c JAi SINGH MORARJI & ORS . Mis SOVANI PVT. LTD. & ORS. October 9. 1972 IA. N. R.\Y. D. G. f'ALEKAR, M. H. BEG A);D S. N. DWiVU)I. JJ.] Bvn1bay R£•nts, JJotel llncl Lodging, House Ratt·s Central Act, SecliolJ J 5 ( 2 )-Validation of suh·l.etting hy
J 959 a1ne11ding Ordinance-Protec- tion only to transfers, assi}?n111ents, or s11h-/ease.\· h:r tenanr.f-Sun.lc•a.\'i' 1ntrfl he in pns<;ei;.~·ion whl'n l11nending Ordinance ca1ne into forCt'. f
The owner let out the premises to one Occhhavlal in 1952. Occhhav- Jal sub-let the premises to one Sovani. About 1952. Sovani assigned his husinc.ss \.\.ith the possession of the suit premises to a private Company of which he h<camc the Director.
Rent was paid to the landlord upto 1966 by Occhhavlal. The owner obtained the posse·sion of the suit pre- mises in execution of a decree obtaincJ against Occhhavlal for n<1!l-pay- mcnt of rent
~1n<l sub-letting. The assignee. private compiloy, made an application for a relief against the Jisposscs~ion under Order XXI, RuJc JOO of the CoJe of Civil Procedure. The Trial Court gra;!ltcd the relief.
but the same was reversed by the appdlatc authority on the revision application filed by the owner. On th" writ petition filed by the private company, the Bombay High Court allowed the Writ Petition holding that Ihc private company was a tenant entitled ·lo the protection of Seq. 15(2) of the Bombay Rent Act.
Allowing the appeal filed by the ow,ner, HELD: Sec. 15(2) of the Act pro\ccts only sub-leases or assign· ments or transfer by the tenants. but. docs not protect subsequent assign- ments or transfers by assignees of trankrerccs. The proviso and explanation to Sec. 15(1) of the Act protects transfer of interest in notified lease or c!ass of lease to assignees or transferees as well as subsequent assignments or transfers. The assignmcnt.s in 'favour of the private company was not covered by any notification issued u/s 15 (I) of the Act.
The assign· meat to the private company was not made by the tenant but suh·tCnant. When the Ordinance of 1959 came into force, Sova:ni did not continue in posses:::'.Jn. It was the private company \Vhich was in pCb~ess1on
Th·zrefor:!. the private. company is not entitled to protection u 's 15 (1) of the Act. Section 108 (2) of the Transfer of Property Act notices disti;nction between sub·lcase by a lessee and transfer by snh-lessce of his interest hy subsequent transfer. [607C. Fl
N. W. Nayak v. C/1/iota/11/ Harira111. 69 Born. LR. 551. approvcJ. Civ1L Al'PELUTE JuRISDlCTION : Civil Appeal No. 269 c.f 1972. Appeal by ;pccir.\ leave from the judgment and order
January 28, 1972 of the Bombay High Court in Special Application No. 2Hl8 of 1971. dated Civil ~04 V. M. Tarl:11nd<', D. N. Misra, J.B. Dadachanji, 0. C. Mathur and Ravinrler N11rai11, for the appellants.
V. V. Patel, S. S. Javali, D. N. Hungund and Vineet Kumar. for the respondent,. The Judgment of the Court was delivered by f..AY, J.-This is an appeal by special leave from the judg- ment dated 28 January 1970 of the High Court at Bombay.
The High Ccurt in a writ petition under Article 227 of the Constitutio11 quashed an order of the Court of Small Causes, Boll)!Jay. c A trust known as Padamsi Bhanji Trust of Bombay owned
a gouown at 8 Mugbhat Lane, Girgaum, Bombay. The tenant o~ the property before 1952 was Ochhavlal. The property there- after came into possession of S. V. Sovani. Sovani carried on
the business of preparation and sale of scientific apparatus. Abouc 1952 Sovani became Director of Sovani Private Limited Com- pany 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 wa' sent by money order to the trustees. The trustees dicl. not accept the money orders. The trustees in the year 1970 filed suit possession. Ochhavlal was the defendant in the suit. The grounds· for evic- tion 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 appliration was made under Order XXI rule I 00 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 ;ipplication under
Article 227 of the Constitution in the High Court. The High J. S. MORARJI V. SOVANI PVT. LTD. (Ray, J.) Court held lb.at the Small Causes Court in revision committed an error in applying section 15 ( 2) of the Bombay Rent Act 194 7. 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 sec- tion 15 of the Bombay Rent Act referred to as the Act. c Section 15 ( I) of the Act is as follows :-
"Notwithstanding anything contained in any law, bu~ subject to ruty 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 pre-
mises let to him or to assign or transfer in any other manner his interest therein. The present sub-section (I) was numbered as sub-section (i) by Bombay Ordinance No. III 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 the 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 noti- fication 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 (i). This ex- planation 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 assign- ments and other transfers of the !'eases or class of leases, and ac- cordingly notwithstanding any judgment, decree or order of any Court, provisions in any notification under the proviso which pur- ports to permit assignments and transfers by lessees shall include and shall always be deemed to have included
assig~ments and transfers of the leasehold, made on or after 12 May 1948, and whether made by the original lessees or their assignees or trans- ferees or dny subsequently assignees or transferees. The net effect of the explanation is that where leases or class of leases are socci- fierl in the Government notifications assi~nments and transfers by original lessees on or after 12 May 104g and subsequent assign- ments and 1ransfers by assignees and transferees are all 'protected. till 6
One of the Government notifications permitted transfer or assignment incidental to the sale of a business as a going concern togemer with the stock-in-trade and the goodwill thereof, provided that the transfer or assignment is of the entire mterest of the transferor or assigno_r in such leasehold premises together with the busmess and the stock-in-trade· and goodwill thereof.
There wue other notifications under the proviso to section 15 ( l) where- by the Government of Bombay permitted in all areas to which Part II of the Act extends several types of transfers and assign- ments by lessees of their interests iu leasehold premises as, and to the extent, specified in the notifications.
The present assign- ment is r.ot 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 lirst limb of the sub-section is that the prohibition against sub- letting by the tenant of whole or any pan of the premises and against the assignment or transfer in any other manner of the in- terest of the tenant therein, contained in sub-section (i J, shall, wbject 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) Ordi-
nance 1959 on 21 May 1959 in any area in which this Act or the provisions were in operatian before the commencement. Sec- tion J5(2) of the Act was inserted on 21 May 1959 by Bombay Ordin&nce No. HI 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 sec- tion 15 as it originally stood pr9hibited sub-lettiug by any tenant c
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 sub-section (i) shall be deemed to have had· F no effect before the Ordinance.
Therefore, the ban against sub- letting by a tenant or assignment or transfer of his intere;t therein prior to the Ordinance of 1959 is removed. 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-1case, assignme,nt 6r transfer or any such pur- ported sub-lease assignment or transfer in favour of any person who has entered into possession before 1959 and has con- tinued to be in possession shall be deemed to be valid and effec- tive.
Therefore, the subletting before 1959 by a tenant is val,id under sub-section (2) provided such sub-lessee entered into pos- session and continued in possession at the commencement of the Ordinance. Such sub-letting is rendered valid notwithstanding anything contained in any contract or any decree or order of ('our!.
The Act :1s a corollary also introduced the measµre that c J, S. MORARJl V. SOVANl PVT. LTD. (Ray, J,) any tenant who has sub-let shall not be liable to evictiOtl) 1111der 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 trans- ferees. Section 15 (2) of the Act protects only sub-lease or assign~ ment 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 Pri- vate Company is a sub-lessee protected under section 15 (2) ot the Act. The answer to the question is whether the respondent Private Company was a sub-tenant prior to 1959 and continued in pos- session at the commencement of the Ordinance in 1959. Ochhavlal in the present case gave the sub-lease to Sovani before the Ordi- nance.
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 !vecame 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 sub- lessee of the tenant but a siibsequent assignee from the sub-lessee. Secondly Sovani who was the sub-lessee was not in possession on t:.e date of the Ordinance on 21 May 1959. It was the Private Company which was in poss~ssion. Therefore, the Private Com- pany is not within the-pr~tection of section 15(2i uf the Act. Section 108 of the Transfer of Property Act provides that a lessee may transfer absolutely by way of mortgage or sub-leas~ 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 th11 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 pro- vided the conditions in section 15 ( 2) are fulfilld.
It is only the, sub-lease by the tenant which is mentioned in sub-section ( 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. Chhota/al Hariram 69 Born. L.R. rightly held that section 15(2) of the Act validated only sub-letting, transfer and assignments by tenants and no further sub-letting or further deri- vative transfer or assignment by such sub-lessees, transferees or assignees.
4-L499SupCl/73 (1973] 2 s.c.R. The word 'tenant' in sectic;n 15 of the Bombay Act means the contractual tenant. In Anand Nivas (P.) Ltd. v. Anandji [1964] 4 S.C.R. 892 this Court said that the expression
"tenant" in section 15(1) of the Act means the contractual ,cna.nt and not the statutory tenant. The legislature by the Ordrncmce ot I '!5'! in- tended to confer protection on sub-tenants of contractual tenants. The Ordinance did not confer any protection on further transfer ll
or further sub-letting by sub-lessees of the contractual tenants. Section 5 (ii) of the Act defines "Tenant". to include sub- tenants or other persons as have derived title under a tenant be- fore the Ordinance of 1959. After the decision of the Bombay High Court in Nayak's case (supra) sub-clause (aa) was in- troduced to clause (ii) in section 5 of the Act. The Amendment was as fQllows :-
"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 introJu~ed . into the Act by the
Maharashtra Act No. 17 of 1968 with retrospective effect as from 12 May 1948. The amendment was b:rought into existence as a re- sult of the decision of the Bombay High Court in Nayak's case (supra).
The Jligh 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 c in section 105 of the Transfecof Property Act. The assignee of a lessee was held not to be a lessee as defined by the Tramfer of Property Act. In this context; the explanation to section 15 (1 ) of the Act as well as sub-Clause ( ait) 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 t.o section 15 (1) of the Act.
A faint attempt was made by counsel for the respondents to suggest that the respondents would be protected by the exolana- tion to Fection 15(i) of the Act. There is no foundation for such a case in the High Court. There are no materials to sunnort 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 respondenf Private Company was pro- tected by section 15 (2) of the Act.
The appeal is: ~herefore, JI J. S. MORARJI V. SOVANI PVT. LTD. (Ray, J.) allowed, The judgment of the High Court is set aside. The appellants. will be entitled to costs. S.B.W. Appeal allowed.