SUPREME COURT JUDGMENT | TENANT EVICTION PUBLIC PREMISES

Supreme Court of India (“Supreme Court”) in its recent judgment [Dr Suhas H Pophale v Oriental Insurance Company Limited and its Estate Officer] has changed the parameters of eviction of the tenant under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 (“Act”). BACKGROUND OF ACT: The Act was incorporated to facilitate easy eviction of unauthorized occupants from public premises and other incidental matters including removal of unauthorized construction, recovery of arrears of rent, etc. As per the Act, public premises means premises belonging to or taken on lease or requisitioned by or on behalf of (i) Central Government, (ii) Company in which the Central Government holds at least 51% paid-up share capital, (iii) wholly or partially subsidiary of the Central Government, (iv) any corporation owned or controlled by the Central Government, (v) universities, (vi) institutes of technology, (vii) major port trust, etc. (collectively referred to as “Public Authority”) CONFLICT: Since inception of the Act, there has been constant conflict on applicability of the Act viz-a-vis the applicability of the state rent control act. The Act has been made applicable since 1958. However, the question arises with respect to premises which were not acquired by such Public Authority until much later date and the tenants were till such date of acquisition, governed by the respective state act. The Supreme Court judgment in Suhas Pophale case clarified the position in such cases. It clarified that the Act can only be applied from 16 September 1958, or from a later date when such premises became government owned with the nationalization of the banks and private insurance companies. The judgment of Supreme Court is primarily aimed at properties belonging to nationalized insurance companies and nationalized banks. CASE ANALYSES: In the instant case, Dr Suhas Pophale was the tenant of Indian Mercantile Insurance Company (“MIC”) and was a lawful tenant under the Bombay Rent Act 1947 (now Maharashtra Rent Control Act, 1999). MIC was merged with the Oriental Insurance Company (“OIC”), a government company, with effect from 1 January 1974. However the management of MIC was taken over by the Central Government in 1971. Dr Suhas Pophale had obtained a license from the original tenant in 1972 and MIC had been informed about the same. Thereafter eviction order came to be passed against the said Dr Suhas Pophale in 1993 by the Estate Officer of OIC which was later affirmed by the City Civil Court and Bombay High Court. Supreme Court allowed the appeal having following effect: When a tenant is protected as a ‘tenant’ or `deemed tenant’ under the State Act, prior to the merger of the erstwhile insurance company with a Government Company, he could be removed only by following the procedure available under the State Act. Thus, as far as the tenants of the premises which are not covered under the Act are concerned, those tenants who were tenants or deemed tenants under the State Act, continues to have their protection under the State Act. Legislation is not be given a retrospective effect unless specifically provided for, and not beyond the period that is provided therein. For any premises to become public premises the relevant date will be 16 September 1958 or whichever is the later date on which the concerned premises become the public premises (as belonging to or taken on lease by Public Authorities like OIC). All those persons failing within the definition of a tenant occupying the premises prior thereto will not come under the ambit of the Act and cannot therefore be said to be persons in “unauthorized occupation”. If possession of their premises is required, that will have to be resorted to by taking steps under the respective State Acts. If person concerned has come in occupation subsequent to such date, then of course the Act will apply. The occupants of these properties were earlier tenants of the private landlords. They have not chosen to be the tenants of the Government Companies. Their status as occupants of the Public Insurance Companies has been thrust upon them by the Act.

MHCO COMMENTS: We understand now 2 categories of occupants of these public corporations will be excluded from the coverage of the Act. Firstly, those who are in occupation since prior to 16 September 1958, i.e. prior to the Act becoming applicable are clearly outside the coverage of the Act. Secondly, those who come in occupation, thereafter, but prior to the date of concerned premises were taken over by Public Authority and are covered under a protective provision of the State Rent Act. We believe this judgment will help thousands of occupants of public premises by limiting and clarifying the application of Act. (The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance)

SEBI | CORPORATE GOVERNANCE REFORMS

SEBI has recently announced its proposal to amend the listing agreement to align it with the provisions of the newly enacted Companies Act, 2013 (“Act”) and also decided to make in certain policies and regulations to strengthen the corporate governance framework for listed companies. Following are the key amendments to the Listing Agreement intimated by the SEBI which are proposed to be applicable to all listed companies with effect from 1 October 2014: Directors a) Nominee director to be excluded from the definition of independent director; b) Independent Director shall not be eligible for stock options of the company; c) Separate meeting of Independent Directors; d) Performance evaluation of all directors (including Independent Directors); e) Maximum number of boards of listed companies on which an independent director can serve to be restricted to 7 (seven), and 3 (three) in case the person is serving as a whole time director in a listed company; f) Total tenure of an Independent Director to be restricted to 2 (two) terms of 5 (five) years. However, if a person who has already served as an independent director for 5 (five) years or more in a listed company, as on the date on which the amendment to Listing Agreement becomes effective, the said Independent Director shall be eligible for appointment for only 1 (one) more term; g) To appoint a minimum of 1 (one) woman director on the board; h) To mandatorily constitute Nomination and Remuneration Committee in listed companies and the Chairman of the said committees shall be independent director; i) To put in place the mechanism for disclosure of appointment of Independent Directors and the letter of resignation of all directors; j) To put in place a system to train Independent Directors. Related Party Transactions (“RPT”) a) The scope of the definition of RPT has been widened to include elements of Act and Accounting Standards; b) Prior approval of Audit Committee for all material RPT; and c) Prior approval of all material RPTs by shareholders through special resolution with related parties abstaining from voting; d) To put in place the policy on dealing with RPTs.       Other Amendments a) To put in place the principles of corporate governance; b) To structure the procedure for divestment of material subsidiaries; c) To compulsorily have whistle blower mechanism; d) To expand the role of Audit Committee; e) To constitute Stakeholders Relationship Committee; f) To enhance disclosure of remuneration policies; g) To put in place the principles for risk management; h) To enunciate the principles of e-voting by shareholders (by top 500 companies); i) Mechanism to orderly succession appointments to the board and senior management. MHCO COMMENTS SEBI’s press release only contains a list of actions to be adopted. The impact will only be analyzed once the listing agreement is amended. Further, once the amendment to the listing agreement are actually brought about one would need to examine if the  SEBI amendments sync with the effectiveness of the remaining sections of the new Act. (The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance)