Anand Nivas (Private) Ltd vs Anandji Kalyanji Pedhi and Ors
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: supreme-court
Case Number: Civil Appeal No. 168 of 1963
Decision Date: 5 September 1963
Coram: A.K. Sarkar, M. Hidayatullah, J.C. Shah
In the case titled Anand Nivas (Private) Ltd versus Anandji Kalyanji Pedhi and others, the Supreme Court of India delivered its judgment on the fifth day of September 1963. The judgment was authored by Justice A K Sarkar, and the bench comprised Justices A K Sarkar, M Hidayatullah and J C Shah. The petitioner was Anand Nivas (Private) Ltd and the respondents were Anandji Kalyanji Pedhi together with other parties. The citation for this decision is reported in the 1965 All India Reporter at page 414 and also in the 1964 Supreme Court Reports (4) at page 892, with several subsequent citations listed in legal digests. The matters under consideration involved the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act of 1947, especially sections twelve, fourteen and fifteen, as amended by the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance of 1959, and the distinction between statutory and contractual tenants with regard to the right of sub‑letting.
The factual background, as set out in the headnote, recorded that the respondents had granted a five‑year lease to a person named Maneklal for the ground floor and the first floor of a building known as Anand Bhawan located in Ahmedabad. When that lease expired, the respondents instituted a suit against Maneklal seeking an order of ejectment and the recovery of arrears of rent; the suit concluded with a decree in favour of the respondents. Subsequent to the institution of that suit but prior to the promulgation of the 1959 amendment ordinance, Maneklal sublet a portion of the premises that he occupied to the appellant. During the execution of the decree, the respondents succeeded in obtaining possession of the first floor, yet the appellant, together with two other individuals who claimed to be sub‑lessees of Maneklal, obstructed their entry into the remaining portion of the premises, asserting that they had acquired tenancy rights over the ground floor upon determination of Maneklal’s tenancy.
The appellant then instituted a suit seeking a declaration that it was not bound to surrender possession of the premises it occupied pursuant to the decree against Maneklal, and also sought an injunction to restrain the respondents from enforcing that decree. Both the trial court and the subsequent appellate court declined to grant the interim injunction sought by the appellant. On appeal, the High Court dismissed the appellant’s case on the ground that a statutory tenant who remained in possession after the determination of a contractual tenancy was, as a matter of law, not competent to sublet the premises either wholly or partially, and that a person purporting to be a sub‑tenant of such a statutory tenant could not successfully rely on the protection afforded by section fourteen of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 as amended by the 1959 ordinance. The appellant thereafter obtained special leave to approach this Court.
The Supreme Court, delivering a majority opinion per Justices Hidayatullah and Shah with a dissenting note by Justice Sarkar, held that (i) Maneklal was a statutory tenant and, accordingly, he did not possess the legal authority to sublet the premises, and consequently the appellant could not acquire any tenancy rights on the determination of Maneklal’s interest under section fourteen of the amended Act.
In the judgment the Court explained that a statutory tenant did not possess any authority to sublet the premises, and consequently the appellant could not acquire any tenancy rights upon the determination of Maneklal’s entitlement under section 14 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 as amended in 1959. The Court further held that the appellant remained bound by the decree that the respondents had obtained against Maneklal and therefore could not rely on the Transfer of Property Act or the Indian Registration (Bombay Amendment) Act, 1939 to assert a contrary position. According to section 15(1) of the Bombay Act, every transfer or assignment of interest in the premises and every sub‑letting by a tenant is unlawful unless a specific contract provides otherwise. The Court clarified that this provision is applicable only to contractual tenants and does not extend to statutory tenants, because statutory tenants do not own any interest in the property. Sub‑letting, the Court observed, entails a transfer of the right to enjoy the property for a definite period against consideration, a concept that is unavailable to a statutory tenant whose right is merely personal and limited to resisting eviction. The Court noted that section 15(2) operates as an exception to section 15(1); it is confined to contractual tenancies, safeguards sub‑tenants of contractual tenants, and removes the prohibition on sub‑letting imposed by section 15(1) and by any contract, provided that the transferee is in possession of the premises at the commencement of the Ordinance. The Court defined a statutory tenant as a person who continues to occupy premises after the contractual tenancy has been determined or has expired. Such a person holds no estate or proprietary interest in the occupied premises; he enjoys only the statutory protection that prevents his removal so long as he pays the standard rent, observes any permitted increases, and complies with the other tenancy conditions. The Court emphasized that this personal right to remain in possession cannot be transferred or assigned and passes on death only in the manner prescribed by the Act. In contrast, the right of a contractual tenant constitutes an estate or interest in the premises, which, absent a contrary contract, is transferable and may be sub‑let. The Court referred to several authorities, including Roe v. Russel [1928] 2 K.B. 117, Lewis v. Reeves [1951] 2 All E.R. 855, Krishna Prasad Bose v. Sm. Sarajubala Dassi AIR 1961 Cal 505 and Solomon v. Orwell [1954] 1 All E.R. 874, to support this distinction. Justice Sarkar further observed that the term “tenant” in section 13(1)(c) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 embraces both contractual and statutory tenants, and that a statutory tenant possesses the power to sublet. The Court rejected the argument that a statutory tenant’s sub‑letting of a portion of the demised premises would constitute a surrender of possession or strip him of the Act’s protection. Finally, the Court indicated that section 13(1)(e) of the Bombay Act confirms the permissibility of lawful sub‑letting by a statutory tenant.
The Court observed that the language of the Bombay Rents, Hotel and Lodging House Rates Control Act allows a statutory tenant to lawfully sublet a portion of the premises, and that Section 15 of the same Act applies equally to contractual and statutory tenants. Consequently, the sub‑letting by Maneklal of part of the premises was held to be lawful. The Court further held that the appellant was not bound by the decree obtained by the respondents against Maneklal. Although under the general common‑law landlord‑tenant relationship a sub‑tenant is bound by a decree passed against the landlord’s tenant for possession, the presence of a statutory scheme such as the Bombay Act confers on a sub‑tenant a right to continue possession even after the statutory tenant’s tenancy is terminated. Hence, the appellant’s tenancy did not cease with the termination of Maneklal’s tenancy, and a decree obtained by the landlord against his tenant did not give the landlord a right to evict a sub‑tenant who is entitled to the protection of Section 14 of the Act. The Court also ruled that the respondents could not rely on Section 52 of the Transfer of Property Act to evict the appellant in the present case. The Court relied upon the authorities Baker v. Turner (1950) A.C. 401, Keeves v. Dean (1924) 1 K.B. 685, Roe v. Russel (1928) 2 K.B. 117, Campbell v. Lill (1926) 135 L.T. 26, Vevindramuthu Pillai v. Maya Nandan (1920) 1 L.R. 43 Mad. 696 and Yusuf v. Joytish Chandra Banerji (1932) 1 L.R. Cal. 739. The judgment concerned Civil Appeal No. 168 of 1963, filed by special leave against the decree of the Gujarat High Court dated 1 May 1962. Counsel for the appellant and counsel for the respondents were listed, and the opinion was delivered on 5 September 1963. Justice A. K. Sarkar expressed a dissenting view, while the majority opinion was authored by Justices M. Hidayatullah and J. C. Shah. The factual background recorded that the respondent landlords had demised certain premises to Maneklal Mafatlal for a term of five years beginning on 5 March 1950. After the lease term expired, Maneklal remained in possession under the protection afforded by the Bombay Rents and Lodging House Rates Control Act, 1947, which had been in force since 2 February 1948. On 27 April 1956 the landlords instituted an eviction suit against Maneklal for non‑payment of rent and obtained a decree on 22 June 1960. While that suit was pending, Maneklal sub‑let a portion of the demised premises to the appellant. In executing the decree, the landlords regained possession of a small portion that was actually occupied by Maneklal, whereas the remaining part, including the portion occupied by the appellant and other sub‑tenants, resisted eviction. The appellant subsequently instituted a suit against the landlords asserting that, under Section 14 of the Act, the determination of Maneklal’s interest by the decree made the appellant a direct tenant of the sub‑let portion and that the landlords should be restrained from evicting him.
The appellant instituted a suit against the landlords asserting that, pursuant to section 14 of the Bombay Rents and Lodging House Rates (Control) Act, the decree that determined the tenant’s interest in the premises also made the appellant the direct tenant of the portion that had been sub‑let to it; consequently the appellant sought a permanent injunction restraining the landlords from evicting it. In the course of that suit the appellant applied for an interim injunction, but the trial court rejected the application and the appellate court affirmed that rejection. The appellant then filed a revision before the High Court of Gujarat, which upheld the lower courts’ orders on the ground that, after the lease term had expired, the original tenant no longer possessed the power to sub‑let; therefore the appellant could not be characterised as a sub‑tenant and was not entitled to any injunction. The present appeal challenges the correctness of the High Court’s judgment. The protection that allowed the tenant to remain in possession after the expiry of his lease derived from sub‑section (1) of section 12 of the Act, which provides that a landlord shall not be entitled to recover possession of any premises so long as the tenant continues to pay rent and observes and performs the conditions of the tenancy specified in that section. The “tenant” contemplated in sub‑section (1) of section 12 is plainly a tenant whose lease term has come to an end. The Act, in several places, uses the word “tenant” to include such a person and it also defines “tenant” in section 5(11)(b) as “any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person …”. A person falling within this definition has been described as a statutory tenant, and the same term will be employed here for brevity. The landlords argue that, although section 12(1) prevents the landlord from evicting the tenant after the lease expires, the tenant consequently loses all interest in the demised premises and therefore cannot lawfully sub‑let them. While general landlord‑tenant law ordinarily denies a tenant any right to sub‑let after the lease term has ended, the statute in question alters that common‑law rule in several respects. Accordingly, the question of whether a statutory tenant may sub‑let cannot be decided by reference to the general law of landlord and tenant; the provisions of the Act must be examined to determine the effect on that power. In the Court’s view, such a power for a statutory tenant is contemplated by the Act, particularly by clause (e) of sub‑section (1) of section 13. That section enumerates the circumstances in which a landlord, notwithstanding the bar created by section 12(1), may obtain a decree of ejectment against the tenant; the relevant portion of the provision reads as follows: “(e) that the tenant has, since the coming into operation of this Act, unlawfully sub‑let the whole or part of the premises or assigned or transferred in any other manner his interest therein.”
The provision in section 13(1) states that, notwithstanding any other provision in the Act but subject to the provisions of section 15, a landlord is entitled to recover possession of any premises if the Court is satisfied, among other things, that the tenant has, since the coming into operation of this Act, unlawfully sub‑let the whole or part of the premises or has assigned or otherwise transferred his interest therein. The Court observed that this clause clearly contemplates a tenant who sub‑lets, and there is no dispute that the term “tenant” in that clause includes a person who sub‑lets. However, it was argued that the tenant referred to in sub‑clause (e) must be a tenant whose lease has not expired – that is, a contractual tenant – because there is no question as to a contractual tenant’s power to sub‑let. The argument relied on the premise that a statutory tenant, having no interest in the demised premises, cannot assign or transfer his interest and therefore the word “tenant” in clause (e) must be understood, with respect to assignment and transfer, as referring only to a contractual tenant. The argument further asserted that, because it would be unlikely for the word “tenant” to carry different meanings within the same clause, it must also refer solely to a contractual tenant when the clause speaks of unlawful sub‑letting.
The Court could not accept this contention. It noted that the definition clause in the Act gives the word “tenant” several distinct meanings, and all those meanings must be applied wherever the word occurs in the Act unless the context requires a different interpretation. Even if a statutory tenant were unable to assign or transfer his interest – a point on which the Court expressed no opinion – clause (e) of section 13(1) would not be addressing such a transfer. That does not preclude the definition of “tenant” as a statutory tenant from being used to determine the category of tenants contemplated by clause (e) when it states that a tenant who unlawfully sub‑lets may be liable to eviction. In every other sub‑clause of section 13(1), the term “tenant” clearly includes both statutory and contractual tenants, indicating that the section allows the word to be employed in more than one sense. The fact that another sub‑clause mentions only a contractual tenant assigning his interest does not create a context that prevents the word “tenant” in the sub‑letting context from being understood as a statutory tenant.
Another line of argument was based on the meaning of the word “sub‑let.” It was contended that “sub‑let” can only signify a transfer of an estate, and therefore the use of “sub‑let” in clause (e) implied that the legislature did not contemplate a statutory tenant, who would have no interest in the demised premises, as being capable of sub‑letting. The Court observed that no authority had been presented to support the proposition that letting or sub‑letting necessarily means a transfer of estate or property, and it found this line of reasoning unconvincing. The Court further indicated that decisions of English courts, which it would refer to later, have held that a statutory tenant may sub‑let. The Court therefore concluded that the term “sub‑let” in clause (e) does not automatically exclude a statutory tenant, because the Act creates rights in the tenant concerning the property, including the ability to maintain an action for trespass against anyone, even the landlord, who unlawfully deprives him of possession. Consequently, the sub‑letting contemplated in sub‑clause (e) may relate to the statutory right in the property, and it would be erroneous to assert that the right is purely personal and therefore incapable of being sub‑let.
In this case the Court observed that a statutory tenant who does not possess an estate or property in the demised premises is nevertheless able to sub‑let. When clause (e) of section 13(1) mentions a statutory tenant sub‑letting, it is not necessarily speaking of a transfer of property. The Act creates rights in the tenant concerning the premises; the tenant may bring an action for trespass against anyone, including the landlord, who deprives him of possession. Accordingly the tenant holds at least an interest that enables him to demand delivery of possession, not merely a personal right to damages. The sub‑letting referred to in clause (e) may therefore involve that statutory right in the property. It would be inaccurate to claim that the right is purely impersonal, because if it could be sub‑let, it cannot be purely personal. The Court referred to Baker v. Turner, where Lord Porter endorsed Scrutton LJ’s observation in Keeves v. Dean that Parliament calls a statutory tenant a tenant and that he possesses more than a mere personal right against his landlord. The Court then noted that the clause makes unlawful sub‑letting as well as unlawful assignment and transfer grounds for eviction, and that if the clause were to grant a statutory tenant a lawful power to sub‑let, it must also grant a lawful power to assign or transfer his tenancy interest. A contention was raised that because a statutory tenant lacks any estate or property in the premises, he cannot assign or transfer any interest, and therefore could not lawfully sub‑let. The Court rejected that reasoning, stating that the word “unlawfully” in the clause applies only to sub‑letting and not to assignment or transfer. Moreover, the Act does not define what would constitute an unlawful assignment or transfer of a tenant’s interest; it would have done so if it intended to govern such matters. The Act specifically distinguishes lawful and unlawful sub‑letting in sections 14 and 15, and does not provide a comparable definition for assignment or transfer. It also cannot be said that the unlawful assignment or transfer contemplated by clause (e) merely refers to a breach of the tenancy contract, because such a breach would already remove the protection against eviction under section 12(1). Consequently the Court found the landlords’ argument to be without basis. The Court added that even if the assumption were accepted that clause (e) contemplated unlawful assignment or transfer of a tenant’s interest in the demised premises, the reasoning would still not support the landlords’ position.
The Court observed that a legislative provision may expressly empower a statutory tenant to assign or transfer his interest in the demised premises, and therefore there is no inherent prohibition against such assignments. It pointed out that section 17 of the English Rent Act of 1957 itself provides for the transfer of a statutory tenancy, demonstrating that the law recognises the possibility of assigning statutory tenancies. Consequently, it could not be said that assignments or transfers of statutory tenancies are inconceivable. The Court further noted that no authority exists for the proposition that a statutory tenant lacks any interest in the demised premises; that proposition forms the basis of a theory the Court considered to be mistaken, namely that a statutory tenant is incapable of transferring his tenancy. While it is true that a statutory tenant does not hold an estate or proprietary interest in the premises, the Court stressed that this is a distinct point. Even without a legal estate, the statutory tenant nevertheless possesses an interest—a personal right to occupy the premises—and that interest may be capable of transfer. The Court rejected the argument that, assuming a statutory tenant could not transfer his interest, the term “tenant” in clause (e) must therefore be interpreted as referring only to a contractual tenant. Instead, the Court held that the word “tenant” must be given the meanings set out in its definition, which include statutory tenants, unless the context clearly indicates otherwise. No indication of such a limitation was found merely because another part of the clause refers to a contractual tenant. The Court then referred to the English case of Roe v. Russell, where the Court of Appeal held that section 4(1)(h) of the Rent and Mortgage Interest (Restrictions) Act, 1923— which provides that no ejectment order may be made unless the tenant, without the landlord’s consent, has assigned or sub‑let the whole dwelling‑house or part of it—demonstrated that a statutory tenant possessed the power to sub‑let part of the premises. In that case, the Court had found that the statutory tenant, although possessing no estate or proprietary interest and only a personal right of possession, nevertheless retained the authority to sub‑let. Subsequent English decisions have affirmed that Roe v. Russell correctly articulated the law, a view with which the Court fully agreed. The Court also cited the earlier decision of Campbell v. Lill, which reached the same conclusion as Roe v. Russell. In Campbell v. Lill, the argument that section 4(1)(h) of the 1923 Act applied solely to contractual tenants was expressly rejected on the ground that the word “tenant” throughout the section was intended to encompass both contractual and statutory tenants, and that to give it a restricted meaning in clause (h) would contravene all rules of statutory interpretation. The Court further observed that, although the English provision makes an unauthorized assignment by a tenant a ground for eviction, the term “tenant” in that provision was expressly understood to refer to a statutory tenant as well.
The Court noted that the statutory tenant was referred to simply as “a statutory tenant” and that the judgment did not state that because the tenant could assign, only a contractual tenant had been contemplated. The same line of argument had been advanced in the present case. The Court then observed that the similarity between section 13(1)(e) of the Bombay Act and section 4(1)(h) of the English Act was obvious. If the English provision was understood to permit a statutory tenant to sub‑let part of the premises, there was no reason for saying that section 13(1)(e) of the Bombay Act did not imply a power in a statutory tenant to sub‑let lawfully; the provision penalised only an unlawful sub‑letting. Accordingly, the Court found some support for the view it had taken. The learned judge of the High Court had not questioned the correctness of the decision in Roe v. Russel(1) but had tried to distinguish it on grounds earlier discussed by the Court. The Court held that the case was indistinguishable for the purpose of interpreting section 13(1)(e) of the Bombay Act. It further observed that if clause (e) of section 13(1) did not contemplate sub‑letting by a statutory tenant, as the landlords contended, the result would be highly anomalous. The Act therefore provided a context indicating that the word “tenant” in that clause was intended to include a statutory tenant. The Court explained that, assuming a statutory tenant actually sub‑let and both he and his sub‑tenant were satisfied with their bargain, the landlord could not rely on section 13(1)(e) to evict the tenant if the landlords’ contention were correct, because, ex hypothesi, the sub‑letting would be ineffective and therefore as if not made at all. This would mean that a contractual tenant who sub‑let would lose protection under section 12(1) while a statutory tenant who did the same would retain the Act’s protection, placing the statutory tenant in a superior position. The Court found such an interpretation unnatural and unacceptable. It was not argued that the anomalous result was intended; rather, it was submitted that even if “tenant” in clause (e) of section 13(1) were understood to refer only to a contractual tenant, no anomaly would arise because a statutory tenant who sub‑let would become liable to eviction under other provisions of the Act, though not under section 13(1)(e). The landlords further contended that a statutory tenant was entitled to protection only while he remained in possession and that by sub‑letting he would forfeit his right to protection under section 12(1). Consequently, they argued that a statutory tenant who sub‑let would not be in a better position than a contractual tenant who did the same.
In this case the Court observed that a contractual tenant who sub‑lets a portion of the premises does not lose the protection afforded by section 12(1). The Court further stated that it could not accept the argument that a statutory tenant who sub‑lets part of the premises thereby relinquishes possession to such an extent that the tenant’s claim to protection under section 12(1) is forfeited. It was emphasized that, for the facts before the Court, the tenant had retained possession of the majority of the premises and had not surrendered the whole premises except for the portion that was sub‑let. The Court then referred to the English decision in Roe v. Russel (1) where, at page 134, it was held that “when an individual is placed, as the statutory tenant undoubtedly was, in the position of having an exclusive personal possession of his premises, he is necessarily in a position in which he can place a third person in actual possession of a part of the premises, while retaining possession of the remainder, and that totally irrespective of whether his own right to exclusive undisturbed possession is purely personal or amounts to something of the nature of an estate or interest in the premises.” The Court also cited Campbell v. Lill (2), which explained that “the policy of the statute is to give protection only to persons in occupation within the meaning of the statute and it aimed at persons who had parted with possession and such parting is deemed to have taken place if the tenant assigns or sub‑lets the whole of the premises or sub‑lets part of them, the remainder being already sub‑let.” Applying these authorities, the Court noted that in the present matter the tenant had sub‑let only a portion of the premises and continued to occupy the remaining part. Consequently, the Court concluded that the tenant remained protected. Both cited cases demonstrated that, under the English Act, a statutory tenant is not deemed to have relinquished possession merely by sub‑letting part of the demised premises. The Court observed that the Bombay legislation provided even less justification for the view that a statutory tenant who sub‑lets a part of the premises loses possession of the whole. No provision in the Bombay Act required the statutory tenant to retain possession of the entire premises in order to enjoy protection. The Court further noted that the English Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, by subsection (1) of section 15, declared that “a tenant who by virtue of the provisions of this Act retains possession of any dwelling‑house… shall, so long as he retains possession, observe and be entitled to the benefit of all the terms and conditions of the original contract of tenancy.” Despite this, English jurisprudence held that parting with a portion of the premises by sub‑letting does not deprive a tenant of the statutory protection. The Court found no express provision in the Bombay Act that linked a statutory tenant’s entitlement to protection with the requirement of having possession of the entire premises. Accordingly, the Court rejected the proposition that sub‑letting a part of the demised premises places a statutory tenant out of possession to the extent that the protection of the Act ceases, as such an interpretation would create an internal conflict within the Act and was deemed unacceptable.
The Court observed that interpreting the statute to mean that a tenant who sub‑lets a portion of the premises thereby loses possession and consequently forfeits the protection of the Act would create a direct conflict between different provisions of the same legislation. Such a result would be wholly unacceptable. The Court found no justification for the proposition that a statutory tenant’s act of sub‑letting a part of the demised premises amounts to a relinquishment of possession that would strip him of the Act’s safeguards. The provision in section 13(1)(e) was read as plainly granting a statutory tenant the power to sub‑let. The Court then proceeded to set out the wording of section 14, which forms the basis of the appellant’s claim. Section 14 states: “Where the interest of a tenant of any premises is determined for any reason, any sub‑tenant to whom the premises or any part thereof have been lawfully sub‑let before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 shall, subject to the provisions of this Act, be deemed to become the tenant of the landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued.” The Court noted that it was not in dispute that the sub‑letting occurred prior to the date specified in the section. The appellant’s contention that the term “interest” in the section limited its operation to sub‑lettings by contractual tenants was dismissed for the reasons earlier articulated. The Court reiterated that a statutory tenant also possesses an interest in the premises, and when the section refers to the interest of a tenant being determined, it includes situations where a statutory tenant’s interest is determined by a decree or by the tenant surrendering the Act’s protection. In the present case, the tenant’s interest was determined by a decree passed against him. The Court further noted that the Ordinance mentioned in section 14 came into force on 21 May 1959. Consequently, the appellant became a sub‑tenant before the date mentioned in section 14, and the interest of the tenant who had sub‑let had already been determined. However, the appellant still needed to establish that the premises had been lawfully sub‑let to him. The only provision in the Act that declares a sub‑letting unlawful is section 15, which provides: “(1) Notwithstanding anything contained in any law, but subject to any contract to the contrary, it shall not be lawful after the coming into operation of this Act for any tenant to sub‑let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein: Provided that the State Government may, by notification in the Official Gazette, permit in any area the transfer of interest in premises held under such leases or class of leases and to …” The Court therefore concluded that the appellant must demonstrate that the sub‑letting was lawful under the terms of section 15.
The provision stated that, to the extent specified in a notification issued by the State Government, a tenant could be permitted to transfer his interest in premises. Sub‑section (2) added that, notwithstanding any judgment, decree, order of a court or any contract, the prohibition on sub‑letting, assignment or transfer of premises contained in sub‑section (1) or in any contract would not affect those sub‑lessees, assignees or transferees who had taken possession in spite of the prohibition before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 and who continued in possession at the moment of that commencement; such a prohibition would be treated as never having operated. It was submitted that the section applied only to tenancies created by contract. The argument advanced was that sub‑section (1) rendered sub‑letting by contractual tenants unlawful after the date specified, except where the lease contract expressly allowed it, and that sub‑section (2) rescued from that illegality certain categories of sub‑lettings made by tenants. It was not contested that, if the section were to apply to sub‑lettings by statutory tenants, the present sub‑letting to the appellant would be protected by sub‑section (2). Further submissions pointed out that the words “but subject to any contract to the contrary” in sub‑section (1) of section 15 indicated that the legislature intended the provision to address only sub‑lettings by contractual tenants. The Court observed that even if those words were applicable solely when a contractual tenant sub‑lets—a view that the Court itself entertained with some doubt—such an interpretation would not necessarily limit the reference to a contractual tenant alone. Those words would only become relevant where the lease contained a covenant permitting sub‑letting. Consider a contractual tenant whose lease lacks any covenant allowing sub‑letting; in that situation the words would have no application even though the tenant remains a contractual tenant. Consequently, where no contractual provision exists regarding the grant of sub‑leases, the section could still be applicable, and there would be no justification for holding that the provision concerns only contractual tenants. In such a circumstance the section would have to be interpreted without reference to the disputed words, and it would then inevitably apply to a statutory tenant who, as previously noted, possesses the power to sub‑let. Therefore it could not be said that section 15 deals exclusively with contractual tenants. The Court then considered the opposite scenario: if section 15 did not apply to statutory tenants, it would imply that a statutory tenant could not sub‑let at all. However, if, apart from section 15, the proper construction of the Act, as earlier articulated by the Court, is that a statutory tenant does have the authority to sub‑let, the Court found no reason to regard section 15 as providing a sufficiently strong ground to override all the considerations supporting that view. The only conclusion that would follow if section 15 were confined to contractual tenants would be that a sub‑letting by a tenant would not have become unlawful by virtue of that section. The Court therefore held that the language and purpose of the provision did not render the appellant’s sub‑letting unlawful.
In this case the Court observed that if the earlier reasoning concerning section 15 were accepted, the appellant’s claim under section 14 would become unquestionable. However, irrespective of how section 15 is interpreted, the Court found no basis to conclude that the provision renders the sub‑letting to the appellant unlawful. The Court further noted that it was unnecessary to examine any hypothetical situation in which the Act might deem a sub‑letting unlawful for reasons not mentioned in the statute, because no party had alleged that the present sub‑letting was unlawful on any such ground. Consequently, the Court held that the sub‑letting to the appellant must be regarded as lawful. One additional issue required consideration. It was undisputed that the sub‑letting to the appellant occurred after the landlords had instituted suit against the tenant, which resulted in a decree for ejectment. The landlords contended that, by virtue of section 52 of the Transfer of Property Act, the appellant was bound by that decree. The appellant, on the other hand, argued that section 52 had been amended for Bombay by the Bombay Act 14 of 1939, and that the amended provision required the giving of notice before any sub‑letting could take effect, invoking the principle of lis pendens contained in the section. The Court found it unnecessary to adjudicate this contention, stating that even the unamended section 52 of the Transfer of Property Act does not affect the sub‑letting in the present circumstances. The Court first pointed out that section 52 does not render any transfer of property illegal; therefore, it cannot support a conclusion that the sub‑letting to the appellant, even if it were characterized as a transfer of property, was unlawful or invalid. For support of this proposition, the Court referred to the authority in Dramuthu Pillai v. Maya Nandan. The Court explained that section 52 merely provides that, while litigation concerning a property is pending, the property cannot be transferred in a manner that would affect the rights of any party under a decree that may be passed in the suit. The sole effect of the provision is to protect the rights of the decree‑holder from being impaired by such a transfer. The Court then explained that the rights of a landlord who obtains a decree for possession of property against his tenant are those set out in Order 21, Rule 35 of the Code, namely, the right to obtain delivery of the premises and, if necessary, to remove any person bound by the decree who refuses to vacate. It is acknowledged that, under the general law of landlord and tenant, a sub‑tenant is a person bound by the decree obtained by the landlord against the tenant for possession, even though the sub‑tenant was not a party to the suit.
In reasoning about the status of a sub‑tenant, the Court explained that the sub‑tenant’s right to remain in possession ceases when the tenancy of the principal tenant is terminated, as demonstrated in Yusuf v. Iyotish Chandra Banerji. However, the Court observed that when a statute such as the Bombay Rents, Hotel and Lodging House Rates Control Act 57 of 1947 – hereinafter referred to as “the Act” – expressly grants a sub‑tenant the right to continue in possession even after the superior tenant’s tenancy ends, the sub‑tenant is not bound by a decree obtained against the superior tenant. Under section 14 of the Act, a sub‑tenant to whom the premises were lawfully sub‑let acquires the status of a person protected by that provision. Consequently, a decree for possession granted to a landlord against his tenant does not empower the landlord to evict a sub‑tenant who is entitled to the benefit of section 14. The Court further held that section 52 could not be invoked by the landlords in the present dispute to evict the appellant, and for these reasons the appeal was allowed. The Court then turned to the factual matrix of the case. The trustees of the trust known as “Anandji Kalyanji Pedhi” granted a lease of the ground floor and the first floor of a building named “Anand Bhavan” in Ahmedabad to a person identified as Maneklal. The lease term was five years commencing on 5 March 1950, and the monthly rent stipulated was Rs 2,000. After the lease expired, the trustees instituted a suit in the Court of Small Causes, which is the competent forum under section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, seeking an ejectment decree and recovery of arrears of rent. The decree was rendered on 22 June 1960. In executing that decree, the trustees succeeded in taking possession of the first floor but encountered resistance concerning the ground floor, where a private limited company named “Anand Nivas Private Ltd.” together with two other parties claimed to be sub‑lessees of Maneklal and asserted that they had acquired tenancy rights over the ground floor upon the termination of Maneklal’s tenancy. Anand Nivas Private Ltd., hereafter referred to as “the Company,” filed Suit No. 2814 in the Court of Small Causes at Ahmedabad, seeking a declaration that it was not bound to surrender possession of the premises it occupied during execution of the decree against Maneklal, and also seeking an injunction restraining the trustees from enforcing that decree. The Company’s application for an injunction was dismissed by the Court of First Instance. The Company appealed that dismissal, but the District Judge of Ahmedabad refused to grant an interim injunction that would have restrained the trustees from executing the decree while the appeal was pending. The trustees then approached the Gujarat High Court, invoking its revisional jurisdiction through a petition challenging the District Judge’s order. At the hearing before the High Court, the petition was, by order of the Court, converted into an appeal from the order refusing to grant an injunction. The High Court dismissed the appeal, holding that a “statutory tenant” who remains in possession after the determination of his contractual tenancy is not legally competent to sub‑let the premises, either wholly or partially, and that a person claiming to be a sub‑tenant of such a statutory tenant could not successfully rely on the protection of section 14 of the Act as amended by Ordinance III of 1959 or the Bombay Act 49 of 1959. With special leave, the Company appealed to this Court, asserting that it had acquired tenant rights by virtue of section 14 of the Act, a claim premised on two grounds: first, that the tenancy contract in favour of the tenant expressly authorised sub‑letting; and second, that the tenant had lawfully sub‑let the premises, thereby enabling the Company to acquire the rights of a tenant upon the termination of the tenant’s interest.
By order of the Court, the petition was transformed into an appeal against the order that refused to grant an injunction. The High Court dismissed that appeal, holding that a “statutory tenant” who remained in possession after his contractual tenancy had been determined was, in law, not competent to sublet the premises either wholly or partly. Consequently, a person claiming to be a sub‑tenant of such a statutory tenant could not successfully invoke the protection of section 14 of the Act, as amended by Ordinance III of 1959, or Bombay Act 49 of 1959. With special leave, the Company appealed this judgment to the Supreme Court. The Company pleaded that it had acquired the rights of a tenant under section 14 of the Act and therefore sought protection of its possession. It supported this plea on two grounds. First, it argued that the tenancy agreement in favour of the original tenant expressly authorized that tenant to sublet, and that the tenant had lawfully sublet the premises; consequently, when the tenant’s interest was determined, the Company succeeded to the tenant’s rights under the landlord. Second, it contended that, irrespective of the first ground, the determination of the statutory tenancy of the original tenant by virtue of Ordinance III of 1959, which retrospectively amended section 15 of the Act, caused the Company to acquire the landlord‑tenant rights. The High Court, however, held that clause (i) of the lease restricted “the ordinary rights of the tenant to sublet” under section 108(j) of the Transfer of Property Act and could not be read as conferring any sub‑letting right on the tenant, because the clause merely postulated the existence of a right to sublet and then imposed restrictions on exercising that right. The question of whether the lease covenant authorised or recognised the power to sublet before the lease term expired was held unnecessary to determine in this appeal. It was agreed that after the lease term expired, no extension or new lease was granted to the tenant, and the tenant could rely only on the rights granted or recognised by the Act. Sub‑section (1) of section 12 of the Act provides that a landlord is not entitled to recover possession of any premises so long as the tenant pays, or is ready and willing to pay, the standard rent and any permitted increases, and observes and performs the other conditions of the tenancy that are consistent with the provisions of the Act. For the protection of tenants, this clause imposes a prohibition on the landlord from recovering possession of the demised premises while the tenant continues to pay the standard rent and any permitted increases and complies with the other tenancy conditions consistent with the Act. A person remaining in occupation of the premises let to him
After the lease term has ended or the tenancy has expired, the occupant is commonly, though not precisely, described in law as a “statutory tenant.” Such an individual is not a tenant in the true sense because he does not possess any estate or legal interest in the premises he occupies. The only protection afforded to him is statutory: he may not be removed as long as he continues to pay the standard rent together with any permitted increases and complies with the other conditions of the tenancy. This protection creates a personal right to remain in possession after the contractual tenancy has terminated; the right is not transferable or assignable and it passes only upon death in the manner prescribed by the statute.
In contrast, a lessee who holds a lease from a landlord enjoys an estate or interest in the premises. Absent an agreement to the contrary, that interest is transferable and the lessee is generally entitled to sublet the premises. However, once the lease terminates, unless the tenant acquires the status of a holding‑over tenant by the landlord’s acceptance of rent or by the landlord’s assent to the tenant’s continued possession, all terms and conditions of the original lease are extinguished. Consequently, the person who remains in possession thereafter is governed solely by the statutory provisions.
Section 12(1) of the relevant Act merely acknowledges the statutory tenant’s right to remain in possession while he pays, or is ready and willing to pay, the standard rent and any permitted increases and observes the other tenancy conditions. The section does not confer any right to enforce the original lease’s terms and conditions after the lease has been determined.
The Court considered the interpretation of Section 12(1) and noted that the authorities cited by the appellant, namely the decisions of the King’s Bench Division in Roe v. Russell and Lewis v. Reeves, offered little assistance. Those English cases interpreted provisions of the Increase of Rent and Mortgage Interest (Restriction) Act, 1920, especially Section 15(1), rather than the Bombay Act of 1947. In Roe v. Russell, the issue was whether a statutory tenant of a dwelling‑house, whose original tenancy did not prohibit subletting, could sublet part of the house. The Court held that a statutory tenant could claim a right to sublet a portion of the premises provided that the remainder had not already been sublet. A similar principle was applied in Lewis v. Reeves, where the widow of a statutory tenant, while remaining in possession, sublet part of the premises she occupied. The decision held that on the widow’s death, the sub‑tenant became a direct tenant of the landlord because the statutory tenant had acquired the entire interest in the premises.
The Court observed that the right claimed by the Company under section twelve, clause one, sub‑clause (g) of the Rent Act, citation ten and eleven George V chapter seventeen, was in fact lawful. Nevertheless, the cases on which the Company relied were decided on the construction of section fifteen, paragraph one, of the 1920 Act. In that provision, insofar as it is relevant, the statute provides that a tenant who, by virtue of the provisions of the Act, continues to retain possession of any dwelling‑house to which the Act applies shall, for as long as he retains possession, be bound by and entitled to the benefit of all the terms and conditions of the original tenancy agreement, to the extent that those terms are consistent with the provisions of the Act …
The Court then compared the language of section fifteen, paragraph one, of the Increase of Rent and Mortgage Interest (Restriction) Act, 1920, with sub‑section one of section twelve of the Bombay Rent Act, fifty‑seven of 1947. The Court noted that the English statute expressly grants a tenant who retains possession, and who is protected by the Act, the entitlement, for as long as he remains in possession, to enjoy all the terms and conditions of the original tenancy agreement so far as those terms do not conflict with the Act. By contrast, the Bombay Act merely furnishes a statutory tenant with conditional protection and does not confer upon him a right to enforce any of the original tenancy terms. The Court emphasized that this difference in wording between the two enactments is critical to the question before it.
Consequently, the Court was unable to accept the proposition that, because the tenant was entitled under the lease to sublet the premises, he could rely upon section twelve, paragraph one, of the Bombay Act to exercise that sub‑letting right after he became a statutory tenant. The Court therefore held that the first ground on which the Company based its claim must fail. The citation to the 1951 case from the All England Law Reports was noted in this context.
The Court also rejected the Company’s second ground, namely its contention that it was a lawful tenant of the trustees. The Court observed that, during the High Court proceedings, both parties agreed that the tenant remained in possession of the leased premises after 5 March 1955 not because of any renewal or fresh grant of tenancy, but solely by virtue of the protection afforded to him by the Act, which designated him as a statutory tenant. The Court explained that, as a statutory tenant, the individual possessed no estate or interest that could be assigned or transferred, and his statutory right to occupy could not be lawfully sublet. The Court reasoned that lawful sub‑letting requires both a right to enjoy the property and a right to transfer that enjoyment to another person; where no such right exists in the premises, sub‑letting cannot occur, particularly because a statutory tenancy terminates when the tenant surrenders possession.
Finally, the Court considered the Company’s reliance on the decision of the Calcutta High Court in Krishna Prosad Bose v. Sm. Sarajubala Dassi. The Court held that this precedent did not support the Company’s argument that a statutory tenant is entitled to sublet the premises he occupies. The Court therefore concluded that the Company’s reliance on that decision was misplaced, and the argument could not be sustained.
In this matter the Premises Rent Control (Temporary Provisions) Act, 1950, was held to recognise a statutory tenant’s ability to sublet the premises he occupies. Section 12 (1) of the West Bengal Act was quoted in full. That provision states that, notwithstanding any contrary rule in any other statute or law, no court may pass an order or decree for the recovery of possession of any premises in favour of a landlord against a tenant, even where the tenant’s lease has expired. The proviso to that subsection adds an exception: the restriction does not apply to a suit seeking a decree for possession against a tenant who has sublet the whole premises or a major portion of them for a period exceeding seven consecutive months. The proviso further provides that, if such a tenant, who has sublet the major portion, agrees to retain possession of the remaining portion as a tenant and pays rent fixed by the court, then the court may pass a decree of ejectment only against the sublet portion. In that event the court is also required to fix a proportionate fair rent for the part of the premises that the tenant continues to occupy. This mechanism therefore protects the statutory tenant’s right to remain in the portion he does not sublet while allowing the landlord to recover the portion that has been sublet for the specified duration.
The judgment also referred to sub‑section (2) of section 13, which deals with the status of a sub‑lessee where the original tenant is a first‑degree tenant. It provides that, insofar as it is material, if any premises or any part thereof has been sublet by a first‑degree tenant and that tenant’s tenancy is lawfully terminated by a method other than a decree obtained by the landlord on any ground specified in clause (h) of the proviso to sub‑section (1) of section 12, then the sub‑lessee is to be deemed a tenant of the premises (or part thereof) directly under the landlord. The sub‑lessee holds the premises in the same capacity as the original tenant whose tenancy was determined. The Court cited the decision in Krishna Prosad Bose v. Sm. Sarajubala Dassi, A.I.R. 1961 Cal. 505, where Justice Sinha enumerated several principles governing statutory tenants. The seventh principle, which was highlighted as material, stated that although a statutory tenant does not possess an estate and his right is personal, he may sublet if the right to sublet can be derived from the Rent Act, either expressly or by necessary implication. The sub‑tenant, however, acquires only those rights that the statute confers. Justice Sinha observed that section 13 (2) clearly recognises the statutory tenant’s right to sublet and also provides for the sub‑tenant to become a direct tenant of the owner in certain circumstances. The present case did not require the Court to decide whether the statutory provisions had been correctly interpreted by the lower court. It was sufficient, the Court noted, to observe that the earlier decision in Krishna Prosad Bose’s case held that the statute recognises the statutory tenant’s right to sublet, thereby affording him protection. Nevertheless, counsel argued that Ordinance III of 1959 had retrospectively invested a statutory tenant with a right to sublet from the commencement of the parent Act, raising the issue of whether that ordinance altered the statutory position.
In this case, the Court observed that the right for a statutory tenant to sublet had been given retrospectively from the commencement of the parent Act. It was uncontested that the tenant attempted to sublet part of the premises he occupied after the trustees had filed an ejectment suit against him, and that this attempt occurred before Ordinance III of 1959 was promulgated. The Company sought to rely on the second ground, invoking the Ordinance, to claim the sub‑tenant’s right, and the Court noted that it was necessary to examine the statutory provisions as they stood after amendment by the Ordinance. Section 5(11), as amended, defines the term “tenant” to mean “any person by whom or on whose account rent is payable for any premises and includes— (a) such sub‑tenants and other persons who have derived title under a tenant before the commencement of the Bombay Rents Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959; (a) any person to whom interest in premises has been transferred under the proviso to sub‑section (1) of section 15; (b) any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or Ms predecessor who has derived title before the commencement of the Bombay Rents Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959; (c) any member of the tenant’s family residing with him at the time of his death as may be decided in default of agreement by the Court” (as reported in A.I.R. 1961 Cal. 505). The Court explained that the word “tenant” appears in different clauses with varying meanings, covering contractual tenants, statutory tenants, or both. In the principal definition the term refers only to a contractual tenant because rent is payable by a contractual tenant and not by a statutory tenant. Under clause (a), sub‑tenants and other persons who obtained title from a tenant before the Ordinance came into force are treated as tenants; these include sub‑lessees, transferees or assignees of contractual tenants. The same clause also brings within the definition persons who received an interest in premises pursuant to a notification issued by the State Government permitting transfer of such interest in any designated area; such persons are likewise transferees of contractual tenants. Clause (b) embraces a tenant who holds over as well as a statutory tenant, covering any person who remains in occupation, with or without the landlord’s assent, when the premises were originally let to him or to his predecessor before the Ordinance commenced. Clause (c) adds family members of either a statutory or contractual tenant who were residing with the tenant at the time of his death, subject to a court’s decision in the absence of an agreement. The Court concluded that because the term “tenant” carries a plurality of meanings, its precise sense in each provision must be determined by looking at the context and the overall scheme of the Act.
The Court explained that the meaning of the word “tenant” must be read in light of the language of the provision and the object that the provision is intended to achieve. In subsection (1) of section 12, which imposes a prohibition against a landlord recovering possession of premises, the term “tenant” must necessarily refer to a statutory tenant and not to a contractual tenant, because until a contractual tenancy is terminated the landlord does not have any right to recover possession. Section 13(1)(e), to the extent that it is relevant, provides that: “Notwithstanding anything contained in this Act, but subject to the provisions of section 15, a landlord shall be entitled to recover possession of any premises if the Court is satisfied—(e) that the tenant has, since the coming into operation of this Act, unlawfully sublet the whole or part of the premises or assigned or transferred in any other manner his interest therein.” In this clause the expression “tenant” plainly denotes a contractual tenant, for it authorises a landlord to recover possession of premises when the tenant has unlawfully assigned, transferred his interest in the premises, or unlawfully sublet the premises. A statutory tenant, by contrast, possesses no interest in the premises he occupies and consequently has no estate that he can assign or transfer. To interpret the clause so that an assignment or transfer of any premises that attracts liability to eviction would apply only to a contractual tenancy, while subletting that invites the same penalty could apply to both contractual and statutory tenancies, would require the Legislature to have intended two different meanings for the word “tenant” in clause (e) of section 13(1). By clause (e) the Legislature therefore recognised the right of a landlord to recover possession when the tenant, without contractual authority, sublets in whole or in part the premises, or assigns or transfers in any other manner his interest therein. The adverb “unlawfully” qualifies all three verbs—sublet, assigned and transferred. This qualification is evident from the terms of section 15(1), which prohibits, subject to any contract to the contrary, the subletting of premises or the assignment or transfer of interest therein. Section 15(1) provides: “Notwithstanding anything contained in any law, but subject to any contract to the contrary, it shall not be lawful after the coming into operation of this Act for any tenant to sub‑let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein: Provided that the State Government may, by notification in the Official Gazette, permit in any area the transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification.” Accordingly, by clause (1) of section 15 all transfers and assignments of interest in the premises, and all subletting of premises by tenants, are unlawful unless a contract to the contrary exists. The clause, however, preserves the effect of contracts to the contrary, and such contracts can operate only in accordance with the saving provision contained in the section.
It was observed that section 15(1) of the Act was intended to operate only in favour of contractual tenants because a statutory tenant possesses no estate in the premises, making it unnecessary to prohibit the transfer of a non‑existent interest. Moreover, the act of letting presupposes a transfer of the right to enjoy the property for a specified period, either expressly or impliedly, in consideration of a price, whereas a statutory tenant merely holds a personal right to resist eviction and therefore cannot lawfully let the premises. Consequently, the prohibition contained in section 15(1) applies solely to contractual tenants, and the proviso to that clause further indicates that any exemption that the Provincial Government may grant is limited to leases or a class of leases.
Sub‑section (2) of the same provision was identified as an exception to sub‑section (1). It provides that, notwithstanding any judgment, decree, order of a Court or any contract, the bar on sub‑letting, assignment or transfer of premises set out in sub‑section (1) shall have no effect with respect to sub‑lessees, assignees or transferees who had taken possession before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959 and who remain in possession at that commencement, and such transactions shall be deemed never to have been barred. Because the principal clause applies only to contractual tenancies, the exception in sub‑section (2) cannot extend to statutory tenancies. Its practical effect is to validate assignments, transfers and sub‑tenancies created by contractual tenants even where the original tenancy contract attempted to forbid such arrangements, and this validation operates retrospectively, protecting sub‑tenants of contractual tenants provided the transferee was in possession when the Ordinance came into force.
The contention that limiting the operation of section 13(1)(e) to contractual tenants would consequently protect sub‑letting by statutory tenants was rejected as untenable. Sections 12 and 13(1) must be read together, and clause (e) of section 13(1) expressly entitles a landlord to obtain possession where a contractual tenant has sub‑let the premises or assigned or transferred his interest during the tenancy. If a statutory tenant were to purportedly sub‑let, assign or transfer his interest and thereby part with possession, he would immediately forfeit the protection afforded to him under section 12(1). In view of this clarified legal position, the claim founded on section 14 was then examined.
Section 14 provides that when the interest of any tenant is determined for any reason, any sub‑tenant to whom the premises, or any part thereof, had been lawfully sub‑let before the commencement of the 1959 Ordinance shall, subject to the provisions of the Act, be deemed to become the landlord’s tenant on the same terms and conditions as if the original tenancy had continued. The language of the section unmistakably indicates that it applies only to contractual tenancies, as it first refers to the “interest of the tenant” and then invests the sub‑tenant, who was lawfully sub‑let before the Ordinance, with the rights of a tenant of the landlord. Such lawful sub‑letting must either be permitted by the original contract or be validated by sub‑section (2) of section 15. The purpose of section 14 is to safeguard the position of sub‑tenants, and the forfeiture of the tenant’s rights under the contingencies enumerated in section 13 does not, in every case, extinguish the protection owed to the sub‑tenant.
The Court noted that section 14 of the Act states that “of this Act, be deemed to become the tenant of the landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued.” The provision clearly indicates that it applies only to contractual tenancies. First, the section refers to the interest of the tenant and to the determination of that interest. It then invests, in a sub‑tenant to whom the premises have been lawfully sublet before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959, the rights of a tenant of the landlord on exactly the same terms and conditions as would have applied if the original tenancy had continued. For a subletting to be lawful, it must be permitted by the original contract or validated by sub‑section (2) of section 15. The object of section 14 is to protect sub‑tenants. Consequently, even if the tenant loses his rights under the contingencies listed in section 13, the protection afforded to sub‑tenants is not automatically destroyed. When a head tenancy is determined, the sub‑tenant’s protection against his own landlord (the head tenant) becomes a protection against the head landlord, provided that the original subletting was lawful. A statutory tenant, as previously observed, is a person who, after the determination of his contractual right, may remain in occupation so long as he complies with the tenancy conditions and pays the standard rent and any permitted increase. The statutory tenant’s personal right of occupation cannot be transferred or assigned, and because he holds no estate in the property, there is no basis for a sub‑letting to operate. If one were to assume that a statutory tenant possessed a right to sublet, absurd results would follow. By parting with possession, the statutory tenant would forfeit all rights in the premises, yet, under a mis‑reading of section 14 suggested by the Company, he could still create an independent interest in a person he inducts into the premises, even though he himself had no interest and the statutory protection would be extinguished by the transfer of possession. Moreover, although a sub‑tenant of a statutory tenant may not be protected because the prohibition on such subletting is not effectively removed by section 15(2), that sub‑tenant would still be able to claim the rights of a tenant under section 14 upon determination of the head tenancy. Therefore, it is clear that a sub‑lessee deriving his tenancy from a statutory tenant under the Act acquires no tenancy right in the premises he occupies. Even under the Increase of Rent and Mortgage Interest (Restriction) Act, 1920, protection was granted to the sub‑tenant of a portion of premises occupied by a statutory tenant.
When a statutory tenant gave up possession of the whole premises that he occupied, whether by subletting the entire property or by subletting part of it and surrendering the remainder, any person who claimed a right to occupy the premises on the basis of the statutory tenant’s tenancy did not receive any protection. The principle was illustrated in the case of Solomon v. Orwell. In that case a statutory tenant of a dwelling‑house had sublet a portion of the house and then vacated the premises she herself occupied by removing all of her belongings. The landlord subsequently instituted a suit against the sub‑tenant who remained in possession of the part that had been sublet. The sub‑tenant contended that, because the statutory tenancy had been surrendered, she was entitled to the same rights against the landlord that the statutory tenant had enjoyed, and therefore her tenancy could not be terminated merely by serving a notice to quit. The Court rejected this contention, holding that a statutory tenant possessed no interest that could exist in law as an estate; the tenant only held a statutory right of occupation, which could not be surrendered under common‑law principles. Consequently, when the statutory tenant vacated the premises, the sub‑tenant’s right of occupation terminated automatically.
Applying this reasoning, the Court concluded that, prior to the filing of the present suit, the statutory tenant identified as Manekal had no authority to sublet the premises, and consequently the Company could not acquire any tenant’s right upon the determination of the statutory tenant’s right under section 14 of the Act. The Court then turned to a further argument that had been raised. It was asserted, on the assumption that a statutory tenant possessed an interest in the occupied property and that such an interest could be transferred by subletting, that the doctrine of “ut lite pendente nihil innovetur” articulated in section 52 of the Transfer of Property Act did not apply to the Company, and that the Company should not be bound by the decree obtained against the tenant. To support this plea, reliance was placed upon the Transfer of Property Act and upon the Indian Registration (Bombay Amendment) Act, 1939. Under that Act, the rule of lis pendens applies only when a notice of the pendency of a suit, in which any right to immovable property is directly and specifically in question, is registered under section 18 of the Registration Act. The provision is somewhat clumsily worded because it applies not to court proceedings themselves but to notices concerning suits or proceedings. The drafting purpose appears to be that registration of a notice is required only where the suit concerns property situated within the territorial area to which the Act is extended. A suit concerning immovable property may, in certain circumstances, be heard in a court other than the court having territorial jurisdiction over the property, for example under clause 12 of the Letters Patent and the relevant provisions of the Code of Civil Procedure.
In this case the Court observed that the Legislature had intended the Act to apply only to transfers of title to immovable property located in areas where the parties were sufficiently sophisticated to understand the importance of registration. Because the Bombay Act of 1939 was meant to apply to the situs of the immovable property rather than to the court in which a proceeding was instituted, the operation of the rule of lis pendens with respect to proceedings concerning immovable property situated in certain areas was made conditional upon the registration of a notice of the pendency of the suit. The Court further noted that the Act did not extend to the suit filed by the trustees. Section 2 of the Act applies solely to notices in respect of suits or proceedings that relate to immovable property situated wholly or partly in Greater Bombay. The proviso to section 2 authorises the Provincial Government, by way of notification, to extend that applicability to notices relating to immovable property situated wholly or partly in other areas that may be specified. The suit in question was instituted by the trustees in the Court of Small Causes at Ahmedabad, and no notification has been placed before the Court indicating that the appropriate Provincial Government had extended the Act to notices relating to immovable property outside Greater Bombay. The Court therefore concluded that, because such a notification was absent, the condition of registration under section 2 could not be satisfied. While the rule of lis pendens under the Transfer of Property Act applies to all suits and proceedings that are not collusive and in which the right to immovable property is directly and specifically in question, the amended Act limits its application in the notified areas to cases where a notice of suit is registered, with effect from the date of registration. Consequently, the rule of lis pendens could not be invoked against the Company in the present proceedings. The provision therefore concerns only notices in respect of suits or proceedings relating to immovable property in the Greater Bombay area and does not apply to suits where property situated in Greater Bombay is not the subject of dispute. The Court also held that the Transfer of Property (Bombay Provision for Uniformity and Amendment) Act of 1959 does not assist the Company. That Act sought, among other objectives, to achieve uniformity in the provisions of the Transfer of Property Act as amended for the State of Bombay after the States Reorganisation Act of 1956. Section 3 of the 1959 Act provided that the provisions of the Bombay Act of 1939, which amended the Transfer of Property Act for the pre‑reorganisation State of Bombay, were to be extended to and to apply to those parts of the State to which they had not previously applied at the commencement of the 1959 Act. The enactment of the 1959 Act was necessitated by section 119 of the States Reorganisation Act, 1956, which preserved the territorial extent of existing laws despite the creation of new States. It was deemed expedient to secure uniformity of the laws throughout the State, and consequently the State Legislature enacted the provision.
The State Legislature had provided that one of the conditions for the rule of lis pendens to apply was that notice of any suit or proceeding in which a right to immovable property situated in the area specified under section 2 of Act XIV of 1939 was directly and specifically in dispute had to be registered under section 18 of the Registration Act. Because that condition was satisfied, the decree issued in the suit filed by the trustees against Maneklal became legally enforceable against the Company. Consequently, the appeal raised by the Company was found to fail and was dismissed with costs. In the order pronounced by the Court, the appeal was dismissed and costs were awarded against the appellant. The Court further recorded that, upon the appellant’s undertaking to vacate the premises and to deliver possession of the property within one month from the date of the order, the execution of the decree obtained by the respondent in Suit No. 707 of 1956 against Maneklal Mafatlal would be stayed for a period of one month. The order was dated 5 September 1963.