Jai Singh Morarji & Ors Vs. M/S
Sovani Pvt. Ltd. & Ors  INSC 248 (9 October 1972)
BEG, M. HAMEEDULLAH DWIVEDI, S.N.
CITATION: 1973 AIR 772 1973 SCR (2) 603 1973
SCC (1) 197
CITATOR INFO :
R 1981 SC1956 (1) D 1985 SC 507 (11,15)
Bombay Rents, Hotel and Lodging, House Rates
Central Act, Section 15(2)--Validation of sub-letting by 1959 amending
Ordinance--Protection only to transfers, assignments, or sub-leases by
tenants--Sub-lease must be in possession when amending Ordinance came into
The owner let out the premises to one
Occhhavlal in 1952.
Occhhavlal sub-let the premises to one
Sovani. About 1952, Sovani assigned his business with the possession of the
suit premises to a private Company of which he became the Director. Rent was
paid to the landlord upto 1966 by Occhhavlal. The owner obtained the possession
of the suit premises in execution of a decree obtained against Occhhavlal for
non-payment of rent and sub-letting. The assignee, private company, made an
application for a relief against the dispossession under Order XXI, Rule 100 of
the Code of Civil Procedure. The Trial Court granted the relief,. but the same
was reversed by the appellate authority on the revision application filed by
On the writ petition filed by the private
company, the Bombay High Court allowed the Writ Petition holding that the
private company was a tenant entitled to the protection of So. 15(2) of the
Bombay Rent Act. Allowing the appeal filed by the owner,
HELD : Sec. 15(2) of the Act protects only
sub-leases or assignments or transfer by the tenants, but does not protect
subsequent assignments or transfers by assignees of transferees. The proviso
and explanation to Sec. 15(1) of the Act protects transfer of interest in
notified lease or class of lease to assignees or transferees as well as
subsequent assignments or transfers. The assignments in favour of the private
company was not covered by any notification issued u/s 15 (1) of the Act. The
assignment to the private company was not made by the tenant but subtenant.
When the Ordinance of 1959 came into force, Sovani did not continue in
possession. It was the private company which was in possession. Therefore the
private company is not entitled to protection u/s 15 (2) of the Act.
Section 108 (2) of the Transfer of Property
Act notices distinction between sub-lease by a lessee and transfer by
sub-lessee of his interest by subsequent transfer. [607C, F] N. W. Nayak v.
Chhotalal Harirain, 69 Bom. LR. 551, approved.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 2669 of 1972.
Appeal by special leave from the judgment and
orderdated January 28, 1972 of the Bombay High Court in Special Civil
Application No. 2108 of 1971.
604 V. M.Tarkunde D. N. Misra, J. B. Dadachanji,
O. C. Mathur and Ravinder Narain, for the appellants.
D. V. Patel, S. S. Javali, D. N. Hungund and
Vineet Kumar for the respondents.
The Judgment of the Court was delivered by
RAY, J.--This is an appeal by special leave from the judgment dated 28 January
1970 of the High Court at Bombay.
The High Court in a writ petition under
Article 227 of the Constitution quashed an order of the Court of Small Causes,
A trust known as Padamsi Bhanji Trust of
Bombay owned a godown at 8 Mugbhat Lane, Girgaum, Bombay. The tenant of the
property before 1952 was Ochhavlal. The property thereafter came into
possession of S. V. Sovani. Sovani carried on the business of preparation and
sale of scientific apparatus. About 1952 Sovani became Director of Sovani Private
Limited Company referred to as the Private Company.
The Private Company went into possession of
the godown as also the business which was carried on by Sovani. Rent was paid
up to the year 1966 in the name of Ochhavlal. Rent receipts were also in the
name of Ochhavlal. In the year 1966 the trust employee who collected rent
refused to accept rent. Thereafter rent was sent by money order to the
trustees. The trustees did not accept the money orders.
The trustees in the year 1970 filed suit
Ochhavlal was the defendant in the suit. The
grounds for eviction of Ochhavlal were first that he was a defaulter in the
payment of rent from 1966, and, secondly, he was guilty of sub-letting. The
suit was decreed ex-parte in the month of March, 1971. On 8 April, 1971 the,
trustees obtained possession.
Thereafter an application was made under
Order XXI rule 100 of the Code of Civil Procedure by the Private Company for
relief against dispossession in execution of the decree.
The trial Court accepted the, contention of
the private Company that they became sub-tenants.
Against that Order an application in revision
was filed by the trustees. The Small Causes Court set aside the order passed by
the trial Court.
The Private Company thereupon made an
application under Article 227 of the Constitution in the High Court. The High
605 Court held that the Small Causes Court in revision committed an error in
applying section 15(2) of the Bombay Rent Act 1947. The High Court held that
the Private Company was a tenant within the meaning of the Bombay Act.
This appeal turns entirely on the provisions
contained in section 15 of the Bombay Rent Act referred to as the Act.
Section 15(1) of the Act is 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.
The present sub-section (1) was numbered as
sub-section (2) by Bombay Ordinance No. 111 of 1959 published on 21 May, 1959.
This was subsequently enacted in Bombay Act No. 49 of 1959. Prior to the
renumbering with the exception of tile words "but subject to, any contract
to the contrary" the body of the section was the same.
There is a proviso to sub-section (1) which
runs thus "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." There is also an explanation to sub-section (1). This
explanation was added by Maharashtra Act No. 17 of 1968. The explanation is
that leases or class of leases shall include and shall be deemed always to have
included within their meaning assignments and other transfers of the leases or
class of leases, and accordingly notwithstanding any judgment, decree or order
of any Court, provisions in any notification under the proviso-which purports
to permit assignments and transfers by lessees shall include and shall always
be deemed to have included assignments and transfers of the leasehold, made on
or after 12 May 1948, and whether made by the original lessees or their assignees
or transferee-, or any subsequently assignees or transferees. The net effect of
the explanation is that where leases or class of leases are specified in the
Government notifications assignments and transfers by original lessees on or
after 12 May 1048 and subsequent assignments and transfers by assignees and
transferees are all protected.
606 One of the Government notifications
permitted 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 were other notifications under
the proviso to section 15 (1) whereby the Government of Bombay permitted in all
areas to which Part 11 of the Act extends several types of transfers and
assignments by lessees of their interests in leasehold premises as, and to the
extent specified in the notifications. The present assignment is not covered by
any of the specified types mentioned in the Government notifications.
The relevant provision for the purpose or the
present appeal is sub-section (2) of section 15 of the Act. Broadly stated, the
first limb of the sub-section is that the prohibition against subletting by the
tenant of whole or any part of the premises and against the assignment or
transfer in any other manner of the interest of the tenant therein, contained
in sub-section (1), shall, subject to the provisions of sub-section (2), be
deemed to have had, no effect before the commencement of the Bombay Rents,
Hotel and Lodging House Rates Control (Amendment) Ordinance 1959 on 21 May 1959
in any area in which this Act or the provisions were in operation before the
commencement. Section 15(2) of the Act was inserted on 21 May 1959 by Bombay
Ordinance No. III of 1959. It was later deemed to have been substituted on 21
May, 1959 for the original by Maharashtra Act No. 38 of. 1962. Prior to the
Bombay Ordinance 1959 section 15 as it originally stood prohibited sub-letting
by any tenant or assignment or transfer of his interest therein. This
prohibition against sub-letting or assignment or transfer by the tenant of his
interest contained in subsection (1) shall be deemed to have had no effect
before the Ordinance. Therefore, the ban against subletting by a tenant or
assignment or transfer of his interest therein prior to the Ordinance of 1959
The matter does not rest there because of the
second limb of sub-section (2) of section 15 of the Act. It is provided there
that any such sub-lease, assignment or transfer or any such purported sub-lease
assignment or transfer in favour of any person who has entered into possession
before 1959 and has continued to be in possession shall be deemed to be valid
and effective. Therefore, the subletting before 1959 by a tenant is valid under
sub-section (2) provided such sub-lessee entered into possession and continued
in possession at the commencement of the Ordinance. Such subletting is rendered
valid notwithstanding anything contained in any contract or any decree or order
of Court. The Act is a corollary also introduced the measure that 607 any
tenant who has sub-let shall not be liable to eviction under section 13(1) (a)
of the Act.
The proviso and the explanation to section
15(1) of the Act protect transfer of interest in notified leases or class of
leases to assignees or transferees as well as subsequent assignees or
transferees. Section 15 (2) of the Act protects only sub-lease or assignment or
transfer by the tenant but does not protect subsequent assignments or transfers
by assignees or transferees.
The entire question in the present appeal is
whether the Private Company is a sub-lessee protected under section 15(2) of
The answer to the question is whether the
respondent Private Company was a sub-tenant prior to 1959 and continued in possession
at the commencement of the Ordinance in 1959.
Ochhavlal in the present case gave the sub-lease
to Sovani before the Ordinance. It is an indisputable feature in the present
case that Sovani did not continue in possession at the commencement of the
Ordinance of 1959. Sovani became a Director of the Private Company. It is the
Private Company which claims to be a sub-leasee. The Private Company was in the
first place not a sublessee of the tenant but a subsequent assignee from the
sub-lessee. Secondly Sovani who was the sub-lessee was not in possession on the
date of the Ordinance on 21 May 1959. It was the Private Company which was in
possession. Therefore, the Private Company is not within the protection of
section 15(2) of the Act.
Section 108 of the Transfer of Property Act
provides that a lessee may transfer absolutely by way of mortgage or sublease
the whole or any part of his interest in the property, and any transferee of
such interest or part may again transfer it. This provision contained in
section 108(j) of the Transfer of Property Act notices the distinction between
the sub-lease by a lessee and transfer by such sub-lessee of his interest by a
subsequent transfer. Section 15 of the Bombay Act. dealt with only sub-letting
by the tenant. That sub-letting by the tenant is no longer unlawful provided
the conditions in section 15(2) are fulfilled. It is only the sub-lease by the
tenant which is mentioned in subsection (1) and rendered valid in sub-section
(2) of section 15 of the Act. The Bombay Rent Act does not in section 15(2)
protect any further lease or transfer by the sub-lessee.
The Bombay High Court in a Bench decision in
N. M. Nayak v.Chhotalal Hariram 69 Bom. L.R. 551 tightly held that section
15(2) of the Act validated only sub-letting, transfer and assignments by
tenants and no further subletting or further derivative transfer or assignment
by such sub-lessees, transferees or assignees.
608 The word 'tenant' in section 15 of the
Bombay Act means the contractual tenant. In Anand Nivas (P.) Ltd. v. Anandji
 4 S.C.R. 892 this Court said that the expression "tenant" in
section 15 (1) of the Act means the contractual tenant and not the statutory
tenant. The legislature by the Ordinance-of 1959 intended to confer protection
on subtenants of contractual tenants. The Ordinance did not confer any
protection on further transfer or further subletting by sub-lessees of the
Section 5(ii) of the Act defines
"Tenant". to include subtenants or other persons as have derived
title under a tenant before the Ordinance of 1959. After the decision of the
Bombay High Court in Nayak's case (supra) sub-clause (aa) was introduced to
clause (ii) in section 5 of the Act.
The Amendment was as follows:"Any person
to whom interest in premises has been assigned or transferred as permitted, or
deemed to be permitted, under section 15".
The amendment was introduced into the Act by
the Maharashtra Act No. 17 of 1968 with retrospective effect as from 12 May
1948. The amendment was brought into existence as a result of the decision of
the Bombay High Court in Nayak's case (supra). The High Court held in that case
that a person seeking to claim protection by the provisions contained in the
notification issued under the proviso to section 15 (1 ) of the Act must
establish that his transferor was a lessee of the premises transferred or assigned.
The decision was to the effect that the only persons who were entitled to
transfer or assign the interest of the premises were to satisfy the character
of a lessee as defined in section 105 of the Transfer of Property Act. The
assignee of a lessee was held not to be a lessee as defined by the Transfer of
Property Act. In this context, the explanation to section 15(1) of the Act as
well as sub-clause (aa) in clause (ii) of section 5 of the Act were introduced
to confer protection on the successive transfer by original lessees in regard
to leases or class of leases notified under the proviso to section 15(1) of the
A faint attempt was made by counsel for the
respondents to suggest that the respondents would be protected by the
explanation to section 15 (1) of the Act. There is no foundation for such a
case in the High Court. There are no materials to support such a plea. This
contention cannot therefore be entertained.
The learned Single Judge of the High Court
was clearly in error in holding that the respondent Private Company was
protected by section 15(2) of the Act. The appeal is, therefore, 609 allowed,
The judgment of the High Court is set aside. The appellants will be entitled to
S.B.W. Appeal allowed.