Subletting By Tenant Impermissible Under Bombay Rent Control Act Unless Contract Allows It : Supreme Court

In a recent ruling, the Supreme Court reiterated that it won’t be lawful to sublet after the enactment of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 unless the contract itself expressly provides so.

“The aforestated provisions make it crystal clear that, in the ordinary course and notwithstanding anything contained in any other law, unless the contract itself permits sub¬letting, it shall not be lawful, after coming into operation of the Act of 1947, for a tenant to sub-let the premises let out to him or to assign or transfer in any manner his interest therein”, a Bench of Justices Justice Sudhanshu Dhulia and Justice Sanjay Kumar stated, while considering a challenge against a Bombay High Court judgement on recovery of possession of the leased premises.

In the case, a petition was filed for recovery of possession of the leased premises from the tenant. The Trial Court held that the appellants were entitled to claim eviction of the tenant under Section 13(1)(e) of the Bombay Rent Control Act. This was confirmed by the Additional District Judge, Pune. Another round before the High Court and the matter reached the Apex Court.

The main question before the Court was whether the tenant committed breach of the lease condition with regard to assignment of his business in the leased premises, warranting his eviction under Section 13(1)(e) of the 1947 Act.

The Court noted that the proviso to Section 15(1) authorizes the State Government to permit, in any area, transfer of interest in premises held under leases or a class of leases, by issuing a notification in the Official Gazette, duly delineating the extent to which such transfer is permitted.

Though a mere execution of a genuine partnership deed by a tenant where they converted a sole proprietary concern into a partnership business while continuing to actively participate in the business and retaining control over the tenanted premises would not amount to subletting, such a principle was not applicable to the current matter as the tenant did not stop short at executing the agreement, the Court said.

In the present case, tenant executed the partnership agreement dated in 1985 and further, went on to execute the assignment agreement where he assigned his hotel business in the leased premises to Krishna B Shetty and received earnest money also. The very execution of the assignment agreement; the tenant admittedly assigned his business in the leasehold premises in favour of Krishna B Shetty for ₹2,00,000 and accepted a sum of ₹50,000 as earnest money, was sufficient in itself to establish transgression of the lease condition and the statutory mandate, the Court explained.

“The very act of execution of this document was sufficient in itself to complete the breach of the lease condition and the statutory mandate and did not require anything further”, the Court observed.

While allowing the appeals, the Court directed that the Respondents (legal representatives of the deceased) to vacate the suit premises and hand it over to the appellants in two months.

Case Title: Yuvraj @ Munna Pralhad Jagdale & Ors. v. Janardan Subajirao Wide | Civil Appeal Nos. 28552856 Of 2011

Citation : 2023 LiveLaw (SC) 228

Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947-In the ordinary course and notwithstanding anything contained in any other law, unless the contract itself permits sub¬letting, it shall not be lawful, after coming into operation of the Act of 1947, for a tenant to sub-let the premises let out to him or to assign or transfer in any manner his interest therein-The very act of execution of the assignment document was sufficient in itself to complete the breach of the lease condition and the statutory mandate and did not require anything further

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