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Gundalapalli Rangamannar Chetty v. Desu Rangiah And Others.
Factual and Procedural Background
This is an application for a writ of certiorari to quash the order of the Subordinate Judge of Nellore in C.M.A. No. 35 of 1950. The petitioner is the landlord of premises bearing door No. 258, Ward No. 5, Stonehousepet, Nellore. The first respondent, Desu Rangaiah, took the premises on rent about ten years prior for his business. Two years before the proceedings he entered into a partnership with Thadikamalla Venkataseshayya and Posa Veeranna for carrying on an onion business; that partnership was embodied in a deed (Ex. B.1), which, according to the opinion, did not transfer the leasehold interest to the partners but regulated only rights and liabilities in respect of the partnership business.
The first respondent remained in possession and liable to pay rent to the petitioner. Rent had been increased over time from Rs. 10 to Rs. 60 and the tenant did not accede to further enhancement requests. The landlord filed M.B.C. No. 32 of 1950 before the House Rent Controller, Nellore, seeking eviction mainly alleging that the first respondent had sub-let the premises to the second respondent's firm (described as Tadikamalla Venkataseshayya and Posa Veeranna represented by its two partners). The Rent Controller dismissed the petition. On appeal the Subordinate Judge upheld the finding that there was no sub-letting and dismissed the appeal. The petitioner sought the present writ to quash that order.
Legal Issues Presented
- Whether, by reason of the partnership arrangement between the first respondent and the other partners, there was a "sub-letting" of the premises within the meaning of S. 7(2)(ii) of Act XXV of 1949, thereby entitling the landlord to evict the tenant.
- Whether the first respondent had "transferred his right under the lease" (as an alternative ground under S. 7(2)(ii)), noting that the petition did not allege such a transfer and the point was not raised before the Subordinate Judge.
Arguments of the Parties
Petitioner's Arguments
- Learned Counsel for the petitioner contended that the partnership arrangement effectively amounted to a sub-letting of the premises to the second respondent within the meaning of S. 7(2)(ii) of Act XXV of 1949, and on that basis the landlord was entitled to eviction.
The opinion does not contain a detailed account of any opposing party's specific legal arguments in the same detail as the petitioner's submissions.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Pebbles v. Glosthwaite(1) | Held that where a lessee retains legal possession, allowing others to use the premises does not amount to assignment, underletting or parting with possession; mere use by others while legal possession is retained is not a breach of covenant. | The court relied on this principle to conclude that sub-letting requires parting with legal possession; mere permission for partners to use premises while the lessee remains in possession does not constitute sub-letting. |
| Jackson v. Simons(2) | Held that an arrangement conferring no estate or interest but merely a privilege or licence to use part of the demised premises does not transfer legal possession and therefore is not an underletting or breach of covenant. | The court used this authority to support the view that a licence to use part of premises, without conferring exclusive possession, does not amount to sub-letting under the eviction provision. |
| Chaplin v. Smith | Held that where the lessee remained constantly on the premises, retained keys and conducted business himself while allowing a company to use the premises, there was no assignment or underletting; the lessee remained in possession. | The court cited this as further support for the conclusion that the lessee's retention of possession precludes a finding of sub-letting; applied analogously to the partnership facts before it. |
Court's Reasoning and Analysis
The court began by identifying the statutory basis for eviction relied on by the petitioner: S. 7(2)(ii) of Act XXV of 1949, which permits eviction where the tenant has, without the landlord's written consent, after 23 October 1915, "transferred his right under the lease or sub-let the entire building or any portion thereof" (quotation as set out in the opinion).
The court observed that the petition neither alleged nor raised the point that the first respondent had transferred his right under the lease; accordingly the petitioner's entitlement to evict could arise only if sub-letting were established.
The court surveyed relevant authorities on the scope of "sub-let" (including Pebbles v. Glosthwaite, Jackson v. Simons, Chaplin v. Smith and a textbook statement from Foa on Landlord and Tenant). From these authorities the court extracted the principle that a sub-lease or underletting requires a parting with legal (exclusive) possession; mere permission for others to use the premises while the lessee retains legal possession does not constitute sub-letting.
The court also referred to S. 105 of the Transfer of Property Act (defining lease as a transfer of a right to enjoy property) to emphasize that a lease or sub-lease confers exclusive possession and enjoyment on another.
Applying those legal principles to the facts found, the court noted that the partnership deed (Ex. B.1) did not transfer the leasehold interest to the partners and did not confer exclusive possession of the premises on them. The first respondent remained the lessee in possession and continued liable to pay rent to the petitioner. Therefore, on the facts, the first respondent had not parted with legal possession and had not sub-let the premises to the second respondent.
On that basis the court concluded that the first respondent was not liable to be evicted under Act No. XXV of 1949.
Holding and Implications
HOLDING: The application is dismissed. The court held that the first respondent did not sub-let the premises to the second respondent and therefore was not liable to be evicted under S. 7(2)(ii) of Act XXV of 1949.
Direct consequences: The writ application fails; the order of the Subordinate Judge (dismissing the appeal and finding no sub-letting) stands effectively upheld by this dismissal. The court ordered costs against the petitioner, including an advocate's fee of Rs. 100.
Broader implications: The opinion applies established authorities on the nature of sub-letting (requiring a parting with legal possession) to partnership arrangements where the partnership deed does not transfer exclusive possession. The opinion does not state that it sets any new legal precedent beyond applying those authorities.
This is an application for issuing a writ of certiorari, and for quashing the order of the Subordinate Judge of Nellore in C.M.A No. 35 of 1950.
The first respondent, Desu Rangaiah took the premises bearing door No. 258, Ward No. 5, Stonehousepet, Nellore belonging to the petitioner on rent 10 years ago for his business. Two years back he entered into a partnership with Thadikamalla Venkataseshayya and Posa Veeranna for carrying on business in onions. The partnership arrangement war, embodied in a deed, Ex. B.1 Under Ex. B.1 the leasehold interest was not transferred to the partners. That related only to the partnership business to be carried on jointly by the first respondent Desu Rangiah, Venkataseshayya and Posa Veeranna. It regulated only the rights and liabilities in regard to the business. The first respondent continued to be in possession of the premises with a liability to pay rent to the petitioner. The rent originally was a sum of Rs. 10. It was enhanced from time to time till it reached the present rate of Rs. 60. Further requests for enhanced rent by the landlord were not acceded to by the first respondent. Presumably this circumstance made the landlord to file M.B.C No. 32 of 1950 on the file of the House Rent Controller, Nellore for evicting the first respondent from the premises. The main ground for eviction was that the first respondent had sub-let the premises to the second respondent's firm. It was alleged that the first respondent was carrying on business in Srigangarajapuram after sub-letting the premises to the second respondent who was described in the petition as Tadikamalla Venkataseshayya, Posa Veeranna, represented by its two partners. The Rent Controller dismissed the petition. In appeal the Subordinate Judge held that there was no sub-letting, and on that finding dismissed the appeal. The petitioner filed the above writ.
Learned Counsel for the petitioner raised before me the same point, which has been negatived by the Subordinate Judge. He contended that by reason of the partnership, in law there was a sub-letting of the premises to the second respondent within the meaning or S. 7(2)(ii) of Act XXV of 1949. The relevant portion of the section reads:
“S. 7(2): A landlord who seeks to evict his tenant shall apply to the Controller, for a direction in that behalf. If the Controller, after giving the tenant a reasonable opportunity of showing cause against the application is satisfied—
(ii) that the tenant has after the 23rd October 1915 without a written consent of the landlord—
(a) transferred his right under the lease or sub-let the entire building or any portion thereof, if the lease does not confer on him any right to do so, the controller shall make an order directing the tenant…….”
Under this clause, a landlord would be entitled to evict his tenant if he transferred his right under the lease or sublet the entire building or any portion thereof. It was not stated in the petition that the first respondent transferred his right under the lease deed; nor was that point raised before the Subordinate Judge. The petitioner would therefore be entitled to evict the first respondent, only if he established that the first respondent sub-let the premises to the second respondent.
The scope of the word “sub-let” has been the subject of judicial determination in connection with covenants prohibiting sub-letting and imposing the penalty of forfeiture, if the covenants, are contravened. In Pebbles v. Glosthwaite(1) Romer J. considered the scope of such a covenant. One Phillip took from the defendant's predecessor-in-title a lease of the first and second floors of a premises. It contained a proviso for re-entry by the lessors in case of a breach of the lessee's covenants, and one of these covenants was that he would not assign, underlet or part with the possession of the demised premises without the previous licence in writing of the lessors. After the death of Phillip, his executors sold the premises and business to a limited company called A.M Pebbles and Son Ltd. The stock was delivered to the company which put its name upon the demised premises. The property was not assigned to the company and no licence to assign or part with the possession was obtained from the lessors. The executors had a large shareholding in the new company, and two of them were directors of it, who attended at the premises and took part in the management of the company's business. The question was whether the executors of the tenant had broken the covenant let. The learned Judge observed:
“Clearly there was no assignment or underletting, but it was said that there had been a parting with possession without the necessary consent………The legal possession was still theirs, although pending completion and the obtaining of a licence to assign they had allowed the company to use the premises for the purposes of the company…….. If a leasee retained possession he did not commit a breach of such a covenant by allowing other people to use the premises.”
The Court of Appeal confirmed the judgment. Lord Justice Lindley made remarks much to the same effect. The learned Judge said:
“They were informed by their solicitor, Mr. Soames, that they should not part with possession. No doubt they let the company into possession but they did not part with possession themselves and so long as it was true in fact that the lessees had not parted with possession they had committed no breach of the covenant.”
In Jackson v. Simons(2) the question was whether the tenant broke a similar covenant. The defendant who was the tenant, without the plaintiffs' consent or knowledge agreed for the sum of 7£ per week to allow the proprietor of a night club carried on in a basement beneath the shop to use the front part of the shop between the hours of 10-30 pm and 2 am for the sale of tickets of admission to the club. Romer J. held that the arrangement conferred no estate or interest in the demised premises but was a mere privilege or licence to use portion thereof, the defendant retaining the legal possession of the whole and did not, therefore, constitute a breach of the covenants not to assign, underlet, or part with the demised premises or any part thereof. The same view was expressed by the Court of Appeal in Chaplin v. Smith. In that case, the lessee had covenanted with his lessor that he would not assign or underlet or part with possession of the demised pre-mises or any part thereof. He assigned his business to a company of which he was the managing director and in which he held a controlling interest. He carried on the business of the company on the premises which were stated to be its registered address and on which the name of the company was exposed. He kept the key of the premises in his possession. The company agreed to indemnify him in respect of the rates and taxes. Subsequently, a second company was formed of which the lessee was the managing director, and which took over the business, assets and liabilities of the first company. In negotiating for this transfer the lessee stipulated that he should remain in possession as actual tenant of the demised premises. On those facts the Court of Appeal held that there had been no breach of the lessee's covenant. At page 211 Scrutton L.J made the following observations:
“He did not assign; nor did he underlet. He was constantly on the premises himself and kept the key of them. He did business of his own as well as business of the company. In my view he allowed the company to use the premises while he himself remained in possession of them.”
Foa on Landlord and Tenant, 6th Edn. at page 323 summarised the law on the subject in the following words:
“The mere act of letting other persons into possession by the tenant, and permitting them to use the premises for their own purposes, is not, so long as he retains the legal possession himself, a breach of the covenant.”
It is clear from the aforesaid decisions that there cannot be a sub-letting unless the lessee parted with legal possession. The mere fact that another is allowed to use the premises while the lessee retains the legal possession is not enough to create a sublease. S. 105 of the Transfer of Property Act defines a lease of immovable property as a transfer of right to enjoy such property. Therefore to create a lease or sub-lease a right to exclusive possession and enjoyment of the property should be conferred on another. In the present case the exclusive possession of the premises was not given to the second respondent. The first respondent continued to be the lessee, though in regard to the business carried on in the premises he had taken in other partners. The partners are not given any exclusive possession of the premises or a part thereof. The first respondent continues to be in possession, subject to the liability to pay rent to his landlord. The partnership deed also, as I have already stated, does not confer any such right in the premises on the other partners. I therefore hold that in the circumstances of the case the first respondent did not sublet the premises to the second respondent, and therefore he is not liable to be evicted under the provisions of Act No. XXV of 1949.
The application therefore fails and is dismissed with costs, Advocate's fee Rs. 100.
V.C.S
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