Ex­e­cute a wa­ter­tight lease agree­ment

HT Estates - - HTESTATES -

Sub­let­ting, as­sign­ment and/ or part­ing with pos­ses­sion of ten­anted premises with­out the con­sent of the land­lord can be se­ri­ous. In­ter­est­ingly, the term sub­lease is not de­fined un­der the Trans­fer of Prop­erty Act, 1882 (‘the Act’). Al­beit, the Act does not de­fine sub­let­ting, terms as they ap­ply to a lease would also ap­ply to sub-lease mu­tatis mu­tan­dis (a Latin phrase mean­ing ‘ chang­ing only those things which need to be changed’). So whilst, the same would be gov­erned by the Act, sub­let­ting is not perse il­le­gal. Whether sub­let­ting, as­sign­ment and/or part­ing with pos­ses­sion is per­mit­ted or not, would be de­ter­mined by the lan­guage of the lease agree­ment ex­e­cuted be­tween the land­lord and ten­ant.

Since a lease amounts to a trans­fer of prop­erty, it is im­per­a­tive for a ten­ant to pro­tect him­self ad­e­quately by in­sert­ing clauses in the lease that pre­vent the ten­ant from sub­let­ting. The lease should also specif­i­cally pro­hibit as­sign­ment, alien­at­ing and/or part­ing with pos­ses­sion of a premises in any man­ner what­so­ever.

Although, the Act does not pro­hibit sub­let­ting, in­ter­est­ingly, the Delhi Rent Con­trol Act, un­der Sec­tion 14 1 ( b) specif­i­cally states that sub­lease, as­sign­ment or part­ing with pos­ses­sion, with part or whole of the ten­anted premises, would be a ground for evic­tion by the land­lord.

Over the years, op­er­at­ing part­ner­ship firms in ten­anted premises have courted much con­tro­versy. Open­ing and op­er­at­ing part­ner­ships amounted to sub­let­ting have been an is­sue and have also been at the heart of many dis­putes.

In the mat­ter of Madras Ban­ga­lore Trans­port Co ( West) v. Inder Singh, the Hon’ble Supreme Cour t , in 1986, drew a dis­tinc­tion be­tween con­tin­u­ing to own the ten­ancy rights and al­low only its use to the firm or for the ben­e­fit of the firm and where the ten­ant trans­fers his ten­ancy rights to the part­ner­ship firm so as to make it the prop­erty of the firm. In case of the lat­ter, the Hon’ble Court, held there was no sub­let­ting or part­ing with pos­ses­sion and there­fore no con­sent of the land­lord would be re­quired.

So l ong as t he t e nant re­mains a part­ner there is no sub­let­ting. How­ever, where the firm was dis­solved and the business passed to the other part­ners op­er­at­ing from the same premises, sub­let­ting would be­gin from the date of dis­so­lu­tion. This was the propo­si­tion held in Trilok Singh v Ram­prasad, in 1971, by the Mad­hya Pradesh High Court.

There­fore, while ex­e­cut­ing part­ner­ship deeds, read­ers are ad­vised to en­sure the deed specif­i­cally pro­vides that the ten­ant re­tains the ten­ancy right to the premises and there is no pass­ing of the ten­ancy, as an as­set, to the part­ner­ship.

The mat­ter of Amar Nath Agar­walla v Dhillon Trans­port Agency, threw up an in­ter­est­ing sit­u­a­tion.The orig­i­nal ten­ancy was in favour of one firm known as Chuni Lal Gheru­lal which had three part­ners, namely Chuni Lal, Gheru Lal and Megh Raj. The part­ner­ship closed down be­fore Novem­ber, 1955 and after that the shop be­gan to be used by another fir m un­der the name and style of Meghraj Ban­sid­har of which one of the part­ners was Meghraj of the old Chuni Lal Gheru­lal fir m and one Ban­sid­har. The Hon’ble Court held there was no sub­let­ting from the old firm in favour of the new firm. One of the propo­si­tions pos­tu­lated by the Hon’ble Court was that was not a le­gal en­tity and a firm’s name was ‘only a com­pen­dious way of de­scrib­ing the part­ners of the firm’. Oc­cu­pa­tion by a firm is only oc­cu­pa­tion by its part­ners. Since Meghraj had been in oc­cu­pa­tion of the shop in his in­di­vid­ual ca­pac­ity, both as a mem­ber of the old firm as well as of the new firm, there was no sub­let­ting.

THINKSTOCK

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