Bombay HC: converting a sole tenancy into a family company, without adding partners, isn't unlawful sub-letting

The Bombay High Court quashed a nearly three-decade-old eviction order passed by an Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 against tenants occupying premises owned by Oriental Insurance Company in Mumbai. The original tenant, a sole proprietor, had converted his business first into a partnership and then into a private limited company over several decades, with only his own family members involved throughout; the Estate Officer, and on appeal the City Civil Court, had held this amounted to unauthorised sub-letting, since possession had passed from an individual to a company. Justice Rajesh S. Patil held that sub-letting or parting with possession occurs only when a third party, someone outside the original tenant's family or business, is inducted into occupation or profits from it; a mere change in the legal form of the same family business does not create a new occupant.

The Court also held that a 2015 amendment to Section 5 of the Public Premises Act, dealing with such transfers, applies only prospectively since the Act does not say otherwise. Since no genuine sub-letting was shown, the tenants could not be treated as 'unauthorised occupants', and the eviction decree was set aside.