THE DIRECTOR, PRASAR BHARATI versus COMMISSIONER OF INCOME TAX, THIRUVANTHAPURAM

[2018] 3 S.C.R. 287

THE DIRECTOR, PRASAR BHARATI

COMMISSIONER OF INCOME TAX, THIRUVANTHAPURAM

(Civil Appeal Nos. 3496-3497 of 2018)

APRIL 03, 2018

[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.]

Income Tax Act, 1961: s. 194H Explanation – Payment ofCommission or brokerage – Applicability of s. 194H – Appellant-assessee entering into an agreement with several advertisingagencies – Payment made by appellant to the agencies, towardscommission in terms of agreement – Assessment order by theAssessing Officer that provisions of s. 194H are applicable to thepayments made by the appellant to the Agencies and since theappellant failed to deduct the “tax at source” from the amount paidto the agencies, the appellant committed default thereby attractingthe rigor of s. 201(1) – Said order upheld by CIT(Appeals), however,set aside by the tribunal – In appeal, the High Court upheld theorder of CIT(Appeals) and AO – On appeal, held: Provisions of s.194H are applicable to the appellant because the payments madeby appellant pursuant to the agreement were in the nature of paymentmade by way of “commission” – In view thereof, the appellant wasunder statutory obligation to deduct the income tax at the time ofcredit or/and payment to the advertisement agencies – Non-compliance of s.194H by the assessee attracts the rigor of s. 201which provides for consequences of failure to deduct or pay the taxas provided u/s. 194H – Thus, the provisions of s. 201 rightly invokedagainst the appellant by the assessing authority.

Dismissing the appeals, the Court

HELD: 1.1 Section 194H of the Income Tax Act, 1961provides that any person other than individual or HUF,responsible for paying any income by way of “commission” (notbeing insurance commission as specified in Section 194D) or“brokerage” to any person shall at the time of credit of suchincome to the account of payee or at the time of payment of suchincome in cash or by cheque or draft or any other mode will deduct

Aincome tax thereon at the rate of 5%. The first proviso specifiesthe limit. The second proviso makes the individual or HUF liableto deduct the income tax, if they exceed the limit specified therein.The third proviso exempts payment of commission or brokeragewhen made to BSNL and MTNL to their public call officefranchisees. The Explanation appended to s.194H defines theBexpression “commission or brokerage”. It is an inclusivedefinition and includes therein any payment received orreceivable, directly or indirectly by person acting on behalf ofanother person for services rendered (not being professionalservices) or for any services in the course of buying or selling ofCgoods or in relation to any transaction relating to assets, valuablearticle or thing not being securities. Clause (ii) definesprofessional services; clause (iii) defines securities; and clause(iv) provides deeming fiction for treating any income so as toattract the rigor of the Section for ensuring its compliance.[Paras27-28] [295-F-G, H; 296-A-B]D

1.2 The reasoning and the conclusion arrived at by the AO,CIT (Appeals) and the High Court appears to be just and properand does not call for any interference. The High Court was rightin holding that the provisions of Section 194H are applicable tothe appellant because the payments made by the appellantEpursuant to the agreement in question were in the nature ofpayment made by way of “commission” and, therefore, theappellant was under statutory obligation to deduct the incometax at the time of credit or/and payment to the payee. [Paras 29,30] [296-C-D]

1.3 The conclusion of the High Court is clear from theundisputed facts emerging from the record of the case becausethe agreement itself has used the expression “commission” inall relevant clauses; Second, there is no ambiguity in any clauseand no complaint was made to this effect by the appellant; Third,Gthe terms of the agreement indicate that both the parties intendedthat the amount paid by the appellant to the agencies should bepaid by way of “commission” and it was for this reason, the partiesused the expression “commission” in the agreement; Fourth,keeping in view the tenure and the nature of transaction, it is

clear that the appellant was paying 15% to the agencies by way of“commission” but not under any other head; Fifth, the transactionin question did not show that the relationship between theappellant and the accredited agencies was principal to principalrather it was principal and Agent; Sixth, it was also clear thatpayment of 15% was being made by the appellant to the agenciesafter collecting money from them and it was for securing moreadvertisements for them and to earn more business from theadvertisement agencies; Seventh, there was clause in theagreement that the tax shall be deducted at source on paymentof trade discount; and lastly, the definition of expression“commission” in the Explanation appended to Section 194H beingan inclusive definition giving wide meaning to the expression“commission”, the transaction in question did fall under thedefinition of expression “commission” for the purpose ofattracting rigor of s. 194 H. [Para 31] [296-E-H; 297-A]

1.4 There is no difference in holding that the payment wasin the nature of “commission” paid by the appellant to theadvertisement agencies to secure more business for theappellant. Once it is held that the provisions of Section 194Happly to the transactions in question, it is obligatory upon theappellant to have deducted the income tax while making paymentto the advertisement agencies. The non-compliance of Section194H by the assessee attracts the rigor of Section 201 whichprovides for consequences of failure to deduct or pay the tax asprovided under Section 194H of the Act. Therefore, theprovisions of Section 201 were rightly invoked against theappellant by the assessing authority once having held that theappellant failed to comply with the provisions of Section 194H ofthe Act. [Paras 32, 33, 34] [297-B-D]

Jagran Prakashan Ltd v. Deputy Commissioner ofIncome Tax (TDS) (2012) 345 ITR 288 – referred to.

Case Law Reference

(2012) 345 ITR 288referred toPara 34

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3496-3497 of 2018.

AFrom the Judgment and Order dated 20.11.2009 of the High Courtof Kerala at Ernakulam in Income Tax Appeal No. 27 of 2009 and IncomeTax Appeal No. 62 of 2009.

Rajeev Sharma, Adv. for the Appellant.

Rupesh Kumar, A. K. Srivastava, Ravi Shankar Kumar, Mrs. AnilBKatiyar, Advs. for the Respondent.

The Judgment of the Court was delivered by

ABHAY MANOHAR SAPRE, J. 1. Delay condoned.

2. Leave granted.

3. These appeals are directed against the final judgment and orderdated 20.11.2009 passed by the High Court of Kerala at Ernakulam inIncome Tax Appeal No.27 of 2009 and Income Tax Appeal No.62 of2009 whereby the High Court allowed the appeals preferred by therespondent herein and reversed the order dated 28.03.2007 passed byDthe Income Tax Appellate Tribunal, Cochin Bench in Income Tax AppealNos. 926 & 927/COCH/2005 for the Assessment Years 2002-2003 and2003-2004 and restored the order dated 04.03.2005 passed by theCommissioner of Income Tax(Appeals)-II, Thiruvananthapuram and theorder dated 22.09.2003 passed by the Assessing Officer.

4. In order to appreciate the issue involved in these appeals, it isnecessary to set out the facts hereinbelow.

5. The appellant is known as “Prasar Bharati DoordarshanKendra”. It functions under the Ministry of Information and Broadcasting,Government of India. The dispute in this case relates to the appellant’sFRegional Branch at Trivandrum.

6. The appellant, in the course of their business activities, whichinclude the running of the TV channel called “Doordarshan”, has beenregularly telecasting advertisements of several consumer companies.

7. With view to have better regulation of the practice ofGadvertising and to secure the best advertising services for the advertisers,the appellant entered into an agreement with several advertising agencies(Annexure-P-12).

8. In terms of the agreement, the advertising agency (hereinafterreferred to as “the Agency”) was required to make an application to the

appellant to get the “accredited status” for their Agency so as to enablethem to do business with the appellant of telecasting the advertisementsof several consumer products manufactured by several companies onthe appellant’s Doordarshan TV Channel.

9. The agreement, inter alia, provided that the appellant wouldpay 15% by way of commission to the Agency. The Agency was toretain the commission/remuneration earned and not to part the sameeither directly or indirectly with any other person, advertiser orrepresentative of any advertiser for whom it may be acting or has actedas an advertising agency. The agreement also provided the manner, modeand the time within which the payment was to be made by the Agencyto the appellant. The failure to make the payment was to result in losingthe accredited status by the Agency. The Agency was to give minimumannual business of Rs.6 Lakhs to the appellant in financial year failingwhich their accredited status was liable to be withdrawn. The Agencywas to furnish bank guarantee for sum of Rs.3 Lakhs. There areother clauses also in the agreement but they are not relevant for thepurpose of disposal of these appeals.

10. The appellant is an assessee under the Income Tax Act(hereinafter referred to as “the Act”). In the assessment year 2002-2003(01.06.2001 to 31.03.2002) and 2003-2004 (01.04.2002 to31.03.2003), the appellant paid sum of Rs.2,56,75,165/- andRs.2,29,65,922/- to various accredited Agencies, with whom they hadentered into the aforementioned agreement for telecasting theadvertisements given by these Agencies relating to products manufacturedby several consumer companies. The amount was paid by the appellantto the Agencies towards the commission in terms of the agreement.

11. The question arose before the Assessing Officer (AO) in theassessment proceedings as to whether the provisions of Section 194Hof the Act, which came into force with effect from 01.06.2001, areapplicable to the payments in question made by the appellant to theAgencies and, if so, whether the appellant deducted “tax at source” asprovided under Section 194H of the Act from the amount paid by theappellant to the Agencies.

12. The AO made the assessment vide its order dated 22.09.2003.Insofar as the aforementioned question was concerned, the AO was ofthe view that the provisions of Section 194H of the Act are applicable tothe payments made by the appellant to the Agencies because the

BCDE

Apayments were made in the nature of “commission” as defined inExplanation appended to Section 194H of the Act. The AO held that theappellant, therefore, committed default thereby attracting the rigor ofSection 201(1) of the Act because they failed to deduct the “tax at source”from the amount paid to various advertising agencies during theAssessment Years in question as provided under Section 194A of theBAct.

13. On quantification, the AO found that during the AssessmentYear 2002-2003, the appellant had paid sum of Rs.2,56,75,165/- towardsthe commission to the Agencies and on this sum, they were required todeduct tax amount to Rs.16,34,283/- and sum of Rs.3,80,611/- towardsCinterest for delayed payment under Section 201(1-A) of the Act andduring the Assessment Year 2003-2004, the appellant had paid sum ofRs.2,29,65,922/- towards the commission to the Agencies and on thissum, they were required to deduct tax amounting to Rs.11,15,944/- anda sum of Rs.1,54,050/- towards interest for delayed payment under SectionD201(1-A) of the Act.

14. The appellant felt aggrieved and filed appeals before theCommissioner of Income Tax (Appeals)-II, Thiruvanathapuram. Byorder dated 04.03.2005, the Commissioner concurred with the reasoningand conclusion arrived at by AO and accordingly dismissed the appeals.

15. The appellant felt aggrieved and filed appeals before theTribunal. By order dated 28.03.2007, the Tribunal following its earlierorder allowed the appeals and set aside the orders passed by AO andCIT (Appeals).

16. The Revenue (Income Tax Department), felt aggrieved byFthe order passed by the Tribunal, filed appeals under Section 260-A ofthe Act in the High Court. By impugned judgment, the High Court allowedthe appeals and while setting aside the Tribunal’s order restored theorder of CIT (Appeals) and AO.

17. The High Court was of the opinion that the provisions ofGSection 194H are applicable to the payments made by the appellant tothe Agencies during the period in question because the payments madewere in the nature of “commission” paid to the Agencies as defined inExplanation appended to Section 194H of the Act and since the appellantfailed to deduct the “tax at source” while making these payments to theAgencies in terms of the agreement in question, they committed defaultH

of non-compliance of Section 194H resulting in attracting the provisionsof Section 201 of the Act.

18. The appellant (assessee) felt aggrieved and filed these appealsby way of special leave in this Court.

19. Heard Mr. Rajeev Sharma, learned counsel for the appellantand Mr. Rupesh Kumar, learned counsel for the respondent.

20. Submissions of learned counsel for the appellant (assesse)were two-fold. In the first place, he argued that the payments made bythe appellant to the accredited agencies during the assessment years inquestion were not in the nature of commission. According to learnedcounsel, the relationship between the appellant and the accreditedAgencies was not that of principal and the agent but it was in the natureof principal-to-principal. In other words, the submission was that theaccredited agencies were not working as agent of the appellant and northe appellant was paying them any amount by way of commission.

21. Referring to the terms of the agreement, learned counsel triedto point out that the Agencies, in terms of the agreement, purchased theair time from the appellant and then sold it in the market for advertisementto their customer after retaining 15% commission given to them by theappellant. It was, therefore, his submission that such transaction cannotbe regarded as being between the principal and agent and nor thepayment can be regarded as having been made by way of commissionso as to attract the rigor of Section 194H and Section 201 of the Act.22. Learned counsel also submitted that by mistake some otherformat of the agreement was placed by the appellant before the HighCourt and, therefore, the appellant suffered adverse order in question(see averments made in Paras 4 and 5 of the application seekingpermission to file additional documents at page 134/135). Learned counselthen took us to the relevant provisions of the proper agreement filed inthis Court as Annexure P-12 and contended that having regard to thenature of the agreement and its terms, the submission urged deservesacceptance.

23. In reply, learned counsel for the respondent (Revenue)supported the impugned judgment and contended that the order passedby the AO, CIT (Appeals) and the impugned judgment deserve to beupheld as all the three orders are based on proper reasoning calling nointerference.

[2018] 3 S.C.R.

A24. Having heard the learned counsel for the parties and on perusalof the record of the case, we find no merit in these appeals.

25. Section 194H, which is relevant for the disposal of these appealsreads as under:

“194H. Commission or brokerage-Any person not beingBan individual or Hindu undivided family, who is responsiblefor paying, on or after the 1[st] day of June, 2001, to resident,any income by way of commission (not being insurancecommission referred to in section 194D) or brokerage,shall, at the time of credit of such income to the account ofCthe payee or at the time of payment of such income in cashor by the issue of cheque or draft or by any other mode,whichever is earlier, deduct income-tax thereon at the rateof five per cent.

Provided that no deduction shall be made under thissection in case where the amount of such income or, asthe case may be, the aggregate of the amounts of suchincome credited or paid or likely to be credited or paidduring the financial year to the account of, or to, the payee,does not exceed fifteen thousand rupees.

Provided further that an individual or Hindu undividedEfamily, whose total sales, gross receipts or turnover fromthe business or profession carried on by him exceed themonetary limits specified under clause (a) or clause (b) ofsection 44AB during the financial year immediatelypreceding the financial year in which such commission orFbrokerage is credited or paid, shall be liable to deductincome-tax under this section.

Provided also that no deduction shall be made underthis section on any commission or brokerage payable byBharat Sanchar Nigam Limited or Mahanagar TelephoneGNigam Limited to their public all office franchisees.

Explanation- For the purposes of this section,-

(i) “commission or brokerage” includes any paymentreceived or receivable, directly or indirectly, by personacting on behalf of another person for services rendered

(not being professional services) or for any services in thecourse of buying or selling of goods or in relation to anytransaction relating to any asset, valuable article or thing,not being securities;

(ii) the expression “professional services” means servicesrendered by person in the course of carrying on legal,medical, engineering or architectural profession or theprofession of accountancy or technical consultancy orinterior decoration or such other profession as is notifiedby the Board for the purposes of section 44AA;

(iii) the expression “securities” shall have the meaningassigned to it in clause (h) of section 2 of the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956);

(iv) where any income is credited to any account, whethercalled “suspense account’ or by any other name, in thebooks of account of the person liable to pay such income,such crediting shall be deemed to be credit of such incometo the account of the payee and the provisions of this sectionshall apply accordingly.”

26. The aforementioned Section was inserted in the Act with effectfrom 01.06.2001 by replacing the earlier Section 194H. This Sectiondeals with the payment of “commission or brokerage”.

27. It provides that any person other than individual or HUF,responsible for paying any income by way of “commission” (not beinginsurance commission as specified in Section 194D) or “brokerage” toany person shall at the time of credit of such income to the account ofpayee or at the time of payment of such income in cash or by cheque ordraft or any other mode will deduct income tax thereon at the rate offive percent. The first proviso specifies the limit. The second provisomakes the individual or HUF liable to deduct the income tax, if theyexceed the limit specified therein. The third proviso exempts payment ofcommission or brokerage when made to BSNL and MTNL to their publiccall office franchisees.

28. The Explanation appended to Section 194H defines theexpression “commission or brokerage”. It is an inclusive definition andincludes therein any payment received or receivable, directly or indirectlyby person acting on behalf of another person for services rendered

A(not being professional services) or for any services in the course ofbuying or selling of goods or in relation to any transaction relating toassets, valuable article or thing not being securities. Clause (ii) definesprofessional services; clause (iii) defines securities; and clause (iv)provides deeming fiction for treating any income so as to attract therigor of the Section for ensuring its compliance.B

29. Keeping in mind the requirements of Section 194H when weexamine the transaction in question, we are of the considered view thatthe reasoning and the conclusion arrived at by the AO, CIT (Appeals)and the High Court appears to be just and proper and does not call forany interference.C

30. In other words, in our considered view, the High Court wasright in holding that the provisions of Section 194H are applicable to theappellant because the payments made by the appellant pursuant to theagreement in question were in the nature of payment made by way of“commission” and, therefore, the appellant was under statutory obligationDto deduct the income tax at the time of credit or/and payment to thepayee.

31. The aforementioned conclusion of the High Court is clearfrom the undisputed facts emerging from the record of the case becausewe notice that the agreement itself has used the expression “commission”Ein all relevant clauses; Second, there is no ambiguity in any clause andno complaint was made to this effect by the appellant; Third, the termsof the agreement indicate that both the parties intended that the amountpaid by the appellant to the agencies should be paid by way of“commission” and it was for this reason, the parties used the expressionF“commission” in the agreement; Fourth, keeping in view the tenure andthe nature of transaction, it is clear that the appellant was paying 15% tothe agencies by way of “commission” but not under any other head;Fifth, the transaction in question did not show that the relationshipbetween the appellant and the accredited agencies was principal toprincipal rather it was principal and Agent; Sixth, it was also clear thatGpayment of 15% was being made by the appellant to the agencies aftercollecting money from them and it was for securing more advertisementsfor them and to earn more business from the advertisement agencies;Seventh, there was clause in the agreement that the tax shall be deductedat source on payment of trade discount; and lastly, the definition of

expression “commission” in the Explanation appended to Section 194Hbeing an inclusive definition giving wide meaning to the expression“commission”, the transaction in question did fall under the definition ofexpression “commission” for the purpose of attracting rigor of Section194H of the Act.

32. For all these reasons, we find no difficulty in holding that thepayment in question was in the nature of “commission” paid by theappellant to the advertisement agencies to secure more business for theappellant.

33. Once it is held that the provisions of Section 194H apply to thetransactions in question, it is obligatory upon the appellant to havededucted the income tax while making payment to the advertisementagencies. The non-compliance of Section 194H by the assessee attractsthe rigor of Section 201 which provides for consequences of failure todeduct or pay the tax as provided under Section 194H of the Act.

34. In our view, the provisions of Section 201 were, therefore,rightly invoked in this case against the appellant by the assessing authorityonce having held that the appellant failed to comply with the provisionsof Section 194H of the Act.

35. Learned counsel for the appellant (assessee) placed relianceon the decision of the Allahabad High Court in Jagran Prakashan Ltdvs. Deputy Commissioner of Income Tax(TDS), (2012)345 ITR288 in support of his submission.

36. On perusal of the said judgment, we find that the law laiddown by the Allahabad High Court is not applicable to the facts of thecase at hand and the learned Judges rightly distinguished the case athand with the facts involved in the Allahabad case. The learned Judgesof the Allahabad High Court in Paras 61 and 62 of the judgment dealtwith the impugned judgment with which we are concerned in theseappeals and distinguished it in the following words:

“61. Now we come to the judgment of the Kerala High Courtin the case of CIT vs. Director, Prasar Bharti reported in(2010) 325 ITR 205(ker.) on which much reliance has beenplaced by the assessing authority. The Prasar Bharati isfully owned Government of India undertaking engaged intelecast of news, various sports, entertainments, cinemas

and other programmes. The advertisements werecanvassed through agents under the agreement with them.The advertising agencies and the Director, Prasar Bharatiwere principal and agent as per the agreement and theDoordarshan provided 15% discount on the basis of whichit was contended that no deduction at source was required.The Tribunal held that there was no liability for deductionof tax at source under Section 194H which judgment wasreversed by the Kerala High Court. From the facts of theaforesaid case, it is clear that Doordarshan had appointedagents i.e. advertising agencies and there was agreemententered between them. In the aforesaid circumstances, 15%advertisement charges collected and remitted was held tobe in the form of commission payable to the agent byDoordarshan. There was explicit agreement between theagency and the Doordarshan where both understood thatpayment made to the agency was liable to tax deduction. Itis useful to quote the following observations of thejudgment of Kerala High Court:-

………………………………………………………………………………………………………………………………

From the above, it is very clear that parties have understoodtheir relationship as Principal and Agent and what is paidto the agent by Doordarshan is 15% of advertisementcharges collected and remitted to it by the agent which isin the form of commission payable to the Agent byDoordarshan. Counsel for the respondent referred to oneof the agreements where the commission is referred to asstandard discount and contended that the arrangementbetween respondent and advertising agency is not agencybut is Principal to Principal arrangement of sharingadvertisement charges. We are unable to accept thiscontention because advertisement contract entered intobetween the customer and the agency is for telecastingadvertisement in Doordarshan channels. The agentcanvasses advertisement on behalf of Doordarshan underagreement between them and the advertisement chargesrecovered from the customers are also in accordance with

tariff prescribed by Doordarshan which is incorporated inthe agreement. Further it is specifically stated in theagreement that advertisement material should also conformto the discipline introduced by Doordarshan which isnothing but Government agency which cannot telecast allwhat is desired to be telecast by advertising agencies. Infact, Doordarshan is bound by advertisement contractcanvassed by advertising agencies and it is their duty underthe agreement between them and the advertising agenciesto telecast advertisement material in terms of the contractwhich the agency signs with the customer. In our view, thetransaction is pure agency arrangement between therespondent and the advertising agencies because one actsfor the other and the act of the agent binds the respondentin their capacity as Principal of the agent. It is pertinent tonote that commission or brokerage defined underexplanation (i) to Section 194H has wide meaning and itcovers any payment received or receivable directly orindirectly by person acting on behalf of another personfor services rendered. In this case, no one can doubt that15% commission paid to advertising agencies by theDoordarshan is for canvassing advertisements on behalf ofthe respondent. So much so, the payment of 15%, bywhatever name called, whether discount or commission,falls within the definition of “commission” as defined underExplanation (i) to Section 194H of the Act.

………………………………………………………………………………………………………………………………

It is very clear from the above provision that the advertisingagency clearly understood the agreement as an agencyarrangement and the commission payable by the respondentto such agency is subject to tax deduction at source underthe Income Tax Act and so much so the provision in theagreement was for the agent after retaining 15% to givecheque or demand draft for TDS amount which wasoriginally 5% until it was enhanced to 10% by Finance Act2007 with effect from 1.6.2007.

62. In the aforesaid case, the relationship of principal andagent was fully established since the advertising agency

ABCDE

Awas appointed as agent by written agreement and there wasspecific clause that tax shall be deductible at source onpayment of trade discount. In the said circumstances, theKerala High Court held that Section 194H of the IncomeTax Act was applicable. In the present case, there is noagreement between the petitioner and the advertisingBagency and the advertising agency has never been appointedas agent of the petitioner. Thus the above case of the KeralaHigh Court is clearly inapplicable and the reliance on thesaid judgment for fastening the liability of tax and intereston the petitioner is wholly untenable. The judgment of theCKerala High Court thus does not help the respondents inthe present case.”37. In our opinion, the Allahabad High Court very rightly noticedthe distinction between the facts in the case of Jagaran PrakashanLtd. (supra) and the case with which we are concerned in these appealsDand held that it depends upon the facts of each case to decide as to whatis the nature of payment made by the party concerned. Their Lordshipsrightly noticed that the case before them (Jagaran Prakashan Ltd.)did not have any agreement like the one in this case wherein in terms ofthe agreement, it is unmistakably proved that the payment was beingmade by the appellant (assessee) to the agencies by way ofE“commission”. In our view, therefore, the decision of the Allahabad HighCourt is of no help to the case of the appellant for taking differentview.

38. In the light of the foregoing discussion, we concur with thereasoning and the conclusion arrived at by the High Court and find noFmerit in these appeals. The appeals thus fail and are accordingly dismissed.

Nidhi Jain

Appeals dismissed.

[2018] 3 S.C.R. 301

SURESH KUMAR KOHLI

RAKESH JAIN & ANR.

(Civil Appeal No. 3996 of 2018)

APRIL 19, 2018

[R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ]

Rent Control and Eviction: Tenancy – Joint tenancy ortenancy-in-common – Appellant let out premises to father and hisson-respondent no. 2 who started family business – Respondentno. 1-second son, inducted as partner in the family business –Issuance of notice to respondent no. 2 and his father terminatingthe tenancy – Subsequently, death of the father – Eviction petitionby appellant – Decreed by the Rent Controller – Said order upheldby the High Court – Meanwhile, objections filed by respondentno. 1 in the execution petition u/s. 47 O. XXI, r 26(1) claiming thathe was necessary party – Additional Rent Controller rejected theobjection petition, however, the High Court allowed the petition –On appeal, held: When original tenant dies, the legal heirs inheritthe tenancy as joint tenants and occupation of one of the tenant isoccupation of all the joint tenants – Landlord need not implead alllegal heirs of the deceased tenant, whether they are occupying theproperty or not – It is sufficient for the landlord to implead either ofthose persons who are occupying the property, as party – Evictionpetition against one of the joint tenant is sufficient against all thejoint tenants and all joint tenants are bound by the order of theRent Controller as joint tenancy is one tenancy and is not tenancysplit into different legal heirs – Furthermore, filing of objections inthe execution petition at this belated stage, seems to be deliberateattempt to nullify the decree passed in favour of the appellant –Thus, the order passed by the High Court set aside and that of theAdditional Rent Controller restored – Code of Civil Procedure, 1908– s. 47 O. XXI, r 26(1).

Tenancy – Joint tenancy or tenancy in common – Conceptof – Difference between – Explained.

302SUPREME COURT REPORTS

AAllowing the appeal, the CourtHELD: 1.1 The concepts of joint tenancy and tenancy-in-common are different and distinct in form and substance. Theincidents regarding the co-tenancy and joint tenancy are different:joint tenants have unity of title, unity of commencement of title,Bunity of interest, unity of equal shares in the joint estate, unity ofpossession and right of survivorship. Tenancy-in-common is adifferent concept. There is unity of possession but no unity oftitle, i.e. the interests are differently held and each co-tenant hasdifferent shares over the estate. Thus, the tenancy rights, beingproprietary rights, by applying the principle of inheritance, theCshares of heirs are different and ownership of leasehold rightswould be confined to the respective shares of each heir and nonewill have title to the entire leasehold property. Therefore, theestate shall be divided among the co-tenants and each tenant incommon has an estate in the whole of single tenancy.DConsequently, the privity exists between the landlord and thetenant in common in respect of such estate.[Para 10, 11] [307-E-H]

1.2 From perusal of lease deed , it is found that the suitpremises was let out jointly to the father and his son. Thus, bothof them were joint tenants and upon the death of the father,Erespondent No. 1 inherited the tenancy as joint tenant only. Inthe light of H.C. Pandey case, the situation is very clear that whenoriginal tenant dies, the legal heirs inherit the tenancy as jointtenants and occupation of one of the tenant is occupation of allthe joint tenants. It is not necessary for landlord to implead all

Flegal heirs of the deceased tenant, whether they are occupyingthe property or not. It is sufficient for the landlord to impleadeither of those persons who are occupying the property, as party.There may be case where landlord is not aware of all the legalheirs of deceased tenant and impleading only those heirs who

are in occupation of the property is sufficient for the purpose ofGfiling of eviction petition. An eviction petition against one of thejoint tenant is sufficient against all the joint tenants and all jointtenants are bound by the order of the Rent Controller as jointtenancy is one tenancy and is not tenancy split into differentlegal heirs. Thus, the plea of the tenants on this count must fail.H[Para 19, 20] [322-F, 323-B-C]

1.3 Even otherwise, the intervention at this belated stageof execution proceedings, in the fact and circumstances of thecase, seems to be deliberate attempt to nullify the decree passedin favour of the appellant as when respondent no.1 filed objectionsunder Section 47 Order XXI, r 26(1) of the Code, he claimed tobe in possession of the suit premises, however, he failed toproduce any evidence except two rent receipts that too when therespondent no. 1 in his objection petition filed in the executionproceedings of the eviction decree has himself admitted that thethere exists dispute between him and Respondent No. 2 andthey had parted their ways. [Para 21] [323-D-E]

1.4 The judgment and order passed by the Single Judge ofthe High Court is set aside. The judgment and order passed bythe Additional Rent Controller is restored. [Para 22] [323-F]

H.C. Pandey v. G.C. Paul (1989) 3 SCC 77 – relied on.

Mohd. Usman v. (Mst.) Surayya Begum (1990) 2 RCR(Rent) 408; Mst. Surayya Begum v. Mohd. Usman andOthers (1991) 3 SCC 114; Harish Tandon v. Addl.District Magistrate, Allahabad, U.P. and Others (1995)1 SCC 537; Boddu Venkatakrishna Rao and Others v.Smt. Boddu Satyavathi and Others AIR 1968 SC 751;Gian Devi Anand v. Jeevan Kumar and Others (1985)2 SCC 683; Uttam v. Saubhag Singh and Others (2016)4 SCC 68 – referred to.

Case Law Reference

ACIVIL APPELLATE JURISDICTION: Civil Appeal No. 3996of 2018.

From the Judgment and Order dated 05.12.2013 of the High Courtof Delhi at New Delhi in CM(M) No. 880 of 2012.

Dhruv Mehta, Sr. Adv., Rajiv Raheja, Adv. for the Appellant.B

Huzefa Ahmadi, Sr. Adv., Ms. Kaveeta Wadia, Shashank Tripathi,Rahul Gupta, Advs. for the Respondents.

The Judgment of the Court was delivered by

R. K. AGRAWAL, J. 1. Leave granted.C

2. The present appeal is directed against the final judgment andorder dated 05.12.2013 passed by the High Court of Delhi in CM (M)No. 880 of 2012 whereby learned single Judge of the High Court allowedthe petition filed by the Respondent No. 1 herein against the judgmentand order dated 08.06.2012 passed by the Additional Rent Controller inDEx Petition No. 51 of 2012 wherein the objections filed by the RespondentNo. 1 herein under Section 47 read with Order XXI Rule 26(1) of theCode of Civil Procedure, 1908 (in short ‘the Code’) were rejected.

3. Brief facts:-

(a) Suresh Kumar Kohli-the appellant herein is the owner of shopEbearing No. 3, Building No. 2656, Ajmal Khan Road, Karol Bagh, NewDelhi (in short ‘the suit premises’). On 15.11.1975, his father, along withone another, let out the suit premises on monthly rental of Rs. 450/- toLate Shri Ishwar Chand Jain, father of Respondent No. 1 herein, andRamesh Chand Jain-Respondent No. 2 herein. The tenants started aFfamily business under the name and style of M/s Rakesh Wool Store.Shri Rakesh Jain - Respondent No. 1 herein was inducted as partnerin the family business on 02.04.1979.

(b) On 25.04.2009, the owner sent legal notice to RespondentNo. 2 herein and his father Late Shri Ishwar Chand Jain terminating theGtenancy with effect from 31.05.2009. Shri Ishwar Chand Jain died on08.03.2010.

(c) Since the tenant failed to vacate the suit premises, the appellantherein filed Eviction Petition bearing No. E-304/2010 under Section14(1)(e) read with Section 25-B of the Delhi Rent (Control) Act, 1958

(hereinafter referred to as ‘the Act’) on the ground of bona fide need.The Additional Rent Controller, New Delhi, vide judgment and orderdated 30.11.2011, decreed the eviction petition in favour of the appellantherein.

(d) Being aggrieved by the decree in favour of the appellant herein,Respondent No. 2 herein preferred Rent Control Revision being No.212 of 2012 before the High Court. Learned single Judge of the HighCourt, vide judgment and order dated 08.05.2012, dismissed the revision.Aggrieved by the above order, Respondent No. 2 herein preferred ReviewPetition being No. 383 of 2012 before the High Court. Learned singleJudge of the High Court, vide judgment and order dated 17.08.2012,dismissed the review petition filed by Respondent No. 2 herein.

(e) Meanwhile, Respondent No. 1 herein filed objections inExecution Petition No. 51/2012 under Section 47 Order XXI Rule 26(1)before the Additional Rent Controller, New Delhi claiming that he beinga necessary party as he inherited rights in joint family business and hewas not aware of the pendency of the eviction proceedings. TheAdditional Rent Controller, vide judgment and order dated 08.06.2012,rejected the objection petition filed by Respondent No. 1 herein.

(f) Aggrieved by the order dated 08.06.2012, Respondent No. 1herein preferred CM (Main) No. 880 of 2012 before the High Court.Learned single Judge of the High Court, vide judgment and order dated05.12.2013, allowed the petition filed by the Respondent No. 1 herein.

(g) Aggrieved by the judgment and order dated 05.12.2013, theappellant has preferred this appeal by way of special leave before thisCourt.

4. Heard Mr. Dhruv Mehta, learned senior counsel for the appellantand Mr. Huzefa Ahmadi, learned senior counsel for the respondents andperused the records.

Point(s) for consideration:-

5. The only point for consideration before this Court is whether inthe light of present facts and circumstances of the case, the status of theheirs and legal representatives of the deceased tenant will be of jointtenants or of tenants-in-common.

ARival submissions:-

6. Learned senior counsel appearing for the appellant contendedthat the High Court failed to appreciate the fact that Respondent No.2,apart from being tenant in his own right, was also one of the heirs andlegal representative of the deceased - Shri Ishwar Chand Jain and, thus,Bhis estate and interest was amply represented and the absence ofRespondent No.1 was not fatal to the maintainability of the EvictionPetition filed by the appellant against the tenant-Respondent No.2.Learned senior counsel further contended that Respondent No.2 and hisfather late Shri Ishwar Chand Jain were joint tenants when their tenancywas determined, and therefore, eviction suit filed by the landlord-appellantCagainst one of the joint tenant was perfectly valid and maintainable. Thedeath of one of the joint tenant after termination of the tenancy will haveno effect as right of the party crystallized on the date of service of thenotice and termination of the tenancy.

7. Learned senior counsel further contended that the High CourtDerred in holding that Respondent No.1 was necessary party to the suitfor eviction on the ground that the tenancy between the parties is tenancy-in-common and not joint tenancy. He finally contended that the HighCourt erred in law in applying the provisions of the Hindu SuccessionAct, 1956 while interpreting the status of Respondent No.1 qua the suitEshop after the death of his father who was the original tenant in the suitpremises. The Act, being special Act and the “tenant” having beendefined in the said Act, the provisions of the Rent Act will prevail overthe provisions of the Hindu Succession Act, 1956. In support of his plea,learned senior counsel relied upon the following decisions of this Court,viz., H.C. Pandey vs. G.C. Paul (1989) 3 SCC 77, Mohd. Usman vs.F(Mst.) Surayya Begum (1990) 2 RCR (Rent) 408, Mst. SurayyaBegum vs. Mohd. Usman and Others (1991) 3 SCC 114 and HarishTandon vs. Addl. District Magistrate, Allahabad, U.P. and Others(1995) 1 SCC 537.

8. On the other hand, learned senior counsel appearing for theGrespondents contended that on careful perusal of the provisions of theAct and the definition of ‘Tenant’ given thereunder read with Section 19of the Hindu Succession Act, 1956, the intention of the legislature wouldnot be to exclude the former Act from the operation of the latter and theHigh Court was right in placing reliance on Section 19 of the Hindu

Succession Act,1956 to hold that on the death of tenant, his legal heirshold the tenancy estate as tenants-in-common and not as joint tenant.

9. Learned senior counsel further submitted that the present appealdeserves to be dismissed as the appellant has acted in clandestinemanner to undermine the interest of Respondent No. 1 in the suit premiseand the High Court was right in setting aside the order of the AdditionalRent Controller and directing the impleadment of Respondent No. 1 inthe eviction petition. He finally contended that the findings of the HighCourt in the present case should not be interfered with as the samewould lead to grave injustice to the respondents. In support of his aforesaidpleas, learned senior counsel has relied upon the following decisions ofthis Court, viz., Boddu Venkatakrishna Rao and Others vs. Smt. BodduSatyavathi and Others AIR 1968 SC 751, Gian Devi Anand vs. JeevanKumar and Others (1985) 2 SCC 683 and Uttam vs. Saubhag Singhand Others (2016) 4 SCC 68.Discussion:-

10. The issue at hand is what would be the status of the succeedinglegal representatives after the death of the statutory tenant. In thisregard, it would be worthy to discuss the two capacities, viz., tenancy-in-common and joint tenancy, and the rights that one holds in these twodifferent capacities. Fundamentally, the concepts of joint tenancy andtenancy-in-common are different and distinct in form and substance.The incidents regarding the co-tenancy and joint tenancy are different:joint tenants have unity of title, unity of commencement of title, unity ofinterest, unity of equal shares in the joint estate, unity of possession andright of survivorship.

11. Tenancy-in-common is different concept. There is unity ofpossession but no unity of title, i.e. the interests are differently held andeach co-tenant has different shares over the estate. Thus, the tenancyrights, being proprietary rights, by applying the principle of inheritance,the shares of heirs are different and ownership of leasehold rights wouldbe confined to the respective shares of each heir and none will have titleto the entire leasehold property. Therefore, the estate shall be dividedamong the co-tenants and each tenant in common has an estate in thewhole of single tenancy. Consequently, the privity exists between thelandlord and the tenant in common in respect of such estate.

A12. In Boddu Venkatakrishna Rao (supra), this Court has heldas under:-

“5. Let us now consider the position in law. The law has beensummarised in Mulla’s Transfer of Property Act (Fifth Edition)at page 226. As early as 1896 it was held by the Judicial Committeeof the Privy Council in Jogeswar Narain Deo v. Ram ChandraDutt that

“The principle of joint tenancy appears to be unknown toHindu law except in the case of coparcenary between themembers of an undivided family.”

and that it was not right to import into the construction of Hinduwill an extremely technical rule of English conveyancing. Manyyears later the principle was reiterated in the case of Mt. BahuRani v. Rajendra Baksh Singh..”

13. In Gian Devi (supra), this Court has held as under:

“34. It may be noticed that the Legislature itself treats commercialtenancy differently from residential tenancy in the matter ofeviction of the tenant in the Delhi Rent Act and also in variousother Rent Acts. All the grounds for eviction of tenant ofresidential premises are not made grounds for eviction of tenantin respect of commercial premises. Section 14(1)(d) of the DelhiRent Act provides that non-user of the residential premises by thetenant for period of six months immediately before the filing ofthe application for the recovery of possession of the premises willbe good ground for eviction, though in case of commercialpremises no such provision is made. Similarly, Section 14(1)(e)which makes bona fide requirement of the landlord of the premiseslet out to the tenant for residential purposes ground for evictionof the tenant, is not made applicable to commercial premises. Atenant of any commercial premises has necessarily to use thepremises for business purposes. Business carried on by tenantof any commercial premises may be and often is, his onlyoccupation and the source of livelihood of the tenant and his family.Out of the income earned by the tenant from his business in thecommercial premises, the tenant maintains himself and his family;and the tenant, if he is residing in tenanted house, may also bepaying his rent out of the said income. Even if tenant is evicted

from his residential premises, he may with the earnings out of thebusiness be in position to arrange for some other accommodationfor his residence with his family. When, however, tenant is thrownout of the commercial premises, his business which enables himto maintain himself and his family comes to standstill. It iscommon knowledge that it is much more difficult to find suitablebusiness premises than to find suitable premises for residence. Itis no secret that for securing com- mercial accommodation, largesums of money by way of salami, even though not legally payable,may have to be paid and rents of commercial premises are usuallyvery high. Besides, business which has been carried on for yearsat particular place has its own goodwill and other distinctadvantages. The death of the person who happens to be the tenantof the commercial premises and who was running the businessout of the income of which the family used to be maintained, isitself great loss to the members of the family to whom the death,naturally, comes as great blow. Usually, on the death of theperson who runs the business and maintains his family out of theincome of the business, the other members of the family whosuffer the bereavement have necessarily to carry on the businessfor the maintenance and support of the family. running businessis indeed very valuable asset and often great source of comfortto the family as the business keeps the family going. So long asthe contractual tenancy of tenant who carries on the businesscontinues, there can be no question of the heirs of the deceasedtenant not only inheriting the tenancy but also inheriting the businessand they are entitled to run and enjoy the same. We have earlierheld that mere termination of the contractual tenancy does notbring about any change in the status of the tenant and the tenantby virtue of the definition of the “tenant” in the Act and the otherRent Acts continues to enjoy the same status and position, unlessthere be any provisions in the Rent Acts which indicate to thecontrary. The mere fact that in the Act no provision has beenmade with regard to the heirs of tenants in respect of commercialtenancies on the death of the tenant after termination of thetenancy, as has been done in the case of heirs of the tenants ofresidential premises, does not indicate that the Legislature intendedthat the heirs of the tenants of commercial premises will cease toenjoy the protection afforded to the tenant under the Act. The

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Legislature could never have possibly intended that with the deathof tenant of the commercial premises, the business carried onby the tenant, however flourishing it may be and even if the sameconstituted the source of livelihood of the members of the family,must necessarily come to an end on the death of the tenant, onlybecause the tenant died after the contractual tenancy had beenterminated. It could never have been the intention of the Legislaturethat the entire family of tenant depending upon the businesscarried on by the tenant will be completely stranded and thebusiness carried on for years in the premises which had been letout to the tenant must stop functioning at the premises which theheirs of the deceased tenant must necessarily vacate, as they areafforded no protection under the Act. We are of the opinion thatin case of commercial premises governed by the Delhi Act, theLegislature has not thought it fit in the light of the situation atDelhi to place any kind of restriction on the ordinary law ofinheritance with regard to succession. It may also be borne inmind that in case of commercial premises the heirs of the deceasedtenant not only succeed to the tenancy rights in the premises butthey succeed to the business as whole. It might have been opento the Legislature to limit or restrict the right of inheritance withregard to the tenancy as the Legislature had done in the case ofthe tenancies with regard to the residential houses but it wouldnot have been open to the Legislature to alter under the Rent Act,the law of succession regarding the business which is valuableheritable right and which must necessarily devolve on all the heirsin accordance with law. The absence of any provision restrictingthe heritability of the tenancy in respect of the commercial premisesonly establishes that commercial tenancies notwithstanding thedetermination of the contractual tenancies will devolve on the heirsin accordance with law and the heirs who step into the position ofthe deceased tenant will continue to enjoy the protection affordedby the Act and they can only be evicted in accordance with theprovisions of the Act. There is another significant considerationwhich, in our opinion, lends support to the view that we are taking.Commercial premises are let out not only to individuals but also toCompanies, Corporations and other statutory bodies having juristicpersonality. In fact, tenancies in respect of commercial premisesare usually taken by Companies and Corporations. When the tenantis Company or Corporation or anybody with juristic personality,question of the death of the tenant will not arise. Despite thetermination of the tenancy, the Company or the Corporation orsuch juristic personalities, however, will go on enjoying theprotection afforded to the tenant under the Act. It can hardly beconceived that the Legislature would intend to deny to one classof tenants, namely, individuals the protection which will be enjoyedby the other class, namely, the Corporations and Companies andother bodies with juristic personality under the Act. If it be heldthat commercial tenancies after the termination of the contractualtenancy of the tenant are not heritable on the death of the tenantand the heirs of the tenant are not entitled to enjoy the protectionunder the Act, an irreparable mischief which the Legislature couldnever have intended is likely to be caused. Any time after thecreation of the contractual tenancy, the landlord may determinethe contractual tenancy, allowing the tenant to continue to remainin possession of the premises, hoping for an early death of thetenant, so that on the death of tenant he can immediately proceedto institute the proceeding for recovery and recover possession ofthe premises as matter of course, because the heirs would nothave any right to remain in occupation and would not enjoy theprotection of the Act. This could never have been intended by theLegislature while framing the Rent Acts for affording protectionto the tenant against eviction that the landlord would be entitled torecover possession, even if no grounds for eviction as prescribedin the Rent Acts are made out.

35. In our opinion, the view expressed by this Court in GanapatLadha case and the observations made therein which we haveearlier quoted, do not lay down the correct law. The said decisiondoes not properly construe the definition of the “tenant” as givenin Section 5(11)(b) of the Act and does not consider the status ofthe tenant, as defined in the Act, even after termination of thecommercial tenancy. In our judgment in Damadilal case this Courthas correctly appreciated the status and the legal position of atenant who continues to remain in possession after termination ofthe contractual tenancy. We have quoted at length the view ofthis Court and the reasons in support thereof. The view expressedby seven Judge Bench of this Court in Dhanapal Chettiar

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case and the observations made therein which we have earlierquoted, lend support to the decision of this Court in Damadilalcase. These decisions correctly lay down that the termination ofthe contractual tenancy by the landlord does not bring about achange in the status of the tenant who continues to remain inpossession after the termination of the tenancy by virtue of theprovisions of the Rent Act. proper interpretation of the definitionof tenant in the light of the provisions made in the Rent Actsmakes it clear that the tenant continues to enjoy an estate or interestin the tenanted premises despite the termination of the contractualtenancy.”

14. This Court, in H.C. Pandey (supra), has held as under:-

“4. It is now well settled that on the death of the original tenant,subject to any provision to the contrary either negativing or limitingthe succession, the tenancy rights devolve on the heirs of thedeceased tenant. The incidence of the tenancy are the same asthose enjoyed by the original tenant. It is single tenancy whichdevolves on the heirs. There is no division of the premises or ofthe rent payable thereof. That is the position as between thelandlord and the heirs of the deceased tenant. In other words, theheirs succeed to the tenancy as joint tenants….”

15. In Mohd. Usman (supra), the High Court of Delhi has heldas under:-

“5. I find no force in the contention raised by the learned counselfor respondent No. 1. The provision regarding inheritance oftenancy in respect of Mahomedans and Hindus is not different.The Supreme Court in Gian Devi Anand’s case (Supra) has nodoubt observed that tenancy right which is inheritable devolveson the heirs under the ordinary law of succession. It only meansthat only those heirs who would be entitled to inherit the propertyof deceased tenant under the ordinary law of succession wouldbe entitled to inherit even the right of tenancy after the death ofthe tenant. This position is amply clear from the fact that evenunder Section 19 of the Hindu Succession Act 1956 whichprescribes the mode of succession of two or more heirs providesthat if two or more heirs succeed together to the property of anintestate they shall take the property as tenants in common and

not as joint tenants and in-spite of this the Supreme Court in H.C.Pandey’s case (supra) has observed that the heirs of deceasedtenant succeed to the right of tenancy as joint tenants. TheSupreme Court in H.C. Pandey’s case (supra) has observed asfollows:-

“It is now well settled that on the death of the original tenant,subject to any provision to the contrary either negativing orlimiting the succession, the tenancy rights devolve on the heirsof the deceased tenant. The incidence of the tenancy are thesame as those enjoyed by the original tenant. It is singletenancy which devolves on the heirs. There is no division ofthe premises or of the rent payable there. That is the positionas between the landlord and the heirs of the deceased tenant.In other words, the heirs succeed to the tenancy as joint tenants.In the present case it appears that the respondent acted onbehalf of the tenants, that he paid rent on behalf of all and heaccepted notice also on behalf of all. In the circumstances, thenotice was served on the respondent was sufficient. It seemsto us that the view taken in Ramesh Chand Bose (AIR 1977Allahabad 38) (supra) is erroneous where the High Court laysdown that the heirs of the deceased tenant succeed as tenantsin common. In the Transfer of Property Act notice served bythe appellant on the respondent is valid notice and thereforethe suit must succeed.”

6. In the light of the above observations of the Supreme Courtthere can be no doubt that even if one of the legal heirs is not aparty to proceedings for eviction filed by the landlord against thelegal heirs of the original tenant, that heir who has been left outcannot later on come forward and agitate his or her right in thetenancy. In the present case, I find that Surayya Begum whoclaims to be living in the same disputed premises alongwith otherlegal heirs after the death of Khalil Raza has chosen to file herobjections after the whole round of litigation is over and after theother legal heirs have lost right upto the Supreme Court. It is thusclear that these objections are filed only to defeat the decree anddelay the execution of the decree. In my view, therefore, even ifSurayya Begum was not party to the previous litigation betweenthe parties she has no right to object to the execution of the decree

and the Additional Rent Controller ought to have dismissed theobjections on that ground alone.

7. In the circumstances, the petition is allowed. The order of theAdditional Rent Controller Delhi dated 2[nd] September, 1989 is setaside. The objections filed by respondent No.1 are dismissed.Respondent No.1 Mst. Surayya Begum is however given onmonth’s time to vacate the premises. No costs.”

16. Further, in Surayya Begum (Mst) (supra), this Court hasheld as under:-

“7. The learned advocates representing the decree holders inthese two appeals have argued that when the tenancy rightsdevolve on the heirs of tenant on his death, the incidence oftenancy remains the same as earlier enjoyed by the original tenantand it is single tenancy which devolves on them. There is nodivision of the premises or of the rent payable, and the position asbetween the landlord and the tenant continues unaltered. Relyingon Kanji Manji v. Trustees of the Port of Bombay and borrowingfrom the judgment in H.C. Pandey case it was urged that theheirs succeed to the tenancy as joint tenants. The learned counselfor the appellants have replied by pointing out that as the aforesaidtwo decisions were distinguished by this Court in the latter caseof Textile Association, it was not open to the landlords to supportthe impugned judgments by relying upon the earlier two cases.

8. So far as Section 19 of the Hindu Succession Act is concerned,when it directs that the heirs of Hindu dying intestate shall takehis property as tenants-in-common, it is dealing with the rights ofthe heirs inter se amongst them, and not with their relationshipwith stranger having superior or distinctly separate right therein.The relationship between the stranger and the heirs of deceasedtenant is not the subject matter of the section. Similar is the situationwhen the tenant is Mohammedan. However, it is not necessaryfor us to elaborate this aspect in the present appeals. The maindispute between the parties, as it appears from their respectivestands in the courts below, is whether the heirs of the originaltenants who were parties to the proceeding, represented theobjector heirs also. According to the decree holder in Miss RenuSharma’s case their interest was adequately represented by their

mother and brothers and they are as much bound by the decreeas the named judgment debtors. In Surayya Begum’s caserespondent 1 has denied the appellant’s claim of being one of thedaughters of Khalil Raza, and has been contending that the fullestate of Khalil Raza which devolved upon his heirs on his deathwas completely represented by respondents 2 to 9. In other words,even if the appellant is held to be daughter of Khalil Raza thefurther question as to whether her interest was represented bythe other members of the family will have to be answered.”

17. In Harish Tandon (supra), this Court has held as under:-

“20. The Act with which we are concerned is statute whichpurports to regulate the relationship between the landlord and thetenant and in many respects contains provisions for achieving thatobject which are different from the Transfer of Property Act. Assuch it was open to the framers of the Act to look to the interestof the tenant as well as the landlord and to prescribe conditionsunder which the tenant can continue to occupy building andhaving contravened any of the conditions prescribed shall bedeemed to have ceased to occupy the building.21. On the question as to whether any contravention by GanpatRoy, one of the heirs of Sheobux Roy, will be ground for evictionfrom the whole premises, the High Court was of the opinion thatafter the death of Sheobux Roy, his five sons became tenants incommon and not joint tenants of the premises because of whichcontravention by one of the tenants shall not be ground foreviction, so far the other co-tenants are concerned. In support ofthis finding, reliance was placed by the High Court on judgmentof this Court in Mohd. Azeem v. Distt. Judge. From the facts ofthat case it appears that the original tenant had died in 1969 leavingbehind widow, three sons and daughter. In connection withsub-section (3) of Section 12, after making reference to the FullBench judgment of Allahabad High Court it was said:

“The Full Bench proceeded on the basis that the heirsbecome joint tenants and answered the main problem by sayingthat if any member of the family of such joint tenants built oracquired house in vacant state the tenancy would be deemedto have ceased. In framing these questions for reference and

in answering the referred questions, the definition of ‘tenant’was lost sight of. All the heirs as normally reside with thedeceased tenant in the building at the time of his death becometenants. The definition does not warrant the view that all theheirs will become body of tenants to give rise to the conceptof joint tenancy. Each heir satisfying the further qualificationin Section 3(a)(1) of the Act in his own right becomes tenantand when we come to Section 12(3) of the Act, the words ‘thetenant or any member of his family’ will refer to the heir whohas become tenant under the statutory definition and membersof his family.”

However, this Court in the case of H.C. Pandey v. G.C. Paul inconnection with the same Act said:

“It is now well settled that on the death of the originaltenant, subject to any provision to the contrary either negativingor limiting the succession, the tenancy rights devolve on theheirs of the deceased tenant. The incidence of the tenancy arethe same as those enjoyed by the original tenant. It is singletenancy which devolves on the heirs. There is no division ofthe premises or of the rent payable therefor. That is the positionas between the landlord and the heirs of the deceased tenant.In other words, the heirs succeed to the tenancy as jointtenants.”

22. The attention of the learned Judges constituting the Bench inthe case of H.C. Pandey v. G.C. Paul was not drawn to the viewexpressed in the case of Mohd. Azeem v. Distt. Judge. Thereappears to be an apparent conflict between the two judgments. Itwas on that account that the present appeal was referred to aBench of three Judges. According to us, it is difficult to hold thatafter the death of the original tenant his heirs become tenants-in-common and each one of the heirs shall be deemed to be anindependent tenant in his own right. This can be examined withreference to Section 20(2) which contains the grounds on whicha tenant can be evicted. Clause (a) of Section 20(2) says that ifthe tenant is in arrears of rent for not less than four months andhas failed to pay the same to the landlord within one month fromthe date of service upon him of notice of demand, then that shallbe ground on which the landlord can institute suit for eviction.Take case where the original tenant who was paying the rentdies leaving behind four sons. It need not be pointed out that afterthe death of the original tenant, his heirs must be paying the rentjointly through one of his sons. Now if there is default as providedin clause (a) of sub-section (2) of Section 20 in respect of thepayment of rent, each of the sons will take stand that he has notcommitted such default and it is only the other sons who havefailed to pay the rent. If the concept of heirs becoming independenttenants is to be introduced, there should be provision under theAct to the effect that each of the heirs shall pay the proportionaterent and in default thereto such heir or heirs alone shall be liableto be evicted. There is no scope for such division of liability to paythe rent which was being paid by the original tenant, among theheirs as against the landlord what the heirs do inter se, is theirconcern. Similarly, so far as ground (b) of sub-section (2) of Section20, which says that if the tenant has wilfully caused or permittedto be caused substantial damage to the building, then the tenantshall be liable to be evicted; again, if one of the sons of the originaldeceased tenant wilfully causes substantial damage to the building,the landlord cannot get possession of the premises from the heirsof the deceased tenant since the damage was not caused by all ofthem. Same will be the position in respect of clause (c) which isanother ground for eviction, i.e., the tenant has without thepermission in writing of the landlord made or permitted to be made,any such construction or structural alteration in the building whichis likely to diminish its value or utility or to disfigure it. Even if thesaid ground is established by the landlord, he cannot get possessionof the building in which construction or structural alterations havebeen made diminishing its value and utility, unless he establishesthat all the heirs of the deceased tenant had done so. Clause (d)of sub-section (2) of Section 20 prescribes another ground foreviction — that if the tenant has without the consent in writing ofthe landlord, used it for purpose other than the purpose for whichhe was admitted to the tenancy of the building or has been convictedunder any law for the time being in force of an offence of usingthe building or allowing it to be used for illegal or immoral purposes;the landlord cannot get possession of the building unless heestablishes the said ground individually against all the heirs. We

are of the view that if it is held that after the death of the originaltenant, each of his heirs becomes independent tenant, then as acorollary it has also to be held that after the death of the originaltenant, the otherwise single tenancy stands split up into severaltenancies and the landlord can get possession of the building onlyif he establishes one or the other ground mentioned in sub-section(2) of Section 20 against each of the heirs of original tenant. Oneof the well-settled rules of interpretation of statute is that it shouldbe interpreted in manner which does not lead to an absurdsituation.”

18. Further, in Uttam (supra), this Court has held as under:-

“9. Also of some importance are Sections 19 and 30 of the saidAct which read as follows:

“19. Mode of succession of two or more heirs.—If twoor more heirs succeed together to the property of an intestate,they shall take the property—

(a) save as otherwise expressly provided in this Act, percapita and not per stirpes; and

(b) as tenants-in-common and not as joint tenants.

30. Testamentary succession.—Any Hindu may dispose ofby will or other testamentary disposition any property, which iscapable of being so disposed of by him or by her, in accordancewith the provisions of the Indian Succession Act, 1925 (39 of1925), or any other law for the time being in force and applicableto Hindus.

Explanation.—The interest of male Hindu in Mitaksharacoparcenary property or the interest of member of tarwad,tavazhi, illom, kutumba or kavaru in the property of the tarwad,tavazhi, illom, kutumba or kavaru shall, notwithstanding anythingcontained in this Act, or in any other law for the time being inforce, be deemed to be property capable of being disposed ofby him or by her within the meaning of this section.”

10. Before analysing the provisions of the Act, it is necessary torefer to some of the judgments of this Court which have dealt, in

particular, with Section 6 before its amendment in 2005, and withSection 8. In Gurupad Khandappa Magdum v. HirabaiKhandappa Magdum, the effect of the old Section 6 was goneinto in some detail by this Court. Hindu widow claimed partitionand separate possession of 7/24th share in joint family propertywhich consisted of her husband, herself and their two sons. If apartition were to take place during her husband’s lifetime betweenhimself and his two sons, the widow would have got 1/4th sharein such joint family property. The deceased husband’s 1/4th sharewould then devolve, upon his death, on six sharers, the plaintiffand her five children, each having 1/24th share therein. Adding1/4th and 1/24th, the plaintiff claimed 7/24th share in the jointfamily property. This Court held: (SCC pp. 386-87, paras 6-7)

14. On application of the principles contained in the aforesaiddecisions, it becomes clear that, on the death of Jagannath Singhin 1973, the proviso to Section 6 would apply inasmuch asJagannath Singh had left behind his widow, who was Class Ifemale heir. Equally, upon the application of Explanation 1 to thesaid Section, partition must be said to have been effected byoperation of law immediately before his death. This being thecase, it is clear that the plaintiff would be entitled to share onthis partition taking place in 1973. We were informed, however,that the plaintiff was born only in 1977, and that, for this reason,(his birth being after his grandfather’s death) obviously no suchshare could be allotted to him. Also, his case in the suit filed byhim is not that he is entitled to this share but that he is entitled to a1/8th share on dividing the joint family property between 8 co-sharers in 1998. What has therefore to be seen is whether theapplication of Section 8, in 1973, on the death of Jagannath Singhwould make the joint family property in the hands of the father,uncles and the plaintiff no longer joint family property after thedevolution of Jagannath Singh’s share, by application of Section8, among his Class I heirs? This question would have to beanswered with reference to some of the judgments of this Court.

15. In CWT v. Chander Sen, partial partition having taken placein 1961 between father and his son, their business was dividedand thereafter carried on by partnership firm consisting of thetwo of them. The father died in 1965, leaving behind him his son

ABC

and two grandsons, and credit balance in the account of thefirm. This Court had to answer as to whether credit balance leftin the account of the firm could be said to be joint family propertyafter the father’s share had been distributed among his Class Iheirs in accordance with Section 8 of the Act. This Court examinedthe legal position and ultimately approved of the view of four HighCourts, namely, Allahabad, Madras, Madhya Pradesh and AndhraPradesh, while stating that the Gujarat High Court view contraryto these High Courts, would not be correct in law. After settingout the various views of the five High Courts mentioned, this Courtheld:

“21. It is necessary to bear in mind the Preamble to theHindu Succession Act, 1956. The Preamble states that it wasan Act to amend and codify the law relating to intestatesuccession among Hindus.

22. In view of the Preamble to the Act i.e. that to modifywhere necessary and to codify the law, in our opinion it is notpossible when Schedule indicates heirs in Class I and onlyincludes son and does not include son’s son but does includeson of predeceased son, to say that when son inherits theproperty in the situation contemplated by Section 8 he takes itas karta of his own undivided family. The Gujarat High Courtview noted above, if accepted, would mean that though theson of predeceased son and not the son of son who isintended to be excluded under Section 8 to inherit, the latterwould by applying the old Hindu law get right by birth of thesaid property contrary to the scheme outlined in Section 8.Furthermore as noted by the Andhra Pradesh High Court thatthe Act makes it clear by Section 4 that one should look to theAct in case of doubt and not to the pre-existing Hindu law. Itwould be difficult to hold today the property which devolvedon Hindu under Section 8 of the Hindu Succession Act wouldbe HUF in his hand vis-à-vis his own son; that would amountto creating two classes among the heirs mentioned in Class I,the male heirs in whose hands it will be joint Hindu familyproperty and vis-à-vis son and female heirs with respect towhom no such concept could be applied or contemplated. It

may be mentioned that heirs in Class I of Schedule under Section8 of the Act included widow, mother, daughter of predeceasedson, etc.

23. Before we conclude we may state that we have notedthe observations of Mulla’s Commentary on Hindu Law, 15thEdn. dealing with Section 6 of the Hindu Succession Act at pp.924-26 as well as Mayne Hindu Law, 12th Edn., pp. 918-19.

24. The express words of Section 8 of the Hindu SuccessionAct, 1956 cannot be ignored and must prevail. The Preambleto the Act reiterates that the Act is, inter alia, to ‘amend’ thelaw, with that background the express language which excludesson’s son but includes son of predeceased son cannot beignored.

25. In the aforesaid light the views expressed by theAllahabad High Court, the Madras High Court[8], the MadhyaPradesh High Court, and the Andhra Pradesh High Court,appear to us to be correct. With respect we are unable toagree with the views of the Gujarat High Court notedhereinbefore.”

17. In Bhanwar Singh v. Puran, this Court followed ChanderSen case and the various judgments following Chander Sen case.This Court held:

“12. The Act brought about sea change in the matter ofinheritance and succession amongst Hindus. Section 4 of theAct contains non obstante provision in terms whereof anytext, rule or interpretation of Hindu law or any custom or usageas part of that law in force immediately before thecommencement of the Act, ceased to have effect with respectto any matter for which provision is made therein save asotherwise expressly provided.

13. Section 6 of the Act, as it stood at the relevant time,provided for devolution of interest in the coparcenary property.Section 8 lays down the general rules of succession that theproperty of male dying intestate devolves according to theprovisions of the Chapter as specified in Class I of the Schedule.

In the Schedule appended to the Act, natural sons and daughtersare placed as Class I heirs but grandson, so long as father isalive, has not been included. Section 19 of the Act providesthat in the event of succession by two or more heirs, they willtake the property per capita and not per stirpes, as also tenants-in-common and not as joint tenants.

14. Indisputably, Bhima left behind Sant Ram and threedaughters. In terms of Section 8 of the Act, therefore, theproperties of Bhima devolved upon Sant Ram and his threesisters. Each had 1/4th share in the property. Apart from thelegal position, factually the same was also reflected in the record-of-rights. partition had taken place amongst the heirs ofBhima.

15. Although the learned first appellate court proceeded toconsider the effect of Section 6 of the Act, in our opinion, thesame was not applicable in the facts and circumstances of thecase. In any event, it had rightly been held that even in such acase, having regard to Section 8 as also Section 19 of the Act,the properties ceased to be joint family property and all theheirs and legal representatives of Bhima would succeed to hisinterest as tenants-in-common and not as joint tenants. In acase of this nature, the joint coparcenary did not continue.”

19. From perusal of lease deed dated 15.11.1975, we find thatthe suit premises was let out jointly to late Shri Ishwar Chand Jain andShri Ramesh Chand Jain, son of late Shri Ishwar Chand Jain. Thus,both of them were joint tenants and upon the death of Shri Ishwar ChandJain, Respondent No. 1 inherited the tenancy as joint tenant only. Further,in view of catena of decisions of this Court on the subject as well asthe principles laid down in H.C. Pandey (supra), we are of the opinionthat the High Court erred in holding that the decisions relied upon bylearned senior counsel for the appellant are not applicable to the facts ofthe present case on the premise that in the given case itself the validityand binding nature of the notice given to one of the legal representativesof the deceased tenant under Section 106 of the Transfer of propertyAct, 1882 on other legal representatives was determined only on thebasis of the fact that they hold the tenancy as joint tenants and noticegiven to one means notice given to all.

Conclusion:-

20. We are of the view that in the light of H.C. Pandey (supra),the situation is very clear that when original tenant dies, the legal heirsinherit the tenancy as joint tenants and occupation of one of the tenant isoccupation of all the joint tenants. It is not necessary for landlord toimplead all legal heirs of the deceased tenant, whether they are occupyingthe property or not. It is sufficient for the landlord to implead either ofthose persons who are occupying the property, as party. There may be acase where landlord is not aware of all the legal heirs of deceased tenantand impleading only those heirs who are in occupation of the property issufficient for the purpose of filing of eviction petition. An eviction petitionagainst one of the joint tenant is sufficient against all the joint tenantsand all joint tenants are bound by the order of the Rent Controller as jointtenancy is one tenancy and is not tenancy split into different legalheirs. Thus, the plea of the tenants on this count must fail.

21. Even otherwise, the intervention at this belated stage ofexecution proceedings, in the fact and circumstances of the case, seemsto be deliberate attempt to nullify the decree passed in favour of theappellant herein as when Respondent No.1 filed objections under Section47 Order XXI of the Code, he claimed to be in possession of the suitpremises, however, he failed to produce any evidence except two rentreceipts for the months of December, 1993 and January 1994 that toowhen the Respondent No. 1 in his objection petition filed in the executionproceedings of the eviction decree has himself admitted that the thereexists dispute between him and Respondent No. 2 and they had partedtheir ways.

22. In light of the above discussion, the judgment and order dated05.12.2013 passed by learned single Judge of the High Court is set aside.The judgment and order dated 30.11.2011 passed by the Additional RentController is hereby restored. The appeal is allowed.

Nidhi Jain

Appeal allowed.