Haji P. Mammu v. Abdurahiman Basha

Malimath, C.J:— These two revision petitions were directed against the order made by the District Judge, Kozhikode in R.C.R.P Nos. 2 and 3 of 1980. The petitioners in these revision petitions are partners of a partnership firm which carries on business in steel in the name of “Steel Link.” They claimed to be the tenants of the premises in dispute. The respondent is admittedly the owner and landlord of the said premises. He sought eviction of the petitioners on several grounds. The order under revision made by the District Judge of Kozhikode shows that the landlord has been given an order of eviction in his favour on the ground of subletting as also on the ground that the landlord bona fide requires the premises for his personal occupation. We are therefore required to examine the contentions of the parties only in regard to the case of subletting and the case of bona fide requirement. The landlord can secure eviction of the tenant under S. 11(4)(i) of the Kerala Buildings (Lease and Rent Control) Act, 1965 on the ground that the tenant has after the commencement of the Act, without the consent of the landlord, 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 landlord is entitled to secure eviction when he needs the premises bona fide for his personal occupation under sub-s. (3) of S. 11 of the Act. Even if the landlord establishes that his requirement is bona fide, he will not be able to secure an order of eviction if as directed in the second proviso it is proved that the tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry oo such trade or business.

2. It is not disputed that the premises was originally leased to a partnership firm consisting of 4 partners known as “Messrs Haji P. Mammu.” One of the partners having died, the remaining three partners who were his sons have carried on the business which the partnership firm was carrying on before the death of their father. On the 1st of May, 1978 a new partnership was brought into existence under the partnership deed executed on that day between the partners of the original firm who were the lessees and petitioners 2 to 8. The case of the respondent is that the said partnership deed Ext. B1 is only a camouflage and what has really been done by the erstwhile tenants is to sublease the premises in favour of petitioners 2 to 8. It is on the basis of these averments that eviction is claimed on the ground of subletting. As already stated, it is also the case of the landlord that he required the permises bona fide for starting a textile business on his own in the premises. The learned District Judge has recorded a finding to the effect that the premises has been sublet in favour of petitioners 2 to 8 by the original tenants holding that the partnership deed Ext. B1 is not a genuine transaction of partnership but is a camouflage for subletting the premises in favour of petitioners 2 to 8. The first contention of Sri. P.N.K Achan, learned counsel for the petitioners is that the finding of the learned District Judge that there is subletting of the premises on the ground that the partnership deed Ext. B1 is only a camouflage for sublease is not in accordance with law. He submitted that the finding has been recorded by the learned District Judge without considering all the clauses of Ext. B1 and the statutory provisions contained in the Partnership Act. The inference of camouflage has been drawn by the learned District Judge only taking into consideration of some of the recitals in the deed of partnership Ext. B1 and not on the basis of any other extraneous evidence produced by the parties. The learned District Judge has taken into consideration the fact that the entire capital of Rs. 70,000/- has been contributed only by petitioners 2 to 8 and not by any of the original tenants, that the original tenants who are said to have become partners of the new partnership firm are not required to share the loss, that they have been made eligible only for the profits, that the original tenants have no right to any of the assets of the partnership or the goodwill on the expiry of the partnership, that the original tenants have no right of management of the partnership, that one of the original tenants is only required to be paid a stipulated amount of Rs. 5,000/- per month and that the assets worth about Rs. 80,000/- of the old partnership of the original tenants has not been brought into a hotchpotch and tr ane as a part of the assets of the new partnership. It appears to us that the learned District Judge while relying upon the aforesaid circumstances failed to take into consideration the fact that the Partnership Act itself contemplates the parties to the partnership entering into an agreement justifying the terms incorporated in Ext. B1. S. 13 of the Act makes it clear that partners of a partnership firm are entitled to share equally the profits earned and are also required to contribute equally to the losses sustained by the firm subject to the contract to the contrary between the parties. S. 13 in terms contemplates a contract being entered into between the partners making a provision to the effect that some of the partners shall be eligible only to the profits and not for the losses. S. 55 of the Partnership Act makes it clear that so far as the goodwill is concerned, the same can be dealt with in the manner agreed to between the partners consequent upon the dissolution of the firm. The Act does not require that every partner should contribute she assets in the same proportion and that depends upon the contract between the parties. The learned District Judge has failed to take note of the fact that the old tenants made available the premises in which they were carrying on the business as their contribution for the partnership to carry on the business. That the original tenants did not put in the hotchpotch of the new partnership the assets of the old partnership worth about Rs. 80,000/- is not a relevant circumstance a? it is open to the parties to decide upon the share of the contribution to be made by each of the partners. The learned District Judge has failed to take info consideration the fact that the provisions which in his opinion lead to the inference of camouflage are those expressly made permissible under the contract to be entered into between the partners. That is precisely what has happened in this case, the parties having entered into a contract to the contrary as is clear from Ext. Bl. What is of crucial importance so far as the finding regarding camouflage is concerned is the failure on the part of the learned District Judge taking into consideration one more clause in Ext. B1 which provides for the sharing of the profits by all the partners including the original tenants. This clause justifies an inference that everyone who became a partner of the new partnership became entitled to the profits of the partnership business. This is a strong circumstance indicating that Ext. B1 is not a document to camouflage the transaction of sublease. If there is subletting, there would have been adequate provision or recompense in favour of the lessor for payment of rent in one way or the other. That would have normally been a fixed amount. But the fact that the lessors are entitled to equal share in the profits is inconsistent with the transaction being a sublease. We have therefore no hesitation in taking the view that the finding recorded by the learned District Judge without taking into consideration the relevant provisions of the Partnership Act and all the clauses of Ext. B1 that it is a camouflage to cover the sublease is not in accordance with law. Hence the said finding stands vitiated and we hereby set aside the said finding.

3. If the finding of the learned District Judge that Est. B1 is a camouflage is not in accordance with law, it follows that we must regard the said document as evidence of partnership. That being the position it is obvious that persons who were orginal tenants of the respondent and who were in possession of the premises have entered into a transaction evidenced by Ext. B1 with petitioners 2 to 8 and a new partnership has come into existence. The property which was in possession of the original tenants thus continues in possession of all the partners of the new partnership firm which includes the original tenants as well. A learned single Judge of this Court has held in P.J Jacob v. T.J Jacob (1977 KLT. 224) that such a transaction does not bring about sublease to enable the landlord to seek eviction invoking S. 11(4)(i) of the Act. That decision has held the field for nearly 10 years. The learned single Judge has followed the judgment of the Madras High Court reported in A.I.R 1954 Madras 182 between Gundalapalli Rangamannar Chetty & Desu Rangiah. The learned Single Judge while referring these cases to the Division Bench has observed that the correctness of the judgment of the learned single Judge reported in 1977 KLT 224 having been questioned, it was felt necessary to refer the cases to the Division Bench. It appears to us that this question need not detain us as the matter now stands concluded by the decision of the Supreme Court reported in (1986) 3 SCC 62 : A.I.R 1986 SC. 1564 between Madras Bangalore Transport Company (West) and Inder Singh. The very judgment of the Madras High Court reported in A.I.R 1954 Madras 182 on which the learned single Judge of our Court has relied upon in the aforesaid decision has been affirmed by the Supreme Court. In a situation like this the Supreme Court has held that there would be no subletting of the premises. As the matter now stands concluded by the decision of the Supreme Court, the question of reconsidering the judgment of the learned single Judge does not arise. Following the said decision of the Supreme Court it has to be held that the case of sublease pleaded by the respondent-landlord has not been established.

4. The learned District Judge has ordered eviction in favour of the respondent-landlord also on the ground that the premises is bona fide required by the landlord for his personal occupation. The finding recorded by the learned District Judge regarding bona fide requirement is a sound and satisfactory finding which does not call for interference in revision. Sri. Achan learnd counsel for the petitioners, however contended that it is not enough for the landlord to secure an order of eviction to establish that his requirement is bona fide. The second proviso to S. 11(3) provides that the Rent Control Court shall not give any direction to a tenant to put the landlord in possession, if such tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such made or business. It is therefore clear that if a tenant establishes that he is depending for his livelihood mainly on the income derived from any trade or business carried on in the premises and that there is no other suitable building available in the locality for such person to carry on such trade or business, the court cannot order eviction in favour of the landlord. The learned District Judge has recorded a finding in this behalf in the following terms:

“Although the first respondent-tenant has raised a contention claming benefits under the second proviso to S. 11(3). I need not consider that in the light of my finding regarding the ground of subletting, since the tenant is not depending for his livelihood mainly on the income derived from the business carried on in the said building. That apart, the 1st respondent is only a firm and not a natural person.”

5. It is therefore clear that the learned District Judge came to the conclusion that the tenant is not depending for his livelihood mainly on the income derived from the business carried on in the premises. The other finding recorded by the learned District Judge is to the effect that Ext. B1 is only a camouflage and not a genuine deed of partnership. But we have reversed that finding and held that it is not a camouflage that there is no subletting and that it is evidence of partnership. Hence the finding of the learned District Judge to the effect that the tenant is not depending for his livelihood mainly on the income derived from the business carried on in the premises cannot be sub-stained. As the learned Dist. Judge has not considered the other material produced by the parties and as the revision petitions have been pending for the last 6 years in this Court, we consider it proper to avoid the cases being remitted for fresh consideration in this behalf. We therefore propose to record the necessary findings on the basis of the evidence produced by the parties in these cases.

6. The principal evidence in this behalf is that of R.W 1, Alikoya, one of the original tenants. He has stated that they have no other business or occupation other than the business that is being carried on in accordance with Ext. B1. He has also stated that they depend entirely on the income of the said business for their livelihood. There is no evidence nor has any circumstance been brought out by the landlord to suggest that there is any other source of income for them. That being the position, there is no reason why we should not accept the testimony of R.W 1 that they have no other business or occupation and that they depend for their livelihood entirely on the income derived from the partnership business.

7. R.W 1 has also stated in his evidence that there is no other suitable building available in the locality for carrying on the business in question. There is nothing to suggest that this statement of R.W 1 is not true. The learned District Judge has not brought out any circumstance justifying an inference that at the relevant point of time other suitable premises were available. We therefore see no good ground for not accepting the evidence of R.W 1 in this behalf. We therefore hold that no suitable alternate premises were available for the tenants for carrying on the business. Hence both the conditions specified in the second proviso to S. 11(3) of the Act having been satisfied, the landlord would not be entitled to an order of eviction in his favour, even though he has been able to establish that his requirement is bona fide. It is no doubt true that the learned District Judge has come to the conclusion that as the business is being carried on by the partnership firm, the second proviso does not become applicable on the ground that the partnership is not a natural person. The answer to this question is to be found in the judgment of the Supreme Court earlier referred to and in particular the relevant observations in paragraph 5 of the judgment, which reads as follows:

“The contention that the old firm and the new firm were different legal entities and therefore the occupation by the new firm amounted to subletting by the old firm was repelled by this Court with these observations:

“This contention is entirely without substance. A firm unless expressly provided for the purpose of any statute which is not the case here is not a legal entity. The firm name is only a compendious way of describing the partners of the firm. Therefore occupation by a firm is the occupation by its partners. Here the firm have a common partner. Hence the occupation has been by one of the original tenants.”

8. The submission that the entry of a stranger as a partner of the new firm indicated that there was sub-letting was not also accepted and it was said:

“It seems to us that the point sought to be made was that when Meghraj was in possession as the partner of Meghraj Bansidhar, he was in possession of the shop in a capacity different from that in which he was in possession as a partner of Chini Lal Gherulal. This is clearly fallacious. Meghraj was in possession all through in his individual capacity. It is impossible to treat him as possessing one legal personality as member of one firm and another such personality as member of another firm.””

9. It is therefore clear that the finding of the learned District Judge that the firm is not a natural person is not correct. It is a compendious name for all the partners of the firm. That being the position, the second proviso would be applicable to the partnership.

10. For the reasons stated above both these revision petitions are allowed, the orders of the learned District Judge are set aside and the petition of the respondent for eviction is dismissed. Parties shall bear their respective costs in both these cases.

11. Allowed.