2026 INSC 348 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4353 OF 2026

[Arising out of SLP (C) No. 25957 of 2023]

SRI M.V. RAMACHANDRASA SINCE DECEASED

REPRESENTED BY LEGAL HEIRS … APPELLANT(S)

VERSUS

M/S. MAHENDRA WATCH COMPANY

REPRESENTED BY ITS PARTNERS

& ORS. … RESPONDENT(S)

J U D G M E N T

R. MAHADEVAN, J.

1. Leave granted.

2. This Civil Appeal is directed against the judgment and order dated

23.05.2023 passed by the High Court of Karnataka at Bengaluru

1

in House Rent

Revision Petition No. 56 of 2017, whereby the High Court allowed the revision

petition preferred by Respondent Nos. 1 to 3 and set aside the order dated

14.07.2017 passed by the Chief Judge, Court of Small Causes, Bengaluru

2

in

H.R.C. No. 63 of 2016. By the said order, the trial Court had allowed the

1

Hereinafter referred to as “the High Court”

2

Hereinafter referred to as “the trial Court”

2

eviction petition and directed the respondents to vacate the schedule premises

and hand over vacant possession to the appellant (since deceased), within a

period of three months.

3. The appellants are the legal representatives of late Sri

M.V.Ramachandrasa, who originally initiated the rent control proceedings

before the trial Court. It is their case that the deceased appellant now represented

through his legal representatives, was a long-term lessee in respect of

immovable properties bearing Municipal New Nos. 22 to 33, situated at

Uttaradhi Mutt Lane, Chickpet, Bengaluru. The said lease was created by virtue

of a registered lease deed dated 02.02.1983 for a period of 55 years. Under the

terms of the lease, the deceased appellant was duly authorised to sub-lease the

whole or any portion of the property.

4. It is the further case of the appellants that Respondent No. 1,

M/s.Mahendra Watch Company, a partnership firm, became a tenant under the

deceased appellant

3

through its partner, Rajesh Kumar, Respondent No. 4, in

respect of premises viz., Shop No.1, Ground Floor, Maruthi Plaza, Block C,

U.M. Lane, Chickpet, Bangalure, by virtue of a lease deed dated 22.02.1985

registered as Document No. 3669 / 1985. Subsequently, the landlord came to

be aware that Respondent Nos. 1 and 4 were no longer in possession of the

premises and that the business therein was being carried on by Respondent Nos.

3

Hereinafter referred to “the landlord”

3

2 and 3, namely Ashish M. Jain and Atul M. Jain, who were not parties to the

said lease agreement. Upon issuance of notice in this regard, the landlord

instituted H.R.C. No. 63 of 2016 under Sections 27(b)(ii), 27(d)(i)(ii) and 27(p)

of the Karnataka Rent Act, 1999, seeking eviction on the ground that

Respondent No. 1 had unlawfully sublet the premises and parted with

possession in favour of third parties without the consent of the landlord.

5. The trial Court, upon consideration of the pleadings and the oral as well

as documentary evidence on record, concluded that the persons in actual

occupation of the premises were strangers to the original tenancy and that the

tenant had unlawfully parted with possession in their favour. Pointing out that

the lease deed expressly prohibited sub-letting or parting with possession

without the consent of the landlord, the trial Court held that the respondents had

rendered themselves liable for eviction. Accordingly, by order dated

14.07.2017, the eviction petition was allowed and the respondents were directed

to vacate the premises and hand over vacant possession to the landlord.

6. Aggrieved thereby, the respondents preferred House Rent Revision

Petition No. 56 of 2017 under Section 46 of the Karnataka Rent Act, 1999

against the appellants herein, who are the legal representatives of the deceased

appellant / landlord. The High Court, by its impugned judgment dated

23.05.2023, allowed the revision petition and set aside the eviction order passed

4

by the trial Court. It is in these circumstances that the appellants have

approached this Court by way of the present appeal.

7. The learned Senior Counsel appearing for the appellants submitted that

the High Court has clearly transgressed the well-settled limits of its revisional

jurisdiction under Section 46 of the Karnataka Rent Act, 1999. The revisional

power is supervisory in nature and does not confer upon the High Court the

status of a court of first appeal. It was submitted that the High Court, instead of

confining itself to examining jurisdictional error, illegality, or perversity, has

proceeded to reappreciate the entire oral and documentary evidence and

substituted its own findings in place of those recorded by the trial Court. Such

an exercise is wholly impermissible in law.

7.1. Reliance was placed on the judgment of this Court in Hindustan

Petroleum Corporation Limited v. Dilbahar Singh

4

, wherein, it was

categorically held that revisional jurisdiction under rent control statutes is

limited and cannot be equated with appellate jurisdiction. Interference is

warranted only where findings are perverse, based on no evidence, or suffer

from manifest illegality.

7.2. It was submitted that the trial Court, upon a comprehensive appreciation

of the evidence on record, returned well-reasoned findings of fact, and

categorically held that Respondent Nos. 2 and 3 failed to establish their status as

4

(2014) 9 SCC 78

5

partners of the original tenant firm namely M/s. Mahendra Watch Company.

The documentary evidence relied upon by the respondents was found unreliable,

and significantly, no partnership deed or credible material was produced to

substantiate the claim that Respondent Nos. 2 and 3 were partners of the original

tenant firm. These are pure findings of fact and could not have been interfered

with by the High Court in the absence of perversity or patent illegality, which is

conspicuously absent in the present case.

7.3. It was further submitted that Clause 19 of the registered lease deed dated

22.02.1985 (Ex. P4) expressly prohibits sub-letting or transfer of the tenancy

rights, including sale of the business, without prior written consent of the

landlord. The respondents have failed to produce any document evidencing such

consent. The material on record clearly establishes that persons presently in

occupation, namely Respondent Nos. 2 and 3 have no lawful nexus with the

original tenancy. Their claim of deriving rights through an alleged partnership is

unsupported by any legally admissible document.

7.4. It was submitted that the respondents’ case rests on an alleged

reconstitution of the partnership firm. However, the so-called reconstitution

deed is unregistered and legally untenable; no original partnership deed was

produced; there is no documentary evidence to establish that Mohanlal, claimed

to be the father of Respondent Nos. 2 and 3, was ever a partner; RW-1

(Mohanlal) himself admitted that at the time of execution of the lease deed in

6

1985, there were five partners, yet, only Respondent No. 4 signed the lease

deed. As such, the trial Court rightly concluded that the respondents failed to

prove any valid induction into the partnership with the consent of the landlord.

7.5. It was further submitted that the reliance placed by the respondents on Ex.

R2 series (rent receipts) is wholly misplaced. The said receipts stand in the

name of the original tenant firm and do not confer any independent right upon

Respondent Nos. 2 and 3. In this regard, reference was made to the decision in

S.R. Radhakrishnan v. Neelamegam

5

, wherein, this Court held that mere

payment of rent or continuance in possession does not ipso facto confer the

status of a tenant.

7.6. It was submitted that the appellants have clearly established grounds for

eviction under Sections 27(2)(b)(ii) and 27(2)(p) of the Karnataka Rent Act,

1999 inasmuch as there has been unauthorised sub-letting / transfer of

possession; the terms of the lease deed have been violated; and the respondents

are in unlawful occupation without any legal right or privity of contract.

7.7. It was submitted that the High Court, without adverting to the above

material aspects and settled principles of law, has erroneously reversed the well-

reasoned judgment of the trial Court and set aside the eviction order. Therefore,

the impugned judgment suffers from serious legal infirmity and warrants

interference by this court.

5

(2003) 10 SCC 705

7

8. Per contra, the learned counsel appearing for the respondents at the out,

submitted that the present appeal is liable to be dismissed in limine as the

appellants have not approached this Court with clean hands and have in fact,

suppressed material particulars in the list of dates and events. It was contended

that the appellants have failed to place true and correct facts and therefore are

not entitled to any relief much less the discretionary relief under Article 136 of

the Constitution of India.

8.1. The learned counsel further submitted that the respondent firm,

represented by its partners, has been a lawful tenant in respect of the suit shop

since the year 1978, having acquired tenancy rights upon payment of goodwill

to the original owner, namely Shrimad Jagadguru Madhav Acharya Moola

Mahasamsthane, Uttaradhi Math, Bengaluru. It was submitted that

subsequently, the landlord obtained a long-term lease of the larger property

under a registered lease deed dated 02.02.1983 for a period of 55 years, taking

symbolic possession of tenanted portions and physical possession of vacant

portions. Upon such acquisition, he proposed redevelopment of the property and

assured all existing tenants, including the respondent firm, that they would be

accommodated in the newly constructed complex, while also offering temporary

alternate accommodation.

8.2. It was submitted that acting upon such assurance, the tenants vacated the

old premises, following which the landlord demolished the existing structure

8

and constructed a new shopping complex. Upon completion, the respondent

firm was allotted a shop measuring 95 sq.ft. in place of the earlier 164 sq.ft. and

a registered lease deed dated 22.02.1985 was executed for a period of 53 years,

expiring on 22.02.2038. The agreed rent was fixed at Rs. 275/- per month with a

provision for periodic enhancement. Since then, the respondent firm has been in

continuous possession and has been carrying on business in the said premises

without interruption.

8.3. The learned counsel emphasised that the lease deed confers valuable and

enduring rights upon the respondent firm, including heritability, transferability

among partners and their heirs, and liberty to carry on business in partnership. It

was further submitted that the lease deed does not contain any forfeiture clause

attracting Section 111(g) of the Transfer of Property Act, 1882, and therefore,

the tenancy cannot be prematurely terminated. It was contended that the

respondent firm is entitled to peaceful possession and enjoyment of the premises

for the entire duration of the lease, and the eviction proceedings initiated during

the subsistence of such lease are wholly misconceived and not maintainable in

law.

8.4. The learned counsel further submitted that the allegation of subletting,

which forms the foundation of the eviction petition, is entirely baseless. It was

contended that the respondent firm has at no point sublet, assigned, or parted

with possession of the premises. The business has continuously been carried on

9

by the partners of the firm, and any change in the constitution of the partnership

does not amount to subletting. It was submitted that a partnership firm is not a

separate legal entity distinct from its partners, and the firm name is merely a

compendious description of the partners who carry on the business.

8.5. Reliance was placed on the judgments of this Court in Associated Hotels

of India Ltd v. S.B. Sardar Ranjit Singh

6

, Jagan Nath (D) through LRs v.

Chander Bhan and another

7

, and Mahendra Saree Emporium (II) v. G.V.

Srinivasa Murthy

8

, wherein it was held that subletting necessarily requires

parting with legal possession in favour of a third party and the mere use of

premises by others, including partners, does not constitute subletting so long as

the tenant retains legal possession. It was submitted that in the present case,

there is no evidence whatsoever to show that any third party has been put in

exclusive possession of the premises.

8.6. The learned counsel further contended that the burden of proving

subletting squarely lies upon the landlord, which burden has not been

discharged in the present case. In the absence of any material to establish

exclusive possession by a third party for consideration, no presumption of

subletting can arise. It was submitted that the High Court rightly appreciated the

6

AIR 1968 SC 933

7

1988 (3) SCC 57

8

(2005) 1 SCC 481

10

evidence on record and applied the settled principles of law in setting aside the

eviction order.

8.7. It was also submitted that the partnership firm was reconstituted on

01.07.2000, prior to the coming into force of the Karnataka Rent Act, 1999, and

that the continuing partners, including Ashish M. Jain, have been carrying on

business in the suit premises before 31.12.2001. The appellants were fully aware

of the same, as rent was being regularly collected from the respondent firm. It

was contended that mere reconstitution of a partnership firm or induction of

partners does not amount to assignment or subletting, particularly when the firm

continues to retain possession and control over the premises.

8.8. The learned counsel submitted that the eviction petition is based on a

wholly illusory cause of action and has been filed by suppressing the existence

of the registered lease deed dated 22.02.1985. A meaningful reading of the

petition would demonstrate that the appellants have attempted to mischaracterise

the partners of the firm as sub-tenants, which is impermissible in law. It was

thus contended that the proceedings are an abuse of the process of court and

liable to be dismissed.

9. We have carefully considered the rival submissions and perused the

material available on record.

11

10. The admitted position is that the appellants are the legal heirs of the

deceased appellant, Sri M.V. Ramachandrasa, who himself acquired leasehold

rights in respect of the property bearing Nos. 22 to 33 under a lease deed dated

02.02.1983 executed by Uttaradi Math represented by its Presiding Swamiji

through its power of attorney, for a period of 55 years with liberty to sub-let the

properties. It is not in dispute that after obtaining the said lease, the landlord

leased the premises to Respondent No. 1 represented by Respondent No. 4,

under a registered lease deed dated 22.02.1985 (Document No. 3669/1985) for a

period of 53 years. Clause 19 of the lease deed expressly restricts subletting

without prior written consent of the landlord. Since the actual and original

partner of Respondent No. 1 firm was not in occupation and possession of the

premises, the landlord preferred eviction petition before the trial Court. After

examining the oral and documentary evidence, the trial Court allowed the

petition and directed the respondents to vacate and hand over the possession of

the premises within a period of three months. However, the High Court allowed

the revision petition and set aside the eviction order. Therefore, the present

appeal at the instance of the appellants, who are the legal representatives of the

deceased appellant / landlord.

11. On the basis of the pleadings, the following issues arise for consideration

in the present appeal:

12

(i) Whether the High Court was justified in interfering with the findings

of fact recorded by the trial Court while exercising its revisional

jurisdiction under Section 46 of the Karnataka Rent Act, 1999?

(ii) Whether the burden of proving unlawful sub-letting lies upon the

landlord, and if so, whether such burden has been duly discharged in

the present case?

(iii) Whether the alleged retirement of the original tenant – partner and

continuation of business by Respondent Nos. 2 and 3 constitutes a

mere reconstitution of partnership or amounts to unlawful sub-letting /

assignment under Sections 27(2)(b)(ii) and 27(2)(p) of the Karnataka

Rent Act, 1999?

Issue No. 1

12. Whether the High Court was justified in interfering with the findings of

fact recorded by the trial Court while exercising its revisional jurisdiction

under Section 46 of the Karnataka Rent Act, 1999?

12.1. At the outset, it must be noted that the scope of revisional jurisdiction

under Section 46 is well-settled and narrowly circumscribed. The provision

empowers the High Court to examine the legality, correctness or propriety of an

order; however, it does not confer appellate powers permitting reappreciation of

13

evidence or substitution of factual findings. For ease of reference, the said

provision reads as under:

“46. Revision.- (1) The High Court may, at any time call for and examine any

order passed or proceeding taken by the Court of Small Causes or the Court of

Civil Judge Senior Division referred to in items (i) and (ii) of clause (c) of

section 3 for the purpose satisfying itself as to the legality or correctness of

such order or proceeding and may pass such order in reference thereto as it

thinks fit.

(2) The District Judge may at any time call for and examine any order passed or

proceeding taken by the Court of Civil Judge Junior Division referred to in item

(iii) of clause (c) of section 3 for the purpose of such order or proceeding and

may pass such order in reference thereto as he thinks fit.

(3) The costs incidental to all proceedings before the High Court or the District

Judge shall be in the discretion of the High Court or the District Judge as the

case may be.

12.2. In Rukmini Amma Saradamma v. Kallyani Sulochana and others

9

, this

Court held that even where the statutory language appears wide, the revisional

court cannot act as a court of appeal and undertake a fresh evaluation of

evidence. It was categorically observed that the High Court cannot reappreciate

oral and documentary evidence under the guise of examining “propriety” as

doing so would obliterate the distinction between appellate and revisional

jurisdiction. The following paragraphs are pertinent:

“9. Notwithstanding the fact that Section 20 of the Act conferring revisional

jurisdiction of the High Court is widely worded, such a jurisdiction cannot be

converted into an appellate jurisdiction. This Court in Rai Chand Jain v.

Chandra Kanta Khosla

10

has clearly pointed out the scope of such revisional

jurisdiction and has held that it cannot act as a second court of appeal.

9

(1993) 1 SCC 499

10

(1991) 1 SCC 422

14

Therefore, the impugned order is liable to be set aside. Without prejudice to the

above, it is submitted that this Court in Aundal Ammal v. Sadasivan Pillai

11

has

held that no second revision is permissible to the High Court either under

Section 115 of the Code or under Section 20 of the Act. The District Court has

exercised the revisional jurisdiction. Hence, the remit order in C.R.P. No. 1719

of 1985 is void and is illegal. If that remit order goes, what remains is only the

revisional order of the District Court, Kollam, confirming the appellate order

directing revision on the ground of bona fide need. Hence, the impugned order

calls for interference.”

“20. We are afraid this approach of the High Court is wrong. Even the wider

language of Section 20 of the Act cannot enable the High Court to act as a first

or a second court of appeal. Otherwise, the distinction between appellate and

revisional jurisdiction will get obliterated. Hence, the High Court was not right

in re-appreciating the entire evidence both oral or documentary in the light of

the Commissioner's report (Exts. C-1 and C-2 mahazar). In our considered

view, the High Court had travelled far beyond the revisional jurisdiction. Even

by the presence of the word “propriety” it cannot mean that there could be a re-

appreciation of evidence. Of course, the revisional court can come to a different

conclusion but not on a re-appreciation of evidence; on the contrary, by

confining itself to legality, regularity and propriety of the order impugned

before it. Therefore, we are unable to agree with the reasoning of the High

Court with reference to the exercise of revisional jurisdiction.”

12.3. The legal position stands conclusively settled by the Constitution Bench

of this Court in Hindustan Petroleum Corporation Ltd (supra), wherein it was

held that revisional jurisdiction, though wider than that under Section 115 of the

Civil Procedure Code, 1908, remains qualitatively distinct from appellate

jurisdiction. The High Court cannot reassess or reanalyse evidence to arrive at a

different conclusion merely because another view is possible. Interference with

findings of fact is permissible only when such findings are perverse, based on

no evidence, suffer from misreading of evidence, or result in a miscarriage of

justice. The following paragraphs are apposite:

11

(1987) 1 SCC 183 : AIR 1987 SC 203

15

“28. Before we consider the matter further to find out the scope and extent of

revisional jurisdiction under the above three Rent Control Acts, a quick

observation about the “appellate jurisdiction” and “revisional jurisdiction” is

necessary. Conceptually, revisional jurisdiction is a part of appellate

jurisdiction, but it is not vice versa. Both, appellate jurisdiction and revisional

jurisdiction are creatures of statutes. No party to the proceeding has an inherent

right of appeal or revision. An appeal is continuation of suit or original

proceeding, as the case may be. The power of the appellate court is coextensive

with that of the trial court. Ordinarily, appellate jurisdiction involves rehearing

on facts and law but such jurisdiction may be limited by the statute itself that

provides for the appellate jurisdiction. On the other hand, revisional

jurisdiction, though, is a part of appellate jurisdiction but ordinarily it cannot be

equated with that of a full-fledged appeal. In other words, revision is not

continuation of suit or of original proceeding. When the aid of Revisional Court

is invoked on the revisional side, it can interfere within the permissible

parameters provided in the statute. It goes without saying that if a revision is

provided against an order passed by the Tribunal/appellate authority, the

decision of the Revisional Court is the operative decision in law. In our view, as

regards the extent of appellate or revisional jurisdiction, much would, however,

depend on the language employed by the statute conferring appellate

jurisdiction and revisional jurisdiction.”

“31. We are in full agreement with the view expressed in Sri Raja Lakshmi

Dyeing Works v. Rangaswamy Chettiar

12

that where both expressions “appeal”

and “revision” are employed in a statute, obviously, the expression “revision”

is meant to convey the idea of a much narrower jurisdiction than that

conveyed by the expression “appeal”. The use of two expressions “appeal”

and “revision” when used in one statute conferring appellate power and

revisional power, we think, is not without purpose and significance.

Ordinarily, appellate jurisdiction involves a rehearing while it is not so in the

case of revisional jurisdiction when the same statute provides the remedy by way

of an “appeal” and so also of a “revision”. If that were so, the revisional power

would become coextensive with that of the trial court or the subordinate tribunal

which is never the case. The classic statement in Dattonpant Gopalvarao

Devakate v. Vithalrao Maruthirao Janagaval

13

that revisional power under the

Rent Control Act may not be as narrow as the revisional power under Section

115 of the Code but, at the same time, it is not wide enough to make the High

Court a second court of first appeal, commends to us and we approve the same.

We are of the view that in the garb of revisional jurisdiction under the above

three rent control statutes, the High Court is not conferred a status of second

12

(1980) 4 SCC 259

13

(1975) 2 SCC 246

16

court of first appeal and the High Court should not enlarge the scope of

revisional jurisdiction to that extent.”

“33. Rai Chand Jain v. Chandra Kanta Khosla

14

that follows Ram Dass v.

Ishwar Chander

15

, also does not lay down that the High Court in exercise of

its power under the Rent Control Act may reverse the findings of fact merely

because on reappreciation of the evidence it has a different view on the

findings of fact. The observations made by this Court in Rai Chand Jain must

also be read in the context we have explained Ram Dass”

“36. The statement in M.S. Zahed v. K. Raghavan

16

that under Section 50 of

the Karnataka Rent Control Act, the High Court is entitled to reappreciate the

evidence with a view to find out whether the order of Small Cause Court is

legal and correct must be understood in the light of the observations made

therein, namely, that revisional power cannot be equated with the power of

reconsideration of all questions of fact as a court of first appeal.”

“43. We hold, as we must, that none of the above Rent Control Acts entitles the

High Court to interfere with the findings of fact recorded by the first appellate

court/first appellate authority because on reappreciation of the evidence, its

view is different from the court/authority below. The consideration or

examination of the evidence by the High Court in revisional jurisdiction under

these Acts is confined to find out that finding of facts recorded by the

court/authority below is according to law and does not suffer from any error

of law. A finding of fact recorded by court/authority below, if perverse or has

been arrived at without consideration of the material evidence or such finding

is based on no evidence or misreading of the evidence or is grossly erroneous

that, if allowed to stand, it would result in gross miscarriage of justice, is open

to correction because it is not treated as a finding according to law. In that

event, the High Court in exercise of its revisional jurisdiction under the above

Rent Control Acts shall be entitled to set aside the impugned order as being not

legal or proper. The High Court is entitled to satisfy itself as to the correctness

or legality or propriety of any decision or order impugned before it as

indicated above. However, to satisfy itself to the regularity, correctness,

legality or propriety of the impugned decision or the order, the High Court

shall not exercise its power as an appellate power to reappreciate or reassess

the evidence for coming to a different finding on facts. Revisional power is not

and cannot be equated with the power of reconsideration of all questions of

fact as a court of first appeal. Where the High Court is required to be satisfied

that the decision is according to law, it may examine whether the order

impugned before it suffers from procedural illegality or irregularity.”

14

(1991) 1 SCC 422

15

(1988) 3 SCC 131

16

(1999) 1 SCC 439

17

12.4. This principle has been consistently reiterated including in Thankamony

Amma and others v. Omana Amma N. and others

17

, where this Court

disapproved reappreciation of evidence in exercise of revisional powers.

12.5. Applying the aforesaid principles, it is evident that the trial Court upon a

detailed appreciation of oral and documentary evidence, recorded specific

findings of fact. These included material discrepancies in the respondents’ case

inter alia inconsistencies regarding the dates relating to purchase and stamping

of stamp paper, non-production of the original partnership deed dated

01.03.2000, absence of proof of retirement of the original partner, and lack of

written consent from the landlord for induction of alleged partners. These

findings were based on the evidence on record and were neither shown to be

perverse nor vitiated by any illegality or procedural irregularity.

12.6. However, the High Court, while exercising jurisdiction under Section 46,

undertook a fresh analysis of the evidence, including depositions of PW-1

(M.R.Goverdhan) and RW-1 (Mohanlal), partnership documents, and rent

receipts, and arrived at independent factual conclusions. Such an exercise

clearly amounts to reappreciation of evidence, which is impermissible in

revisional jurisdiction.

12.7. It is also significant that the statutory scheme provides for an appeal

under Section 26 of the Karnataka Rent Act, 1999. Where the legislature has

17

(2020) 19 SCC 254

18

consciously created a separate appellate remedy, the revisional jurisdiction

cannot be expanded so as to substitute or bypass the appellate mechanism.

12.8. In view of the above, this Court is of the considered opinion that the

findings recorded by the trial Court were pure findings of fact based on proper

appreciation of evidence. No perversity, illegality, or jurisdictional error has

been demonstrated.

12.9. Accordingly, the High Court transgressed the limits of its revisional

jurisdiction by reassessing the evidence and substituting its own conclusions.

The impugned interference under Section 46 of the Karnataka Rent Act, 1999 is

therefore unsustainable in law as it effectively converts revisional jurisdiction

into appellate jurisdiction.

Issue No. 2

13. Whether the burden of proving unlawful sub-letting lies upon the

landlord, and if so, whether such burden has been duly discharged in the

present case?

13.1. It is a settled principle of law that the burden of proof lies upon the party

asserting a fact. In eviction proceedings founded on the ground of sub-letting,

the initial onus rests upon the landlord to establish that the tenant has parted

with possession of the tenanted premises in favour of a third party without

authority.

19

13.2. The jurisprudence on this issue is well crystallized. In Associated Hotels

of India Ltd v. S.B. Sardar Ranjit Singh (supra), this Court held that the

landlord must first prove parting with possession. However, recognizing the

inherently clandestine nature of sub-letting arrangements, courts have evolved a

rule of evidence that once exclusive possession of a third party is established,

the burden shifts to the tenant to explain the nature of such possession.

13.3. This principle has been consistently reaffirmed in Joginder Singh Sodhi

v. Amar Kaur

18

, and further authoritatively expounded by a three Judge Bench

in Mahendra Saree Emporium (II) v. G.V. Srinivasa Murthy (supra), wherein

it was held that once a prima facie case of exclusive possession by a stranger is

made out, a presumption of sub-letting arises, thereby shifting the onus onto the

tenant.

13.4. In Ram Murti Devi v. Pushpa Devi and others

19

, after considering the

earlier precedents, the Court reiterated that direct evidence of sub-letting is

seldom available, and the same can be inferred from surrounding circumstances,

particularly where exclusive possession of a third party is established. The

relevant paragraphs are extracted below for better appreciation:

“17.……. This Court held in the above case that transaction of sub-letting in

their very nature are clandestine arrangements between tenant and sub-tenant

and there cannot be any direct evidence and even it is a matter of legitimate

inference. It was further held that burden of proof of establishing fact

18

(2005) 1 SCC 31

19

(2017) 15 SCC 230

20

although lies on the landlord but it may shift according to the weight of

evidence adduced by the party during the trial.

18. In Kala v. Madho Parshad Vaidya

20

, again the Court held that the onus of

proof is on the landlord and if he establishes the parting of with the possession

in favour of third party, the onus would shift to the tenant to explain. In para 16

following has been explained: (SCC p. 577)

“16. … The onus to prove sub-letting is on the landlord and if he establishes

parting of with the possession in favour of a third party, the onus would shift

to the tenant to explain. In the instant case, however, the landlord did not

discharge the initial onus and although it was not required, yet, the tenant

explained how Appellant 2 had the permissive possession of the shop as its

Manager.”

19. This Court in Joginder Singh Sodhi v. Amar Kaur, had occasion to

consider various aspects of sub-letting. After noticing the various earlier

judgments of this Court, this Court reiterated the law in para 13 to para 17,

which are to the following effect: (SCC pp. 36-37)

“13. Regarding sub-letting, in our opinion, the law is well settled. It is

observed in the leading case of Associated Hotels of India Ltd. v. S.B.

Sardar Ranjit Singh that in a suit by the landlord for eviction of tenant on

the ground of sub-letting, the landlord has to prove by leading evidence that

(i) a third party was found to be in exclusive possession of the rented

property, and (ii) parting of possession thereof was for monetary

consideration.

14. The above principle was reiterated by this Court from time to time. In

Shama Prashant Raje v. Ganpatrao

21

, the Court stated that on sub-letting,

there is no dispute with the proposition that the two ingredients, namely,

parting with possession and monetary consideration therefore have to be

established.

…..

16. The contention of the learned counsel for the appellant, however, is that

even if it is assumed that one of the ingredients of sub-letting was

established, the second ingredient, namely, parting of possession with

“monetary consideration” was not established. The counsel urged that

there is no evidence on record that any amount was paid either in cash or in

kind by Respondent 2 to Respondent 1. In the absence of such evidence sub-

tenancy cannot be said to be established and the landlady was not entitled

to get an order of eviction against the tenant.

20

(1998) 6 SCC 573

21

(2000) 7 SCC 522

21

17. We are unable to appreciate the contention. As observed by this Court in

Bharat Sales Ltd. v. LIC

22

, sub-tenancy or sub-letting comes into existence

when the tenant gives up possession of the tenanted accommodation, wholly

or in part, and puts another person in exclusive possession thereof. This

arrangement comes about obviously under a mutual agreement or

understanding between the tenant and the person to whom the possession is

so delivered. In this process, the landlord is kept out of the scene. Rather,

the scene is enacted behind the back of the landlord, concealing the overt

acts and transferring possession clandestinely to a person who is an utter

stranger to the landlord, in the sense that the landlord had not let out the

premises to that person nor had he allowed or consented to his entering

into possession of that person, instead of the tenant, which ultimately

reveals to the landlord that tenant to whom the property was let out has

put some other person in possession of that property. In such a situation, it

would be difficult for the landlord to prove, by direct evidence, the contract

or agreement or understanding between the tenant and the sub-tenant. It

would also be difficult for the landlord to prove, by direct evidence, that the

person to whom the property had been sub-let had paid monetary

consideration to the tenant. Payment of rent, undoubtedly, is an essential

element of lease or sub-lease. It may be paid in cash or in kind or may have

been paid or promised to be paid. It may have been paid in lump sum in

advance covering the period for which the premises is let out or sub-let or it

may have been paid or promised to be paid periodically. Since payment of

rent or monetary consideration may have been made secretly, the law does

not require such payment to be proved by affirmative evidence and the

court is permitted to draw its own inference upon the facts of the case

proved at the trial, including the delivery of exclusive possession to infer

that the premises were sub-let.”

(emphasis in original)

20. A three-Judge Bench in Mahendra Saree Emporium (2) v. G.V. Srinivasa

Murthy, had occasion to consider the question of sub-letting (sub-tenancy) and

question of burden of proof. In para 16, the Court had elaborated the concept of

sub-letting and laid down the following: (SCC pp. 490-91)

“16. ..........The onus to prove sub-letting is on the landlord. If the landlord

prima facie shows that the occupant, who was in exclusive possession of

the premises, let out for valuable consideration, it would then be for the

tenant to rebut the evidence.”

Thus, in the case of sub-letting, the onus lying on the landlord would stand

discharged by adducing prima facie proof of the fact that the alleged sub-tenant

was in exclusive possession of the premises or, to borrow the language of

Section 105 of the Transfer of Property Act, was holding right to enjoy such

22

(1998) 3 SCC 1

22

property. A presumption of sub-letting may then be raised and would amount to

proof unless rebutted.”

21. From the pronouncements of this Court as noticed above, following

statement of law can be culled out:

21.1. In a suit by the landlord for eviction of the tenant on the ground of sub-

letting the landlord has to prove by leading evidence that:

(a) A third party was found to be in exclusive possession of the whole or part of

rented property.

(b) Parting of possession thereof was for monetary consideration.

21.2. The onus to prove sub-letting is on the landlord and if he has established

parting of possession in favour of a third party either wholly or partly, the onus

would shift to the tenant to explain.

21.3. In the event, possession of the tenant wholly or partly is proved and the

particulars and the instances of the transactions are found acceptable, in

particular facts and circumstances of the case, it is not impermissible for the

court to draw an inference that the transaction was entered with monetary

consideration. It may not be possible always to give direct evidence of monetary

consideration since such transaction of sub-letting are made between the tenant

and sub-tenant behind the back of the landlord.

22. In each case, the proof of sub-letting/sub-tenancy thus, has to be established

on the parameters of law, as laid down in the above cases. Whether, in

particular facts and circumstances the landlord has successfully discharged the

burden of proving sub-tenancy depends on pleading and evidence in each case.”

13.5. Thus, the legal position that emerges is that the landlord discharges the

initial burden by establishing (i) exclusive possession of a third party, and (ii)

absence of the original tenant from possession. Upon such proof, a presumption

of sub-letting arises, and the onus shifts to the tenant to demonstrate that such

possession is lawful and not in the nature of sub-tenancy.

23

13.6. Applying the aforesaid principles, it is evident that the landlord has

successfully discharged the initial burden. The lease deed recognizes only

Respondent No. 4 as the tenant. Respondent Nos. 2 and 3 are not parties to the

lease and therefore, cannot claim any independent tenancy rights. The material

on record clearly establishes that the original tenant is no longer in possession,

and Respondent Nos. 2 and 3 are in exclusive occupation of the premises. This

finding has been categorically recorded by the trial Court. In such

circumstances, the landlord has successfully proved exclusive possession of

third parties thereby discharging the initial burden and giving rise to a

presumption of unlawful sub-letting.

13.7. The burden, therefore, shifted upon the respondents to rebut the said

presumption. However, the respondents have failed to discharge this burden. No

cogent or reliable evidence has been adduced to establish the existence of a

valid partnership, reconstitution deed, lawful induction, or consent of the

landlord to such arrangement. In the absence of such evidence, the possession of

Respondent Nos. 2 and 3 remains unexplained and unlawful. As held in

Joginder Singh Sodhi, direct proof of monetary consideration is not

indispensable and may be legitimately inferred from the surrounding

circumstances, particularly where exclusive possession is established without

lawful explanation.

24

13.8. Accordingly, this Court holds that the burden of proving unlawful sub-

letting initially lay upon the landlord, which has been duly discharged by

establishing exclusive possession of third parties and absence of the original

tenant. The burden thereafter shifted to the respondents, who have failed to

rebut the presumption by adducing cogent evidence. Consequently, unlawful

sub-letting stands proved.

Issue No. 3

14. Whether the alleged retirement of the original tenant – partner and

continuation of business by Respondent Nos. 2 and 3 constitutes a mere

reconstitution of partnership or amounts to unlawful sub-letting / assignment

under Sections 27(2)(b)(ii) and 27(2)(p) of the Karnataka Rent Act, 1999?

14.1. The law governing sub-letting through the device of partnership is well-

settled and no longer res integra. In Amar Nath Agarwalla v. Dhillon

Transport Agency

23

, this Court reiterated that a partnership firm is not a

separate legal entity but merely a compendious name for its partners, and that

sub-letting necessarily involves parting with legal possession. The following

paragraphs are pertinent:

“8. In Murlidhar v. Chuni Lal

24

this Court had repelled the contention that the

old firm and the new firm being two different legal entities, the occupation of the

shop by the new firm was occupation by the legal entity other than the original

23

(2007) 4 SCC 306

24

1969 Ren CR 563 : 1970 Ren CJ 922 (SC)

25

tenant and such occupation proved sub-letting. Repelling the contention this

Court held:

“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 only occupation by

its partners. Here the firms have a common partner. Hence the occupation

has been by one of the original tenants.”

9. In Mohammedkasam Haji Gulambhai v. Bakerali Fatehali

25

this Court

observed: (SCC p. 618, para 13)

“There is absolute prohibition on the tenant from sub-letting, assigning or

transferring in any other manner his interest in the tenanted premises.

There appears to be no way around this subject of course if there is any

contract to the contrary between the landlord and the tenant. In a

partnership where the tenant is a partner, he retains legal possession of

the premises as a partnership is a compendium of the names of all the

partners. In a partnership, the tenant does not divest himself of his right

in the premises. On the question of sub-letting etc. the law is now very

explicit. There is prohibition in absolute terms on the tenant from sub-

letting, assignment or disposition of his interest in the tenanted premises.”

14.2. This position has been comprehensively analysed in Celina Coelho

Pereira (Ms) and others v. Ulhas Mahabaleshwar Kholkar and others

26

,

wherein the Court, after considering earlier precedents, distilled the governing

principles. The following paragraphs are pertinent:

“17. In Helper Girdharbhai v. Saiyed Mohmad Mirasaheb Kadri

27

this Court

held that in a case where a tenant becomes a partner of a partnership firm and

allows the firm to carry on business in the demised premises while he himself

retains legal possession thereof, the act of the tenant does not amount to sub-

letting. It was held that whether there is genuine partnership or not must be

judged in the facts of each case in the light of the principles applicable to

partnership.

25

(1998) 7 SCC 608

26

(2010) 1 SCC 217

27

(1987) 3 SCC 538

26

18. While dealing with the mischief contemplated under Section 14(1)(b) of the

Delhi Rent Control Act, 1958 providing for eviction on the ground of sub-letting,

this Court in Jagan Nath v. Chander Bhan

28

held: (SCC p. 61, para 6)

“6. The question for consideration is whether the mischief contemplated

under Section 14(1)(b) of the Act has been committed as the tenant had sub-

let, assigned, or otherwise parted with the possession of the whole or part of

the premises without obtaining the consent in writing of the landlord. There

is no dispute that there was no consent in writing of the landlord in this

case. There is also no evidence that there has been any sub-letting or

assignment. The only ground perhaps upon which the landlord was seeking

eviction was parting with possession. It is well settled that parting with

possession meant giving possession to persons other than those to whom

possession had been given by the lease and the parting with possession must

have been by the tenant; user by other person is not parting with possession

so long as the tenant retains the legal possession himself, or in other words

there must be vesting of possession by the tenant in another person by

divesting himself not only of physical possession but also of the right to

possession. So long as the tenant retains the right to possession there is no

parting with possession in terms of clause (b) of Section 14(1) of the Act.

Even though the father had retired from the business and the sons had been

looking after the business, in the facts of this case, it cannot be said that the

father had divested himself of the legal right to be in possession. If the father

has a right to displace the possession of the occupants i.e. his sons, it cannot

be said that the tenant had parted with possession.”

19. The question whether the tenant has assigned, sub-let or otherwise parted

with the possession of the whole or any part of the premises without the

permission of the landlord within the meaning of Section 13(1)(e) of the

Rajasthan Premises (Control of Rent and Eviction) Act, 1950 fell for

consideration in Gopal Saran v. Satyanarayana

29

. This Court held: (SCC pp. 69-

70, para 16)

“16. … Sub-letting means transfer of an exclusive right to enjoy the property

in favour of the third party. In this connection, reference may be made to the

decision of this Court in Shalimar Tar Products Ltd. v. H.C. Sharma

30

where it was held that to constitute a sub-letting, there must be a parting of

legal possession i.e. possession with the right to include and also right to

exclude others and whether in a particular case there was sub-letting was

substantially a question of fact. In that case, a reference was made at SCC p.

28

(1988) 3 SCC 57

29

(1989) 3 SCC 56

30

(1988) 1 SCC 70

27

77, para 16 of the Report to the treatise of Foa on Landlord and Tenant, 6th

Edn., at p. 323, for the proposition that:

‘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.’

In para 17 of the Report, it was observed that parting of the legal possession

means possession with the right to include and also right to exclude others. In

the last mentioned case, the observations of the Madras High Court in

Gundalapalli Rangamannar Chetty v. Desu Rangiah

31

were approved by

this Court in which the legal position in Jackson v. Simons

32

were relied

upon. The Madras High Court had also relied on a judgment of Scrutton,

L.J. in Chaplin v. Smith

33

at p. 211 of the Report where it was said:

‘He did not assign, nor did he under-let. 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.’

This position was also accepted in Vishwa Nath v. Chaman Lal Khanna

34

wherein it was observed that parting with possession is understood as parting

with legal possession by one in favour of the other by giving him an exclusive

possession to the ouster of the grantor. If the grantor had retained legal

possession with him it was not a case of parting with possession.”

The Court also reiterated that to prove sub-tenancy, two ingredients have to be

established, firstly, the tenant must have exclusive right of possession or interests

in the premises or part of the premises in question and secondly, the right must be

in lieu of payment of some compensation or rent.

20. In G.K. Bhatnagar v. Abdul Alim

35

this Court held as follows:(SCC p. 518,

para 5)

“5. A conjoint reading of these provisions shows that on and after 9-6-1952,

sub-letting, 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. However, inducting a

31

AIR 1954 Mad 182

32

(1923) 1 Ch 373 : 1922 All ER Rep 583

33

(1926) 1 KB 198 (CA)

34

AIR 1975 Del 117

35

(2002) 9 SCC 516

28

partner in his business or profession by the tenant is permitted so long as

such partnership is genuine. If the purpose of such partnership may

ostensibly be to carry on the business or profession in partnership, but the

real purpose be sub-letting of the premises to such other person who is

inducted ostensibly as a partner, then the same shall be deemed to be an act

of sub-letting attracting the applicability of clause (b) of sub-section (1) of

Section 14 of the Act.”

21. A three-Judge Bench of this Court in Parvinder Singh v. Renu Gautam

36

commented upon the device adopted by tenants many a time in creating

partnership as a camouflage to circumvent the provisions of the Rent Control Act.

The following observations are worth noticing: (SCC pp. 799-800, paras 8-9)

“8. The rent control legislations which extend many a protection to the

tenant, also provide for grounds of eviction. One such ground, most common

in all the legislations, is sub-letting or parting with possession of the tenancy

premises by the tenant. Rent control laws usually protect the tenant so long

as he may himself use the premises but not his transferee inducted into

possession of the premises, in breach of the contract or the law, which act is

often done with the object of illegitimate profiteering or rack-renting. To

defeat the provisions of law, a device is at times adopted by unscrupulous

tenants and sub-tenants of bringing into existence a deed of partnership

which gives the relationship of tenant and sub-tenant an outward appearance

of partnership while in effect what has come into existence is a sub-tenancy

or parting with possession camouflaged under the cloak of partnership.

Merely because a tenant has entered into a partnership he cannot necessarily

be held to have sub-let the premises or parted with possession thereof in

favour of his partners. If the tenant is actively associated with the

partnership business and retains the use and control over the tenancy

premises with him, maybe along with the partners, the tenant may not be

said to have parted with possession. However, if the user and control of the

tenancy premises has been parted with and deed of partnership has been

drawn up as an indirect method of collecting the consideration for creation

of sub-tenancy or for providing a cloak or cover to conceal a transaction

not permitted by law, the court is not estopped from tearing the veil of

partnership and finding out the real nature of transaction entered into

between the tenant and the alleged sub-tenant.

9. A person having secured a lease of premises for the purpose of his business

may be in need of capital or finance or someone to assist him in his business

and to achieve such like purpose he may enter into partnership with

strangers. Quite often partnership is entered into between the members of any

36

(2004) 4 SCC 794

29

family as a part of tax planning. There is no stranger brought on the

premises. So long as the premises remain in occupation of the tenant or in his

control, a mere entering into partnership may not provide a ground for

eviction by running into conflict with prohibition against sub-letting or

parting with possession. This is a general statement of law which ought to be

read in the light of the lease agreement and the law governing the tenancy.

There are cases wherein the tenant sub-lets the premises or parts with

possession in defiance of the terms of lease or the rent control legislation and

in order to save himself from the peril of eviction brings into existence, a deed

of partnership between him and his sub-lessee to act as a cloak on the reality

of the transaction. The existence of deed of partnership between the tenant

and the alleged sub-tenant 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 sub-letting or parting with

possession or interest in tenancy premises by the tenant in favour of a third

person. The rule as to exclusion of oral by documentary evidence governs the

parties to the deed in writing. A stranger to the document is not bound by the

terms of the document and is, therefore, not excluded from demonstrating the

untrue or collusive nature of the document or the fraudulent or illegal

purpose for which it was brought into being. An enquiry into reality of

transaction is not excluded merely by availability of writing reciting the

transaction.”

22. In yet another decision, a three-Judge Bench of this Court in Mahendra Saree

Emporium (II) v. G.V. Srinivasa Murthy considered earlier decisions, few of

which have been referred to above, while dealing with a matter relating to sub-

letting of the premises within the meaning of Section 21(1)(f) of the Karnataka

Rent Control Act, 1961 and observed as follows: (SCC pp. 490-92, para 16)

“16. The term ‘sub-let’ is not defined in the Act-new or old. However, the

definition of ‘lease’ can be adopted mutatis mutandis for defining ‘sub-lease’.

What is ‘lease’ between the owner of the property and his tenant becomes a

sub-lease when entered into between the tenant and tenant of the tenant, the

latter being sub-tenant qua the owner landlord. A lease of immovable

property as defined in Section 105 of the Transfer of Property Act, 1882 is a

transfer of a right to enjoy such property made for a certain time for

consideration of a price paid or promised. A transfer of a right to enjoy such

property to the exclusion of all others during the term of the lease is sine qua

non of a lease. A sub-lease would imply parting with by the tenant of the right

to enjoy such property in favour of his sub-tenant. Different types of

phraseology are employed by different State Legislatures making provision

for eviction on the ground of sub-letting. Under Section 21(1)(f) of the old

Act, the phraseology employed is quite wide. It embraces within its scope sub-

letting of the whole or part of the premises as also assignment or transfer in

30

any other manner of the lessee's interest in the tenancy premises. The exact

nature of transaction entered into or arrangement or understanding arrived

at between the tenant and alleged sub-tenant may not be in the knowledge of

the landlord and such a transaction being unlawful would obviously be

entered into in secrecy depriving the owner landlord of the means of

ascertaining the facts about the same. However still, the rent control

legislation being protective for the tenant and eviction being not permissible

except on the availability of ground therefor having been made out to the

satisfaction of the court or the Controller, the burden of proving the

availability of the ground is cast on the landlord i.e. the one who seeks

eviction. In Krishnawati v. Hans Raj

37

reiterating the view taken in

Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh this Court so

noted the settled law: (Hans Raj case , SCC p. 293, para 6)

‘6. … [T]he onus to prove sub-letting is on the landlord. If the landlord

prima facie shows that the occupant who was in exclusive possession of

the premises let out for valuable consideration, it would then be for the

tenant to rebut the evidence.’

Thus, in the case of sub-letting, the onus lying on the landlord would stand

discharged by adducing prima facie proof of the fact that the alleged sub-tenant

was in exclusive possession of the premises or, to borrow the language of Section

105 of the Transfer of Property Act, was holding right to enjoy such property. A

presumption of sub-letting may then be raised and would amount to proof unless

rebutted. In the context of the premises having been sub-let or possession parted

with by the tenant by adopting the device of entering into partnership, it would

suffice for us to notice three decisions of this Court. Murlidhar v. Chuni Lal is a

case where a shop was let out to a firm of the name of Chuni Lal Gherulal. The

firm consisted of three partners, namely, Chuni Lal, Gherulal and Meghraj. This

partnership closed and a new firm by the name of Meghraj Bansidhar commenced

its business with partners Meghraj and Bansidhar. The tenant firm was sought to

be evicted on the ground that the old firm and the new firm being two different

legal entities, the occupation of the shop by the new firm amounted to sub-

letting. This Court discarded the contention as ‘entirely without substance’ and

held that a partnership firm 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 only occupation by its partners. The two firms, old and new, had a

common partner, namely, Meghraj, who continued to be in possession and it was

fallacious to contend that earlier he was in possession in the capacity of partner

of the old firm and later as a partner of the new firm. The landlord, in order to

succeed, has to prove it as a fact that there was a sub-letting by his tenant to

another firm. As the premises continued to be in possession of one of the original

37

(1974) 1 SCC 289

31

tenants, Meghraj, then by a mere change in the constitution of the firm of which

Meghraj continued to be a partner, an inference as to sub-letting could not be

drawn in the absence of further evidence having been adduced to establish sub-

letting. In Helper Girdharbhai v. Saiyed Mohmad Mirasaheb Kadri the tenant

had entered into a partnership and the firm was carrying on business in the

tenancy premises. This Court held that if there was a partnership firm of which

the appellant was a partner as a tenant, the same would not amount to sub-letting

leading to forfeiture of the tenancy; for there cannot be a sub-letting unless the

lessee parted with the legal possession. The mere fact that another person is

allowed to use the premises while the lessee retains the legal possession is not

enough to create a sub-lease. Thus, the thrust is, as laid down by this Court, on

finding out who is in legal possession of the premises. So long as the legal

possession remains with the tenant the mere factum of the tenant having entered

into partnership for the purpose of carrying on the business in the tenancy

premises would not amount to sub-letting. In Parvinder Singh v. Renu Gautam a

three-Judge Bench of this Court devised the test in these terms: (SCC p. 799, para

8)

‘8. … If the tenant is actively associated with the partnership business and

retains the use and control over the tenancy premises with him, maybe along

with the partners, the tenant may not be said to have parted with possession.

However, if the user and control of the tenancy premises has been parted with

and deed of partnership has been drawn up as an indirect method of

collecting the consideration for creation of sub-tenancy or for providing a

cloak or cover to conceal a transaction not permitted by law, the court is not

estopped from tearing the veil of partnership and finding out the real nature

of transaction entered into between the tenant and the alleged sub-tenant.’ ”

23. In Vaishakhi Ram v. Sanjeev Kumar Bhatiani

38

, one of us (Tarun Chatterjee,

J.) in a case of sub-letting under Section 14(1)(b) of the Delhi Rent Control Act,

held: (SCC pp. 360 & 362, paras 15 & 21)

“15. … A plain reading of this provision would show that if a tenant has sub-

let or assigned or otherwise parted with the possession of the whole or any

part of the premises without obtaining the consent in writing of the landlord,

he would be liable to be evicted from the said premises. That is to say, the

following ingredients must be satisfied before an order of eviction can be

passed on the ground of sub-letting:

(1) the tenant has sub-let or assigned or parted with the possession of the

whole or any part of the premises;

38

(2008) 14 SCC 356

32

(2) such sub-letting or assigning or parting with the possession has been done

without obtaining the consent in writing of the landlord.

…

21. It is well settled that the burden of proving sub-letting is on the landlord

but if the landlord proves that the sub-tenant is in exclusive possession of the

suit premises, then the onus is shifted to the tenant to prove that it was not a

case of sub-letting.”

24. In Nirmal Kanta v. Ashok Kumar

39

this Court held thus: (SCC p. 727, para

16)

“16. What constitutes sub-letting has repeatedly fallen for the consideration

of this Court in various cases and it is now well established that a sub-

tenancy or a sub-letting comes into existence when the tenant inducts a

third-party stranger to the landlord into the tenanted accommodation and

parts with possession thereof wholly or in part in favour of such third party

and puts him in exclusive possession thereof. The lessor and/or a landlord

seeking eviction of a lessee or tenant alleging creation of a sub-tenancy has

to prove such allegation by producing proper evidence to that effect. Once it

is proved that the lessee and/or tenant has parted with exclusive possession of

the demised premises for a monetary consideration, the creation of a sub-

tenancy and/or the allegation of sub-letting stands established.”

25. The legal position that emerges from the aforesaid decisions can be

summarised thus:

(i) In order to prove mischief of sub-letting as a ground for eviction under rent

control laws, two ingredients have to be established, (one) parting with

possession of tenancy or part of it by the 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 sub-letting. However, if the purpose of such

partnership is ostensible and a deed of partnership is drawn to conceal the real

transaction of sub-letting, 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 the tenant and alleged sub-

tenant or ostensible transaction 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 sub-letting or

39

(2008) 7 SCC 722

33

parting with possession in tenancy premises by the tenant in favour of a third

person.

(iv) If the tenant is actively associated with the partnership business and retains

the control over the tenancy premises with him, may be along with partners, the

tenant may not be said to have parted with possession.

(v) Initial burden of proving sub-letting 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 to the

tenant to prove the nature of occupation of such third party and that he (tenant)

continues to hold legal possession in tenancy premises.

(vi) In other words, initial burden lying on the landlord would stand discharged

by adducing prima facie proof of the fact that a party other than the tenant was in

exclusive possession of the premises. A presumption of sub-letting may then be

raised and would amount to proof unless rebutted.”

14.3. From the above decisions, the essence of the law is that:

(i) sub-letting requires parting with legal possession, i.e., transfer of the right to

exclusive possession;

(ii) mere induction or retirement of partners does not amount to sub-letting so

long as the tenant retains control and legal possession;

(iii) courts are entitled to lift the veil of partnership where it is used as a device

to conceal an impermissible transfer; and

(iv) once exclusive possession of a third party is established, the burden shifts to

the tenant to prove that the arrangement is bona fide.

Thus, the determinative test is whether the original tenant continues to retain

legal possession and control over the premises.

34

14.4. It is not in dispute that Respondent No. 4 alone was the original tenant

under the lease. The material on record indicates that he retired from the

business around the year 2000. Significantly, no legally admissible evidence has

been produced to establish either the factum of such retirement in accordance

with law or that he continued to retain legal possession or control thereafter.

14.5. The respondents have failed to produce the original partnership deed, any

duly proved retirement deed, or any document evidencing continuity of the

original tenant firm. The alleged reconstitution deed (Ex. R3), apart from being

unregistered, has not been proved in accordance with law and is shrouded in

doubt. There is also no material to show that Respondent Nos. 2 and 3 were

partners in the original tenant firm. Their induction into possession is, therefore

not traceable to the original tenancy.

14.6. On the contrary, the material on record, including the cross-examination

of RW-1, clearly demonstrates that the original tenant has ceased to have any

role in the business or the premises, and that Respondent Nos. 2 and 3 are in

exclusive possession and control. This satisfies the test of parting with

possession, both in fact and in law, as explained in Jagan Nath v. Chander

Bhan.

14.7. Once such exclusive possession by third parties is established, the burden

shifts to the respondents to prove that the arrangement is a genuine partnership

35

and not a device to conceal sub-letting. The respondents have failed to discharge

this burden by producing any cogent or reliable evidence.

14.8. The mere fact that rent receipts may continue in the name of the original

tenant does not advance the respondents’ case, as it is legal possession and

control and not the formality of rent payment, which is determinative.

14.9. In the present case, the original tenant has clearly divested himself of

legal possession, and Respondent Nos. 2 and 3, who are strangers to the

tenancy, are in exclusive occupation of the premises without the consent of the

landlord. The so-called reconstitution is nothing but a cloak to conceal an

unlawful transfer of possession, warranting lifting of the veil.

14.10. Accordingly, the arrangement cannot be regarded as a bona fide

reconstitution of partnership. It squarely amounts to unlawful sub-letting /

assignment within the meaning of Section 27(2)(b)(ii) of the Karnataka Rent

Act, 1999. Further, the continued occupation by Respondent Nos. 2 and 3

without any lawful right, attracts Section 27(2)(p) of the Act. The respondents

are, therefore, liable to eviction.

15. For the reasons aforesaid, the Civil Appeal is allowed. The judgment and

order dated 23.05.2023 passed by the High Court in House Rent Revision

Petition No. 56 of 2017 is set aside and the order dated 14.07.2017 passed by

the trial Court in H.R.C. No. 63 of 2016 directing eviction of the respondents

36

from the schedule premises is restored. The respondents are granted three

months’ time from today to vacate and handover vacant possession of the

premises to the appellants. There shall be no order as to costs.

16. Pending application(s), if any, shall stand disposed of.

………….…………………………J.

[AHSANUDDIN AMANULLAH]

.…………………………J.

[R. MAHADEVAN]

NEW DELHI;

APRIL 10, 2026.