007-NLR-NLR-V-72-S.-D.-ABDUL-LATIFF-Appellant-and-M.-N.-SEYED-MOHAMED-and-another-Respondents.pdf
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SIVA SU PR AM A XIA M, J.— Abdul LaliJJ v.
Seycd Mohamcd
Present: Siva Supramaniam, J.
S. D. ABDUL LATIFF, Appellant, and M. N. SEYEDMOHAMED and another, Respondents
S. C. 105J1965—C. R. Kurunegala, 2302jL
Bent Restriction Act—Subletting of premises in the guise of a “ partnershipagreement ”— Immateriality of the label to the transaction.
Whore a tenant of rent-controlled promises enters into a “ partnershipagreement ” -with a person in rotation to the premises but such agreement isonly a blind to cover the sublotting of tho premises, tho tenant and thosub-tenant are liable to be ejected by the landlord if the landlord ha3 not givenhis written consent to tho agreement.
Appeal from a judgment of tho Court of Requests, Kurunegala.
Ranganalhan, Q.G., with Ananda Pciranavitane, for the plaintiff-appellant.
If. D. Gunasekcra, for the defendants:rcspondcnts.
Cur. ado. cult.
March 20, 1907. Siva S ujpk a max r am, J.—
The only question for determination on this appeal is whether on thofacts as found by the learned Commissioner of Requests tho appellant-has established that the 1st respondent sublet the premises in suit to tho2nd respondent. The principal facts arc as follows :—Tho appellantbecarno the owner of the premises in suit (which are subject to the provi-sions of tho Rent Restriction Act) in July 19G2 and the 1st respondentwho had beeii tho tenant under tho previous owner attorned tenancy tothe appellant in August 1902. Tho 1st respondent had previouslycarried on the business of selling fancy goods in the said premises. SinceJuly 1959 the business had in fact been carried on by the 2nd respondentin terms of a notarially attested agreement D1 entered into between thetwo respondents on 20th July 1959 which was effective for a period offour years. On 23rd April 1963 tho respondents entered into a freshagreement D2, valid for a period of seven years. The new agreement D2
SlVA SUPJiAMAXIAM, j.—Abdul Lotijj i21
.Seyed M chained
was a renewal of the old agreement D1 with a variation of some of theterms and conditions. Each of the documents D1 and D2 was designated‘ Partnership Agreement
The appellant contends that D1 and D2 were not in fact partnershipagreements but were blinds to cover the subletting of the premises by the1st respondent to tlie 2nd respondent. The case of the respondents, onthe other hand, is that the business was carried on in partnership andthat the 2nd respondent, as the Managing partner, was in occupation ofthe premises and in control of the business. It is not disputed, however,that the attornment of tenancy to the appellant by the 1st respondentwas in his personal capacity and not as an agent of the partnership.
It will be sufficient for the purpose of this appeal to examine the docu-ment D2, as that was the agreement entered into between the respondentsduring the period the 1st respondent was a tenant of the appellant-.Among the terms and conditions of D2 were the following :—
(а)that all the capital necessary for —the business should ~ becontributed by the 2nd respondent ;
(б)that the 2nd respondent should have the full management andcontrol of the business “ without any interference whatsoever ”from the 1st respondent ;
that all electricity bills due on the said premises and all licencefees, etc., due in respect of the said business shall be paid by the2nd respondent “ on his own account ” ;
that the 1st respondent shall not be entitled to any share of theprofits or be liable for any share of the losses arising from the saidbusiness ;
that the 2nd respondent shall pay the 1st respondent as his share ofthe profits a fixed sum of Rs. 100 per month out of which the 1strespondent shall pay the rent and rates and taxes due in respect ofthe said premises ;
{/) that, in any case, the 1st respondent “ shall not be entitled to anypayment over and above the monthly sum of Rupees One hundredabove mentioned either as profit or in any other manner ” ;
(p) that the 1st respondent shall not have the right to request the 2ndrespondent to wind up the business ;
(h) that the 2nd respondent shall have “ the full liberty to admit suchother partner or partners to carry on the said business ”, and thatthe 1st respondent shall have no right to prevent the 2nd respondentfrom taking in such partner or partners ;
(») that certain furniture and fittings in the said premises belong to the1st respondent ; and
(j) in the event of default of pa3*ment of the monthly sum of Rs. 100for more than three months, the 2nd respondent will deliverpeaceful possession of the premises along with the furniture andfittings to the 1st respondent.
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Sivasupramaniam v. foabari
The aforesaid “ terms and conditions ” of the agreement D2 mako itabundantly clear that the business carried on in the premises was thesole concern of tho 2nd respondent and all that the 1st respondent wasentitled to was the right to receive a fixed monthly payment of Rs. 100during the period of seven years covered by the agreement. The sum ofRs. 100 was in reality the rent payable by the 2nd respondent to the 1strespondent for the premises and the furniture. There can bo littledoubt that tho use of the word “ partnership ” in the agreement was infact a blind to cover a lease of the premises. If the document had beendescribed as a ‘* lease of the furnished premises ” instead of as a “ partner-ship ” the respective lights and obligations of the two respondents wouldnot have been any different. As was stated by Nagaliagain S.P.J. inCharles Appuhamy v. Abeyesekera 1, “ the mere affixing of a label to atransaction by the parties or by their legal advisers does not control orgovern the true nature of the rights and liabilities created which have to bedetermined by an examination of the terms and conditions of theinstrument itself. ”
It was also established in evidence that, on the bills issued in connectionwith the business carried on in tho premises in question, the name of the2nd respondent was mentioned as the “ proprietor ".
On the evidence before him, the learned Commissioner of Requestsshould have answered in favour of the appellant the issue relating to thosubletting of the premises by tho 1st respondent to 2nd respondentwithout the written consent of the appellant and the consequential issuerelating to ejectment.
I allow the appeal, set aside the judgment and decree and direct that afresh decree be entered in favour of the idaintiff-appeliant as pra3'ed forin the plaint. The 1st defendant-respondent will be entitled to credit inrespect of all sums of money paid bv him as rent to tho plaintiff-appellantafter the date of the institution of this action.
The appellant will be entitled to his costs ir. both Courts.
Appeal alloived.