Authority. 14. We are of the view, landlord has clearly established unauthorised transfer of right by the first respondent to others. First respondent has already received notice but did not appear. There is also no appearance on behalf of the third respondent. Facts would show that he has already parted with his possession. The subtenants could enjoy the tenanted premises as if it is their own, without paying rent to the landlord. Landlord has got a specific case that first respondent has partitioned the upstair portion of the room and also the ground floor. Since both the courts have found that it is only a temporary partition we are not ordering eviction under Section 11(4)(ii). All the same, we are upholding the finding of the court below under Section 11(2)(b) and also order eviction under Section 11(4)(i) of the Act. Revision petition is accordingly allowed. There will be an order of eviction passed under sections 11(2)(b) and 11(4)(i) of the Act.