Petrol Pump Licence Automatically Stands Cancelled On Expiry Of Lease, No Hearing Required: Kerala High Court

The Kerala High Court recently clarified that as per the Petroleum Rules, 2002, when the licensee of a petroleum outlet loses the right to the site for storing petroleum due to expiry of lease period, the license gets automatically cancelled without any need for a formal order.

Justice M.A. Abdul Hakhim observed that in such cases, license can be cancelled without granting an opportunity of hearing to the licensee.

“Rule 152 of the Petroleum Rules provides that every license granted under the said Rules shall stand cancelled if the licensee ceases to have any right to the site for storing petroleum… When the licensee ceases to have any right to the site for storing petroleum, the license stands cancelled automatically without any formal order for the same by the Licensing Authority in view of Clause (iii) of Rule 152(1). Hence, the question of following a procedure for cancellation or granting an opportunity of hearing…does not arise,” the Court observed.

The Court was considering a writ petition filed by the lessors of a property in which an Indian Oil petroleum outlet was being run by the lessee, who is an individual holding license. After the tenure of the lease deed came to an end, the petitioners prayed for a direction against the respondents, including the lessee and Indian Oil, so as to vacate and deliver possession of the leased premises.

As a second prayer, the petitioners had also sought a writ of mandamus against the Deputy Chief Controller of Explosives to cancel the Explosive License issued to the lessee and the petroleum company.

The respondents opposed the plea stating that the writ petition was not maintainable since the lessee here was not Oil Marketing company (State under Article 12 of the Constitution) but, a private entity.

The Court noted that there was no sub-lease entered into by Indian Oil and as such, the prayer to evict the lessee, a private individual, cannot sustain.

Moving to the next prayer seeking cancellation of explosive licence, the Court looked into Rule 152 of the Petroleum Rules, which is the provision regarding cancellation of license received under the Rules.

The Court noted that as per the Rental agreement between the lessors and lessee, after the expiry of the lease tenure, the lessee shall surrender and deliver peaceful possession. However, in this case, the lessee has not done so even after expiry of the tenure, which meant that the lessee no longer had the right to the site for storing petroleum products.

Going by Rule 152(1)(i), the Bench observed that for the afore reason, the license granted under the Rules will get automatically cancelled. It refused to accept that contention of the lessee that as per the proviso in Rule 152, he had the right to be heard before the licence is cancelled.

It clarified:

“The said Proviso is applicable only in the case of suspension or cancellation of license under Clause (iii) of Rule 152(1) by the Licensing Authority for any contravention of the Act or of any rule thereunder or of any condition contained in such license or by order of the Central Government, if it is satisfied that there are sufficient grounds for doing so.”

The Court allowed the plea in part by allowing the second prayer of the petitioners and directing the Deputy Chief Controller of Explosives to cancel the Explosive License issued in favour of the respondents.

Case No: WP(C) No. 39399 of 2025

Case Title: Choorapilan Jameela and Anr. v. Padavanna Shamseer and Ors.

Citation: 2026 LiveLaw (Ker) 24

Counsel for the petitioners: K.M. Sathyanatha Menon

Counsel for the respondents: P. Martin Jose, Nithin George, M.V. Haridas Menon, Rithu Jose, P. Prijith, Thomas P. Kuruvilla, R. Githesh, Anna Linda Eden, Ajay Ben Jose, Manjunath Menon, Anavadya Sanil Kumar, Anjali Krishna, S. Sreekumar (Sr.), G. Sheeba – Government Pleader

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