Subletting Must Be Presumed In Commercial Tenancy Where Tenant Allows Outsider To Use The Premises For Profiteering: Bombay High Court
The Bombay High Court observed that in commercial tenancy, if a tenant permits an outsider to use their shop to do business, subletting can be presumed. It emphasized that beneficial legislation like the Rent Control Act should be misused by the tenant and thus in cases of misuse of tenancy protections, subletting should be inferred.
Justice Sandeep V. Marne was considering the applicants/defendants civil revision application against the order of the First Appellate Court.
The respondent/plaintiff had rented a shop in Panvel to applicant/defendant no. 1. The plaintiff claimed the defendant no.1 stopped using the shop for its intended purpose and sublet it to the defendant no.2, who used it as a godown. The Trial Court and Appellate Court ruled in favor of the plaintiff, ordering the defendants to hand over possession and pay arrears of rent.
The High Court noted that in residential premises, simply allowing an outsider to reside with a tenant may not always lead to presumption of subletting and. However, this may not be the case in for commercial tenancy.
It noted that in commercial tenancy, if the tenant permits an outsider to use his shop while still conducting his own business, subtenancy can be presumed, even without evidence of exclusive possession of the shop.
“In case of tenancy in respect of a shop, if tenant permits an outsider (not his employee) to use part of the shop to do business while tenant also continues his own business, even though it is not proved that the outsider is in 'exclusive' possession of the tenanted shop, subtenancy can be presumed in a given case.”
It remarked that in commercial cities Mumbai or Pune, even a small display space can command high rent, allowing tenants to profit by letting out of their shop. It noted that some tenants may not want to run their business and may secretly allow an outsider to take over, keeping all documents and licenses in their own name while making occasional visits to deny subletting claims.
It stated courts must assess these situations based on the preponderance of probability.
“Such clandestine arrangements are required to be inferred by Courts by applying the test of preponderance of probability.”
The Court stated that if a third person is using the shop, it should be considered as a breach of condition of tenancy. This is because “…beneficial legislation like Rent Control Act is not to be misused by the tenant to the complete disadvantage of the owner."
It observed that when a tenant is misusing tenancy protection by from allowing a third party to use the premises, subletting must be inferred. It remarked “…in every case, where the tenant is seen attempting to take disadvantage of tenancy protection by indulging in profiteering by letting a third party actually use the premises, subletting must be inferred.”
In the present case, the Court noted that respondent/defendant no.2 was using the shop to store his goods and was in full control of the premises.
It thus upheld the order of the Appellate Court and dismissed the petition.
Case title: Shri. Narayan Damodar Thakur & anr. vs. Shri. Madanlal Mohanlal Malpani (Civil Revision Application No. 343 of 2024 with Interim Application (St.) No. 20513 of 2024)