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Jyotiba Shankar Karole v. Gajanan Channappa Angolkar

Karnataka High Court
Aug 5, 1985
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Structured Summary of the Opinion by K.A. Swami, J.

Factual and Procedural Background

This is a Civil Revision Petition under Section 115 of the Code of Civil Procedure challenging the order dated 31-05-1982 of the Principal District Judge, Belgaum, which affirmed the order dated 20-08-1980 of the First Additional Munsiff, Belgaum (HRC No. 323 of 1976), directing eviction of the petitioners from a non-residential shop (C.T.S. No. 110.A, Shahapur, Belgaum) on the ground of sub-letting.

The sequence of relevant events as recorded in the opinion: - The owner of the premises (the father of the 2nd respondent) executed a possessory mortgage in favour of the first respondent (the mortgagee). - At the time of mortgage execution the first petitioner was the tenant in occupation. - The first respondent, after becoming mortgagee in possession, initiated eviction proceedings alleging that the first petitioner had sub-let the premises to the second petitioner. Other grounds were pleaded at trial but were negatived and not pursued on revision; only the ground of sub-letting survived for consideration. - The Trial Court and the District Judge both found that sub-letting had occurred and directed eviction; this finding and order are the subject-matter of the present revision under Section 115 CPC.

Legal Issues Presented

  1. Whether the facts established amounted to unlawful sub-letting of the premises by the first petitioner to the second petitioner.
  2. Whether a possessory mortgagee (the first respondent) can rely upon a ground of eviction (unlawful sub-letting) which arose before he became mortgagee in possession, i.e., whether that right to seek possession passes with title to the mortgagee in possession.
  3. Whether the appellate/revisional jurisdiction under Section 115 of the Code of Civil Procedure justifies interference with the concurrent findings of fact recorded by the Trial Court and the District Judge on the question of sub-letting.

Arguments of the Parties

Petitioners' Arguments

  • There was no sub-letting; the first petitioner initially rented the premises and later formed a partnership with the second petitioner to conduct a stationery business, and the partnership (not a sub-tenant) occupied the premises.
  • The first respondent (mortgagee) is not entitled to rely on a ground of sub-letting that existed prior to his becoming mortgagee in possession. Under the definition of "landlord" in the Karnataka Rent Control Act, 1961, the mortgagee could not take advantage of a breach that had already occurred before the mortgage was executed; only grounds coming into existence after the mortgage would be available to him.

Respondent's Allegations / Contentions (as reflected in the record)

  • The first respondent alleged that the first petitioner had sub-let the entire premises to the second petitioner and sought eviction on that ground.
  • The first respondent relied on his status as mortgagee in possession (possessory mortgage) and, implicitly, on the transfer of rights that accompany such possession to seek eviction for unlawful sub-letting.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shantinath S. Gongade v. Rajmal Uttamchand Gugale, AIR 1979 Bombay 269 The decision emphasised the phrase "for the time being in force" in a definition of "landlord" and held that a transferee was not entitled to base a claim for possession on breaches committed prior to vesting of title; continued breaches up to suit date were held to be immaterial. The Court in the opinion explicitly rejects the Shantinath decision on several grounds: (a) it took undue emphasis on "for the time being in force" while ignoring the wider scope of the definition of "landlord"; (b) the court held that rights to seek possession for sub-letting travel with the property and hence a possessory mortgagee can rely on sub-letting that pre-dates his possession. Additionally, the opinion notes that Shantinath has been overruled by a later Division Bench decision (Radhabai).
Radhabai Bapurao Shelar v. Trimbak Madhvrao Shirole, AIR 1983 Bombay 303 Division Bench decision of the Bombay High Court which, according to the opinion, overruled the Shantinath decision. The Court relied on the fact that Shantinath has been overruled by this Division Bench decision to treat Shantinath as no longer authoritative; this supports the Court's conclusion that a possessory mortgagee can rely on earlier sub-letting to seek eviction.

Court's Reasoning and Analysis

The Court's reasoning proceeds through factual determination and legal analysis, applied in sequence to the issues before it:

  1. Factual determination on sub-letting:

    Both the Trial Court and the District Judge found that sub-letting had occurred. The opinion records that the petitioners' claim of a genuine partnership was undermined by their oral evidence and multiple admissions, which indicated that the partnership was essentially "make believe" and that the first petitioner had in effect parted with possession to the second petitioner, who was in exclusive occupation. The Court treats this as a pure finding of fact and declines to interfere with concurrent findings of fact in revision under Section 115 CPC, noting that the courts below were entitled to arrive at their conclusion on the evidence on record and that any error in fact-finding would not affect jurisdiction.

  2. Characterisation of the mortgage:

    On reading the mortgage document the Trial Court had held it to be a possessory mortgage because it authorised the first respondent to receive rent and be in enjoyment of the property. The opinion records that this question was not contested before the District Judge; the possessory character of the mortgage stands.

  3. Legal question whether a possessory mortgagee may rely on pre-existing sub-letting:

    The Court engages with authorities and statutory text. The petitioners relied on the Bombay High Court's decision in Shantinath S. Gongade, which emphasised the phrase "for the time being in force" in a statutory definition of "landlord" and held that a transferee could not rely on breaches that had occurred prior to vesting. The judge rejects Shantinath for several articulated reasons:

    • The entire statutory definition of "landlord" must be read, and it is wide: it includes any person (not being a tenant) who from time to time derives title under a landlord, thereby covering successors-in-interest and transferees.
    • The right to seek possession (except where it is a personal right such as bona fide personal use) is a right that "goes with the property" and is not strictly personal to the original owner. The right to seek eviction on the ground of unlawful sub-letting arises out of the state of the property and therefore transfers with title.
    • If undue emphasis is placed only on the phrase "for the time being" that would render the latter portion of the statutory definition nugatory.
    • Section 21 of the Karnataka Rent Control Act does not distinguish between the person who was landlord at the time of letting or at the time of commission of the breach and one who becomes landlord later; Section 21(1)(f) specifically identifies unlawful sub-letting as a ground for eviction and contemplates sub-letting whether it occurred before Part V came into force or after, subject to Section 61 exceptions. Thus the statutory scheme supports transferability of the right to evict for sub-letting.

    On this analysis the Court concludes that where a possessory mortgagee derives title from the landlord and the tenant has unlawfully sub-let without the landlord's consent (and the original landlord has not waived the right to seek possession), the possessory mortgagee is entitled to seek eviction on the ground of that sub-letting even if the sub-letting preceded his becoming mortgagee in possession.

  4. Precedent hierarchy:

    The opinion also notes that the Shantinath decision has been overruled by a Division Bench decision of the Bombay High Court in Radhabai Bapurao Shelar v. Trimbak Madhvrao Shirole (AIR 1983 Bombay 303), and therefore treats Shantinath as no longer a valid precedent for the petitioners' case.

  5. Disposition as tempered by equitable consideration:

    While formally dismissing the Revision Petition and thus upholding the concurrent findings and orders below, the Court nonetheless addresses the practical difficulty of displacement in Belgaum. The opinion records that the second petitioner (the sub-lessee) is not legally entitled to time because his possession is unauthorised. Nevertheless, the Court grants the second petitioner limited time until 31 December 1985 to vacate, on conditions (deposit of rent for the period, filing an undertaking, and promising not to damage or alter the premises).

Holding and Implications

Holding:

DISMISSED: The Civil Revision Petition under Section 115 CPC is dismissed. The concurrent findings of the Trial Court and the District Judge that the first petitioner unlawfully sub-let the premises to the second petitioner are upheld, and the eviction order was affirmed.

Direct consequences and practical implications for the parties:

  • The first respondent (possessory mortgagee) is entitled to rely upon the ground of unlawful sub-letting which occurred prior to his becoming mortgagee in possession and to seek eviction on that basis.
  • The second petitioner (sub-lessee) was nevertheless granted limited time to vacate the premises up to 31 December 1985, subject to conditions:
    • Deposit of rent at the rate of Rs. 40 per month for use and occupation, to be paid on or before the end of September 1985 covering the period up to December 1985.
    • Filing an undertaking within thirty days from the date of the opinion before the Trial Court that he will hand over vacant possession on or before 31 December 1985 and that he will not damage or alter the premises.
  • The Court declined to disturb the factual findings of the lower courts in revision under Section 115 CPC and treated the right to seek possession for unlawful sub-letting as a right that travels with the property to a mortgagee in possession.

Broader precedent: The opinion expressly rejects the earlier Bombay High Court precedent in Shantinath S. Gongade (AIR 1979 Bombay 269) and notes that it has been overruled by Radhabai Bapurao Shelar v. Trimbak Madhvrao Shirole (AIR 1983 Bombay 303). The opinion applies the statutory definition of "landlord" and Section 21(1)(f) of the Karnataka Rent Control Act in concluding the mortgagee's entitlement. The opinion does not announce a separate novel principle of law beyond applying and preferring the Division Bench authority and the statute as described.

Show all summary ...

K.A Swami, J.:—

This Civil Revision Petition under Section 115 of the Code of Civil Procedure, is directed against the order dated 31-5-1982 passed by the learned Principal District Judge, Belgaum, in HRC. Revision No. 177/80 affirming the order dated 20-8-1980 passed by the learned First Additional Munsiff, Belgaum, in HRC. No. 323 of 1976 directing eviction of the petitioners from the schedule premises on the ground of sub-letting

2. The premises in question is a non-residential premises (a shop) bearing C.T.S No. 110.A, Shahapur, Belgaum. The father of the 2nd respondent, who was the owner of the premises in question, mortgaged it under a possessory mortgage to the first respondent. At the time of execution of mortgage, the first petitioner was the tenant. After becoming mortgagee of the schedule premises, the first respondent, initiated the proceeding for eviction of the petitioners on the ground that the first petitioner has sub-let the premises in question to the 2nd petitioner. In addition to the ground of sub-letting, there were other grounds pleaded. It is not necessary to refer to the same because the Court of first instance has negatived those grounds, and in the revision before the District Judge, those grounds are not pursued; therefore, for our consideration, only the ground of sub-letting survives.

3. It is contended on behalf of the petitioners that there is no subletting of the premises; that though the first petitioner initially took the premises in question on rent and was conducting the business in furniture, but subsequently due to the loss suffered by him in the business, he formed a partnership along with the 2nd petitioner for conducting a stationery shop and as such, it was the partnership firm consisting of the petitioners that was in occupation, and as such, there was no question of sub-letting. It is also further contended that the first respondent is not entitled to seek possession on the ground of sub-letting because he has become the mortgagee in possession of the premises subsequent to the formation of the partnership; therefore, as per the definition of the word ‘landlord’ found in the Karnataka Rent Control Act, 1961 (hereinafter referred to as the ‘Act’), he is not entitled to rely upon the ground of sub-letting which existed prior to the date of mortgage and it was not taken advantage of by the then landlord. It is submitted that it is only such ground which comes into existence after the mortgage is executed by the 2nd respondent, is available to the first respondent; that as the ground of sub-letting was available even prior to the mortgage and the 2nd respondent did not take advantage of it, the first respondent is not entitled to seek eviction of the petitioner from the premises in question on that ground.

4. As far as the mortgage in question is concerned, on reading the document, the Trial Court has held that it is a possessory mortgage because it has authorised the first respondent to receive rent and to be in enjoyment of the property; therefore, it is not possible to hold that the mortgage in question is not a possessory mortgage. This question has also not been urged before the learned District Judge.

5. That there was a sub-letting is found by both the Courts below. On the facts and circumstances of this case, it becomes a pure finding of fact. The petitioners set up a partnership in order to prove that there was no subletting, and they were together carrying on business in the schedule premises as partners. But, the oral evidence adduced by the petitioners and several admissions made by them go to show that the partnership was only a make believe theory and in fact the first-petitioner had parted with possession of the entire premises to the 2nd petitioner and it was the 2nd petitioner who was in exclusive possession of the schedule premises. It is on this basis, the Courts below have found that there is sub-letting of the premises by the 1st petitioner to the 2nd petitioner. Therefore, I do not see any justification to interfere with the said finding of fact, in revision under Section 115 of the Code of Civil Procedure. The Courts below were entitled to arrive at that finding on appreciation of the evidence on record; therefore, such a finding even if it is found to be erroneous, cannot be held to affect the jurisdiction of the Courts below to record such a finding.

6.1) The next question for consideration is as to whether the first respondent is entitled to put forth the ground of sub-letting.

6.2) Learned Counsel for the petitioners places reliance on a decision of the High Court of Bombay in Shantinath S. Gongade v. Rajmal Uttamchand Gugale . AIR 1979 Bombay 269. and contends that as the definition of the word ‘landlord’ found in Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, is similar to the one occurring in the Act; the aforesaid decision applies to the present case. There is no doubt that in the aforesaid decision, stress is laid on the words found in the definition “for the time being in force” and it has been held that the transferee of the premises is not entitled to base his claim for possession on breaches alleged to have been committed by the tenant in occupation at the time prior to vesting of title in the transferee. It has also been further held that the fact that those breaches continued up to the date of the suit would not be material because the breaches had already occurred and there was no question of breaches being continued. It appears to me that it is not possible to agree with the aforesaid decision on more grounds than one. In that decision, the effect of the entire definition of the word ‘landlord’ has not been taken into consideration. The stress is laid only on the words “for the time being in force”. The definition of the word ‘landlord’ is so wide that it includes any person not being a tenant who from time to time derives title under a landlord. Thus, the definition includes all those persons who derive title from the original landlord. Thus, it covers all those persons who are successors-in-interests to or transferees of interest from the original landlord. Right to seek possession of the property is a right which goes with the property. It is not personal to the owner as long as it is not based on the ground of bonafide personal use and occupation. Thus, the right to seek possession on the ground of unlawful sub-letting is not a personal right. It goes with the property as it arises out of sub-letting of the premises. In the instant case, the first respondent has derived title from the father of the 2nd respondent by obtaining the possessory mortgage in respect of the premises in question. The sub-letting of the premises unlawfully has taken place without the consent of the mortgagor-original landlord. Further, the original landlord has not waived his right to seek possession on the ground of sub-letting. Thus, the possessory mortgagee will be entitled to seek possession of the premises on the ground of sub-letting; as such a right which goes with the property stands transferred to the possessory mortgagee on the execution of the deed of mortgage. If the stress is laid on the words “for the time being” then the latter portion of the definition will be rendered nugatory. In addition to this, Section 21 of the Act, does not make any distinction, whether the person who seeks eviction is the one who was the landlord at the time of letting out the premises or at the time of commission of the breach on the basis of which the eviction of the tenant is sought or whether the person has become landlord on the date of filing the petition. Section 21(1)(f) makes it clear that the tenant who has unlawfully sub-let the whole or part of the premises or assigned or transferred in any other manner, his interest therein and where the sub-letting assignment or transfer has been made before the coming into force of Part-V of the Act, except in respect of sub-letting, assignment or transfer to which the provisions of Section 61 of the Act, are applicable, and such sub-letting, assignment or transfer has been made contrary to any provision of law then in force. Such tenant is liable to be evicted. Thus, in the instant case, on the date the 1st respondent-landlord became the mortgagee in possession, the tenant in occupation of the premises had incurred a liability to be evicted and the right to evict the tenant on that ground had accrued to the original landlord mortgagor and such a right is transferable. Accordingly, it stood transferred to the mortgagee in possession on the execution of the deed of mortgage. Therefore, I am of the view that the first respondent who has derived the title from the landlord is entitled to rely upon the fact of subletting which had taken place earlier to his becoming the mortgagee in possession. In addition to this, it is also relevant to notice that the aforesaid decision of the Bombay High Court in Shantinath's case is over-ruled by a Division Bench of that High Court in Radhabai Bapurao Shelar v. Trimbak Madhvrao Shirole . AIR 1983 Bombay 303.. Therefore, the decision in Shantinath's case is no more a precedent. Accordingly, I do not see any ground to interfere with the orders of the Court below.

7. For the reasons stated above, this Revision Petition fails and the same is dismissed. However, it is contended that as the second petitioner is conducting the business in schedule premises and as it is not possible to secure an alternate accommodation especially in a city like Belgaum, sufficient time for vacating the premises may be granted. As a matter of fact, the 2nd petitioner is not entitled to grant of any time. He is a sub-lessee. His possession is unauthorised. To grant any time to the 2nd petitioner is to put a premium on the unauthorised occupation. Even then, taking into consideration of the fact that the business is being conducted by the 2nd petitioner in the premises in question, he is granted time till the end of December, 1985 on conditions that he deposits the rent at the rate of Rs. 40/- per month for the use and occupation of the premises, on or before the end of September, 1985 covering the period up to December, 1985 and files an undertaking within thirty days from to-day before the Trial Court that he will hand over vacant possession of the premises in question to the 1st respondent on or before the 31st of December, 1985; and that he will not cause damage, or make any alterations in the premises in question.