Expiry Of Lease Term Renders Lessee’s Possession Unlawful; Respondent Cannot Squat On Property: Andhra Pradesh High Court

"Any right which the dealer has over his site was the right which he had acquired in terms of the lease. When that lease expired and when the landlord declined to renew the same and also called upon the erstwhile tenant to surrender possession, the erstwhile lessee could no longer assert that he had any right to the site." Andhra Pradesh High Court, in a ruling dated September 22, 2026, held that a lessee cannot maintain possession of a property after the expiration of the lease agreement, affirming that such continued occupation constitutes "litigious possession" rather than lawful possession.

A bench led by Justice Ravi Cheemalapati underscored that public sector corporations must act as model litigants and cannot justify squatting on private land post-lease expiry by relying on technical pleas or the absence of formal termination.

The petitioner, T.V. Yuvaraj, sought the eviction of respondent nos. 2 to 4—an oil corporation—from a property in Tirupathi district following the expiration of a 20-year lease on March 31, 2018. The petitioner asserted that despite the lease term ending, the respondents failed to vacate the premises, stopped paying rentals, and unilaterally installed electrical charging stations without consent. The respondents contested the petition, arguing that the petitioner lacked exclusive title and that the petition was barred by laches due to a seven-year delay.

The primary question before the court was whether a lessee, specifically an oil corporation, has the legal right to retain possession of land for a petroleum retail outlet after the express expiration of the lease agreement. The court was also called upon to determine whether the High Court could exercise its writ jurisdiction under Article 226 of the Constitution to direct eviction in cases of long-standing occupancy following the expiry of a lease.

The court analyzed the applicability of Rule 152 of the Petroleum Rules, 2002, noting that the continuation of a license for petroleum storage is strictly contingent upon the licensee maintaining a legal "right to the site." The court observed that once the lease term lapses and the landlord denies renewal, the foundational right of the lessee to occupy the premises evaporates. Consequently, any further occupation ceases to be lawful.

No Absolute Right To Occupy Post-Expiry

Citing the Supreme Court’s precedent in C. Albert Morris v. K. Chandrasekharan, the court reiterated that a lessee whose term has expired cannot assert a right to the site. The court emphasized that the corporation’s occupation cannot be regarded as a source of legal right to the land when the landlord has clearly expressed an intent not to renew the lease.

Litigious Possession Is Not Lawful Possession

The bench emphasized the distinction between juridical possession and lawful possession, stating that "litigious possession cannot be regarded as lawful possession." The court categorically rejected the respondents' attempt to justify their presence on the property through technical arguments, noting that the corporation had continued to utilize the site—including installing new infrastructure—without a valid leasehold interest.

"The Corporation, being a Government of India Company, should be a role model for the other litigants, but it cannot resort to unnecessary litigation by squatting on the site without paying rents, and that too, without using the same for the purpose, for which it was originally leased out."

Duty Of Public Sector Corporations

Reflecting on the conduct of the respondent corporation, the court characterized their refusal to vacate as "arbitrary and totally irrational." The judge noted that public sector entities are expected to function as model litigants. By "squatting" on private land post-expiry, the respondents failed to meet the standards of fair dealing expected of a Government of India undertaking, thus warranting the court’s intervention under Article 226 to protect the petitioner’s fundamental property rights.

Concluding that there was no semblance of a legal defense for the respondents to retain possession, the court declined to relegate the petitioner to a lengthy civil suit. The High Court directed the respondent corporation to remove all equipment and hand over vacant physical possession of the subject property to the petitioner within a period of three months.

Date of Decision: 22 September 2026