B. K. Mehta, J.
1. A short but interesting question arises in this revision application preferred by original defendants Nos. 1 and 2, who were respectively original tenant and sub-tenant or assignee from the original tenant, of the shop bearing census No. 4602/1 situate at Kalupur within the city of Ahmedabad. The monthly rent of the premises was Rs. 100/-. The opponents herein, who were the original plaintiffs, filed the present suit for possession against the defendants on the grounds of arrears of rent, bona fide personal use and subletting by defendant No. 1 to defendant No. 2. The Small Causes Court at Ahmedabad, where this suit was filed, granted the eviction decree on the sole ground of subletting under Section 13(1)(e) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as 'the Bombay Rent Act') since defendant No. 1 Shah Chatrabhuj Narshi (hereinafter called 'the original tenant') had entered into a partnership with 16 other persons for carrying on business of goods transport under the name and style of 'The Orient Mail Speed Transport Company' on the terms and conditions as contained in the partnership deed executed between the parties in that behalf on August 8, 1963, which is produced at Ex. 79 on the record of the trial Court, where, inter alia, it was agreed between the parties thereto that the separate businesses carried on prior to 3rd day of December 1962 by the partners together with all its assets, benefits, licences, rights, titles and interests in all other tangible and intangible properties of the said businesses including the tenancy rights would be deemed to have been taken over by and in possession of the new partnership firm. The defendants, therefore, carried the matter in appeal before the Appellate Bench of the Small Causes Court, which confirmed the judgment and decree of the trial Court and dismissed the appeal. It is this order of the Appellate Court which has been challenged in this revision application preferred by the original defendants.
2. This revision application reached hearing before our learned Brother Mankad J, who, finding some apparent conflict between the decisions of two learned Single Judges of this Court in Mehta Jagjivan Vanechand v. Doshi Vanechand Harakhchand and Ors. (1971) 12 Guj. L.R. 487 (Per Thakkar J.), and Manchharam Sobhraj and Ors. v. Jamnadas Mulchand and Anr. (1975) 16 Guj. L.R. 898 (Per S.H. Sheth J.), was of the opinion that the question involved in this revision application was of importance and, therefore, should be referred to a Division Bench of this Court. This is how the matter has come up before us.
3. In order to appreciate whether there is really any conflict between the aforesaid two decisions, we may shortly refer to them. In Jagjivan Vanechand's case (supra) the tenant who was carrying on business in the demised premises, with which Thakkar J. was concerned, as a sole proprietor of the business, took in two other persons as his partners and carried on the business in the suit shop for the benefit of the partner ship. The partnership deed executed between the tenant and his two partners in terms made it clear that the tenancy rights continued to vest into the tenant and the other two persons joining as partners were not to acquire any interest in the tenancy rights belonging to him. In that set up of facts, a question arose bsfore Thakkar J., whether taking of two partners by the tenant and his carrying on partnership business on the premises with the two other partners amounted to subletting or assignment of the tenancy rights in the shop premises which exposed the original tenant to a decree of eviction under Section 13(1)(e) of the Bombay Rent Act. On behalf of the landlord, it was contended that since the tenant was in possession and enjoyment of the shop premises by carrying on business thereon till 1957 after which year the same business was carried on by the partner ship firm, it would justify the conclusion that there has been either sublet ting or assignment of the tenancy rights notwithstanding the stipulation set out above in the partnership deed. This contention did not find favour with Thakkar J., since, in his opinion, on the principle enunciated in South of England Dairies Ltd. v. Baker (1906) 9 Ch. Div. 631, 'an assignment of a lease must necessarily embrace all the estate of the assignor', who must divest his interest altogether and the answer would not have been different even if the tenancy interest had been thrown into partnership since a tenant joining partnership business continues to have the interest in the tenancy rights. In any case, an assignment could not have been in one's own favour. In the opinion of the learned Single Judge (Thakkar J) the transaction in question before him would not amount to subletting as well because subletting postulates two distinct per-sons-the head-tenant and the sub-tenant, and if transaction of taking in partners constitutes a subletting, the sitting tenant would be the head-tenant, and along with his partners would be sub-tenants also which situation exposes the fallacious contention urged on behalf of the landlord. An alternative contention on behalf of the landlord that there was a transfer of possession in favour of the partnership firm was also negatived by Thakkar J on the ground that there is a distinction between physical occupation and legal occupation, and till the legal occupation is transferred, no sub-tenancy could have been created. The learned Single Judge sought support to his view from the decision of a learned Single Judge of Madras High Court in Gundalapalli Rangamannar Chetty v. Dssu Rangiah and Ors. : AIR1954Mad182 .
4. In Manchharam Sobhraj's case (supra) a sitting tenant took two other persons as partners and in an action for ejectment brought by the landlord on the ground, amongst others, under Section 13(1)(e) of the Bombay Rent Act, the trial Judge refused to grant a decree as prayed for. However, the Appellate Court differed from the trial Court with his finding refusing eviction decree on the ground of subletting under Section 13(1)(e), and held that the premises in question in that case were sublet by the sitting tenant to the partnership firm. The tenant came in revision before this Court. Sheth J., agreed with the view of Thakkar. J., in Jagjivan Vanechand's case (supra) that subletting postulates two distinct persons-the head-tenant and sub-tenant, and no one can be one's own sub-tenant which position would not arise by any stretch of imagination. He also agreed with the view of Thakkar J., that a tenant cannot split up the interest, retain a part of it and transfer the remainder to his partners, merely because a firm continues to carry on his business in the same shop in which he had been carrying on business and his decision to take two partners into the business would not amount to change of legal possession, which concept must be distinguished from physical occupation or user of tee premises. Sheth J., was, therefore, in complete agreement with the principles laid down by Thakkar J. However, Sheth J., in paragraph 15 of his judgment, referred to an unreported decision of Chagla C.J. (as he then was) in Uttamlal Muljibhai v. A. Hasan Elahi Noor Elahi Civil Revision Application No. 1204 of 1951 decided on 29th July 1952, where it has been laid down that the Rent Act does not prevent a tenant of the premises from taking partners in his business and carrying on partnership business thereon since there is no restriction against a tenant allowing the use of his premises to his partners for carrying on his business in which he has a share along with his partners, and as long as the right of occupancy as monthly tenant in respect of the premises remained with the tenant and does not form part of the assets of the partnership firm, there cannot be said to be any subletting.
5. The learned Advocates, appearing on behalf of the parties hereto told us that Mankad J., has, in view of the agreement of Sheth J., with the ratio of the aforesaid unreported decision of the Bombay High Court, found some conflict between the aforesaid two decisions of this Court and has, therefore, referred the matter to us.
6. On behalf of the petitioner-tenant these two decisions of this Court have been pressed into service by contending that in the present case before us even if on construction of the partnership deed, Ex. 79, the Court is inclined to conclude that the tenancy rights have been thrown into partnership assets, even then, there is no divesting of interest by the petitioner-tenant since he continues to have the interest as a partner in the tenancy rights and, therefore, there cannot be any assignment in one's own favour. On the same grounds, the Court cannot conclude subletting which postulates a head-tenant and a sub-tenant, which would not be possible in the present situation where a sitting tenant takes some partners in the business, because, obviously one cannot be simultaneously a head-tenant and a sub-tenant. We do not think that these contentions urged on behalf of the petitioner-tenant are well-founded since in our opinion the learned Advocate for the petitioner-tenant is reading more than what is warranted in the aforesaid two decisions of this Court.
7. In Jagjivan Vanechand's case (supra) the partnership deed made it clear that the tenancy rights continued to vest into the tenant, and the two persons taken as partners were not to acquire any interest in the tenancy rights belonging to him. In view of this unequivocal stipulation in the partnership deed, there was no question of the tenancy rights being thrown into the partnership assets or for that matter any interest having been created in them in favour of the partnership firm, or other partners. It was sought to be contended on behalf of the landlord in Jagjivan Vanechand 's case (supra) that since the possession from 1957 onwards was with the partnership firm, the Court should draw an inference about the subletting or assignment that the learned Single Judge tried to distinguish between the two concepts - legal possession and actual possession. In Manchharam Sobhraj's case (supra) it was not clear exactly as to what were the terms and conditions of the partnership deed, though it appears from the judgment of the trial Court that the sitting tenant there had taken some persons as partners in the business and allowed them to carry on the business of partnership firm on the premises. It does not appear clearly whether the tenancy rights there were thrown into partnership assets or for that matter any interest was created therein in favour of the firm or any incoming partners. As a matter of fact, Sheth J., had cited the unreported decision of the Bombay High Court in Uttamlal Muljibhai's case (supra) where Chagla C.J., ruled that as long as the right of occupancy as a monthly tenant in respect of the premises remained with the tenant and did not form part of the assets of partnership firm, there could not be said to be any subletting. Sbeth J., observed thereafter as under:
Different considerations will certainly prevail if the tenancy rights have been amalgamated in the pool of partnership assets and all partners are entitled to a share therein upon the dissolution of the partnership.
It supports our view that in Manchharam Sobhraj's case (supra) there was no question malgamation of tenancy rights in the pool of partnership been the situation, according to Sheth J., different considerations would have prevailed. In our opinion, therefore, the real crux of the problem is, whether the tenancy rights are thrown into partnership assets or for that matter any interest is created therein in favour of the incoming partners? A number of English decisions has been cited before us on behalf of the petitioner-tenant in support of his contentions. It cannot be gainsaid that the question has to be decided in accordance with the Transfer of Property Act and the Bombay Rent Act and not according to the law prevalent in England since there are special conditions attached to the land tenure in England; for example, in India, a lessor is expressly empowered to grant a lease in perpetuity and is not obliged for that purpose, as in England, to grant a lease for lives or for a term with a covenant for perpetual renewal vide: Hunsraj and Ors. v. Bejoy Lal Seal and Ors. .
8. Two provisions of the Transfer of Property Act have material bearing on the contentions which have been advanced on behalf of the petitioner-tenant. These two relevant provisions are to be found in Section 108(j) and Section 5 of the Transfer of Property Act, which will, in our opinion, set at rest the controversy raised on behalf of the petitioner-tenant in the contentions set out above. Section 108(j) empowers a lessee to transfer absolutely or by way of mortgage or sublease the whole or any part of the interest in the property and any transferee of such interest or part may again transfer it, and the lessee shall not, by reason only of such transfer, cease to be subjected to any of the liabilities attached to the lease. Clause (j) of Section 108, therefore, expressly permits a lessee to transfer absolutely or by way of mortgage and sublease the whole or part of any interest in the property. Clause (j), therefore, refers to assignments that are absolute and to assignments by way of mortgage and sublease (vide: Transfer of Property by Mulla, Sixth Edition, p. 704). The difference between absolute assignment and assignment of lesser interest is well recognized. Absolute assignments are those assignments where the whole interest of the lessee is transferred The effect of such assignment is that it creates privity of estate between the lessor and the assignee, and the assingee becomes liable to the lessor on covenants running with the land including the covenant to pay rent. An assignment of a lesser interest can be effected by way of a mortgage or sublease as provided in Clause (j). A sublease is an assignment of a lesser term and accordingly there is no privity of estate between the lessor and the sublessee vide: Timmappa v. Rama Venkanna (1897) ILR 21 Bom. 311 and Transfer of Property by Mulla, Sixth Edition, p. 706). Clause (j) therefore permits a lessee to transfer his whole interest by way of absolute assignment or part of it by way of sublease or mortgage. The contention urged on behalf of the petitioner-tenant that in order to be a valid assignment, there should be a transfer of the whole estate and consequent diverting thereof from assignor is not well-founded. Similarly, the contention that there cannot be any assignment to one's own self or for that matter there cannot be any sublease in favour of one's own self is also not justified on the matter of principle.
9. Section 5 of the Transfer of Property Act defines the term 'transfer of property' to mean an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons, and 'to transfer property' is to perform such act. The following passage captioned 'Interest in property' to be found at page 50 of the Transfer of Property by Mulla. Sixth Edition, should be pertinently noted in this behalf. It reads,-
As ownership consists of a bundle of rights, the various rights and interests may be vested in different persons, e.g., a mortgagor and a mortgagee, a lessor and a lessee, or a tenant for life and a remainderman. Absolute ownership is an aggregate of component rights such as the right of possession, the right of enjoying the usufruct of land, and so on.
These subordinate rights, the aggregate of which make up absolute ownership, are called in this Act interests in property; and in English law, real rights. A transfer of property is either a transfer of absolute ownership or a transfer of one or more of these subordinate rights. In Section 58, however, the word interest is not distinguished from absolute ownership. With reference 10 an English mortgage it is used to express an absolute interest i.e. ownership which is not the less absolute because it is subject to a covenant to reconvey.
The submission on behalf of the petitioner-tenant that there cannot be any assignment in one's own favour or a sublease in one's own favour is not legally tenable in view of the provisions contained in Section 5 of the Transfer of Property Act, since transfer of property includes a transfer of one or more of the subordinate interests or rights, which can be affected by conveying it in present or in future to one or more living persons or to himself and one or more living persons. We do not think, therefore, that it would be right to contend that there cannot be any assignment of the whole or lesser interest by way of assignment or sublease in favour of himself and other living persons.
10. In W.H. King v. Republic of India and Anr. : 1952CriLJ836 , where the appellant was convicted under Section 18 of the Bombay Rent Act, 1947 for receiving 'Pugree' of Rs. 29.500/- and also under Section 19(2) of the said Act for receiving the said sum as a condition for relinquishment of his tenancy, and the defence of the appellant was that he was in search of a partner to carry on business during his intended absence from the country and he, therefore, entered into negotiations with the complainant who paid the said sum as his capital contribution, the Supreme Court, while pointing out the difference between relinquishment and assignment, held as under:.It would thus be seen that an assignment of the lease or -transfer in any other manner by a tenant is not made an offence; the statute merely says that it is not a lawful transaction. It is the landlord's consent to the transfer of a lease by sub-lease or otherwise on receipt of consideration that has been made an offence. Then follows Section 19 which speaks of the relinquishment of his tenancy of any. premises by a tenant. If by the expression an assignment such as we have in the present case was meant, appropriate words could have been used, such as the transfer by a tenant of his interest, which we find in Section 108, sub Clause (j) Transfer of Property Act.
The distinction between an assignment on the one hand and relinquishment or surrender on the other is too plain to be ignored. In the case of an assignment, the assignor continues to be liable to the landlord for the performance of his obligations under the tenancy and this liability is contractual while the assignee becomes liable by reason of privity of estate. The consent of the landlord to an assignment is not necessary, in the absence of a contract or local usage to the contrary. But in the case of relinquishment, it cannot be a unilateral transaction; it can only be in favour of the lessor by mutual agreement between them.
This exposition of assignment of tenancy rights has been affirmed by the Supreme Court in its latter decision in Pandit Kishan Lal v. Ganpat Ram Khosla and Anr. : 2SCR17 We do not therefore think that the learned Advocate for the petitioner-tenant was right in his contention that till there is transfer of the whole interest of the transferor and consequent divesting of his interest, there cannot be any assignment. As stated above, there can be assignment of the whole interest or the lesser interest. Equally we must reject the contention that there cannot be any assignment of interest by a sitting tenant by transferring his tenancy rights and throwing them into the partnership assets since he continues to have interest therein as a partner. As stated above, there can be a transfer of interest in favour of himself and one or more other living persons. The real question, therefore, is, as posed by Chagla C. J., whether the tenancy rights have been thrown into the partnership assets or for that matter any interest is created in tenancy rights in favour of the incoming partners for purposes of determining whether Section 13(1)(e) of the Bombay Rent Act is attracted or not.
11. In Gian Singh & Co. v. Devraj Nahar and Ors. (1965) I All ER 768, the Privy Council was concerned with an appeal at the instance of landlords from an order of the Court of Appeal of the Supreme Court of the Federation of Malaya, allowing the appeal of the tenant against the order of eviction. The facts were that the sitting tenant took two partners in his business in March 1958 and an action brought by the landlords for eviction oh the ground that the tenant had assigned the tenancy rights to the partnership thereby committing breach of the covenant not to assign or sublet the premises without the landlords' written consent which was admittedly refused. The tenancy was a protected tenancy by the Control of Rent Ordinance No. 2 of 1956. The tenancy was validly terminated with the result that the tenant had become a statutory tenant and under the Ordinance no order for possession could have been made against him unless there was any breach of the covenant. The trial Judge, after hearing the oral evidence and considering the deed of partnership, concluded that there was a covenant against assigning or subletting and the tenant was in breach of it by entering into the partnership deed, He, therefore, made an order for possession against the tenant. The Appellate Court reversed that order since in its opinion there had been no breach of the covenant under the partnership deed. The landlords, therefore, carried the matter before the Privy Council. Lord Pearce, speaking for the Privy Council, read the relevant Clauses of the partnership deed and found that it contained no specific reference to tenancy nor gave any indication as to what rights or duties any party shall have with regard to it. On behalf of the landlords, it was argued that a tenancy was one of the other assets of the business of Nahar & Co., and that the partners were entitled to capital and the property for the time being of the partnership in equal shares under clauses 5 and 6 of the partnership deed, and the joint effect of the two Clauses was to divest the tenant of his tenancy and to vest it in the partners, thus constituting an assignment. Reliance was also placed on behalf of the landlords on some admission said to have been made by the tenant in his cross-examination to the effect that the premises were a valuable asset to his business and that he did not retain a portion of the premises for himself when the partnership was formed and all the partners enjoyed the use of the entire premises. In this context Lord Pearce observed as under:.In their Lordships' view, however, these supplemental considerations add nothing to the deed. The tenant could not but admit that these excellent premises were an asset to the business, but that does not bear on the question whether the tenancy was an asset of the business which was transferred to the partnership; and the fact that the partners enjoyed the use of the entire premises was an obvious consequence of the deed but it does not decide the point in issue.... Be that as it may, their Lordships are of opinion that it is to the deed that the landlords must look if they are to establish an assignment-.There is no certainty that the tenant regarded his personal tenancy, albeit used by him as premises for carrying on the business, as an asset of the business, which passed with the business and if, under the deed, the tenancy was being assigned to the partnership, one would certainly except to find clearer provision with regard to it.
The Privy Council, therefore, found itself unable to construe the partnership deed as constituting an assignment. The real question, therefore, as posed by Lord Pearce, is, whether the tenancy was an asset of the business which was transferred to the partnership, and for answering the question, we have to look to the deed and deed alone. The relevant provision for this purpose is to be found in Clause 5 of the partnership deed of August 8, 1963, produced at Ex. 79 on the record of the trial Court, which reads as under:
5. The aforesaid respective separate business as carried on prior to the 3rd day of December 1962 by the partners hereto together with stock-in-trade, tenancy rights of the business premises, good-will, furniture, fixtures, trade, name, telephone, all benefits, licences right, title and interest and all other tangible and intangible assets and paraphernalia of the said business save and except the liabilities, outstanding and trucks of the aforesaid business as on the 3rd day of December 1962 have been, are and shall be deemed to have been taken over by and in possession of the partnership between the parties hereto and the parties hereto have agreed and confirmed to execute the necessary deed or deed for vesting and/or assigning of the aforesaid businesses together with stock-in-trade, tenancy rights of the business premises, furniture, fixtures, trade name, telephone, all benefits licences, rights, title and interest and all other tangible and intangible assets and paraphernalia of the said business in favour of the partnership. The partnership has taken over, settled, paid and/or adjusted towards capital and agreed value of the aforesaid businesses, stock-in-trade, tenancy right of the business premises, good will, furniture, fixtures, trade name, telephone all benefits licences, right, title and interest and all other tangible and intangible assets and paraphernalia of the said businesses to such of the partners as has been mutually agreed upon and the remaining partners have agreed not to claim any amount against the value of aforesaid businesses, trade name, goodwill and all aforesaid business assets contributed by them since the respective share of capital contribution and of profits have been duly determined after taking into account the value of their aforesaid business, trade name, goodwill and all other aforesaid business assets contributed by them.
(emphasis supplied by us)
On true construction of Clause 5 of the partnership deed, its net effect cannot be gainsaid that the separate businesses of the partners, who were parties to the deed of partnership, Ex. 79, including the present petitioner-tenant, which were carried on prior to 3rd day of December 1962, together with the stock-in-trade, tenancy rights of the business premises, good-will trade name and all other tangible and intangible assets, save and except the liabilities, outstandings and trucks, were taken over by the partnership firm and it has taken over, settled, paid and adjusted towards its capital the agreed value of the aforesaid businesses, stock-in-trade, tenancy rights, good-will and all tangible and intangible assets as aforesaid as respective shares of capital contribution of the respective partners. In other words, the separate businesses of the partners, together with their stock-in trade and tenancy rights of the business premises and all other tangible and intangible assets, except those 2-3 specified items, were, for all intents and purposes, taken over as partnership assets and the value of each of the separate businesses was adjusted as capital contribution of each such partner. In our opinion, therefore, there cannot be any escape from the conclusion that along with separate businesses of the partners all the tangible and intangible assets, including the tenancy rights of the business premises, were thrown and amalgamated in the partnership assets of the new firm constituted by the partnership deed Ex. 79. If that is the conclusion, and we think none other is possible, in our opinion, there is a complete assignment of the tenancy rights of the business premises along with the separate businesses of the partners who were parties to the deed of the partnership Ex. 79, including that of the petitioner-tenant before us. In our opinion, therefore, Section 13(1)(e) is attracted and the petitioner-tenant has exposed himself to the consequences ensuing thereunder.
12. The learned Advocate for the petitioner-tenant, therefore, attempted to persuade us that the partnership deed, Ex. 79, is merely an agreement to assign, inter alia, the tenancy rights and, therefore, cannot by itself create any interest therein in favour of the new partnership firm or its partners. He invited our attention to the material portion of Clause 5 reading: 'and the parties hereto have agreed and confirmed to execute the necessary deed or deed for vesting and/or assigning of the aforesaid businesses together with stock-in-trade, tenancy rights of the business premises and all other tangible and intangible assets and paraphernalia of the said businesses in favour of the partnership', which supports this contention. The submission is that unless the necessary documents are executed by the parties for vesting and/or assigning the aforesaid business, inter alia with the tenancy rights in favour of the partnership, there is no effective assignment under the partnership deed by itself. Alternately he urged that since the partnership deed, on the own showing of the respondent-landlord, purports or operates to create and/or assign either in present or in future, the interest in the tenancy rights of the value of Rs. 100/-and upwards in the immovable property, it would, per se, require registration under Section 17(1)(b) of the Registration Act, 1908. Both these contentions appear to be attractive, but, on the close scrutiny, they would not stand the legal test. In our opinion, both these contentions overlook the real effect of Section 14 of the Partnership Act and the nature of the agreement to carry on partnership business in which the partners constituting the firm bring in movable and immovable properties to be treated as partnership assets. Section 14 deals With the property of the firm and reads as under:
14. Subject to contract between the parties, the property of the firm includes all property and rights and interests in property originally brought into tee stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm, and includes also the goodwill of the business.
Unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
13. In Addanki Narayanappa and Ors. v. Bhaskara Krishnappa A.I.R. 1968 SC 1300, a question arose before the Supreme Court whether document recording previous fact of dissolution of partnership and relinquishment of interest of the partners in the partnership assets by way of adjustment is compulsorily registerable or not. In that context Mudholkar J. speaking for the Court, on consideration of the relevant provisions of the Partnership Act and the well recognized principles of partnership law in India, as well as in England, and on exhaustive survey of the case law in that behalf, succinctly summed up the position in the following terms as to what the true effect of formation of a partnership firm and bringing in all the properties and rights and interests in properties by various partners and the allotment of the partnership assets on dissolution of the firm:.The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated his right during the subsistence of the partner ship is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges.
The Supreme Court, on consideration of the dissolution, concluded that the interest of the partners of a family in the partnership assets was a movable properly and the document evidencing the relinquishment of their interest was not compulsorily registerable under Section 17(1) of the Registration Act. The Supreme Court in this context specifically did not approve the view of Jardine and Telang JJ., in Joharmal v. Tejram Jagrup (1893) I.L.R. 17 Bom. 235 where they opined that though a partner's share does not include any specific part of any specific item of the partnership property, still where the partnership is entitled to immovable property, such share does include an interest in immovable property and, therefore, every instrument operating to create or transfer a right to such share requires to be registered under the Registration Act. The decision of the Supreme Court in Addanki's case (supra) has been affirmed in Commissioner of Income-tax v. Dewas Cine Corporation : 68ITR240(SC) , and it was held that on a dissolution of partnership business of the exhibitors if the theatre of the partnership business is returned to the original owner in satisfaction partially or wholly of his claim to a share in the residue of the assets, it would not amount to a transfer of property for a price and, therefore, a sale as understood in Section 10(2)(vii) of the Income-tax Act, 1922.
14. In Smt. Mohini Thappar v. Commr. of Income-tax : 83ITR208(SC) , the Supreme Court held that a person cannot by handing over his goods to a partnership of which he is a partner, and that as his share of capital be considered as having sold the goods to the partnership.
15. In R.M. Ramanathan Chettiar and Anr. v. Controller of Estate Duty. Madras : 99ITR410(Mad) , the Madrass High Court held that no document of transfer is necessary when a partner brings into the partnership some of his assets with an intention to treat the same as partnership assets even though the assets so brought in consist of immovable properties.
16. Patna High Court has also taken a similar view in Firm Ram Sahay Mall Rameshwar Dayal v. Bishwanath Prasad : AIR1963Pat221 that all property and rights and interests which the partners may have brought in the common stock as their contribution to the common business are parts of the partnership property, and even if a property contributed by one partner be an immovable property, no document, registered or otherwise, is required for transferring the property to the partnership, because by virtue of Section 14 of the Partnership Act and certain provisions to the Contract Act, they become the properties of the firm as soon as the partners intend to so bring them in and treat them as such.
17. In Premraj Brahmin v. Bhani Ram Brahmin (1946) ILR 1 Cal 191, the High Court of Calcutta took the view that no written document or registration is necessary to bring in the separate properties of partners into partnership stock, and they become the properties of the firm as soon as the partners intend to bring them in and treat them as such since this is not prohibited by Transfer of Property Act or the Indian Registration Act. It should be noted that both these decisions have been referred to without any further comment by Mudholkar J., in Addanki's case (supra).
18. In view of the settled legal position, we are of the opinion that the learned Advocate for the petitioner-tenant was not justified in contending that the partnership deed in question would not amount to assignment in law since it requires registration, inasmuch as it purports to create or transfer the interest in the tenancy rights along with the other assets of the businesses of the partners constituting new firm, for the obvious reason that it is more a question of the intention of the parties and the transfer which takes place is by operation of law under Section 14 as well as other relevant provisions in that behalf of the Partnership Act. The contention of the learned Advocate that the partnership deed, Ex. 79, does not purport or operate to create or assign any interest in the tenancy rights or other assets of the business of the partners in present since the parties thereto have expressly agreed that necessary documents for effectively vesting or assigning the rights in the business including the tenancy rights would be executed in future. We are not impressed by this contention since it tries to read and construe the relevant Clause in a truncated manner. If we read Clause 5 as a whole what is agreed between the parties to the partnership deed Ex. 79 is that the new firm in effect and substance would take over all the assets of the separate businesses of the partners including their tenancy rights in the business premises, and the value thereof will be treated as capital contribution of each of such partners in the books of the partnership firm for which appropriate credit would be given in the account of the respective partners. It is no doubt true that in Clause 5 it has been stated that the parties agreed to execute further documents as may be found necessary to vest effectively the assets of the business in the new partnership firm. However, in our opinion, that would not militate against the view which we are taking on reading Clause 5 as a whole because, in law, it is the intention of the partners that results into throwing their individual assets into the pool of partnership business and converting them into partnership assets. In our opinion, therefore; both these contentions of the learned Advocate for the petitioner-tenant should be rejected.
19. A faint attempt was made on behalf of the petitioner-tenant to rely on the decision of the Madras High Court in Gundatappalli Rangamannar Chetty v. Desu Rangiah : AIR1954Mad182 in support of the contention that there cannot be a subletting unless the lessee parted with the legal possession. We have not been able to appreciate how this decision can be of any assistance to the cause of the petitioner-tenant. The partnership arrangement before the Madras High Court was clear enough and the lease hold interest was not transferred to the partners and the sitting tenant continued to be in possession of the premises with liability to pay rent to the landlord. The contention advanced before the Madras High Court was that by reason of the partnership, in law, there was a subletting of the premises within the meaning of Section 7(2)(ii) of the Madras Buildings (Lease and Rent Control) Act, 1949. This contention did not appeal to the learned Single Judge of the Madras High Court, because, per se, partnership between a sitting tenant and other persons, who may be permitted to avail of the business premises, cannot amount to subletting. Mere fact that another person is allowed to use the premises while the lessee retains the legal possession is not enough to create a sub-lease. In order to create a sublease, the right to exclusive possession should be confirmed on another. As the Supreme Court ruled in Associated Hotels of India Ltd. v. R.N. Kapoor : 1SCR368 , the real test is the intention of the parties, and if the document creates an interest in the property, it is a lease, and the factum of exclusive possession of a property by a person, prima facie, indicates that he is a tenant. The test of exclusive possession, therefore, cannot be conclusive. Ultimately it is the intention of the parties, whether they intend to create an interest in the property and that would be determinative along with the other circumstances when a question arises whether a lease or sublease is created or not. We do not, therefore, think that the decision of the Madras High Court in Gundalapalti's case (supra) can take the case of the petitioner-tenant any further.
20. We are, therefore, of the opinion that, on the facts and in the circumstances of this case, the petitioner-tenant has created interest in the tenancy rights of the suit premises in favour of the partnership-firm. Orient Mail Speed Transport Services, constituted by Ex. 79, which is a compendious name for its partners, and that the tenancy rights along with the other assets of the business of the Pin. No. 1 became the partnership assets by virtue of Clause 5 of the partnership deed Ex. 79. The decisions of this Court in Jagjivan Vanechand's case (supra) and Manchharam Shobhraj's case (supra) are not of much assistance to the cause of the petitioner-tenant for the obvious reason that no interest was created in the tenancy rights with which this Court was concerned in those two cases and the observations made therein are more or less in the context of the contentions urged before the Court, because, admittedly, the tenancy rights continued with the sitting tenant and the partners were allowed to avail of the business premises without having any interest in them. We must, therefore, hold that there was an assignment of the tenancy rights in the suit premises in favour of the new firm, and the petitioner-tenant has rendered himself liable for being evicted there from under Section 13(1)(e) of the Bombay Rent Act. We, therefore confirm the eviction decree granted by the Appellate Bench of the Small Causes Court, Ahmedabad, under Section 13(1)(e) of the Bombay Rent Act for the reasons which we have stated in this judgment.
21. That takes us to the second contention, whether the petitioner-tenant was in arrears of rent and the decree for eviction is justified on that ground under any of the Clauses of Section 12(3) of the Bombay Rent Act. The learned Advocates of the parties before us have produced a statement of the amount of rent deposited in the Court by the petitioner-tenant from time to time and what was the amount of rent then due at the time of first hearing, at the time of the decree of the trial Court and at the time of the decree of the first Appellate Court. The Appellate Court was of the opinion that since the tenant was not regular in payment of rent, he was liable to be evicted under Section 12(3)(b) of the Act. The Appellate Bench has found that, on the facts and in the circumstances of the case, since there was an obligation to pay property-tax, which liability would be an annual liability, the case would not fall within the terms of Section 12(3)(b), but would be governed by Section 12(3)(b), in view of the decision of this Court in Panchal Mohanlal Ishwardas v. Maheshwari Mills Ltd. : (1962)3GLR574 . It should be recalled that the Appellate Bench has granted the eviction decree under Section 12(?)(b) of the Bombay Rent Act. In our opinion, the decree of the Appellate Bench is not according to law, obviously for the reason that Clause (b) permits a tenant to deposit on or before the first day of hearing of the suit or on or before such other date as may be fixed by the Court, the amount of standard rent together with permitted increases then due together with the costs of the suit, and thereafter continues to pay or tenders in Court regularly such rent and permitted increases till the suit is finally disposed of. It is an admitted position that the trial Court has not made any order fixing the date before which the amount of rent in arrears together with the costs was to be deposited and till that order is made, it cannot be said successfully that the tenant has defaulted himself within the terms of Section 12(3)(b) and, therefore, the view of the Appellate Bench that he was liable to be evicted under Section 12(3)(b) is not according to law since, otherwise, the tenant would lose his valuable right to protect himself by making deposit within the extended time.
These were the only contentions which were urged in this revision application.
22. In that view of the matter, which we have taken on the question of assignment, we must confirm the decree of eviction granted by the Appellate Bench of the Small Causes Court. The result is that this revision fails and is dismissed. Rule is discharged with no order as to costs.
23. Warrant for possession shall not be executed against the petitioner-tenant upto 31st December, 1979 on the condition that they give an undertaking to this Court that they will pay a sum of Rs. 100/- every month to the respondent-landlord by way of damages for use and occupation of the premises in question and will further undertake for and on behalf of the firm that the premises in question will not be transferred further in any manner or create any interest therein whatsoever in favour of any other parson or they would not part with the possession thereof and will also agree to hand over vacant and quiet possession of the premises on the expiry of the aforesaid period.