Once Landlord Proves Absence Of Original Tenant & Third-Party Possession, Onus To Rebut Presumption Of Unlawful Sub-Letting Shifts To Tenant: Supreme Court
|The Court reiterated that in cases of alleged subletting, once the landlord establishes exclusive possession of a third party and absence of the original tenant, a presumption arises, shifting the burden onto the tenant to justify such possession.
The Supreme Court held that in eviction proceedings based on unlawful subletting, once the landlord discharges the initial burden by proving that the premises are in exclusive possession of a third party and that the original tenant is no longer in possession, a presumption of subletting arises, and the onus shifts to the tenant to establish that such possession is lawful and not like subtenancy.
The Court was hearing a civil appeal arising from the judgment of the Karnataka High Court, which had set aside an eviction order passed by the trial court under the Karnataka Rent Act, 1999.
A Bench comprising Justice Ahsanuddin Amanullah and Justice R. Mahadevan observed, “landlord discharges the initial burden by establishing (i) exclusive possession of a third party, and (ii) absence of the original tenant from possession, … upon such proof, a presumption of sub-letting arises, and the onus shifts to the tenant to demonstrate that such possession is lawful and not in the nature of sub-tenancy”.
Senior Advocate Devashish Bharuka appeared for the appellants, while Advocate T. Harish Kumar appeared for the respondents.
Background
The dispute arose out of eviction proceedings initiated by the landlord under Sections 27(2)(b)(ii) and 27(2)(p) of the Karnataka Rent Act, 1999, on the ground of unlawful sub-letting and parting with possession.
The landlord, who had acquired leasehold rights over the property, had let out a shop premises to Respondent No. 1, a partnership firm, under a registered lease deed. The lease expressly prohibited subletting or parting with possession without prior written consent.
It was alleged that the original tenant and its partner were no longer in possession of the premises, and that the business was being carried on by Respondent Nos. 2 and 3, who were strangers to the lease agreement. On this basis, eviction proceedings were initiated.
The trial court, upon appreciation of oral and documentary evidence, found that the persons in actual possession were not original tenants and that the tenant had unlawfully parted with possession. Accordingly, the eviction petition was allowed.
However, the High Court, in revision under Section 46 of the Act, set aside the eviction order by reappreciating the evidence and accepting the respondents' case that the arrangement was merely a reconstitution of the partnership and not sub-letting.
Aggrieved thereby, the landlord approached the Supreme Court.
Court’s Observation
The Supreme Court examined the scope of revisional jurisdiction under Section 46 of the Karnataka Rent Act and held that such jurisdiction is limited and does not permit reappreciation of evidence.
It held that the High Court had transgressed its jurisdiction by reassessing oral and documentary evidence and substituting its own findings in place of those of the trial court, which were pure findings of fact based on evidence. The Court reiterated that revisional jurisdiction cannot be equated with appellate jurisdiction and interference is permissible only in cases of perversity, illegality, or jurisdictional error.
On the issue of sub-letting, the Court undertook an extensive survey of precedents and reaffirmed the settled legal position governing the burden of proof.
It observed, “in eviction proceedings founded on sub-letting, the initial onus lies upon the landlord… however, once exclusive possession of a third party is established, the burden shifts to the tenant to explain the nature of such possession.”
The Court further held, “that direct evidence of sub-letting is seldom available, and the same can be inferred from surrounding circumstances, particularly where exclusive possession of a third party is established”.
Applying these principles to the facts, the Court noted that the lease deed recognised only one partner as the tenant, and Respondent Nos. 2 and 3 were not parties to the lease. The material on record established that these respondents were in exclusive possession of the premises, while the original tenant was not in possession.
The Court held that this was sufficient to discharge the initial burden and raise a presumption of sub-letting. It found that the respondents failed to rebut this presumption, as no credible evidence was produced to establish a valid partnership, lawful induction, or consent of the landlord.
The Court also examined the defence of “partnership reconstitution” and reiterated that while a genuine partnership does not amount to sub-letting, such arrangements cannot be used as a camouflage to conceal unlawful transfer of possession. It emphasised that courts are entitled to pierce the veil of such arrangements to ascertain the real nature of the transaction.
Conclusion
The Supreme Court held that the High Court erred in interfering with the well-reasoned findings of the trial court and in failing to apply the settled principles governing sub-letting and burden of proof.
Accordingly, the appeal was allowed, the judgment of the High Court was set aside, and the eviction order passed by the trial court was restored. The respondents were granted three months to vacate and hand over vacant possession of the premises to the appellants.
Cause Title: Sri M.V. Ramachandrasa (Since Deceased) v. M/s Mahendra Watch Company & Ors. (Neutral Citation: 2026 INSC 348)
Appearances
Appellant: Senior Advocate Devashish Bharuka; Advocate Sarvshree (AOR); H.S. Somnath, Advocate.
Respondents: Advocate T. Harish Kumar (AOR).