In a suit for possession on the ground of subletting, once the landlord establishes that a third party is in exclusive possession of the premises, the onus shifts on to the tenant to prove that he continues to hold legal possession in tenancy

The Supreme Court in the matter of A. Mahalakshmi vs. Ala Venkatram (D) (Civil Appeal No. 9443/2019) on 07.01.2020 held that in a suit for possession on the ground of subletting, the onus is on the landlord but once he is able to establish that a third party is in exclusive possession of the premises and that tenant has no legal possession of the tenanted premises, the onus shifts on to the tenant to prove that he continues to hold legal possession in tenancy.

Facts:
The Appellant in the instant case under the authority of the original owners, let out the premises via rent agreement in 2007 to Respondent No. 1 for running a super-market in the name of Best Mark Super Market. It was the case of the Appellant that the rent was initially paid by Respondent No. 1 till October 2007. However, upon the default in payment of the rent, the Appellant noticed a change in the name as well as ownership of the shop in the tenanted premises from ‘Best Mark Super Market’ to ‘Amutham Super Market’. Further, Respondent No. 1 had sub-let the premises to Respondent No. 2, in violation of the rent agreement.
The Appellant filed an eviction suit on the ground of sub­letting as well as on the ground of arrears of rent against the Respondents under Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. Respondent No. 1 challenged the suit on the ground that they were running ‘Amutham Super Market’ in the suit property since the Respondents refused to give the business in the name of the landlady, she filed eviction petition with an ulterior motive. A similar written response was filed by Respondent No. 2.
The Rent Controller dismissed the eviction petition against which an appeal was filed and an eviction decree on the ground of sub-letting only was allowed. The Respondents preferred a revision application before the High Court which the High Court allowed and set aside the eviction order passed by the Rent Control Appellate Authority. Hence, the appeal.

Issue:
Whether the High Court was justified in setting aside the eviction decree on the ground of subletting?

Ratio:
The Court at first, before pronouncing the ratio discussed sub-letting and precedence about the same. The Court observed that sub-letting means transfer of an exclusive right to enjoy the property in favour of the third party. To constitute a sub­letting, there must be a parting of legal possession, i.e., possession with the right to include and right to exclude others. Sub­letting, assigning or otherwise parting with the possession of the whole or any part of the tenancy premises, without obtaining the consent in writing of the landlord, is not permitted and if done, the same provides a ground for eviction of the tenant by the landlord. When eviction is sought on the ground of subletting, the onus to prove sub­letting is on the landlord.
In the case of Associated Hotels of India Limited vs. S.B. Sardar Ranjit Singh, AIR 1968 SC 933, it was held that if the landlord prima facie shows that the third party is in exclusive possession of the premises let out for valuable consideration, it would then be for the tenant to rebut the evidence. Further in the case of G.K. Bhatnagar v. Abdul Alim, (2002) 9 SCC 516 and Girdharbhai v. Saiyed Mohmad Mirasaheb Kadri, (1987) 3 SCC 538, it was held that where a tenant becomes a partner of a partnership firm and allows the firm to carry on business in the premises while he himself retains the legal possession thereof, the act of the tenant does not amount to sub­letting. It was further held that inducting the partner in his business or profession by the tenant is permitted so long as such partnership is genuine. It is observed by the Court that if the purpose of such partnership is ostensible in carrying on business or profession in a partnership but the real purpose in sub­letting such premises to such other person who is inducted ostensibly as a partner then the same shall be deemed to be an act of subletting. Finally, in conclusion, the Court referred to the case of Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar, (2010) 1 SCC 217, where the following points were laid down:
(i) In order to prove mischief of subletting as a ground for eviction under rent control laws, two ingredients have to be established, (one) parting with possession by tenant in favour of a third party with exclusive right of possession and (two) that such parting with possession has been done without the consent of the landlord and in lieu of compensation or rent.
(ii) Inducting a partner or partners in the business or profession by a tenant by itself does not amount to subletting. However, if the purpose of such partnership is ostensible and a deed of partnership is drawn to conceal the real transaction of sub­letting, the court may tear the veil of partnership to find out the real nature of transaction entered into by the tenant.
(iii) The existence of deed of partnership between tenant and alleged sub­tenant in any other form would not preclude the landlord from bringing on record material and circumstances, by adducing evidence or by means of cross-examination, making out a case of sub­letting or parting with possession in tenancy premises by the tenant in favour of a third person.
(iv) If a tenant is actively associated with the partnership business and retains the control over the tenancy premises with him, maybe along with partners, the tenant may not be said to have parted with possession.
(v) Initial burden of proving subletting is on landlord but once he is able to establish that a third party is in exclusive possession of the premises and that tenant has no legal possession of the tenanted premises, the onus shifts to tenant to prove the nature of occupation of such third party and that he (tenant) continues to hold legal possession in tenancy premises.
In the instant case, the Court observed that before the Rent Control Authority, it was the case on behalf of Respondent No.1 that because of the old age he was not in a position to manage the affairs of the shop and that is why he admittedly has handed over the possession of the shop to Respondent No.2 through a power of attorney. He also admits that the bank account and license are in the name of Respondent No. 2 and Respondent No. 2 is running the shop as the owner. From the material/evidence on record, the Court opined that this was a clear case of subletting.
Therefore, the impugned judgment and order passed by the High Court was set aside and the judgment and decree passed by the Rent Control Appellate Authority restored.