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’).

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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.

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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

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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

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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.

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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

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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

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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;

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(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 –

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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

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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

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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

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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

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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.”

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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,

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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

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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

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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

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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

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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

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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

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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

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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

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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 1

st

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 1

st

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 1

st

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 29

th

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 29

th

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 29

th

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 1

st

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 1

st

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 1

st

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 1

st

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