Petroleum License Stands Automatically Cancelled When Lessee Loses Right to Site After Lease Expiry: Kerala HC [Read Judgment]

Kerala: The Kerala High Court has held that when a licensee of a petroleum retail outlet ceases to have any right to the site due to the expiry of the lease period, the license issued under the Petroleum Rules, 2002 stands automatically cancelled, without requiring any formal order from the licensing authority.

Justice M.A. Abdul Hakhim delivered the judgment on January 12, 2026, while partially allowing a writ petition filed by Choorapilan Jameela and Pookodan Noushad seeking eviction of the lessee and cancellation of the explosive license for a petroleum outlet operating on their land.

The petitioners had executed a registered lease deed dated January 21, 2004, in favour of Padavanna Shamseer (the first respondent) for a period of 20 years commencing from February 1, 2004, to conduct a petroleum retail outlet on 30 cents of leased premises. The lease expired on January 31, 2024. The first respondent was granted the right to sub-lease the premises to Indian Oil Corporation, the oil marketing company, and had been operating the petroleum outlet as a dealer of Indian Oil Corporation.

After the expiry of the lease, the petitioners sought a writ of mandamus directing the respondents to vacate and deliver possession of the leased premises, and to cancel the explosive license issued for operating the petroleum retail outlet.

Counsel for the petitioners argued that the tenure of the lease deed had ended and that the respondents had no right to continue in possession of the leased premises. Reliance was placed on the Supreme Court decision in C. Albert Morris v. K. Chandrasekaran, the Kerala High Court decision in T.M. Biju v. Indian Oil Corporation Limited, as confirmed by a Division Bench, and a Bombay High Court decision in Vijay v. Indian Oil Corporation Limited. It was further pointed out that in a settlement incorporated in an earlier court judgment, the first respondent had agreed to abide by the terms of the lease, including surrendering peaceful possession upon determination of the lease.

Senior counsel appearing for the first respondent contended that the writ petition was not maintainable and that the petitioners ought to have approached the civil court for eviction. It was argued that the decisions relied upon were distinguishable, as in those cases the lessee was the oil marketing company, which falls within the definition of ‘State’ under Article 12 of the Constitution and is amenable to writ jurisdiction, whereas the first respondent is a private individual. It was further submitted that the Petroleum Rules, 2002 prescribe a specific procedure for cancellation of licenses, which could not be bypassed. It was also pointed out that the petitioners had already instituted a commercial suit for recovery of possession before the civil court.

Counsel for Indian Oil Corporation supported these submissions and relied on the Supreme Court decisions in Hindustan Petroleum Corporation Ltd. v. Dolly Das and Roshina T. v. Abdul Azeez K.T., contending that a writ petition is not maintainable where the dispute is between private parties and does not involve constitutional or statutory rights.

On the first prayer seeking eviction, the Court held that since the first respondent was a private individual in possession of the leased premises, and not an oil marketing company which is an instrumentality of the State, the prayer for eviction could not be granted in writ jurisdiction. The Court noted that in T.M. Biju, eviction was sought against an oil marketing company, which fell within the ambit of Article 12. Accordingly, the first prayer was rejected.

On the second prayer seeking cancellation of the explosive license, the Court noted that the petitioners had submitted a representation dated September 16, 2025, to the fourth respondent (Deputy Chief Controller of Explosives) and had filed the writ petition on October 22, 2025, after waiting for a reasonable period of one month without receiving any response. The Court held that when an authority fails to respond within a reasonable time, a writ of mandamus can be sought by treating the inaction as a refusal.

The Court examined Rule 152 of the Petroleum Rules, 2002, which provides that every license granted under the Rules shall stand cancelled if the licensee ceases to have any right to the site for storing petroleum. It held that upon expiry of the lease deed, the first respondent ceased to have any such right.

The argument that the proviso to Rule 152(1) entitled the license holder to an opportunity of being heard before cancellation was rejected. The Court clarified that the proviso applies only in cases of suspension or cancellation under Clause (iii) of Rule 152(1) for contravention of statutory provisions or license conditions. Where the licensee ceases to have any right to the site, the cancellation is automatic and does not require a formal order or hearing.

The Court placed substantial reliance on C. Albert Morris v. K. Chandrasekaran, wherein the Supreme Court held that a person can claim a right only when it has a lawful origin. A trespasser cannot assert a right over land merely by being in possession. Any right the dealer had over the site flowed solely from the lease, and upon its expiry and refusal of renewal by the landlord, no such right subsisted.

The Court also noted that the petitioners had produced a reply obtained from the Vazhikkadavu Grama Panchayat under the Right to Information Act, 2005, which revealed that no license application had been submitted by the petroleum outlet for the year 2025–26. The first respondent had not filed a counter-affidavit disputing these averments.

In view of the above, the Court allowed the writ petition in part and issued a writ of mandamus directing the Deputy Chief Controller of Explosives to cancel the explosive license issued for operating the petroleum retail outlet on the leased premises.

Case Title: Choorapilan Jameela and Another v. Padavanna Shamseer and Others

[Read Judgment]