Bharat Petroleum Corporation Ltd. v. Chembur Service Station

Quick Summary

This case explains what a DPSL licence means in a company-controlled petrol pump (CCRO). The dealer is licensed only to sell the company’s fuel using the company’s premises and equipment.

If supply stops or the licence ends, the dealer has no right to enter or use the outlet. The Supreme Court allowed BPCL’s appeal and protected its possession of the outlet.

Issues

• What is the nature and scope of the licence under the DPSL agreement granted to the dealer?

Rules

• Licences differ in width. Some almost resemble leases; others are very narrow—like a right to enter only for a limited use.
• A DPSL licence tied to the licensor’s goods and equipment ends when supply ends; entry/use cannot continue for other purposes.
• In CCROs, the licensor (company) owns/leases the site and equipment; the dealer only sells the licensor’s products.

Facts (Timeline)

Arguments

Judgment

The Supreme Court allowed the appeal.

• Orders directing status quo were set aside.
• BPCL could continue in possession of the outlet and use it for its business.
• BPCL could lawfully prevent the dealer from entering the premises.
• Ruling applies to CCRO models where premises and equipment are company-owned/leased.

Ratio Decidendi

Where a licence is restricted to selling the licensor’s products using the licensor’s site and equipment, it is not a possessory right. On stoppage of supply or termination, the dealer’s entry/use ends; the company need not sue for “possession”.

Why It Matters

• Clarifies the limits of dealership licences in CCRO petrol pumps.
• Helps draft agreements that clearly define entry and use rights.
• Guides courts on possession vs. licence in company-controlled outlets.

Key Takeaways

1. DPSL in a CCRO is a limited, purpose-bound licence.
2. Stopping supply ends the dealer’s right to enter/use the outlet.
3. Company need not file a separate possession suit to exclude the dealer.

Mnemonic + 3-Step Hook

Mnemonic: “SELL–SITE–STOP”

• SELL: Licence is only to sell licensor’s fuel.
• SITE: Premises and equipment belong to the licensor (CCRO).
• STOP: When supply stops, entry/use stops.

IRAC Outline

Glossary

DPSL Agreement

Dispensing Pump and Selling Licence—dealer sells the company’s fuel from company-controlled premises.

CCRO

Company Controlled Retail Outlet—site and equipment owned/leased by the oil company.

Licence vs Possession

Licence gives limited use for a purpose; possession implies control and broader rights.

FAQs

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