AI Drafter 
TaxTMI 
TaxTMI 
2011 (3) TMI 1832
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....g 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. 5. ....
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....show cause notice dated 12.6.2007 was illegal and did not constitute a just and sufficient cause for cutting off or 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 Appel....
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....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 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....
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....a) The DPSL agreement executed on 1.4.1972 appointing the Respondent as a dealer, granted an exclusive licence to the Respondent to use the petrol pump premises for a period of 15 years; that as the licensee is in lawful occupation of the premises, he could not be dispossessed forcibly from the premises but could only be evicted in a manner known to law. (b) As it was in possession of the premises as a licensee as on 1.2.1973, 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 li....
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.... 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. xxxx 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. xxxx 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. xxxx 12. This Licence may be terminated without assigning any reason whatsoever by either party giving to the othe....
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....ain 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, therefore, clear distinction between the two concepts. The dividing line is clear though sometimes it becomes very thin or even b....
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....y 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 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....
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....ary 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 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 re....
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....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 evict....
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....mpany 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 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....
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....see 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 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. Theref....
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....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 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 re....
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....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 person by whom or on whose account rent is payable for any premises and includes,- (a) such person,- (i) who is a tenant, or (ii) who ....
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....reement for licence given for a licence fee or charge; and includes any person in such 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 Cooperative 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: 15A. Certain licensees in occupation on 1st February 1973 to become tenants- (1) Notwithstanding anything contained elsewhere in this Act or anything c....
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....ken 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 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 h....
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....gs 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. 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 res....
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....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. 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 prelimin....
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....d 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 ta....
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....) 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 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 th....
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....ancelled 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 c....
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....ed 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. 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 governm....
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....nt, or (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 all....
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....e 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: 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 mean....
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.... 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 and Ors. v. State of West Bengal ....
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....ve been made. 32. In Indian Oil Corporation Ltd. v. Amritsar Gas Service and Ors. (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. 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 v. 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 dwel....
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....nauthorised. 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 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 ....