Statutory vesting and lease permission defeat rent-control eviction based on alleged sub-letting or assignment.

Statutory vesting that substitutes a new lessee in place of the original tenant is not an assignment or sub-letting by the tenant for purposes of rent-control eviction grounds. The court held that where the leasehold interest passes by operation of law, the tenant does not commit the prohibited act under Section 21(1)(f) of the Karnataka Rent Control Act, 1961, and eviction on that basis is not justified. It further held that, even on the assumption of a transfer or sub-letting, a lease covenant permitting licensing or sub-letting without the landlord's consent removes the arrangement from the rent-control prohibition. The tenant therefore retained protection against eviction on the pleaded ground.

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Issues: (i) Whether the tenant's continuance in occupation after the statutory acquisition and transfer of Esso's undertakings amounted to an assignment or sub-letting in contravention of Section 21(1)(f) of the Karnataka Rent Control Act, 1961. (ii) Whether, even assuming a transfer or sub-letting, the lease deed authorised such arrangement so as to take the case outside the prohibition in the rent control law.

Issue (i): Whether the tenant's continuance in occupation after the statutory acquisition and transfer of Esso's undertakings amounted to an assignment or sub-letting in contravention of Section 21(1)(f) of the Karnataka Rent Control Act, 1961.

Analysis: The acquisition statute vested Esso's rights in the Central Government and then enabled vesting in a Government company by force of law. The leasehold interest was not transferred by any voluntary act of the tenant, but stood statutorily substituted. A tenant can attract the rent-control ground only when he unlawfully sub-lets, assigns, or transfers his interest. Where the legislature itself replaces one contracting party with another and continues the lease by statutory fiction, the transaction is not an assignment or sub-letting by the tenant.

Conclusion: The statutory vesting did not amount to an assignment or sub-letting by the tenant, and the ground under Section 21(1)(f) was not made out against the respondent.

Issue (ii): Whether, even assuming a transfer or sub-letting, the lease deed authorised such arrangement so as to take the case outside the prohibition in the rent control law.

Analysis: The lease deed permitted the tenant to licence or sub-let the premises without the landlord's consent. That contractual permission operated independently of the rent-control prohibition, whose object is to prevent sub-letting or transfer without consent in writing. On that construction, the lease covenant was wide enough to cover the case and there was no breach of the rent-control restriction on that ground also.

Conclusion: The lease deed authorised the arrangement, so the matter did not fall within the mischief of the rent-control prohibition.

Final Conclusion: The revision petition failed because the impugned occupation was brought about by statutory substitution rather than by an unlawful transfer by the tenant, and in any event the lease terms permitted the arrangement; the tenant therefore retained protection from eviction on the pleaded ground.

Ratio Decidendi: A transfer of leasehold rights effected directly by statute, substituting a new lessee in place of the original one, is not an assignment or sub-letting by the tenant for purposes of rent-control eviction provisions, especially where the lease deed itself permits sub-letting or licensing without the landlord's consent.

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