G.R. Majithia, J.
1. This revision petition is directed against the order of the Appellate Authority dated September 4, 1987 reversing, on appeal, that of the Rent Controller, Chandigarh dated August 7 1985 and ordering eviction of the tenant.
2. Facts first : -
The respondent is the landowner/landlord of Shop-cum-Flat No. 15 situated in Sector 21-C, Chandigarh. He leased out the shop portion of Shop-cum-Flat No. 15 to Harbhajan Singh, petitioner No. 1 (hereinafter the tenant) on June 11, 1968 on a monthly rent of Rs. 400/- (excluding water and electricity charges) through a rent note. On February 6, 1973, the landlord filed an application under Section 13 of the East Punjab Urban Rent Restriction Act, 1949 for short, the Act) for eviction of the tenant on various grounds including sub letting to M/s. Narang Cycle Co. Karnal. This application was rejected by the Rent Controller on April 28, 1977. On the question of subletting, the Rent Centroller held that the tenant was a partner of M/s Narang Cycle Co., Karral and that the landlord had been receiving rent from it ; thus sub-letting was not established. The judgment was affirmed on appeal by the Appellate Authority on May 31, 1978. This Court affirmed the judgment of the Appellate Authority by judgment dated August. 16, 1983 rendered in C. R. No. 2 170 of 1978. The only ground pressed was change of user and this Court found that the tenant was engaged in the sale of motor cycles and their servicing is a part of motor cycle business and the ground of change of user was not established.
The landlord filed another application under Section 13 of the Act on January 4, 1984. He sought eviction of the tenant on two grounds, namely, that the tenant was in arrears of rent and that after the commencement of the Act, he had parted with possession of the demised premises in favour of M/s. Karan Enterprises, SCF No. 15, Sector 15-C, Chandigarh (for brevity, the sub-tenant). The sub-tenant is running the business of sale of T. V.S -50 CC Mopeds and the tenant has shifted his business of sale of motor cycles accessories to Shop-cum-Flat No. 12, Sector 21-C, Chandigarh.
3. A joint written statement was filed on behalf of the tenant and sub-tenant. It was denied that the tenant had sublet the demised premises. It will be useful to reproduce the version of the landlord as pleaded in para 4(b) of the eviction application regarding creation of the sub-tenancy and the corresponding reply of the tenant and the sub-tenant in the written statement : --
Para 4(b) of the eviction application ;
'That the respondent No. 1 has after the commencement of East Punjab Urban Rent Restriction Act in the urban area of Chandigarh, without the written consent of the petitioner, completely parted with the possession of the premises in favour of respondent No. 2 for a valuable consideration. Respondent No. 2 is running the agency of the sale of TVS-50 CC Mopeds. Respondent Mo. . has shifted business of sale of motorcycle accessories to SCF No. 12, Sector 2l-C, Chandigarh.'Corresponding Para 4(b) of the written statement:'Wrong and hence denied. The premises have neither been sub let nor its possession parted with by respondent No. 1 in any manner The factual position is that the. respondent No. 2 is the firm of two brothers and a daughter-in-law and none else and the other partners than respondent No. I are not in any way in possession of the demised premises. The respondent No. 1 alone is in full and effective possession of the premises Similarly, the respondent No. 1 has not committed any change of user in the premises. Para 19 of the Rent Note clearly speaks of the user of premises of the business of Motor Cycle accessories and for the sale purchase thereof. Actually the same business is carried out in the demised premises as TVS-50 CC too is not less or more than that of a light motor cycle. It is further denied that if the respondent No. 2 is paying any consideration at all. It is noteworthy that the Hon'ble Court has held in earlier judgment amongst the petitioner and respondent No. 1 only that such type of arrangement is not sub-letting.'
4. On the pleadings of the parties, the following issues were framed by the Rent Controller :
(1) Whether the petition is barred by the principle of res judicata OPR
(2) Whether the demised premises are being used for the purpose of other than for these were leased OPR
(3) Whether the demised premises have been sub-let by respondent No. 1 in favour of respondent No. 2 without written consent of the landlord OPR
(4) Relief.
5. The Rent Controller decided issue No. 1 in favour of the landlord and against the tenant on the ground that the objection remained unproved. Issues No. 2 and 3 were answered in favour of the tenant and against the landlord and it was held that the landlord had failed to prove that the tenant was using the demised premises for purposes other than that for which it was leased ' out and that the landlord had not been able to prove that the tenant had sub-let the demised premises to M/s. Karan Enterprises, the alleged subtenant. The eviction application was rejected by order dated August 7, 1985.
6. Aggrieved against the order of the Rent Controller, the landlord preferred appeal under Section 15 of the Act before the-Appellate Authority Before the Appellate Authority, the 'landlord pressed., the plea of sub-letting by the tenant to the alleged sub-tenant, namely, M/s Karan Enterprises. The Appellate Authority, on consideration of the evidence brought on record, held that the tenant had sub let the demised premises to M/s. Karan Enterprises and accordingly allowed the eviction application and ordered eviction of the tenant. Aggrieved against this order of the Appellate Authority, the tenant and the alleged sub-tenant have come up in revision before this Court.
7. The revision petition came up for hearing before N. C. Jain, J. The learned Judge found that some important question of law will arise for determination in the revision petition and directed that with the permission of Hon'ble the Chief Justice the revision petition be placed for hearing before a larger Bench. It is how this matter has been placed before us for adjudication.
8. From a perusal of the record and after hearing learned counsel for the parties, we find that the question arising for determination falls in a narrow compass. As stated earlier, the landlord has sought eviction on the ground that the tenant has sublet the demised premises to M/s. Karan Enterprises and has shifted his own business of sale of motor cycle accessories to SCF No. 12, Sector 21-C, Chandigarh. It is not disputed that SCF No. 12, Sector 21-C, Chandigarh is owned by the tenant. The tenant controverted the plea of the landlord and asserted that he had not parted with possession of the demised premises to the alleged sub-tenant and that M/s. Karan Enterprises, the alleged sub-tenant, is a partnership firm of two brothers and a daughter-in-law and none else and other partners than respondent No. 1 are not in any way in possession of the demised premises.
9. Now, it is to be seen whether the tenant has succeeded in establishing that the firm alluded to by him in the written statement of which he is claiming to be a partner is in actual possession of the demised premises and is carrying on the business of sale of TVS-50 CC Mopeds. The tenant brought on record partnership deed dated September 7, 1982, Exhibit R-2, evidencing that Mrs. Poonam Narang wife of Manjit Singh, Harbhajan Singh Narang sen of Sawan Singh and Manpreet Singh son of Darshan Singh were the partners having 50%, 25%, 25% shares respectively in the profit and losses of the firm known as M/s. Karan Enterprises, The partnership business was to commence w. e. f. September 7, 1982. R. W. 2 Shri Darshan Singh, Upper Division Clerk, Income-tax: Office, Survey Circle, stated on oath that the firm M/s. Karan Enterprises had three partners, namely, Mrs. Poonam Narang, Harbhajan Singh Narang and Manpreet Singh and they had 50%, 25% and 25% shares respectively in it. It first filed its return with effect from April 1, 1982. The testimony of this witness establishes that M/s. Karan Enterprises is a partnership concern having three partners, namely, Mrs Poonam Narang, Harbhajan Singh Narang and Manpreet Singh having shares of 50%, 25%. 25% respectively and the firm filed its return with effect from April 1, 1982. The statement of this witness does not establish that M/s. Karan Enterprises as is mentioned in the written statement is in possession of the demised premises.
10. The tenant also examined R. W. 1 Sh. Gurdev Singh, Upper Division Clerk in Income-tax Office, Circle 1(3) .Chandigarh, who brought the summoned record and on the basis of which he deposed that M/s. Narang Cycle Co. is a partnership concern and the partners were Manjit Singh, Manmohan Singh and the tenant having 50%, 40% and 10% shares respectively The partnership firm is running business since April 1, 1976 and the partnership deed was received,in the office on March 30, 1977 and addrees of the firm is mentioned in the partnership deed as 'Shop-cum-Flat No. 15, Sector 21-C, Chandigarh'. The firm has been filing income-tax return, and it filed its returns upto July 31, 1983, The evidence of this official does' not establish that the firm referred to in the written statement is in actual physical possession of the demised premises.
11. The tenant appeared as R. W. 3. He produced the original partnership-deed dated April 7, 1983. and a photostat copy thereof is Annexure R. 3 According to him, M/s. Karam Enterprises, a partnership firm, was formed on September 7, 1982 and its partners were Mrs. Poonam Narang, Manpreet Singh and the tenant. This partnership continued till April 7, 1983 on which date a new partnership firm was constituted by partnership-deed Exhibit R-3. This partnership firm comprised of' three partners viz. Mrs Poonam Narang, Surinder Singh and the tenant having 45%, 45% and 10% shares respectively. This partnership firm was to come into force w.e.f. April 1, 1983. This is the partnership firm which is referred to in the written statement.
12. 'Whether it is a genuine partnership' is the sole question which requires to be determined. The answer to this question will flow from the following proved facts :-
(i) Partnership deed dated September 7, 1982 Exhibit R-2 evidences that Mrs. Poonam Narang, the tenant and Manpreet Singh were the partners and the business was to be carried on under the name and style of M/s Karan Enterprises. Registration was granted to this firm by the Assessing Officer under Section 184(7) of the Income-tax Act, 1961 (hereinafter to be referred to as the 'Tax Act'). R. W. 2 Shri Darshan Singh, U. D. C. in Income-tax Office, Survey Circle, Chandigarh says that the firm filed returns with effect from April 1, 1982 and the place of business of this firm is Shop-cum-Flat No. 15, Sector 21-C, Chandigarh and the firm is still in existence. This partnership firm was not dissolved Continuity will be presumed till the contrary is proved. Registration to this firm was granted by the Income tax Officer and the returns filed by it were accepted by the Assessing Officer. Once registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year as is provided in sub-section (7) of Section 184 of the Tax Act. If any change in the constitution of the firm or the share of the partners has been made after the registration has been granted, then fresh registration for the concerned assessment year has to be sought under sub-section (8) of Section 184 of the Tax Act. The change in the constitution of the firm of M/s. Karan Enterprises was effected as is pleaded and sought to be proved by the tenant. But, this firm is not registered under sub-section (8) of Section 184 of the Tax Act. Sub-section (8) of Section 184 enjoins upon partners to get fresh registration after the re-constitution of the previous firm for getting the firm assessed in a particular assessment year. Since the re-constituted firm, Exhibit R 3, was never got registered under sub-section (8) of Section 184 of the Tax Act, it will be presumed that the firm M/s. Karan Enterprises constituted of Mrs. Poonam Narang, Manpreet Singh and the tenant was in existence and R. W. 2 Shri Darshan Singh also says so. R. W. 2 Shri Darshan Singh's statement was recorded on March 3,1984 and the same reads thus:-
'I have brought the summoned record, i. e. M/s. Karan Enterprises. Poonam Narang, Harbhajan Singh and Manpreet Singh are the partners of the firm to the extent of Rs. 50%, 25% and 25% respectively. The firm has filed returns w. e. f. 1-4-1982. Again said that the firm is in existence w.e.f. 7-9-1982.
CXXXN.
The partnership deed was filed in our Department on 31-3-1982 The place of the business of firm is S.C.F. No. 15, Sector 21-C, Chandigarh. The firm is still in existence '
(ii) The account books of the firm M/s. Karan Enterprises have not been produced. This evidence would have given an inkling that the firm mentioned in the written statement had been carrying on business in the demised premises. Apart from this, no ocular evidence had been produced of customers having business dealings with the firm.
(iii) The firm did not submit Income-tax returns or made a prayer to the Assessing Officer for its registration under Section 184(7) of the Tax Act. There is no proof that the firm incurred any necessary business expenditure.
(iv) There is no independent evidence that the firm constituted vide Exhibit R-8 is in possession of the demised premises. The firm is a commercial establishment within the meaning of Section. 2(4) of the Punjab Shops and Commercial Establishments Act, 1958. An establishment has to maintain a register of its employees which has to be made available for inspection to the Shop Inspector. The registration of the commercial establishment would have indicated that the firm had come into existence and was carrying on business activities. Failure to produce this evidence negatives the plea of the existence of this commercial establishment.
(v) The partnership firm constituted by partnership deed dated September 7, 1982 Exhibit R 2, applied for financial assistance to the Punjab and Sind Bank, Sector 11 Branch, Chandigarh and the same was granted. Exhibit R-4 is the application made by the firm (constituted vide partnership deed, Exhibit R-2) to the Punjab and Sind Bank for financial assistance. This document evidences that initially Mrs. Poonam, Manpreet Singh and the tenant were the partners of M/s. Karan Enterprises, but the name of Surinder Singh was entered at serial No. 4 with a different pen while the name of Manpreet Singh was scored off by drawing a parallel line on it. The Appellate Authority, after appraisal of this evidence, observed thus:-
'It appears that he has deliberately taken a wrong stand in the written statement about the partnership firm being constituted by his family members as the perusal of Exhibit R-4 dated 4 9.1983 filed by M/s Karan Enterprises with the Punjab and Sind Bank for securing a loan reveals that initially Mrs. Poonam, Manprit Singh and Harbkajan Singh were depicted as its partners but name of Surinder Singh was entered at Serial No. 4 with a different pen while the name of Manprit Singh at Serial No. 2 was scored off by drawing a parallel line on it. If actually aforesaid Manprit Singh was not partner of this firm with effect from 1.4.1983, vide Exhibit R-3, then there was no question of figuring his name at serial No. 2 in this application which clearly shows that the partnership deed Exhibit R-3 was created after the institution of the present application, i. e. after 3.1.1984 in order to set up a defence that Harbhajan Singh tenant had not entered into partnership with strangers probably on the misconception of law that a partnership with a family member by the tenant is on better footing legally than with stranger in order to show that the premises were not sublet.'(vi) If the firm had been doing business, the partners or the managing partner must have received some salary or profits front the firm. No proof is led to this effect.
13. These proved facts in unmistakable terms suggest that M/s. Karan Enterprises, the partnership firm, allegedly constituted vide partnership deed dated April 7, 1983, Exhibit R-3, referred to in the written statement, is not a genuine but a sham firm allegedly created for the defence of the eviction application.
14. Apart from this, R. W. 1 Shri Gurdev Singh, Upper Division Clerk, Income Tax Office, Circle I (3), Chandigarh, stated on oath that the firm M/s Narang Cycle Co. in which Manjit Singh, Manmohan Singh and Harbhajan Singh tenant are partners having 50%, 40%, and 10% shares respectively has given its address to the Income-tax Office as 'SCF No. 15, Sector 21-C, Chandigarh'. The change of the constitution of this firm had not been intimated to the Income-tax Office.
15. The tenant, who appeared as R. W. 3, admitted in his crossexamination that M/s. Narang Motors had shifted their business to Shop No. 12, Sector 21. He also admitted that the telephone which was installed in the premises where M/s. Narang Motors was carrying on business was installed in his personal name and that telephone was shifted to his residence. The statement of R. W. 3 suggests that M/s. Narang Motor-cycles which was carrying on business in the demised premises had shifted its business to SCF No. 12, Sector 21-C, Chandigarh. The unchallenged evidence of the landlord that the tenant is running his business in SCF No. 12, Sector 21-C, Chandigarh and is not doing any business in the demised premises finds ample corroboration from the statement of R. W. 3 that M/s. Narang Motor-cycles, which was carrying on business in the demised premises, had shifted its business to SCF No. 12, Sector 21-C, Chandigarh. The landlord's version that the tenant is not working in the demised premises was never challenged in the cross-examination. This piece of evidence suggests that the tenant has shifted his business to SCF No. 12, Sector 21-C, Chandigarh, which is owned by him, and the partnership firm which is alleged to be doing business in the demised premises is a sham firm. The tenant could save his eviction if he had succeeded in establishing that the partnership firm constituted vide Exhibit R-3 was in existence and that it contained the essential pre-requisites as enjoined by Section 4 of the Partnership Act, viz , (I) it was the result of an agreement between several persons, (ii) the agreement was to share the profits of a business, a (iii) the business was carried on by all or any of them acting for all and there was an intention to become partners On the proved facts and from the partnership deed dated April 7, 1983, Exhibit R-3, it is not possible to spell out that the. basic re- quirement that the business was to be carried on by all or any of the partners acting for all was established and the only inference deducible is that the tenant has created a sub-tenancy in favour of M/s. Karam Enterprises and the same is hit by Section 13 (2) (ii) (a) of the Act. The cumulative effect of the facts mentioned in para (v) is that the relationship between the tenant and his brother and daughter-in-law, as mentioned in the written statement, is not that of partners. If the partnership firm is a sham and fake transaction, the sub-tenancy will be deemed to have been established.
16. Before we part with this judgment, it is necessary to deal with the last submission made by the learned counsel for the tenant. He submitted that even if M/s. Karan Enterprises, of which the tenant, tenant's brother and daughter-in-law are partners as is evidenced by the partnership deed, Exhibits R-3, is not found to have been established, the partnership firm comprising of Mrs. Poonam Narang, Manpreet Singh and the tenant, Exhibit R-2, will be deemed to be in existence and continued its business activities in the demised premises as has been stated by R. W. 2 Darshan Singh and eviction of the tenant cannot be ordered on the ground of creating sub-tenancy. The submission is untenable for the reason that the tenant came to the Court with a firm plea that the partnership firm of which two brothers and daughter-in-law are partners is in possession of the demised premises He led evidence to prove this fact and the same remained unproved. After perusing the entire evidence, we have given a firm finding that the partnership firm created by partnership deed, Exhibit R-3, is not a genuine but a sham firm. The landlord will be taken by surprise, if it is to be assumed as is being said at the time of arguments that the partnership firm created under the partnership deed, Exhibit R-2, is in existence.
17. The Appellate Authority, on appreciation of the entire evidence, gave a firm finding that the tenant had sub let the demised premises to M/s. Karan Enterprises. This is essentially a finding of fast and not open to any exception in revision petition. The finding arrived at by the Appellate Authority has not been shown to be in any manner unwarranted or unjustified or lacking in propriety.
18. The questions of law referred to in the order dated September 12, 1988 passed by N. C. Jain, J. do not arise on the proved facts of the case and we have not alluded to the same since on merits we have found that on the facts proved, the sub-tenancy exists.
19. For the reasons stated above, the revision petition fails and is dismissed with costs quantified at Rs. 2000/-. However, in the interest of justice, the tenant is allowed three month's time to vacate the demised premises provided (i) he pays or deposits arrears of rent upto date and (ii) furnishes an undertaking to the Rent Controller that he. will vacate the demised premises within the aforementioned period.