Renewal Not Automatic, No Evidence Of Notice Or Mutual Agreement: AP High Court Dismisses Indian Oil’s Appeal Against Eviction

“Extension of lease is not automatic. There is no evidence of notice or mutual agreement. The appellant is not entitled to continue as a tenant under the guise of renewal clause” – Andhra Pradesh High Court, in a significant ruling in M/s Indian Oil Corporation vs Badam Sundara Rao & Others, dismissed the second appeal filed by Indian Oil Corporation against concurrent judgments of eviction passed by the lower courts. The Court held that the lease had expired by efflux of time, the renewal clause was not complied with, and no substantial question of law was raised to justify interference under Section 100 of the Code of Civil Procedure, 1908.

Lease Expired by Efflux of Time – Renewal Clause Not Complied With

Justice V. Gopala Krishna Rao, sitting in second appeal jurisdiction, confirmed the concurrent findings of both the Trial Court and the First Appellate Court that the lease between the plaintiff-landlord and the defendant-company stood terminated on 01.09.2017 by efflux of time, and that the appellant continued in possession thereafter without any legal basis.

The Court recorded that the original registered lease deed dated 02.09.2002, executed for a fixed period of 15 years, had expired by 01.09.2017. It was also undisputed that the defendant remained in possession after that date. Indian Oil Corporation, through its dealer, had taken the stand that the lease included a renewal clause for a further period of 15 years, and hence, its continued possession was lawful. However, the High Court firmly rejected this argument, observing:

“As per Clause No.4 of the lease deed, a lessee has to issue three months’ prior notice to the lessor to express its desire to continue... There is no evidence on record to show that a lessee has given such notice or that there was mutual agreement for extension.”

Justice Rao emphasized that the renewal clause was conditional and not automatic:

“Extension of lease is not an automatic renewal. There is no mutual understanding between the parties to renew the lease for a further period of fifteen years.”

The appellant also claimed to have written to the landlord prior to expiry of lease, but failed to produce any such correspondence. The Court noted that the burden to prove compliance with the renewal conditions lay on the lessee, and it was not discharged.

Binding Effect of Prior Suit for Specific Performance

The appellant had earlier filed a separate suit for specific performance seeking enforcement of the renewal clause, which had been dismissed by the Trial Court and upheld by the First Appellate Court. Justice Rao observed that the findings in that suit had attained finality and could not now be revisited in the present eviction proceedings.

“The appellant cannot indirectly claim renewal in eviction proceedings contrary to binding findings in the earlier specific performance suit.”

This effectively barred the appellant from raising the plea of renewal once again in the present litigation.

No Substantial Question of Law – Second Appeal Not Maintainable

Turning to the maintainability of the second appeal under Section 100 CPC, the Court reiterated the narrow scope of interference at this stage. It noted that both the Trial Court and the First Appellate Court had concurrently found that the lease expired and no renewal was proved. There was no perversity, misreading of evidence, or legal error shown.

Quoting established precedent, the Court said:

“The mere appreciation of facts, the documentary evidence and the contents of the documents cannot be held to be raising a substantial question of law.”

Further reinforcing this, Justice Rao stated:

“The questions raised, strictly speaking, are not even pure questions of law, let alone substantial questions of law. The findings were based on proper appreciation of evidence.”

Reliance was placed on Supreme Court rulings, including Boodireddy Chandraiah v. Arigela Laxmi and Gurdev Kaur v. Kaki, where the Apex Court clarified that a second appeal lies only when a substantial question of law arises.

Relief of Time to Vacate Granted as Equitable Measure

Though the appeal was dismissed, the Court granted Indian Oil Corporation six months’ time to vacate the premises, taking into account the nature of occupation and public utility aspect of the business being run.

“In the result, the second appeal is dismissed at the stage of admission... granting six months’ time to the appellant to vacate the plaint schedule premises.”

No order was made as to costs, and all pending applications were disposed.

The Andhra Pradesh High Court’s judgment reaffirms the principle that lease renewal clauses are not self-executing and require strict compliance with contractual conditions. The decision also underscores the limited scope of second appeals and the judiciary's reluctance to reopen findings of fact unless a real legal issue is at stake.

The ruling serves as a cautionary precedent for commercial tenants relying on vague or conditional renewal clauses without ensuring proper documentary evidence and compliance.

Date of Decision: 10.12.2025