Case Note & Summary
By way of civil appeal by special leave, the Supreme Court considered whether a private company that had taken an assignment of business and possession from a sub-tenant before 1959 could claim the protective umbrella of Section 15(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The dispute arose from a godown at 8 Mugbhat Lane, Girgaum, Bombay, owned by Padamsi Bhanji Trust. The original tenant before 1952 was Ochhavlal, who sub-let the premises to S. V. Sovani. Sovani carried on business of scientific apparatus and around 1952 became director of Sovani Private Limited, which took possession of the godown and the business. Rent continued to be paid in the name of Ochhavlal until 1966, when the trust's employee refused to accept rent; subsequent money orders were also not accepted. In 1970, the trustees filed an eviction suit against Ochhavlal on grounds of default in payment of rent and sub-letting; an ex-parte decree was passed in March 1971 and possession was obtained on 8 April 1971. The private company then filed an application under Order XXI Rule 100 of the Code of Civil Procedure, 1908 for relief against dispossession, claiming it was a sub-tenant. The trial court accepted the company's contention, but the Small Causes Court in revision set aside that order. The company then moved a writ petition under Article 227 of the Constitution before the Bombay High Court, which held that the company was a tenant entitled to protection under Section 15(2) of the Bombay Rent Act and quashed the revisional order. The landlord appealed to the Supreme Court. The legal issue was the scope of Section 15(2) of the Act, which validated certain sub-leases, assignments and transfers made before 21 May 1959. The appellant landlord contended that Section 15(2) protected only sub-leases, assignments or transfers by tenants, not subsequent assignments by assignees or transferees; the respondent company argued it came within the protective ambit as it was in possession before the Ordinance. The Supreme Court examined the language of Section 15(2) and noted that it created a limited validation: the ban in Section 15(1) was deemed ineffective before the 1959 Ordinance only for any such sub-lease, assignment or transfer in favour of a person who had entered into possession before 1959. The phrase such referred back to sub-leases, assignments or transfers by tenants. The Court found that the assignment in favour of the private company was made not by the tenant Ochhavlal but by the sub-tenant Sovani; moreover, when the 1959 Ordinance came into force Sovani did not continue in possession, the private company being in possession. The Court also noted that the notifications under the proviso to Section 15(1) did not cover the present assignment, and the explanation added by Maharashtra Act 17 of 1968 did not help because the assignment was not covered by any notified class. It referred to Section 108(2) of the Transfer of Property Act, 1882 which distinguishes between a sub-lease by a lessee and a subsequent transfer by a sub-lessee, and approved the decision in N. W. Nayak v. Chhotalal Harirain. Accordingly, the Supreme Court allowed the appeal, set aside the High Court's order, and held that the private company was not entitled to protection under Section 15(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Headnote
A) Bombay Rent Act - Sub-letting, Assignment and Transfer - Scope of Validation under Section 15(2) - Section 15(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 protects only sub-leases, assignments or transfers made by tenants, not subsequent assignments or transfers made by assignees or transferees of tenants - The prohibition in Section 15(1) against sub-letting, assignment, or transfer by a tenant was retrospectively ineffective before 21 May 1959 only for direct acts of tenants; the second limb of Section 15(2) expressly limited validation to any such sub-lease, assignment or transfer in favour of any person who entered into possession before 1959, but the assignor had to be the tenant - Held that Section 15(2) did not extend to an assignment made by a sub-tenant to a private company (Pages 604-607). B) Bombay Rent Act - Possession Requirement for Validation under Section 15(2) - Eligibility of Assignee in Possession at Commencement of 1959 Ordinance - Section 15(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 - The private company claimed protection as assignee of the business and possession from sub-tenant Sovani, but when the 1959 Ordinance came into force Sovani did not continue in possession; the private company was in possession as subsequent transferee from sub-tenant - Held that because the assignment was not made by the tenant and the sub-tenant was not in possession at the relevant date, the private company was not entitled to protection under Section 15(2) (Pages 606-607). C) Transfer of Property Act - Distinction Between Sub-lease and Subsequent Transfer - Section 108(2) - Transfer of Property Act, 1882 - The court noticed the statutory distinction between a sub-lease by a lessee and a transfer by a sub-lessee of his interest by subsequent transfer; an assignee of a sub-tenant does not stand in the same position as a direct transferee from a tenant - Held that this distinction supported the conclusion that the private company, as assignee from a sub-tenant, was outside the protective scope of Section 15(2) (Page 607).
Issue of Consideration
Whether a private company which took assignment of business and possession from a sub-tenant before 1959 is entitled to protection under Section 15(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 when the original tenant's sub-tenant was not in possession at the commencement of the 1959 Ordinance.
Final Decision
Appeal allowed; Supreme Court set aside High Court order; held private company not entitled to protection under Section 15(2) of the Bombay Rent Act because assignment was made by sub-tenant, not tenant, and by the time the 1959 Ordinance came into force Sovani was not in possession; the company was in possession, but as subsequent transferee from sub-tenant it did not get statutory protection; Section 108(2) Transfer of Property Act distinction noted; N.W. Nayak v. Chhotalal Harirain approved.
Law Points
- Section 15(2) of Bombay Rents
- Hotel and Lodging House Rates Control Act
- 1947 validates only sub-leases
- assignments or transfers made by tenants before 21 May 1959
- subsequent assignments or transfers by assignees or transferees are not protected
- possession at commencement of 1959 Ordinance must be with the person claiming direct under tenant
- distinction between sub-lease and subsequent transfer recognized under Section 108(2) Transfer of Property Act
- 1882
- notifications under proviso to Section 15(1) do not cover unspecified assignment to private company.
