Court’s Decision
The Bombay High Court dismissed two Civil Revision Applications filed by the legal heirs of a deceased tenant challenging concurrent eviction decrees passed by the trial court and the appellate court. The Court held that the tenants had unlawfully sublet the premises under the guise of a partnership, had defaulted in payment of rent in violation of Section 12(3) of the Bombay Rent Act, 1947, and that the landlord-bank had established bona fide and reasonable requirement of the premises for its business. The Court further observed:
“The miniscule share of 1% each militates against the partnership being a genuine transaction. It defies comprehension that for a meagre 3% profit in the partnership business, the tenants continued to exercise control over the demised premises.”
Accordingly, the Court upheld the eviction decrees, dismissed both revision applications with costs, and continued interim relief for six weeks subject to an undertaking.
Facts
The dispute pertained to premises situated on Harbhat Road, Sangli, belonging to an urban cooperative bank. The premises, admeasuring 80.4 sq. meters, had been let out to a tenant, Bhausaheb Patil, at ₹350 per month. The tenant defaulted in payment of rent and electricity charges since July 1988. Despite notice, arrears remained unpaid.
The landlord-bank filed RCS No. 444 of 1989 for eviction on the ground of default and bona fide requirement. During its pendency, another suit, RCS No. 214 of 2006, was filed alleging unlawful subletting after the tenant’s death in 1998. The legal heirs had allegedly sublet the premises to third parties who ran shops like Anand Shopee and later Get In.
Both suits were decreed in favour of the bank—RCS 214 of 2006 in 2013 and RCS 444 of 1989 in 2015. Appeals before the District Judge were dismissed in 2019. Thereafter, the tenants approached the High Court through revision applications.
Issues
- Whether the partnership deed relied upon by the tenants was a genuine arrangement or a subterfuge to conceal unlawful subletting.
- Whether consistent delay in payment of rent amounted to default under Section 12(3) of the Bombay Rent Act.
- Whether subsequent developments eclipsed the landlord-bank’s bona fide need for the premises.
- Whether greater hardship would be caused to the tenant if eviction was granted.
Petitioner’s Arguments
The tenants contended that there was no subletting; instead, they had entered into a registered partnership with Rajesh Gidwani (PW-5), thereby retaining tenancy rights. They argued that the courts below erred in dismissing the partnership deed as a sham. They submitted that their participation in the business, albeit with smaller profit shares, demonstrated continued possession.
On rent default, they contended that though there was some delay, arrears were cleared with interest, and occasional delay should not amount to forfeiture of tenancy.
As to bona fide requirement, they argued that subsequent developments—construction of new premises by the bank and availability of other tenanted premises—negated the landlord’s pressing need
.
Respondent’s Arguments
The bank contended that the so-called partnership was a device to mask subletting. Evidence of PW-5, who admitted to having 97% profit share initially, showed that effective possession and control were transferred. The miniscule 1% profit share of the heirs was illusory.
On default, it was argued that the tenants had failed to comply with Section 12(3) of the Rent Act by not depositing rent regularly during the pendency of proceedings. Their attempt to deposit arrears for 120 months in one tranche in 2024 only confirmed habitual default.
On requirement, the bank asserted that its bona fide need subsisted, as the premises were essential for customer convenience given that the main branch was on the first floor while locker facilities were in the basement
.
Analysis of the Law
The Court reiterated that subletting disguised as partnership is a known device in tenancy law. While genuine partnerships may not constitute subletting, when control and possession are effectively parted with, courts must pierce the veil of partnership deeds.
On rent default, Section 12(3) of the Bombay Rent Act requires tenants to pay or deposit rent regularly. Irregular deposits spanning months amounted to consistent default, justifying forfeiture of tenancy.
On bona fide requirement, the Court emphasized that the crucial date is the filing of the eviction suit, as held in Gaya Prasad v. Pradeep Srivastava (2001). Subsequent events must eclipse the landlord’s need entirely to negate eviction, which was not the case here.
Precedent Analysis
The Court referred to:
- Parvinder Singh v. Renu Gautam (2004) 4 SCC 794 — Held that partnership deeds can be devices to conceal subletting; courts must examine the reality.
- Narhar D. Sakhawalkar v. Suresh Lahoti (2009 (2) Mh.L.J. 755) — Held that disproportionate profit-sharing in favour of strangers evidences subletting.
- Gaya Prasad v. Pradeep Srivastava (2001) 2 SCC 604 — Ruled that bona fide requirement is judged as of the date of filing, with subsequent events relevant only if they eclipse the need.
- D. Sasi Kumar v. Soundararajan (2019) 9 SCC 282 — Reaffirmed that landlords cannot be penalised for judicial delays; requirement subsisting at filing suffices.
Court’s Reasoning
The Court held that the partnership deed showing only 1% profit share for the tenants was not credible. PW-5’s admission that he had exclusive control over the premises established that the arrangement was a camouflage. Thus, subletting was proved.
On rent default, the Court noted habitual delays and the failure to comply with the 2019 High Court order requiring regular rent deposits. Depositing arrears for 120 months in 2024 showed persistent non-compliance.
On bona fide requirement, the Court reasoned that the bank’s need for the premises—located on the ground floor for better customer access and to complement locker facilities in the basement—remained pressing. The availability of other premises and construction of new branches only indicated business expansion, not elimination of need.
The Court also found no greater hardship to the tenants, as they had ceded possession to third parties and had alternate premises.
Conclusion
The High Court dismissed both revision applications, upheld eviction on grounds of unlawful subletting, rent default, and bona fide requirement, and imposed costs. Interim relief protecting tenants was continued for six weeks to enable them to vacate, subject to an undertaking.
Implications
This judgment underscores that tenants cannot hide behind partnership deeds to escape eviction when control is transferred to outsiders. It reinforces strict compliance with Section 12(3) of the Rent Act and clarifies that bona fide requirement is assessed at the time of filing the suit. For landlords, it affirms protection against sham defences; for tenants, it serves as a warning against misuse of partnership structures and rent defaults.
FAQs
Q1. Can a partnership deed protect tenants from eviction on subletting grounds?
No. Courts will pierce the veil of such deeds if effective control is transferred to outsiders. Sham partnerships are treated as subletting.
Q2. What constitutes default under Section 12(3) of the Bombay Rent Act?
Failure to deposit rent regularly during proceedings amounts to default, even if arrears are later cleared.
Q3. When is landlord’s bona fide requirement assessed in eviction cases?
As on the date of filing the eviction suit. Subsequent events matter only if they completely eclipse the need.
