# MIS. S.F. ENGINEER v. METAL BOX INDIA LTD. AND ANR

- **Citation:** [2014] 4 S.C.R. 1047
- **Court:** Supreme Court of India
- **Decided:** 2014-03-28
- **Case number:** Civil Appeal No. 4189 of 2014
- **Bench:** Anil R. Dave, Dipak Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-s-f-engineer-v-metal-box-india-ltd-and-anr-29818
- **Pages:** 29

## Headnote

Bombay Rent Act, 1947 - s.13(1)(e) - Suit for eviction -
A
B
On ground of unlawful sub-letting - Principle of legitimate
inference - Invoking of - Held: Requisite conditions for C
establishing the factum of sub-letting are parting of legal
possession, and availing of monetary consideration which
could be in cash or kind and which fact might not be required
to be directly proven by the landlord in all circumstances - In
the case in hand, plaintiff-landlord let out premises to
D
defendant no.1-company exclusively for providing residential
accommodation to its executive staff and not for any other
purpose - Defendant no. 1 handed over possession of the
premises to an employee, defendant no.2 - Handing over of
possession to defendant no. 2 was in accord with the terms
and conditions of agreement entered between landlord and
tenant and, thus, entry of defendant no. 2 into the premises
was legal -· Trial Court and Appellate Court drew inference that
after defendant no. 2, employee, resigned from service but
remained in occupation while he was not entitled to, defendant
E
F
no. 1 did not take any steps to get back the possession - But
such inaction cannot lead to the conclusion that sub-letting
was proved - Nothing to show that there was any kind of
arrangement between defendant 1 and 2 - Non-payment of
provident fund and gratuity and other retiral dues would not
amount to consideration or a kind of arrangement - Barring
G
withholding of retiral dues, defendant no. 1 had not received
any thing either in cash or in kind or otherwise from the
defendant no. 2 and hence, under those circumstances, it
cannot be held that factum of sub-letting was established.
1047
H
1048
SUPREME COURT REPORTS
(2014] 4 S.C.R.
A
Rent control and eviction:
Sub-letting - Legitimate inference - Held: Court under
certain circumstances can draw its own inference on the basis
of materials brought at the trial to arrive at the conclusion that
8
there has been parting with the legal possession and
acceptance of monetary consideration either in cash or in kind
or having some kind of arrangement - The transaction of
subletting can be proved by legitimate inference though the
burden is on the person seeking eviction - Constructive
possession of the tenant by retention of control would not
C make it parting with possession as it has to be parting with
legal possession - Sometimes emphasis has been laid on
the fact that the sub-tenancy is created in a clandestine
manner and there may not be direct proof on the part of a
landlord to prove it but definitely it can bring materials on
D record from which such inference can be drawn.
Sub-letting - Requisite conditions for establishing the
factum of sub-letting - Discussed.
E
Revision: Scope of - Held: High Court, in revision, is not
entitled to interfere with the findings of the appellate court, until
and unless it is found that such findings are perverse and
arbitrary.
The plaintiff-landlord had let out the premises in
F question to defendant no.1-company exclusively for the
purpose of providing residential accommodation to its
executive staff and not for any other purpose. The
plaintiff-appellant filed suit for eviction of defendant no.1
and its former employee, defendant no. 2, contending that
G defendant no.- 2 was an unlawful sub-tenant and thereby
Section 13(1)(e) of the Bombay Rent Act, 1947 was
attracted justifying the eviction. The defendant no.1 took
stand that it had not breached the conditions in using the
suit premises for the purpose of which the same was let
H out for continuous period of six months preceding the
S.F. ENGINEER v. METAL BOX INDIA LTD.
1049
AND ANR.
date of the suit without reasonable cause and the suit A
premises had been illegally and wrongfully occupied by
defendant no. 2 against the will of defendant no.1 by
remaining in the suit flat. It was the further case of
defendant no.1 that the defendant no. 2, as an officer of
defendant No. 1 was allotted flat as a part of his service
B
amenities.

## Text

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[2014] 4 S.C.R. 1047
MIS. S.F. ENGINEER
V.
METAL BOX INDIA LTD. AND ANR.
(Civil Appeal No. 4189 of 2014)
MARCH 28, 2014
[ANIL R. DAVE AND DIPAK MISRA, JJ.)
Bombay Rent Act, 1947 - s.13(1)(e) - Suit for eviction -
A
B
On ground of unlawful sub-letting - Principle of legitimate
inference - Invoking of - Held: Requisite conditions for C
establishing the factum of sub-letting are parting of legal
possession, and availing of monetary consideration which
could be in cash or kind and which fact might not be required
to be directly proven by the landlord in all circumstances - In
the case in hand, plaintiff-landlord let out premises to
D
defendant no.1-company exclusively for providing residential
accommodation to its executive staff and not for any other
purpose - Defendant no. 1 handed over possession of the
premises to an employee, defendant no.2 - Handing over of
possession to defendant no. 2 was in accord with the terms
and conditions of agreement entered between landlord and
tenant and, thus, entry of defendant no. 2 into the premises
was legal -· Trial Court and Appellate Court drew inference that
after defendant no. 2, employee, resigned from service but
remained in occupation while he was not entitled to, defendant
E
F
no. 1 did not take any steps to get back the possession - But
such inaction cannot lead to the conclusion that sub-letting
was proved - Nothing to show that there was any kind of
arrangement between defendant 1 and 2 - Non-payment of
provident fund and gratuity and other retiral dues would not
amount to consideration or a kind of arrangement - Barring
G
withholding of retiral dues, defendant no. 1 had not received
any thing either in cash or in kind or otherwise from the
defendant no. 2 and hence, under those circumstances, it
cannot be held that factum of sub-letting was established.
1047
H
1048
SUPREME COURT REPORTS
(2014] 4 S.C.R.
A
Rent control and eviction:
Sub-letting - Legitimate inference - Held: Court under
certain circumstances can draw its own inference on the basis
of materials brought at the trial to arrive at the conclusion that
8
there has been parting with the legal possession and
acceptance of monetary consideration either in cash or in kind
or having some kind of arrangement - The transaction of
subletting can be proved by legitimate inference though the
burden is on the person seeking eviction - Constructive
possession of the tenant by retention of control would not
C make it parting with possession as it has to be parting with
legal possession - Sometimes emphasis has been laid on
the fact that the sub-tenancy is created in a clandestine
manner and there may not be direct proof on the part of a
landlord to prove it but definitely it can bring materials on
D record from which such inference can be drawn.
Sub-letting - Requisite conditions for establishing the
factum of sub-letting - Discussed.
E
Revision: Scope of - Held: High Court, in revision, is not
entitled to interfere with the findings of the appellate court, until
and unless it is found that such findings are perverse and
arbitrary.
The plaintiff-landlord had let out the premises in
F question to defendant no.1-company exclusively for the
purpose of providing residential accommodation to its
executive staff and not for any other purpose. The
plaintiff-appellant filed suit for eviction of defendant no.1
and its former employee, defendant no. 2, contending that
G defendant no.- 2 was an unlawful sub-tenant and thereby
Section 13(1)(e) of the Bombay Rent Act, 1947 was
attracted justifying the eviction. The defendant no.1 took
stand that it had not breached the conditions in using the
suit premises for the purpose of which the same was let
H out for continuous period of six months preceding the
S.F. ENGINEER v. METAL BOX INDIA LTD.
1049
AND ANR.
date of the suit without reasonable cause and the suit A
premises had been illegally and wrongfully occupied by
defendant no. 2 against the will of defendant no.1 by
remaining in the suit flat. It was the further case of
defendant no.1 that the defendant no. 2, as an officer of
defendant No. 1 was allotted flat as a part of his service
B
amenities. Defendant No. 1 became sick company and
thereafter defendant No.2 resigned from service.
Defendant No. 2 continued to occupy the premises while
the employer withheld his provident fund dues for which
the Commissioner of Provident Fund issued a notice to c
defendant No. 1. Defendant No. 1 filed writ petition before
the High Court against the Regional Provident Fund
Commissioner and defendant No. 2 for settlement of
dues of defendant No. 2 and for handing over vacant
possession of the premises.
D
The question which arose for consideration in the
present appeal filed by the landlord was whether there
was an unauthorized subletting under 13(1)(e) of the
Bombay Rent Act, 1947 warranting an order for grant of
possession.
Dismissing the appeal, the Court
E
F
HELD: 1. The Court under certain circumstances can
draw its own inference on the basis of materials brought
at the trial to arrive at the conclusion that there has been
parting with the legal possession and acceptance of
monetary consideration either in cash or in .kind or
having some kind of arrangement. The transaction of
subletting can be proved by legitimate inference though
the burden is on the person seeking eviction. The
G
materials brought out in evidence can be gathered
together for arriving at the conclusion that a plea of
subletting is estabiished. The constructive possession of
the tenant by retention of control would not make it
parting with possession as it has to be parting with legal
H
1050
SUPREME COURT REPORTS
[2014] 4 S.C.R.
A possession. Sometimes emphasis has been laid on the
fact that the sub-tenancy is created in a clandestine
manner and there may not be direct proof on the part of
a landlord to prove it but definitely it can bring materials
on record from which such inference can be drawn. [Para
B 23] [1067 -E-H; 1068-A]
Bharat Sales Ltd. v. Life Insurance Corporation of India
(1998) 3 SCC 1: 1998 (1) SCR 711; Joginder Singh Sodhi
v. Amar Kaur(2005) 1 SCC 31: 2004 (5) Suppl. SCR 303;
C Smt. Rajbir Kaur and another v. Mis. S. Chokesiri and Co.
(1989) 1 SCC 19: 1988 (2) Suppl. SCR 310; Dipak Banefjee
v. Smt. Lilabati Chakraborty (1987) 4 SCC 161: 1987 (3)
SCR 680; Bhairab Chandra Nandan v. Ranadhir Chandra
Dutta (1988) 1 SCC 383; Mis. Shalimar Tar Products Ltd. v.
H. C. Sharma and others (1988) 1 SCC 70: 1988 (1) SCR
D 1023; United Bank of India v. Cooks and Kelvey Properties
(P) Limited (1994) 5 SCC 9: 1994 (1) Suppl. SCR 55; Shama
Prashant Raje v. Ganpatrao(2000) 7 SCC 522: 2000 (3)
Suppl. SCR 448; Celina Coelho Pereira (Ms) and others v.
Ulhas Mahabaleshwar Kholkar and others (2010) 1 SCC 217:
E 2009 (15) SCR 558 and Vinaykishore Punamchand
Mundhada and another v. Shri Bhumi Kalpataru and others
(2010) 9 SCC 129: 2010 (9) SCR 963 - relied on.
Associated Hotels of India Ltd. v. S. B. Sardar Ranjit
F Singh (1968) 2 SCR 548 - referred to.
2. In the case at hand, an agreement was entered into
by the landlord and the tenant in respect of the premises
with the stipulation that it would be used only for
providing the residential accommodation of the executive
G staff and not for any other purpose. Undisputedly,
defendant No. 2 was a member of the executive and he
was provided the premises as a part of the amenities
towards his perquisites. As the company sustained loss
and was declared sick under SICA, defendant No. 2
H resigned from his post and defendant No. 1 accepted the
S.F. ENGINEER v. METAL BOX INDIA LTD.
1051
AND ANR.
same. The trial Judge applied the principle of legitimate
A
inference wtiich was accepted by the appellate Judge. It
is settled in law that the requisite conditions for
establishing the factum of sub-letting are - parting of legal
possession, and availing of monetary consideration
which can be in cash or kind and which fact may not be
B
required to be directly proven by the landlord in all
circumstances. Defendant No. 2 was given possession
by defendant No.1 as an executive of the company. It was
made available to him under the conditions of service
and such provision was in consonance with the c
agreement entered into by the landlord and the tenant,
i.e., the plaintiff and the defendant No.1. Submission of
the plaintiff-appellant was founded on inference made by
the trial Judge that the provident fund, gratuity and other
dues of the defendant No. 2 were withheld in lieu of D
allowing defendant No. 2 for such occupation. [Paras 24,
25) [1068-B-D; 1069-E-H; 1070-A]
3. Defendant No. 2 was put in possession by
defendant No. 1 while he was in service. There was an
agreement between defendant No. 2 and defendant No.
E
1. One of the stipulations in the agreement of tenancy
between the plaintiff and defendant No. 1 was that the
tenant was given the premises on lease for the purpose
of-occupation of its executive staff. Thus, handing over
of the possession of the premises to the defendant No.
F
2 was in accord with the terms and conditions of the
agreement entered between the landlord and the tenant
and, therefore, the entry of the defen'dant No. 2 into the
premises was legal. The trial court as well as the appellate
court drew inference that after defendant No.2, the
G
employee, resigned from service and remained in
occupation while he was not entitled to, defendant No. 1
did not take any steps to get-baclythe possession and
the proceedings initiated under the Companies Act were
dismissed for non-prosecution and at a belated stage
H
1052
SUPREME COURT REPORTS
[2014] 4 S.C.R.
A only a suit for recovery of occupational charges was
instituted. The emphasis is on the inaction on the part of
the defendant No. 1 to institute a suit for eviction. Such
inaction would not by itself persuade a court to come to
the conclusion that the sub-letting was proved. Nothing
B has been brought on record by way of documentary or
oral evidence to suggest that there was any kind of
arrangement between the defendant No. 1 and the
defendant No.2. The written statement filed by defendant
No.2, i~ fact, was a series of self serving assertions for
c his own benefit. His stand would show that non-payment
of provident fund and gratuity and other retiral dues
amounted to consideration or a kind of arrangement. That
apart, he has claimed himself to become a tenant under
· the landlord and also had put an aspirational
0 asseveration that he had negotiated with the landlord to
purchase the property to become the owner. The High
Court has noted that the tenant, defendant No.1, was a
sick company under the SICA and could not have
received any money in a clandestine manner. Be that as
it may, withholding of retiral dues cannot be considered
E as a consideration or any kind of arrangement. The
settlement before this Court shows that the defendant
r;.Jo.2 had paid the amount for overstaying in the premises
in question and the deposited amount with the High
Court was required to be paid towards the dues of the
F defendant No. 2 after deducting overstayal charges. The
counsel for the appellant, has contended that the
settlement before this Court was between the defendant
No.1 and the defendant No. 2 to which the landlord was
not a party and hence, it cannot have any effect on the
G issue of sub-letting. True it is, it is a settlement between
the defendant No. 1 and defendant No.2, but it is a
settlement between an employer and an erstwhile
employee and, therefore, the landlord had no role. The
settlement only shows that barring withholding of the
H retiral dues, the employer had not received any thing
S.F. ENGINEER v. METAL BOX INDIA LTD.
1053
AND ANR.
either in cash or in kind or otherwise from the defendant
A
No. 2 and hence, under these circumstances, it is
extremely difficult to hold that the factum of sub-letting
has been established. [Para 27) [1073-E-H; 1074-A-H]
4. It is well settled that the High Court, in revision, is
8
not entitled to interfere with the findings of the appellate
court, until anc4 unless it is found that such findings are
perverse and arbitrary. There cannot be any cavil over the
said proposition of law. But in the present case, the trial
court as well as the appellate court has reached their
conclusions on the basis of inferences. The issue of C
subletting can be established on the· basis of legitimate
inference drawn by a court. Drawing inference from the
facts established is not purely a question of fact. In fact,
it is always considered to be a point of law insofar as it
relates to inferences to be drawn from finding of fact.
D
When inferences drawn do not clearly flow from facts and
are not legally legitimate, any conclusion arrived at on
that basis becomes absolutely legally fallible. Therefore,
it cannot be said that the High Court has erred in
exercise of its r~visional jurisdiction by substituting the
E
finding of fact which has been arrived at by the courts
below. Therefore, the High Court has not committed any
illegality in its exercise of revisional jurisdiction under the
obtaining facts and circumstances. [Para 28) [1075-B-F]
Renuka Das v. Maya Ganguly and another (2009) 9 SCC
413 and P. John Chandy and Co. (P) Ltd. v. John P. Thomas
(2002) 5 sec 90: 2002 (3) SCR 549 - relied on.
Case Law Reference:
1998 (1) SCR 711
relied on
Para 12
2004 (5) Suppl. SCR 303
relied on
Para 12
(1968) 2 SCR 548
referred to
Para 12
F
G
H
A
B
c
D
E
F
1054
SUPREME COURT REPORTS
[2014] 4 S.C.R.
1988 (2) Suppl. SCR 310
relied on
Para 16
1987 (3) SCR 680
relied on
Para 16
(1988) 1 sec 383
relied on
Para 17
1988 (1) SCR 1023
relied on
Para 18
1994 (1) Suppl. SCR 55
relied on
Para 19
2000 (3) Suppl. SCR 448
relied on
Para 20
2009 (15) SCR 558
relied on
Para 21
2010 (9) SCR 963
relied on
Para 22
(2009) 9 sec 413
relied on
Para 28
2002 (3) SCR 549
relied on
Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal "No.
4189 of 2014.
From the Judgment and Order dated 12.08.2010 of the
High Court of Bombay in CRA No. 355 of 2010.
C.A. Sundaram, Jatin Zaveri, Amit Mehta, Neel Kamal
Mishra for the Appellant.
S. Ganesh, J.K. Sethi, Preeti Ramani, Siddharth
Srivastav, Indra Sawhney for the Respondents.
The Judgment of the Court was delivered by
DIPAK MISRA, J. 1. Leave granted.
2. This appeal, by special leave, by the landlord arises out
G of and is directed against the judgment and order dated
12.8.2010 of the Bombay High Court passed in Civil Revision
Application No. 355 of 2010, allowing the respondent-tenants'
appeal and - in reversal of the concurrent findings of the courts
below that there was an unauthorized subletting - dismissing
H appellant's application under 13(1 )(e) of the Bombay Rent Act,
S.F. ENGINEER v. METAL BOX INDIA LTD.
· AND ANR. [DIPAK MISRA, J.]
1947 for an order for grant of possession.
1055
3. The appellant-plaintiff, owner of the suit premises, i.e.,
Flat Nos. 201 and 204 on second floor of the building known
as "Marlow" and two garages Nos. 7 and 8 on the ground floor
of the suit building situate at 62-B, Pochkhanwala Road, Worli,
Mumbai, instituted RAE No. 45/84 of 1997 for eviction of the
first respondent (defendant No. 1) and its former employee, the
respondent No. 2 (defendant No. 2). For the sake of
convenience, the parties hereinafter shall be referred to as per
the rank in the suit.
4. The case of the plaintiff in the court below was that the
defendant No. 1 was a tenc;int under the plaintiff on a
consolidated monthly rent of Rs.1075/-. The premises, as set
forth in the plaint, was let out to the defendant No. 1 exclusively
A
B
c
for the purpose of providing residential accommodation to its
D
executive staff and not for any other purpose. Though the
defendant No. 2 had no right tQ remain in possession of the
flat No. 201, yet the employer company unlawfully sublet the said
flat to him. The plaintiff vide notice dated 19.1, 1989 terminated
the tenancy of defendant No. 1. The said notice was replied to
E
by the defendant No. 1 through its advocate on .13.2.1989
denying the assertions made in the notice. This compelled the
plaintiff to initiate the civil action for eviction of the defendants
from the suit premises on the ground of subletting, bona fide
requirement and non-user for the purpose for which it was let
F
out.
5. The defendant No. 1 filed its written statement and
denied the averments in the plaint. Its affirmative stand was, it
had not breached the conditions in using the suit ptemises for
the purpose of which the same was let out for continuous period
G
of six months preceding the date of the suit without reasonable
cause and the suit premises had been illegally and wrongfully
occupied by the defendant No. 2 against the will of defendant
No. 1 by remaining in flat No. 201. As far as flat No. 204 was
concerned, the stand of the defendant No. 1 was that it was in
H
1056
SUPREME COURT REPORTS
[2014) 4 S.C.R.
A occupation of the staff, General Manager, officers and
executives of the Company. The claim of bona fide requirement
was seriously disputed on many a ground. It was the further
case of defendant No.1 that the defendant No. 2, as an officer
of defendant No. 1 was allotted flat No. 201 as a part of his
B service amenities under the terms and conditions stipulated in
agreement dated 11.5.1982. On 27.5.1988 the defendant No.
1 was declared a sick company by the Board for Industrial and
Financial Reconstruction (BIFR) under the provisions of the
Sick Industrial Companies (Special Provision) Act, 1985 and
c thereafter on 11.2.1989 the defendant No. 2 resigned from his
post which was accepted by the defendant No. 1. The
defendant No. 2 continued to occupy the premises and the
employer withheld his provident fund dues for which the
Commissioner of Provident Fund on 19.10.1993 issued a
0
notice to defendant No. 1. At that juncture, the defendant No. 1
filed writ petition No. 2134 of 1993 before the High Courf
against the Regional Provident Fund Commissioner and the
defendant No. 2 for settlement of dues of the defendant No. 2
..
and for handing over vacant possession of the premises. The
defendant No. 1 also filed a criminal complaint under Section
E 630 of the Companies Act, 1956 which was dismissed for nonprosecution. These asseverations were made to demolish the
ground of subletting as asserted by the plaintiff and, eventually,
the dismissal of the suit was sought.
F
6. The defendant No. 2 filed his separate written statement
stating, inter alia, that he was not concerned with flat No. 204
and garage No. 8 and he was a statutory tenant in respect of
flat No. 201 and he had been in long continuous use and
occupation of the suit premises, i.e., flat No. 201 and garage
G No. 7. It was his further stand that he was not unlawfully
occupying the suit premises because he was allowed to use
the suit premises as an employee of the defendant No. 1 and
hence, he was occupying the part of the suit premises as a
lawful sub-tenant with the consent and knowledge of the plaintiff.
H
S.F. ENGINEER v. METAL BOX INDIA LTD.
1057
AND ANR. [DIPAK MISRA, J.]
7. The trial Judge initially framed the following issues: -
"(1) Whether the plaintiffs prove that the suit premises
have not been used by the defendants without
reasonable cause for the purpose for which they
were let for a continuous period of 6 months
immediately preceding the date of the suit?
(2)
Whether the plaintiffs prove that they required the
suit premises reasonably and bonafide for their own
use and occupation?
(3)
To whom greater hardship would be caused by
passing the decree than by refusing to pass it?
(4)
Whether the plaintiffs are entitled to recover the
possession of the suit premises from the
defendants?
(5)
What decree, order and costs?"
And thereafter framed the following additional issue:-
"Do plaintiffs prove that the defendant No. 1 unlawfully sublet the part of the suit premises to defendant no. 2?"
A
B
c
D
E
8. On consideration of the evidence brought on record the
Small Causes court came to hold that the plaintiff had failed to
prove that it required the suit premises reasonably and bona
F
fide for his use and occupation and also it had not been proven
that greater hardship would be caused to the plaintiff.
Accordingly, the issue Nos. 2 and 3 were answered in the
negative. As far as issue No. 1 was concerned, i.e. non-user
for a period of six months for the purpose it was let out which
G
is a ground under Section 1"3(1 )(k) of the Bombay Rent Act,
1947 (for short "the Act"), the learned trial Judge came to hold
that the plea of non-user in respect of flat No. 204 was not
established but the said plea had been proven as far as flat
No. 201 wa;; concerned but, regard being had to the language
H
1058
SUPREME COURT REPORTS
[2014] 4 S.C.R.
A used in the provision enshrined under Section 13(1 )(k) of the
Act to the effect that when a part of the tenanted premises was
not in use of the tenant, the said provision would not be ·
applicable and, accordingly, he answered the said issue
against the plaintiff. While dealing with the additional issue the
B learned trial Judge referred to Section 13(1)(e) of the Act and
came to hold that no case of unlawful subletting had been
made out in respect of flat No. 204 and one garage, but, as
far as flat No. 201 and another garage are concerned, plea of
subletting stood established. To arrive at the same conclusion
c he took note of the fact that the use and occupation of
defendant No. 2 on the said part of the suit premises before
12.2.1989 was on the basis of agreement Exh. SA which
showed that the defendant No. 2 was in use and occupation of
flat No. 201 and garage No. 7 as licencee of his employerD defendant No.1 and thereafter from 12.2.1989 on ceasing to
be in service of the defendant No. 1, the use and occupation
of defendant No.2 in respect of the said premises could neither
be considered as legal nor could it be protected under any
provision of law. Thereafter, he considered the rival
submissions and referred to clause 13 of the agreement dated
E 11.5.1982, Exh. SA, the factum of resignation by the defendant
No. 2 and acceptance thereof by the defendant No. 1, the
liability on the part of defendant No. 1 to take appropriate legal
steps to evict the defendant No. 2 from the said part of the suit
premises within a reasonable time, the silence maintained by
F the defendant No. 1, the dismissal of the criminal proceeding
instituted under Section 630 of the Companies Act for nonprosecution and filing of another criminal proceeding only in
2003, the use and occupation of the defendant No. 2 at the
behest of the defendant No.1, the retention of provident fund
G by the defendant No. 1 of the defendant No. 2, the stand of the
defendant No. 2 that he was in lawful occupation as a subtenant, the admission of the sole witness of the defendant t-Jo.1
to the effect that the defendant No.2 was in possession as a
sub-tenant, and ultimately came to hold that the plaintiff had
H been able to establish that the defendant No. 1 had unlawfully
S.F. ENGINEER v. METAL BOX INDIA LTD.
1059
AND ANR. [DIPAK MISRA, J.]
sublet a part of the suit premises, i.e., flat No. 201 and garage
A
No. 7 and, accordingly, directed that the defendant Nos. 1 and
2 jointly and severally to deliver the vacant possession of the
suit premises, i.e., flat Nos. 201 and 204 along with garage Nos.
7 and 8.
9. On an appeal being preferred the Division Bench of the
appellate court basically posed two questions, namely, (i)
whether the suit premises, more particularly, flat No. 201 was
illegally sublet by the defendant No. 1 to the defendant No. 2;
B
and (ii) whether the flat Nos. 201 and 204 were not used for
C
the purpose for which they were let out for more than 6 months
without sufficient reason.
10. The appellate court answered the question No. 2 in the
negative. As far as question No. 1 is concerned, the appellate
court took note of the admission of the witness of the defendant
D
No.' 1, the inaction on the part of the plaintiff to take steps for
eviction against defendant No.2 and proceeded to deal with the
contours of Section 13(1 )(e) of the Act and in that context opined
thus: -
"It covers different aspects under the heading of subletting,
it is not mere subletting, it includes assignment or creating
third party interest. Non user of the premises in possession
of defendant No.2 by the defendant No. 1 is clear.
Defendant No. 2 already found to be not in service after
E
F
his resignation. With a gap of about three or four years,
litigation is started by the defendant No. 1 that too on the
count of arrears of provident fund. No substantial suit for
seeking possession was filed immediately and act
continued on that day. Aspect of subletting has its own
importance. We find evidence of defendant No.1 's witness
G
is clear in itself. Ld. Trial Court arrived at the conclusion
that this aspect attracts section 13(1 )(e) of Rent Act. We
find said aspect required to be accepted."
11. Being of this opinion, it affirmed the view expressed
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[2014] 4 S.C.R.
A by the learned trial Judge and upheld the judgment and decree
passed against the defendants.
12. The non-success compelled the defendant No. 1 to
invoke the civil revisional jurisdiction of the High Court. The
8
learned single Judge referred to the filing of the writ petition with
regard to the provident fund dues, appeal by way of special
leave preferred by the defendant No. 1 and the ultimate
settlement arrived at between the two defendants on 4.4.2007,
the stand of the defendant No. 1 that there was no consensus
between it and the defendant No. 2 allowing to occupy the
C premises after he ceased to be in Company's employment and
later to initiate action to evict him, and thereafter referred to the
decisions in Bharat Sales Ltd. v. Life Insurance Corporation
of lndia 1, Joginder Singh Sodhi v. Amar Kaur and Associated
Hotels of India Ltd. v. S.B. Sardar Ranjit Singh 3 and took note
D of certain facts, namely, (i) defendant No. 2 was inducted as a
licencee under a licence agreement which was produced before
the Courts; (ii) after cessation of his employment defendant No.
2 continued to occupy the premises; (iii) applicant had filed a
suit for recovery of overstayal charges and, eventually, was
E allowed to recover a sum of Rs.4, 17 ,000/- in terms of order of
the Court dated 15.3.2007, in Civil Appeal No. 2425 of 2007;
(iv) applicant had vacated the premises on 4.4.2007 in terms
of the settlement; and (v) applicant was a sick company and
not in a position to receive any clandestine payment and
F concluded thus: -
G
"These facts are so glaring, as are the attempts of
applicant to get rid of respondent No. 2 that it would be
inconsistent with any clandestine agreement of sub-letting.
True finding of facts by the courts below may be respected.
But the conclusions drawn about a jural relationship was
thoroughly unwarranted and runs in conflict with the very
1.
(1998) 3 sec 1.
2.
(2005) 1 sec 31.
H
3.
(1968) 2 SCR 548.
S.F. ENGINEER v. METAL BOX INDIA LTD.
1061
AND ANR. [DIPAK MISRA, J.]
requirement of a consensus. Therefore, the decree of
A
eviction on the ground of sub-letting passed by the trial
court and maintained upon appeal by the appellate bench
cannot at all be sustained."
13. Criticizing the judgment and order passed by the
8
learned single Judge, learned senior counsel for the appellant
submitted that though the defendant No. 2, the employee,
retired from service, yet the defendant No. 1, employer, did not
take any steps for a period of more than four years from
February, 1989 till October, 1993 and allowed the complaint
C
filed under Section 630 of the Companies Act to be dismissed
for non-prosecution and was constrained to prefer the writ
petition challenging the direction of the Regional Provident Fund
Commissioner only when it faced a statutory consequence and
these circumstances go a long way to establish its conduct of
tacit acceptance of the position of defendant No. 2 as a subD
tenant. He has also highlighted that the defendant No. 1 filed
the second complaint under Section 630 of the Companies Act
after a span of seven years and filed the summary suit under
Section 37, CPC only for recovery of occupation charges and
not for eviction after fourteen years of the resignation of the
E
defendant No.2 from service of the defendant No.1 which
ultimately resulted in a settlement before this Court, and these
aspects, considered cumulatively, do clearly show that in effect
the defendant No. 1, tenant, had sublet the premises in question
and the High Court has fallen into grave error in overturning the
F
finding based on legitimate inferences in exercise of revisional
jurisdiction which is a limited one. It is his further submission
that the finding recorded by the learned trial Judge and
concurrence given to the same in appeal establish two aspects,
namely, the defendant No. 2 was allowed to remain in exclusive
G
use and occupation of the premises; and that there was
involvement of consideration inasmuch as the. employer withheld
the provident fund to appropriate the same towards the
occupational charges and the arrangement is obvious. The
learned senior counsel would also contend that the sole witness
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[2014] 4 S.C.R.
A
of defendant No. 1 has categorically admitted that defendant
No. 2 is an unlawful sub-tenant and after such an admission any
stand to the contrary has to be treated as paving the path of
tergiversation. He has also laid immense emphasis on the fact
that the defendant No. 2 in his written statement has clearly
B admitted that he was a sub-tenant with the consent of the
landlord, but the factum of consent has not been proven.
c
14. Mr. Ganesh, learned senior counsel, per contra, in
support of the decision of the High Court would contend that
necessary ingredients of subletting have not been fulfilled and
when the reasonings ascribed by the trial court and the
appellate court are absolutely on the basis of perverse
consideration of the materials brought on record, it was
obligatory on the part of the High Court to rectify the same in
supervisory jurisdiction and that having been done the impugned
D order is absolutely flawless and totally infallible. It is put forth
by him that reliance on some evidence and the stand and
stance of the defendant No. 2 who had an axe to grind against
the defendant No. 1 and further had an ambitious motive to get
the flat from the plaintiff on ownership basis would not establish
E the plea of subletting. It is further contended that the defendant
No. 1 had taken appropriate steps at the relevant time to
prosecute the defendant No. 2 under various laws and hence,
it is inapposite to say that there was a tacit consent allowing
the employee to occupy the premises. In any case, submits Mr.
F
Ganesh, that withholding of provident fund dues or settlement
as regards the same before this Court would not make out a
case of subletting as proponed by the plaintiff-appellant.
15. To appreciate the revalised submissions raised at the
G Bar it is first necessary to have a survey of authorities of this
Court which state the position of law as to how subletting of a
premises alleged by a landlord are to be established.
16. In Smt. Rajbir Kaur and another v. Mis. S. Chokesiri
and Co. 4, after referring to the decision in Dipak Banerjee v.
H
4.
(1989) 1 sec 19.
S.F. ENGINEER v. METAL BOX INDIA LTD.
1063
.AND ANR. [DIPAK MISRA, J.]
Smt. Lilabati Chakraborty5 and other decisions the Court
A
opined that if exclusive possession is established, and the
version of the respondent as to the particulars and the incidents
of the transaction is found acceptable in the particular facts and
circumstances of the case, it may not be impermissible for the
court to draw an inference that the transaction was entered into
B
with monetary consideration in mind. It has been further
observed that such transactions of subletting in the guise of
licences are in their very nature, clandestine arrangements
between the tenant and the subtenant and there cannot be
direct evidence got and itis not, unoften, a matter for legitimate
C
inference. Dealing with the issue of burden it held that: -
"The burden of ma.king good a case of subletting is, of
course, on the appellants. The burden of establishing facts
and contentions which support the party's case is on the
party who takes the risk of non-persuasion. If at the
D
conclusion of the trial, a party has failed to establish these
to the appropriate standard, he will lose. Though the burden
of proof as a matter of law remains constant throughout a
trial, the evidential burden which rests initially upon a party
bearing the legal burden, shifts according as the weight
E
of the evidence adduced by the party during the trial."
17. In th is context, reference to a two-Judge Bench
decision in Bhairab Chandra Nandan v. Ranadhir Chandra
Dutta6 would be apposite. In the said case the tenant had
permanently shifted his residence elsewhere leaving the rooms
completely to his brother for his occupation without obtaining
the landlord's permission. In that context, the Court observed
thus: -
F
"5. Now coming to the question of sub-letting, once again
G
we find that the courts below had adequate material to
conclude that the respondent had sub-let the premises,
albeit to his own brother and quit the place and the sub5.
(1987) 4 sec 161.
6.
(1988) 1 sec 383.
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[2014] 4 S.C.R.
A
letting was without the consent of the appellant. Admittedly,
the respondent was living elsewhere and it is his brother
Manadhir who was in occupation of the rooms taken on
lease by the respondent. The High Court has taken the view
that because Manadhir is the brother of the respondent,
B
he will only be a licensee and not a sub-tenant. There is
absolutely no warrant for this reasoning. It is not as if the
respondent is still occupying the rooms and he has
permitted his brother also to reside with him in the rooms.
On the contrary, the respondent has permanently shifted
c
his residence to another place and left the rooms
completely to his brother for his occupation without
obtaining the consent of the appellant. There is therefore
no question of the respondent's brother being only a
licensee and not a sub-tenant."
D
18. In M/s. Shalimar Tar Products Ltd. v. H. C. Sharma
and others7, while dealing with parting of legal possession, the
two-Judge Bench observed that there is no dispute in the legal
proposition that there must be parting of the legal possession.
Parting to the legal possession means possession with the right
E to include and also right to exclude others.
19. In United Bank of India v. Cooks and Kelvey
Properties (P) Limited8 the question arose whether the
appellant-Bank had sublet the premises to the union. This Court
F set aside the order of eviction on the ground that : -
" .... though the appellant had inducted the trade union into
the premises for carrying on the trade union activities, the
bank has .not received any monetary consideration from
the trade union, which was permitted to use and enjoy it
G
for its trade union activities. It is elicited in the crossexamination of the President of the trade union that the
bank had retained its power to call upon the union to
1.
(1988) 1 sec 10.
H
8
(1994) s sec 9.
S.F. ENGINEER v. METAL BOX INDIA LTD.
1065
AND ANR. [DIPAK MISRA, J.]
vacate the premises at any time and they had undertaken
A
to vacate the premises. It is also elicited in the crossexam ination that the bank has been maintaining the
premises at its own expenses and also paying the
electricity charges consumed by the trade union for using
the demised premises. Under these circumstances, the
B
inference that could be drawn is that the appellant had
retained its legal control of the possession and let the trade
union to occupy the premises for its trade union activities.
Therefore, the only conclusion that could be reached is that
though exclusive possession of the demised prer!Jises c
was given to the trade union, the possession must be
deemed to be constructive possession held by it on behalf
of the bank for using the premises for trade union activities
so long as the union used the premises for trade union
activities. The bank retains its control over the trade union
D
whose membership is only confined to the employees of
the bank. Under these circumstances, the inevitable
conclusion is, that there is no transfer of right to enjoy the
premises by the trade union exclusively, for consideration."
20. In this context we may fruitfully refer to the decision in
E
Joginder Singh Sodhi (supra) wherein the Court, dealing with
the concept of subletting, has observed that to establish a plea
of subletting two ingredients, namely, parting with possession
and monetary consideration, therefor have to be established.
In the said case reliance was placed on Shama Prashant Raje
F
v. Ganpatrao 9 and Smt. Rajbir Kaur (supra). The Court also
extensively referred to the principle stated in Bharat Sales Ltd.
(supra) wherein it has been observed that it would also be
difficu!t for the landlord to prove, by direct evidence, that the
person to whom the property had been sub-let had paid
G '
monetary consideration to the tenant. Though payment of rent,
undoubtedly, is an essential element of lease or sub-lease, yet
it may be paid in cash or in kind or may have been paid or
promised to be paid, or it may have been paid in lump sum in
9.
(2000) 7 sec 522.
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SUPREME COURT REPORTS
[2014] 4 S.C.R.
A advance covering the period for which the premises is let out
or sub-let or it may have been paid or promised to be paid
periodically. The Court further observed that since payment of
rent or monetary consideration may have been made secretly,
the law does not require such payment to be proved by
B affirmative evidence and the court is permitted to draw its own
inference upon the facts of the case proved at the trial, including
the delivery of exclusive possession to infer that the premises
were sub-let.
C
21. In this regard reference to Celina Coelho Pereira (Ms)
and others v. U/has Mahabaleshwar Kho/kar and others10
would be pertinent. In the said case a two-Judge Bench, after
referring to number of authorities and the rent legislation,
summarized the legal position relating to issue of sub-letting
or creation of sub-tenancy. The two aspects which are of
D relevance to the present case are:
.
"(i) In order to prove mischief of sub-letting as a ground
for eviction under rent control laws, two ingredients have
to be established. (one parting with possession of tenancy
E
or part of it by the tenant in favour of a third party with
exclusive right of possession, and (two) that such parting
with possession has been done without the consent of the
landlord and in lieu of compensation or rent.
F
(ii), (iii) & (iv)
(v) Initial burden of proving sub-letting is on the landlord but
once he is able to establish that a third party is in exclusive
possession of the premises and that tenant has no legal
possession of the tenanted premises, the onus shifts to the
G
tenant to prove the nature of occupation of such third party
and that he (tenant) continues to hold legal possession in
tenancy premises."
22. In Vinaykishore Punamchand Mundhada and
H
10. (2010) 1 sec 217.
S.F. ENGINEER v. METAL BOX INDIA LTD.
1067
AND ANR. [DIPAK MISRA, J.]
another v. Shri Bhumi Kalpataru and others11 it has been held
A
that it is well settled that sub-tenancy or sub-letting comes into
existence when the tenant voluntarily surrenders possession of
the tenanted premises wholly or in part and puts another person
in exclusive possession thereof without the knowledge of the
landlord. In all such cases, invariably the landlord is kept out of
B
the scene rather, such arrangement whereby and whereunder
the possession is parted away by the tenant is always
clandestine and such arrangements takes place behind the
back of the landlord.