SC: Section 9 protection under Madras City Tenants’ Protection Act requires tenant’s actual physical possession—sub-letting/licensing defeats right to purchase land.

Case Name: Bharat Petroleum Corporation Ltd. v. R. Chandramouleeswaran & Others (with connected appeals)
Date of Judgment: JANUARY 28, 2020
Citation: 2020 INSC 92; Civil Appeal No. 2870 of 2007 & batch
Bench: Hon’ble Mr. Justice N.V. Ramana, Hon’ble Mr. Justice Sanjiv Khanna, and Hon’ble Mr. Justice Krishna Murari.

Held: The Supreme Court held that oil companies seeking the benefit of Section 9 of the Madras City Tenants’ Protection Act, 1921 (right to compel sale of the leased land at court-fixed price) must be in actual physical possession of the land and the superstructure constructed thereon. Where the tenant has parted with possession by sub-letting or granting a dealership/licence the statutory privilege to purchase the land is not available. The Court clarified the scheme of Section 2(4): clauses (i) and (ii)(a) continue to protect tenants not covered by the erstwhile Section 12 proviso, while clause (ii)(b) (introduced retrospectively) is confined to tenants earlier excluded by that proviso and introduces the stricter requirement of “actual physical possession.”

Summary: The appellants (BPCL/IOCL/HPCL) had long-term registered leases over sites where they erected petrol pump structures and later operated through dealers under dealership/licence agreements. After expiry of the lease terms, landlords sued for ejectment; the oil companies invoked Section 9 to compel sale of the land. Tracing the legislative history and amendments of 1955, 1960, 1972 and 1973, the Court explained that deletion of the Section 12 proviso retrospectively expanded the Act’s reach, but the 1973 insertion of Section 2(4)(ii)(b) simultaneously limited this newly included class of tenants to those continuing in actual physical possession. Relying also on an earlier remand order that had already construed “actual physical possession” literally (as a matter of fact, not deemed possession), the Court rejected the companies’ plea that possession through dealers/licencees sufficed. The Act’s protective purpose is to prevent demolition and displacement of those personally occupying their superstructures; it does not extend to tenants who have divested possession to third parties.

Decision: All appeals by the petroleum companies were dismissed. The High Court’s view was affirmed that tenants who have parted with possession to dealers/licencees are not entitled to Section 9 relief; consequently, their applications to compel sale of the demised land fail. No order as to costs.