### Subletting or licensing during subsistence of lease with contractual liberty cannot constitute unlawful subletting under Rent Act.

In brief

The question

1. Whether the defendant-tenant committed a breach of Section 13(1)(e) and 13(1)(ee) of the Gujarat Rent Act by subletting or licensing the premises to a dealer without prior permission

The court held

The Court held that there was no unauthorized subletting or licensing under Section 13(1)(e) or (ee) because the license was created while the lease was valid and the landlord had acquiesced to the arrangement for nearly nine years

It also directed

The High Court allowed the revision application and quashed the judgments of the Trial Court and Appellate Court

The eviction decree was set aside, and the original suit was dismissed

01Facts

The plaintiff (landlord) leased a plot of 10,800 sq.ft. in Keshod to Defendant No. 1 (HPCL) via a registered lease deed dated 31.07.1975 for five years

pp. 2-3

Clause 3(a) of the deed permitted the lessee to license or sublet the premises without the lessor's consent

p. 3, 17

During the lease (1976), HPCL appointed Defendant No. 2 as its dealer

p. 3, 17

The lease expired on 31.12.1979 without a formal renewal request from HPCL, making it a statutory tenant

p. 3, 6

In 1985, the plaintiff filed an eviction suit alleging unauthorized subletting/licensing under the Gujarat Rent Act

pp. 4-5

Both the Trial Court and the Appellate Court passed eviction decrees, holding that HPCL breached Section 13(1)(e) & (ee) by licensing the premises to its dealer without prior permission

pp. 5-7

HPCL challenged these findings in revision

p. 7

02Issues

i.1. Whether the defendant-tenant committed a breach of Section 13(1)(e) and 13(1)(ee) of the Gujarat Rent Act by subletting or licensing the premises to a dealer without prior permission

p. 16

ii.2. Whether the conduct of the landlord regarding the presence of the dealer since 1976 amounted to acquiescence or implied permission

pp. 20-22

03Law Applied

The court primarily applied Section 13(1)(e) regarding unlawful subletting and Section 13(1)(ee) read with Section 15A of the Gujarat Rent Act, 1947, which prohibits a tenant from giving premises on license for monetary consideration without the landlord's "previous permission"

pp. 15-16

The court relied on the Supreme Court's interpretation of "acquiescence" from N. Murugesan v. Union of India, defining it as passive acceptance through knowledge and conduct

p. 21

It further distinguished Section 13(1)(ee), which requires mere "permission," from Section 13(1)(b), which requires "consent given in writing"

p. 15, 22

Provisions in the judgment · 2 · Linked ones open on LawLens

Gujarat Rents, Hotel and Lodging House Rates Control Act, 1947 Section 29 Section 13

04Reasoning

The High Court found the lower courts' findings perverse as they ignored the fact that the dealer was appointed in 1976 during the subsistence of a lease that explicitly allowed licensing without consent

p. 17, 19

The court reasoned that since no new license was created after the lease expired (when HPCL became a statutory tenant), there was no fresh breach of the Act

p. 18, 23

Crucially, the court noted that Section 13(1)(ee) does not mandate written permission, unlike other sections

p. 22

The plaintiff’s admission of knowing about the dealer since 1976 and failing to object in the first legal notice of 1980 constituted "acquiescence" and "implied permission"

p. 20, 23

Therefore, the statutory requirement of "previous permission" was satisfied by the landlord’s historical conduct and the original lease terms

p. 23