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TMI Blog2004 (3) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... s held by him whether they are for residential or non-residential purposes (see para 10) ; and on that basis, found that the leasehold rights cannot be put to sale. In my opinion, prima facie, by virtue of section 56 of the Act, which is a non obstante provision, the limitation or restriction imposed in Section 26 of the Act is lifted and would enable the decree-holder to enforce the decree qua such premises, for it recognises that the tenant or any person acting or purporting to act on behalf of the tenant can claim or receive any sum or any consideration as a condition of the relin-quishment, transfer or assignment of his tenancy of any premises. The judgment of this Court pressed into service has obviously not considered the efficacy of Section 56 of the Act, which has a non obstante clause. In the circumstances, the appropriate course is to refer the matter to a larger Bench for an authoritative pronouncement of the question that arises for consideration in this case. Accordingly, the papers be placed before the learned Chief Justice for assigning it to a larger Bench. ( 2. ) This is now the present Full Bench has been constituted by Honble the Chief justice. ( 3. ) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a transfer of right to enjoy the property leased and by way of lease, the lessee gets the right to remain in occupation of the premises on payment of rent. ( 9. ) In Ramesh Himmatlal Shah v. Harsukh Jadhavji Joshi, (1975) 2 SCC 105 : (AIR 1975 SC 1470) the Supreme Court was seized with the question of law : Is a flat in a tenant co-partnership housing society under the Maharashtra Co-operative societies Act, 1960 liable to attachment and sale in execution of a decree against a member in whose favour or for whose benefit the same has been allotted by the society. The Supreme Court considered the said question in the light of the provisions of section 60 of the Civil Procedure Code (CPC), the provisions of the Maharashtra Co-operative Societies Act, 1960 and also the byelaws of the society and held in para 19 of the report thus 19. This right or interest to occupy is a species of property. We have to consider whether this right to the particular property is attachable and saleable in execution of the decree against the judgment-debtor. It is contended by Mr. Chatterjee, amicus curiae, that Section 31 of the Act completely bars attachment, and sale of the said property in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion that this species of property, namely the right to occupy a flat of this type, assumes significant importance and acquires under the law a stamp of transferability in furtherance of the interest of commerce. We have seen no fetter under any of the legal provisions against such a conclusion. The attachment and the sale of the property in this case in execution of the decree are valid under the law. ( 10. ) In what we have discussed above, it cannot be seriously disputed that tenants right to remain in occupation of the nonresidential tenanted premises is a property. If it were not so, the interest of a lessee of the residential building to which the Rent control Act was applicable would not have been excluded by introducing clause (kc) in proviso to sub-section (1) of Section 60, CPC. ( 11. ) Section 6 of the TP Act provides that property of any kind may be transferred, except as otherwise provided therein or by any other law for the time being in force. Clause (d) of Section 6 reads thus : 11. What may be transferred. Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force. (d) An interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancy. When the interest of a tenant of any premises is determined for any reason, any sub-tenant to whom the premises or any part thereof have been lawfully sub let and such sub-tenancy is subsisting on the date of commencement of this Act or where subtenancy is permitted by a contract between the landlord and the tenant, such sub-tenant shall, subject to the provisions of this act, be deemed to become the tenant of his landlord on the same terms and conditions as he would have held from the tenant if the tenancy had continued. ( 14. ) In the background of Section 7 (15)and Section 25 of the Act of 1999, we turn to Section 26 which reads thus : 26. In absence of contract tenant not to sub-let or transfer or to give on licence. Notwithstanding anything contained in any law for the time being in force, but subject to any contract to the contrary, it shall not be lawful for any tenant to sublet or give on licence the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein ; provided that, the State Government may by notification in the Official Gazette, permit in any area the transfer of interest in premises held under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety. The supreme Court also held that the right to occupy such a flat assumed significant importance and acquired under the law a stamp of transferability in furtherance of the interest of commerce to impose a ban on saleability. It was held that though the flat was owned by the society, the member allottee had a right or interest to occupy the same and that there was nothing in Section 31 to indicate that the right to occupation which was a right to be sold in auction was not attachable in execution proceedings. Mr. Mahendra Ghelani, the learned counsel appearing for the applicants in support of the chamber summons sought to distinguish missed by the City Civil Court but the learned single Judge of this Court allowed the appeal and set aside the attachment and sale of the flat. The Division Bench of this court maintained the order of the learned single Judge and the matter was carried to the Supreme Court and as noticed by us above, the Supreme Court held that right of interest to occupy the flat by the judgment-debtor Hasmukh Joshi was a species of the property and that it was both attachable and saleable. In the light of the principles laid down by the Supreme Court in Ramesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the lessee to contract that the lessee can sub-let the premises or as-sign or transfer in any other manner his interest therein. In other words the prohibi-tion contained in sub-section (1) is not ab-solute. The section nowhere provides that the transfer shall be void. The proviso of the sub-section confers power on the State Gov-ernment to issue notification permitting the transfer of interest and such notification has been issued permitting transfer of interest of the lessee in the business premises, pro-vided what is transferred is the running business with tenancy rights. It is, therefore, clear that even the legislature never contemplated that the lessee of non-residential premises cannot transfer or assign the interest in the leasehold rights. The learned judge was, therefore, not right in observing that the transfer of leasehold interest in non-residential premises is totally prohibited and therefore not liable for attachment. It was also overlooked that the grievance on account of breach of sub-section (1) of Section 15 of the Bombay Rent Act can only be at the behest of the lessor and the lessee whose interest in the leasehold rights is attached cannot complain about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e let for the business, trade or storage. In our considered view, this difference in proviso by taking out non-residential premises out of the purview of State Governments power to permit the transfer of interest by issuance of notification in Official Gazette does not make the ratio of the Division Bench in Mittersain rupchand inapplicable under Section 26 of the Act of 1999. Even if we assume that under the proviso to Section 26 of the Act of 1999, the State Government cannot permit the transfer of interest in the premises let out for business, trade or storage, the prohibition contained in Section 26 being subject to the contract to the contrary does not alter the legal position that the restriction under Section 26 is neither absolute nor total. We find ourselves unable to agree with the submission of Mr. Mahendra Ghelani that Section 26 of the Act: of 1999 provides total prohibition for transfer io the tenant and the only exception being the contract to the contrary and, therefore, the tenancy right is not saleable. ( 20. ) Incidentally , we may notice that one of us (S. J. Vazifdar, J.) in M/s. Veetrag Investments and Finance Company v. M/s. Premier Brass and Metal Works P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the notification. This section was amended in 1959 and was made subject to any contract to the contrary. The clear effect of this section is that until the Act was amended no tenant was entitled in any manner to transfer or sub-let his interest in the tenancy, and after the amendment unless permitted by the contract. Under the proviso the State Government had issued notifications from time to time which permitted the transfer of tenancy interest along with business as a going concern, and the sad experience of the litigating public is that it is extremely misused, However, with the policy of the legislation we are not concerned. ( 22. ) In Zarina Umer Chamdewala, the division Bench went on to hold thus in the present case, the flat is a residential flat and the agreement gives no power to the defendant to transfer her interest in the property. On the contrary, it specifically prohibits her from transferring the same to, anyone under clause 11 thereof. It is obvious, therefore, that under S. 15 of the Bombay Rent Act the transfer is unlawful. In the circumstances, assuming that it is property the question is, is it such property that it can be divisible amongst the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1937 Nagpur 242)occupancy land in Nagpur and in masumayya v. Official Receiver, Kurnool (AIR 1943 Mad 72) Masjir service lands, were held not to vest in the receiver in insolvency. In the first case under the Agra Tenancy Act the ex-proprietary tenancy could not be transferred in execution or alienated except inaccordance with law. In the second case, the lands involved were governed by the punjab Tenancy Act which could not be attached or sold in execution of a decree or transferred by private contract without the consent of the landlord. In the fourth case, which is more apposite, the lands were service Inam lands. Such lands it was held in anjanevalu v. Sri Venugopala Rice Mill Ltd. (1992 ILR 45 Mad 620) to be inalienable by reason of S. 6 (d) of the Transfer of Property act as it was opposed to the nature of the interest affected thereby . In our view, the ratio of these cases must apply to the case where a tenant is a monthly tenant governed by the Rent Act unless his tenancy is made alienable under the proviso to S. 15 (1) of the Bombay Rent Act. ( 23. ) Zarina Umer Chamdewala was considered by the Division Bench in Mittersain rupchand and was distinguished thus at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the agreement between the parties while effecting transfer was only for the purpose of creation of sub-tenancy of the premises and nothing more. As mentioned hereinabove it is not permissible to merely transfer or assign Interest in the leasehold property but it must be accompanied by transfer of running business and stock-intrade. The decision therefore proceeds on the peculiar facts and that case nowhere holds that the leasehold interests of a lessee of non-residential premises are not liable to attachment and sale. Reliance on the decision of the single judge of Delhi High Court in the case of belrux India Ltd. (AIR 1983 Delhi 430) (supra) is also not accurate. Section 14 of delhi Rent Control Act, inter alia provided that no order or decree for recovery of possession of any premises shall be made by any Court in favour of landlord against the tenant unless the tenant has on and after june 9, 1952 sub-let, assigned or otherwise parted with possession of the premises without obtaining the consent of the landlord in writing. As the tenant in the case before the delhi High Court had transferred the interest without obtaining consent of the landlord in writing, it was held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Roy chowdhary, decided on September 1, 1891 and reported in (1893) ILR20 Calcutta 273, the Division Bench of Calcutta High Court held, we take it to be clear law in India, as in England, that a general restriction on assignment does not apply to an assignment by operation of law taking effect in invitum, as a sale under an execution. The Bombay cases cited are authorities for this proposition as regards India . Golar Nath Roy Chowdhary was a case where certain land was leased the lease expressly prohibiting the lessee and his heir from making any assignment of the property either by sale or gift, though there was no provision for forfeiture or for re-entry by reason of assignment in violation of its terms. The leased property was sold in execution of the decree against the lessee. In the suit to recover possession, the plaintiff contended that by virtue of the provisions in the lease nothing passed to the purchaser under the sale nor was there any saleable interest within the provisions of Section 266 (now Section 60)of the C. P. C. in the lessee. The defence of the auction purchaser, inter alia, was that the lease did not prevent a sale in execution. The Division Bench of Calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable to be attached and sold in execution of a decree, the same cannot affect the rights of the landlords/head tenant in any manner for the right of a tenant under Section 56 of 1999 Act can only be exercised with the consent of the landlord and that in execution of a decree against the tenant/subtenant, the Court cannot force an unwilling landlord/head tenant to enter into such a agreement. We however keep this question open to be decided by the executing Court at the appropriate stage. ( 29. ) Even otherwise, if the tenant acts in contravention of the prohibition contained in Section 26 by voluntary transferring or assigning the interest of tenancy, the tenant exposes himself to eviction as unlawfully sub-letting or transfer or assignment by the tenant is a ground for eviction. ( 30. ) Section 60 of the Civil Procedure code is as follows: 60. Property liable to attachment and sale in execution of decree. (1) The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes. Government securities, bonds or other securities for money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of a lease to any other person. ( 33. ) The aforesaid provision leaves no manner of doubt that it enables the tenant to claim or receive any sum or any consideration, as a condition of the relinquishment, transfer or assignment of his tenancy of any premises. It indicates that the tenant has a disposing power in respect of the interest in the tenancy in the non-residential premises for his own benefit either by surrendering it to the landlord for any sum or consideration or transfer or assign the tenancy for consideration. Clause (kc) appended to the proviso of sub-section (1) of Section 60 prohibits the attachment and sale of Interest of the lessee of a residential building to which the Rent Control Act applies but the said prohibition is not applicable to the interest of a tenant of a nonresidential premises to which the Maharashtra Rent Control Act applies and therefore, it can safely be held that the Interest of the tenant in the nonresidential premises to which the Act of 1999 applies Is attachable and saleable in execution of the decree against the tenant. ( 34. ) Section 26 as well as Section 56 of the Act of 1999 start with the non obstante clause. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public auction the interest of the tenant in execution with a view to get back his property without undertaking exercise of eviction. The cases may be many. Can it be said that interest of the tenant in the non-residential premises is not saleable or that the tenant has no disposing power in respect of such interest for his beneflt. The answer obviously has to be in the negative. ( 36. ) The submission of Mr. Mahendra ghelani that the saleable right has to be in praesenti and merely because the lessor may give his consent later on or he may ratify the act of transfer or assignment done by the tenant cannot be a reason to hold that the interest in tenancy can be transferred in the teeth of Section 26, is without merit and devoid of substance for the reasons we have already indicated above. ( 37. ) In Veetrag Investments I, the learned single Judge in paras 8, 9 and 10 noted thus 8. The next submission made by Shri samdani is that the demised premises are not liable to be attached. There is no dispute on the fact that the applicant is the owner and landlord of the entire building of which the demised premises are a part and that the defendant is only tenant in the demised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises in demised of the plaintiff was made on 30-3-2001 i. e. exactly one year after the coming into force of the Rent Act, 1999. It is therefore, obvious that the question as to whether tenancy and goodwill in respect of the premises which are non-residential can be transferred, is governed not by a Rent Act, 1947 but, the Rent Act, 1999. Shri Samdani referred to the provisions of section 26 of the Rent Act, 1999 which provides that in the absence of contract tenant not to sub-let or transfer or give on licence. 10. The proviso enables the State Government to permit in any area the transfer of interest in the premises held on lease other than those let for business. It is not brought to my notice that the State Government has issued any notification under the proviso of Section 26 of the Rent Act, 1999. Even in that case, the notification cannot be in respect of the premises let for business. It is therefore, clear that in the absence of any contract, the tenant has no right to sublet or transfer the. premises held by him whether they are for residential or non-residential purposes. The argument of shri Samdani is to the effect that the sale of the demised premises as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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