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Siddhnath and anr. Vs. Kaluram - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 388 of 1968
Judge
Reported inAIR1981MP244
ActsMadhya Pradesh Accommodation Control Act, 1955 - Sections 12(1), 13(1) and 13(2)
AppellantSiddhnath and anr.
RespondentKaluram
Appellant AdvocateR.G. Waghmare, Adv.
Respondent AdvocateS.D. Sanghi, Adv.
DispositionAppeal allowed
Cases ReferredIn Tansukhdas Chhaganlal v. Smt
Excerpt:
.....to be an agent of the newly constituted firm of which he is not even a partner. this clearly goes to show that there is no conflict in the two decisions referred to above and therefore the further questions raised by learned counsel for the respondent on the assumption that there is some conflict between the two decisions do not deserve to be considered......shall not be treated as part-heard and may be listed in the normal course before any single judge. learned counsel for both the parties frankly conceded that the question referred and the answer of the division bench does not in any manner help in the decision of the appeal the appeal, according to learned counsel, has to be heard on merits and disposed of. accordingly it was heard and is being disposed of.7. learned counsel appearing for the appellants contended that the decree has been passed under sections 12 (1) (a) and 12 (1) (b) of the act. as regards section 12 (1) (a) he contended that looking to the written statement, the rate of rent as well as the quantum of arrears of rent were disputed and in the light of the dispute raised by the defendant-appellants the trial court was.....
Judgment:

G.L. Oza, J.

1. This second appeal has been filed by the appellant-tenants against a decree for eviction granted for a shop and a godown on the ground Under Section 12 (1) (a) for the tenant having failed to pay arrears of rent as required by this provision and under Section 12 (1) (b) on the allegation that the premises have been sublet.

2. The plaintiff-respondent filed the present suit against the appellants on the allegation that appellant Siddhnath had taken from him the suit shop described in the plaint paragraph 16 (a) with effect from 3-4-1958 on a monthly rent of Rs. 60/- and executed a rent note in his favour. It is further alleged that he also took a godown described in paragraph 16 (b) of the plaint on a monthly rent of Rs. 75/- with effect from 20-2-1961. It was further alleged that the tenancy so far as the shop is concerned, commenced from the 3rd of every English calendar month and for the godown from the 1st of the English calendar month.

3. It was alleged that the defendant-appellant was irregular in payment of rent and up to 2-12-1963 he was in arrears of Rs. 440/- in respect of the shop and of Rs. 590/- up to November 1963 in respect of the aodown. It was also alleged that he failed to pay or tender the above arrears within two months of service of demand notices Exs. P/1 and P/2 served on him. It was alleged that the plaintiff-respondent needed these premises genuinely for his own business and that for that purpose no other suitable accommodation of his own in the city of Indore is available. It was further alleged that the defendant-appellant No. 1 Siddhnath without consent or permission of the plaintiff-respondent sublet the suit premises to the firm Bombay Garage, defendant-appellant No. 2, and, therefore, is also liable for eviction on that ground. The plaintiff-respondent terminated the tenancy of the defendant-appellant in respect of both the premises by service of registered notices Exs. P/1 and P/2 and as the defendant-appellants failed to comply with the notices the suit was filed for eviction.

4. In the written-statement it was alleged that Rs. 60/- was settled between the plaintiff and the defendant for two shops, one on the eastern end and the other on the western end. But ultimately the plaintiff-respondent gave only the possession of one shop, i. e, on the western side and let out the other shop to another tenant and on this basis it was disputed that the agreed rent was Rs. 60/- per month. It was further contended that the standard rent of this shop is not more than Rs. 10/- and the plaintiff-respondent is not entitled to recover anything more than that. The quantum of arrears of rent was also disputed. It was further alleged that proceedings have been launched for fixation of fair rent before the Rent Controlling Authority. It was also contended that the premises have not been sublet but the defendant No. 1 took his maternal uncle Shri Pannalal as a partner and the name of the firm continued to be Bombay Garage. The genuine requirement of the plaintiff also was denied.

5. The trial Court decreed the suit, On appeal the lower appellate court held that the plaintiff-respondent has not been able to establish the ground of genuine requirement, but maintained the decree for eviction under Sections 12 (1) (a) and 12 (1) (b) of the M. P. Accommodation Control Act (hereinafter called 'the Act'). It is against this that the present second appeal has been filed.

6. This appeal was first heard by a single Judge of this Court who felt that there was a question of law of some importance and therefore referred the matter to the Chief Justice for being placed before a larger Bench. He in fact, after hearing the parties, framed a question which was referred to the Division Bench. The Division Bench answered that question and normally the appeal should have been listed before the same learned Judge who made the reference: in fact, the appeal went before him, but the learned Judge ordered that it shall not be treated as part-heard and may be listed in the normal course before any single Judge. Learned counsel for both the parties frankly conceded that the question referred and the answer of the Division Bench does not in any manner help in the decision of the appeal The appeal, according to learned counsel, has to be heard on merits and disposed of. Accordingly it was heard and is being disposed of.

7. Learned counsel appearing for the appellants contended that the decree has been passed under Sections 12 (1) (a) and 12 (1) (b) of the Act. As regards Section 12 (1) (a) he contended that looking to the written statement, the rate of rent as well as the quantum of arrears of rent were disputed and in the light of the dispute raised by the defendant-appellants the trial Court was found to pass an order under Section 13 (2) of the Madhya Pradesh Accommodation Control Act fixing the provisional monthly rent as well as the provisional amount of arrears of rent. And as admittedly, in the present case no order was passed under Section 13 (2) of the Act, the operation of the provisions contained in Sub-section (1) of Section 13 of the Act remained suspended in view of the Full Bench decision reported in Chhogalal v. Idol of Bhagwan Shri Satyanarayan. 1975 MPLJ 657 : (AIR 1976 Madh Pra 5) and therefore a decree for eviction under Section 12 (1) (a) could not have been passed.

8. As regards subletting, it was contended that admittedly the appellant No. 1 took the premises on rent and later he took his maternal uncle Shri Pannalal as a partner and continued his own business in partnership. According to learned counsel for the appellant, there is nothing in the evidence to indicate that appellant No. 1 left the business or that he gave Over the possession of the premises to the partner-ship firm. Merely because one partner was added in the business it will not amount to subletting. Learned counsel contended that a partnership firm is not a legal person but is only a group of persons and appellant No. 1 continued his business in the premises. He therefore contended that the decree under Section 12 (1) (b) also could not be passed against him. In support of his contention learned counsel for the appellants placed reliance on the decisions reported in D. N. Sanghvi and Sons v. Ambalal Tribhuvan Das. AIR 1974 SC 1026 and Murli Dhar v. Chuni Lal, 1970 Ren CJ 922 (SO: He also contended that the decision reported in Niranjan Kumar v. Dhyan Singh, 1976 UJ (SC) 802 : (AIR 1976 SC 2400) also does not take a contrary 'view and that also supports his contention.

9. Learned counsel for the respondent on the other hand contended that a reading of the written-statement indicates that there was no specific denial about the rate of rent or the quantum of arrears of rent. According to learned counsel the plea about standard rent will not bring the question under dis-pute as contemplated in Section 13 (2) of the Act. Alternatively, it was also contended that even if it is accepted that there was a dispute, by filing an application the defendant-appellant waived his right as by this application he sought time to deposit the arrears of rent. As regards subletting, learned counsel contended that this is not a case where there is nothing except that a partner has been taken up and the partnership business is being carried on in the shop: but according to learned counsel, appellant No. 1 admitted in his statement that the rent paid by him was debited in the partnership account. Thus there is positive evidence that the shop was transferred to the partnership. On this basis it was contended that this evidence, coupled with the fad that on the shop the business of the partnership was being carried out, is sufficient in the light of the Supreme Court decisions to hold that it was subletting. It was also contended by the learned counsel that the decision in 1976 UJ (SC) 802 : (AIR 1976 SC 24001 (supra) is in conflict with the earlier decision of their Lordships of the Supreme Court reported in 1970 Rent CJ 922 (SC) (supra). It was therefore contended that the subsequent judgment, i.e. 1976 UJ (SC) 802 : (AIR 1976 SC 2400) (supra) will have to be followed. Learned counsel therefore contended that in view of the subsequent decision of the Supreme Court the tenant having taken a partner, as in the present case, it will amount to subletting.

10. In paragraph 2 of the plaint the plaintiff alleged that he had let out the premises, i.e. shop, at the rate of Rupees 60/- per month and also alleged that Rs. 440/- stood as arrears of rent with regard to this shop whereas in paragraph 9 of the plaint it was alleged by the plaintiff-respondent that the other godown was taken on 20-2-1961 at the rate of Rs. 75/- per month and in paragraph 8 it was alleged that Rs, 590/- remained as arrears on account of this godown. In the written-statement paragraph 1 the defendant-appellant has alleged that Rs. 60/- was settled as rent for two shops, one on the eastern corner and another on the western corner and ultimately the respondent let out the shop on the eastern corner to someone else at the rate of Rs. 120/- per month and gave possession of only one shop on the western corner to the appellant. And in this context the defendant-appellant disputed the agreed rent to be Rs. 60/-per month. In paragraph 3 of the written-statement the quantum of arrears of Rs. 440/- also was disputed. It is therefore clear that the rate of rent as well as the quantum of arrears was disputed. The defendant-appellant also disputed the rent with regard to the godown. It was contended by learned counsel for the respondent that a rent note was executed and it is not pleaded by the defendant-appellant that the rent note was executed under some misrepresentation or fraud. He also contended that this plea, that originally two shops were to be given has no substance as the rent note clearly talks of one shop having been let out. But this argument may be useful when this dispute is to be resolved, and it could not be doubted that what has been alleged in the written-statement clearly raises a dispute and the dispute pertains to the rate of rent as well as the quantum of arrears of rent. Under Section 13 (2) of the Act it is not necessary for the court to find out as to whether the dispute is such which indicates that the plea of the defendant appears to be acceptable; but what is required is that a dispute is raised. It may be possible that the arguments as were advanced by learned counsel for the respondent might have impressed the trial court and the trial court might have fixed the provisional rent as demanded by the plaintiff. But apparently, the attention of the trial court was not attracted to this aspect of the matter that a dispute has been raised and it is necessary for the trial court to pass an order under Section 13 (2) of the Act.

11. It is not disputed before me that in absence of such an order passed by the trial Court the operation of Section 13 (1) is suspended in view of the Full Bench decision referred to above and in that view of the matter a decree for eviction could not be passed on the ground under Section 12 (1) (a) of the Act. But it was contended by learned counsel for the respondent that even after such a dispute was raised in the written-statement the appellant-defendant submitted an application in the court below for extension of time for depositing the arrears of rent and he deposited rent and also deposited rent monthly although defaults have been committed. And on this basis learned counsel contended that the appellant-defendant waived his obiection which he had raised in his written-statement about a dispute of rate of rent and quantum of arrears. And on account of this waiver, learned counsel contended, it will not be necessary for the court below to pass an order fixing provision al rent under Sub-section (2) of Section 13 of the Act. In support of his contention learned counsel placed reliance on a number of decisions.

12. In Motilal Padampat v. State of Uttar Pradesh, AIR 1979 SC 621. the Supreme Court had occasion to consider what is waiver and it was observed (at p. 628):

'Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be 'an intentional act with knowledge'..... There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it.'

In this context, if we examine as to whether by submitting an application for extension of time the defendant gave up the plea he raised in the written-statement. it is not possible to hold that the defendant gave up the plea that he had raised. It could not be held that when the defendant-appellant submitted an application for extension of time he intentionally made this application knowing full well that he has waived his right to challenge the allegations in the plaint about rate of monthly rent and the quantum of arrears. In this view of the matter, therefore, in my opinion it could not be said that the appellant waived his plea and thus it was not necessary for the trial court to pass an order under Section 13 (2) of the Act.

13. It is not in dispute that no order under Section 13 (2) was passed and it is also therefore not disputed that the operation of Sub-section (1) of Section 13 remained suspended. Under these circumstances, therefore, a decree under Section 12 (1) (a) could not be passed against the defendant-appellants.

14. As regards subletting, it is not in dispute that on 3-4-1958 when the shop was taken On rent it was taken on rent by appellant No. 1 alone. It is also not disputed that on 5-4-1961 the partnership was formed as stated in Ex. D/6 copy of the extract from the Register of Firms. The godown was taken on rent on 20-2-1961 but the tenancy was commenced from 1-4-1961. It is also not in dispute that these tenancies were taken by appellant No. 1 and he has taken his maternal uncle Pannalal as partner. It is also not in dispute that the business is run in the name of Bombay Garage and that appellant No. 1 is actively associated with the business of this firm and it is not a case where appellant No. 1 has parted with the business and left it to his other partner Pannalal alone.

15. The lower appellate court on these facts held that this amounts to subletting as the person who took the premises on rent was appellant-defendant No. 1 alone. The learned lower appellate court placed reliance on the decision reported in Tansukhdas v. Smt.

Shambai, AIR 1954 Nag 160. In this decision the view taken was that the partnership is a distinct personality in law different from the person who took the premises on rent. Apparently, partnership is only an association of persons and not a distinct person except when it has been so provided under any particular Act. Section 4 of the Partnership Act provides that the persons constituting partnership collectively are known as 'firm', i. e., it is a group of persons and not a distinct person :

'4. 'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm', and the name under which their business is carried on is called the 'firm name'. '

16. This question came up for con-sideration before the Supreme Court in 1970 Ren CJ 922 (supra) and it was observed :--

'It appears that two contentions were raised in the High Court both of which were rejected. The first was that the possession of the premises by new firm proved subletting. The contention appears to have been that the old firm and the new firm being two different legal entities, the occupation of the shop by the new firm was occupation by the legal entity other than the original tenant and such occupation proved subletting. This contention is entirely without substance. A firm unless expressly provided for the purpose of any statute which is not the case here, is not a legal entity. The firm name is only a compendious way of describing the partners of the firm. Therefore occupation by a firm is only occupation by its partners. Here the firms have a common partner. Hence the occupation has been by one of the original tenants.'

In the above decision their Lordships specifically considered the question as to whether a firm is a different legal entity than its partners and it was held that a firm name is only a compendious wav of describing the partners as a firm.

17. The decision in AIR 1954 Nag 160 (supra) has been specifically considered by their Lordships of the Supreme Court in AIR 1974 SC 1026 (supra) and their Lordships clearly laid down that the statement of law in this decision does not appear to be universally true as their Lordships observed (at p. 1031) :

'In Tansukhdas Chhaganlal v. Smt, Shambai, AIR 1954 Nag 160 the Nagpur High Court has held that where a tenant carrying on business in the demised shop converts the business into a partnership business and allows the latter business to be carried on in the demised premises, it would amount to subletting because the partnership 'was clearly a personality in law distinct from that of the petitioner himself'. There also, the High Court was concerned with clause 13 of the aforesaid Order. This statement of law does not appear to be universally true.....'

It was further observed that it is only for the purpose of Income-tax Act that the firm is a distinct legal entity:--

'It is held that a firm is a distinct entity different from its partners for purposes of assessment. These decisions are based on particular provisions of that Act which are radically different from the provisions of the Act.....'

It is therefore clear that it could not be contended that partnership is a different legal entity here and in the light of the observations made by their Lordships of the Supreme Court in 1970 Ren CJ 922 (supra) when the appellant No. 1 continues to be the partner and continues to manage the business it could not be said that the premises have been sublet.

18. By referring to the passage in 1970 Ben CJ 922 (SC) :

'It seems to us that the landlord cannot succeed. He has to prove it as a fact that there was a subletting by his tenant to another person. He does not prove this merely by showing that his tenant was one firm and the premises are in the occupation of another firm, as he sought to do in the present case.

It was contended by learned counsel for the respondent that in the present case something further has been proved and he placed reliance on the statement made by defendant-appellant No. 1 that the rent he paid to the landlord was debited in the account of the partnership firm. This only goes to show that the business is run by the partnership and the rent which is paid to the landlord is paid out of the partnership funds. But it does not make any difference as the partnership firm is nothing more than appellant-defendant No. 1 and his maternal uncle. It is not in dispute that appellant No. 1 continues to be the partner in the firm and continues to manage the affairs. In this view of the matter, therefore, the contention advanced by learned counsel for the respondent that this statement that rent paid is debited in the partnership account carries the case of the landlord-respondent any further cannot be accepted. In the decision referred to above their Lordships were considering a case where the tenant was one firm constituted of some partners whereas the business was carried on by another firm constituted of some other partners but one of the partners who took the lease continued to be a partner in both the firms and in this context their Lordships held that it could not be said that it was a case of subletting as is clear from the facts stated in paragraph 2 of the iudgment : 'It appears that the premises in dispute, a shop, was let out originally to a ' firm of the name of Chuni Lal, Gheruial. The firm consisted of three partners, namely, Chunilal, Gheruial and Meghraj. The business of this partnership was closed sometime before November 1955 and thereafter the shop was used by a new firm of the name of Meghrai Bansi-dhar of which the partners were Meghrai of the firm of Chunilal, Gheruial and Bansidhar.'

19. Another decision on which reliance has been placed by learned counsel for both the parties, and which according to learned counsel for the respondent lays down a different proposition, is the decision reported in 1976 UJ (SC) 802 : (AIR 1976 SC 2400). The facts of this case are that On January 30, 1963 respondent no. 1 gave a shop on rent to re-pondent Sat Parkash for a period of 11 months commencing on February 1, 1963. A partnership firm called Messrs Sat Parkash Single and Brother of which respondent 2 Sat Parkash and his three brothers were partners occupied the shop, evidently on the authority of the rent note and continued its business in the shop even after the expiry of the period of the rent note. On March 31. 1968 the respondent No. 2 retired from the firm under a deed of dissolution and the two other brothers of his ioined the reconstituted partnership. This firm also did its business in the same premises. It is on this basis that eviction was sought which was granted and the order was maintained by the High Court of Punjab and Haryana. This was upheld in this decision by their Lordships of the Supreme Court. This judgment apparently is based on the fact that in the second partnership the person who originally took the premises on lease, i. e. Sat Parkash, was not even a partner and therefore their Lordships maintained the decree for eviction. Learned counsel for the respondent in the present case laid much emphasis on the observations made by their Lordships (at p. 2403)

'Even assuming for the purposes of argument that respondent 2 acted as an agent of the firm which was in existence in 1963, it would, in any event, be impossible to hold that the new firm which was constituted on the retirement of respondent 2 in March 1968 also became a tenant of respondent 1. No notice of dissolution was given to respondent 1 and one cannot impose a totally new contract on him as between himself and the partnership which was formed on the retirement of respondent 2.'

But this clearly goes to show that so long as respondent 2 was a partner in the firm it should be assumed that he was acting as an agent of the firm and their Lordships observed that he could not be held to be an agent of the newly constituted firm of which he is not even a partner.

20. It appears that it is because of this that the learned single Judge (Bha-chavat J.) who heard this second appeal felt that in view of conflict between the judgments of this Court the question needs to be determined by a larger Bench and he therefore framed the following question :

'Whether the very fact of entering into partnership by a tenant with another person and carrying on the partnership business on the tenanted premises would amount to subletting or it would depend on certain facts and if it would depend upon certain facts, whether it is necessary for the plaintiff to aver and prove those facts or it is for the defendant to aver and prove facts so as to establish that the creation of partnership was not subletting.'

When the Division Bench on reference heard the matter, it observed that merely because a tenant has entered into a partnership with another person, it could not be said that it amounts to subletting; but an inference of subletting may be drawn on the facts of each case. And it is because of this that the second appeal has ultimately come up for hearing before me.

21. The contention advanced by learned counsel for the respondent that these two decisions of the Supreme Court have laid down conflicting law, in my opinion, does not appear to be correct. An analysis of the later decision shows that if one of the partners takes premises on lease, it could be said that he acted as agent of the partnership firm as is contemplated under Section 18 of the Partnership Act; and as when the business was transferred to the second firm of which the person who took the lease was not even a partner, their Lordships felt the difficulty that he could not even be treated as agent of the firm as he was not even a partner then. It is therefore clear that this does not lay down any proposition of law which is in conflict with the law laid down in 1970 Ren CJ 922 (SC) (supra). In that case, although the partnership's constitution was changed, but one of the partners, i. e. Meghraj, continued to be the partner of another firm and it was in this context that in that decision it was held that it does not amount to subletting. The logic, it appears, is the same as the partnership is not a different legal entity but is only an association of persons and if one of the partners takes the premises on lease and continues to be a member of that association, although some other members may come and go, still, one of them who continues can always be presumed to be an agent of the firm or agent of the rest of them. In the subsequent case the difficulty arose because the person who initially took the premises on lease ceased to be a partner of the firm which ultimately came into possession of the premises and therefore their Lordships felt that he could not be said to be acting as agent of the firm as he is not even a partner. This clearly goes to show that there is no conflict in the two decisions referred to above and therefore the further questions raised by learned counsel for the respondent on the assumption that there is some conflict between the two decisions do not deserve to be considered.

22. In the light of the discussion therefore, in my opinion, the Court below was wrong in coming to the conclusion that by taking up Pannalal, the maternal uncle, as partner appellant No. 1 had sublet the premises. As discussed above, on the facts found and in view of the law laid down by their Lordships of the Supreme Court it could not be said that there was subletting and hence the decree under Section 12 (1) (b) of the Act could not be maintained. 23. No other question was raised. The second appeal is allowed, the judgment and decree passed by the court below is set aside and the suit is dismissed with costs throughout. Appellant shall lie entitled to costs of this appeal and counsel fee as per schedule, if certified.


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