2011 (3) TMI 1832 - SC - Indian Laws

Appeal Overturns Interim Order: Respondent Not a Tenant, No Possessory Rights Under DPSL Agreement; Section 15A Claim Rejected.

The appeal was allowed, overturning the HC's interim order of status quo. The court determined that the Respondent was not a tenant but an agent under the ... Licence as permission to use premises and equipment incidental to sale of licensor's goods - distinction between lease and licence - substance over form and intention of parties - revocability of commercial licence/agency and consequences of termination - deemed tenancy under Section 15A of the old Bombay Rent Act - Public Premises (Eviction of Unauthorised Occupants) Act - due process for recovery of possession of public premises - remedy for wrongful determination of agency-damages and rights under Sections 205 and 221 of the Indian Contract ActLicence as permission to use premises and equipment incidental to sale of licensor's goods - distinction between lease and licence - substance over form and intention of parties - revocability of commercial licence/agency and consequences of termination - Nature of the DPSL licence granted to the Respondent under the agreements dated 1.4.1972 and 1.12.1995. - HELD THAT: - The Court held that the DPSL agreement grants a revocable permission to enter the company's retail outlet and use company owned specialised equipment only for the exclusive purpose of selling the company's petroleum products at prices fixed by the company. By applying established tests distinguishing lease from licence (substance over form and intention of parties) and referring to authority, the Court concluded that the agreement created no estate or tenancy in favour of the licensee; legal possession remained with the company. The licence was incidental to the licence/agency to sell the appellant's goods and therefore stands terminated when the licence/agency or supply of goods is validly suspended or terminated. Consequentially, on termination the licensee ceases to have any right to enter, remain on, or use the facilities and may be treated as a trespasser if he persists. [Paras 21, 23, 24, 25, 26]The DPSL is a commercial, revocable licence/agency limited to sale of the appellant's products; it does not create tenancy or proprietary rights in favour of the respondent and ends on valid termination or stoppage of supply.Public Premises (Eviction of Unauthorised Occupants) Act - due process for recovery of possession of public premises - remedy for wrongful determination of agency-damages and rights under Sections 205 and 221 of the Indian Contract Act - protection of occupation pending determination - right to be heard - Whether the High Court was justified in holding that the appellant may proceed under the Public Premises Act and cannot obtain possession by force but must follow due process. - HELD THAT: - The Court upheld the High Court's view that, given the appellant's contention that the RPO is public premises (company in which Centre holds majority shares and premises vested in appellant), the appellant may take recourse to the Public Premises Act to recover possession. The Court emphasised that even if the relationship is that of principal and agent, the occupant (who had occupied the premises since 1972) is entitled to an opportunity of being heard and the minimum procedural protection of an expeditious hearing under the Public Premises Act. The Court rejected the submission that the appellant could use force to dispossess the respondent and noted authorities requiring an opportunity to be heard where civil rights are affected. The Court further observed that if termination amounts to breach of contract the respondent's remedy is damages and that certain contractual remedies (lien under Section 221, claim under Section 205 of Contract Act) may also be available; nevertheless an appropriate forum must adjudicate. [Paras 29, 34, 35, 36, 37]The High Court's direction stands: the appellant may proceed under the Public Premises Act (if permissible) to seek possession but cannot use force; the respondent must be afforded due process and an opportunity to be heard.Deemed tenancy under Section 15A of the old Bombay Rent Act - definition of 'licensee' in rent control law - exclusion of persons in service or conducting running business of licensor - Whether the respondent, being a dealer/licensee in occupation since 1.4.1972, became a deemed tenant under Section 15A of the old Bombay Rent Act (and hence protected by rent control law). - HELD THAT: - The Court examined the definition of 'licensee' under Section 5(4A) of the old Bombay Rent Act and the effect of Section 15A which protected certain licensees in occupation on 1.2.1973 by deeming them tenants. It held that the protection under Section 15A applies only to persons who were licensees in occupation on that date in their own right, not to persons occupying premises on behalf of the licensor or conducting the licensor's running business. An agent or dealer who occupies and runs the licensor's business does not fall within the statutory definition of licensee for deemed tenancy. Consequently the respondent did not become a deemed tenant and could not claim protection under the rent control legislation. [Paras 30, 31, 32, 33, 34]The respondent did not become a deemed tenant under Section 15A of the old Bombay Rent Act and therefore is not entitled to protection as a tenant under the rent control law.Final Conclusion: The appeals are allowed in part and dismissed in part: the orders directing status quo as to continued supply and interfering with the appellant's possession are set aside; the DPSL is a revocable commercial licence/agency not creating tenancy, the respondent did not become a deemed tenant under the old Bombay Rent Act, and the appellant is entitled to continue possession and lawfully prevent the respondent from entering the premises; however the appellant must, if applicable, proceed under the Public Premises Act and afford the respondent due process (an opportunity to be heard) rather than effect dispossession by force; the trial court is directed to dispose of the suit expeditiously in accordance with law. Issues Involved:1. Nature of the Licence under the DPSL Agreement.2. Justification of the High Court's interim order of status quo.3. Applicability of Section 15A of the old Bombay Rent Act to the licence granted to the Respondent.Detailed Analysis:1. Nature of the Licence under the DPSL Agreement:The primary issue was to determine the nature of the licence granted to the Respondent by the Appellant under the Dispensing Pump and Selling Licence (DPSL) agreement. The Court examined the terms of the DPSL agreement, which explicitly stated that the Respondent was granted a licence to enter upon the Appellant's premises solely for the purpose of selling the Appellant's petroleum products. The agreement emphasized that the premises and facilities remained the absolute property and in sole possession of the Appellant, and that the Respondent had no right to use the premises for any other purpose or to claim any tenancy or other rights of occupation.The Court referred to the distinction between a lease and a licence as established in Associated Hotels of India Ltd. v. R.N. Kapoor and Southern Roadways Ltd. Madurai v. S.M. Krishnan, highlighting that a licence does not create any interest in the property and is merely a permission to use the property for a specific purpose. The Court concluded that the Respondent was not in possession of the premises in its own right but was using it on behalf of the Appellant to sell the Appellant's products. Therefore, the licence granted to the Respondent was a limited one, revocable upon termination of the dealership agreement.2. Justification of the High Court's Interim Order of Status Quo:The High Court had directed the Appellant to maintain the status quo, meaning the Respondent could remain in possession of the premises until the issue of jurisdiction was decided. The Appellant contended that the Respondent, being an agent, had no possessory rights and could be removed without resorting to legal action. The Court referred to Southern Roadways Ltd. Madurai v. S.M. Krishnan, which established that an agent's possession is on behalf of the principal, and upon termination of the agency, the principal can take possession without legal proceedings.However, the Court acknowledged that the Respondent had been in occupation since 1972 and had raised claims of tenancy and deemed tenancy under the Maharashtra Rent Control Act (MRC Act). The Court emphasized that the Respondent's occupation was not independent but on behalf of the Appellant. Therefore, the High Court's order to maintain status quo was set aside, allowing the Appellant to take possession and prevent the Respondent from entering the premises.3. Applicability of Section 15A of the Old Bombay Rent Act:The Respondent claimed to be a deemed tenant under Section 15A of the old Bombay Rent Act, which provided tenancy rights to licensees in occupation as of 1.2.1973. The Court examined the definitions under the old Bombay Rent Act and the MRC Act, noting that a person conducting a running business on behalf of the licensor is not considered a licensee under these Acts.The Court concluded that the Respondent, being an agent running the Appellant's business, did not qualify as a licensee entitled to deemed tenancy under Section 15A. The Respondent's occupation was not for its own use but for selling the Appellant's products, and thus, it did not become a tenant or deemed tenant. Consequently, the Respondent could not claim protection against eviction under the rent control laws.Conclusion:The appeal was allowed, setting aside the High Court's order of status quo. The Appellant was entitled to take possession of the petrol pump premises and prevent the Respondent from entering. The Court directed the trial court to dispose of the suit expeditiously, in accordance with the legal position explained. The Respondent's claim of deemed tenancy was rejected, affirming that the Respondent was merely an agent with no independent possessory rights.