Case Note & Summary
The case arose out of proceedings under the Delhi Rent Control Act, 1958, initiated by the respondent landlords, who were owners of premises in Connaught Circus, New Delhi, for recovery of possession from the appellant company, South Asia Industries Private Ltd., an assignee of the tenancy, and the original tenant, Allen Berry & Co. (Calcutta) Ltd. The premises had been let out to Allen Berry & Co., which transferred the lease to the appellant in 1959 without obtaining the landlords' consent. The landlords filed an application under Section 14(1) proviso (b) of the Act before the Rent Controller, alleging unauthorised assignment. While the application was pending, Allen Berry & Co. went into liquidation and was dissolved; its name was struck off. The Controller subsequently made an order for recovery of possession against the appellant alone. The appellant's appeals to the Rent Control Tribunal and the Punjab High Court were dismissed, leading to the present appeal by special leave before the Supreme Court. The central legal issues were: first, whether an order for recovery of possession under Section 14(1) proviso (b) could be made against an assignee of the tenancy after the original tenant company had ceased to exist; and second, whether a clause in the lease defining 'lessee' as including assignee amounted to consent to assignment. The appellant contended that the proviso lifted the ban on eviction only with respect to the tenant who had assigned the tenancy, and therefore no order could be made against the assignee, particularly after the assigning tenant was no longer a party. It also argued that the lease clause operated as consent. The landlords argued that the proviso set out grounds for eviction and that the Act contemplated orders against all persons in occupation, including assignees, so as to enable the landlord to recover possession without further litigation; they also argued that the lease clause did not constitute consent. The majority, speaking through Sarkar J. and Bachawat J., rejected the appellant's first contention. Sarkar J. held that the clauses of the proviso were not intended to indicate the persons against whom an order for recovery of possession could be made, but only the circumstances in which such an order may be made. The use of the definite article 'the' before 'tenant' merely emphasised that the assigning tenant must be the tenant of the landlord seeking eviction. The object of the proviso was to enable the landlord to recover possession in specified cases against all persons in occupation. Section 18 of the Act plainly implied that an order against a sub-tenant was contemplated, and Section 25 would make an order binding on assignees and sub-tenants, who were therefore entitled to be heard. Thus an order could be made against the assignee even after the original tenant had been dissolved. Bachawat J. concurred, noting that both the tenant and assignee were properly parties, and if the tenant company had been dissolved, proceedings could continue against the assignee alone. On the second issue, both majority judges held that the lease clause did not amount to consent; the consent contemplated by clause (b) must be a direct consent to a contemplated assignment to a particular assignee, and the clause did not satisfy this requirement; Regional Properties Ltd. v. Frankenchwerth was applied. Mudholkar J. dissented on the first issue, holding that the ban against eviction was lifted by the proviso only with respect to the tenant, and since the tenant company had been dissolved and could not be represented, there was a lacuna in the law that the court could not fill. The majority dismissed the appeal and upheld the eviction order.
Headnote
A) Rent Control and Eviction - Interpretation of Section 14(1) Proviso (b) - Order for recovery of possession can be made against assignee/sub-tenant, not just assigning tenant; assignee remains liable even after tenant company is dissolved - Delhi Rent Control Act, 1958, Section 14(1) proviso (b) read with Sections 18 and 25 - The landlords filed for possession after the tenant company assigned the lease without consent; while proceedings were pending, the tenant company dissolved and its name was struck off. The majority (Sarkar and Bachawat JJ.) held that the proviso sets out grounds for eviction, not persons against whom the order may be made, and the Act contemplates orders against persons in occupation, including assignees, to enable the landlord to recover possession without further trouble; Section 18 implies an order against a sub-tenant, and Section 25 makes the order binding on the assignee, who is entitled to be heard, so an order can be made against the assignee. Held that an order against the appellant alone after the tenant company dissolved was competent; appeal dismissed. (Paras 832-835, 839-840) B) Landlord and Tenant - Consent to Assignment - Clause in lease defining 'lessee' to include assignee does not amount to consent in writing to assignment; consent under proviso (b) must be direct consent to a contemplated assignment to a particular assignee or at least clear general consent - Delhi Rent Control Act, 1958, Section 14(1) proviso (b) - The lease included a clause that 'lessee' includes assignee; the appellant argued this operated as the landlord's consent. Majority held the clause did not lead to the conclusion of consent, especially as the consent contemplated is a direct consent to an assignment to a particular assignee; applied Regional Properties Ltd. v. Frankenchwerth. Held no consent, landlord entitled to possession. (Paras 835, 840)
Issue of Consideration
Whether an order for recovery of possession under Section 14(1) proviso (b) of the Delhi Rent Control Act, 1958 can be made against an assignee of the tenancy, particularly after the original tenant company has been dissolved and ceased to be a party; and whether a clause in the lease defining 'lessee' to include assignee constitutes consent in writing by the landlord to the assignment as required under the proviso.
Final Decision
Majority (Sarkar and Bachawat JJ.) dismissed the appeal and upheld the order for recovery of possession against the appellant assignee; it held that an order under Section 14(1) proviso (b) can be made against an assignee even after the original tenant company ceased to exist, and that the lease clause did not amount to consent. Mudholkar J. dissented on the first point, holding that the order could not be made against the assignee alone because the tenant must be a party to the proceedings.
Law Points
- Proviso to Section 14(1) lifts ban on eviction and sets out grounds
- not persons against whom order may be made
- order for recovery of possession can be made against assignee or sub-tenant
- assignee is entitled to be heard
- clause in lease including assignee in definition of lessee does not amount to consent
- consent under proviso (b) must be direct consent to contemplated assignment
- order can be made against assignee alone after original tenant company dissolved
