Tenants Ought To Be In Actual Possession Of Premises To Avail Benefit Of Section 9 Of TN City Tenants Protection Act: Supreme Court

A bench comprising Justices L. Nageshwara Rao and B.R. Gavai allowed a civil appeal filed by National Company (appellant) against Bharat Petroleum Corporation Limited ("BPCL") for not vacating the premises leased out to them even after the term of the lease agreement had expired. In the factual context of the case, the Court further thought it fit to impose a cost of INR 1,00,000 (One Lakh) on BPCL, payable to the appellant.

The predecessor of BPCL viz., Burmah Shell Oil Storage and Distributing Company had entered into a lease agreement with the predecessor of the appellant for a vacant land back in the year 1960. The initial term of the lease was 30 years, which was renewed for another 20 years and subsequently for a period of 11 years, which came to an end on 31st December, 2009. A petrol pump was set up on the vacant land by BPCL and was sub-let to a dealer (M/s Vijaya Auto Services). Before the stipulated term of the lease came to an end, a notice of termination of lease was sent out to BPCL, thereafter in three subsequent notices the intention was reiterated by the appellant. Neither did BPCL vacate the premises, nor took measures to enter into a fresh agreement. Against such gross inaction, the appellants approached the Ld. Single Judge of the Madras High Court in a Writ Petition. While the matter was pending before the High Court, BPCL showed interest in buying out the premises, but the same did not materialise. Citing conflicting judgments of the Madras High Court with respect to maintainability of writ petition, the matter was referred by the Single Judge to the Division Bench. Though perturbed by the conduct of BPCL, the Division Bench could not grant the remedy sought while exercising jurisdiction in a Writ Petition. Therefore, the appellants approached the Apex Court seeking appropriate relief.

Contentions raised by appellant

The appellants submitted that in Bharat Petroleum Corporation Limited v. R. Chandramouleeswaran And Ors. (2020) 11 SCC 718, the Apex Court had held that tenants would not be entitled to the benefit of the Tenants Act unless they are in actual physical possession of the concerned building. Placing the judgment in the context of the present case, the appellants argued that BPCL having sub-let the concerned premises was no longer in actual possession.

It was further averred that considering there were no disputed questions of law and facts, the Division Bench ought to have allowed the reliefs sought in the Writ Petition.

It was pointed out by the appellants that the property was being consistently utilised by BPCL free of cost even when the term of the lease had expired. Therefore, a plea was raised to direct BPCL to pay rent from the day the lease ended till the delivery of actual possession. The appellants reckoned that -

"...the conduct of the respondent No.1­ BPCL is unbecoming of a statutory corporation, which is a State within the meaning of Article 12 of the Constitution of India."

Contentions raised by BPCL

BPCL contended that the sub-letting of the premises was a disputed question of fact. The possession of the premises with all the controls always rested with BPCL and the same was argued to be evident from the sub-letting agreement. BPCL also went a step ahead to question the correctness of the judgment of the Supreme Court in R. Chandramouleeswaran in this regard.

Findings of the Supreme Court

Observing that in its judgment, the Division Bench had made reference to ABL International Ltd. and another v. Export Credit Guarantee Corporation of India Ltd. And Ors. (2004) 3 SCC 553, which held that a party disputing facts in a writ jurisdiction would not bind the court to relegate the parties to a suit, the Apex Court inferred that the Division Bench was not inclined to entertain the plea of BPCL challenging maintainability of writ on account of alternate remedy. Another judgement of the Supreme Court viz., Hindustan Petroleum Corporation Ltd. And Anr v. Dolly Das (2006) 1 SCC 228 wherein in similar fact situation, HPCL was directed to hand over vacant possession and pay rent in a writ jurisdiction, was also relied upon by the Division Bench.

The Supreme Court further noted that the benefit under Section 9 of the Tamil Nadu City Tenant Protection Act, 1972 could only be extended to the tenants who had actual possession. The said issue was considered by the Division Bench in the light of its judgment in Bharat Petroleum Corporation Ltd. v. R. Ravikiran 2011 (5) CTC 437, which had held that the oil company was in legal possession whereas the dealer was in actual position and therefore denied benefit under the Tenant Act. The Supreme Court took note of the fact that even after such elaborate discussions, the Division Bench did not grant relief to the appellants only on the ground that the decision in R. Ravikiran was challenged and the batch appeals were pending before the Supreme Court. The Court observed that "the said impediment is now no more in existence" since the view of the Division Bench in R. Ravikiran had been endorsed by the Apex Court in R. Chandramouleeswaran as under:

"18. Thus, while interpreting sub­clause (b) to Section 2(4)(ii), this Court has held that the expression "actual physi­cal possession of land and building" would mean and require the tenant to be in actual possession and sub­clause (b) would not apply if the tenant has sub­let the building or has given the premises on leave and licence basis. The aforesaid decision would operate as res judicata in the case of the appel­lant and the landlords who were par­ties to the decision. In other cases, it would operate as a binding precedent under Article 141 of the Constitution."

To clarify the position regarding actual and legal possession, the Apex Court referred to the concluding paragraph of R. Chandramouleeswaran:

"28. Recording the aforesaid position, we dismiss the present appeals by the appel­lant, that is, the three petroleum compa­nies, and uphold the orders passed by the High Court that the appellant tenants would not be entitled to the benefit and rights under the Act unless they are in actual physical possession of the building constructed by them. In other words, in case the appellants have let out or sub­let the building or given it to third parties, including dealers or li­censees, they would not be entitled to protection and benefit under the Act." [emphasis supplied]"

The Court perused the agreement between the dealer and BPCL and observed that they were similar to the agreement in R. Chandramouleeswaran. The Court further stated that R. Chandramouleeswaran being a judgment passed by a three-judge bench was binding on them.

It was noticed by the Court that, BPCL had utilised the premise beyond the term of the lease without paying a penny to the appellant and therefore, apart from directing BPCL to vacate and handover peaceful and vacant possession within a period of three months from the date of judgment, it also directed BPCL to pay arrears of market rent from 31st December, 2009 (the last date of the lease) till the date of handing over of possession. However, the Court postponed the issue of determination of the market rent by three weeks from the date of judgement, providing time to the parties to file written submissions.

"...the conduct of the respondent No.1­BPCL in continuing with the occupation of the said premises without paying any rent from 31st December, 2009 is unbecoming of a statutory corporation, which is a State within the meaning of Article 12 of the Constitution of India", the Court observed, while imposing cost of Rs one lakh on BPCL.

[Case Title: National Company, Represented by its Managing Partner v. The Territory Manager, Bharat Petroleum Corporation Ltd. And Ors. Civil Appeal No. 6726 of 2021]

Citation : LL 2021 SC 647

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