Reportable  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2276 OF 2011 [Arising out of SLP [C] No.9134/2009]

Bharat Petroleum Corporation Ltd. … Appellant

Vs.

Chembur Service Station … Respondent

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted.

2. The  appellant  -  Bharat  Petroleum  Corporation  Ltd.  

(also referred to as BPCL) is a Public Sector Undertaking  

under  the  administrative  control  of  the  Ministry  of  

Petroleum  &  Natural  Gas,  Union  of  India,  engaged  in  

refining, distributing and selling petroleum products, such  

as  Motor  Spirit  (MS/Petrol),  High  Speed  Diesel  (HSD),  

Kerosene, Liquefied Petroleum Gas (LPG), etc. all over the  

country. It is the successor-in-title of Burmah-Shell Oil  

Storage and Distributing Company of India Ltd. (for short  

‘Burmah Shell’).

1

3. On 2.9.1971, Burmah Shell took on lease a piece and  

parcel of land admeasuring about 680 sq.yds. bearing CTS  

Nos. 339 and 339/1 situated at V.N. Purav Marg, Chembur,  

Mumbai,  for  the  purpose  of  a  Storage  Depot  or  Service  

Station with the right to erect and maintain all manner of  

equipment, plant, machinery, tanks, pumps and structures.  

In the said plot, Burmah Shell erected and installed the  

Dispensing pumps together with underground tanks and other  

equipment, fittings and facilities for storage of petrol,  

High Speed Diesel (HSD) and other products and constructed  

some structures for carrying on the business of sale and  

supply of such products. The said service station is also  

referred to as a Retail Petroleum Outlet (for short ‘the  

RPO’). On 1.4.1972, the appellant entered into a Dispensing  

Pump  and  Selling  Licence  agreement  (for  short  ‘DPSL  

Agreement’)  with  the  respondent,  appointing  it  as  the  

dealer for selling the petroleum products of the appellant  

from the said RPO.  

4. The undertaking of Burmah Shell was taken over by the  

Central  Government  and  subsequently  vested  in  Bharat  

Petroleum Corporation Ltd., appellant herein, in accordance  

with  the  provisions  of  the  Burmah  Shell  (Acquisition  of  

Undertakings in India) Act, 1976 on 24.1.1976.  

2

5. The respondent had originally two partners, Dharma Vir  

Joshi and Mahesh Mangtani and on the death of Dharma Vir  

Joshi,  a  fresh  dealership  agreement  described  as  

‘Dispensing Pump and Selling Licence’ was executed between  

the appellant and respondent on 1.12.1995. In terms of the  

said agreement, the respondent was functioning as a dealer  

of the appellant.  

6. During a surprise inspection on 9.3.2007 carried out  

by  the  Quality  Control  Cell  of  the  appellant  in  the  

presence of the Manager of the respondent, it was noticed  

that one of the dispensing units (No.OIC 3633) was giving a  

short delivery of 20 ml. of HSD (that is, when tested for  

accuracy  against  a  five  litre  calibrated  measure,  the  

display showed 5.02 litres). When the Dispensing Unit was  

checked on flash mode 55555 twice, it gave short delivery  

of 210 ml. (that is as against 5 litres, the display showed  

5.21 litres). Therefore, the Electronic Register Assembly  

(ERA) of the said dispensing unit was removed from the Unit  

and was sent for inspection to MIDCO - the manufacturer of  

the  dispensing  Unit.  MIDCO  gave  a  report  on  27.3.2007  

stating that there was a deviation in the counting ERA and  

the Microcontroller chip hardware in the ERA was not the  

3

original  component  supplied  by  them  with  the  Dispensing  

Unit. The appellant, therefore, issued a show cause notice  

to the respondent on12.6.2007 alleging that the respondent  

had manipulated/altered the original chip with a view to  

making  illegal  gain  by  cheating  the  customers  of  the  

company, thereby causing breach of trust, and calling upon  

the  respondent  to  show  cause  within  15  days,  as  to  why  

action  should  not  be  taken  including  termination  of  the  

dealership.   The respondent sent a reply dated 10.7.2007  

denying the allegations in the show cause notice.  

7. The respondent filed a suit (Suit No.913/2008) in the  

Court of Small Causes, Bombay for the following reliefs :  

(a)  for  a  declaration  that  it  is  the  tenant  of  the  

appellant in respect of the structures and equipment and  

sub-tenant of the appellant in regard to the land comprised  

in the suit premises (CTS Nos. 339 and 339/1, V.N. Purav  

Marg, Chembur, Mumbai, measuring 6118 sq. ft.); (b) for a  

declaration  that  the  supply  of  petrol  and  petroleum  

products  by  the  appellant  at  the  suit  premises  was  an  

essential supply under section 29 of the Maharashtra Rent  

Control  Act,  1999;  (c)  for  a  declaration  that  the  show  

cause  notice  dated  12.6.2007  was  illegal  and  did  not  

constitute a just and sufficient cause for cutting off or  

4

withholding the essential supply of petrol and petroleum  

products; (d) for a permanent injunction restraining the  

appellant from forcibly dispossessing respondent from suit  

premises or in any manner interfering with the possession  

of the respondent in regard to the suit premises; and (e)  

restraining the appellant from withholding or cutting off  

the supply of petrol and petroleum products from the suit  

premises. An application for temporary injunction was also  

filed to restrain the appellant from forcibly dispossessing  

the respondent from the premises or interfering with its  

possession  of  the  suit  premises  and  from  withholding  or  

cutting off of any supply of petrol and petroleum products.  

8. The appellant resisted the suit and the application  

for temporary injunction by contending that the respondent  

was  neither  a  tenant,  nor  a  sub-tenant,  nor  a  deemed  

tenant. The Court of Small Causes by interim order dated  

13.5.2008 directed the appellant to maintain status quo as  

on  that  date,  that  is,  the  respondent  “shall  remain  in  

possession of the suit premises” and the appellant shall  

“continue to supply petrol and petroleum products to the  

petrol  pump  in  the  suit  premises”,  till  the  preliminary  

issue  regarding  jurisdiction  to  entertain  the  suit  was  

framed and a decision was rendered thereon.

5

9. Feeling aggrieved, the appellant filed an appeal. A  

Division Bench of the Small Causes Court, by order dated  

26.8.2008,  partly  allowed  the  appeal.  It  set  aside  the  

order  of  the  trial  court  in  so  far  as  it  directed  the  

appellant to continue the supply of petrol and petroleum  

products in the suit premises to respondent. The direction  

that the appellant shall maintain status quo by permitting  

the respondent to continue with the possession of the suit  

premises was not disturbed. The appellate bench held that  

the respondent had prima facie established its induction in  

the  suit  premises  as  a  licensee  in  the  light  of  the  

agreements  dated  1.4.1972  and  1.12.1995.  The  said  order  

dated 26.8.2008 of the appellate bench of the Small Causes  

Court  was  challenged  by  the  respondent  by  filing  W.P.  

No.6689/2008, to the extent it reversed the direction for  

supply  of  petroleum  products.  The  said  order  was  also  

challenged  by  the  appellant  in  W.P.No.8130/2008  to  the  

extent  that  it  permitted  the  respondent  to  remain  in  

possession of the suit premises.

10. The respondent’s writ petition (WP No.6689/2008) was  

dismissed  by  a  learned  Single  Judge  by  judgment  dated  

1.10.2008. The writ petition filed by the appellant (W.P.  

No.8130/2008)  was  disposed  of  by  a  brief  order  dated  

6

29.1.2009,  observing  that  “Instead  of  getting  embroiled  

with the larger issues raised in the present petition, in  

my opinion, interest of justice would be subserved if the  

petition is disposed of, by clarifying the order of status  

quo granted by the Lower Court to mean that the said order  

of status quo shall not preclude the petitioner (BPCL) from  

taking  recourse  to  recovery  of  possession  of  the  suit  

property from the respondent (plaintiff) by following due  

process of law including by resorting to action under the  

provisions  of  the  Public  Premises  Act,  if  permissible.”  

The  said  order  is  challenged  in  this  appeal  by  special  

leave.

Subsequent events  

11. Certain subsequent events require to be noticed. The  

respondent filed a second suit (Suit No.2557/2008) in the  

City  Civil  Court,  Mumbai,   praying  for  the  following  

reliefs:  (a)  a  declaration  that  supply  of  petrol  and  

petroleum products in the suit premises to respondent by  

the appellant is an essential supply under the Essential  

Commodities  Act,  1955;  (b)  for  a  declaration  that  the  

notice dated 12.6.2007 is illegal and a further declaration  

that the appellant is not entitled to terminate/set aside  

7

the dealership under the agreement dated 1.12.1995; and (c)  

for an injunction restraining the appellant from stopping  

the supply of petrol and petroleum products or acting upon  

the notice dated 12.6.2007.

12. On 19.3.2009, the appellant terminated the dealership  

agreement and informed the respondent that it shall have no  

right to use the retail outlet premises for any purpose  

whatsoever  and  the  facilities  (Motor  Spirit  and/or  High  

Speed Diesel pumps, storage tanks, pipes and fittings and  

all other facilities erected and provided by the company at  

the retail outlets) or to sell any petroleum products lying  

in the retail outlets. Supply of petroleum products to the  

said  Retail  Petroleum  Outlet  was  also  stopped.  The  said  

termination  however  made  it  clear  that  the  order  was  

without interfering with or disturbing the order of status  

quo in regard to the possession passed on 30.5.2008 and  

affirmed the orders dated 26.8.2008 and 29.1.2009 passed by  

the appellate bench and the High Court respectively.    

13. The respondent filed a third suit (Suit No.706/2009 in  

the City Civil Court, Bombay) for the following reliefs :  

(a)  a  declaration  that  the  termination  notice  dated  

19.3.2009  was  illegal  and  unenforceable  and  that  the  

dealership agreement dated 1.12.1995 continues to subsist;  

8

(b) for a permanent injunction restraining the appellant or  

giving effect to the termination notice dated 19.3.2009;  

and  (c)  for  an  order  restraining  the  appellant  from  

discontinuing or withholding supply of petrol and petroleum  

products and CNG to the petrol pump premises and declare  

that the supply of petrol and petroleum products to the  

said premises is an essential supply.

Contentions of appellant

14. The appellant has urged the following contentions :  

(a) The dealership granted by the appellant in favour of  

the respondent was in the nature of an agency for sale of  

the petroleum products supplied by the appellant, in the  

appellant’s  property,  under  the  appellant’s  emblem  (BPCL  

Petrol  Pump  or  Service  Station).  The  respondent  as  the  

dealer/agent  uses  the  petrol  pump  premises  and  the  

equipments  therein  as  an  agent  of  the  appellant.  The  

respondent does not have any right, title or interest in  

the premises. (b) A person appointed by the appellant, as  

its dealer to sell the petroleum products supplied by the  

appellant through the company retail outlet premises under  

the terms of a Dispensing Pump and Selling Licence (DPSL)  

agreement,  on  termination  of  the  selling  agreement  –  

9

cessation of supplies ceases to be a dealer. Consequently  

he can neither sell any petroleum products in the retail  

outlet  premises,  nor  use  the  appellant’s  retail  outlet  

premises or facilities for any other purpose, nor create  

any obstruction to the running of the retail outlet by the  

appellant directly or through another dealer - regular or  

ad hoc. (c) Even if the termination of the dealership is  

invalid, the only relief that could be claimed by the ex-

dealer/agent is award of compensation. A court could not  

therefore  grant  temporary  injunction  requiring  the  

appellant to maintain status quo, thereby permitting the  

respondent  to  hold  on  to  the  petrol  pump  premises  and  

prevent the use thereof by the appellant in the manner it  

deems fit.

Contention of Respondent

15. The  respondent  contended  as  follows:  (a)  The  DPSL  

agreement executed on 1.4.1972 appointing the respondent as  

a dealer, granted an exclusive licence to the respondent to  

use the petrol pump premises for a period of 15 years; that  

as the licensee is in lawful occupation of the premises, he  

could not be dispossessed forcibly from the premises but  

could only be evicted in a manner known to law.  (b) As it  

was in possession  of the premises as a licensee as on  

1

1.2.1973, it became a deemed tenant by virtue of Section  

15A  of  the  Bombay  Rents,  Hotel  and  Lodging  House  Rates  

(Control) Act, 1947 (for short ‘the old Bombay Rent Act’);  

and  consequently  it  became  entitled  to  the  protection  

against  eviction  under  that  Act.  When  the  said  Act  was  

repealed and replaced by the Maharashtra Rent Control Act,  

1999  (for  short  ‘the  MRC  Act’);  the  protection  against  

eviction continued to be available to it under the MRC Act.  

(c) There was no error or defect in the Dispensing Unit and  

the  decision  to  suspend  the  supplies  and  terminate  the  

licence were illegal and unwarranted.  

Questions arising for consideration  

16. On the contentions raised, the questions that arise  

for our consideration are :  

(i) What is the nature of a licence that is granted to the  

respondent by the appellant under the DPSL agreement ?  

(ii) Whether the High court was justified in upholding the  

grant  of  an  interim  order  of  status  quo  directing  the  

appellant  not  to  interfere  with  the  respondent’s  

‘possession’ of the petrol pump premises and requiring the  

appellant to resort  to appropriate legal action to secure  

possession from the respondent ?

(iii) Whether  the  licence  to  use  the  petrol  pump  

premises for the purpose of sale of the petroleum products  

1

of the appellant granted to respondent on 1.4.1972 could be  

construed as a licence as defined in Section 5(4A) of the  

old Bombay Rent Act so as to attract section 15A of the  

said  Act  which  provided  that  any  person  who  was  in  

occupation of any premises as a licensee as on 1.2.1973  

shall on that date be deemed to have become a tenant of the  

landlord in respect of the premises in his occupation ?  

The contract

17. Both parties agreed and submitted that the rights and  

obligations of parties are governed by the terms of the  

DPSL agreement dated 1.12.1995. We may therefore refer to  

the relevant provisions thereof :

“WHEREAS the Company has at the request of the  Licensees agreed to permit the Licensees to enter  upon  the  Company’s  premises  described  in  the  Schedule  and  shown  on  the  blueprint  attached  hereto  (hereinafter  referred  to  as  “the  said  premises”) as the Licensees of the Company for  the purposes, and upon the terms and subject to  the conditions hereinafter mentioned. …”

NOW THESE PRESENT WITNESS AND IT IS HEREBY AGREED  AND DECLARED AS FOLLOWS :

“1.  Subject  to  the  conditions  contained  hereinafter  the  Company  hereby  grants  Licence  unto the Licensees for a period of 15 (fifteen)  years and during the continuance of this Licence  to enter upon the said premises and  to use the  Motor Spirit and/or H.S.D. Pumps, Storage Tanks,  Pipes  and  Fittings  and  all  other  facilities  erected and provided by the Company upon the said  premises, and also any additional facilities at  any time during the continuance of this Licence  provided by the Company upon the said premises  (all  of  which  are  hereinafter  for  brevity  referred  to  as  “the  said  facilities”)  for  the  

1

purpose  of  the  sale  of  Motor  Spirit  and/or  H.S.D.,  Motor  Oils,  Greases  and  other  Motor  accessories, as the Licensees of the Company. The  Company expressly reserves to itself the right to  take back the whole or any portion of the said  premises or the said facilities or alter them at  any time during the continuance of this Licence  at its sole discretion.                                    x x x x

4.  The  said  premises  and  the  said  facilities  shall at all times during the continuance of this  Licence remain the absolute property and in sole  possession of the Company and no part of the said  facilities shall be removed by the Licensees nor  shall  the  position  of  any  constituent  part  thereof  or  of  the  said  premises  be  changed  or  altered without the previous written consent of  the Company.

5. The premises and the said facilities hereby  licensed to the Licensees shall only be used for  stocking  and  selling/dispensing  the  Petroleum  Products of the Company and shall not be used for  any other purpose except as may be permitted in  writing by the Company.

x x x x

9.  Neither  the  Licensees  nor  the  Licensees’  servants  or  agents  shall  interfere  in  any  way  with  the  working  parts  of  the  pumps  or  other  equipment provided by the Company.   x x x x

12.  This  Licence  may  be  terminated  without  assigning any reason whatsoever by either party  giving  to  the  other  not  less  than  ninety  days  notice in writing to expire at any time of its  intention to terminate it and upon the expiration  of  any  such  notice  this  Licence  shall  stand  cancelled  and  revoked.  The  requisite  period  of  notice may be reduced or waved by mutual consent.  

x x x x

1

15. Upon the revocation or termination of this  Licence  for  any  cause  whatsoever  the  Licensees  shall  cease  to  have  any  rights  whatsoever  to  enter or remain on the premises or to use the  said  facilities  and  shall  be  deemed  to  be  trespassers if they continue to do so. Upon such  termination or revocation either under Clause 12  or Clause 13 hereof, if the Licensees or their  servants and/or agents remain on the premise, the  Company  shall  be  at  liberty  to  evict  them  by  using such means as may be necessary and prevent  them from entering upon the licensed premises.  

x x x x

18.  The  Licensees  hereby  expressly  agree  and  declare  that  nothing  herein  contained  shall  be  construed  to  create  any  right  other  than  the  revocable  permission  granted  by  the  Company  in  favour  of  the  Licensees  in  respect  of  the  Licensed  premises/facilities  strictly  in  accordance with the terms hereof. In particular  nothing  herein  contained  shall  be  construed  to  create any tenancy or other right of occupation  whatsoever in favour of the Licensees.”

(emphasis  supplied)

Re : Questions (i) and (ii)

18. Licence  is  defined  in  section  52  of  the  Indian  

Easements Act, 1882  as under :  

“52. ‘License’ defined :  

Where  one  person  grants  to  another,  or  to  a  definite number of other persons, a right to do,  or  continue  to  do,  in  or  upon  the  immovable  property of the grantor, something which would,  in the absence of such right, be unlawful, and  such right does not amount to an easement or an  interest in the property, the right is called a  license.”

1

The definition of licence makes it clear that a licence  

granted by the owner enables a licensee a right to do or  

continue  to  do  certain  specified  things  in  or  upon  an  

immovable property.  

19. In Associated Hotels of India Ltd. v. R.N. Kapoor (AIR  

1959            SC 1262) this Court referred to the  

difference between a lease and licence.:  

“There is a marked distinction between a lease  and  a  licence.  Section  105  of  the  Transfer  of  Property  Act  defines  a  lease  of  immovable  property as a transfer of a right to enjoy such  property made for a certain time in consideration  for a price paid or promised. Under Section 108  of the said Act, the lessee is entitled to be put  in  possession  of  the  property.  A  lease  is  therefore a transfer of an interest in land. The  interest  transferred  is  called  the  leasehold  interest.  The  lessor  parts  with  his  right  to  enjoy the property during the term of the lease,  and it follows from it that the lessee gets that  right to the exclusion of the lessor……”  

After referring to the definition of licence in Section 52  

of the Easement Act, this court held:

“Under the aforesaid section, if a document gives  only a right to use the property in a particular  way or under certain terms while it remains in  possession and control of the owner thereof, it  will  be  a  licence.  The  legal  possession,  therefore, continues to be with the owner of the  property, but the licensee is permitted to make  use of the premises for a particular purpose. But  for  the  permission,  his  occupation  would  be  unlawful. It does not create in his favour any  estate  or  interest  in  the  property.  There  is,  

1

therefore,  clear  distinction  between  the  two  concepts.  The  dividing  line  is  clear  though  sometimes it becomes very thin or even blurred.  At  one  time  it  was  thought  that  the  test  of  exclusive  possession  was  infallible  and  if  a  person  was  given  exclusive  possession  of  a  premises, it would conclusively establish that he  was  a  lessee.  But  there  was  a  change  and  the  recent trend of judicial opinion is reflected in  Errington  v.  Errington  [1952]  1  All  E.R.  149,  wherein Lord Denning reviewing the case law on  the  subject  summarizes  the  result  of  his  discussion thus at p. 155 :  

"The result of all these cases is that, although  a person who is let into exclusive possession is,  prima  facie,  to  be  considered  to  be  tenant,  nevertheless he will not be held to be so if the  circumstances negative any intention to create a  tenancy."  

“…The  following  propositions  may,  therefore,  be  taken  as  well-established  :  (1)  To  ascertain  whether a document creates a licence or lease,  the substance of the document must be preferred  to the form; (2) the real test is the intention  of the parties - whether they intended to create  a lease or a licence; (3) if the document creates  an interest in the property, it is a lease; but,  if it only permits another to make use of the  property, of which the legal possession continues  with the owner, it is a licence; and (4) if under  the document a party gets exclusive possession of  the property, prima facie, he is considered to be  a  tenant;  but  circumstances  may  be  established  which negative the intention to create a lease…”

In C.M. Beena vs. P.N. Ramachandra Rao - 2004 (3) SCC 595,  

this Court explained a Licence thus :  

“Only a right to use the property in a particular  way or under certain terms given to the occupant  while the owner retains the control or possession  over  the  premises  results  in  a  licence  being  created; for the owner retains legal possession  

1

while all that the licensee gets is a permission  to use the premises for a particular purpose or  in a particular manner and but for the permission  so given the occupation would have been unlawful.”

20. Licences can be of different kinds. Some licences with  

reference to use of immovable property may be very wide,  

virtually bordering upon leases. Some licences can be very  

very narrow, giving a mere right enabling a person to visit  

a  premises  –  say  a  museum  or  a  lecture  hall  or  an  

exhibition. In between are the licences of different hues  

and degrees. All licences can not be treated on the same  

footing. We may refer to some illustrations to highlight  

the difference.

Illustration (A):

An owner of a property enters into a lease thereof,  

but to avoid the rigours of Rent Control legislation, calls  

it as a licence agreement. Though such a lease is captioned  

as a ‘licence agreement’, the terms thereof show that it is  

in essence, a lease. Such a licence agreement which puts  

the  licensee  in  exclusive  possession  of  the  premises,  

untrammeled by any control, and free from any directions  

from  the  licensor  (instead  of  conferring  only  a  bare  

personal privilege to use the premises) will be a lease,  

even  if  described  as  licence.   For  example,  if  the  

1

exclusive possession of an apartment or a flat or a shop is  

delivered by the owner for a monthly consideration without  

retaining  any  manner  of  control,  it  will  be  a  lease  

irrespective of whether the arrangement is called by the  

owner as a ‘lease’, or ‘licence’. As far as the person who  

is let into exclusive possession, the quality and nature of  

his rights in respect of the premises will be that of a  

lease or a tenant and not that of a licensee. Obviously  

such a ‘licensee’ cannot be ‘evicted’ or ‘dispossessed’ or  

prevented from using the premises without initiating legal  

action in accordance with law.

Illustration (B):  

The owner of a land constructs a shopping mall with  

hundred  shops.  The  owner  of  the  mall  earmarks  different  

shops  for  different  purposes,  that  is  sale  of  different  

types  of  goods/merchandise,  that  is  shops  for  exclusive  

clothing for men, shops for exclusive clothing for women,  

shops for hosieries, shops for watches, shops for cameras,  

shops for shoes, shops for cosmetics and perfumes, shops  

for watches, shops for sports goods, shops for electronic  

goods, shops for books, shops for snacks and drinks etc.  

The  mall  owner  grants  licences  in  regard  to  individual  

shops to licensees to carry on the identified or earmarked  

1

business.  The  licensor  controls  the  hours  of  business,  

regulates the maintenance, manner of display, cleanliness  

in the shops. The ingress and egress to the shop licensed  

to  the  licensee  is  through  the  corridors  in  the  mall  

leading from three or four common access points/entrances  

which are under the control of the licensor.  The licensee  

is however entitled to stock the shop with brands of his  

choice  though  he  does  not  have  the  right  to  change  the  

earmarked purpose, entertain any clientale or customers of  

his choice and fix the prices/terms for his goods. He can  

also lock the shop at the end of the business hours and  

open it whenever he wants. No one else can trade in that  

shop.  In  such  a  case,  in  spite  of  the  restrictions,  

controls and directions of the licensor, and in spite of  

the grant being described as licence, the transaction will  

be  a  lease  or  tenancy  and  the  licensee  cannot  be  

dispossessed or evicted except by recourse of law.  

Illustration (C):

In a shopping complex or in a mall the owner gives a  

licence to a person to use a counter to sell his goods in  

consideration of a fee. The access is controlled by the  

licensor  and  there  is  no  exclusive  use  of  any  specific  

space by the licensee. At the end of the day, the licensee  

1

can  close  the  counter.  The  space  around  the  counter  is  

visited  and  used  by  customers  to  the  mall  and  not  

exclusively by the customers of the licensee. In such a  

case,  if  the  licence  is  terminated,  the  licensor  can  

effectively  prevent  the  licensee  from  entering  upon  his  

premises and the licensee will have no right to use the  

counter except to remove his belongings. In such a licence  

it  may  not  be  necessary  for  the  licensor  to  sue  the  

licensee for ‘possession’ or ‘eviction’.  

Illustration (D):

A  much  narrower  version  of  a  licence  is  where  an  

exhibitor  of  cinematograph  films,  or  a  theatre  owner  

permits a ‘customer’ or ‘guest’ to visit an entertainment  

hall to view and enjoy a movie or a show for the price of a  

ticket. The licensee is permitted to occupy a seat in the  

theatre  exclusively  for  the  period  of  the  show.  Or  a  

cloakroom  with  toilet  facilities  in  a  public  building  

permits a visitor to use the toilet/closet facilities on  

payment  of  a  fee.  The  licensee  is  permitted  to  use  the  

toilet/closet  exclusively  to  relieve  himself.  In  such  

cases,  the  licence  is  for  a  specific  purpose  and  for  a  

specific period. The licensee has no other right to enter  

the premises, nor the right to continue to occupy the seat  

2

in the theatre or use the toilet/closet continuously. Such  

a licensee can be forcibly removed by the licensor if the  

licensee overstays or continues to occupy the seat beyond  

the show, or refuses to leave the cloakroom.  It is not  

necessary for the licensor to sue the licensee.

Illustration (E):

A reputed manufacturer of textiles owns several retail  

outlets in different parts of the country. The outlets are  

housed in premises owned by the manufacturer or premises  

taken  by  it  on  lease.  The  manufacturer  employs  a  sales  

manager on salary for each outlet to manage the outlet and  

sell  its  products  and  entrust  him  with  the  keys  of  the  

premises, so that he can open the outlet for business and  

close  the  outlet  at  the  end  of  the  day.  Or  the  

manufacturer, instead of engaging a sales manager, appoints  

an agent who is permitted to sell only the products of the  

manufacturer in the retail outlet, and receive a commission  

on the turnover of sales. The manufacturer stipulates the  

manner of sale, and the terms of sale including the prices  

at which the goods are sold. The manufacturer also checks  

the  products  sold  periodically  to  ensure  that  only  its  

products (and not fakes) are sold. The manufacturer also  

reserves the right to terminate the services of the sales  

manager/agent. In such cases on termination of the services  

2

of  the  employee/agent,  the  manufacturer  can  physically  

prevent the sales manager/agent from entering the retail  

outlet and make alternative arrangements for running the  

outlet. There is no need to approach a court to ‘evict’ the  

sales manager/agent.

21. Where an employer or principal permits the use of its  

premises,  by  its  employee  or  agent,  such  use,  whether  

loosely  referred  to  as  ‘possession’  or  ‘occupation’  or  

‘use’ by the employee or the agent, is on behalf of the  

employer/principal. In other words, the employer/principal  

continues  to  be  in  possession  and  occupation  and  the  

employee/agent  is  merely  a  licensee  who  is  permitted  to  

enter the premises for the limited purpose of selling the  

goods of the employer/principle. The employee/agent cannot  

claim any ‘possession’ or ‘occupation’ or ‘right to use’  

independent of the employer/principal who is the licensor.  

In such cases if the employee is terminated from service,  

he cannot obviously contend that he is in “occupation” of  

the premises and that he can be evicted or dispossessed  

only by initiating action in a court of law. Similarly the  

agent who is permitted to enter the premises every day to  

sell  the  goods  cannot,  on  termination  of  the  agency,  

contend that he continues to be in exclusive occupation of  

2

the  premises  and  unless  evicted  through  a  court  of  law  

entitled to continue in occupation. This is because licence  

that is granted to the employee/agent is a limited licence  

to  enter  upon  and  use  the  premises,  not  for his  own  

purposes or his own business, but for the purposes of the  

employer/principal,  to  sell  its  goods  in  the  manner  

prescribed  by  the  employer/principal  and  subject  to  the  

terms  and  conditions  stipulated  in  the  contract  of  

employment/agency  in  regard  to  the  manner  of  sales,  the  

prices at which the goods are to be sold or the services to  

be  rendered  to  the  customers.  In  such  cases,  when  the  

employment  or  agency  is  terminated  and  the  

employer/principal  informs  the  employee/agent  that  his  

services are no longer required and he is no longer the  

employee/agent, the licence granted to such employee/agent  

to  enter  the  retail  outlet  stands  revoked  and  the  ex-

employee/ex-agent  ceases  to  have  any  right  to  enter  the  

premises.  On  the  other  hand,  the  employer/principal  who  

continues to have possession will be entitled to enter the  

premises,  or  appoint  another  employee  or  agent,  or  

legitimately prevent the ex-employee/ex-agent from entering  

upon the premises or using the premises. In such cases,  

there is no need for the licensor (that is the employer or  

the principal) to file a suit for eviction or injunction  

2

against  the  ex-employee  or  ex-agent.  The  licensor  can  

protect or defend its possession and physically prevent the  

licensee (employee/agent) from entering the outlet.

22. In this behalf we may refer to the decision of this  

court  in  Southern  Roadways  Ltd.  Madurai  v.  SM  Krishnan  

(1989) 4 SCC 603. In that case, Southern Roadways appointed  

the respondent as its commission agent for carrying on its  

business in Madras city. Southern Roadways took on lease a  

godown and put it in the possession of the respondent for  

the  purpose  of  carrying  on  the  agency  business.  The  

agreement  between  the  parties  provided  that  Southern  

Roadways could remove the agent at any time without notice  

and upon removal, it could occupy the godown and also use  

the services of the employees engaged by the agent. In the  

course of audit, mismanagement and misappropriation by the  

agent  was  discovered  and  as  a  result  Southern  Roadways  

terminated the agency and took possession of the godown and  

appointed another person as agent. The respondent prevented  

the  new  agent  and  the  appellant  from  carrying  on  the  

business in the godown premises. Therefore the appellant  

filed  a  suit  for  injunction  against  the  respondent.  A  

learned Single Judge granted a temporary injunction. On an  

appeal by the ex-agent, the division bench of the Madras  

2

High  Court  vacated  the  injunction  which  was  challenged  

before this court by Southern Roadways. This Court allowed  

the appeal. This court held:

“At the outset, we may state that we are not so  much concerned with the rival claims relating to  actual possession of the suit premises. Indeed,  that  is  quite  irrelevant  for  the  purpose  of  determining the rights of the company to carry on  its business. Mr. Venugopal, learned Counsel for  the appellant also discreetly did not advert to  that controversy. He, however, rested his case on  certain facts which are proved or agreed. They  may be stated as follows : The company was and is  the  tenant  of  the  suit  premises  and  has  been  paying rent to the owner. The lease in respect of  the premises has been renewed up to November 22,  1993. It was the company which has executed the  lease and not the respondent. The respondent as  agent was allowed to remain in possession of the  premises. It was only for the purpose of carrying  on  company's  business.  His  agency  has  been  terminated  and  his  authority  to  act  for  the  company has been put an end to. These facts are  indeed  not  disputed.  On  these  facts  the  contention of counsel is that when the agency has  been  terminated,  the  respondent  has  no  legal  right to remain in the premises or to interfere  with the business activities of the company.

The principal has right to carry on business as  usual after the removal of his agent. The Courts  are rarely willing to imply a term fettering such  freedom  of  the  principal  unless  there  is  some  agreement to the contrary. The agreement between  the parties in this case does not confer right on  the respondent to continue in possession of the  suit premises even after termination of agency.  Nor does it preserve right for him to interfere  with the company's business. On the contrary, it  provides that the respondent could be removed at  any  time  without  notice  and  after  removal  the  company could carry on its business as usual. The  company  under  the  terms  of  the  agreement  is,  therefore,  entitled  to  assert  and  exercise  its  

2

right which cannot be disputed or denied by the  respondent.

…under law, revocation of agency by the principal  immediately  terminates  the  agent's  actual  authority  to  act  for  the  principal  unless  the  agent's authority is coupled with an interest as  envisaged  under  Section  202  of  the  Indian  Contract Act. When agency is revoked, the agent  could claim compensation if his case falls under  Section  205  or  could  exercise  a  lien  on  the  principal's  property  under  Section  221.  The  agent's  lien  on  principal's  property  recognised  under Section 221 could be exercised only when  there is no agreement inconsistent with the lien.  In the present case the terms of the agreement by  which  the  respondent  was  appointed  as  agent,  expressly  authorises  the  company  to  occupy  the  godown upon revocation of agency. Secondly, the  lien  in  any  event,  in  our  opinion,  cannot  be  utilised or taken advantage of to interfere with  principal's business activities.  

The crux of the matter is that an agent holds the  principal's  property  only  on  behalf  of  the  principal. He acquires no interest for himself in  such property. He cannot deny principal's title  to property. Nor he can convert it into any other  kind or use. His possession is the possession of  the principal for all purposes.

In this case, the respondents’ possession of the  suit premises was on behalf of the company and  not on his own right.  

It is, therefore, unnecessary for the company to  file  a  suit  for  recovery  of  possession.  The  respondent has no right to remain in possession  of  the  suit  premises  after  termination  of  his  agency. He has also no right to interfere with  the company's business.”

23. In this case, the DPSL Agreement clearly demonstrated  

that licence granted by the appellant enabled the licensee  

(respondent) to enter upon the retail outlet premises only  

2

for the limited purpose of using the facilities (that is  

Motor Spirit/HSD Pumps, storage tanks etc.) for purposes of  

sale of appellant’s Motor Spirit, HSD, Motor oils, Greases  

or  other  motor  accessories  (together  referred  to  as  

‘Products of the appellant’) as a licensee of the appellant  

at the prices specified by the appellant. The respondent  

could not sell any other goods or the products of any one  

else. It could not charge a price different from what was  

stipulated by the appellant. The respondent could not enter  

the  outlet  premises  if  the  licence  granted  to  the  

respondent  to  sell  the  appellant’s  petrol  and  petroleum  

products was terminated. In other words, the respondent-

licensee had no licence to enter the petrol pump premises  

or use the ‘facilities’, if it could not sell the products  

of the appellant. The relevant terms of the DPSL agreement  

extracted in para 17 above show that the licence was given  

to the licensee to enter the appellant’s outlet premises  

and use the equipment/facilities provided by the appellant  

for the exclusive purpose of sale of the products of the  

appellant. This has been completely lost sight of by the  

courts below.  

24. It should be noted that the appellant has installed  

specialized  equipments  (that  is  HSD/Petrol/oil  

2

dispensers/pumps  attached  to  storage  tanks  through  

pipes/fittings) and the licence given to the respondent was  

to  enter  upon  the  premises  to  use  the  said  

equipment/facilities provided  by  the  appellant  for  the  

purpose of sale of the appellant’s products (that is motor  

spirit, HSD, motor oil, grease etc.) at the rates/prices  

fixed by the appellant. If the respondent could not sell  

these  petroleum  products  on  account  of  

suspension/termination, there is no occasion or need for  

the  respondent  to  enter  upon  the  outlet  premises  as  it  

cannot sell any other goods or use the outlet for any other  

purpose. Therefore the licence to enter and use the outlet  

premises  also  comes  to  an  end  when  the  licence  is  

terminated or supply of appellant’s products is stopped.  

Clause 15 of the DPSL Agreement specifically provides that  

on revocation or termination of the licence for any cause  

whatsoever, the licensee shall cease to have any right to  

enter or remain in the premises or use the facilities. As  

the  licence  is  only  to  enter  the  appellant’s  outlet  

premises  to  use  the  facilities  for  sale  of  appellant’s  

petroleum products, if the licence to use the appellant’s  

facilities for sale of appellant’s products comes to an end  

and  supply  of  appellant’s  products  for  sale  by  the  

respondent is stopped, there is no question of the licensee  

2

entering the outlet premises at all or remaining in the  

outlet premises or using the outlet premises.  

25. To reiterate, the permission granted to the respondent  

by the appellant to enter the outlet premises is for the  

purposes  of  using  the  equipments/facilities  belonging  to  

the appellant installed in the outlet, to sell the products  

of the appellant. Under the licence (DPSL) agreement, the  

respondent cannot enter the premises for any purpose other  

than for using the facilities or equipment installed by the  

appellant  or  for  any  purpose  other  than  selling  the  

petroleum products of the appellant. Therefore the licence  

to  enter  the  premises  and  the  licence  to  use  the  

facilities/equipment is incidental to the licence to sell  

the  products  of  the  appellant  as  a  licensed  dealer,  

distributor or agent. In this case the premises is a land  

held  on  leasehold  by  the  appellant  wherein  it  has  

constructed/erected  certain  structures  and  housed  certain  

facilities/ equipment. The premises is known as appellant’s  

‘company  owned  retail  outlet’.  The  goods/products  sold  

belong to the appellant. If the appellant decides to stop  

the  supply  of  its  goods  for  sale  in  the  said  outlet,  

automatically  the  licence  granted  to  the  respondent  to  

enter  premises  and  use  the  facilities  become  redundant,  

2

invalid and infructuous.  There is no licence in favour of  

the  licensee  to  use  the  premises  or use  the  facilities  

independent  of  the  licence  to  sell  the  goods  of  the  

appellant. Further the agreement makes it clear that the  

agreement  does  not  create  any  tenancy  rights  in  the  

premises; that it is terminable by 90 days notice on either  

side and it is terminable by the appellant even without  

giving such notice in the event of breach. Therefore there  

cannot  be  an  injunction  restraining  the  appellant  from  

entering upon its outlet premises or using the outlet for  

its business or inducting any new dealer or agent.

26. Where the licence in favour of the licensee is only to  

use  the  retail  outlet  premises  or  use  the  

equipments/facilities  installed  therein,  exclusively  in  

connection with the sale of the goods of the licensor, the  

licensee does not have the right to use the premises for  

dealing  or  selling  any  other  goods.  When  the  licensee  

cannot use the premises for any purpose on account of the  

stoppage of supply of licensor’s goods for sale, it will be  

wholly  unreasonable  to  require  the  licensor  to  sue  the  

licensee for ‘possession’ of such company controlled retail  

outlet premises. This is not a case where the licensee has  

3

alleged that any amount is due to it from the licensor by  

way of commission or remuneration for services, or that on  

account of non-payment thereof it is entitled to retain the  

retail outlet premises and facilities of the licensor by  

claiming a lien over them under section 221 of the Indian  

Contract Act, 1872. In regard to a licence governed by a  

commercial contract, it may be inappropriate to apply the  

principles of Administrative Law, even if the licensor may  

answer the definition of ‘State’ under Article 12 of the  

Constitution  of  India.  In  view  of  the  above,  it  is  

unnecessary  to  examine  whether  appellant  is  a  ‘state’  

within the meaning of that expression under Article 12 of  

the Constitution of India, nor necessary to keep in view  

the requirement that if the licensor answers the definition  

of ‘state’, a duty to act fairly and reasonably without any  

arbitrariness or discrimination is also implied. Be that as  

it may.  

27. It is made clear that this decision applies only to  

licences where the licensor is the owner/ lessee of the  

premises and the equipment (in this case dispensing pumps  

and  other  equipment)  and  where  the  licensee  is  engaged  

merely for sale of the products of the licensor. In other  

words, this decision would apply to petrol stations which  

are known as CCROs (‘Company Controlled Retail Outlets’).  

3

If the licensee is himself the owner/lessee of the premises  

where the petroleum products outlet is situated or where  

the exclusive right to use the premises is given to the  

licensee for carrying on any business or dealing with any  

goods unconnected with the licensor, this decision may not  

apply  and  it  may  be  necessary  for  the  licensor  to  have  

recourse either to a Civil Court for a mandatory injunction  

to give up the premises, or the Estate Officer under the  

Public  Premises  Act  for  ‘eviction’  as  the  case  may  be,  

depending upon the nature of licence and the status and  

relationship of the parties.  

28.  In this case in pursuance of a routine inspection  

certain  serious  irregularities  were  viewed  and  as  a  

consequence supply of its products was stopped, suspended  

and a show cause notice was issued calling upon respondent  

to  show  cause  why  action  should  not  be  taken  including  

termination  of  the  dealership  for  the  reasons  stated  

therein.  Therefore  when  such  a  notice  is  issued  as  a  

precursor to termination, the respondent licensee ceases to  

have right to sell the goods in the outlet premises and  

does not get the cause of action either to seek continuance  

of the supply of the products or remain in and use the  

premises.  The  show  cause  notice  was  followed  by  a  

termination of the licence of dealership on 19.3.2009. Even  

3

if  the  termination  or  non-supply  amounts  to  breach  of  

contract, the remedy of the agent-licensee at best is to  

seek damages, if it is established that the dealership was  

wrongly  determined  or  supply  was  wrongly  stopped.  

Consequently, the licensee does not have any right to use  

the premises nor any right to enter upon the premises after  

the termination of the agency.

Re: Question No.(iii)

29. The contention of the respondent is that as it was a  

licensee  from  1.4.1972,  it  become  a  deemed  tenant  under  

section 15A of the old Bombay Rent Act (which provided that  

any person in occupation of a premises as a licensee as on  

1.2.1973, became a deemed tenant) and consequently can be  

evicted only by filing a petition for eviction under the  

Rent Act.  

30. To appreciate the said contention of the respondent,  

it is necessary to refer to the relevant provisions of the  

relevant rent law. We may first refer to the definitions of  

‘tenant’ and ‘licensee’ under the old Bombay Rent Act and  

MRC Act.  

Section 7(15)(a) of the MRC  Act reads as follows :-

(15)  “tenant”  means  any  

Section  5(11)  of  the  Old  Bombay Rent Act  

“Tenant” means any person by  

3

person by whom or on whose  account rent is payable for  any premises and includes,-

(a) such person,-

(i) (i) who is a tenant, or (ii) (ii) who is a deemed tenant,  

or (iii)(iii) who is a sub-tenant as  

permitted  under  a  contract  or  by  the  permission  or  consent of the landlord, or

(iv) (iv)  who  has  derived  title  under a tenant, or

(v) (v)  to  whom  interest  in  premises  has  been  assigned  or transferred as permitted,

by virtue of, or under the  provisions  of,  any  of  the  repealed Acts;

(b) a person who is deemed  to be a tenant under section  25;  (c) a  person  to  whom  interest  in  premises  has  been assigned or transferred  as  permitted  under  section  26;

x x x x x x x

whom or on whose account rent  is  payable  for  any  premises  and includes –  

(a)  Such  sub-tenants  and  other persons as have derived  title under a tenant (before  the 1st day of February, 1973;

(aa)  any  person  to  whom  interest in premises has been  assigned  or  transferred  as  permitted  or  deemed  to  be  permitted, under section 15;

x x x x x x x

(bb) such licensees as are  deemed to be tenants for the  purposes  of  this  Act  by  section 15A;

x x x x x x x

Section 7(5) of the MRC Act  

(5)  ‘Licensee’,  in  respect  of any premises or any part  thereof,  means  the  person  who is in occupation of the  premises  or  such  part,  as  the  case  may  be,  under  s  subsisting  agreement  for  licence given for a licence  free or charge; and includes  any  person  in  such  

Section 5(4A) of the old  Bombay Rent Act  

(4A)  ‘licensee’,  in  respect  of any premises or any part  thereof,  means  the  person  who is in occupation of the  premises  or  such  part,  as  the  case  may  be,  under  a  subsisting  agreement  for  licence given for a licence  fee or charge; and includes  any person in such occupation  

3

occupation  of  any  premises  or  part  thereof  in  a  building  vesting  in  or  leased  to  a  co-operative  housing  society  registered  or  deemed  to  be  registered  under  the  Maharashtra  Co- operative  Societies  Act,  1960 (Mah. XXIV of 1961) but  does  not  include  a paying  guest, a member of a family  residing together, a person  in the service or employment  of the licensor, or a person  conducting  a  running  business  belonging  to  the  licensor or a person having  any  accommodation  for  rendering  or  carrying  on  medical  or  paramedical  services or activities in or  near  a  nursing  home,  hospital, or sanatorium  or  a  person  having  any  accommodation  in  a  hotel,  lodging house, hostel, guest  house,  club,  nursing  home,  hospital,  sanatorium,  dharmashala,  home  for  widows,  orphans  or  like  premises, marriage or public  hall or like premises…….”

of  any  premises  or  part  thereof in a building vesting  in  or  leased  to  a  co- operative  housing  society  registered  or  deemed  to  be  registered  under  the  Maharashtra  Co-operative  Societies  Act,  1960;  but  does  not  include a  paying  guest, a member of a family  residing  together,  a  person  in the service or employment  of the licensor, or a person  conducting a running business  belonging  to  the  licensor,  (for  a  person  having  any  accommodation  for  rendering  or  carrying  on  medical  or  para-medical  services  or  activities  in  or  near  a  nursing  home,  hospital  or  sanatorium, dharmashala, home  for widows, orphans or like  premises, marriage or public  hall or like premises………”  

(emphasis supplied)  

31. The old Bombay Rent Act recognised such licensees as  

‘deemed  tenants’  under  section  15A  and  they  are  covered  

under the definition of a tenant under section 7(15)(a) of  

the MRC Act. Section 15A of the old Bombay Rent Act read as  

follows : -

3

“15A.  Certain  licensees  in  occupation  on  1st  

February 1973 to become tenants-

(1) Notwithstanding  anything  contained  elsewhere  in this Act or anything contrary to in any  other law for the time being in force, or in  any contract where any person is on the 1st day  of  February  1973  in  occupation  of  any  premises,  or  any  part  thereof  which  is  not  less than a room, as a licensee he shall on  that date be deemed to have become, for the  purpose  of  this  Act,  the  tenant  of  the  landlord, in respect of the premises or part  thereof, in his occupation.

(2) The provisions of sub-section (1) shall not  affect  in  any  manner  the  operation  of  sub- section  (1)  of  section  15  after  the  date  aforesaid.”   

Significantly  there  is  no  provision  either  in  the  old  

Bombay Rent Act or under the MRC Act, enabling or treating  

any person who became a licensee after 1.2.1973 as a deemed  

tenant.

32. The occupation by the respondent was not occupation on  

its own account, but occupation on behalf of the appellant.  

Therefore  the  respondent  was  not  in  ‘occupation’  of  the  

outlet in its own right for its own proposes, but was using  

the outlet and facilities in the possession and occupation  

of the appellant, to sell the appellant’s products in the  

manner provided in the DPSL Agreement. In such a situation,  

the agent who is called as the licensee does not become a  

deemed tenant. The condition for deemed tenancy is not the  

3

description  of  the  person  as  ‘licensee’,  but  the  person  

being  in  occupation  of  a  premises  as  licensee  as  on  

1.2.1973.  A  person  who  obtains  a  licence  from  the  

government to sell liquor is a ‘licensee’. A person who  

obtains  a  licence  from  the  municipal  corporation  to  

construct  a  building  is  also  a  ‘licensee’.  A  person  

authorized to drive a motor vehicle is also a ‘licensee’.  

Every  person  who  holds  any  type  of  ‘licence’  does  not  

become a tenant. The deemed tenancy under Section 15A of  

old Bombay Rent Act refers to a person who held a licence  

to use a premises for his own use as on 1.2.1973.  

33. Section 5(4A) of the old Bombay Rent Act defined a  

licensee in respect of any premises or any part thereof, as  

referring  to  the  person  who  is  in  occupation  of  the  

premises  or  such  part  under  a  subsisting  agreement  for  

licence given for a licence fee or charge. The definition  

makes it clear,  a person in the service or employment of  

the  licensor,  or  a person  conducting a  running business  

belonging to the licensor  is not a ‘licensee’ where the  

appellant has a retail outlet in a premises either owned or  

taken  on  lease  by  it,  where  it  has  installed  its  

specialized equipment/facilities for sale of its products  

and  the  outlet  is  exclusively  used  for  the  sale  of  the  

3

products of the appellant, the unit is running business of  

the  appellant.  An  agent  licensed  to  run  the  Retail  

Petroleum  outlet  of  the  appellant,  which  is  a  running  

business  belonging  to  the  appellant  is  not  therefore  a  

‘licensee’ either under the old Bombay Rent Act (nor under  

the new MRC Act). Therefore the respondent did not become a  

tenant  under  the  appellant  nor  became  entitled  to  

protection against eviction.  

34. Only those persons who held a licence to occupy any  

premises as on 1.2.1973 could become deemed tenants under  

Section  15(A)  of  the  old  Bombay  Rent  Act.  As  a  person  

conducting a running business on behalf of the owner of  

such business is not a ‘licensee’ as defined under the Rent  

Act, even if the person concerned was using premises on  

1.2.1973, he will not become a deemed tenant. Consequently  

the  respondent  could  not  claim  that  he  became  a  deemed  

tenant.  Therefore  the  respondent  could  not  claim  the  

protection of any rent control law as a tenant. One more  

aspects may be noticed here. If the respondent had become a  

deemed tenant in 1972, it would not have entered into an  

agreement on 1.7.1995 reiterating that it continue to be a  

licensee and that it does not have any leasehold or tenancy  

rights in the premises. In view of the above, it is not  

3

necessary  to  consider  the  alternative  contention  of  the  

appellant that even if the respondent had become a deemed  

tenant in pursuance of the agreement dated 1.4.1972, such a  

tenancy  come  to  an  end  and  the  appellant  again  become  

licensee  pure  and  simple  from  1.12.1995  when  the  fresh  

agreement was entered, does not require to be considered.  

Conclusion

35. In  view  of  the  above,  this  appeal  is  allowed.  The  

order of the High Court and the order of the courts below,  

directing  status  quo  are  set  aside.  Consequently,  the  

appellant  is  entitled  to  continue  in  possession  of  the  

petrol  pump  premises  and  use  it  for  its  business.  The  

appellant  is  also  entitled  to  lawfully  prevent  the  

respondent from entering upon the premises. The trial court  

is directed to dispose of the suit expeditiously, on the  

basis of the evidence, in accordance with law, keeping in  

view the legal position explained above.

.................J. (R V Raveendran)

New Delhi; March 2, 2011.

3

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2276 OF 2010

ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 9134 OF 2009

Bharat Petoleum Corpn. Ltd.             …Appellant  

            Versus

Chembur Service Station             …Respondent

J U D G M E N T

Gokhale J.

Leave Granted.   

2.  This appeal seeks to challenge the order passed  

by  a  Single  Judge  of  the  Bombay  High  Court  dated  29th  

January, 2009 disposing of the Writ Petition No. 8130 of  

2008  filed  by  the  appellant  herein  with  certain  

observations.   The  appellant  intends  to  regain  the  

possession of a Retail Petroleum Outlet concerning which,  

the High Court has observed that it will be open to the  

appellant to proceed in respect of the concerned premises,  

if they are public premises, by following due process of  

law and not by force.  According to the appellant however,  

4

issuing a show cause notice, and terminating the dealership  

after  considering  the  reply  of  the  respondent,  is  the  

required due process of law and nothing more.

3. Short  facts  leading  to  this  appeal  are  as  

follows:-  The appellant  is the successor to the erstwhile  

Burmah-Shell Oil Storage and Distributing Company of India  

Ltd.  (hereinafter  referred  to  as  Burmah  Shell).   On  

2.9.1971, Burmah Shell took on lease a piece / parcel of  

land admeasuring about 680 sq.yds. bearing CTS Nos. 339 and  

339/1 situated at V.N. Purav Marg, Chembur, Mumbai.  This  

was for the purpose of erecting one or more petrol pumps  

together  with  underground  tanks  and  other  fittings  and  

facilities  for  storage  of  petrol  and  High  Speed  Diesel  

(HSD) Oil, for carrying on the business of sale & supply of  

such  products.   Burmah  Shell  constructed  the  necessary  

structures  and  erected  the  petrol  pumps  and  other  

structures,  fittings  and  facilities  which  are  jointly  

referred to hereafter as Retail Petroleum Outlet (RPO).   A  

few rooms were also put up on that land for facilitating  

the working of the RPO.  On 1.4.1972, the appellant entered  

into  an  agreement  with  the  respondent,  whereby  the  

respondent were appointed as the dealers for selling the  

petroleum products of the appellant from the said RPO.

4

4. The  Burmah  Shell  Company  was  taken  over  by  the  

Government of India under the Burmah Shell (Acquisition of  

Undertakings in India) Act, 1976, and later the name of the  

Company was changed to Bharat Petroleum Corporation Ltd.  

(BPCL), the appellant herein.  By a subsequent notification  

issued under Section 7 of the said Act of 1976, the rights  

and  liabilities  of  Burmah-Shell  in  relation  to  its  

undertakings in India, stood transferred to be appellant.  

Accordingly, upon the aforesaid vesting by virtue of the  

provisions of this Act, the appellant Company became the  

lessee in respect of the said RPO at Chembur, Mumbai.

5. Subsequently, on the death of one of the partners  

of  the  respondent,  a  fresh  dealership  agreement  was  

executed  between  the  appellant  and  the  respondent  on  

1.12.1995,  and  we  are  concerned  with  the  rights  and  

liabilities of the parties under this agreement.

6. It  so  transpired  that  during  a  surprise  

inspection carried out by the Quality Control Cell of the  

appellant in the presence of the manager of the respondent,  

it was noticed that one dispensing unit was making a short  

delivery of 20 ml. of HSD per 5 litres.   It was checked  

twice thereafter, when it gave short delivery of 210 ml.  

per 5 litres measure.  Therefore, the Electronic Register  

4

Assembly  (ERA)  of  the  said  dispensing  unit  was  removed  

therefrom and was sent for inspection to the manufacturer  

MIDCO.  MIDCO gave a report on 27.3.2007 stating amongst  

others,  that  there  was  a  deviation  in  the  ERA,  but  the  

Microcontroller  chip  hardware  in  the  ERA  was  not  the  

original as supplied by them.  The appellant, therefore,  

issued a show cause notice to the respondent on 12.6.2007  

under the relevant provisions of the agreement between the  

parties stating therein that the respondent had manipulated  

/ altered the original chip with a view of making illegal  

gain  by  cheating  the  customers  of  the  Company,  thereby  

causing breach of trust, and calling upon the respondent to  

show cause within 15 days, as to why action should not be  

taken including termination of the dealership.

7. Respondent denied all these allegations by their  

reply dated 10.7.2007, but before the appellant could take  

any  decision  on  the  show  cause  notice,  the  respondent  

instituted a suit in the Court of Small Cause at Mumbai  

(being RAD suit No. 913/2008) for a declaration that the  

respondent was a tenant of the appellant company in respect  

of the structures, and a sub-tenant of the appellant in  

respect of the land on which the RPO was situated.  The  

respondent  made  a  further  submission  that  the  supply  of  

petrol and petroleum products was an essential supply under  

4

Section 29 of the Maharashtra Rent Control Act (hereinafter  

referred  to  as  the  MRC  Act).   The  show  cause  notice,  

therefore,  was  illegal,  and  that  the  appellant  had  no  

sufficient cause for withholding the essential supply of  

petrol  and  petroleum  products.   The  respondent  moved  an  

interim  application  to  restrain  the  appellants  from  

dispossessing  them  from  the  said  RPO  and  also  from  

withholding supply of petrol and petroleum products.

8. The  appellant  filed  a  reply  to  the  injunction  

application and stated amongst others that the respondent  

was neither a tenant, nor a sub-tenant, nor a deemed tenant  

in respect of the suit premises.  In para 3 (b) it was  

stated as follows:-

“b)   The  defendant  is  a  Government  company  wherein the Govt. of India has more than 51% shares.  The defendant is a lessee of land.  The alleged suit  premises are public premises within the meaning of  Public Premises Eviction Act, 1971.  The plaintiff  who claims through the defendant possession of the  suit premises is covered under the said Act.”

It  was  further  stated  that  the  respondent  was  

only  a  dealer,  and  the  open  piece  of  land  under  the  

agreement  was  not  covered  in  the  definition  of  the  

‘premises’ under the MRC Act, and that the MRC Act was not  

applicable.

4

9. A  learned  Single  Judge  of  the  Court  of  Small  

Causes initially granted an interim injunction as prayed by  

the respondent herein. Since the appellant wanted the issue  

regarding  jurisdiction  to  be  decided  as  a  preliminary  

issue, the learned Judge directed that until the framing of  

preliminary issue regarding jurisdiction to entertain and  

try the suit, and decision thereon, the appellant will not  

dispossess the respondent from the petrol pump, and shall  

continue  to  supply  the  petroleum  products,  though  the  

appellant will have the right to inspect the petrol pump  

and equipments for the purpose of checking smooth working  

of the same.

10. Being aggrieved by this order the appellant filed  

an appeal before the Division Bench of Small Causes Court  

at Mumbai (being Appeal No. 401 of 2008).   The Division  

Bench by its order dated 26.8.2008 allowed this appeal in  

part deleting the direction to continue to supply petrol  

and petroleum products, but maintained the order of status-

quo with respect to the possession of the respondent.

11. Being aggrieved by the part of that order which  

vacated  the  direction  to  supply  petrol  and  petroleum  

products,  the  respondent  filed  a  Writ  Petition  (bearing  

W.P. 6689 of 2008) in the Bombay High Court.  A Learned  

4

Single  Judge  by  his  order  dated  1.10.2008  dismissed  the  

said Writ Petition.  The Learned Single Judge noted that  

the  respondent  herein  was  claiming  a  tenant-landlord  

relationship  on  the  basis  of  the  dealership  agreement  

between them, and then seeking a direction to supply petrol  

and petroleum products as an essential supply to be enjoyed  

by the tenant under Section 29 of the MRC Act.  The Learned  

Judge held that it had to be first decided as to whether  

the  relationship  between  them  was  that  of  tenant  and  

landlord.  Until then, such a mandatory order could not be  

passed.  He further held that:-

‘any  dispute  or  cause  of  action  pertaining  to  the  breach  of  terms  and  conditions of the such dealership agreement  cannot be gone into by Court under MRC Act.  The remedy is elsewhere.’

The  Learned  Judge  held  that  the  order  of  the  lower  

appellate court was reasoned and correct one.

12. The  appellant  also  filed  another  Writ  Petition  

being Writ Petition No. 8130 of 2008 and challenged the  

other part of the order dated 26.8.2008 to the extent it  

was against the appellant viz. the direction to maintain  

the status quo with respect to the possession of the RPO.  

Another Learned Single Judge heard the petition and by his  

order dated 29th January, 2009 held that:-

4

“Interest of justice would be subserved if  the Petition is disposed of by clarifying the order  of status quo granted by the Lower Court to mean  that the said order of status quo shall not preclude  the Petitioner from taking recourse to recovery of  possession  of  the  suit  property  from  the  Respondent/plaintiff by following due process of law  including  by  resorting  to  action  under  the  provisions of Public Premises Act, if permissible”

He further held that:-

“If the Competent Authority were to order  eviction of the Respondent in the said proceedings,  that  order  will  naturally  supersede  the  order  of  status quo passed by the Lower Court, if it were to  be established that the property is public premises  as it belongs to the Petitioner Corporation.  In  order words, order of status quo shall operate only  till the Competent Authority and/ or the appropriate  forum were to pass order of eviction against the  Respondent in relation to the suit premises.”

13. The Counsel for the respondent submitted before  

the Learned Single Judge that the observations in the order  

may influence the proceedings pending between the parties  

before the Civil Court.  Thereon the Learned Single Judge  

observed  that  the  Civil  Court  is  bound  to  follow  the  

mandate of law, if the suit premises are public premises,  

and the question of precluding the petitioner from taking  

recourse to the action under that act, if available, cannot  

be countenanced. He further held that in spite of pendency  

of  the  civil  action,  it  will  be  open  to  the  Petitioner  

Corporation to proceed in respect of suit premises if the  

same are public premises.  Lastly he held that:-

4

“in any case the possession of the premises  cannot be obtained by the Petitioner by force, but  by following due process of law which option is  left to the Petitioner in terms of this order.”

The petition was disposed of accordingly by the order  

dated 29th January, 2009.  Being aggrieved by this order the  

present  Petition  for  leave  to  Appeal  has  been  filed  on  

4.4.2009.

14. It so transpired that the respondent on the other  

hand filed another suit being Short Cause Suit No. 2557 of  

2008 in the City Civil Court of Mumbai, seeking a direction  

that the appellant should continue to supply the petroleum  

products.  A summons / notice dated 3.2.2009 was served on  

the appellant.  On 19.3.2009 the appellant has, by their  

letter dated 19.3.2009 terminated the dealership agreement  

and stopped the supplies of petroleum products to this RPO.  

The respondent has thereafter fled a third suit bearing No.  

706  of  2009  in  the  City  Civil  Court  at  Mumbai  for  a  

declaration  that  the  termination  was  illegal  and  

unforceable, and for other consequential reliefs.

15. As  stated  earlier,  the  main  submission  of  the  

appellant  in  the  SLP  is  that  they  are  not  required  to  

proceed under The Public Premises (Eviction of Unauthorised  

Occupant) Act, 1971, hereinafter referred to as the Public  

Premises Act. They have terminated the dealership agreement  

4

and stopped the supply of petroleum products.  They contend  

that they should be entitled to take possession without re-

course to the proceedings under the Public Premises Act.  

According to them the observations of the Learned Single  

Judge  that  the  possession  of  the  premises  cannot  be  

obtained by force was uncalled for.

16. It is submitted on behalf of the appellant that  

the relation between the appellant and the respondent is  

that of a principal and an agent, and as a dealer, the  

respondent  cannot  claim  any  kind  of  possessory  right,  

interest  or  any  title  in  the  premises  from  where  the  

business  was  being  carried  out  on  by  virtue  of  the  

dealership  agreement.   The  appellant  relied  upon  the  

judgment of this Court in Southern Roadways Ltd. vs. S.M.  

Krishnan  [1989  (4)  SCC  603]  in  this  behalf,  and  

particularly paragraphs 12 to 22 there of.  It is submitted  

that the respondent only pays the electricity charges for  

the activities carried on at the RPO.  He does not pay  

anything for the premises.  He is not in any independent  

occupation.

17. It is submitted that the respondent was an agent  

of the appellant and in that capacity he was handed over an  

open  piece  of  land  and  a  few  structures  thereon  which  

4

cannot be called, in any manner, ‘public premises’, under  

the Public Premises Act.  Since the respondent is not in an  

independent  occupation  of  the  premises,  there  was  no  

question  of  taking  any  action  against  him  as  an  

unauthorized occupant under the said act.  The respondent  

is simply an agent and the moment the agency is determined,  

he has to vacate the premises.  Issuance of a show cause  

notice, considering the reply to the show cause notice, and  

thereafter  determining  the  dealership  was  the  sufficient  

compliance with the requirement of due process of law, and  

nothing further was required to be done by the appellant to  

get back the possession in the nature of filing of a suit  

or obtaining an order from a competent authority.

18. Relying  upon  the  judgment  in  Southern  Roadways  

(supra), it was submitted on behalf of the appellant that  

the possession of the premises which an agent is having, is  

basically the possession of the principal and he does not  

occupy the premises independently.  It was submitted that  

though,  in  the  agreement  between  the  parties,  the  

respondent is referred as a licensee, it is essentially an  

agreement of agency.  Then, it was submitted that once the  

agreement  of  dealership  was  terminated,  the  only  relief  

which  could  be  sought  by  the  dealer  was  to  seek  

compensation  for  loss  of  earning,  in  the  event  the  

5

termination is held to be bad in law.  There cannot be any  

order of restoration of the dealership or any obstruction  

in running of the RPO by the petroleum company even by way  

of  an  ad-hoc  arrangement.   Reliance  was  placed  in  this  

behalf on the judgment of this Court in Amritsar Gas v.  

Indian Oil Corporation [1991 (1) SCC 533].

19. Some of the clauses of the dealership agreement  

were pressed into service by the appellant, particularly  

the following clauses:-

“i) In the preamble – “…. the Company has at  the request of the Licensees agreed to permit the  Licensees to enter upon the Company’s premises…”

ii)  In  Clause  1  –  “…  The  company  expressly  reserves to itself the right to take back the whole  or any portion of the said premises or the said  facilities  or  alter  them  at  any  time  during  the  continuance of this Licence at its sole discretion… …”

iii) In Clause 4 – “… The said premises and the  said  facilities  shall  at  all  times  during  the  continuance  of  this  Licence  remain  the  absolute  property and in sole possession of the Company and  no part of the said facilities shall be removed by  the  Licensees  nor  shall  the  position  of  any  constituent part thereof or of the said premises be  changed  or  altered  without  the  previous  written  consent of the company. …..”.

iv) In Clause 8 – “… Neither the Licensee nor  the Licensees’ servants or agents shall interfere in  any way with the working parts of the pumps or other  equipment provided by the Company. …..”.

v)  In  Clause  12  –  “This  Licence  may  be  terminated without assigning any reason whatsoever  by either party giving to the other not less than  

5

ninety days notice in writing to expire at any time  of  its  intention  to  terminate  it  and  upon  the  expiration  of  any  such  notice  this  Licence  shall  stand cancelled and revoked.  The requisite period  of  notice  may  be  reduced  or  waived  by  mutual  consent.”

vi)  In  Clause  13  (a)  –  “  Notwithstanding  anything  to  the  contrary  herein  contained  the  Company  shall  be  at  liberty  to  terminate  this  Agreement  forthwith  upon  or  at  any  time  on  the  happening of any of the events following:

…………………………

…………………………

(vii) – If the Licensees shall be guilty  of  a  breach  of  any  of  the  covenants  and  stipulations on their part contained in this  agreement. …..”.

vii) In Clause 15 – “Upon the revocation or  termination of this Licence for any cause whatsoever  the  Licensees  shall  cease  to  have  any  rights  whatsoever to enter or remain on the premises or to  use the said facilities and shall be deemed to be  trespassers if they continue to do so.  Upon such  termination or revocation either under clause 12 or  Clause 13 hereof, if the Licensees or their servants  and/ or agents remain on the premises, the Company  shall be at liberty to evict them by using such  means  as  may  be  necessary  and  prevent  them  from  entering upon the licensed premises.”;

viii) In Clause 18 -  “ The Licensees hereby  expressly  agree  and  declare  that  nothing  herein  contained  shall  be  construed  to  create  any  right  other than the revocable permission granted by the  company in favour of the Licensees in respect of the  licensed premises/facilities strictly in accordance  with the terms hereof.  In particular nothing herein  contained shall be construed to create any tenancy  or other right of occupation whatsoever in favour of  the Licensees.”

20. It  was  therefore,  submitted  on  behalf  of  the  

appellant that both the suits filed by the respondent were  

5

mis-conceived.  Firstly, the respondent has approached the  

Court of Small Causes under the MRC Act for a declaration  

that it is the tenant of the appellant in respect of the  

structures, and a sub-tenant in respect of the land.  In  

that suit itself the respondent has prayed for an order  

that the supply of petroleum products should be continued  

as an essential supply under Section 29 of the MRC Act.  

The Appellate Bench of the Court of Small Causes is right  

in  vacating  the  mandatory  direction  given  by  the  Single  

Judge of that Court to supply the petroleum products.  Such  

an order could not be granted in those proceedings, and the  

Learned Single Judge of the High Court who heard was also  

correct in not entertaining Writ Petition No. 6689 of 2008  

filed by the respondent.

21. The case of the appellant, however was that the  

appellant were right in challenging the other part of the  

order of the Appellate Bench of the Court of Small Causes  

wherein the bench had maintained the part of the order of  

status-quo  passed  by  a  Single  Judge  at  that  Court  with  

respect to the possession of the respondent.  The appellant  

had,  therefore,  rightly  filed  the  abovereferred  Writ  

Petition No. 8130 of 2008.  According to the appellant,  

they had not let out the premises to the respondent, but  

had  allowed  the  respondent  only  to  sell  appellant’s  

5

petroleum  products  at  a  price  fixed  by  the  Ministry  of  

Petroleum  from  time  to  time.   The  manipulation  in  the  

dispensing unit effected by the respondent had led to the  

issuance  of  the  show  cause  notice.   The  respondent  had  

rushed to the Court of Small Causes even before the reply  

of the respondent could be considered by the appellant.  By  

seeking an injunction in the Court of Small Causes, the  

respondent  had  restrained  the  appellant  from  taking  any  

decision  on  the  show  cause  notice,  which  decision  the  

appellant has now taken after the impugned order was passed  

by the Learned Single Judge in Writ Petition No. 8130 of  

2008, who has held that the civil action initiated by the  

respondent  could  not  prevent  the  appellant  from  taking  

action in accordance with due process of law.  That is why  

now the appellant has determined the respondent’s licence  

by their letter dated 19.3.2009 and according to them that  

is sufficient compliance of the requirement of due process  

of  law.   According  to  the  appellant,  with  this  

determination of agency, the action in accordance with the  

due  process  of  law  is  complete  and  they  can  take  the  

possession of the RPO, if required forcibly.  According to  

them the emphasis of the Learned Single Judge on following  

the  due  process  under  the  Public  Premises  Act  was  

erroneous.    

5

22. As against this submission of the appellant, it  

was submitted on behalf of the respondent that the suit in  

the  Court  of  Small  Causes  was  perfectly  justified.  

Firstly,  it  was  pointed  out  that  all  throughout,  the  

respondent was described in the dealership agreement as a  

licensee of the premises.  According to them, the monthly  

licence fee as described in Clause 2 (a) of the agreement  

was nothing but the rent for the premises excluding the  

municipal and government charges.  The respondent relies  

upon clause 2 (b) of the dealership agreement which reads  

as follows:-

“ (b) The Licensees further agree to pay  and discharge all rates, taxes, cesses, duties and  other impositions and outgoings levied or imposed by  the  Municipality,  Government  or  any  other  public  body upon or in respect of the said premises and/ or  the said facilities, provided that the Company shall  pay  the  actual  licence  Fees  payable   to  the  Government for any Motor Spirit/ HSD Storage licence  or  licences  required  in  connection  with  the  said  facilities  under  the  Petroleum  Act,  1934  and  the  Rules thereunder.”

23. According to the respondent, the respondent falls  

within the definition of a tenant under Section 7 (15) of  

the MRC Act.  They point out that in any case, it is not  

disputed  that  the  respondent  is  in  possession  of  the  

concerned premises as a licensee since prior to 1.2.1973  

when similar such licensees in occupation of premises came  

be  protected  under  Section  15  A  of  the  then  applicable  

5

Bombay Rents, Hotel and Lodging Houses, Rates Control Act  

1947 (shortly called as Bombay Rent Act), which act has  

been  since  repealed  and  replaced  by  MRC  Act  and  which  

protection  has  been  continued  under  the  MRC  Act.   The  

Bombay  Rent  act  recognized  such  licensees  as  ‘deemed  

tenants’ under Section 15 A and they are covered under the  

definition of a tenant under Section 7 (15) (a) of the MRC  

Act.  Section 15 A of the Bombay Rent Act reads as follows:  

-

“15A. Certain licensees in occupation on 1st February 1973  to become tenants-  

(1) Notwithstanding anything contained elsewhere  in this Act or anything contrary in any other law for  the time being in force, or in any contract where any  person is on the 1st day of February 1973 in occupation  of any premises, or any part thereof which is not less  than a room, as a licensee he shall on that date be  deemed to have become, for the purpose of this Act,  the tenant of the landlord, in respect of the premises  or part thereof, in his occupation.

(2) The provisions of sub-section (1) shall not  affect in any manner the operation of sub-section (1)  of section 15 after the date aforesaid].”    

Section 7 (15) (a) of the MRC Act reads as follows:-

(15)  “tenant”  means  any  person  by  whom  or  on  whose  account rent  is payable  for any  premises and  includes,-

(a) such person,-

(i) who is a tenant, or

5

(ii) who is a deemed tenant, or

(iii) who is a sub-tenant as permitted under  a contract or by the permission or consent of the  landlord, or

(iv) who has derived title under a tenant,  or

(v) to whom interest in premises has been  assigned or transferred as permitted,

By virtue of, or under the provisions of, any of the  repealed Acts;”

24. The respondent submitted that the order passed by  

the Learned Single Judge in Writ Petition No. 6689 of 2008  

had confirmed the order passed by the Appellate Court which  

meant that the injunction granted by the Ld. Single Judge  

of the Court of Small Causes was continued and approved by  

a Judge of the High Court.   It was submitted that it is  

true that the Leaned Single Judge did hold in Writ Petition  

No. 6689 of 2008, that the respondent could not seek an  

order  for  supply  of  petroleum  products  in  the  Court  of  

Small Causes under Section 29 of the MRC Act.  For that  

purpose the respondent has filed another suit in the City  

Civil Court at Mumbai.  It was submitted by the respondent  

that both these suits and injunction granted by the Court  

of Small Causes would become infructuous, if the appellant  

was allowed to remove the respondent only on determination  

of  the  dealership  agreement.   In  any  case,  there  was  

nothing wrong in the Learned Single Judge observing in the  

5

impugned order that the appellant ought to have resorted to  

the remedy under the Public Premises Act, whereunder the  

respondent will at least get an opportunity to defend its  

position, though in a forum chosen by the appellant.

25. We  have  noted  the  submissions  of  both  the  

counsel.  At the outset we must note that in the facts of  

this  case  there  is  no  conflict  between  the  two  orders  

passed by the two Learned Single Judges.  The Writ Petition  

No. 6689 of 2008 was filed by the respondent to challenge  

the  order  of  the  Appellate  Bench  of  the  Court  of  Small  

Causes to the extent it was against the respondent viz.  

that  the  respondent  could  not  seek  a  direction  for  the  

petroleum supply in their proceeding in the Court of Small  

Causes.   The  grievance  of  the  respondent  in  that  writ  

petition was only with respect to that part of the order,  

and  therefore,  when  the  Learned  Single  Judge  held  that  

there was no reason to interfere with that order, the order  

will have to be read as confined to the grievance of the  

respondent raised before the Learned Judge.  The part of  

the  order  of  the  Appellate  Bench  of  the  Court  of  Small  

Causes protecting the possession of the respondent was not  

under consideration in that Writ Petition which was filed  

by the respondent.  Any observation by the Learned Single  

Judge in that order cannot be read as a determination on  

5

the  correctness  or  otherwise  of  this  part  of  the  order  

which was not in challenge in that proceeding.  

26. As  far  as  the  other  part  of  the  order  of  the  

Appellate  Bench,  protecting  the  possession  of  the  

respondent was concerned, the same was in challenge only  

before the other Learned Single Judge in Writ Petition No.  

8130 of 2008.  That was at the instance of the appellant.  

In that petition the Learned Single Judge has held that the  

pendency  of  the  proceeding  in  the  Civil  Court  will  not  

preclude the appellant from taking steps in accordance with  

due process of law, which according to the Learned Single  

Judge was taking steps under the Public Premises Act, if  

permissible.   

27. When we consider all these aspects, we have to  

note  that,  even  if  the  respondent  is  an  agent  of  the  

appellant, the fact remains that he is in occupation of the  

concerned  premises  consisting  of  the  rooms  and  the  

structures of the RPO situated on the particular plot of  

land  since  1.4.1972.   The  appellant  has  authorized  the  

respondent to be in occupation of this RPO by virtue of the  

dealership agreement between the parties.  The respondent  

is not a trespasser.  The ‘Public Premises’ are defined  

under the Public Premises Act as follows:-

5

  SC.  “2(e) ” public premises” means -   

(1)  any  premises  belonging  to,  or  taken  on  lease  or  requisitioned  by,  or  on  behalf  of  the  Central Government, and includes any such premises  which have been placed by that Government, whether  before  or  after  the  commencement  of  the  Public  Premises  (Eviction  of  Unauthorised  Occupants)  Amendment Act, 1980 (61 of 1980), under the control  of  the  Secretariat  of   either House of Parliament for providing residential  accommodation to any member of the staff of that  Secretariat;

(2)  any  premises  belonging  to,  or  taken  on  lease by, or on behalf of –

(i) any company as defined in section 3 of the  Companies Act, 1956 (1 of 1956), in which not less  than fifty-one per cent of the paid up share capital  is held by the Central Government or any company  which is a subsidiary (within the meaning of that  Act) of the first-mentioned company.

Unauthorised  Occupation  is  defined  under  this  Act  as  follows:-   

SC.2 (g) “unauthorized occupation”, in relation to  any  public  premises,  means  the  occupation  by  any  person of the public premises without authority for  such  occupation,  and  includes  the  continuance  in  occupation  by  any  person  of  the  public  premises  after the authority (whether by way of grant or any  other mode of transfer) under which he was allowed  to  occupy  the  premises  has  expired  or  has  been  determined for any reason whatsoever.”

28. The respondent is in occupation/control/charge of  

the premises right from 1.4.1972 and is very much claiming  

in the suit filed by them in the Court of Small Causes to  

be a tenant or a deemed tenant under the MRC Act.  It is in  

this suit that he has obtained an interim order.  In a  

challenge to that interim order the Learned Single Judge  

6

has  permitted  the  appellant  to  take  steps  in  accordance  

with  the  Public  Premises  Act  by  observing  that  the  

proceedings  in  the  Civil  Court  will  not  hinder  the  

appellant from taking steps under the Public Premises Act,  

if permissible.  Thus, in fact to that limited extent the  

order  of  the  Learned  Single  Judge  takes  care  of  the  

submission of the appellant viz. that the respondent’s suit  

under the MRC is mis-conceived.  Not only that, but the  

Learned Single Judge has also observed that the “order of  

status quo would operate only till the Competent Authority  

were to pass order of eviction against the respondent in  

respect  to  the  suit  premises”.   In  fact  what  is  also  

material to note, as quoted earlier in para 3 (b) of their  

reply, the appellant themselves had contended before the  

Court  of  Small  Causes  that  the  concerned  premises  are  

Public  Premises  within  the  meaning  of  Public  Premises  

(Eviction  of  Unauthorised  Occupants)  Act,  1971.   In  the  

present Special Leave Petition also the same is reiterated  

by them in the list of dates by stating that in May 2008,  

they filed the aforesaid reply to the interim application  

in  the  Court  of  Small  Causes  wherein  they  took  the  

aforesaid legal position.

29. This being the position it is not possible for  

this Court to find any fault with the impugned order passed  

6

by the Learned Single Judge viz. that it will be open to  

the respondent to take steps in accordance with the Public  

Premises Act which will be the due process of law, and not  

by any force.  The termination of the dealership agreement  

by the appellant will render the occupation of the premises  

by the respondent to be unauthorised one and it will be  

open  to  the  respondent  to  take  further  steps  to  take  

possession thereof though only in accordance with the due  

process of law.  This much minimum protection has to be  

read  into  the  relationship  created  between  the  parties  

under the clauses of the agreement noted earlier.  Besides,  

an opportunity of being heard in a situation which affects  

the civil rights of an individual has to be implied from  

the nature of the functions to be performed by the public  

authority  which  has  the  power  to  take  punitive  or  the  

damaging actions as held by a Constitution Bench of this  

Court in Maneka Gandhi v. Union of India reported in [1978  

(1) SCC 248].

30. It was submitted on behalf of the appellant that  

in the event the respondent does not vacate the premises in  

spite of the termination of the agreement of dealership,  

the appellant will be entitled to use force to remove them,  

if necessary.  The appellant relied upon the observations  

in para 85 of the judgment in Bishna Alias Bhiswadeb Mahato  

6

and Others Vs. State of West Bengal reported in [2005 (12)  

SCC  657].   It  was  a  criminal  case  wherein  among  other  

submissions  the  accused  had  submitted  that  they  had  

exercised  the  right  of  private  defence  as  regards  their  

property leading to the incidents.  In this context, it was  

observed in the referred paragraph 85 as follows: -

“85. Private defence can be used to ward off  unlawful  force,  to  prevent  unlawful  force,  to  avoid unlawful detention and to escape from such  detention.  So far as defence of land against the  trespasser is concerned, a person is entitled to  use  necessary  and  moderate  force  both  for  preventing  the  trespass  or  to  eject  the  trespasser.  For the said purposes, the use of  force must be the minimum necessary or reasonably  believed to be necessary.  A reasonable defence  would mean a proportionate defence.  Ordinarily,  a trespasser would be first asked to leave and if  the  trespasser  fights  back,  a  reasonable  force  can be used.”

To  say  the  least,  the  submission  based  on  this  

paragraph  is  totally  untenable.   By  no  stretch  of  

imagination the respondent can be called a trespasser into  

the  concerned  premises.   The  respondents  have  been  

permitted  to  occupy  the  premises  under  the  dealership  

agreement and have been so occupying it under the agreement  

with  the  appellant  since  1st April  1972.   A  Submission  

coming from a public authority in this fashion is totally  

unacceptable and deserves to be rejected.   

6

31. The  appellant  had  relied  upon  the  judgment  in  

Southern Roadways Ltd., Madurai Vs. S.M. Krishnan (supra)  

to contend that the respondent can not claim any kind of  

possessory right in the premises wherein the respondent was  

working as an agent.  There can not be much dispute with  

the proposition though what is material to be note is that  

in that case the appellant had taken a godown on lease and  

the respondent was put in possession for carrying on his  

agency  business  with  the  appellant.   The  appellant  had  

terminated  the  agency  on  coming  to  know  about  the  

mismanagement  of  the  business  and  wanted  to  take  the  

possession  of  the  godown.   On  being  prevented,  the  

appellant had filed a suit for a declaration of their right  

of  carrying  on  business  in  the  concerned  premises  and  

sought an injunction therein, initially in the Madras High  

Court  and  subsequently  in  the  SLP  in  this  Court.   The  

appellant  had  not  resorted  to  any  use  of  force.   While  

granting  the  injunction  the  aforesaid  observations  have  

been made.  

32. In Indian Oil Corporation Ltd. Vs. Amritsar Gas  

Service and Others (supra), the respondent was appointed as  

a distributing agent of the gas cylinders in Amritsar.  On  

receiving  the  complaints  about  the  working  of  the  

distributorship, the appellant had terminated the agency.  

6

Thereupon the respondent had moved the Civil Court whereas  

the appellant had sought arbitration which was granted by  

this Court and it was in that context that this Court has  

observed that on termination of the agency the only relief  

which could have been granted was to seek compensation for  

loss of earning.  The method of taking the possession was  

not involved in either of the two cases.  In neither of the  

two cases the possession was sought to be taken by force.

33. It is instructive to note in this behalf that in  

Olga Tallis Vs. Bombay Municipal Corporation [AIR 1986 SC  

180] the question was with respect to the eviction of the  

hutment dwellers from the footpaths of Mumbai.  Section 314  

of the Bombay Municipal Corporation Act provided that the  

Municipal  Commissioner  may,  without  notice,  cause  an  

encroachment to be removed.  It was submitted on behalf of  

Municipal  Corporation  that  the  footpath  dwellers  can  be  

removed by use of force and even without a notice.  In the  

judgment of the Constitution Bench, this Court held that  

though the section did not specifically make it mandatory,  

issuance of a notice was a minimum requirement.  It was  

submitted  on  behalf  of  Municipal  Corporation  that  the  

hutment dwellers can not have any defence.  The relevant  

observations of this Court in paragraph 47 of the judgment  

6

(as reported in AIR 1986 SC Page 180) based on authorities  

are as follows:-

“The proposition that notice need not be given  of a proposed action because, there can possibly be  no answer to it, is contrary to the well-recognized  understanding  of  the  real  import  of  the  rule  of  hearing.-----

-----Both the right to be heard from, and the  right to be told why, are analytically distinct from  the  right  to  secure  a  different  outcome;  these  rights to interchange express the elementary idea  that to be a person, rather than a thing, is at  least to be consulted about what is done with one.”

34. This  was  the  approach  of  this  Court  where  the  

notice  was  not  mandatory  in  the  case  of  occupiers  of  

footpaths.  This Court held that issuance of a notice and  

affording of an opportunity was a minimum requirement.  In  

the  present  case  as  stated  above,  the  respondents  are  

occupying  the  premises,  may  be  as  an  agent  of  the  

appellant, right from the 1st April 1972.  According to the  

appellant the respondent have no authority to remain on the  

premises after the dealership agreement is terminated.  As  

against that the respondent has contended that respondent  

is  a  tenant  and  in  any  case  a  ‘deemed  tenant’  of  the  

premises.   The  respondent  has  moved  the  Court  of  Small  

Causes for the declaration and has obtained an order of  

status-quo.  That order presently survives and is not set  

aside though the Learned Single Judge has observed in the  

6

impugned order that the order of status-quo would operate  

only  till  the  competent  authority  passes  the  order  of  

eviction.  The respondents have not challenged this order  

either by filing a Special Leave Petition or by filing any  

cross objections in the present appeal, and therefore it  

binds them.  In the circumstances of the present case, the  

Learned Single Judge has permitted the appellant to proceed  

against the respondent under the Public Premises Act on the  

footing  that  after  the  termination  of  the  dealership  

agreement  the  occupation  would  be  unauthorised.   He  has  

rightly observed that the pendency of the proceeding in the  

Civil  Court  can  not  preclude  the  appellant  from  taking  

recourse to recovery of the possession of the suit premises  

by following due process of law including by resorting to  

action  under  the  provisions  of  Public  Premises  Act,  if  

permissible.  He has, however, made it clear that in any  

case possession can not be obtained by force.  In our view,  

there is no reason for this Court to take any different  

view.  The respondent has to be afforded an opportunity of  

being heard, may be in the forum of the appellant, and only  

after obtaining an order from the competent authority the  

respondent can be evicted.

35. It  is  true  that  in  Southern  Roadways  Limited  

(supra) this Court did observe in paragraph 22 that the  

6

possession of the respondent in that case was on behalf of  

the company and not on his own right.  And therefore, it  

was not necessary for the company to file a suit for the  

recovery of possession.  Those observations will have to be  

read as laying down the law in the fact situation which  

emerged in that case and would apply to similar situations.  

The  issue  with  respect  to  the  premises  of  a  Public  

Corporation did not arise in that matter.  Besides, in the  

facts of the case before us, amongst others the respondent  

had  raised  the  issue  with  respect  to  the  nature  of  his  

licence to remain on the premises, and had also sought the  

protection  which  was  available  to  the  licencee  in  

occupation of the premises prior to 1.2.1973.  Whether the  

respondent was right in that contention or not is not for  

this  Court  to  determine.   It  is  for  the  appropriate  

authority to decide.  That is the minimum opportunity which  

will be required to be provided to the respondent in the  

facts of the present case, when he is in occupation of the  

concerned  premises  for  nearly  40  years.   It  is  also  

relevant  to  note  that  even  on  the  footing  of  being  an  

agent, apart from the right to receive the compensation in  

a situation which could be placed under Section 205 of the  

Contract Act, the agent also has the right to remain on the  

property of the principal under Section 221 of the Contract  

6

Act, for the reliefs which are available under that section  

if he makes out such a case.  It is another matter that as  

stated above the respondent has placed his case on a higher  

pedestal, but even on the basis that he is a mere agent, he  

does have certain rights under Sections 205 and 221 of the  

Contract  Act,  and  para  13  of  Southern  Roadways  Limited  

(supra)  specifically  recognizes  that.   This  being  the  

position it cannot be said that the respondent does not  

deserve even an opportunity of being heard.  What are the  

relevant terms of the agreement between the parties, what  

is their true connotation and what order could be obtained  

by the appellant against the respondent, or what relief at  

the highest the respondent would be entitled to, will have  

be considered and decided before an appropriate forum.

36. It is also relevant to note that all throughout  

the respondent has contended that respondent has been in  

exclusive possession of the premises concerned, and all the  

employees on the premises are that of the respondent.  Even  

in  the  first  suit  filed  in  the  court  of  small  causes,  

respondent has pointed out that there was a problem with  

respect to the dispensing unit once in the past in year  

2002,  and  in  consultation  with  the  petitioner  the  

respondent  took  corrective  measures.   The  reports  all  

throughout  thereafter  have  been  satisfactory  and  the  

6

respondent has relied upon a voluminous correspondence in  

that behalf in paragraphs 33 to 60 of the plaint filed in  

the court of small causes.  In the third suit bearing No.  

706  of  2009  challenging  the  termination  of  the  licence  

filed in the City Civil Court Mumbai, the respondent has  

specifically pleaded in paragraph 69 that the termination  

was without any reasons and was contrary to public policy,  

and  was  violative  of  Article  14  of  the  Constitution  of  

India.   In  paragraph  77,  respondent  has  specifically  

submitted  that  a  technical  fault  in  the  machine  cannot  

amount to manipulation and that apart it was not a case of  

adulteration.   All  these  submissions  of  the  respondent  

require a determination.  An opportunity of being heard is  

something minimum in the circumstances.  The proceedings  

before the authority under the Public Premises Act is an  

expeditious proceeding and that is something minimum in the  

circumstances.  A Public Corporation from which a higher  

standard  is  expected,  cannot  refuse  to  follow  this  much  

minimum due process of law.

37. In  the  circumstances  we  have  no  reason  to  

interfere  with  the  order  passed  by  the  Learned  Single  

Judge.  We, however, make it clear that the observations  

made above are for the purposes of deciding the correctness  

or otherwise of the impugned order passed by the Learned  

7

Single Judge and not on the merit of the rival claims.  We  

make it very clear that in the event the appellant takes  

the steps under the Public Premises Act, it will be open to  

the  respondent  to  plead  their  case  before  the  competent  

authority on all counts, though it will also be open to the  

competent authority concerned to take its own decision on  

the merits of the rival contention on facts as well as on  

law.   

38. This appeal is, therefore, dismissed though there  

will be no order as to costs.

  ....................J.  ( H.L. Gokhale  )

New Delhi

Dated:  March 02, 2011

7

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2276 OF 2011 [Arising out of SLP(C) No.9134/2009]

BHARAT PETROLEUM CORPORATION LTD. .......APPELLANT  

Versus

CHEMBUR SERVICE STATION .....RESPONDENT

O R D E R

Leave granted.  

In view of the divergence in views, the  

Registry is directed to place the matter before the  

Hon'ble Chief Justice of India for placing the matter  

before a larger Bench.

  ......................J.               ( R.V. RAVEENDRAN )

New Delhi;    ......................J. March 02, 2011.                 ( H.L. GOKHALE )

7