# N. W. Nayak v. C/1/iota/11/ Harira111. 69 Born. LR. 551. approvcJ

- **Citation:** [1973] 2 S.C.R. 603
- **Court:** Supreme Court of India
- **Decided:** 1972-01-28
- **Case number:** Special Application No. 2Hl8 of 1971
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/n-w-nayak-v-c-1-iota-11-harira111-69-born-lr-551-approvcj-5879
- **Pages:** 7

## Headnote

B
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JAi SINGH MORARJI & ORS .
...
Mis SOVANI PVT. LTD. & ORS.
October 9. 1972
IA. N. R.\Y. D. G. f'ALEKAR, M. H. BEG A);D S. N. DWiVU)I. JJ.]
Bvn1bay R£•nts, JJotel llncl Lodging, House Ratt·s Central Act, SecliolJ
J 5 ( 2 )-Validation of suh·l.etting hy
J 959 a1ne11ding Ordinance-Protection only to transfers, assi}?n111ents,
or
s11h-/ease.\· h:r
tenanr.f-Sun.lc•a.\'i'
1ntrfl he in pns<;ei;.~·ion whl'n l11nending Ordinance ca1ne into forCt'.
f
The owner let out the premises to one Occhhavlal in 1952.
OcchhavJal sub-let the premises to one Sovani.
About 1952. Sovani assigned his
husinc.ss \.\.ith the possession of the suit premises to a private Company
of which he h<camc the Director.
Rent was paid to the landlord upto
1966 by Occhhavlal. The owner obtained the posse·sion of the suit premises in execution of a decree obtaincJ against Occhhavlal for n<1!l-paymcnt of rent
~1n<l sub-letting. The assignee. private compiloy, made an
application for a relief against the Jisposscs~ion under Order XXI, RuJc
JOO of the CoJe of Civil Procedure.
The Trial Court gra;!ltcd the relief.
but the same was reversed by the appdlatc authority on
the
revision
application filed by the owner. On th" writ petition filed by the private
company, the Bombay High Court allowed the Writ Petition holding that
Ihc private company was a tenant entitled ·lo the protection of Seq. 15(2)
of the Bombay Rent Act.
Allowing the appeal filed by the ow,ner,
HELD: Sec. 15(2) of the Act pro\ccts only sub-leases or assign·
ments or transfer by the tenants. but. docs not protect subsequent assignments or transfers by assignees of trankrerccs. The proviso and explanation
to Sec. 15(1) of the Act protects transfer of interest in notified lease or
c!ass of lease to assignees or transferees as well as subsequent assignments
or transfers. The assignmcnt.s in 'favour of the private company was not
covered by any notification issued u/s 15 (I) of the Act.
The assign·
meat to the private company was not made by the tenant but suh·tCnant.
When the Ordinance of 1959 came into force, Sova:ni did not continue
in
posses:::'.Jn.
It
was
the private company \Vhich was in pCb~ess1on
Th·zrefor:!. the private. company is not entitled to protection u 's 15 (1)
of the Act.
Section 108 (2) of the Transfer of Property Act notices disti;nction
between sub·lcase by a lessee and transfer by snh-lessce of his interest hy
subsequent transfer. [607C. Fl
N. W. Nayak v. C/1/iota/11/ Harira111. 69 Born. LR. 551. approvcJ.
Civ1L Al'PELUTE JuRISDlCTION :
Civil Appeal No. 269 c.f
1972.
H
Appeal by ;pccir.\ leave from the judgment and order
January 28, 1972 of the Bombay High Court in
Special
Application No. 2Hl8 of 1971.
dated
Civil
~04
SUPREME COURT REPORTS
[1973] 2 s.c.R.
V. M. Tarl:11nd<', D. N. Misra, J.B. Dadachanji, 0. C. Mathur
A
and Ravinrler N11rai11, for the appellants.
V. V. Patel, S. S. Javali, D. N. Hungund and Vineet Kumar.
for the respondent,.

## Text

B
c
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F
G
JAi SINGH MORARJI & ORS .
...
Mis SOVANI PVT. LTD. & ORS.
October 9. 1972
IA. N. R.\Y. D. G. f'ALEKAR, M. H. BEG A);D S. N. DWiVU)I. JJ.]
Bvn1bay R£•nts, JJotel llncl Lodging, House Ratt·s Central Act, SecliolJ
J 5 ( 2 )-Validation of suh·l.etting hy
J 959 a1ne11ding Ordinance-Protection only to transfers, assi}?n111ents,
or
s11h-/ease.\· h:r
tenanr.f-Sun.lc•a.\'i'
1ntrfl he in pns<;ei;.~·ion whl'n l11nending Ordinance ca1ne into forCt'.
f
The owner let out the premises to one Occhhavlal in 1952.
OcchhavJal sub-let the premises to one Sovani.
About 1952. Sovani assigned his
husinc.ss \.\.ith the possession of the suit premises to a private Company
of which he h<camc the Director.
Rent was paid to the landlord upto
1966 by Occhhavlal. The owner obtained the posse·sion of the suit premises in execution of a decree obtaincJ against Occhhavlal for n<1!l-paymcnt of rent
~1n<l sub-letting. The assignee. private compiloy, made an
application for a relief against the Jisposscs~ion under Order XXI, RuJc
JOO of the CoJe of Civil Procedure.
The Trial Court gra;!ltcd the relief.
but the same was reversed by the appdlatc authority on
the
revision
application filed by the owner. On th" writ petition filed by the private
company, the Bombay High Court allowed the Writ Petition holding that
Ihc private company was a tenant entitled ·lo the protection of Seq. 15(2)
of the Bombay Rent Act.
Allowing the appeal filed by the ow,ner,
HELD: Sec. 15(2) of the Act pro\ccts only sub-leases or assign·
ments or transfer by the tenants. but. docs not protect subsequent assignments or transfers by assignees of trankrerccs. The proviso and explanation
to Sec. 15(1) of the Act protects transfer of interest in notified lease or
c!ass of lease to assignees or transferees as well as subsequent assignments
or transfers. The assignmcnt.s in 'favour of the private company was not
covered by any notification issued u/s 15 (I) of the Act.
The assign·
meat to the private company was not made by the tenant but suh·tCnant.
When the Ordinance of 1959 came into force, Sova:ni did not continue
in
posses:::'.Jn.
It
was
the private company \Vhich was in pCb~ess1on
Th·zrefor:!. the private. company is not entitled to protection u 's 15 (1)
of the Act.
Section 108 (2) of the Transfer of Property Act notices disti;nction
between sub·lcase by a lessee and transfer by snh-lessce of his interest hy
subsequent transfer. [607C. Fl
N. W. Nayak v. C/1/iota/11/ Harira111. 69 Born. LR. 551. approvcJ.
Civ1L Al'PELUTE JuRISDlCTION :
Civil Appeal No. 269 c.f
1972.
H
Appeal by ;pccir.\ leave from the judgment and order
January 28, 1972 of the Bombay High Court in
Special
Application No. 2Hl8 of 1971.
dated
Civil
~04
SUPREME COURT REPORTS
[1973] 2 s.c.R.
V. M. Tarl:11nd<', D. N. Misra, J.B. Dadachanji, 0. C. Mathur
A
and Ravinrler N11rai11, for the appellants.
V. V. Patel, S. S. Javali, D. N. Hungund and Vineet Kumar.
for the respondent,.
The Judgment of the Court was delivered by
B
f..AY, J.-This is an appeal by special leave from the judgment dated 28 January 1970 of the High Court at Bombay.
The High Ccurt in a writ petition under Article 227 of the
Constitutio11 quashed an order of the Court of Small Causes,
Boll)!Jay.
c
A trust known as Padamsi Bhanji Trust of Bombay owned
a gouown at 8 Mugbhat Lane, Girgaum, Bombay. The tenant o~
the property before 1952 was Ochhavlal.
The property thereafter came into possession of S. V. Sovani.
Sovani carried on
the business of preparation and sale of scientific apparatus. Abouc
1952 Sovani became Director of Sovani Private Limited ComD
pany referred to as the Private Company. The Private Company
went into possession of the godown as also the business which
was carried on by Sovani.
Rent was paid up to the year 1966
in the name of Ochhavlal. .Rent receipts were also in the name of
Ochhavlal. In the year 1966 the trust employee who collected
rent refused to accept rent.
Thereafter rent wa' sent by money
E
order to the trustees.
The trustees dicl. not accept the money
orders.
The trustees
in the year
1970 filed
suit possession.
Ochhavlal was the defendant in the suit. The grounds· for eviction of Ochhavlal were first that he was a defaulter in the payment
of rent from 1966, and, secondly, he was guilty of sub-letting.
F
The suit was decreed ex-parte in the month of March, 1971. On
8 April, 1971 the trustees obtained possession.
Thereafter an appliration was made under Order XXI rule
I 00 of the Code of Civil Procedure by the Private Company for
relief against dispossession in execution of the decree. The trial
G
Court accepted the contention of the private Company that they
became sub-tenants.
Against that Order an application in revision was filed by the
trustees.
The Small Causes Court set aside the order passed by
the trial Court.
The Private Company thereupon made an ;ipplication under
Article 227 of the Constitution in the High Court. The High
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J. S. MORARJI V. SOVANI PVT. LTD. (Ray, J.)
605
A
Court held lb.at the Small Causes Court in revision committed an
error in applying section 15 ( 2) of the Bombay Rent Act 194 7.
The High Court held that the Private Company was a tenant
within the meaning of the Bombay Act.
This appeal turns entirely on the provisions contained in sec8
tion 15 of the Bombay Rent Act referred to as the Act.
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Section 15 ( I) of the Act is as follows :-
"Notwithstanding anything contained in any law, bu~
subject to ruty 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.
The present sub-section (I) was numbered as sub-section (i) by
Bombay Ordinance No. III of 1959 published on 21 May, 1959.
This was subsequently enacted in Bombay Act No. 49 of 1959_
Prior to the renumbering with the exception of the words "but
subject to any contract to the contrary" the body of the section
was the same.
There is a proviso to sub-section ( 1) which runs thus :
"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."
There is also an explanation to sub-section (i). This explanation was added by Maharashtra Act No. 17 of 1968. The
explanation is that leases or class of leases shall include and shall
be deemed always to have included within their meaning assignments and other transfers of the !'eases or class of leases, and accordingly notwithstanding any judgment, decree or order of any
Court, provisions in any notification under the proviso which purports to permit assignments and transfers by lessees shall include
and shall always be deemed to have included
assig~ments and
transfers of the leasehold, made on or after 12 May 1948, and
whether made by the original lessees or their assignees or transferees or dny subsequently assignees or transferees. The net effect
of the explanation is that where leases or class of leases are soccifierl in the Government notifications assi~nments and transfers by
original lessees on or after 12 May 104g and subsequent assignments and 1ransfers by assignees and transferees are all 'protected.
'
till 6
SUPREME COURT REPORTS
[1973] 2 s.c.R.
One of the Government notifications permitted transfer or
assignment incidental to the sale of a business as a going concern
togemer with the stock-in-trade and the goodwill thereof, provided
that the transfer or assignment is of the entire mterest of the
transferor or assigno_r in such leasehold premises together with
the busmess and the stock-in-trade· and goodwill thereof.
There
wue other notifications under the proviso to section 15 ( l) whereby the Government of Bombay permitted in all areas to which
Part II of the Act extends several types of transfers and assignments by lessees of their interests iu leasehold premises as, and
to the extent, specified in the notifications.
The present assignment is r.ot covered by any of the specified types mentioned in
the Government notifications.
The relevant provision for the purpose or the present appeal
is sub-section (2) of section 15 of the Act. Broadly stated, the
lirst limb of the sub-section is that the prohibition against subletting by the tenant of whole or any pan of the premises and
against the assignment or transfer in any other manner of the interest of the tenant therein, contained in sub-section (i J, shall,
wbject to the provisions of sub-section ( 2), be deemed to have
· had, no effect before the commencement of the Bombay Rents,
Hotel and Lodging House Rates Control (Amendment) Ordinance 1959 on 21 May 1959 in any area in which this Act or
the provisions were in operatian before the commencement. Section J5(2) of the Act was inserted on 21 May 1959 by Bombay
Ordin&nce No. HI of 1959.
It was later deemed to have been
substituted on 21 May, 1959 for the original. by Maharashtra
Act No. 38 of 1962. Prior to the Bombay Ordinance 1959 section 15 as it originally stood pr9hibited sub-lettiug by any tenant
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or assignment or transfer of his interest therein. This prohibition
against sub-letting or assignment or transfer by the tenant of his
interest contained in sub-section (i) shall be deemed to have had· F
no effect before the Ordinance.
Therefore, the ban against subletting by a tenant or assignment or transfer of his intere;t therein
prior to the Ordinance of 1959 is removed.
The matter does not rest there because of the second limb of
sub-section (2) of section 15 of the Act.
It is provided there
that any such sub-1case, assignme,nt 6r transfer or any such purported sub-lease
assignment or transfer in
favour
of
any
person who has entered into possession before 1959 and has continued to be in possession shall be deemed to be valid and effective.
Therefore, the subletting before 1959 by a tenant is val,id
under sub-section (2) provided such sub-lessee entered into possession and continued in possession at the commencement of the
Ordinance. Such sub-letting is rendered valid notwithstanding
anything contained in any contract or any decree or order of
('our!.
The Act :1s a corollary also introduced the measμre that
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J, S. MORARJl V. SOVANl PVT. LTD. (Ray, J,)
607
any tenant who has sub-let shall not be liable to evictiOtl) 1111der
section 13 (1 ) (a) of the Act.
The proviso and the explanation to section 15 (1) of the Act
protect transfer of interest in notified leases or class of leases to
assignees or transferees as well as subsequent assignees or transferees. Section 15 (2) of the Act protects only sub-lease or assign~
ment or transfer by the tenant but does not protect subsequent
assignments or transfers by assignees or transferees:
The entire question in the present appeal is whether the Private Company is a sub-lessee protected under section 15 (2) ot
the Act.
The answer to the question is whether the respondent Private
Company was a sub-tenant prior to 1959 and continued in possession at the commencement of the Ordinance in 1959. Ochhavlal
in the present case gave the sub-lease to Sovani before the Ordinance.
It is an indisputable feature in the present case
that
Sovani did not continue in possession at the commencement of
the Ordinance of 1959. Sovani !vecame a Director-of the Private
Company. It is the Private Company which claims to be a subleasee.
The Private Company was in the first place not a sublessee of the tenant but a siibsequent assignee from the sub-lessee.
Secondly Sovani who was the sub-lessee was not in possession on
t:.e date of the Ordinance on 21 May 1959. It was the Private
Company which was in poss~ssion. Therefore, the Private Company is not within the-pr~tection of section 15(2i uf the Act.
Section 108 of the Transfer of Property Act provides that a
lessee may transfer absolutely by way of mortgage or sub-leas~
the whole or any part of his interest in the property, and any
transferee of such interest or part may again transfer it. This
provision contained in_section 108(j) of th11 Transfer of Property
Act notices the distinction between the sub-lease by a lessee and
transfer by such sub-lessee of his interest by a subsequent transfer.
Section 15 of the Bombay Act dealt with only sub-letting by the
tenant. That sub-letting by the tenant is no longer unlawful provided the conditions in section 15 ( 2) are fulfilld.
It is only the,
sub-lease by the tenant which is mentioned in sub-section ( 1)
and rendered valid in sub-section (2) of section 15 of the Act.
The Bombay Rent Act does not in section 15 ( 2) protect any
further lease or transfer by the sub-lessee.
The Bombay High Court in a Bench decision in N. M. Nayak
v. Chhota/al Hariram 69 Born. L.R.
551
rightly held that
section 15(2) of the Act validated only sub-letting, transfer and
assignments by tenants and no further sub-letting or further derivative transfer or assignment by such sub-lessees, transferees or
assignees.
4-L499SupCl/73
608
SUPREME COURT REPORTS
(1973] 2 s.c.R.
The word 'tenant' in sectic;n 15 of the Bombay Act means the
A
contractual tenant. In Anand Nivas (P.) Ltd. v. Anandji [1964]
4 S.C.R. 892 this Court said that the expression
"tenant" in
section 15(1) of the Act means the contractual ,cna.nt and not the
statutory tenant.
The legislature by the Ordrncmce ot I '!5'! intended to confer protection on sub-tenants of contractual tenants.
The Ordinance did not confer any protection on further transfer
ll
or further sub-letting by sub-lessees of the contractual tenants.
Section 5 (ii) of the Act defines "Tenant". to include
subtenants or other persons as have derived title under a tenant before the Ordinance of 1959. After the decision of the Bombay
High Court in Nayak's case (supra) sub-clause (aa) was introduced to clause (ii) in section 5 of the Act. The Amendment
was as fQllows :-
"Any person to whom interest in premises has been
assigned or transferred as permitted, or deemed to be
permitted, under section 15".
The amendment was
introJu~ed . into the Act by the
Maharashtra Act No. 17 of 1968 with retrospective effect as from
12 May 1948. The amendment was b:rought into existence as a result of the decision of the Bombay High Court in Nayak's case
(supra).
The Jligh Court held in that
case that a person
seeking to claim protection by the provisions contained in the
notification issued under the proviso to section 15 ( 1 ) of the Act
must -establish that his transferor was a lessee of the premises
transferred or assigned.
The decision was to the effect that the
only persons who were entitled to transfer or assign the interest
of the premises were to satisfy the character of a lessee as defined
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in section 105 of the Transfecof Property Act. The assignee of
a lessee was held not to be a lessee as defined by the Tramfer of
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Property Act. In this context; the explanation to section 15 (1 )
of the Act as well as sub-Clause ( ait) in clause (ii) of section 5
of the Act were introduced to confer protection on the successive
transfer by original lessees in regard to leases or class of leases
notified under the proviso t.o section 15 (1) of the Act.
A faint attempt was made by counsel for the respondents to
suggest that the respondents would be protected by the exolanation to Fection 15(i) of the Act. There is no foundation for such
a case in the High Court. There are no materials to sunnort such
a plea.
This contention cannot therefore be entertained.
The learned Single Judge of the High Court was clearly in
error in holding that the respondenf Private Company was protected by section 15 (2) of the Act.
The appeal is: ~herefore,
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J. S. MORARJI V. SOVANI PVT. LTD. (Ray, J.)
609
allowed, The judgment of the High Court is set aside.
The
appellants. will be entitled to costs.
S.B.W.
Appeal allowed.