ARM GROUP ENTERPRISES LTD. versus WALDORF RESTAURANT AND ORS.

Citation: [2003] 3 S.C.R. 222 · Decided: 01-04-2003 · Supreme Court of India · Bench: DORAISWAMY RAJU · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
ARM GROUP ENTERPRISES LTD. 
v. 
WALDORF RESTAURANT AND ORS. 
APR!L 1, 2003 
B 
[DORAISWAMY RAJU AND D.M. DHARMADHIKARI, JJ.] 
Rent Control and Eviction: 
West Bengal Premises Rent Control (Temporary Provisions) Act, 1950-
C Seciions 12 and 13-Tenant surrendering tenancy, thereafter, inducting sub 
tenant-sole proprietor of a concern---Original landlord obtaining compromise 
decree of evictio11c-Firm with new partners excluding erstwhile sole proprietor 
claiming status of direct tenant--Seeking protection against eviction in 
execution by decree-Held: Only 'tenant inferior to tenant a/first degree' can 
D claim protection as 'direct tenant' under landlord-Sub tenant of 'tenant 
inferior to tenant of firs/ degree· does not have any such status or protection-
There is neither evidence nor case set up by either of the parties that erstwhile 
proprietor had sub-let the premises to the firm-Thus, firm with new partners 
excluding erstwhile sole proprietor cannot claim status of direct tenant-Term 
of the compromise decree reserved right to the landlord to take necessary 
E legal steps lo evict sub tenants, thus decree executable. 
Appellant acquired title to the suit premises from the original owner. 
Respondent No.3 was a contractual tenant of the original landlord. He gave 
a formal notice to the landlord expressing its intention to surrender the 
tenancy and vacate the leased premises by 31.8.1953. Respondent No.3 
F vacated the suit premises but the vacant possession was not handed over 
to the landlord. Landlord filed a suit for eviction. Suit was decreed in terms 
of compromise decree under which the tenant vacated the suit premises 
and reserved liberty to the landlord to take necessary legal steps for 
evicting sub-tenants who had been inducted by the tenant. Landlord then 
G filed suit for eviction against sub-tenant. Respondent No.I-firm pleaded 
that before surrender of tenancy tenant had inducted E being the sole 
proprietor of the restaurant on I. 7.1953, later on E formed a partnership 
with two others, which was registered on 1.3.1954 much later after 
surrender of tenancy by the tenant on 31.8.1953. Single Judge of High 
Court held that the remedy of the landlord was to execute the compromise 
II 
222 
ARM GROUP ENTERPRISES LTD. 1·. WALDORF RESTAURANT 
223 
decree and that it was barred by section 47 CPC. Landlord then filed an A 
application for execution of decree which was allowed. Meanwhile 
respondent No. I-firm as sub-tenant filed a counter suit seeking declaration 
of its status as direct tenant under West Bengal Premises Rent Control 
(Temporary Provisions) Act 1950 and protection thereunder. The Court 
held that the remedies of the parties lay in execution proceedings. Landlord B 
again filed an application for execution of the decree. High Court allowed 
the same holding that the registered partnership firm could not have been 
inducted as sub tenant on l. 7.1953 when as matter of fact on that date 
the restaurant was only a proprietary concern of E th.us the firm cannot 
claim status of protected tenant directly under the landlord as per the 
provisions of Section 13(2) of.the Act. The firm filed an appeal. Division C 
Bench allowed the appeal holding that by operation of.law E either as the 
proprietorship concern or as a partner of partnership firm became a 
tenant directly under original landlord and that the landlord would be 
entitled to bring a suit for eviction against the firm on the ground that as 
sub-tenant, it was inducted unlawfully by the proprietor of the restaurant 
D 
who had become tenant directly under the Act but recourse to execution 
proceedings was impermissible in law. Hence the present appeals. 
Appellant contended that the firm having come into existence on its 
registration on 1.3.1954, after surrender of tenancy by the tenant on 
31.8.1953 and also admitting the fact of entry of E in the tenanted premises E 
on I. 7.1953 for carr.ying on the business of restaurant as the sole 
proprietor, the firm, of which the sole proprietor subsequently became 
partner and which came into existence on 1.3.1954 on registration, could 
not, on surrender of tenancy by the tenant on 31.8.1953, claim status of 
direct tenant under the Act; that the Division Bench failed to make a 
distinction between the claim of status of direct tenant by the sole F 
proprietor and the firm of which the sole proprietor subsequently became 
a partner; and that the sole proprietor to whom the tenant h

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