Petroleum Rules 2002 | Pendency Of Suit For Lease Renewal Doesn't Confer ‘Right To Site’ For Storing Petroleum After Lease Expiry: Bombay High Court

A division bench of Justice Rohit B Deo and Justice MW Chandwani sitting at Nagpur quashed the license granted to the Indian Oil Corporation Limited (IOCL) for operating a petrol pump on a plot in Nagpur.

“respondent 1 (IOCL) cannot claim the status of statutory tenant in view of the provisions of Section 3 (1)(b) of the Maharashtra Rent Control Act, 1999 which excludes the licensee from the protective umbrella of the said enactment…the lease tenure expired on 29.10.2015. The pendency of the civil suits would not confer upon the licensee “right to the site” within the meaning of Rule 152(1)(i). The possession of respondents 1 and 2 is litigious and not lawful”, the court observed.

Rule 152(1)(i) of the Petroleum Rules, 2002 provides that every license granted under these rules shall stand cancelled, if licensee ceases to have any right to the site for storing petroleum.

One Vijay Choudhary had leased his plot in Nagpur, to IOCL for 11 years and 6 months, which expired on October 29, 2015. However, IOCL failed to vacate the premises, causing Choudhary to issue a quit notice under Section 106 of the Transfer of Property Act, 1882 and file a civil suit for eviction. IOCL also filed a suit for specific performance.

During the pendency of the suit, Choudhary informed the Joint Chief Controller of Explosives that the lease had expired and suit for eviction is pending. After several rounds of litigation in the HC, the Joint Chief Controller, via an order dated November 1, 2021, refused to cancel or suspend IOCL’s license. Thus, Choudhary filed the present writ petition challenging the order.

Choudhary argued that the license should be suspended or cancelled as IOCL no longer had any “right to the site” in view of expiry of the lease. Litigious possession cannot be equated with “right to site” under Rule 152(1) of the Petroleum Rules, he argued.

IOCL contended that negotiations had taken place between the parties, and Choudhary had agreed to extend the lease for a period of 30 years as per an affidavit dated January 1, 2004. IOCL argued that the issue of renewal was pending in a civil suit and that the license should not be suspended or cancelled until the outcome of the case. Since Choudhary’s civil suit for eviction and IOCL’s suit seeking decree of specific performance of condition of renewal are pending, the rights of parties are not established, IOCL argued.

The court rejected IOCL’s contention that it had an existing right to the site due to the pending litigation. Relying on the Supreme Court's judgment in C. Albert Morris v. K. Chandrasekaran and Ors, the court held that the expiration of the lease and the petitioner's refusal to renew it meant that IOCL had no legal right to the site. The court concluded that the possession of IOCL was litigious and not lawful.

The court noted that IOCL cannot claim the status of statutory tenant as per Section 3 (1)(b) of the Maharashtra Rent Control Act, 1999 which excludes Public Sector Undertakings from the protective umbrella of the Act.

Therefore, the court quashed the impugned order dated November 1, 2022, and directed the Joint Chief Controller of Explosives to suspend or cancel the IOCL’s license for storing, selling, or conducting business in petroleum, diesel, and allied products and services on the plot.

The court however, stayed the operation of this order for six weeks from July 1, 2023.

Case no. – Writ Petition 8508 of 2022

Case Title – Vijay S/o. Harinarayan Choudhary v. M/s. Indian Oil Corporation Ltd. and Ors.