Bombay High Court Orders HPCL To Vacate Dahanu Petrol Pump Land, Holds Tenancy Became Monthly After Ten-Year Lease Expired And Was Validly Terminated On 15 Days’ Notice
Bombay High Court Restores Landlord’s Eviction Decree Against HPCL, Rules Earlier Yearly Lease Terms Do Not Survive Holding Over And Unencashed Rent Cheques Prove Monthly Tenancy
Facts
Hushang Adi Vakil claimed ownership, under his mother’s will, of approximately 24,025 sq. ft. of land at Vadkun Lonipada, Dahanu, Palghar. His mother had leased the land on 1 January 1964 to Esso Standard Eastern Inc. for ten years; Hindustan Petroleum Corporation Ltd. (HPCL) succeeded to Esso’s interest and continued to occupy the site for a petrol pump after the term ended in 1974. Although the original lease stipulated yearly rent of ₹4,100, the landlord maintained that HPCL subsequently tendered ₹4,100 per month. Citing arrears, he issued notice dated 19 November 1998 terminating the tenancy with effect from 31 December 1998 and filed Regular Civil Suit No. 32 of 1999 for possession and ₹49,200 in rent arrears. On 27 August 2018 the Trial Court decreed possession, arrears and a separate inquiry into mesne profits. The Palghar District Court reversed that decree on 25 November 2022, treating the tenancy as yearly and the termination notice as insufficient. The landlord filed the present second appeal.
Issues
Whether a lessee holding over after expiry of a contractual year-to-year lease retains the yearly character of the expired arrangement or becomes a month-to-month tenant where the premises are used neither for agriculture nor manufacture; whether a 15-day notice under Section 106 of the Transfer of Property Act, 1882 (TPA), validly terminated HPCL’s tenancy; and whether cheques for monthly rent could be disregarded merely because the landlord did not encash them.
Appellant’s Arguments
Vakil argued that the 1964 agreement had expired by efflux of time in 1974 and had never been renewed by a registered instrument. HPCL’s continued occupation coupled with acceptance of rent made it a lessee holding over under Section 116 TPA, not a tenant enjoying the old ten-year lease indefinitely. Because operating a petrol pump is neither an agricultural nor a manufacturing purpose, Sections 106 and 116 deemed the post-expiry tenancy monthly and terminable on 15 days’ notice. He relied upon Burmah Shell Oil Distributing Co. v. Khaja Midhat Noor, (1988) 3 SCC 44. He also cited HPCL’s monthly rent cheques (Exhibits 31–34), its correspondence and its own tendering of rent as evidence that the parties dealt on a monthly basis, irrespective of non-encashment.
Respondent’s Arguments
HPCL contended that the original lease expressly contemplated payment of rent on a yearly basis and that its terms had continued after expiry. Though unregistered, the lease document was stamped and, according to HPCL, could be examined for collateral purposes; the landlord had also referred to continuation on the ‘same terms’. A year-to-year tenancy required six months’ notice under Section 106 TPA, so the 1998 termination and resulting eviction suit were said to be defective. HPCL additionally maintained that the landlord had deliberately failed to encash certain cheques and had withheld records showing the mode of rent payments over the intervening years; the District Court was therefore justified in declining to treat the cheques as proof of monthly tenancy.
Analysis of the Law
Section 106(1) TPA provides, subject to a contrary contract or usage, for year-to-year tenancy and six months’ notice where a lease is for agriculture or manufacturing; other leases are presumed month-to-month and require 15 days’ notice. Section 107 requires a registered instrument for a lease from year to year, for more than one year or reserving yearly rent. Section 111 recognises determination by efflux of time and by notice. Crucially, Section 116 governs ‘holding over’: when a lessee remains after termination and the lessor accepts rent or assents to continued possession, the relationship renews from year to year or month to month according to the statutory purpose of the letting, absent a fresh contrary agreement. Thus the old contractual classification does not automatically persist once its fixed term expires. Evidence of rent tendered periodically remains relevant to the nature of the subsequent tenancy even if particular cheques were not realised.
Precedent Analysis
The appellant invoked Burmah Shell Oil Distributing Co. (now Bharat Petroleum Corporation Ltd.) v. Khaja Midhat Noor & Ors., (1988) 3 SCC 44, in support of the legal treatment of a lessee continuing in possession after the original contractual period. The Bombay High Court decided the controversy principally by construing Sections 106, 107, 111 and 116 TPA and applying them to the expired Esso lease, the non-manufacturing use of the land and HPCL’s subsequent rental conduct. The judgment does not conduct an extended comparison of multiple reported authorities; the governing statutory distinction between a subsisting contractual lease and a tenancy created by holding over is decisive.
Court’s Reasoning
Justice Sandeep V. Marne held that, during its contractual term, the 1964 lease had expressly provided for yearly tenancy. However, there was no proof of an extension for a further fixed period. Once that agreement expired in 1974, HPCL remained only as a lessee holding over because rent continued to be tendered and accepted. The contractual ‘yearly lease’ exception ceased to govern the new statutory tenancy, whose periodicity depended upon the purpose of the letting. Both lower courts had rejected HPCL’s assertion that a retail petrol pump involved manufacture; accordingly, the post-expiry lease was month-to-month and could be terminated with 15 days’ notice. The High Court also found independent documentary confirmation in four HPCL cheques dated January–June 1995 for ₹4,100 each and HPCL’s letter of 9 June 1995 expressly describing the sum as monthly rent. Non-encashment did not destroy the evidentiary significance of HPCL tendering rent on that basis. The District Court had therefore wrongly characterised the holding-over tenancy as yearly and wrongly invalidated the termination notice.
Conclusion
The Bombay High Court allowed Second Appeal No. 228 of 2023 with costs, set aside the Palghar District Court’s judgment dated 25 November 2022 and restored the Trial Court’s decree dated 27 August 2018. HPCL was directed to hand over vacant possession of the petrol-pump land to the landlord within three months. Restoration of the Trial Court decree also reinstated its directions concerning ₹49,200 in rent arrears and a separate inquiry into mesne profits under Order XX Rule 12(c) CPC. The ruling clarifies that a lease surviving only by holding over after expiry of a fixed-term agreement is classified afresh under Section 116 read with Section 106 TPA: for a non-agricultural, non-manufacturing use, it is monthly and terminable upon 15 days’ notice, notwithstanding the expired agreement’s earlier yearly-rent terms.
Case: Hushang Adi Vakil v. Hindustan Petroleum Corporation Ltd.
Court: High Court of Judicature at Bombay, Civil Appellate Jurisdiction
Case Number: 2026:BHC-AS:45352; Second Appeal No. 228 of 2023
Bench: Justice Sandeep V. Marne (Single Judge)
Date: 5 November 2026 (reserved on 29 October 2026)
Result: Second appeal allowed with costs; eviction decree restored; HPCL to deliver possession within three months.
