Law Web: Whether Individual Partner Can Claim Eviction On Bonafide Need Ground For His Occupation Of Building Owned By Partnership Firm?

We have no hesitation to negative the claim by a firm,

seeking eviction of a tenant from a building owned by the partnership

firm, on the ground of bonafide need of an individual partner when

his/her claim is that he/she wanted to occupy the building for personal

use. We find it impossible to stretch the law under Section 11(3) of the

Act to hold that occupation by such a partner will amount to own

occupation by the landlord, as he/she individually cannot be regarded

as the landlord as long as the building remains in the ownership of the

firm. We have already mentioned the distinctions between a partner

and a co-owner. Once we find that the building belongs to a firm, the

rights and obligations of the partners are governed by the terms of the

contract and in the absence of any provisions in the contract, they shall

be guided by the Partnership Act. Finding that the building belongs to a

partnership firm cuts at the root of the claim by an individual partner for

own occupation since he/she ceases to be a landlord. In other words,

no partner individually can claim to be a landlord when the firm owns

the building. Hence, one partner cannot claim eviction on the ground of

bonafide need for his/her own occupation of the building. Clear wording

in Section 11(3) of the Act would show that a landlord alone can claim

eviction on the ground of bonafide need of a building for his own

occupation. Since the individual partner cannot be regarded as landlord

in respect of a building owned by a firm, the provision does not apply in

such a case. Corollary is that in such a situation Section 11(3) of the

Act can be invoked by a firm only when the firm itself bonafide needs to

occupy the tenanted premises.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

MR. JUSTICE A.HARIPRASAD

MR.JUSTICE T.V.ANILKUMAR

RCRev. No.228 OF 2018

AMEER, MAMMUNHI HAJI, Vs M/S.B.AMOO AND BROTHERS,

Dated this the 15th day of October, 2019

COMMON ORDER

Hariprasad, J.

In the captioned cases, common respondents figure in the

party array. 1st respondent is an unregistered partnership firm

represented by its managing partners. Managing partners of the 1st

respondent firm are arrayed as respondents 2 and 3 individually too.

They together filed two eviction petitions, against two tenants occupying

two separate rooms in a larger building, claimed to be belonging to the

1st respondent partnership firm, on the ground that the tenants kept rent

in arrears and also the respondents bonafide needed vacant

possession of the rooms to fulfill the requirement of two partners, by

invoking Sections 11(2) and 11(3) of the Kerala Buildings (Lease and

Rent Control) Act, 1965 (in short, "the Act"). Revision petitioners are the

tenants who lost in the Rent Control Court as well as in the Appellate

Authority where bonafide need was concurrently found in favour of the

respondents. It is submitted by the learned counsel for the revision

petitioners that the eviction orders in both cases under Section 11(2)(b)

of the Act, for keeping rent in arrears, were vacated by invoking Section

11(2)(c) by depositing the quantified arrears of rent. In both these

revisions, therefore, the ground of eviction surviving for consideration is

under Section 11(3) of the Act.

2. It is to be noticed that bonafide need set up for eviction of

the tenant in R.C.P.No.21 of 2015 before the Rent Control Court,

Kasargod is for own occupation of Smt.Hajira, who is said to be a

sleeping partner in the unregistered firm, for starting a tailoring shop.

Tenant has disputed bonafides of the need by contending that

averments in the petition are machinations to unjustly evict him. Against

the concurrent findings in the above Rent Control Petition,

R.C.R.No.228 of 2018 has been filed.

3. Respondents claimed eviction in R.C.P.No.17 of 2016

against another tenant under the aforementioned ground contending

that they require the building for bonafide occupation of Smt.Jameela,

who allegedly is a partner of the firm, for starting a fancy articles store.

It is pointed out by the learned counsel for the revision petitioners that

from the evidence adduced in the case, it has been revealed that

Jameela was not a partner of the firm, but a legal heir of a deceased

partner. Here also the tenant disputed genuineness of the bonafide

need contending that it is only a stratagem to send him out of the

tenanted premises without any lawful reason.

4. The revision petitioners not only disputed bonafides of the

need set up in the eviction petitions, but contended that they are

entitled to get the protection of the second proviso to Section 11(3) of

the Act. After considering the evidence, the courts below granted

eviction repelling the contentions of the revision petitioners.

5. Heard Sri.C.R.Syam Kumar, learned counsel for the

revision petitioners and Sri.Jawahar Jose, learned counsel for the

respondents.

6. In both cases, the revision petitioners challenge

correctness of the eviction order under Section 11(3) of the Act

contending that the courts below erred seriously in assessing bonafides

of the need put forward by the respondents. Apart from that, the

revision petitioner in R.C.R.No.228 of 2018 urged a contention that

when the landlord is a partnership firm, individual need of a partner,

especially that of a sleeping partner, to start an independent business

will not come within the ambit of bonafide need under Section 11(3) of

the Act. It is also contended that the courts below ought to have

appreciated the fact that Section 11(3) of the Act would apply only if the

premises are needed for the business of the firm. Yet another

contention is that the expressions “own occupation” or “for occupation

of any member of the family dependent on him” under Section 11(3) of

the Act will not embrace a claim to use the building by one of the

partners for his or her exclusive or individual purpose.

7. In R.C.R.No.83 of 2019, apart from the challenge against

the finding of bonafide need by the courts below, a question is raised

whether eviction under Section 11(3) of the Act can be granted in

respect of a building owned by a partnership firm, if bonafide need

urged is for a person who is not a partner of the firm.

8. Learned counsel for the respondents attempted to shape

up a contention that Ext.A5 partnership deed produced and marked in

R.C.P.No.21 of 2015 (which is exhibited as Ext.A9 in R.C.P.No.17 of

2016) would clearly reveal that immovable property; viz., the building

and appurtenant land, has not been made the asset of the firm.

According to him, Ext.A5 is only a partnership for collection and division

of the rent accrued from the building. It is also contended that the

building and land belong to respondents 2 and 3 and other co-owners

as tenants-in-common. As per the terms in Ext.A5 partnership deed,

the building and immovable property were not brought to the common

stock. Reliance is placed on Clause 4 in the partnership deed to

contend that capital assets of the parties are the amounts standing to

their credit in the books of accounts as on 21st day of February, 2000.

9. One glaring fact is that Ext.A5 partnership deed is a

reconstitution deed. The recitals therein would show that the parties

to 3 to Ext.A5 were carrying on a business along with B.Amoo Haji in

the name and style of “B.Amoo & Bros., Prop: Hotel Airlines, Bank

Road, Kasargode” as per the terms and conditions embodied in a deed

of partnership dated 01.04.1992. It is also seen that B.Amoo Haji

expired on 20.02.2000 and therefore, Ext.A5 partnership deed was

executed for reconstituting the partnership by admitting his legal heirs

as partners. It is pertinent to note that the original deed of partnership

executed on 01.04.1992 has not been produced by the respondents. In

the absence of the original partnership deed, which operated during the

life time of B.Amoo Haji, it may not be possible to find out what are the

assets that had been brought to the common stock. We find no

tangible explanation from the side of the respondents for not producing

this document.

10. Respondents' contention that the building and immovable

property are not assets of the firm and only the rent collected therefrom

could be taken as the asset of the firm is stoutly denied by the revision

petitioners. Strikingly, the respondents raise such a contention for the

first time in these revision petitions. According to Mr.Syam Kumar, this

newly developed argument will go against the pleadings in the eviction

petitions and also the evidence adduced by the managing partner of the

firm in both the cases.

11. Our attention has been drawn to the averments in

R.C.P.No.21 of 2015, wherein it has been clearly mentioned in

paragraph 3 that the petition A schedule building is one of the

shoprooms in the building complex under the name and style “Hotel

Airlines, Bank Road, Kasaragod”. It is also averred that the partnership

firm (1st respondent) is the owner of the building. Further, respondents 2

and 3 are the managing partners. Besides, it is pleaded that the firm,

who is the owner of the building, is an unregistered entity. True, it is

mentioned in the petition that respondents 2 and 3 are co-owners of the

building and eviction petition has been filed on behalf of all the partners

of the firm.

12. On a perusal of the eviction petition in R.C.P.No.17 of

2016, we find exactly the same pleadings in paragraph 3, emphatically

stating that the 1st respondent partnership firm is the owner of the

building. In the teeth of this definite pleadings, we find no merit in the

argument raised by the learned counsel that the building was not

brought in as an asset of the firm as per Ext.A5. On the contrary, the

entire pleadings are to the effect that the firm is the owner of the

building.

13. 3rd respondent testified in both the cases as PW1. In the

proof affidavit filed by PW1 in lieu of his chief examination, he has

expressly stated that the 1st respondent, the partnership firm, is the

owner of the building. This also pins him down to an undeniable fact

that the shop rooms in dispute are owned by the partnership firm.

Therefore, we reject the argument raised by the learned counsel for the

respondents that Ext.A5 is a partnership deed executed only for sharing

profit and loss in respect of the rent collected from the building.

14. Although the 1st respondent is an unregistered firm, its right

to file an eviction petition under Section 11(3) of the Act cannot be

disputed. Learned counsel for the revision petitioners fairly conceded

that law declared by the Supreme Court in Haldiram Bhujiawala v.

Anand Kumar Deepak Kumar ((2000) 3 SCC 250), which was

followed by a Division Bench of this Court in Dungarsi Ranchhodas v.

Mooliji Visanji (2004(2) KLT 524) would clearly establish that Section

69(2) of the Partnership Act, 1932 cannot bar the enforcement of a

statutory right, by way of an eviction petition, by an unregistered firm.

Indisputably, an eviction petition under Section 11 of the Act is one to

enforce a statutory right, which is not controlled by any other law or

contract.

15. As stated above, in the eviction petition, it is seen

mentioned that respondents 2 and 3 are co-owners of the building. It is

further contended that all the partners are co-owners of the building, in

which the tenanted premises are also included. On this basis, learned

counsel contended that respondents 2 and 3, who are co-owners, are

entitled to seek eviction on behalf of other co-owners. Generally

speaking, there is no legal impediment for one of the co-owners to file a

petition for eviction of a tenant, if he does so without negating the rights

of other co-owners. It is also an unchallengeable proposition that the

petitioner-co-owner need not obtain prior consent of other co-owners

for filing an eviction petition (see Mohinder Prasad Jain v. Manohar

Lal Jain ((2006) 2 SCC 724) and Kasthuri Radhakrishnan and

others v. M.Chinniyan and another ((2016) 3 SCC 296).

16. But, this legal principle cannot be applied to these cases

for the reason that we have already seen that the buildings belong to

the 1st respondent firm. Principle that one out of other co-owners is

entitled to maintain a petition for eviction under the Act is grounded on

the legal reality that each co-owner can be presumed to be the absolute

owner of the building for the purpose of eviction of a tenant, as long as

he does not negate the rights of other co-owners. If the respondents 2

and 3 had initiated the eviction petitions on the ground that they are coowners,

and not as partners of a firm, then, probably the argument

would have been appealing. But, in this case, having specifically

pleaded and deposed before the court that the building belongs to a

partnership firm, they cannot raise such a contention at this stage.

17. For completion of the discussion, we may refer to Section

14 of the Partnership Act, 1932. It reads as follows:

“The property of the firm.- Subject to contract

between the partners, the property of the firm includes all

property and rights and interest in property originally brought

into the stock of the firm, or acquired, by purchase or

otherwise, by or for the firm, or for the purposes and in the

course of the business of the firm, and includes also the

goodwill of the business.

Unless the contrary intention appears, property and

rights and interests in property acquired with money

belonging to the firm are deemed to have been acquired for

the firm.”

This Section describes, subject to the contract between the partners, as

to what are the property of a partnership firm. Property and interests in

property, originally brought into the stock of the firm or acquired, by

purchase or otherwise, by or for the firm, or for the purpose and in the

course of business of the firm, constitute the property of the

partnership. As stated above, pleadings and evidence in these cases

emphatically show that the whole building has become the property of

the firm as envisaged in Section 14 of the Partnership Act. Withholding

the original deed of partnership dated 01.04.1992 is a circumstance

against the respondents on which adverse inference can be drawn.

18. Lucid expositions in Lindley on the “Law of Partnership”

tell us how a partnership property could be distinguished from a joint

property (see 15th Edition, paged 79-80). Characteristic features of coownership

and partnership compared, which are relevant in the Indian

context, are extracted hereunder:

“..........Speaking generally, and excluding all

exceptional cases, the principal differences between coownership

and partnership may be stated as follows :

1. Co-ownership is not necessarily the result of

agreement. Partnership is.

2. Co-ownership does not necessarily involve

community of profit or of loss. Partnership does.

3. One co-owner can, without the consent of the

others, transfer his interest, or in the case of land his

equitable interest, to a stranger, so as to put him in the

same position as regards the other owners as the

transferor himself was before the transfer, except that in

the case of a transfer by a joint tenant the stranger will

become a tenant in common, or in the case of land a

tenant in common in equity with the other owners. A

partner is in a much more restricted position.

4. One co-owner is not as such the agent, real or

implied, of the others. A partner is – so far as concerns

activities falling within the scope of the partnership.

5. One co-owner has no lien on the thing owned in

common for outlays or expenses, nor for what may be

due from the others as their share of a common debt. A

partner has.”

On understanding the salient features distinguishing a co-ownership

and a partnership in the above lines, it has to be found in these cases

that even if the respondents and others are tenants-in-common in

respect of the property and building thereon, on formation of a

partnership, they become assets of the unregistered partnership. Once

co-owners decide to form a partnership by pooling their joint rights over

the property and execute a deed of partnership, their rights will be

subject to the contract between them. In that case, the legal incidents

of co-ownership will be eclipsed as long as the partnership

arrangement continued. Therefore, these aspects also render the case

of the respondents unacceptable.

19. We shall now take up the crucial question to be decided in

these cases regarding the acceptability of the bonafide need set up by

the respondents. In order to understand the scope and legal effect of

Section 11(3) of the Act, excluding the provisos thereto, we shall extract

the provision:

“A landlord may apply to the Rent Control Court for

an order directing the tenant to put the landlord in

possession of the building if he bona fide needs the

building for his own occupation or for the occupation by any

member of his family dependent on him”

A dissection of the above provision will show that the following legal

components are to be established by a landlord against a tenant to

claim eviction under the provision. Firstly, his need should be bonafide.

Authentic, genuine, real, true, actual, sound, legal, legitimate, valid,

unadulterated, etc. are the dictionary meanings of the word “bonafide”.

It has been well settled by pronouncements that a mere desire or wish

evinced by a landlord would not amount to bonafide need. Landlord

must prove that he genuinely requires the accommodation for his own

use or for occupation of any member of his family dependent on him.

In other words, bonafide need must be an outcome of a sincere and

honest desire in contradistinction with a mere pretext for evicting a

tenant. Since decisions are galore on the point, we do not deem it

necessary to enlist them. We only intend to make it clear that bonafide

need being a state of mind, a landlord must place all the materials

before the court to assess the genuineness and truthfulness of his

claim for eviction.

20. After establishing the bonafides of his claim, the landlord

has to convincingly show that the building is required for his own

occupation or for occupation of any member of his family dependent on

him. The expression “own occupation” poses no difficulty to

understand. It is settled by judicial pronouncements that a landlord can

claim eviction under Section 11(3) of the Act for occupying the building

as such, with or without any modification, or for demolishing it for

constructing a new building in its place or keeping the site vacant for

other purposes, like to provide an access, extension of an existing

adjacent building, etc. In this context, it is to be remembered that a

landlord seeking eviction under Section 11(3) of the Act for demolition

of the structure in existence and for construction of a building for his

own use or for occupation of any member of his family dependent on

him must be distinguished from a claim for eviction on the ground of

reconstruction, where the tenant could claim a first option for occupying

a portion of the reconstructed building. The pleadings in each case will

determine the nature of the claim for eviction.

21. Regarding the claim by a landlord for evicting a tenant

under Section 11(3) of the Act for occupation of any member of his

family dependent on him, following aspects will have to be established

by him. Initially, as stated above, bonafides of the need has to be

established. Thereafter, it must be shown that the person on whose

behalf eviction is sought is a member of his family dependent on him.

In a catena of decisions it has been held that the term “dependent” not

only takes in financial dependency, but other forms of dependency as

well. For example, a son or daughter, who unquestionably is a family

member of the landlord, who may not be financially dependent on him,

still could be a dependent on the landlord for the purpose of starting a

new venture in the tenanted premises, provided he has no other place

to start the intended business venture. It is quite natural because of the

proximity of the relationship between them, he would look up to the

landlord for a help. It is also to be seen that the expressions “for the

occupation of any member of his family dependent on him” would apply

only to living persons/natural persons and not to juristic persons, other

legal entities and association of persons.

22. What is important at this juncture is to understand the

relationship between the partners in a firm. Section 4 of the Partnership

Act defines “partnership” as the relationship between persons who have

agreed to share the profits of a business carried on by all or any of

them acting for all. In Dulichand v. I.T.Commissioner (AIR 1956 SC

354) it has been held that our partnership law is based on the English

law and we have also adopted the notions of English lawyers as

regards partnership firm. Further, it is held thus:

“.......... The general concept of partnership, firmly

established in both the English and Indian systems of law,

still is that a firm is not an entity or 'person' in law but is

merely an association of individuals and a firm name is

only a collective name of those individuals who constitute

the firm. In other words, a firm name is merely an

expression, only a compendious mode of designating the

persons who have agreed to carry on the business in

partnership. ….....”

Long line of decisions show that Indian law has not given a legal

personality to a firm apart from the partners. One of the contentions

raised in R.C.R.No.228 of 2018 is that the person on whose behalf the

bonafide need is set up, viz.,Smt.Hajira, is a sleeping partner. This

expression is not defined in the Partnership Act. In English law, the

expression “dormant partner” is used interchangeably for “sleeping

partner”. Pullock and Mulla on the Indian Partnership Act (7th edition,

page 49) makes the following observations:

“A sleeping partner is nevertheless a partner, even

when he only 'sleeps'. Sometimes partners are

absolutely inactive or deliberately choose to be inactive,

for instance, is some cases where a partner is a

government servant or person with similar status who is,

by service rules, prohibited from engaging in any trade or

business.”

If a partner could seek eviction of a tenant from a building owned by a

partnership firm, whether such partner is a sleeping partner or not

makes no difference in the legal parlance.

23. We have no hesitation to negative the claim by a firm,