Madan Mohan Singh vs Ved Prakash Arya on 5 March, 2021


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Supreme Court of India

Madan Mohan Singh vs Ved Prakash Arya on 5 March, 2021

Author: Ashok Bhushan

Bench: Ashok Bhushan, R. Subhash Reddy

                                                                                1

                                                                      REPORTABLE

                                  IN THE SUPREME COURT OF INDIA

                                  CIVIL APPELLATE JURISDICTION

                                CIVIL APPEAL NOS.814-815 Of 2021
                         (arising out of SLP(C)Nos.11009-11010 of 2019)

         MADAN MOHAN SINGH                                   ...APPELLANT(S)

                                              VERSUS

         VED PRAKASH ARYA                                    ...RESPONDENT(S)



                                          J U D G M E N T

ASHOK BHUSHAN,J.

Leave granted.

2. These appeals have been filed by the appellant

challenging the judgment of the High Court of Punjab

and Haryana dated 06.12.2018 by which Regular Second

Appeal No.35 of 1997 filed by the respondent, the

defendant in suit, has been allowed, and the Regular

Second Appeal No.2610 of 2002 filed by the appellant
Signature Not Verified
has
Digitally signed by
been dismissed and the suits filed by the
MEENAKSHI KOHLI
Date: 2021.03.05
15:38:23 IST
Reason:

plaintiff-appellant have been dismissed.
2

3. Brief facts of the case which are necessary to be

noted are:

The appellant due to surrender of a temporary

stall at Nehru Market was allotted Booth No.186 in

Sector 35-D, Chandigarh vide Allotment Letter dated

20.06.1972 issued by the Estate Officer, Chandigarh

Administration. The allotment specifically provided

that appellant-plaintiff has no right to transfer his

rights directly or indirectly. The appellant was

restrained from subletting the premises or any part

thereof. The building was leased out for cattle

poultry feed and for no other purpose. The appellant

entered into a partnership deed dated 18.12.1976 with

the respondent, Ved Prakash for carrying out the

business of cycle repairing etc. in partnership at

Booth No.186, Sector 35-D, Chandigarh. The

appellant’s case is that by notice dated 04.10.1979,

the respondent dissolved the partnership and

thereafter he became an employee of the appellant in

the Booth.

3

4. The Estate Officer, Chandigarh passed an order

dated 09.09.1980/15.04.1982 terminating the hire-

purchase agreement of the Booth on the ground that

the premises are being used in contravention of

Allotment Letter dated 20.06.1972. The appellant

filed an application before the Chief Administrator,

Union Territory, Chandigarh questioning the order

dated 15.04.1982 praying that order be declared

illegal and wrong. The respondent, Ved Prakash filed

an application before the Chief Administrator, in the

proceedings claiming him to be occupier of the

premises, paying that he may also be made party to

the proceedings. By order dated 09.02.1984 passed

under Public Premises (Eviction of Unauthorised

Occupants) Act, 1971, the Estate Officer directed

eviction from Booth No.186. The appeal was filed by

the respondent, Ved Prakash before the Additional

District Judge, Chandigarh. In the aforesaid appeal

the appellant also appeared. The appeal was dismissed

on 10.06.1985. However, the Appellate Court observed

that Booth belonged to the appellant and the
4

respondent, Ved Prakash was in possession as an

employee of the appellant.

5. The respondent, Ved Prakash has also filed Appeal

No.21 of 1984 challenging the order dated 09.09.1980

of the Estate Offider, Chandigarh issued on

15.04.1982 (cancelling the hire-purchase agreement).

The Chief Administrator, Chandigarh Administration

decided the aforesaid appeal on 13.03.1986 where the

Chief Administrator has also noticed that misuse of

the premises has been stopped, hence, the premises be

restored to hirer-the appellant and the respondent-

Ved Prakash was also held as servant of the hirer by

the Chief Administrator. The respondent also filed

Civil Writ Petition No.3115 of 1985 challenging the

order of eviction under the Public Premises Act which

was dismissed as infructuous on 14.03.1986 by the

High Court noticing that the order of resumption has

been revoked.

6. The appellant being unable to take possession of

the premises, he filed Civil Suit No.77 of 1986
5

impleading the respondent as sole defendant. The

appellant’s case in the suit was that possession of

Booth No.186 was given to the respondent in pursuance

of partnership deed dated 18.12.1976. It was pleaded

that after restoration of the Booth by Chief

Administrator, Chandigarh dated 04.03.1986, the

plaintiff-appellant became owner of the property and

it was further pleaded that the respondent after

dissolution of the partnership has been allowed to

use the premises as an employee. By notice dated

17.02.1986 the services of the respondent-defendant

have been terminated and the defendant was requested

to handover the vacant possession of the premises to

the plaintiff. However, the possession was never

restored to the plaintiff till date, the plaintiff

prayed for direction of mandatory injunction against

the defendant directing the defendant to restore

possession to the plaintiff of Booth No.186, Sector

35-D, Chandigarh.

7. The defendant filed a written statement. In the

written statement, the defendant pleaded that he took
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the premises on rent from the plaintiff on 18.12.1976

at a monthly rent of Rs.450/- per month. The

execution of partnership deed dated 18.12.1976 was

admitted but it was claimed as sham document. It was

further stated in para 2 of the written statement

(reply on merits) that plaintiff has never issued any

receipt for the rent and he has been refusing the

rent from October, 1982. The defendant claimed to be

a tenant. The trial court vide its judgment dated

29.02.1992 dismissed the suit. The trial court held

the defendant to be a tenant notwithstanding the fact

that defendant failed to prove any documents

pertaining to the tenancy. The execution of

partnership deed dated 18.12.1976 was accepted,

however, the trial court observed that the said

partnership deed was executed only to avoid the

prohibition in hire purchase agreement.

8. Against the order of the trial court appeal was

filed by the appellant. The First Appellate Court

vide its judgment dated 02.12.1996 allowed the appeal
7

granted the decree of mandatory injunction to the

appellant-plaintiff. The First Appellate Court held

that there was no material to come to the conclusion

that defendant was tenant. The findings of the trial

court on the question of tenancy was held to be based

on surmises and conjectures. It was held that there

was no presumption of landlord and tenant. The First

Appellate Court also noticed that the respondent, Ved

Prakash appeared as DW-2 and stated that he had

maintained accounts books in the business but there

is no record regarding payment to the appellant,

accounts books were not produced in the Court.

Against the judgment of the First Appellate Court,

the Second Appeal was filed by the defendant which

was allowed by the High Court by impugned judgment

dated 06.12.2018. The High Court framed following two

questions:

‘(i) Whether the court while adjudicating upon
the dispute must go to the route of the case
and unearth the evil design by lifting the
veil ?

(ii) Whether the first appellate court, before
setting aside a judgment passed by the learned
8

trial court, is required to analyse the reasons
given by the learned trial court and after
critical appraisal thereof give its own reasons
while disagreeing or setting aside the reasons
given by the learned trial court ?’

9. The High Court has held that the First Appellate

Court wrongly relied upon the order passed by the

Chief Administrator. The High Court further observed

that the First Appellate Court also misread that

before the Chief Administrator the defendant had

taken a stand that he was merely a servant, which is

against the record. The High Court has further

observed that the First Appellate Court has also

drawn adverse inference on account of the non-

production of the accounts books by the defendant.

The High Court held that entire story put forth by

the plaintiff does not appeal to the reason. A

Regular Second Appeal No.2610 of 2002 was filed by

the plaintif against the judgment refusing to grant

the mandatory injunction directing the defendant for

not using the Booth for cycle repairing. The appeal

filed by the defendant was allowed setting aside the
9

decree of First Appellate Court. Aggrieved by the

aforesaid judgments, these appeals have been filed by

the plaintiff-appellant.

10. There is no dispute between the parties that

Booth No.186 was allotted to the plaintiff-appellant

by order dated 20.06.1972. The condition Nos.12, 13

and 19 which are relevant for the present case are as

follows:

“12. You will have no right to transfer your
rights under this lease directly or indirectly.
You will not sublet the premises or any part
thereof. If there is any dispute as to whether
the premises have been sublet or not the
decision of the Chief Administrator,
Chandigarh, on the point shall be binding on
the parties, no fragmentation of the building
be permissible.

13. The building shall be used only for the
purpose it is leased out cattle poultry feed
and for no other purpose.

19. The undersigned shall have full rights,
power and authority at all times to do through
his officers or servants all acts and things
which may be necessary or expedient for the
purpose of enforcing compliance with all or any
of the terms conditions and reservations herein
10

contained and to recover from you the cost of
doing any such act or thing.

11. It is also admitted that a partnership deed dated

18.12.1976 was executed both by the plaintiff and the

defendant under which deed it was decided and agreed

mutually to carry out the business of cycle repairing

etc. in Booth No.186. It is relevant to notice that

the execution of partnership deed was not disputed by

the defendant, Ved Prakash but his case was that he

took premises on rent at the rate of Rs.450/- per

month on 18.12.1976. The partnership document was

termed as sham document by the defendant. In

paragraph 2 of the plaint, the plaintiff has made

pleading, which was replied in para 2 of the written

statement, which are as follows:

“Para 2 of the Plaint: That after the taking
possession of the said booth the plaintiff
earlier started running business under the name
and style of M/s Prakash Cycle Store in
partnership with the defendant and partnership
deed was duly executed between the parties on
18.12.1976. Copy of the partnership deed is
attached.

11

Para 2 of written statement: Para 2 of the
plaint as stated is wrong and denied. It is
stated that the defendant took the demised
Premises on rent from the plaintiff on the
18.12.1976 at a monthly rent of Rs.450/- per
month. The said partnership deed dated the
18.12.1976 was executed. It was a sham document
executed only to save the plaintiff from the
rigours of clause 12 of the Allotment Order
dated 20.06.1976 in favour of the plaintiff,
which lays down that in case of sub-tenancy the
booth may be resumed. In fact, the execution of
this partnership deed was one of the pre-
conditions laid down by the plaintiff for
renting out the demised premises to the
defendant. Even since the 18.12.1976 the
defendant has been in exclusive possession as a
tenant and has been paying rent at the rate of
Rs.450/- per month. The plaintiff has never
issued any receipt for the rent received. The
plaintiff has now been refusing rent since
October, 1982.

12. As noted above, the premises was resumed by the

Estate Officer by order dated 09.09.1980 which was

issued on 15.04.1982 on the ground that premises is

not being used for the purpose for which it was

granted but it was being used for cycle repairing.
12

Against the order dated 09.09.1980 the respondent

himself filed an Appeal No.21 of 1984 where the

plaintiff-appellant had also appeared and claimed

that the defendant is only a servant of the

plaintiff. The Chief Administrator allowed the appeal

holding that misuse having stopped the allotment be

restored to hirer, Madan Mohan Singh. The Chief

Administrator also after considering the arguments of

the parties came to the conclusion that Ved Prakash

was a servant of the hirer. The relevant observations

of Chief Administrator are as follows:

“….At the outset the counsel for the
appellant has stated that the misuse has been
stopped and that the premises in question are
now being used for running a shop for the sale
of poultry and cattle feed etc. The
representative of the Estate Officer has
admitted the factum of the removal of the
misuse by the appellant. Sh. Kaushal has argued
that the appellant has no locus standi for
filing this appeal because the appellant is
merely a servant of the hirer Sh.Madan Mohan
Singh. In support of his contention he has
produced before me a copy of the judgment of
the Additional Distt. Judge, Chandigarh who
dismissed the appeal of Shri Ved Prakash
holding the view that the appellant was in
13

possession of the said premises not as a tenant
or licencee but only as an employee. …… The
consideration of argument put forward by Sh.
Kaushal and that of the evidence adduced before
me by him lead me to conclude that the
appellant being a servant of the hirer has no
cause of action to agitate the impugned order.
Leaving this matter aside and adverting to the
main issue involved in this case, I find that
the misuse which was the basis for the passing
of the impugned order has been removed and the
booth is being used for the purpose for which
it was sold. I, therefore, do not find any
justification to deprive the hirer of this
booth to hold back this property. In this back
ground the allotment of the booth is restored
to its hirer Sh. Madan Mohan Singh. Since the
booth had been put to misuse the amount of
forfeiture shall stand and should be paid
within thirty days reckonable from the date of
issue of this order.

Announced in the presence of the parties.
Chandigarh Dated the, Chief Administrator”
th
4 March, 1986 Chandigarh Administration
Dated : 13.03.86.”

13. We may notice one more finding rendered by the

Additional District Judge in appeal filed by the

respondent against the order passed for eviction

under the Public Premises (Eviction of Unauthorised
14

Occupants) Act. The appeal was dismissed by the

Additional District Juge on 10.10.1985. However, in

paragraph 4 the Additional District Judge has made

the following observation:

“4. I have heard and have perused the file. A
perusal of the file shows that the booth
belonged to Shri Madan Mohan Singh. The said
Madan Mohan Singh appeared before the Estate
Officer and produced the record to show that
the appellant was in possession of the premises
as his employee. This position was found to be
true by the Estate Officer. Even thereafter a
notice was issued to Shri Ved Prakash which was
served on him. In appeal a copy of the original
affidavit has been placed on the file by the
landlord to show that the appellant agreed to
work on the premises as an employee on salary
of Rs.320/- P.M. In view of the position it
becomes clear that the appellant is not in
possession of the premises in his own right
either as a tenant or a licencee. Rather his
possession is only as an employee.”

14. We have noticed Clause 19 of the Allotment Order

in which, it is the Estate Officer, Chandigarh

Administration who has full rights, power and

authority for the purpose of enforcing compliance

with all or any of the terms, conditions of allotment
15

dated 20.06.1972. It is further relevant to note that

Booth was resumed by the Estate Officer by order

dated 09.09.1980 (issued on 15.04.1982) on the ground

of uses of the premises not for cattle poultry feed

but cycle/autorickshaws repairing. The Chief

Administrator in his judgment dated 13.03.1986, which

order was passed in appeal filed by the defendant

against the resumption order, has observed after

hearing the argument of hirer that the respondent is

only a servant of the hirer. The above observation

and finding of the Chief Administrator cannot be

wished-away by the defendant as irrelevant. The High

Court while referring to the order of the Chief

Administrator has only observed that the Appellate

Court has misread that defendant had taken a stand

that he was merely a servant, which is against the

record. When the Administrator has noted the case of

the parties and came to the conclusion that defendant

was a servant of the hirer, those findings cannot be

said to be against the record. The specific findings

of the Chief Administrator are “The consideration of
16

argument put forward by Sh. Kaushal and that of the

evidence adduced before me by him lead me to conclude

that the appellant being a servant of the hirer has

no cause of action to agitate the impugned order”.

Further the Chief Administrator has held that there

is no justification to deprive the hirer of the

Booth. In view of the order of Chief Administrator

dated 13.03.1986, the appellant-plaintiff was clearly

entitled to the possession and user of the Booth but

when the possession was not handed over by the

defendant to the appellant, he had to file the suit

for mandatory injunction.

15. The defence which was taken by the defendant

before the trial court by filing written statement

and by appearing in the evidence was that he is a

tenant of the premises which was let out to him on

18.12.1976 at the rate of Rs.450/- per month.

16. We may first notice the finding of the trial

court by which trial court held that defendant was

tenant of the premises. The trial court framed the
17

Issue No.4, “whether the defendant is a tenant” ? The

trial court while answering Issue No.4 recorded the

following finding:

“Therefore, the defendant has to be held to be
a tenant in respect of the booth in question
notwithstanding the fact that the defendant
failed to prove any documents pertaining to the
tenancy. Therefore, this issue is also decided
in favour of the defendant and against the
plaintiff.”

17. The categorical finding recorded by the trial

court is that the defendant failed to prove any

documents pertaining to the tenancy. The tenancy is a

relationship which is created between two parties.

The agreement of tenancy can be both by writing or

oral. Even if there is oral agreement of tenancy, the

Court has to look into the circumstances and

intention of the parties and other material to

conclude as to whether there was any tenancy or not.

The present is not a case where defendant claimed any

rent agreement. The defendant has come up with a case

that he is paying rent at the rate of Rs.450/- per

month. Defendant in his written statement has stated
18

that plaintiff has never issued any rent receipt.

Thus, present is not a case where there was any rent

receipt filed by the defendant in support of his

claim of tenancy. The defendant himself appeared as

DW-2. In cross-examination following statement was

made by DW-2:

“No rent note was written in December, 1976
regarding booth in question. I have no receipt
in my possession with regard to payment of
rent. I maintain books of account in the
regular course of business with regard to the
business being carried out in the shop. I
cannot produce the account books with regard to
the business being done in the shop. I have not
maintain any account with regard to payment of
rent to the plaintiff. I have sent the rent by
money order to the plaintiff, but the plaintiff
never received any money order and I cannot
produce any receipt of the money order vide
which the plaintiff would have accepted the
rent with regard to the premises.”

18. This court had laid down in C.M. Beena and

another vs. P.N. Ramachandra Rao, 2004 (3) SCC 595,

that conduct of the parties before and after the

creation of relationship is relevant for finding out

their intention.

19

19. When there is no evidence of taking premises on

rent and it is admitted by DW-2 that he had not

maintained any record of accounts of payment of rent,

there is no base for holding that relationship of

landlord and tenant is proved. The trial court

itself has held that defendant had failed to prove

any documents pertaining to tenancy. The First

Appellate Court, thus, has rightly come to the

conclusion that findings of the trial court that the

defendant is a tenant is based on the surmises and

conjectures.

20. One more fact to be noticed is that the defendant

claimed his tenancy with effect from 18.12.1976. On

18.12.1976, admittedly partnership deed was signed

both by the plaintiff and defendant which was before

the Court. The defendant had not denied the execution

of partnership deed but he wanted to wish-away the

partnership deed saying that it was a sham document

to save the hirer from rigours of clause 12 of the

Allotment Order. When the parties signed a document
20

and entered into a partnership deed, they cannot wish

away the consequences which flow from the signing of

deed. The plaintiff having categorically denied the

tenanacy and there being no evidence with regard to

the tenancy, we do not find any error in the judgment

of the First Appellate Court that defendant was not a

tenant of the premises. We do not find any error in

the judgment of the First Appellate Court holding

that defendant was not a tenant of the premises.

21. When Clause 12 of the Allotment Letter as noted

above prohibits the hirer from subletting the

premises or any part thereof, it is the decision of

the Chief Administrator which shall be binding on the

parties. The relevant portion of Clause 12 in this

regard is “You will not sublet the premises or any

part thereof. If there is any dispute as to whether

the premises have been sublet or not the decision of

the Chief Administrator, Chandigarh, on the point

shall be binding on the parties”. As noted above,

Chief Administrator in its order dated 04.03.1986
21

which was passed in the appeal filed by the defendant

himself, has concluded that the Ved Prakash-defendant

(respondent herein) was a servant of the hirer. The

said decision by clause 12 is final between the

parties and it is not open for the defendant to plead

contrary to the above. Both the trial court and the

High Court have erred in not taking in consideration

Clause 12 and finding of the Chief Administrator in

its order dated 04.03.1986. The finding of the Chief

Administrator dated 04.03.1986 which was passed after

the order of the Estate Officer cannot be wished away

by the defendant nor can be ignored while deciding

the question as to whether the premises were sublet

to the defendant or not.

22. We may also notice that the High Court while

deciding the Regular Second Appeal filed by the

defendant has also decided Regular Second Appeal

filed by the appellant-plaintiff which arose from

the Suit No.77 of 1986 filed by the plaintiff

seeking relief for permanent and mandatory
22

injunction, restraining the defendant from using

the Booth No.186 for cycle repairs. The Regular

Scond Appeal No.2610 of 2002 filed by the

plaintiff-appellant has also been dismissed. In

view of our decision that Suit No.77 of 1986 filed

by the appellant deserved to be decreed and had

rightly been decreed by the First Appellate Court,

the judgment of the High Court in RSA No.2610 of

2002 is of no avail.

23. In view of the foregoing discussions, we allow

these appeals and restore the judgment of the First

Appellate Court dated 02.12.1996. The Estate

Officer, Chandigarh Administration shall ensure

that the appellant is immediately put in possession

of the premises of Booth No.186. It shall be open

for the appellant to take appropriate proceedings

to recover the damages and mesne profit for the use
23

of premises by the defendant. The appeals are

allowed with costs.

………………….J.

( ASHOK BHUSHAN )

………………….J.

( R. SUBHASH REDDY )

New Delhi,
March 05, 2021.



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