IMPORTANT POINT
When premises was demised to Foreign Company and because of FERA regulation an Indian Company was floated in which Foreign Company had 40% share, it was sub-letting.

ORDER

This appeal by special leave arises from the judgment of the Delhi High Court dated July 27, 1983 dismissing the Second Appeal No. 630/85 confirming the decree of eviction passed against the appellants under Section 14(1)(b) of the Delhi Rent Control Act.

2. The admitted facts are that the premises in question was demised to Cox & Kings (AGENTS) Limited, a company incorporated under the United Kingdom Companies Act (for short, "Foreign Company"), tenant of Smt. Jagdish Rani Sethi who subsequently sold the property to Smt. Chander Malhotra by a registered conveyance. Mrs. Rani Sethi had filed eviction petition on diverse grounds. Smt. Chander Malhotra, the respondent, after getting impleaded, amended the petition and also pleaded sub-letting to the appellant, an Indian Company. The Rent Controller found that premises had been sub-let by the Foreign Company and, therefore, ordered eviction. That was confirmed in appeal. As stated earlier, the second appeal was also dismissed. The principle question that arises for consideration, on reference to this Bench, is: whether involuntary transfer of the leasehold interest from Foreign Company to the Indian Company is not sub-letting within the meaning of Section 14(1)(b) of the Act? The said section reads under:

"...that the tenant has, on or after the 9th day of June, 1952, sub-let, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord".

3. The contention of Shri R.F. Nariman, learned senior counsel for the appellants, is that after the Foreign Exchange Regulation Act, 1973 [for short, the "FERA"] had come into force, by operation of Section 29 of the Act, the Foreign Company was required to obtain, to carry on the business, written permission of the Reserve Bank of India. Accordingly, it had applied for permission but the Reserve Bank had refused permission to continue the same business. As a consequence, the Indian Company was floated in which Foreign Company, though sought to have 100% shares, on refusal of the permission, had only 40% share in the business to which approval was given by the Reserve Bank of India. Consequently, the Indian Company has been carrying on the business in the same premises. Since the transfer of the leasehold interest from the Foreign Company to the Indian Company is by compulsion, it is an involuntary one and thus is not a case of "sub-letting" within the meaning of Section 14(1)(b) of the Act. Therefore, the view taken by the courts below is not correct in law. We find it difficult to give acceptance to the contention. It is true that under Section 29 of the FERA, without prejudice to the provisions of Section 28 and Section 47 and notwithstanding anything contained in any other provision of that Act or the provisions of the Companies Act, 1956, a person residing outside India (whether a citizen of India or not) or a person who is not a citizen of India but is resident in India, or a Company (other than a Banking Company) which is not incorporated under any law in force in India or in which the non-resident interest is more than 40% or any branch of such Company shall not, except with the general or special permission of the Reserve Bank of India, (a) carry on in India, or establish in India a branch office or other place of business for carrying on any activity of a trading, commercial or industrial nature, other than an activity for the carrying on of which permission of the Reserve Bank has been obtained under Section 28...."; (b) every application made under clause (a) shall be in such form and contain such particulars as may be specified by the Reserve Bank; and (c) where an application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may think fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application.

4. It is not in dispute that such a