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Kanhiya Lal Balkishan Dass Vs. Labhu Ram - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtDelhi High Court
Decided On
Case NumberSecond Appeal No. 110D of 1962
Judge
Reported inILR1971Delhi25
ActsDelhi Rent Control Act, 1958 - Sections 9 and 14(1); Indian Contract Act, 1872 - Sections 43
AppellantKanhiya Lal Balkishan Dass
RespondentLabhu Ram
Advocates: R.M. Lal,; Arun Mohan and; B.K. Jaggi, Advs
Cases ReferredIn K. Devarajulu Naida v. C. Ethirajavathi Thayaramma and
Excerpt:
tenancy - liability for rent - sections 9 and 14 (1) of delhi rent control act, 1958 and section 43 pf indian contract act, 1872 - dissolution of firm would not affect right of appellant to claim rent of premises from persons who were partners before dissolution - all partners of firm liable for rent of premises till possession of premises surrendered back to landlord - fact that partners mutually decided to dissolve firm and to allot premises to respondent would not absolve partners of their liability for rent vis-a-vis landlord. - - 110-d of 1962 as well as mr. a firm, it is well-known, is a compendious name of the partners constituting the firm......the respondent in s.a.o 110-d of 1962 is labhu ram while that in r.s.a. 105 of 1967 is firm gokal chand jagan nath through jagan nath partner. the two appeals are being decided by a common judgment as the submission of the learned counsel for the parties is that common questions of law and fact arise in the two cases and the decision in one is bound to impinge upon the decision in the other. (2) the brief facts of the case are that the appellants are the owner-landlords of the premises in dispute comprising shop no. 3659, pahari dhiraj, saddar bazar, delhi. the premises were let out by the appellants to firm gokal chand jagan nath through jagan nath on 1-1-1957 at a monthly rent of rs. 29.00. the firm gokal chand jagan nath was subsequently dissolved on 13-4-1959 and the lessee rights.....
Judgment:

H.R. Khanna, C.J.

(1) This judgment would dispose of S.A.O 110-D of 1962 and R.S.A. 105 of 1967. Both the appeals have been filed by M/s. Kanhiya Lal Balkishan Das. The respondent in S.A.O 110-D of 1962 is Labhu Ram while that in R.S.A. 105 of 1967 is firm Gokal Chand Jagan Nath through Jagan Nath partner. The two appeals are being decided by a common judgment as the submission of the learned counsel for the parties is that common questions of law and fact arise in the two cases and the decision in one is bound to impinge upon the decision in the other.

(2) The brief facts of the case are that the appellants are the owner-landlords of the premises in dispute comprising shop No. 3659, Pahari Dhiraj, Saddar Bazar, Delhi. The premises were let out by the appellants to firm Gokal Chand Jagan Nath through Jagan Nath on 1-1-1957 at a monthly rent of Rs. 29.00. The firm Gokal Chand Jagan Nath was subsequently dissolved on 13-4-1959 and the lessee rights of the premises in dispute fell to the share of Labhu Ram respondent. Labhu Ram filed an application under section 9 of the Delhi Rent Control Act, 1958, for fixation of standard rent on the allegation that the agreed rent was excessive. The appellant-landlords admitted that the shop in dispute had been let out to firm Gokal Chand Jagan Nath, but alleged that there was no relationship of landlord and tenant between the parties. Plea was also taken that the shop had been sublet to Labhu Ram without the written permission of the appellant-landlords and as such the application of Labhu Ram was not maintainable,

(3) The Additional Controller after hearing the Parties came to the conclusion that Labhu Ram was a partner of firm Gokal Chand Jagan Nath and on dissolution of that firm he became a tenant by operation of law. The application for fixation of standard rent as such was held to be maintainable. The appellants went up in appeal, but the decision of the Additional Controller was affirmed by learned Rent Control Tribunal. S.A.O. 110-D of 1962 is directed against the order of the Rent Control Tribunal. When the appeal came up for hearing before Dua, C.J., the learned Chief Justice directed that it be disposed of by a larger Bench.

(4) R.S.A. 105 of 1967 arises out of a suit for recovery of rent of Rs. 1,134.00 brought by the landlord-appellants for the period prior to 304-1964 for the premises in dispute. The rent for the period which was beyond the period of limitation was given up and the amount of Rs. 1,134.00 as representing rent for three years only was claimed.

(5) The above suit was contested by the defendant firm. It was pleaded on .its behalf that though there came into existence tenancy in respect of the premises in dispute on 1-1-1957, the defendant firm had thereafter been dissolved on 13-4-1959. According to the defendant firm, as a result of dissolution of the partnership the premises in dispute were allotted to Labhu Ram and as such the liability to pay rent was that of Labhu Ram alone. Notice regarding dissolution of partnership was also stated to have been served upon the landlord-plaintiffs. The following issues were framed in the case :-

'(1)Whether Shri Labhu Ram is a necessary party to the suit? (2) Whether the defendant is not a subsisting tenant of the plaintiff? If so, to what effect? (3) To what amount and from when the plaintiff is entitled.

(6) The trial court decided issue No. (1) against the defendant firm. Issue No. (2) was decided against the plaintiffs and it was held that there was no relationship of landlord and tenant between the plaintiffs and the defendant firm in view of the dissolution of the partnership and the allotment of the premises in dispute to Labhu Ram. Issue No. 3 was held to be redundant in view of the finding on issue No. (2). In the result the plaintiffs' suit was dismissed. On appeal the learned Additional District Judge affirmed the finding of the trial Court on issue No. (2) and dismissed the appeal. R.S.A. 105 of 1967 is directed against the judgment and decree of the Additional District Judge. At the time this appeal was admitted it was directed that it should be heard with S.A.O. 110-D of 1962.

(7) We have heard Mr. Radhey Mohan Lal on behalf of the appellants and Mr. Jaggi on behalf of the respondent in S.A.O. 110-D of 1962 as well as Mr. Jagdish Kumar on behalf of the respondent firm in R.S.A. 105 of 1967, and are of the opinion that there is no substance in the contention advanced on behalf of the appellant's in S.A.O. 110-D while there is force in the submissions made on appellants' behalf in R.S.A. 105. So far as S.A.O. IIO-D of 1962 is concerned, the first contention of Mr. Radhey Mohan Lal is that assuming that Labhu Ram was a partner of firm Gokal Chand Jagan Nath, he might have been inducted as such in that firm after 1-1-1957, the date of the commencement of the tenancy, and before 13-4-1959, the date of the dissolution of the firm. This submission essentially involves questions of fact and the order of the Rent Control Tribunal or even that of the Additional Controller shows that no such point was raised before them. As such we are not prepared to entertain this plea involving questions of fact for the first time in second appeal.

(8) Mr. Radhey Mohan Lal argues that even if Labhu Ram was a partner of firm Gokal Chand Jagan Nath, the allotment of the premises in dispute to him on the dissolution of the firm should be held to amount to subletting. The learned counsel in this context has emphasised the fact that the original tenant of the premises was firm Gokal Jagan Nath. Th.ere is no force in the above contention. A firm, it is well-known, is a compendious name of the partners constituting the firm. According to Section 4 of the Indian Partnership Act, 1932, persons who have entered into partnership with one another are called individually 'partners and collectively 'a firm'. It would, thereforee, follow that when firm Gokal Chand Jagan Nath took the premises in dispute on rent from the appellants, Labhu Ram who was one of the partners of the firm became, along with the other partners a tenant in the premises. Subletting essentially entails the induction of a third person into the premises. The allotment of the shop to one of the partners of the firm, which was the tenant of the premises, upon its dissolution cannot amount to subletting. We are fortified in this conclusion by a Bench decision (Andley & Tatachari JJ.) of this Court in Shrimati Saraswati Devi v. L. Gian Chand 1970 R.C.R. 874. It was held in that case that where premises were out to a partnership firm and one of the partners left the firm and a new partner entered the firm, it did not amount to subletting. In Murli Dhar v. Chuni Lal and others, 1970 R.C.J. 922,(2) it was held by their Lordships of the Supreme Court that the firm name was only a compendious way of describing the partners of the firm and the occupation of premises by a firm was the same as occupation by its partners. The Court held that where the old and new firms had a common partner, the occupation by the new firm of a premises shall be taken to be the occupation by the old tenant as the common partner will be considered to be in possession all through in his individual n capacity. In Ram Vichar and another v. Daulat Ram Mohan Das & others 1967 D.L.T. 223(3), a Division Bench of the Punjab High Court, (Mahajan and Kapur JJ.), held that there would be no sub-letting of the premises if the firm consisting of 6 to 10 partners was no longer in possession of the premises and a firm consisting of 4 partners, who were also partners of the first firm, was in possession, In K. Devarajulu Naida v. C. Ethirajavathi Thayaramma and others, : AIR1950Mad25 , one of the two partners after dissolution of the firm assigned to the other partner the interest of the partnership in the premises which had been taken on lease by the firm. It was held by Rajamannar C.J. and Mack J. that the above assignment did not amount to breach of the convenant prohibiting an assignment of the lease without the consent of the Lesser and as such the landlord was not entitled to eviction on that ground,

(9) Lastly it has been argued in S.A.O. 110-D of 1962 that Labhu Ram alone could not maintain an application for fixation of standard rent. In this respect we find that according to Section 9 of the Delhi Rent Control Act, 1958, the Controller shall, on an application made to him in this behalf either by the landlord or by the tenant in the prescribed manner, fix standard rent of the premises. Labhu Ram. a? stated above, became a tenant of the premises when firm Gokal Chand Jagan Nath took the same on rent. As such Labhu Ram was entitled to apply for fixation of standard rent. Nothing has been brought to our notice as makes it imperative that all the persons who took the premises on rent should join as petitioners in an application under section 9 of the said Act. S.A.O. IIO-D of 1962 is consequently liable to be dismissed.

(10) So far as R.S.A. 105 of 1967 is concerned, Mr. Radhey Mohan Lal submits that the appellants let out the premise? to firm Goka I Chand Jagan Nath. All the partners of that firm consequently became liable for the rent of the premises till such time as the possession of the premises was surrendered back to the landlords. The dissolution of the firm, according to Mr. Radhey Mohan Lal, would not affect the right of the appellants to claim rent of the premises from the persons who were partners of the firm before its dissolution. The above stand has been controverter by Mr. Jagdish Kumar, but in our opinion there is considerable force in the submissions of the appellants in this respect. The appellants on 1-1-1957 let out the premises to firm Gokal Chand Jagan Nath. As such the liability to pay rent of the premises was that of all the partners of the firm. The fact that the partners mutually decided to dissolve the firm and to allot the premises to Labhu Ram alone would not absolve them of their liability for rent vis a vis the landlords. There is nothing to show that the landlords gave their assent to the arrangement by which the premises in dispute were allotted to Labhu Ram. It may be that if the rent of the premises is realised by the landlords from a partner other than Labhu Ram, he may have a claim against Labhu Ram for being reimbursed in view of the terms of dissolution, but that fact would not affect the right of the landlords to recover the rent from the partners of the firm. According to Section 43 of the Indian Contract Act, when two or more persons make a joint promise, the promise may, in the absence of express agreement to the cortrary, compel any one or more of such joint promisors to perform the whole of the promise. What is the effect of a change in a firm on its liabilities qua the third party has been discussed on pages 44 and 324 of Law of Partnership by Lindley, Twelfth Edition. It is stated on page 44 :-

'ANOTHER most important consequence of the principle, that on any change amongst the persons composing a partnership there is in fact a new partnership, and not a mere continuation of the old one, is that although, upon a change in a firm, it may be agreed between the members of the old and new partnerships, the rights and obligations of the old shall devolve upon the new partners, this has no effect upon third parties unless they accede to it.'

(11) Again on page 324 the learned author has observed:-

'SO as regards changes occasioned by the retirement of a partner. It has been already shown that the retirement of a partner in no way affects his rights against or obligations to strangers in respect of past transactions.'

(12) We are, thereforee, of the view that the finding of the Courts below on issue No. (2) was not correct. R.S.A. 105 of 1967 must consequently be allowed.

(13) In the result, S.A.O. 110-D of 1962 is dismissed, but R.S.A. 105 of 1967 is accepted. As in the latter appeal the Courts below did not decide issue No. (3) in view of the finding on issue No, (2), the case is remanded to the trial Court for decision in accordance with law. Keeping in view all the circumstances, we leave the parties to bear their own costs in both the appeals. The parties are directed to appear in the trial Court on 27th February, 1971.


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