Interplay of laws a factor in public premises eviction

The recent judgment of the Supreme Court in Dr Suhas H Pophale v Oriental Insurance Company Limited and its Estate Officer finally answered the much debated question of whether the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, applies to the occupant/licensee/tenant of public premises protected under a state rent act.

The Supreme Court held that in future the following two categories of occupants/licensees/tenants of public corporations are to be excluded from the coverage of the central act: (1) those who were in occupation of the public premises prior to 16 September 1958, when the central act became applicable; and (2) those who came into occupation after that date but prior to the date on which the premises became public premises and are protected occupants under the provisions of the state rent act.

Facts

Eric Voller was the original tenant of Indian Mercantile Insurance Company, the predecessor in title of Oriental Insurance, in respect of the premises, a flat in Mumbai. In December 1972, Voller executed a leave and licence agreement in favour of Pophale for a term of two years and gave Pophale exclusive possession of the flat. In 1973, Voller sought to transfer the tenancy of the flat to Pophale. Indian Mercantile accepted Pophale as its tenant and started accepting rent directly from him. Meanwhile, the Maharashtra government had inserted section 15-A in the then Bombay Rent Act, with effect from 1 February 1973, to protect the licensees in occupation of any premises, by virtue of which Pophale became a deemed tenant of the flat.

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Eviction proceedings

The management of Indian Mercantile had been taken over by the central government with effect from 13 May 1971, as part of a nationalization scheme, but Indian Mercantile was merged into Oriental Insurance only on 1 January 1974. In 1980, Oriental Insurance issued a termination notice to Voller with respect to the flat and subsequently filed an eviction suit in the Court of Small Causes at Mumbai against Voller and Pophale, which was withdrawn on 22 February 1994.

The eviction suit was followed first by show cause notices under sections 4 and 7 of the central act and later by cases before the estate officer under the act, which were decided in favour of Oriental Insurance by directing eviction of Voller and Pophale along with recovery of damages. On an appeal by Pophale before the City Civil Court at Mumbai under section 9 of the act, the court set aside the order of damages but upheld the order of eviction.

Pophale filed a writ petition before the High Court of Bombay challenging the order upholding the order of eviction passed by the estate officer. The high court upheld the decisions of the lower courts and dismissed the writ petition on 7 June 2010. Pophale then filed an appeal by special leave before the Supreme Court, challenging the high court decision.

Arguments

Pophale contended that even though the central government assumed the control of the management of Indian Mercantile on 13 May 1971, Indian Mercantile continued to exist until it was merged with Oriental Insurance on 1 January 1974. Accordingly, the finding of the high court that the central act applies to the flat from 13 May 1971 was erroneous given the meaning of “belonged” as per section 2(e)(2)(i) of the act. Pophale further contended that he was a deemed tenant with respect to the flat with effect from 1 February 1973 by virtue of section 15-A of the Bombay Rent Act. This occurred before the flat became public premises and therefore the central act did not apply.

Oriental Insurance contended that once the management of Indian Mercantile was taken over, the central act became applicable and it was permissible for Oriental Insurance to initiate eviction proceedings against Pophale under the act.

Decision

The Supreme Court held that although the central government took over the management of Indian Mercantile with effect from 13 May 1971, this was a transitory arrangement which only empowered the government to take necessary steps to safeguard the company’s property. The ownership of Indian Mercantile along with its properties belonged with the central government only with effect from 1 January 1974, when Indian Mercantile merged with Oriental Insurance.

The court further held that Pophale could not be arbitrarily evicted from the flat as he was not an unauthorized tenant in terms of the central act but was actually a protected tenant as per the provisions of the older Bombay Rent Act and its successor Maharashtra Rent Control Act, 1999. Moreover, if Pophale had to be evicted, due process of law, which would mean the process as available under the Bombay Rent Act, should have been followed.

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Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Aditya Deolekar is an associate.