Case: Bharat Petroleum Corp.Ltd Vs. Chembur Service Station

or deemed to be registered under the Maharashtra Co- under the Maharashtra Co- operative Societies Act, operative Societies Act, 1960 (Mah. XXIV of 1961) but 1960; but does not include a does not include a paying paying guest, a member of a guest, a member of a family family residing together, a residing together, a person person in the service or in the service or employment employment of the licensor, of the licensor, or a person or a person conducting a conducting a running running business belonging business belonging to the to the licensor, (for a licensor or a person having person having any any accommodation for accommodation for rendering rendering or carrying on or carrying on medical or medical or paramedical para-medical services or services or activities in or activities in or near a near a nursing home, nursing home, hospital or hospital, or sanatorium or sanatorium, dharmashala, a person having any home for widows, orphans or accommodation in a hotel, like premises, marriage or lodging house, hostel, guest public hall or like house, club, nursing home, premises........." hospital, 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 contrary to in any other law for the time being in force, or in any contract where any person is on the 1st day of February 1973 in occupation of any premises, or any part thereof which is not less than a room, as a licensee he shall on that date be deemed to have become, for the purpose of this Act, the tenant of the landlord, in respect of the premises or part thereof, in his occupation.(2) The provisions of sub-section (1) shall not affect in any manner the operation of sub- section (1) of section 15 after the date aforesaid." Significantly there is no provision either in the old Bombay Rent Act or under the MRC Act, enabling or treating any person who became a licensee after 1.2.1973 as a deemed tenant. 32. The occupation by the respondent was not occupation on its own account, but occupation on behalf of the appellant. Therefore the respondent was not in `occupation of the outlet in its own right for its own proposes, but was using the outlet and facilities in the possession and occupation of the appellant, to sell the appellants 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 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 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 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]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 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 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.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 licensors 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 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).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 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.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 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.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.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 appellants 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 respondents 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.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 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 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 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 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.