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Suleman Haji Abdul Satara Vs. Miya Mohmed Haji Pirmohmed Silkwala and ors. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtGujarat High Court
Decided On
Judge
Reported in(1979)1GLR182
AppellantSuleman Haji Abdul Satara
RespondentMiya Mohmed Haji Pirmohmed Silkwala and ors.
Cases ReferredPhilatelic Orient v. Kodak Limited
Excerpt:
.....good-will and tenancy rights in respect of the suit premises. it further provides that if the tenants want to transfer the tenancy rights with good-will of the business or in any other manner, the written consent of the landlords shall be obtained by them. absence of a restrictive covenant cannot be equivalent to the operation of an express restrictive covenant between the parties, ft clearly appears from the analysis of sub-section (1) that the amendment was intended to relax the rigour of the non-obstante clause with which sub-section (1) of section 15 opened and not to create any new right for the tenant. it is difficult to think that the expression 'but subject to any contract to the contrary' permeates through the principal part of sub-section (1) as well as the proviso. the..........that there was nothing in the proviso which permitted the tenant to violate the sanctity of the contract. proviso to sub-section (1) of section 15 served only the limited purpose of withdrawing the absolute prohibition contained in sub-section (1) and nothing more.15. this decision fully supports the argument which mr. sanjanwala has raised before us. its soundness has been called in question by miss v.p. shah on behalf of defendant 4. she has argued that absence of any covenant in respect of sub-letting stands on par with the restrictive covenant prohibiting a tenant from sub-letting his premises or transferring or assigning his interest therein. absence of a restrictive covenant cannot be equivalent to the operation of an express restrictive covenant between the parties, ft clearly.....
Judgment:

S.H. Sheth, J.

1. Respondents Nos. 1 to 11 are the plaintiffs. They are the trustees of a public trust to which the suit premises belong. Respondents 12 and 13 are original tenants. Respondent 14 is the manager of defendant No. 4, who, in his turn, is the petitioner before us. The plaintiffs let out the suit premises to defendants 1 and 2 on 1st July 1966. Defendants 1 and 2 started therein restaurant business. On 10th July 1967, defendants 1 and 2 transferred to defendant 4 their business with stock-in-trade, good-will and tenancy rights in respect of the suit premises. On 26th December 1967, the plaintiffs terminated the tenancy of defendants 1 and 2 on various grounds and thereafter instituted the suit for recovery of possession of the suit premises. The plaintiffs urged before the trial Court several grounds on which they sought possession of the suit premises to which the Bombay Rents, Hotel and Lodging House Rates Control Act, 19-17 is applicable. The learned trial Judge negatived all grounds except one. He found against defendants 1 and 2 that they had unlawfully transferred to defendant 4 their tenancy rights and that they were not protected by Sub-section (1) of Section 15 of the Rent Act. In view of this finding which the learned trial Judge recorded, he passed against defendant 1 and 2 decree for possession on the ground specified in Clause (e) of Sub-section (1) of Section 13 of the Rent Act. Defendant 4 who was directly affected by this decree appealed against it to the District Court. The learned appellate Judge confirmed the finding recorded by the learned trial Judge and dismissed the appeal.

2. It is that appellate decree which is challenged by defendant No. 4 in this Civil Revision Application.

3. The question which has been raised by Miss Shah on behalf of defendant No. 4 is whether defendant 4 is the unlawful transferee from defendants 1 and 2 or whether he is protected by the notification issued under proviso to Sub-section (1) of Section 15 of the Rent Act.

4. Before we deal with the legal contention which has been raised in this case, it is necessary to have a look at the relevant covenant recited in rent note Ex. 70. It provides that the tenants shall not sub-let the suit premises to any one nor will they transfer their tenancy rights to any one. It further provides that if the tenants want to transfer the tenancy rights with good-will of the business or in any other manner, the written consent of the landlords shall be obtained by them. It is clear, therefore, that this covenant created an express contractual obligation for defendants 1 and 2 not to transfer the tenancy rights to any one except with the written consent of the plaintiffs.

5. We now turn to Section 15 of the Rent Act. Sub-section (1) of Section 15 provides as follows:

Notwithstanding anything contained in any law, but subject to any contract to the contrary, it shall not be lawful after the coming into operation of this Act for any tenant to sub-let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein

Provided that the State Government may, by notification in the Official Gazette, permit in any area the transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification.

It has been argued by Miss Shah that the proviso creates a right in favour of the tenants to sub-let the premises to which the notification issued thereunder applies. Before we examine the argument which she has raised, it is necessary to note the historical aspect of this section and then to analyse it. The expression '...but subject to any contract to the contrary' was inserted in Sub-section (1) for the first time by Bombay Act 49 of 1959. The proviso itself did not occur in the Act as it was originally enacted but was inserted by Bombay Act 36 of 1948. Sub-section (1) with the proviso annexed to it as it was prior to its amendment in 1959 came up for construction before the Supreme Court in Waman Shriniwas Kini v. Ratilal Bhagwandas and Co. : AIR1959SC689 Adverting to the embargo which Sub-section (1) of Section 15 as it was prior to its amendment in 1959 placed the Supreme Court observed that it prohibited sub-letting and made it unlawful for a tenant to assign or to transfer his interest in the premises let to him. The non-obstante clause 'Notwithstanding anything contained in any law' meant that even if any other law allowed sub-letting, e.g. Section 108 of the Transfer of Property Act, the sub-letting would, by virtue of the provisions of Section 15, be unlawful. The Supreme Court further observed that even where there was a contract between the parties under which a tenant was permitted by his landlord to sublet the premises, sub-letting would be unlawful because all contracts would fall under the provisions of law relating to contracts, that is to say, the Contract Act. Therefore, even such contract would be hit by non-obstante clause with which Sub-section (1) of Section 15 opened. The Supreme Court further observed that it was not permissible to any person to rely upon a contract the making of which was prohibited by law. Any agreement which was entered into between the parties in contravention of the provisions of Section 15 would be unenforceable at law because it would be a contravention of the express provisions of the Act which prohibited the making of such an agreement. Since the Supreme Court took the view that, by virtue of the provisions of Sub-section (1) of Section 15 as it stood before its amendment in 1959, a tenant could not lawfully sub-let the premises in his possession to any one even though the landlord agreed to sub-letting, the Legislature stepped in and amended Sub-section (1) of Section 15 and inserted therein the expression 'but subject to any contract to the contrary'.

6. Therefore, so far as unamended Section 15 was concerned, there was a blanket ban on sub-letting except in cases to which the notification issued under Section 15 applied.

7. The effect of the amendment made to Sub-section (1) in Section 15 in 1959 was to permit sub-letting by consent of parties. In other words, if there was an agreement between the landlord and the tenant under which a tenant could sub-let his premises to any one, he could do so without contravening the provisions of Section 15 and incurring the liability to be evicted under Clause (e) of Sub-section (1) of Section 13 of the Rent Act.

8. The history of Section 15 shows that when the Rent Act was enacted in 1947, the Legislature laid a complete embargo upon sub-letting. At that time, in no conceivable case could a tenant sub let his premises. In 1948 the full-throated rigour of this embargo was relaxed by the Legislature when it enacted proviso to Sub-section (1) and permitted, probably for the purpose of permitting free business transactions, sub-letting by tenants of such premises in respect of which sub-letting was permitted by the State Government by issuing a notification under the proviso. In 1959 the rigour of this embargo was further relaxed in two ways. The enactment of Sub-section (2) expressly validated all unlawful sub-lettings, assignments and transfers made prior to the promulgation of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959. This provision dealt with unlawful transactions entered in the past. So far as future was concerned, the rigour of the embargo, which was slightly relaxed in 1948 by enacting proviso to Sub-section (1), was further relaxed by providing that a tenant could lawfully sub-let or assign his premises or transfer his interest therein to a third party if there was a contract between him and his landlord to that effect. This analysis of Section 15 makes it clear that when the Legislature enacted the Rent Act in order to protect the tenants against eviction by landlords,' the Legislature thought of containing the mischief which the tenants might commit by sub-letting or assigning or transferring their interest in the premises to others. In a legislation which was intended to protect the tenants against eviction and exploitation, certain rights of the landlords were protected. The protection which was granted to the landlords by Section 15 was first diluted in 1948 in the interest of society because the social interest requires free business transactions. It was further diluted in 1959. This analysis makes it clear that the fundamental object of legislation in enacting Section 15 was to protect certain rights of the landlords. The subsequent amendments made to Section 15 show that protection was diluted to a certain extent and in certain respects but it cannot be said that the object of the Legislature in enacting Section 15 and amending it twice was to create any substantive right for the tenant.

9. The analysis of Section 15 leads to a three-fold classification of contracts or agreements between the landlords and tenants:

(i) contracts which expressly permit the tenants to sub-let their premises to third parties;

(ii) contracts which are silent on this aspect;

(iii) contracts which expressly contain a covenant against sub-letting.

So far as the first class of contracts is concerned, by virtue of the amendment made in 1959 which inserted the expression 'but subject to any contract to the contrary', it is lawful for a tenant to sub let, assign or transfer his premises to a third party. In such a case, the principal part of Sub-section (1) of Section 15 with its exception holds the field.

10. So far as the second class of contracts is concerned, in absence of any contract to the contrary between the landlord and the tenant, it shall not be lawful for a tenant to sub-let or assign or transfer his premises therein to anyone. In this class of cases, therefore, the proviso will hold the field. A tenant, to a limited extent, will be entitled to transfer or assign his interest in the premises or to sub-let them to a third party. The exception which is limited in character extends to those leases or class of leases to which the notification issued under Section 15 applies. Therefore, in case of second class of leases, a tenant shall not be able to lawfully sub-let his premises or transfer or assign his interest therein unless the premises in his possession are governed by the notification issued under the proviso to Sub-section (1) of Section 15. The notification issued under Section 15 specifies nine kinds of leases in respect of which sub-letting of the premises or assignment or transfer of a tenant's interest therein is permitted to be done by the tenant. One of the kinds is as under:

Transfer or assignment incidental to the sale of a business as a going concern together with the stock-in-trade and the goodwill thereof, provided that the transfer or assignment is of the entire interest of the transferor or assignor in such leasehold premises together with the business and the stock-in-trade and goodwill thereof.

There is no doubt or dispute about the fact that if there was no express covenant in the rent note Ex. 70, forbidding defendants 1 and 2 from sub-letting the premises or transferring or assigning their interest therein, the transaction between defendants 1 and 2 on one hand and defendant 4 on the other hand would be governed by the notification issued under the proviso to Sub-section (1) of Section 15.

11. Miss Shah has argued, in the first instance, that the transaction of assignment of the interest of defendants 1 and 2 to defendant 4 in the suit premises is governed by the notification issued under the proviso to Sub-section (1) of Section 15 and that, therefore, there is no unlawful subletting. On the other hand, it has been argued by Mr. Sanjanwala that the proviso does not override the express contractual obligation undertaken by the tenants not to sub-let, assign or transfer their interest therein - a case falling under the third class stated hereinabove.

12. The question which, therefore, has arisen before us is: whether, in case of a rent note which evidences an express obligation undertaken by a tenant not to sub-let the premises, it is the obligation which prevails or it is overridden by the proviso to Sub-section (1) of Section 15.

13. Reliance has been placed by Mr. Sanjanwala upon the decision of Chief Justice M.C. Chagla in Philatelic Orient v. Kodak Limited 57 Bom. L.R. 175. In that case, Chief Justice Chagla was concerned with interpreting Section 15 as it stood before its amendment in 1959. In order to appreciate the principle which the learned Judge has laid down, it is necessary to note a few facts of that case.

14. Defendant 1 was the tenant and he assigned his right, title and interest in his tenancy to defendant 2. The plaintiffs, therefore, filed a suit for eviction in the Court of Small Causes at Bombay on the ground that defendant 1 had unlawfully assigned his right, title and interest in his tenancy to defendant 2. The Court of Small Causes passed decree for eviction against defendant 1. That decree was challenged in appeal Court which dismissed the appeal. That decree was challenged in the High Court. In that context, the learned Chief Justice examined Section 12 of the Bombay Rent Act and observed that the tenant was protected under Section 12 if he observed and performed the conditions of tenancy in so far as they were consistent with the provisions of the Rent Act. The obligation upon the tenant to observe and perform the conditions of tenancy was unqualified except in regard to those conditions which were inconsistent with the provisions of the Rent Act. A tenant was not bound to observe the conditions of tenancy which were inconsistent with the provisions of the Act. Analysing the scheme of Section 15 as it stood prior to its amendment in 1959, the learned Chief Justice observed that it contained an absolute prohibition against sub-letting of premises or assignment or transfer of premises subject to the proviso with which we are concerned in this case. It was argued on behalf of the tenant in that case that if the Government issued a notification under the proviso which applied to a particular premises, then the tenant would become entitled to transfer his interest in the premises notwithstanding the fact that the contract of tenancy prohibited him from doing so. That argument was negatived by the learned Chief Justice who observed that Section 15 enacted a complete prohibition against sub-letting and that the proviso only relaxed that prohibition to the extent set out therein, and that, so far as the proviso was concerned, the only question which arose related to the extent and nature of that relaxation. The learned Chief Justice further observed that the Legislature by enacting the proviso permitted the transfer of interest in certain premises and that, therefore, the prohibition contained in the principal part of Sub-section (1) of Section 15 was relaxed. However, according to the learned Chief Justice, the proviso did not mean that the Legislature permitted the tenant to commit a breach of the term of tenancy. The learned Chief Justice further observed that if a tenant was entitled under the contract of tenancy to transfer his interest in the premises, then the prohibition against his doing so contained in Section 15 was withdrawn and that he was allowed to exercise his contractual rights. He, therefore, repelled the argument advanced on behalf of the tenant that the proviso not only permitted the tenant to exercise his contractual right, but permitted him to commit a breach of his express contractual obligation. In other words, proceeding further, the learned Chief Justice observed that if the contention raised on behalf of the tenant was upheld, although the contract between the tenant and the landlord prevented the tenant from assigning the premises without the previous consent of the landlord, the Legislature in its generosity permitted the tenant to violate the sanctity of the contract and transfer his interest in the premises contrary to the provisions of the lease. According to the learned Chief Justice, if such an interpretation was placed upon the proviso, it would be contrary to all canons of construction because it is the fundamental canon of construction that a Court of law would not permit the sanctity of obligations or of contracts to be interfered with unless the statute in express terms permitted a violation of that sanctity and that there was nothing in the proviso which permitted the tenant to violate the sanctity of the contract. Proviso to Sub-section (1) of Section 15 served only the limited purpose of withdrawing the absolute prohibition contained in Sub-section (1) and nothing more.

15. This decision fully supports the argument which Mr. Sanjanwala has raised before us. Its soundness has been called in question by Miss V.P. Shah on behalf of defendant 4. She has argued that absence of any covenant in respect of sub-letting stands on par with the restrictive covenant prohibiting a tenant from sub-letting his premises or transferring or assigning his interest therein. Absence of a restrictive covenant cannot be equivalent to the operation of an express restrictive covenant between the parties, ft clearly appears from the analysis of Sub-section (1) that the amendment was intended to relax the rigour of the non-obstante clause with which Sub-section (1) of Section 15 opened and not to create any new right for the tenant. If it was the intention of the Legislature that express obligations undertaken by the tenants not to sub-let the premises or assign or transfer their interest therein should be nullified, it would have certainly said so either in the proviso or elsewhere in the section. A non-obstante clause or some qualifying words could have been used by the Legislature in the proviso if the Legislature intended to create for the tenants a fresh right of sub-letting in face of the express obligations undertaken by them to the contrary. That the proviso does not create a right in favour of the tenants is indicated by the language used by the Legislature. What the Legislature has provided is to enable the State Government to issue notification permitting in any area the transfer of interest in premises held under certain leases or a class of leases and to such extent as may be specified in that behalf. What the State Government has been enabled by the Legislature to do is to permit the transfer of interest and not to do something by which an express contractual obligation is overridden. Wherever the Legislature wanted to override contractual obligations, it has expressly provided for it. To illustrate, reference may be made to Sub-section (1) of Section 12 which, inter alia, provides that 'A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act. (Emphasis supplied). Sub-section (1) of Section 27 which provides for recovery of rent according to British calendar opens with the expression 'Notwithstanding anything contained in any law for the time being in force or any contract, custom or local usage to the contrary....' It has been argued by Miss Shah on behalf of defendant 4 that the contractual obligation not to sub-let the premises or assign or transfer their interest in the suit premises undertaken by defendants 1 and 2 is inconsistent with the provisions of the Rent Act, particularly Sub-section (1) of Section 12 read with Section 15. We are not impressed by this argument because if there is a term of tenancy which is inconsistent with the provisions of the Act, it cannot be given effect to. Under Sub-section (1) of Section 12, a tenant is not under an obligation to observe and perform a condition of tenancy if it is inconsistent with the provisions of the Act. No provision has been pointed out to us by Miss Shah which militates against such a term of tenancy. On the contrary, it is consistent with the scheme of Section 15 which initially placed a total embargo on sub-letting of, or transfer or assignment of interest in the premises to a third party, then relaxed it by enacting proviso to Sub-section (1) of Section 15 and further relaxed it by inserting in 1959 the expression' but subject to any contract to the contrary.' Sub-section (2) of Section 15 cannot be pressed into service for supporting the argument which Miss Shah has raised because the scheme of Sub-section (2) is to validate all unlawful tenancies, assignments and transfers which took place prior to the promulgation of Bombay Ordinance No. III of 1959. Whereas Sub-section (2) deals with the past, Sub-section (1) deals with the present and the future.

16. It has next been argued that proviso to Sub-section (1) is an independent provision and does not carve out an exception to the rule laid down in the principal part of Sub-section (1). We are not impressed by this argument because Sub-section (1) which places a total embargo upon sub-letting, assignment or transfer of interest in the premises held by a tenant is subject to two exceptions. One exception is made by the proviso and the other exception is made by the amendment made in 1959. Therefore, it is clear from the language of the proviso that it relaxes the rigour of the rigid rule which the Legislature enacted in the shape of Section 15. It is difficult in these circumstances to imagine that the proviso contains a provision which is independent of the rule laid down in Sub-section (1). In fact, the expression 'but subject to any contract to the contrary' inserted in Sub-section (1) of Section 15 means any contract which is contrary to embargo on sub-letting or transfer or assignment of interest in the premises. It will not cover a contract which is consistent with that embargo. In other words, an obligation undertaken by a tenant not to sub-let is not a contract contrary to what has been laid down in Sub-section (1) of Section 15. It is a contract which is consistent with what has been laid down in Sub-section (1) of Section 15. Therefore, such a contract does not attract the exception incorporated in the expression 'but subject to any contract to the contrary.' If the Legislature really wanted to override contracts against subletting, it would have said so in the proviso itself. It is difficult to think that the expression 'but subject to any contract to the contrary' permeates through the principal part of Sub-section (1) as well as the proviso. To extend it to the proviso is to nullify the proviso itself because if there is an agreement between a landlord and a tenant under which the tenant is permitted to sub-let the premises or transfer or assign his interest therein, then the notification issued under proviso by State Government becomes redundant. If the notification issued by the State Government to the proviso of Sub-section (1) permits sub-letting, assignment or transfer in a particular case, then the consent of the landlord is unnecessary. Therefore, we are of the opinion that the effect of the expression 'but subject to any contract to the contrary' is confined to the principal part of Sub-section (1) itself and does not travel beyond it. We are clear in our mind that the proviso confers no right but merely relaxes the rigour of the prohibition enacted in Sub-section (1). We are fortified in expressing this view because if the Legislature had intended to permit the tenants to sub-let their premises or transfer or assign their interest to a third party even in cases where there is an express covenant to the contrary, there was no need to enact Section 15 at all in the form in which it has been enacted. So far as the Transfer of Property Act is concerned, it permits sub-letting and under-letting. Therefore, no particular provision was required to be made in the Rent Act repeating what is provided by the Transfer of Property Act, 1882 (4 of 1882).

17. If the Legislature had intended to override the express obligation undertaken by a tenant not to sub-let his premises or transfer or assign his interest therein, then the Legislature would have enacted, instead of the section as it is in the present case, a small section and provided that, notwithstanding anything contained in any contract to the contrary, it shall be lawful for a tenant to sub-let his premises or assign or transfer his interest therein to a third party. The construction which Miss Shah has tried to place upon the proviso to Sub-section (1) could have been easily expressed by the Legislature in the aforesaid manner if the Legislature would have intended to do so. The fact that the Legislature did not do so clearly shows that the intention of the Legislature is to honour written obligations between landlords and tenants except where they have been overridden by legislative provisions. We are, therefore, of the opinion that in the third class of cases where the tenant has undertaken an express obligation not to sublet the premises held by him or transfer or assign his interest to a third party, it is not open to him to do so under any of the provisions of the Rent Act. He is bound to honour that obligation. Failure on his part to do so will render him liable to be evicted from the premises under Clause (e) of Sub-section (1) of Section 13.

18. It has lastly been argued by Miss Shah that, in the instant case, there is no lease executed by the parties. That there is no formal lease executed by the parties is an undisputed fact. All that is on record is the rent note executed by the tenant. A rent-note is not a lease. However, the terms and conditions of tenancy agreed upon between the parties can certainly be made out by the Court from the rent root. She has argued that in case of a rent note, there must be oral evidence to show that a particular term was agreed upon between the parties and if there is such evidence on record, it can be supported by the recitals made in the rent note. According to her, a mere rent note is no evidence of the terms of tenancy. We are unable to uphold the contention raised by Miss Shah. A rent note which has been proved can certainly be looked at for the purpose of discovering the terms and conditions of tenancy. That is exactly what we have done in the instant case. The attempt which Miss Shah has made, therefore, to prevent us from looking at the rent note, must fail.

19. These are the contentions which Miss Shah has raised before us. We are unable to uphold them. We, therefore, confirm the finding recorded by the learned appellate Judge. In the result, the revision application fails and is dismissed. Rule is discharged with costs. Miss Shah who appears on behalf of defendant 4 orally applies for certificate of fitness under Clause (1) of Article 133 of the Constitution to appeal to the Supreme Court against this decision. In our opinion, no substantial question of law arises in this case which is required to be determined by the Supreme Court. Therefore, the oral application made by Miss Shah is rejected. In order to enable defendant 4 to appeal against this decision to the Supreme Court by obtaining special leave, Miss Shah applies for staying the execution of the decree for possession for some time. In order to enable defendant 4 to do so, we direct that the execution of the decree for possession passed herein shall be stayed for a period of three months.


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