Holding

Mere continuance in possession after the lease has expired, even with receipt of rent, does not create a tenancy or confer a legal "right to the site" under Rule 153(1) of the Petroleum Rules, 1976, and therefore the licence can be cancelled.

Summary

C. Albert Morris leased a vacant plot in Pondicherry to operate a petrol bunk. The lease expired in 1996 and the landlord, K. Chandrasekaran, served a notice to vacate, filed an eviction suit (later dismissed for default), and sought cancellation of the No‑Objection Certificate (NOC) and non‑renewal of the licence under Rule 153(1) of the Petroleum Rules, 1976. The Madras High Court allowed the landlord’s writ petition, holding that the tenant no longer had a "right to the site" and that the lease of vacant land was not covered by the Pondicherry Buildings (Lease and Rent Control) Act, 1969. On appeal, the Supreme Court affirmed that mere possession after lease expiry, even with receipt of rent, does not create a tenancy or a legal right under Rule 153(1); the tenant is not a statutory tenant, and the licence may be cancelled. The appeal was dismissed.

Issues considered

The meaning of "right to the site" under Rule 153(1) of the Petroleum Rules, 1976 and whether it is satisfied by mere possession after lease expiry.
Whether the tenant, after the lease term, becomes a statutory tenant or enjoys protection under the Pondicherry Buildings (Lease and Rent Control) Act, 1969.
Whether acceptance of rent by the landlord after the lease terminates creates a new tenancy under the Transfer of Property Act.
Whether the landlord has locus standi to seek cancellation of the NOC and a writ directing non‑renewal of the licence.

Legislation cited

Petroleum Act, 1934
Petroleum Rules, 1976s. Rule 144, s. Rule 153(1)
Transfer of Property Acts. Section 113, s. Section 116

Subjects

lease of vacant landpetroleum rulesright to sitestatutory tenantrent controlevictionlicence renewalno objection certificatetenancy at sufferanceholding over

Judgment

C. ALBERT MORRIS A
v.
K. CHANDRASEKARAN AND ORS.

OCTOBER 26, 2005

[DR. AR. LAKSHMANAN AND AL TAMAS KABIR, JJ.] B

Petroleum Rules, 1976---'Rules 144 and 153(1)-Lease of vacant Land-
For installation of retail outlet of-petrol-Accessory construction put up by
tenant-Installation after getting No Objection Certificate from State-After C
expiry of lease suit for eviction-Dismissal thereof for default-Landlord
approaching the authorities for seeking cancellation of permission to tenant
to store petroleum and also seeking revocation of No Objection Certificate-
Writ petition seeking non-renewal of licence to carry on petrol bunk as the
tenant had lost right to the site-Allowed by High Court and upheld in writ
appeal-Jn appeal, held: Mere continuance in occupation of the demised D
premises after expiry of the lease, notwithstanding receipt of an amount by
the landlord would not create a tenancy so as to confer on the erstwhile
tenant the status of tenant or a right to be in possession-The word 'right'
used is s. 153(1) only means a legal right to continue on the Land-'-Juridical
possession or litigious possession do not connote a valid legal right to E
continue in possession under the rule-Unless the person seeking a licence
is in a position to establish a right to the site, he would not be entitled to
hold or have his licence renewed-Since the leased premises was a vacant
land, and the constructions thereon belonged to the tenant, he was not a
statutory tenant in view of the construction· on the site°"·"Rent Control and
Eviction-Pondicherry Buildings (Lease and Rent Control) Act. 1969. F
The appellant was the dealer of the second respondent. The said
dealership was being carried on in the leased site belonging to the first
respondent-landlord. Government (\ad granted No Objection Certificate under
Rule 144-(llof the Petroleum Rules, 1976 for the installation of the retail
outlet of petrol and HSD. First respondent had only leased vacant site to put G
up a petrol bunk with accessory constructions thereon. Respondent-landlord
filed a suit for decree of eviction and possession of the leased land. The same
was dismissed for default. Landlord filed application for restoration of the
suit. During pendency landlord again issued a notice Of termination of lease.
779 H
780 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

" · A The defence of appellant-tenant was that he was a statutory tenant governed
by the Rent Control Act as during renewal of the lease deed there were super-
structures. Landlord also approached the authorities seeking revocation of
the No Objection Certificate granted to the appellant. He also sought a Writ
of Mandamus before High Court seeking direction that the licence of the
B appellant to carry on petrol bunk shall not be renewed. He contended that the
same was liable to be cancelled under Rule 153(1) of the Petroleum Rules as
the appellant had lost right to the site. The Writ Petition was allowed. It held
that though the possession of the site did not entitle the appellant for renewal,
he could be dispossessed only under due process of Jaw. In writ appeal, Division
Bench confirmed the order of Single Judge holding that though the possession
C was illegal but the filing of suit did not prevent the first respondent from
seeking a writ remedy. Hence the present appeal.

Dismissing the appeal, the Court

HELD: 1. A mere continuance in occupation of the demised premises
D after the expiry of the lease, notwithstanding the receipt of an amount by the
quondam landlord would not create a tenancy so as to confer on the erstwhile
tenant the status of tenant or a right to be in possession. Mere acceptance of
rent by the landlord-respondent herein from the tenant in possession after
the lease has been determined either by efflux of time or by notice to quit
E would not create a tenancy so as to confer the erstwhile tenant the status of
a tenant or a right to be in possession. [792-A, B; 799-G I

Bhawanji lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors.,
p 972] 2 SCR 890; Raptakos Brett & Co. ltd. v. Ganesh Property., [I 9981 7
SCC I 84; Saleh Bros. v. K. Rajendran and Anr., AIR (1970) Madras 165; R. V.
Bhupal Prasad v. State ofA. P. and Ors. [I 9951 5 SCC 698; Karmani Industrial
F
Bank ltd. v. The Province of Bengal and Ors., AIR (1951) SC 285 and
Konchada Ramamurty Subudhi (dead) by his l.Rs. v. Gopinath Naik and Ors.,
AIR (1968) SC 919, relied on.

Kai Khushroo Bazonjee Capadia v. Bai .ferbai Hi1jibhoy Warden and
G Anr., AIR 1949 FC 124, referred to.
1.2. Any right which the dealer has over his site was the right which
he had acquired in terms of the lease. When that Jease expired and when the
landlord declined to renew the same and also called upon the erstwhile tenant
to surrender possession, the erstwhile lessee could no longer assert that he
H had any right to the site. His continued occupation of something which he
C. ALBERT MORRIS v. K. CIIANDRASEKARAN 781

had no right to occupy cannot be regarded as source of a right to the land of A
which he himself was not in lawful possession. [806-Fl

1.3. The word "right" used in Rule 153(1) of the Petroleum Rules, 1976
only means a legal right to continue on the land. The term "juridical
possession" or "litigious possession" do not connote a valid legal right to
continue in possession within the meaning of Rule 153 of the Petroleum B
Rules, 1976. The occupation without consent is wrongful occupation.
[802-C, DJ

MC. Chockalingam and Ors. v. V Manickavasagam and Ors., [1974[ I
sec 48, relied on.
c
1.4. Rule 153(1) (i) of the Petroleum Rules is "right to the site" for
storing petroleum. It is not the right for storing petroleum on the site. That
is so because that aspect is dealt with specifically in sub-clause (ii) of Rule
153(1) which refers to a no objection certificate, which the District authority
or the State Government is required to give. No Objection Certificate which D
is granted under Rule 144 is the one given by the concerned authority stating
that it has no objection for the storage of petroleum on the site after examining
the site plan and other relevant factors. The words "right to the site" have,
therefore, to be understood as referring to right to the site on which the
petroleum is stored. A person can be said to have a right to something when
it is possible to find a lawful origin for that right. A wrong cannot be a right E
of a person who trespasses on to another's land cannot be said to have a right
to the land vis-a-vis the owner because he happens to be in possession of that
land. Mere presence on the land by itself does not result in a right to the
land. Such presence on the premises may ripen into a right by reason of
possession having become adverse to the true owner by reason of the passage F
of time and possession being open uninterrupted, continuous and in one's own
right. [806-B, C, D El

1.5. It cannot be said that the landlord's assent should be inferred from
the conduct of the landlord who had filed the s·uit for ejectment, but did not
pursue the same. This suit was withdrawn with liberty to file a fresh suit on G
the same cause of action, liberty which the Court has granted. The possession
of this site by the erstwhile lessee does not ripen into a lawful possession
merely because the landlord did not proceed with the suit for ejectment at
that time, but reserved the right to bring such a suit at a later point of time.
That cannot amount to an assent on his part to the continued occupation of
the landlord under cover of a right asserted by the erstwhile lessee. The words H
782 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A "right to the site" in Rule 153(1) (i) must, therefore, be given their full
meaning and the effect that unless the person seeking a licence is in a position
to establish a right to the site, he would not be entitled to hold or have his
licence renewed. [807-B, CJ

2.1. What was leased out was a vacant land and that the lessee was given
B a right to construct a compressor room, store room, a bath room and latrine
together with a septic tank. Therefore, the provisions of The Pondicherry
Buildings (Lease and Rent Control) Act, 1969 cannot be invoked. The said
Act was enacted to regulate the letting of residential and non-residential
buildings and the control of rents of such buildings and the prevention of
C unreasonable eviction of tenants therefrom in the Union Territory of
Pondicherry. [801-B, CJ

Bhuneshwar Prasad and Anr. v. United Commercial Bank and Ors.,
120001 7 sec 232, relied on.

2.2. It is also mentioned in the plaint that the appellant/tenant herein
D is not a statutory tenant or tenant holding over since he has been clearly
apprised that no rent will be received from him subsequent to the
determination of the tenancy and that any amount that might be paid by him
will be adjusted towards compensation for illegally occupying the schedule
mentioned property. It was also submitted that the first defendant was given
E possession of a vacant site only and no building was leased out by the plaintiff.
[802-BI

2.3. It is abundantly clear from the recitals in the plaint, the schedule
to the notice and to the plaint and also of the lease deed that the word "leased
out" was only a vacant site to put up a petrol bunk with accessory constructions
F thereon. The mention of a small shed in the current lease is undoubtedly
belonged to the tenant himself and, therefore, the building put up by the tenant
situated in the vacant site belongs to the landlord cannot be said to be the
building of the landlord in order to attract the statutory protection of the Rent
Control Act. [804-A, Bl

G 3. It cannot be said that the first respondent is not entitled to maintain
the writ petition as the proceedings initiated by him before the Collector for
cancellation of the No Objection Certificate is pending. While granting NOC,
the Collector is not concerned about the ownership of the land. He is
concerned about the location of the land and its suitability as a place for ·
storage of petroleum. Rule 144 deals with the grant of NOC does not
H contemplate an enquiry into the ownership of the land nor does it require the
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, l] 783
Collector to enquire into the nature of the right claimed by the person who A
has applied for the NOC. 1807-F, G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No, 1027 of2005.

From the Judgment and Order dated 7, 10.2003 of the Madras High Court
in W.A. No. 1149 of2002. B
L.N. Rao, S, Aravindh and V. Ramasubramanian for the Appellant.

R, Sundaravardhan, R. Nedumaran, Ashok Panigrahi and Rajiv Rufus for
the Respondent No. I.

Ashok Bhan, T.A. Khan, V.K. Venna and D.S. Mahra for the Respondent
c
No. 3.

Mukul Rohtagi, Sr.Adv., Sanjay Kapur, Rajeev Kapur, Sanjeev Kumar
and Ms. Subhra Kapur for the Respondent No. 2.
D
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. The above appeal is directed against the
final judgment and order of the High Court of Judicature at Madras dated
7.10.2003 in Writ Appeal No. 1149 of2002 thereby dismissing the same.
E
The short facts which are relevant for the disposal of this appeal are
as under:

The appel!ant-C. Albert Morris is the tenant of the first respondent-K.
Chandrasekaran (landlord) vide a lease deed for ten years culminating in the
year 1966. The appellant is the dealer of the second respondent. The Hindustan F
Petroleum Corporation Ltd. The said dealership is being carried on in the
leased site belonging to the first respondent. The Government of Pondicherry
gr3.nted No Objection Certificate under Ru le 144(1) of the Petroleum Rules,
1976 for the installation of retail outlet of petrol and HSD. The said No
Objection Certificate mentioned the details and description of the location of G
the said outlet As already noticed, the appellant entered into a lease deed
with the first respondent-landlord for a period of ten years. The purpose of
the lease was clearly mentioned as for running a petrol bunk On 15.5.1992,
the landlord issued notice to the appellant seeking vacant possession of the
property. The appellant caused a reply notice to the same denying the various
allegations. Consequently, the landlord filed O.S. No. 58 of 1994 on the file H
784 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A of the Principal sub-Judge, Pondicherry praying for a decree of eviction and
possession. The said suit was dismissed for default and non-prosecution.
The landlord, however, filed an application for restoration of the said suit.
During the pendency of the application of the restoration, the landlord again
issued a notice of termination of lease entered into between the appellant and
the first respondent-landlord. The appellant caused a reply notice to the
B landlord. The appellant-tenant also raised the defence that during the renewal
of the lease deed, there were super-structures on the same and hence the
appellant is a statutory tenant governed by the Rent Control Act and hence
the notice is wholly illegal. On 4.12.1996, the landlord then approached the
3rd respondent-the Joint Chief Controller of Explosives (South Circle), Shastri
C Bhawan, Chennai seeking to cancel the permission granted to the appellant
for the storage of petroleum. The landlord also approached the authorities at
Pondicherry to revoke the No Objection Certificate granted in the name of the
appellant.

While so, the landlord sought for a writ of mandamus before the High
D Court directing that the licence of the appellant to carry on petrol bunk shall
not be renewed. It was his contention that the appellant had lost his right to
site and hence was liable to be cancelled under Rule I 53 ( l) of the Petroleum
Rules, 1976. In reply to the writ petition, the appellant put forth the following
submissions:

E I. That the right to site envisaged under the Petroleum Rules is
synonymous to the right of mere possession as the licence to
trade in petroleum and also the No Objection Certificate for
storage. were still valid and not cancelled under the law;
2. That the appellant was a tenant holding over and not a tenant
F at sufferance or a trespasser as put forth by the landlord;
3. That the tenant is also a statutory tenant and hence entitled to
the protection of the Rent Acts.

The above submissions of the appellant did not find favour with the
G learned single Judge of the High Court who allowed the writ petition filed by
the landlord purely relying upon the decisions based on the Cinematograph
Act to conclude that a "right" only meant a "legal right to continue in
occupation or possession without interruption" and that the possession of
the site did not entitle him for renewal. However, the learned single Judge held
that the appellant could be dispossessed only under the due process of law.
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN. J.] 785

Aggrieved by the same, the appellant approached the Division Bench A
of the High Court by way of an appeal. The Division Bench upheld the order
of the learned single Judge but on different reasons. The Division Bench gave
a finding that the appellant is not a lawful tenant and that the possession was
not legal possession and that the earlier suit filed by the landlord would not
be in any manner prevent him from seeking a writ remedy. The Bench also
held that the provisions of Rule 144 of the Petroleum Rules does contemplate B
any enquiry into the right of the lessee to hold the property and .the same
is not a bar to the writ petitiori. Consequently, the Division Bench confinned
the judgment of the learned single Judge. Aggrieved by the dismissal of the
writ appeal, the appellant has preferred this appeal.

We heard Mr. L.N. Rao, learned senior counsel appearing for the appellant
c
and Mr. R. Sundaravardan, learned senior counsel appearing for respondent
No. 1, Mr. Mukul Rohtagi, learned senior counsel appearing for respondent
No. 2 and Mr. Ashok Bhan, learned counsel appearing for respondent No. 3.

Mr. L.N. Rao made the following submissions: D
Mr. L.N. Rao invited our attention to Rule 153(1) of the Petroleum Rules
which reads as under:

"153. Suspension and cancei/ation of licence.-( I) Every licence
granted under these rules shall E
(i) stand cancelled, if the licensee ceases to have any right to the
site for storing petroleum;

(ii) stand cancelled, if the no-objection certificate is cancelled by the
District Authority or the State Government in accordance with
sub-rule (I) of rule 151; F
(ii) be liable to be suspended or cancelled by an order of the licensing
authority for any contravention of the act or of any rule thereunder
or of any condition contained in such licence, or by order of the
Central Government if it is satisfied that there are sufficient
grounds for doing so: G
Provided that -
(a) before suspending or cancelling a licence under this rule, the
holder of the licence shall be given an opportunity of being
heard;
H
786 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A (b) the maximum period of suspension shall not exceed three months;
and
(c) the suspension of a licence shall not debar the holder of the
licence from applying for its renewal in accordance with the
provisions of rule 149.
B (2) Notwithstanding anything contained in sub-rule (I), an opportunity
of being heard may not be given to the holder of a licence before his
licence is suspended or cancelled in cases -

(a) where the licence is suspended by a licensing authority as an
interim measure for violation of any of the provisions of the act
c or these rules, or of any conditions contained in such licence and
in his opinion such violation is likely to cause imminent danger
to the public:
Provided that where a licence is so suspended, the licensing authority
shall give the holder of the licence an opportunity of being heard
D before the order of suspension is confirmed; or
(b) where the licence is suspended or cancelled by the Central
Government, if that government considers that in the public
interest or in the interest of the security of the State such
opportunity, should not be given.
E
(3) A licensing authority or the Central Government suspending or
cancelling a licence under sub-rule ( l ), shall record its reasons for so
doing in writing."

Mr. L.N. Rao submitted that the "right" mentioned in Rule 153(1) of the
F Petroleum Rules will have to be interpreted in a widest manner possible and
it is synonymous to the mere right of possession as the provision itself does
not classify the nature of right. Thus the same would stand to be differently
interpreted than the position contemplated under the Cinematograph Act. He
placed reliance on the line of cases starting from Mis. East India Hotels
G wherein this Court categorically asserted that the right to remain in possession
would also include the right to carry on the business for which it was allowed
and hence the appellant was entitled to renewal of his licence as the same
was not validly cancelled by any authority. Our attention was also drawn to
. .i '
the Black's Law Dictionary which explains "right" as something that is due
to a person by just claim, legal guarantee, a power privilege or immunity
H secured by a person by law, a legally enforceable claim, a recognised and
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.] 787

protected interest the violation of which is wrong, the interest, claim or A
ownership that one has in tangible or intangible property. Thus even going
by this meaning the right of the appellant is a right of possession as accepted
by the Courts below and as laid down by this Court in East India Hotels case
the right to possession will and should also include the right to carry on the
activity contemplated by such possession. Thus the appellant cannot be said
to have lost the right to the site as envisaged by Rule 153(1) of the Petroleum B
Rules.

Mr. L.N. Rao further submitted that the appellant is a tenant holding
over and that the conduct of the first respondent establishes acquiescence
on his behalf for having received the rents but not taking any steps for C
eviction for more than 10 years. He cited the judgment in Kai Khushroo
Bezonjee Capadia v. Bai Jerbai Hitjibhoy Warden and Anr., AIR (1949) FC
124: In the said judgment, it has been held that whenever rents are submitted
as rents and the same has been received by the landlord and that his conduct
to acquiesce with the continuance of tenancy then it is not necessary that
the payments should be made only as rents as such. Any payment equivalent D
to the rental amounts and voluntary receipt of the same by the landlord and
also his conduct of not seeking to throw the tenant out would conclusively
assert the right of the appellant as a tenant holding over.

He also invited our attention to the judgment of this Court in Bhawanji
Lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors., [ l 972] 2 SCR 890 E
which according to him would categorically assert that where the conduct of
the parties is such that there is an offer of rent and acceptance then there
arises a relationship of tenancy. At any rate, the appellant can never be called
as a trespasser or a tenant at sufferance.

Further, Mr. L.N. Rao relied on the judgment of this Court in Bhuneshwar
F
Prasad and Anr. v. United Commercial Bank and Ors., [2000] 7 SCC 232. This
Court after following both the judgments of Kai Khushroo Bezonjee Capadia
v. Bai Jerbai Hiriibhoy Warden and Anr., (supra) and also that of Bhawanji
Lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors. (supra) held that
if the conduct proves a relationship of landlord and tenant then the tenant G
is entitled to the consequent protection under law.

It was further submitted that the appellant is not entitled to usurp
jurisdiction of the High Court under Art. 226 of the Constitution of India to
issue a mandamus not to renew the licence and that the High Court ought
not to have entered into this aspect even before the concerned authority H
788 SUPREME COURT REPORTS [1005] SUPP. 4 S.C.R.

A expresses its mind as to whether the licence issued is liable to be cancelled
or not. Therefore. the High Court is in error in pre-judging the issue.

Concluding his arguments, Mr. L.N. Rao submitted that the appellant is
a statutory tenant on the basis of the recitals of the lease agreement wherein
the property leased out was not a vacant site alone. Even at the time of the
B agreement, there was a shed put up by the appellant pursuant to his earlier
agreement of tenancy. Hence, although the Schedule mentions as vacqnt land
the recitals clearly mention the presence of shed and hence the appellant has
raised the plea of statutory tenancy.

Mr. R. Sundaravardan, learned senior counsel appearing for respondent
C No.1 made the following submissions:

It is contended that the use of the word "rent" does not lead to an
inference of a fresh concluded contract in the absence of an offer and
acceptance of a fresh contract which are lacking in the instant case. The
D landlord has expressly and unequivocally manifested his intention that whatever
amount that was received by him after the efflux of time the lease concerned
was only towards damages for use and occupation and not towards rent.

According to the learned senior counsel, the term ''right" has to be
construed as only a legal right and not a right to continue on the land without
E the consent of the landlord as the tenant. The word "right" is used in Rule
153(1 )(i) of the Petroleum Rules. 1976 only to mean a legal right to continue
on the land. It was submitted that the term "juridical possession" or "litigious
possession" do not connote a valid legal right to continue in possession
within the meaning of Rule 153 of the Petroleum Rules, 1976. All occupation
without consent is wrongful occupation. According to him, reference to Kai
F Khushroo Bezonjee Capadia v. Bai Jerbai Hi1jibhoy Warden and Anr. (supra) (
is not apposite to the facts of the case. Instead in Bhawanji lakhamshi and
Ors. v. Himatlal .Jamnadas Dani and Ors. (supra), the observations of Patanjali
Shastri, J. in the judgment of Kai Khushroo Be:c:onjee Capadia v. Bai Jerbai
Hirjibhoy Warden and Anr.. (supra) were relied on. The judgment in the case
G of Saleh Bros. v. K Rajendran and Anr., AIR (1970) Madras 165 refers to
consensus of judicial opinion as to present controversy being in favour of
the landlord and in turn refers to Karmani Industrial Bank ltd v. The
Province of Bengal and Ors., AIR (1951) SC 285 to show that the user of the
word "rent" does not conclude the matter and that the judgment in the case
of Kai Khushroo Bezonjee Capadia v. Bai .!erhai Hi1_jibhoy Warden and Anr.,
H (supra) should be confined to the facts of the case vide paragraphs 12 to 18
I

I
CALBERT MORRIS 1· K. CHANDRASEKARAN [LAKSHMANAN, J.] 789

at page 170 of Saleh Bros. v. K. Rajendran and Anr., (supra) and the latter A
paragraph referring to the unifonnjudicial opinion of the High Courts of India.
The Federal Court judgment turned upon the facts of the case; the landlord
was pitted against the main lessee and an official receiver who threatened to
take possession and, therefore, he had no option but to take the sub-lessee
as a lessee.
B
Replying to the argument of Mr. L.N. Rao, in regard to the statutory
protection, Mr. R. Sundaravardan submitted that there is no question of any
statutory protection in this case as the term of the lease deed in question
which is in effect a continuation of original lease of 1984 makes it abundantly
clear that what was leased out was only a vacant site to put up a petrol bunk C
with accessory constructions thereon. The mention of a small shed in the
current lease which belongs to the lessee himself cannot be said to be the
building of the landlord. The basic and dominant object of the lease is to
effect a petrol bunk at the instance of the lessee which could be achieved by
·•· · lease of vacant site only.
D
Mr. Mukul Rohtagi, learned senior counsel appearing for respondent
No.2-Thc Hindustan Petroleum Corporation Limited, invited our attention to
the Preamble of the Petroleum Act, 1934 which reads as under:

"An Act to consolidate and amend the law relating to the import,
transport, storage, production, refining and blending of Petroleum." E
For effectuating the purpose of the said Act, the Petroleum Rules, 1976
have been framed.

- For the purposes of storing petroleum in tank(s), an applicant has to
apply, under Rule 144 of the Petroleum Rules, 1976, to the District authority
with two copies of the site plan showing the location of the premises proposed
F

to be licenced for a certificate to the effect "that there is no objection to the
applicant receiving a licence for the site proposed". The District Authority is
thus required to consider and grant no objection ce1tificate after considering
the suitability of the site proposed.
G
Under Rule 153(1) of the Petroleum Rules, 1976, every licence granted
under these Rules shall stand cancelled, if the licensee ceases to have any
right to the site for storing petroleum. The purpose of Rule 153(1) is that the
licence should be cancelled once the licensee is evicted from the site. The
authority, while exercising its power under Rule 153 of the Petroleum Rules, H
790 SUPREME COURT REPORTS 12005] SUPP. 4 S.C.R.

A 1976. is not required to consider and decide whether the licensee is in rightful
possession or not. The purpose of obtaining the licence and the "No Objection
Certificate", under the Petroleum Rules, has to be understood keeping in mind
the object and purpose of the Petroleum Act.

It was submitted that to invoke Rule 153, the right to use the site and
B possession of the licensee should have ceased/come to an end. In this case,
however, the licensee is still in possession and is not liable to be evicted,
without following due process of law.

It was further submitted that the issue whether the licensee has any
statutory protection, is not required to be decided in the proceedings under
C Section I 53( I) of the Petroleum Rules, 1976. Admittedly, the designated
authority under the Petroleum Rules is not competent to decide whether the
licensee is a protected tenant or whether the notice to quit has been validly
issued. The term "right'' as used in Rule 153(1) cannot be construed as only
a legal right, as alleged by the first respondent. The purpose and object of
D the Petroleum Act and the Rules framed thereunder is not to empower the
authorities designated therein, to determine whether the licensee has a legal
right or not.

The first respondent/landlord has no role whatsoever or locus standi to
contest the present proceedings. The present dispute arises only between the
E authority designated under the petroleum Rules and the licensee.

It was submitted that the first respondent by withdrawing the suit of
eviction and accepting the further rent has impliedly permitted the appellant
to continue as a tenant and further affinned the tenancy. The possession/right
to the site, of the appellant, on the said site hence continues.
F
It was submitted that the Federal Court in the case of Kai Khushroo
Bezonjee Capadia v. Bai Jerbai Hirjibhoy Warden and Anr., (supra) held as
under:

" .... If now the landlord accepts rent from such person or otherwise
G expresses assent to the continuance of his possession, a new tenancy
comes into existence as contemplated by Section l 16 of the Transfer
of Property Act, and unless there is an agreement to the contrary,
such tenancy would be regarded as one from year to year or from
month to month in accordance with the provisions of Section 116 of
the Act."
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN. J.] 791

Reliance was placed on the judgment of this Court in Bhawanji A
Lakhamshi and Ors. v. Himatlal .Jamnadas Dani and Ors. (supra) wherein the
aforementioned passage was referred to, had affirmed the ratio laid down by
the Federal Court in the case of Kai Khushroo Bezonjee Capadia v. Bai
.Jerbai Hirjibhoy Warden and Anr (supra).

Mr. Ashok Bhan, learned counsel appearing for respondent No.3 B
submitted that the licence was granted on 30.11.1984 according to the
procedures and Rules as laid down in the Petroleum Act and on the basis of
"No Objection Certificate" dated 6.7.1984 which was issued by the Additional
District Magistrate, Pondicherry vide Certificate No. 4834/84/F. It was submitted
that the third respondent does not have the jurisdiction to enquire into C
contractual intricacies amongst third parties. The Division Bench of the High
Court granted interim stay of the order dated 11.2.2002 passed by the single
Judge. Subsequently, the third respondent stayed its earlier order dated
8.5.2002. The writ appeal was finally disposed of on 17.10.2003 upholding the
order of the single Judge. In pursuance of this order, the third respondent
cancelled the licence on 17.12.2003. Against the order passed by the Division D
Bench, the appellant preferred this appeal wherein this Court granted stay of
the operation of the judgment and order dated 7.10.2003 of the High Court.
Therefore, the third respondent vide another order dated 9.2.2004 stayed its
earlier order dated 17.12.2003. It was further submitted that the disputes are
between the appellant and respondent No.1. As per the Petroleum Rules, E
1976, the third respondent is the licensing authority. He shall grant such
licence only on receipt of a "No Objection Certificate" from the District
Authority who happens to be the Additional District Magistrate. The third
respondent does not have the jurisdiction to go into the legalities and rights
of the other third parties. It confines its domain to the objections of the
District Authority. The question of right to the site in dispute is pendente lite F
and the third respondent is only following the order passed by the Courts.
In view of the submissions made, learned counsel pleaded that this Court may
pass such orders as deemed fit in the interest of justice and equity.

We have carefully considered the rival submissions. We have been
taken through the pleadings, the annexures, the documents filed along with G
the appeal and the judgments of the High Court.

Though the arguments of the learned senior counsel appearing for the
appellant are attractive on the first blush yet on a careful reconsideration of
the same, it has no merits. The judgments cited by the learned senior counsel H
792 SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R.

A appearing for the appellant are not only distinguishable on facts but also on
law. Much argument was advanced on the receipt of the rent by the landlord
after the cancellation of the lease. The consensus of judicial opinion in this
country is that a mere continuance in occupation of the demised premises
after the expiry of the lease, notwithstanding the receipt of an amount by the
quondam landlord would not create a tenancy so as to confer on the erstwhile
B tenant the status of tenant or a right to be in possession. In this context, we
may refer to judgment of this Court in Raptakos· Brett & Co. ltd. v. Ganesh
Property, [ 1998] 7 SCC 184. In paragraph 13 of the said judgment, this Court
held as under:

"Jn view of the aforesaid settled legal position, it must be held
c that on the expiry of the period of lease, the erstwhile lessee continues
in possession because of the law of the land, namely that the original
landlord cannot physically throw out such an erstwhile tenant by
force. He must get his claim for possession adjudicated by a competent
Court as per the relevant provisions of law. The status of an erstwhile
D tenant has to be treated as a tenant at sufferance ·akin to a trespasser
having no independent right to continue in possession."

The following judgments may also be beneficially looked into in suppol1
of the above submission:

E The judgment in Saleh Bros. v. K. Rajendran and Anr., (supra) which
deals with the receipt of rent subsequent to the notice determining lease and
pending adjudication suit and as to whether receipt of rent by itself amounts
to waiver. In paragraphs 12, 19,20 & 31, this Court held as under:

"Para 12. The receipt of rent may only create a presumption and
F cannot by its own force amount to a waiver. Section 113 consists of
two limbs: (a) the express or implied consent of the person to whom
notice is given and (b) "the act of the person giving the notice
showing the intention to treat the lease as subsisting". In order to
constitute a waiver, both the limbs must concurrently operate, which
means," that an act by itself and of its own force. without reference to
G the intention of the parties, cannot bring about a waiver. So much is
quite clear from the plain language of the section, which embodies the
basic principles, and I find no justification for reading the Illustrations
as being repugnant to the section. Every effort should be made to
interpret the Illustration in conformity with the main section. The
H principle underlying Section 116 of the Act will also apply in applying
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN. J.] 793

Section 113 as this is also a case of continuance of the lease restoring A
the old tenancy.

Para 19-I shall next refer to another recent decision of the Supreme
Court, in (1968) 2 Andh WR (SC) 42: (1968) 2 SCJ 291: ( 1968) 2 Mad
LJ (SC) 42 = (AIR 1968 SC 4 71 ). In that decision, too, the Supreme
Court pointed out that under Section 113 of the Transfer of Property B
Act the act which operates as a waiver must show an intention to treat
the lease as subsisting and other party's consent, express or implied
therefor. In that case the tenants, who were holding over, issued, on
12th August, 1953, a notice to the landlord of their intention to vacate
the premises on 3 lst August, 1953. But by their letter, dated 26th
August they withdrew that notice. The landlord did not agree to the C
withdrawal of the notice and insisted that the lease had been determined
under Section 111 (h) of the Transfer of Property Act Dealing with
the question of waiver, the Supreme Court observed as follows:-

"Clearly Section 113 contemplates waiver of the notice by any act on D
the part of the person giving it, if such an act shows an intention to
treat the lease as subsisting and the other party gives his consent... ..
express or implied therefor. The law under the Transfer of Property
Act on the question in hand is not different from the law in England.
Once a notice is served determining the tenancy or showing an
intention to quit on the expiry of the period of the notice, the tenancy E
is at an end, unless with the consent of the other party to whom the
notice is given the tenancy is agreed to be treated as subsisting."

Para 20-"The question therefore is, quo animo the rent was received,
and what the real intention of both parties was?"
F
Para 3-The decision in Kai Khurshroo v. Bai Jerbai, ( 1949) FCR 262
= (1949) FLJ 168 =AIR 1949 FC 124, turned upon the peculiar facts
of that case and there was a difference of opinion, Patanjali Sastri, J.,
as he then was, taking a different view. There, after notice to quit,
defendants 2 and 3 who claimed to be sub-tenants insisted upon
continuing in possession and paid the rent month after month. The G
majority took the view that the landlord had obvious motive in receiving
the payments of rent after a particular period i.e. the appointment of
a receiver of the property of the mortgagor at the instance of his
mortgagee. Having regard to the uniform view taken in all the decisions,
both Indian and English, I am not inclined to interpret this decision H
794 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.
,
A of the Federal Court as an authority for the position that the payments
and receipt of rent as such in every circumstance would amount to
waiver, whatever may be the circumstances of the case and the intention
of the lessor".

In the case of Bhawanji Lakhamshi and Ors. v. Himatlal Jamnadas
B Dani and Ors. (supra), this Court observed as under:
"The act of holding over after the expiration of the term does not
create a tenancy of any kind. If a tenant remains in possession after
the determination of the lease, the common law rule is that he is a
tenant on sufferance. A distinction should be drawn between a tenant
C continuing in possession after the determination of the term with the
consent of the landlord and a tenant doing so without his consent.
The former is a tenant at sufferance in English Law and the latt¢r a
tenant holding over or a tenant at will. In view of the concluding
words of section 116 of the Transfer of Property Act, a lessee holding
over is in a better position than a tenant at will. The assent of,the
D
landlord to the continuance of possession after the determination of
the tenancy will create a new tenancy. What the section contemplates
is that on one side there should be an offer of taking a new lease
evidenced by the lessee or sub-lessee remaining in possession of the
property after his term was over and on the other side there must be
E a definite consent to the continuance of possession by the iandlord
expressed by acceptance of rent or otherwise. In Kai Khushroo
Bezonjee Capadia v. Bai Jerbai Hzijibhoy Warden and Anr. the Federal
Court had occasion to consider the question of the nature of the
tenancy created under Section I 16 of the Transfer of Property Act and
Mukherjea J. speaking for the majority said, that the tenancy which
F
is created by the "holding over" of a lessee or under-lessee is a new
tenancy in law even though many of the terms of the old lease might
be continued in it, by implication; and that to bring a new tenancy
into existence, there must be a bilateral act. It was further held that
the assent of the landlord which is founded on acceptance of rent
G must be acceptance of rent as such and in clear recognition of the
tenancy right asserted by the person who pays it. Patanjali Sastri J.,
in his dissenting judgment, has substantially agreed with the majority
as regards the nature of the tenancy created by section J J6 of the
Transfer of Property Act, and that is evident from the following
observations:-
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN. J.] 795

"Turning now to the main point, it will be seen that the section A
postulates the lessee remaining in possession after the determination
of the lease which is conduct indicative, in ordinary circumstances of
his desire to continue as a tenant under the lessor and implies a tacit
offer to take a new tenancy from the expiration of the old on the same
terms so far as they are applicable to the new situation, and when the
lessor assents to the lessee so continuing in possession, he tacitly B
accepts the latter's offer and a fresh tenancy results by the implied
agreement of the parties. When, further, the lessee in that situation
tenders rent and the lessor accepts it, their conduct raises more
readily and clearly the implication of an agreement between the parties
to create a fresh tenancy." c
In the case of R. V Bhupal Prasadv. State ofA.P. and Ors., [!995] 5 SCC
698, in paragraphs 8 & 9 this Court observed as under:

"Para 8-Tenant at sufferance is one who comes into possession of
land by lawful title, but who holds it by wrong after the termination D
of the term or expiry of the lease by efflux of time. The tenant at
sufferance is, therefore, one who wrongfully continues in possession
--:-after the extinction of a lawful title. There is little difference between
him and a trespasser. In Mulla's Transfer of Property Act (7th Edn.)
page 633, the position of tenancy at sufferance has been stated thus:·
A tenancy at sufferance is merely a fiction to avoid continuance in E
possession operating as a trespass. It has been described as the least
and lowest interest which can subsist in reality. It, therefore, cannot
be created by contract and arises only by implication of law when a
person who has been in possession under a lawful title continues in
possession after that title has been determined, without the consent F
of the person entitled. A tenancy at sufferance does not create the
relationship of landlord and tenant. At page 769, it is stated regarding
the right of a tenant holding over thus: The act of holding over after
the expiration of the term does not necessarily create a tenancy of any
kind. If the lessee remaining in possession after the determination of
the term, the common law rule is that he is a tenant on sufferance. The G
expression "holding over" is used in the sense of retaining possession.
A distinction should be drawn between a tenant continuing in
possession after the determination of the lease, without the consent
of the landlord and a tenant doing so with the landlord's consent. The
former is called a tenant by sufferance in the language of the English H
796 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A law and the latter class of tenants is called a tenant holding over or
a tenant at will. The lessee holding over with the consent of the lessor
is in a better position than a mere tenant at will. The tenancy on
sufferance is converted into a tenancy at will by the assent of the
landlord, but the relationship of the landlord and tenant is not
established until the rent was paid and accepted. The assent of the
B landlord to the continuance of the tenancy after the determination of
the tenancy would create a new tenancy. The possession of a tenant
who has ceased to be a tenant is protected by law. Although he may
not have a right to continue in possession after the tennination of the
tenancy, his possession is juridical.
c Para 9-The question then is what is the meaning of the expression
"lawful possession". This was considered by this Court in a leading
decision on the right to grant licence under the Cinematographic Act
and the Madras Cinemas Rules in M.C. Chockalingam v. V.
Manickavasagam. Rule 13 of the Madras Rules required the licensee
D in lawful possession, when he had applied for renewal after the expiry
of the lease of the licensee. The Court observed thus: (SCC p. 57, para
15).

"Turning to Rule 13, even in the first part if the applicant for the
licence is the owner of the property he has to produce before the
E licensing authority the necessary records not only relating to his
ownership but also regarding his possession. It is implicit, that the
owner having a title to the property, if he can satisfy the licensing
authority with regard to his possession also, will indeed be in 'lawful
possession', although the word 'lawful' is not used in the first part.
It is in that context that the word 'possession' is even not necessary
F to be qualified by 'lawful' in the first part of Rule 13. If, however, the
applicant for the licence is not the owner, there is no question of his
showing title to the property and the only requirement of the law is
to produce to the satisfaction of the authority documentary evidence
with regard to his lawful possession of the property. The word 'lawful'.
G therefore, naturally assumes significance in the second part while it
was not even necessary in the first part. The fact that after expiry of
the lease the tenant will be able to continue in possession of the
property by resisting a suit for eviction, does not establish a case in
law to answer the requirement of lawful possession of the property
within the meaning of Rule 13. Lawful possession cannot be established
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.] 797

without the concomitant existence of a lawful relationship between the A
landlord and the tenant. This relationship cannot be established against
the consent of the landlord unless, however, in view of a special law,
his consent becomes irrelevant. Lawful possession is not litigious
possession and must have some foundation in a legal right to possess
the property which cannot be equated with a temporary right to
enforce recovery of the property in case a person is wrongfully or B
forcibly dispossessed from it. This Court in lallu Yeshwanl Singh
case had not to consider whether judicial possession in that case was
also lawful possession. We are clearly of opinion that juridical
possession is possession protected by law against wrongful
dispossession but cannot per se always be equated with lawful C
possession."

In the case of Karmani Industrial Bank lid. v. The Province of Bengal
& Ors., (supra), this Court held as under:

"Apart from the fact that the appellants did not set up in any of their D
letters a case of holding over, we have to see whether the plea can
be said to have been successfully made out by them. There is no
doubt that the appellants have established that the rent was paid on
their behalf up to 31.3.1938, & it was accepted by respondent I. It has
also been established that this payment was made by a cheque & that
cheque has been cashed by the Government. Section 116, T.P. Act, on E
which reliance was placed on behalf of the appellants runs as follows:

"If a lessee or under lessee of property remains in possession thereof
after the deterrn ination of the lease granted to the lessee, & the lessor
or his legal representative accepts rent from the lessee or underlessee,
or otherwise assents to his continuing in possession, the lease is, in F
the absence of an agreement to the contrary, renewed from year to
year, or from mo11th to month, according to the purpose for which the
property is leased ...... "

The section was construed by the F.C. in K.B. Capadia v. Bai Arbai,
1949 O.C.R. 262, & it was held that where rent was accepted by the G
landlord after the expiration of the tenancy by efflux of time, S.116
applied even though the landlord accepted the amount remitted to him
as "part deposit towards his claim for compensation for illegal use &
occupation, & without prejudice to his rights". It is to be noted that
in that case rent had been accepted after the expiry of the tenancy. H
798 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A In our judgment, the present case cannot be governed by that decision,
because of the fact, which in our opinion is important, that here the
payment of rent up to 31.3.1938, was made not after the date of expiry
of the lease, but on 5.4.1937, nearly a year before the expiry of the
lease. A reference to S. 116, T.P. Act, will show that for the application
of that section, two things are necessary: (I) the lessee should be in
B possession after the termination of the lease: & (2) the lessor or his
representative should accept rent or otherwise assent to his continuing
in possession. The use of the word 'otherwise' suggests that
acceptance of rent by the landlord has been treated as a form of his
giving assent to the tenant's continuance of possession. There can
C be no que~,tion of the lessee "continuing in possession" until the
lease has expired, & the context in which the provision for acceptance
of rent finds a place clearly shows that what is contemplated is that
the payment of rent & its acceptance should be made at such a time
& in such a manner as to be equivalent to the landlord assenting to
the lessee continuing in possession."
D
In the case of Konchada Ramamurty Subudhi (dead) by his L.Rs. v.
Gopinath Naik and Ors., AIR (!968) SC 919, this Court held as under:

"Where the suit for ejectment of tenant after termination of tenancy,
having been dismissed, a compromise decree was passed in the
E appellate court, enabling the decree-holder, by its terms to execute the
decree if the judgment-debtor failed w pay "rent" for any three
consecutive months.

Held the compromise deed did aot create a lease but a license. It
was difficu It to impute to the decree-holder an intention to create a
F fresh tenancy while the fact that he brought the suit showed that his
intention was to eject the judgment-debtor after having purported to
terminate the tenancy. The fact that the word 'rent' had been used in
the compromise deed was not conclusive as in its wider sense rent
meant any payment made for the use of land or buildings and thus
included the payment by a licensee in respect of the use and
G
occupation of any land or buildings. The period of five years granted
under the deed to the judgment-debtor for continuation of the
possession also did not militate against the construction that the -
compromise only created a license for the decree-holder had lost in
the trial court and it was only in the court of appeal that the compromise
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.) 799

was arrived at". A
It is also seen from Annexure R-6 (page 33 of the paper book Vol.II)
which is a notice sent by the landlord's advocate to the tenant-the appellant
herein on 21.2.1997 wherein it has been clearly stated in paragraphs 2,3 & 4
which read as under:
B
"You were a tenant under my client in the property described in the
schedule hereunder. My client states that as the period of lease
expired on 30.9.1996 by agreement, my client had issued a notice dated
24.8.1996 determining the lease and directing you to vacate and
handover possession of the schedule mentioned property. My client
states that after the determination of lease your possession amounts C
to that of a trespasser and you are liable to pay compensation which
is to be determined after your vacating the premises.

My client states that subsequent to the notice dated 24.8.1996, you
have chosen to send three Banker's cheques dated 30.11.1996,
24.12.1996 and 29.1.1997, each for Rs. 4500/-. My client states that he D
had not consented for your continued possession of the schedule
mentioned property in any manner. Hence my client apprehends that
the banker's cheques being sent are a ruse to create the appearance
of continuation of tenancy.

Hence take notice that my client will encash the banker's cheques E
already sent by you and any that might be sent in future under protest
and that the payments made by way of such cheques will be adjusted
towards the compensation payable by you and take notice that
encashments of any cheques already issued and that might be issued
in future should not be treated or considered as consent from my F
client for your occupying the schedule mentioned property."

We are, therefore, of the opinion that mere acceptance of rent by the
landlord-1st respondent herein from the tenant in possession after the lease
has been determined either by efflux of time or by notice to quit would not
create a tenancy so as to confer the erstwhile tenant the status of a tenant G
or a right to be in possession. We answer this issue accordingly.

We shall now consider whether the appellant is a statutory tenant on
the basis of the recitals of the lease agreement. It is seen from the Schedule
to the Plaint in 0.S.No. 569 of 2004 filed by the. landlord that only a vacant
site was lease out. The Schedule reads thus: H
800 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A "Schedule of Property"

In Pondicherry RD, oulgret Sub. RD., Thattanchavady Revenue Village,
the vacant site covering an extent of OH. 10A.28CA (approximately 11050 sq.
ft.) within R.S.No. 242/2 pt. And bounded on the north by land belonging to
Small Industries Service Institute, Extension Centre, on the West by house
B and land belonging to Diderot Kannagi, on the South by Pondy-Tindivana,
Highway, on the cast by land belonging to Diderot Kannagi acquired by the
Agricultural Marketing Committee measuring 22.5 metres on the north (east
to west), 30 meters on the West (north to south), 7.5 meters plus 27 meters
on the south (west to east), 19 meters on the east (south to north) 6.1 meters
C on the south (west to east), and 26.2. meters on the east (south to north) all
measured continuously."

On 24.8.1996, a notice was issued to the appellant through the landlord's
advocate calling upon the tenant to vacate and hand over the vacant
possession of the Scheduled mention property and also to take necessary
D steps for removing equipments which have been installed on behalf of the
tenant in the said property. The schedule given to the said notice reads as
under:

"Schedule of property"

E Vacant land measuring OH. JOA, 28Ca. (approximately 11.050 sq. ft.)
forming pait of Rs.No.242/2 pt. In Thattanchavady revenue, Villager
No. 34, in Oulgeret Commune, Pondicherry.

Metes :md Bound:

Bound on the north by land belonging to small industries service
F Institute on the west by house and lands belonging to Dicerot Kannagi,
on the South by Pondi Thindivam Road, on the east by lands belonging
to Bicerct Kannagi measuring 22.5 meters on the North (east to West)
30.0 meters on the west (North to South) 7.5 meters plus 7.0 meters
on the south (west to east) 19.0 meters on the east (south to north)
G 6.1 meters on the south (west to east) and 26.02 meters on the south
(south to north) all measured continuously. This encloses an area of
OH: JOA 28 Ca. (approximately 11.050 sq. ft.)."

The instant case is based on 7.10.1986 lease deed entered into between
the appellant-tenant and the first respondent-landlord. It was mutually agreed
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.] 801

between the parties under clause (d) as follows: A
"(d) In addition to the show room building of size 20x 10 feet
already constructed by the lessee, the lessee shall have the right to
construct a compressor room, store room, a bath room and latrine
together with a septic tank."
B
From the above recital, it is crystal clear that what was leased out was
a vacant land and that the lessee was given a right to construct a compressor
room, store room, a bath room and latrine together with a septic tank. Therefore,
in our opinion, the provisions of The Pondicherry Buildings (Lease and Rent
Control) Act, 1969 cannot be invoked. The said Act was enacted on 7.6.1969
to regulate the letting of residential and non-residential buildings and the C
control of rents of such buildings and the prevention of unreasonable eviction
of tenants therefrom in the Union Territory of Pondicherry. The "Building"
has been defined as under:

"2(4) "building" means any building or hut or part of a building /
or but, let or to be let separately for residential or non-residential D
purposes an d includes-
(a) the garden, grounds and out-houses, if any, appurtenant to such
building, hut or part of such building or but and let or to be let
along with such building or hut;
E
(b) any furniture supplied by the landlord for use in such building
or hut or part of a building or hut, but does not include a room
in a hotel or boarding house;"

The term "landlord" and "tenant''. have also been defined. The terms
landlord includes the person who is receiving or is entitled to receive the rent F
of a building. The term "tenant" means any person by whom or on whose
account rent is payable for a building.

This apart, the landlord has filed O.S. No. 569 of 2004 with the following
prayer in the plaint which reads thus:
G
"(i) directing for the ejectment that this Court may be pleased to
pass a mentioned property after removal of super structures;
(ii) directing the first defendant to pay the cost of the suit;
(iii) Granting leave to the plaintiff to file a separate suit for recovery
of compensation from the first defendant for his illegal occupation H
802 SUPREME COURT REPORTS [2005] SUPP. 4 S.C.R.

A of the schedule mentioned property and
(iv) Granting such further or other relief as this Court might deem fit
and proper under the circumstances of the case."

It is also mentioned in the plaint that the appellant/tenant herein is not
B a statutory tenant or tenant holding over since he has been clearly apprised
that no rent will be received from him subsequent to the determination of the
tenancy and that any amount that might be paid by him will be adjusted
towards compensation for illegally occupying the schedule mentioned property.
It was also submitted that the first defendant was given possession of a
vacant site only and no building was leased out by the plaintiff.
c Interpretation of Rule 153 by the learned s_enior counsel appearing for
the appellant, in our opinion, has no merits. The .word "right" used in Rule
·153( I) of the Petroleum Rules, 1976 only means a legal right to continue on
the land. It is seen from the judgments referred to in this appeal by us clearly
hold that the term 'juridical possession., or "/i(igious possession" do not
D connote a valid legal right to continue in possession within the meaning of
Rule 153 of the Petroleum Rules, 1976. We are. therefore, of the opinion that
the occupation without consent is wrongful occupation. This Court had
occasioned to interpret the expression lawful possession, its meaning, nature
and significance in the case of M.C. Chockalingam and Ors. v. V.
E Manickavasagam and Ors., (1974] I SCC 48. The special significance in the
context of Section 5(1) of the Madras Cinemas (Regulations) Act, 1955 was
also considered by this Court. The main question was whether a tenant, who
is not a statutory tenant, is entitled to claim to be in lawful possession of the
premises on determination of the tenancy, on expiry of the lease. This Court
interpreted Rule 13 in paragraph I5 of the judgment which is reproduced
F hereunder:
"Para 15-Tuming to Rule 13, even in the first part if the applicant
for the licence is the owner of the property he has to produce before
the licensing authority the necessary records not only relating to his
ownership but also regarding his possession. It is implicit, that the
G owner having a title to the property, if he can satisfy the licensing
authority with regard to his possession also, will indeed be in 'lawful
possession', although the word 'lawfu I' is not used in the first part.
It is in that context that the word 'possession' is even not necessary -
to be qualified by 'lawful' in the first part of Rule 13. If, however, the
applicant for the licence is not the owner, there is no question of his
H
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.] 803

showing title to the property and the only requirement of the law is A
to produce to the satisfaction of the authority documentary evidence
with regard to his lawful possession of the property. The word 'lawful',
therefore, naturally assumes significance in the second part while it
was not even necessary in the first part. The fact that after expiry of
the lease the tenant will be able to continue in possession of the
property by resisting a suit for eviction, does not establish a case in B
Jaw to answer the requirement of lawful possession of the property
within the meaning of Rule 13. Lawful possession cannot be established
without the concomitant existence of a lawful relationship between the
landlord and the tenant. This relationship cannot be established against
the consent of the landlord unless, however, in view of a special law, C
his consent becomes irrelevant. Lawful possession is not litigious
possession and must have some foundation in a legal right to possess
the property which cannot be equated with a temporary right to
enforce recovery of the property in case a person is wrongfully or
forcibly dispossessed from it. This Court in Latu Yeshwant Singh 's
case (supra) had not to consider whether juridical possession in that
D
case was also lawful possession. We are clearly of opinion that
juridical possession is possession protected by law against wrongful
dispossession but cannot per se always be equated with lawful
possession."
E
We have already referred to 'the observations of Patanjali Shastri, J. in
the judgment in Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy
Warden and Anr. (supra).

As already noticed, the judgment in the case of Saleh Bros. v. K.
Rajendran & Anr., (supra) refers to the consensus of the judicial opinion as F
to the present controversy being in favour of the respondent-landlord and in
tum refers to the judgment in Karmani Industrial Bank Ltd. v. The Province
of Bengal & Ors. (supra) and Konchada Ramamurthy Subudhi (dead) by
L.Rs. v. Gopinath Naik and Ors., (supra) to show that the use of the word
rent does not conclude the matter under the Federal Court judgment should G
be confined to the facts of the case in Saleh Bros. v. K. Rajendran and Anr.,
(supra) at page 170 and the latter paragraph referring to the judicial opinion
of the High Courts of India. We have already extracted the relevant paragraphs
in the above two judgments in paragraphs supra.

We have already referred to the arguments advanced by both the H
804 SUPREME COURT REPORTS [2005) SUPP. 4 S.C.R.

A parties in regard to the nature of tenancy and the statutory protection. It is
abundantly clear from the recitals in the plaint, the schedule to the notice and
to the plaint and also of the lease deed that word "leased out" was only a
vacant site to put up a petrol bunk with accessory constructions thereon. The
mention of a small shed in the current lease is undoubtedly belonged to the
B tenant himself and, therefore, the building put up by the tenant situated in
the vacant site belongs to the landlord cannot be said to be the building of
the landlord in order to attract the statutory protection of the Rent Control
Act. This issue is, therefore, answered against the tenant.

This Court in the case of Bhuneshwar Prasad and Anr. v. United
C Commercial Bank and Ors. (supra) considered the case of an agreement
creating a fresh tenancy within the meaning of Section 116 of the Transfer
of Property Act and held that it can be inferred from the conduct of the
parties. This Court approved the judgment in Kai Khushroo Bezonjee Capadia
v. Bai Jerbai Hirjibhoy Warden and Anr. (supra) and distinguished on facts
the judgment of this Court in Bhawanji Lakhamshi and Ors. v. Himatlal
D Jamnadas Dani & Ors. (supra). In paragraph 7 of the said judgment, this
Court observed as under: /
"Para 7-Mr. Sanyal, learned Senior Counsel appearing for the
appellants contends that Section 116 of the Transfer of Property Act
would not be attracted merely on acceptance of rent. Reliance is
E placed upon a decision of the Federal Court in Kai Khushroo Bezonjee
Capadia v. Bai Jerbai Hirjibhoy Warden. We agree that to bring a
new tenancy into existence within the meaning of Section 116, there
should be an agreement as the section contemplates that on one side,
there should be an offer of taking a fresh demise evidenced by the
F lessee's continuing occupation of the property after the expiry of the
lease and on the other side, there must be a definite assent to this
continuance of possession by the lessor/landlord and that such an
assent of the landlord cannot be assumed in cases of tenancies to
which the rent Restriction Acts apply on account of the immunity
from eviction which a tenant enjoys even after the expiry of lease. IN
G
such cases, the landlord cannot eject him except on specified grounds
mentioned in the Rent Restriction Acts and thus the acceptance of
rent by the landlord from a statutory tenant, whose lease has already
expired, would not be taken as evidence of a new agreement of
tenancy and it would not be open to such a tenant to urge that by
H acceptance of rent, a fresh tenancy was created. We do not expect a
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN, J.] 805

lessor not to accept the rent when, in view of the protection granted A
by the rent restriction laws, without existence of one or the other
ground, he is precluded from seeking eviction of the lessee and in
such a case, there would be no question of creation of tenancy from
month to month. Under these circumstances, mere acceptance of
amount equivalent to rent or the standard rent would not attract
Section 116. Assent to the lessee continuing in possession would be B
absent in such cases. However, an agreement creating fresh tenancy
within the meaning of Section 116 can be implied from the conduct of
.. the parties. In Ganga Dutt Murarka v. Karlik Chandra Das while
affirming the dictum laid down in Khushroo case it was held that apart
from an express contract, conduct of the parties may undoubtedly c
justify an inference that after determination of the contractual tenancy,
the landlord had entered into a fresh contract with the tenant, but
whether the conduct justifies such an inference must always depend
upon the facts of each case. In Bhawanji Lakhamshi v. Himatlal
Jamnadas Dani again the question that came up for considenition
was as to whether a fresh tenancy was created or not by acceptance
D
of rent by the lessor after the termination of the tenancy by the efflux
of time. This Court declined the prayer to reconsider Ganga Dutt
Murarka case and held that acceptance by the landlord from the
tenant, after the contractual tenancy had expired, of amounts equivalent
to rent or an amount which was fixed as standard rent did not amount E
to acceptance of rent from a lessee within the meaning of Section I 16
of the Transfer of Property Act. The present is not a case of acceptance
of amounts equivalent to rent or amounts fixed as standard rent but
acceptance of increased rent. It was also observed that: (SCC p. 394,
para 13)
F
"We do not say that the operation of Section 116 is always excluded
whatever might be the circumstances under which the tenant pays the
rent and the land lord accepts it."

The whole basis of Section 116 is that a landlord is entitled to file a
suit for ejectment and obtain a decree for possession and, therefore, G
his acceptance of rent after expiry of lease is an unequivocal act
referable to his desire to assent to the tenant continuing possession.
It would be absent in cases where there are restrictions as contemplated
by rent laws. In such cases, therefore, it is for the tenant where it is
said that the landlord accepted the rent not as a statutory tenant but H
'""
806 SUPREME COURT REPORTS [2005) SUPP. 4 S.C.R.

A only as a legal tenant indicating his assent to the tenant's continuing
possession. to establish it.

The argument of Mr. L.N. Rao, learned senior counsel appearing for the
appellant that the words "right to site" appearing in Rule 153(1) of the
Petroleum rules must be given liberal interpretation having regard to the
B public interest sub-served by the Petrol bunks which are essential for the
smooth flow of goods and services as also for the movement of persons. Rule
153( I) (i) of the Petroleum Rules is "right to the site" for storing petroleum.
It is not the right for storing petroleum on the site. That is so because that
aspect is dealt with specifically in sub-clause (ii) of Rule 153(1) which refers
C to a no objection certificate, which the District authority or the State
Government is required to give. No Objection Certificate which is granted
under Rule 144 is the one given by the concerned authority stating that it has
no objection for the storage of petroleum on the site after examining the site
plan and other relevant factors. The words "right to the site" have, therefore,
to be understood as referring to right to the site on which the petroleum is
D stored. A person can be said to have a right to something when it is possible
to find a lawful origin for that right. A wrong cannot be a right of a person
who trespasses on to another's land cannot be said to have a right to the
land vis-a-vis the owner because he happens to be in possession of that land.
Mere presence on the land by itself does not result in a right to the land. Such
E presence on the premises may ripen into a right by reason of possession
having become adverse to the true owner by reason of the passage of time
and possession being open uninterrupted, continuous and in one's own right.

In our opinion, any right which the dealer has over his site was the right
which he had acquired in terms of the lease. When that lease expired and
F when the landlord declined to renew the same and also called upon the
erstwhile tenant to surrender possession, the erstwhile lessee could no longer
assert that he had any right to the site. His continued occupation of something
which he had no right to occupy cannot be regarded as source of a right to
the land of which he himself was not in lawful possession. As observed by
G this Court in the case of M.C. Chockalingam and Ors. v. V. Manickavasagam
and Ors. (supra), litigious possession cannot be regarded as lawful possession.
As rightlx pointed out by the Division Bench of the High Court the right
referred to in this Rule has necessarily to be regarded as right which is in
accordance with law and the right to the site must be one which is capable
of being regarded as lawful. We have already referred to Bhawanji Lakhamshi
H and Ors. v. Himatlal Jamnadas Dani and Ors. (supra) wherein this Court held
C. ALBERT MORRIS v. K. CHANDRASEKARAN [LAKSHMANAN. J.] 807
that the act of holding over after the expiration of the term does not create A
a tenancy of any kind. A new tenancy is created only when the landlord
assents to the continuance of the erstwhile tenant or the landlord agrees to
accept rent for the continued possession of the land by the erstwhile tenant.
The contention of Mr. L.N. Rao that the landlord's assent should be inferred
from the conduct of the landlord who had filed the suit for ejectment, but did
not pursue the same, has no force. This suit was withdrawn with liberty to B
file a fresh suit on the same cause of action, liberty which the Court has
granted. The possession of this site by the erstwhile lessee does not ripen
into a lawful possession merely because the landlord did not proceed with
the suit for ejectment at that time, but reserved the right to bring such a suit
at a later point of time. That cannot amount to an assent on his part to the C
continued occupation of the landlord under cover of a right asserted by the
erstwhile lessee. The words "right to the site" in Rule 153( I) (i) must, therefore,
in our opinion, be given their full meaning and the effect that unless the
person seeking a licence is in a position to establish a right to the site, he
would not be entitled to hold or have his licence renewed. We have already
rejected the contention of Mr. L.N. Rao thatthe appellant-tenant is a statutory D
tenant for the reasons recorded earlier. The lease deed is very clear as to what
was leased. The lease was of vacant land. That is evident from the recitals
in the plaint, legal notice, lease deed etc. 1t is, therefore, not in dispute that
the lease of land is not covered by the statute, The Pondicherry Buildings
(Lease and Rent Control) Act, 1969 in force extending protection to tenants. E
We now come to the last contention of Mr. L.N., Rao that the first
respondent is not entitled to maintain the writ petition as the proceedings
initiated by him before the Collector for cancellation of the No Objection
Certificate is pending. The said submission cannot be accepted. While granting
NOC, the Collector is not concerned about the ownership of the land. He is p
concerned about the location of the land and its suitability· as a place for
storage of petroleum. Rule 144 deals with the grant of NOC does not
contemplate an enquiry into the ownership of the land nor does it require the
Collector to enquire into the nature of the right claimed by the person who
has applied for the NOC. We, therefore, uphold the judgment and final order
passed by the Division Bench dated 7.10.2003 in Writ Appeal Nos. 1149 & G
2140 of 2002 for the reasons given by us in this judgment.

The appeal stands dismissed. However, there shall be no order as to
costs.

K.K.T. Appeal dismissed. H