Case at a Glance
A shop in Chickpet, Bengaluru was let in 1985 to a partnership firm through one partner for 53 years at ₹275 a month. Years later the landlord found that the original partner was gone and two others were running the business, and sought eviction for unlawful sub-letting under the Karnataka Rent Act, 1999. The Small Causes Court ordered eviction, but the High Court reversed it in revision, accepting that the firm had merely been reconstituted. The Supreme Court held that the High Court had wrongly re-appreciated evidence in revision, that the landlord had discharged the burden of showing exclusive third-party occupation, and that the unproved ‘reconstitution’ was “nothing but a cloak” for unlawful sub-letting. It restored the eviction order.
Uttaradi Math leased property in Chickpet, Bengaluru to the landlord in 1983 for 55 years with liberty to sub-let. By a registered deed of 22 February 1985 he let Shop No. 1, Ground Floor, Maruthi Plaza to M/s Mahendra Watch Company, represented by its partner Rajesh Kumar, for 53 years at ₹275 per month. Finding that Rajesh Kumar and the firm as originally constituted were no longer in possession and two others were running the business, the landlord filed an eviction petition under Sections 27(2)(b)(ii), 27(2)(d) and 27(2)(p) of the Karnataka Rent Act, 1999.
On 14 July 2017 the Small Causes Court found unlawful sub-letting and ordered eviction. The occupants said the firm was reconstituted on 1 July 2000, before the 1999 Act came into force, with the continuing partners carrying on business, and that the landlord knew because he accepted rent. On 23 May 2023 the Karnataka High Court allowed their revision under Section 46 and set aside the eviction.
The Key Question Before the Court
Was the retirement of the original partner and continuation of business by others a genuine reconstitution of the tenant firm, or unlawful sub-letting under the Karnataka Rent Act — and could the High Court reassess evidence in revision?
Revision Is Not a First Appeal, and an Unproved Reconstitution Is No Defence
Relying on Hindustan Petroleum Corporation Ltd. v. Dilbahar Singh, (2014) 08 SC CK 0075, the Court held that in revision “the High Court cannot reassess or reanalyse evidence to arrive at a different conclusion”; by doing so the High Court acted as a court of first appeal. On burden, drawing on Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh, (1967) 12 SC CK 0017 and later cases, the Court held that the landlord must show a third party in exclusive possession and the tenant’s parting with possession, after which the burden shifts to the tenant. The landlord had proved exclusive occupation by the two new persons and the original tenant’s absence, and the presumption of sub-letting was not rebutted.
Quoting Murlidhar v. Chuni Lal that “The firm name is only a compendious way of describing the partners of the firm”, the Court examined the claimed reconstitution. The original partner’s retirement around 2000 was not proved by admissible evidence, the reconstitution deed was unregistered and unproved, no partnership deed was produced, and rent receipts in the firm’s name did not establish lawful possession. It held: “The so-called reconstitution is nothing but a cloak to conceal an unlawful transfer of possession”, which “squarely amounts to unlawful sub-letting / assignment” under Section 27(2)(b)(ii), with continued occupation attracting Section 27(2)(p).
What the Court Actually Held
- Under Section 46 of the Karnataka Rent Act, the High Court cannot reassess evidence to reach a different conclusion; it wrongly acted as a first appellate court.
- Once the landlord shows exclusive third-party occupation and the tenant’s absence, the burden shifts to the tenant to rebut the presumption of sub-letting.
- An unproved ‘reconstitution’ of the tenant firm was a cloak for unlawful sub-letting/assignment under Section 27(2)(b)(ii).
- The High Court’s judgment of 23.05.2023 was set aside and the eviction order of 14.07.2017 restored; the occupants were given three months from 10.04.2026 to vacate; no costs.
Why This Judgment Matters
- Tenant firms often change partners; this ruling shows when such changes become sub-letting.
- It limits High Courts’ revisional power over rent control findings of fact.
- It explains the shifting burden of proof in sub-letting cases.
What Should Advocates Take Away From the Judgment?
For Landlords and Tenant Firms
- Changes in a tenant firm’s partners must be properly documented and proved, or they may be treated as sub-letting.
- Accepting rent in the firm’s name does not by itself legalise occupation by new persons.
- Landlords should gather evidence of who actually occupies and runs the premises.
For Counsel
- Object when a revisional court re-appreciates evidence under Section 46.
- Produce the partnership and reconstitution deeds — an unregistered, unproved deed will not help.
- Plead both Section 27(2)(b)(ii) and 27(2)(p) where occupation continues without lawful right.
Key Takeaways
- Revisional courts cannot re-weigh evidence.
- Burden shifts to tenant once exclusive third-party occupation is shown.
- Unproved reconstitution is a cloak for sub-letting.
- Eviction restored with three months to vacate.
Frequently Asked Questions
Is a change of partners in a tenant firm always sub-letting?
No, a genuine reconstitution may not be. Here the Court found the claimed reconstitution unproved — the deed was unregistered and unproved and no partnership deed was produced — and treated it as a cloak for unlawful sub-letting.
Does accepting rent from the firm mean the landlord consented?
The Court held that rent receipts in the firm’s name do not establish lawful possession by the new occupants.
How much time did the occupants get to vacate?
Three months from 10 April 2026.
Conclusion
Mahendra Watch Company, (2026) 04 SC CK 0476 looks past the firm name to who actually occupies the premises. Where the original tenant has vanished and the ‘reconstitution’ cannot be proved, the law treats it as what it is — a transfer of possession.
Practical takeaway: Tenant firms reorganising their partners should keep registered, provable records and, ideally, the landlord’s consent; otherwise the change can cost them the tenancy.
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