Case: Nandini J. Shah &amp; Another Vs. Life Insurance Corporation of India &amp; Others

2. The RespondentLife Insurance Corporation has sought eviction of the appellants on the ground that the recordedShah who was the mother of appellant No.1 had sublet the premises in favour of three private limited companies and the appellant No.2 partnership firm.3. The premises in question is an office admeasuring 258 sq.ft. The building in which it is situated is almost 100 years old. The building belongs toThe premises have been in the use of the family of the appellants as a tenant for last several decades. Since prior to 1937, P.T.Shah, theof appellant No.1 was the tenant of the premises. P.T.Shah was practising as an Income Tax Consultant. His son, Jayant P.Shah, assisted him in the consultancy. After P.T.Shah expired the consultancy was continued by Jayant P.shah and the tenancy rights of the premises devolved upon him. Jayant P.Shah expired on 6 July 1959 leaving behind his widow Smt.Vilasben Shah (Vilasben), three sons and three daughters as his heirs and legal representatives.4. After the death of Jayant P.Shah, Smt.Vilasben, who had a masters degree in economics, continued the consultancy. Pursuant to an application dated 5 November 1968 made by Vilasben theInsurance Corporation (the Corporation) treated Smt.Vilasben as tenant of the premises. The present Appellant No.1 Ms.Nandini Shah (Ms.Nandini) is the daughter of Vilasben, who was brought on record as heir of Vilasben after Vilasben expired during the pendency of the present proceedings.5. On 17 September 2004, the Corporation through their Advocate issued a notice of eviction to Vilasben. The Corporation alleged that Vilasben had sublet the premises in favour of a partnership firm M/s.Jayant P.shah Shipping Tax Counsels (Appellant No.2) (the firm) and three private limited companies, i.e. (1) State Street Capital Finance Inc. (2) State Street CapitalFinance Private Limited and (3) State Street Securities Pvt.Limited (the companies). Notice was replied by Vilasben vide letter dated 12 October 2004, and she denied the charge. The Corporation thereafter filed an application before the Estate Officer appointed under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (Public Premises Act) seeking eviction of Vilasben, the three Companies and the Firm. The Corporation contended that Vilasben being tenant of the premises had no right to assign any interest in the premises in favour of the Firm and the Companies without permission of the Corporation. She had thus committed breach of the terms upon which she was granted tenancy rights.6. The Estate Officer issued notices on the application filed by the Corporation to Vilasben, the Companies and the Firm, who were arrayed as opponents. The notices were duly served. The opponents filed their written statement. The Companies did not independently participate in the proceedings before the Estate Officer. The Estate Officer decided to proceedp.m. from 1 December 2004 to 31 December 2011 and further damages at the same rate alongwith interest at the rate of 9% p.a. till possession.8. Ms.Nandini and the firm M/s.Jayant P.Shah filed Misc.Appeal No.121 of 2011 in the City Civil Court, Bombay challenging the decision of the Estate Officer. The City Civil Court held that the Appellant No.2 firm was essentially formed only of Vilasben and her daughter Ms.Nandini being the partners and therefore creation of this firm did not amount to subletting. As regards the Companies, the City Civil Court came to the conclusion that there was nothing to show that the Companies were belonging to Vilasben. The City Civil Court held that the action of Vilasben in assigning her rights in favour of the Companies which were operating from the said premises, amounted to subletting. The City Civil Court accordingly dismissed the Misc Appeal by its judgment and order dated 3 April 2012.9. The decision of the Estate Officer and the City Civil Court were challenged by Ms.Nandini and the firm M/s.Jayant P.shah, by way of Writ Petition No.4337 of 2012. In the petition, the learned Single Judge came to the conclusion that the said three Companies were distinct and different legal entities and Vilasben had sublet the premises in favour of these Companies without any permission of the Corporation. Accordingly the learned Single Judge was pleased to dismiss the writ petition by order dated 14 August 2012. The learned Single Judge confirmed the order of eviction and payment of compensation. Thus the appellants are before us in this Letters Patent Appeal.

Court's reasoning:
14. It is true that the petitions arising out of the order passed under the Public Premises Act were being heard by the Division Bench. This was being done due to observation of the Division Bench of this Court in the case of NusliNeville Wadia V/s. New India Assurance Co.Ltd.Another (2010 (4) Bom.C.R.807). However by an order dated 15 November 2011, another Division Bench of this Court expressed doubt about the correctness of the observation made in the case of Nusli Neville Wadia (supra) and referred the issue as to whether the petitions arising out of the orders passed under the Public Premises Act should be heard by the division Bench or Single Judge, to the Full Bench for consideration. The Full Bench in the case of PrakashSecurities(2012 (4) Bom.C.R.1)(supra) found that clause 3 of Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules 1960 was wide enough to include orders passed by anyauthority under any enactment, even if such explanation is not covered by clause 1, 2, 4 to 43 of Rule 18. The Full Bench found that the order passed byauthority under the Public Premises act is also covered by Rule 18 (3) so as to indicate that the petitions under Articles 226227 of the Constitution of India challenging such orders are to be heard and decided by the Single Judge. Reference was accordingly disposed of by the Full Bench by its judgment dated 26 April 2012. The Full Bench held that the Appellate Side Rules as they stand, provide that the petitions challenging the orders passed under the Public Premises Act are required to be heard by the learned Single Judge and therefore the observations made in the case of NusliNeville Wadia (supra), were not correct. The petitions relating to orders passed under Public Premises Act were being entertained by the Division Bench when the rules provided that they should be entertained by the Single Judge. Therefore there was no conscious decision to remove the petitions arising from orders passed under the Public Premises, from Division Bench and to place them before Single Judge. In fact Full Bench found that these petitions were being wrongly entertained by the Division Bench.15. In the judgment of the Full Bench there is no indication that Letters Patent Appeal arising out of the orders passed by the Single Judge in proceedings under the Public Premises Act will not be maintainable. If Letters Patent Appeals are otherwise maintainable, judgment of the Full Bench does not take away that right in respect of petitions challenging the orders passed under Public Premises Act. Therefore the argument advanced by the learned counsel on maintainability of the appeal on this ground cannot be accepted. Maintainability was not contested on any other ground. In the present case, the petitioner has invoked both Articles 226 and 227 of the Constitution of India. The learned Judge also has referred to the said Articles in the impugned order. Furthermore, theis itself amenable to writ jurisdiction of this Court, being a public corporation. There is therefore no substance in the preliminary objection raised by thelearned counsel for theRespondent that the appeal is not maintainable and that it should be dismissed at the threshold without looking at the merits of the matter.We have perused the documents which are produced on record. Before the Estate Officer, the appellants had produced several documents. Amongst these were copies of annual returns filed by Vilasben, including documents in respect of State Street CapitalFinance Limited which showed the names of directors and the total shareholding to be of immediate family members of Vilasben. The annual returns of State Street CapitalFinance Pvt.Limited were also produced on record. The composition of directors was placed on record which demonstrates that Harshal Jyotindra ShahMs.Nandini Jyotindra Shah daughter; Jyotindra Ramanlal Shah; and Smt.Vilasben Jayantilal Shahmother (recorded tenant) were the directors and shareholders. In view of these documents produced on record, we do not find that the observation of the learned City Civil Court while dismissing the appeal that no documents were produced on record to show the composition of the directors and shareholders of the Companies, was justified.In the present case the tenantVilasben was director in the company along with her daughter,n. Looking at the composition of the company it cannot be said that she relinquished control of the premises or parted with possession to a stranger. The directors of the companies were her immediate family members. The premises were in occupation of the family since the time of their greatand continued to be within the family even after formation of these three companies. The family business/profession was relating to tax and financial services and continued to be so. In a changing commercial scenario she found formation of partnership firm and private limited companies was more effective way of conducting the tax and financial services. This was nothing but extension of existing business activity to remain in tune with the changing financial environment. Thus by employing the principle of lifting corporate veil and looking at the true nature of the Companies we find that Vilasben had not relinquished the control of premises by creating these three companies and there was no subletting.23. The Division Bench of Delhi High Court in the case of PremlataBhatia (128 (2006) DLT 24 )(supra) in similar facts situation undertook the exercise of lifting the corporate veil to examine the charge of subletting. In this case the Petitioner Premlata was allotted a shop by the Union of India. Clause 8 of the licence deed therein prohibited the licensee from transferring or alienating her interest in the premises without permission of the Union of India. Premlata incorporated a company along with her husband holding 97.93% shares. The Union of India instituted the proceedings under the Public Premises Act on the ground of subletting. The Estate Officer ordered eviction of Premlata and her challenge was negatived by the Single Judge. Smt.Premlata thereafter filed appeal before the Division Bench of Delhi High Court. The Division Bench allowed the appeal by holding that the corporate veil ought to have been lifted to ascertain the true nature of the company and found that there was no subletting.In the present case, the tenanted premises are in occupation of the appellants for several decades. All that Vilasben had done was to create three Companies with her son,n. Eviction of the appellants from the premises in the circumstances will be unjust. Once we have come to the conclusion that there was no subletting in the first place, there is no question of appellants paying any amount of compensation as ordered by the impugned orders.