Supreme Court clarifies sub-letting under Delhi Rent Control Act: Puri Investments vs. Young Friends & Co. (23 February 2022)

Date of the Judgment: 23 February 2022
Citation: Civil Appeal No. 1609 of 2022 (Arising out of Special Leave Petition (C) No. 6516/2019)
Judges: Vineet Saran, J, Aniruddha Bose, J.
Can a tenant be evicted for allowing medical practitioners to use a portion of their rented premises? The Supreme Court of India recently addressed this question in a case concerning a shop in Connaught Place, Delhi. The Court examined whether the tenant had sub-let the premises by allowing doctors to operate their clinics there. The bench, composed of Justices Vineet Saran and Aniruddha Bose, delivered the judgment.

Case Background

The case involves a dispute between M/S Puri Investments, the landlord, and M/S Young Friends & Co., the tenant, concerning a shop in Connaught Place, Delhi. The landlord initiated eviction proceedings in 1974 under Section 14 of the Delhi Rent Control Act, 1958, alleging that the tenant had sub-let the premises without consent. The property was originally rented in 1936, and the appellant became the landlord in 1958 after purchasing the property. The core issue was whether the tenant had illegally sub-let parts of the premises to three medical practitioners and two other firms.

Timeline

Course of Proceedings

The Additional Rent Controller initially dismissed the eviction petition on 5th June 1997, finding no evidence of sub-letting. However, the Appellate Tribunal reversed this decision, ruling in favor of the landlord based on the sub-letting to three medical practitioners. The Delhi High Court then overturned the Appellate Tribunal’s order, stating that there was no exclusive possession granted to the medical practitioners and that the tenant maintained full control of the premises. The High Court restored the order of the Rent Controller. The Supreme Court heard the appeal against the High Court’s decision.

Legal Framework

The case revolves around Section 14 of the Delhi Rent Control Act, 1958, which deals with the grounds for eviction of a tenant. The specific ground in question is sub-letting without the landlord’s consent. The Supreme Court considered the interpretation of sub-letting and what constitutes exclusive possession in the context of this Act. The relevant portion of the Delhi Rent Control Act, 1958 was not quoted in the judgment.

Arguments

Appellant’s Arguments:

• The appellant argued that the Appellate Tribunal, as the final fact-finding forum, had correctly determined that sub-letting had occurred based on the evidence presented.
• It was contended that the High Court should not have interfered with the Appellate Tribunal’s order, as it was based on a proper appreciation of the facts and did not suffer from any perversity.
• The appellant emphasized that the tenant had allowed three medical practitioners to operate their clinics within the premises, which constituted sub-letting.
• The appellant relied on cases such as Flora Elias Nahoum & Ors. v. Idrish Ali Laskar [(2018) 2 SCC 485], Celina Coelho Pereira (Ms) & Ors. v. Ulhas Mahabaleshwar Kholkar & Ors. [(2010) 1 SCC 217], Bharat Sales Ltd. v. Life Insurance Corporation of India [(1998) 3 SCC 1], Smt. Rajbir Kaur & Anr. v. S Chokesiri & Co. [(1989) 1 SCC 19], and Chimajirao Kanhojirao Shirke & Anr. v. Oriental Fire & General Insurance Co. Ltd. [(2000) 6 SCC 622] to support their claim.

Respondent’s Arguments:

• The respondents argued that they had not sub-let the premises, as they maintained full control over the property.
• They contended that the medical practitioners were only permitted to use the space temporarily and that the tenant had not ceded exclusive possession.
• The respondents emphasized that the entry and exit to the premises remained under their control.
• The respondents cited cases such as Dipak Banerjee v. Lilabati Chakraborty [(1987) 4 SCC 161], Jagan Nath v. Chander Bhan & Ors. [(1988) 3 SCC 57], Shalimar Tar Products Ltd. v. H. C. Sharma & Ors. [(1988) 1 SCC 70], and Ram Murti Devi v. Pushpa Devi & Ors. [(2017) 15 SCC 230], including Flora Elias Nahoum (supra), to support their position.

Issues Framed by the Supreme Court

The Supreme Court framed the main issue as follows:

1. Whether the act of the respondents in inducting the three medical practitioners constituted sub-letting.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court considered the following authorities:

Cases:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on Ram Murti Devi v. Pushpa Devi & Ors. [(2017) 15 SCC 230]* to emphasize the burden of proof on the landlord to show exclusive possession and monetary consideration.
• The Court used Flora Elias Nahoum & Ors. v. Idrish Ali Laskar [(2018) 2 SCC 485]* to highlight that once the presence of a third party is admitted, the burden shifts to the tenant.
• The Court applied the principles from Bharat Sales Ltd. v. Life Insurance Corporation of India [(1998) 3 SCC 1]* to determine that sub-letting occurs when possession is given to a third party, and direct proof of monetary consideration is not always required.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the Appellate Tribunal had correctly applied the principles of law and had reached a conclusion based on the evidence presented. The Court noted that the High Court had overstepped its supervisory jurisdiction by re-appreciating the evidence, instead of focusing on whether the Appellate Tribunal’s decision was perverse. The Court emphasized that the tenant had not sufficiently demonstrated that they maintained control over the premises, given the exclusive use by the medical practitioners. The presence of separate cabins and telephone connections for the doctors also weighed heavily in the Court’s decision.

Logical Reasoning:

The Court considered the argument that the tenant had not ceded full control, but it was rejected because the medical practitioners had exclusive use of their portions during their practice hours. The Court emphasized that the Appellate Tribunal’s findings were based on a correct interpretation of the law and the evidence, and the High Court’s interference was not warranted. The Court noted that the High Court had engaged in a re-appreciation of evidence, which is not within the scope of its supervisory jurisdiction under Article 227 of the Constitution of India.

The Supreme Court stated, “There was no perversity in the order of the Appellate Tribunal on the basis of which the High Court could have interfered.” The Court also noted, “In our view, the High Court tested the legality of the order of the Tribunal through the lens of an appellate body and not as a supervisory Court in adjudicating the application under Article 227 of the Constitution of India. This is impermissible.” Furthermore, the Court observed, “The finding of the High Court that the appellate forum’s decision was perverse and the manner in which such finding was arrived at was itself perverse.”

The Court held that the High Court had overstepped its bounds by re-evaluating evidence and substituting its own opinion for that of the Appellate Tribunal. The Court concluded that the Appellate Tribunal’s decision was not perverse and should not have been disturbed by the High Court.

Key Takeaways

• Sub-letting occurs when a tenant gives up exclusive possession of a property, even if only for a limited time.
• The burden of proof is initially on the landlord to show exclusive possession by a third party and some form of monetary consideration.
• Once the presence of a third party is established, the burden shifts to the tenant to prove that no sub-letting has occurred.
• High Courts should not re-appreciate evidence in supervisory jurisdiction under Article 227 of the Constitution of India, unless the findings of the lower court are perverse.
• The presence of separate cabins, telephone connections, and fixed hours of operation for medical practitioners within a rented premises can be indicative of sub-letting.
• The judgment clarifies the extent of control a tenant must maintain over the premises to avoid being deemed to have sub-let it.

Directions

The Supreme Court directed the respondents to vacate the premises within 53 weeks from the date of the judgment. The respondents were also directed to pay occupation charges at the rate of rupees thirty thousand per month from 14.11.2018 until the premises are vacated. Additionally, the respondents were ordered to remit a sum of rupees one lac within one month and rupees twelve lacs within six months from the date of the judgment. The respondents were also required to give an undertaking that they would vacate the premises on or before 28.02.2023 and not create any third-party rights in the meantime.

Development of Law

The ratio decidendi of this case is that sub-letting occurs when a tenant gives up exclusive possession of a property, even if for a limited time, and that the High Court should not re-appreciate evidence under Article 227 of the Constitution of India. The Supreme Court upheld the principles laid down in previous cases, clarifying that the burden shifts to the tenant once the presence of a third party is established. This case reinforces the importance of maintaining the boundaries of supervisory jurisdiction and the need for fact-finding forums to be respected unless their findings are perverse.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the Appellate Tribunal’s order of eviction. The Court clarified the principles relating to sub-letting under the Delhi Rent Control Act, 1958, emphasizing that exclusive possession, even for a limited time, can constitute sub-letting. The decision underscores the importance of the burden of proof and the limitations of supervisory jurisdiction. The tenant was directed to vacate the premises and pay outstanding occupation charges.