Bharat Petroleum Corp.Ltd vs Chembur Service Station

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.

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.

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. 6

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.

15. The respondent contended as follows: (a) The DPSL agreement executed on 1.4.1972 appointing the respondent as a dealer, granted an exclusive licence to the respondent to use the petrol pump premises for a period of 15 years; that as the licensee is in lawful occupation of the premises, he could not be dispossessed forcibly from the premises but could only be evicted in a manner known to law. (b) As it was in possession of the premises as a licensee as on 1 1.2.1973, it became a deemed tenant by virtue of Section 15A of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 (for short `the old Bombay Rent Act'); and consequently it became entitled to the protection against eviction under that Act. When the said Act was repealed and replaced by the Maharashtra Rent Control Act, 1999 (for short `the MRC Act'); the protection against eviction continued to be available to it under the MRC Act.

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

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.

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.

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.

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.

12. The appellant also filed another Writ Petition being Writ Petition No. 8130 of 2008 and challenged the other part of the order dated 26.8.2008 to the extent it was against the appellant viz. the direction to maintain the status quo with respect to the possession of the RPO. Another Learned Single Judge heard the petition and by his order dated 29th January, 2009 held that:- 4

The petition was disposed of accordingly by the order dated 29th January, 2009. Being aggrieved by this order the present Petition for leave to Appeal has been filed on 4.4.2009.

To say the least, the submission based on this paragraph is totally untenable. By no stretch of imagination the respondent can be called a trespasser into the concerned premises. The respondents have been permitted to occupy the premises under the dealership agreement and have been so occupying it under the agreement with the appellant since 1st April 1972. A Submission coming from a public authority in this fashion is totally unacceptable and deserves to be rejected. 6

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.

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.