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        Case ID :

        1996 (12) TMI 401 - SC - Indian Laws

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        Leasehold transfer without landlord consent can amount to assignment or sub-letting, even when driven by regulatory compulsion. A transfer of leasehold interest from a foreign company to an Indian company, even if prompted by corporate or regulatory compulsion, can amount to ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                        Provisions expressly mentioned in the judgment/order text.

                            Leasehold transfer without landlord consent can amount to assignment or sub-letting, even when driven by regulatory compulsion.

                            A transfer of leasehold interest from a foreign company to an Indian company, even if prompted by corporate or regulatory compulsion, can amount to sub-letting or assignment where the transaction expressly conveys the business as a going concern with tenancy-related rights. Section 14(1)(b) of the Delhi Rent Control Act is wide enough to cover any parting with possession without the landlord's written consent. The fact that the transferee continues in possession and carries on the business does not cure the defect. Regulatory permission under the Foreign Exchange Regulation Act did not displace the need for landlord consent.




                            Issues: Whether the transfer of leasehold interest from a foreign company to an Indian company, pursuant to corporate and regulatory compulsion, amounted to sub-letting or assignment within the meaning of Section 14(1)(b) of the Delhi Rent Control Act.

                            Analysis: The leasehold interest was not merely affected by a change in business form; the transaction documents showed an express assignment of the business as a going concern together with assets, liabilities, and tenancy-related rights. The statutory language of Section 14(1)(b) is wide enough to cover sub-letting, assignment, or any other parting with possession without the landlord's written consent. The foreign company had transferred the tenancy interest to the Indian company, which continued in possession and carried on the business, and no written consent of the landlord had been obtained. The regulatory requirement under Section 29 of the Foreign Exchange Regulation Act, 1973 did not compel the landlord to accept the transferee as tenant. The earlier authorities relied on by the Court supported the view that even involuntary transfer or assignment of tenancy interest attracts the prohibition where possession is parted with without consent.

                            Conclusion: The transfer constituted sub-letting, or in any event an assignment, within Section 14(1)(b) of the Delhi Rent Control Act, and the eviction finding was .

                            Ratio Decidendi: A transfer of tenancy interest, even if brought about by regulatory compulsion, falls within the mischief of a statutory prohibition against sub-letting, assignment, or parting with possession where the landlord's written consent is absent.


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