Lease Dispute and Possession of Petrol Stations

In Constitution Petition No. D-899 of 2020, the Sindh High Court addressed a dispute involving the lease and possession of two petrol stations located at Jinnah International Airport, Karachi, operated by Pakistan State Oil Co. Ltd. (PSO). The petitioner, PSO, sought protection against eviction and contested the Pakistan Civil Aviation Authority’s (PCAA) termination notices, which sought to repossess the petrol stations after the expiration of the 30-year lease in 2018. The Court ruled that the factual disputes, including whether PSO had rights as a statutory tenant or merely as a licensee, required adjudication by a competent court. In the meantime, the Court restrained PCAA from evicting PSO or interfering with the operation of the petrol stations until the dispute was resolved.

Background:

PSO had operated two petrol stations under a 30-year lease agreement with PCAA, which expired on 31.08.2018. Following the lease's expiration, PSO continued to operate the stations and deposit rent, which PCAA initially accepted. However, PCAA subsequently issued notices for the repossession of the petrol stations, leading to the filing of six petitions by PSO and its dealers. PSO argued that it retained lawful possession and sought the renewal of the lease, while PCAA maintained that PSO’s occupation was unlawful, as no new lease had been executed. PSO also sought interim relief to continue operating the petrol stations and to restrain PCAA from interfering with its possession.

Key Issues:

Legal Status of PSO Post-Lease Expiry: Whether PSO had acquired statutory tenancy rights or was merely a licensee after the expiration of the lease.

PCAA’s Authority to Terminate the Lease and Repossess the Stations: Whether PCAA lawfully exercised its right to terminate the lease and evict PSO after the lease expired.

Maintainability of PSO’s Petitions: Whether the issues raised by PSO could be decided under the writ jurisdiction of the High Court, or whether the matter required resolution by a civil court.

Court's Analysis:

Legal Status of PSO: The Court observed that the central issue of whether PSO had become a statutory tenant or remained a licensee after the lease expired could not be resolved within the High Court's writ jurisdiction under Article 199 of the Constitution. The relationship between PSO and PCAA, and the legal status of PSO’s possession, required the examination of evidence, including the terms of the original lease and the parties' conduct after the expiration of the lease. The Court held that these matters needed to be addressed by a civil court, where the parties could present evidence and cross-examine witnesses to determine whether PSO’s continued possession was lawful.

PCAA’s Termination Notices: PCAA had issued multiple termination notices to PSO, including notices under the Federal Government Lands and Buildings (Recovery of Possession) Ordinance, 1965, demanding that PSO vacate the premises. PSO contested these notices, arguing that its payments of rent to the Rent Controller constituted a valid continuation of the lease or tenancy. The Court noted that while PCAA argued that PSO was a trespasser, these claims could not be decided without a full trial. The Court emphasized that the termination of the lease and the validity of PCAA’s actions to repossess the petrol stations were issues of fact and law that required adjudication by a court of competent jurisdiction.

Jurisdictional Limits of the High Court: The Court acknowledged that its writ jurisdiction did not extend to resolving the factual disputes at the heart of the case. The relationship between PSO and PCAA, including whether PSO could seek specific performance of a new lease or was entitled to remain in possession under a statutory tenancy, involved complex legal and factual questions. The Court held that these issues could only be determined through a civil trial, where evidence could be presented and scrutinized. As such, the Court refrained from making any final determinations on these matters and directed the parties to pursue their claims in the appropriate forum.

Court's Conclusion: The Court concluded that the factual disputes between PSO and PCAA required adjudication by a competent civil court. In the meantime, the Court restrained PCAA from evicting PSO or interfering with its operation of the petrol stations, pending the resolution of the dispute by the civil court. PSO was directed to continue depositing payments with the Rent Controller as mesne profits, which would later be determined by the civil court as either rent, lease payments, or license fees.

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