INDIAN OIL CORPORATION LTD., vs SRI. SHIVA KUMAR KHENY

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU


TH
DATED THIS THE 25 DAY OF SEPTEMBER, 2026

PRESENT

THE HON'BLE MR. JUSTICE D K SINGH

AND

THE HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN

COMMERCIAL APPEAL NO. 421 OF 2026

BETWEEN:

INDIAN OIL CORPORATION LTD.,
A REGISTERED COMPANY,
HAVING ITS STATE OFFICE AT
INDIAN OIL BHAVAN,
NO. 29, P KALINGA RAO ROAD (MISSION ROAD),
BANGALORE 560 027.
BY ITS DIVISIONAL RETAIL HEAD (DRH)






…APPELLANT
(BY SRI. VIGHNESHWAR S SHASTRI, SENIOR COUNSEL A/W
SMT.AISHWARYA HEGDE, ADVOCATE FOR
SRI. GURURAJ R., ADVOCATE)

AND:

1. SRI. SHIVA KUMAR KHENY
S/O LATE SRI M M KHENY,
AGED ABOUT 76 YEARS,




Digitally signed
by MALA K N
Location:
HIGH COURT
OF
KARNATAKA

2. SRI. SIDDHARTH KHENY
S/O SHIVA KUMAR KHENY,
AGED ABOUT 47 YEARS,

BOTH ARE R/AT NO. 27, I BLOCK, II CROSS,
RMV II STAGE, BANGALORE 560 094.
…RESPONDENTS
(BY SRI.NITIN PRASAD, ADVOCATE FOR C/R1 & 2 IN CP
18388/26)

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THIS COMAP / COMMERCIAL APPEAL UNDER SECTION
13 (1A) OF THE COMMERCIAL COURTS ACT, 2015 PRAYING TO
SET ASIDE THE ORDER ON IA NO.5/SUMMARY JUDGMENT
DATED.27.07.2026 PASSED BY THE LXXXVI ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT,
BENGALURU, (CCH-87), IN COM.O.S.NO.832/2025 AND
CONSEQUENTLY RESTORE THE SUIT TO THE FILE OF THE
COMMERCIAL COURT FOR DISPOSAL ON MERITS IN
ACCORDANCE WITH LAW, IN THE INTEREST OF JUSTICE AND
EQUITY.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE D K SINGH
AND
HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN

ORAL JUDGMENT

(PER: HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN)

This Commercial Appeal Section 13(1A) of the
Commercial Courts Act, 2015 has been filed calling in
question the order dated 27.07.2026 passed by the
LXXXVI Additional City Civil and Sessions Judge,
Commercial Court, Bengaluru (CCH-87) ( ‘Commercial
Court’ ), in Com.O.S. No.832/2025.

2. For the sake of convenience, and to avoid any
confusion, the parties are referred to herein by their
respective rankings before the Commercial Court.

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I. Facts pleaded in the plaint
3. The plaintiff - Indian Oil Corporation Limited,
instituted Com. O.S. No. 832/2025 seeking specific
performance of Clause 9 of the registered Lease-cum-
Rental Agreement dated 25.06.2004 executed between
the parties in respect of property bearing No. 171, MLA
Layout, Mattadahalli Further Extension, R.T. Nagar,
Bengaluru, measuring 5,400 Sq. Ft. Under the said
agreement, the defendants had leased the property to the
plaintiff for a period of twenty years for establishing and
operating a petroleum retail outlet. The plaintiff relied
upon Clause 9 of the agreement, which provided for
renewal of the lease for a further period of five years,
subject to the lessee giving not less than three months’
notice before expiry and duly observing the terms and
conditions of the lease. It was the plaintiff’s specific case
that, in exercise of the said contractual right, it issued a
letter dated 25.03.2024 bearing Ref. No.
Lease/BDO/IOCL/01, requesting renewal of the lease and

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calling upon the defendants to submit their offer for
extension. The plaintiff contended that the said letter was
handed over to defendant No. 2 by its Field Officer of the
plaintiff - Corporation, Shri Saurabh, during a routine visit
to the retail outlet. It further relied upon subsequent
representations dated 12.08.2024 and 15.10.2024 seeking
renewal for another five years. According to the plaintiff, it
had complied with the contractual conditions and remained
ready and willing to perform its obligations under the
agreement.

4. The plaintiff pleaded that the defendants,
instead of proceeding with the renewal, issued a legal
notice dated 08.08.2024 asserting that the lease had
expired on 24.06.2024, that no notice invoking Clause 9
had been received and that the plaintiff was in
unauthorised occupation of the property. The plaintiff
disputed the said stand and relied upon the defendants’
acceptance of rent for June and July 2024 without protest,
as well as the continuation of the dealership operations

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and upliftment of petroleum products by defendant No. 2
until 06.08.2024. It was contended that the conduct of the
parties raised questions of waiver, acquiescence and
estoppel, which could not be determined merely on the
basis of the defendants’ denial of receipt of the renewal
letter. The plaintiff also stated that defendant No. 2 was
operating the retail outlet under a dealership agreement
dated 01.12.2005 and that valuable machinery and
equipment belonging to the Corporation remained installed
on the leased property. According to the plaintiff, the
cessation of operations and non-utilisation of the
equipment had affected its business and assets. The
plaintiff had earlier obtained an ex parte ad-interim
injunction on 17.06.2025 in respect of the machinery and
equipment situated on the property. It therefore sought a
decree directing the defendants to renew the registered
lease dated 25.06.2004 for a further period of five years in
terms of Clause 9, together with costs and other
appropriate reliefs.

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II. Statement of objections filed by the defendants
5. The defendants had filed their statement of
objections resisting the claim of the plaintiff for specific
performance of Clause 9 of the registered Lease-cum-
Rental Agreement dated 25.06.2004. They contended that
the lease was for a period of twenty years and had expired
on 24.06.2024, and that the plaintiff was required to issue
a renewal notice on or before 24.03.2024. According to
them, no such notice was received within the period
stipulated under the agreement. They specifically denied
receipt of the letter dated 25.03.2024 bearing Ref. No.
Lease/BDO/IOCL/01 and contended that the said letter
was relied upon only after the defendants issued a legal
notice dated 08.08.2024 calling upon the plaintiff to
vacate the premises. The defendants pointed out that the
plaintiff had not produced any postal receipt or
acknowledgment to establish dispatch and service of the
alleged renewal notice. They further contended that the
subsequent letters dated 12.08.2024 and 15.10.2024

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could not cure the failure to comply with the contractual
requirement within the prescribed period. On these
grounds, the defendants maintained that the lease had
come to an end by efflux of time and that the plaintiff had
no subsisting right to seek renewal or continue in
possession of the property.

6. The defendants further contended that Clause 9
of the agreement contemplated renewal for a further
period of five years on mutually agreeable terms, with
execution and registration of a fresh lease deed, and did
not confer an unconditional right upon the plaintiff to
compel renewal irrespective of their willingness. They
relied upon their communication dated 23.10.2024,
reiterating that the lease had expired and that they had
not received the alleged letter dated 25.03.2024, and
asserted that the plaintiff was not entitled to specific
performance in the absence of compliance with the
essential contractual conditions. After the plaintiff’s suit
was restored by the High Court of Karnataka on

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03.02.2026 in Com. A.P. No. 645/2025, the defendants
filed I.A. No. 5 on 18.02.2026 under Order XIII-A of the
Code of Civil Procedure, 1908,( 'CPC' ) read with Section
151 thereof, seeking summary judgment and dismissal of
the suit. They maintained that the plaintiff had no real
prospect of succeeding in its claim, since the alleged notice
was neither proved to have been served within the
stipulated period nor sufficient to compel renewal on terms
to which the defendants had not agreed. The defendants
accordingly sought disposal of the suit without a full-
fledged trial, contending that the admitted expiry of the
lease and the terms of Clause 9 were sufficient to defeat
the relief claimed by the plaintiff.

III. Judgment of the Commercial Court
7. The LXXXVI Additional City Civil and Sessions
Judge, Commercial Court, Bengaluru, considered I.A. No.
5 in Com. O.S. No. 832/2025 and, by order dated
27.07.2026, allowed the application and summarily
dismissed the suit. The Commercial Court noted that the

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execution of the registered Lease-cum-Rental Agreement
dated 25.06.2004 and the twenty-year lease period were
not in dispute, and that the lease had expired on
24.06.2024 unless validly renewed. The principal question
was whether the plaintiff had invoked Clause 9 by issuing
and serving the letter dated 25.03.2024 within the
stipulated period. The Court noticed the defendants’
specific denial of receipt of the letter and their contention
that the plaintiff had not produced satisfactory material to
establish its dispatch or service. It also examined the legal
notice dated 08.08.2024 issued by the defendants,
wherein they asserted that the lease had expired and
called upon the plaintiff to vacate the premises. The Court
observed that the plaintiff’s subsequent representations
dated 12.08.2024 and 15.10.2024 were issued after the
defendants’ legal notice and that the record, as it then
stood, did not establish service of the earlier letter dated
25.03.2024. The Court therefore held that the plaintiff had

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not satisfactorily demonstrated compliance with the notice
requirement under Clause 9.

8. The Commercial Court also considered the
amendment permitted on 11.03.2026, by which the
plaintiff introduced paragraph 4(a) stating that the letter
dated 25.03.2024 had been handed over to defendant No.
2 by the Corporation’s Field Officer, Shri Saurabh, during a
routine visit to the retail outlet. The Court regarded this
explanation as an afterthought, particularly, in the
absence of an outward register or other contemporaneous
record establishing that the letter had been dispatched on
the stated date. It further held that, even if the plaintiff’s
version regarding hand delivery were accepted, the notice
dated 25.03.2024 was beyond the last permissible date of
24.03.2024, as computed by the Court. On the
construction of Clause 9, the Court held that renewal was
contemplated on mutually agreeable terms and that a
fresh lease deed was to be executed and registered. In its
view, the provision did not enable the plaintiff to compel

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renewal when the defendants were unwilling to continue
the contractual relationship. The Commercial Court
consequently answered the principal point in favour of the
defendants, holding that the plaintiff had no real prospect
of succeeding in the claim and that the suit was liable to
be dismissed under Order XIII-A of CPC by the order dated
27.07.2026, I.A. No. 5 was allowed and the suit was
summarily dismissed.

IV. Grounds of appeal
9. The appellant/plaintiff - Indian Oil Corporation
Limited, has challenged the order dated 27.07.2026
passed on I.A. No. 5 in Com. O.S. No. 832/2025,
contending that the Commercial Court erred in summarily
dismissing the suit without permitting adjudication of the
disputed facts surrounding the renewal notice dated
25.03.2024. It is urged that the Court failed to give due
consideration to the amended pleading, permitted by order
dated 11.03.2026, specifically asserting hand delivery of
the letter through Field Officer Shri Saurabh, and wrongly

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treated the said plea as an afterthought without recording
evidence. The plaintiff contends that the absence of an
outward register could not, by itself, conclusively disprove
the pleaded mode of delivery, particularly when the
concerned officer could have been examined and cross-
examined. It further disputes the finding that the notice
was beyond time, maintaining that the computation of the
three-months period preceding expiry of the lease on
24.06.2024 required proper consideration. The plaintiff
also submits that Clause 9, which provides that the lessor
shall grant renewal for a further period of five years upon
fulfillment of the stipulated conditions, was misconstrued
by treating the requirement of mutually agreeable terms
as rendering the renewal covenant unenforceable. The
acceptance of rent for June and July 2024, the pleaded
continuation of dealership operations until 06.08.2024,
and the subsequent correspondence, according to the
plaintiff, raised issues concerning waiver, acquiescence
and estoppel which could not be conclusively determined

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at the summary stage. It is therefore contended that the
Commercial Court applied Order XIII-A of CPC without
properly examining whether the plaintiff had a real
prospect of succeeding and whether there was a
compelling reason for the matter to proceed to trial, and
that the impugned order deserves to be set aside and the
suit restored for disposal on merits in accordance with law.

10. We have heard Sri. Vighneshwar S. Shastri,
learned Senior Counsel along with Smt. Aishwarya Hegde,
Sri. Gururaj R appearing for the plaintiff/appellant and
Sri. Nitin Prasad for defendant/respondent Nos.1 and 2/
caveators.

11. Upon consideration of the pleadings, the
records placed before this Court and the submissions
advanced on behalf of the plaintiff the following point
arises for our consideration:
"Whether the plaintiff has made out any
ground to allow the appeal and consequently
decree the suit dated 27/07/2026 passed by
the learned LXXXVI Addl City Civil & Sessions

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Judge, Commercial Court, Bangalore, (CCH-
87) in Comm OS No 832/2025."

V. ANALYSIS AND REASONS
12. In the present case, the registered Lease-cum-
Rental Agreement was executed on 25.06.2004 for a
period of twenty years, which expired on 24.06.2024.
Clause 9 stipulated that the lessee was required to give
notice not less than three months before the expiry of the
lease and provided for renewal for a further period of five
years “at mutually agreeable terms.” It further
contemplated execution and registration of a fresh
document. Thus, the clause did not provide for an
unconditional extension of the existing lease merely upon
the lessee expressing its intention to continue in
possession. The plaintiff was, therefore, required to
establish not only compliance with the stipulated
procedure but also a legally enforceable basis to compel
renewal on the terms contemplated by Clause 9.

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13. The plaintiff relies upon the letter dated
25.03.2024, allegedly delivered by its Field Officer, Shri
Saurabh, to the second defendant during a visit to the
retail outlet. The defendants disputed the receipt of the
letter. The Commercial Court, by its order dated
27.07.2026, noticed the absence of an outward register or
other sufficient material evidencing its dispatch or delivery
and treated the plea of hand delivery, introduced by
amendment dated 11.03.2026, with due caution. Even
assuming, for the purpose of examining the plaintiff’s
case, that the letter was delivered, such delivery would
establish, at the highest, the plaintiff’s intention to seek
renewal. It would not, by itself, establish that the
defendants had agreed to renew the lease for a further
five years on mutually acceptable terms.

14. The plaintiff has also relied upon the alleged
acceptance of rent for June and July 2024 and the
continuation of dealership operations until 06.08.2024.
These circumstances have to be considered in the context

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of the lease having expired on 24.06.2024 and the
defendants having issued a legal notice dated 08.08.2024
calling upon the plaintiff to vacate the premises. Mere
receipt of rent for the period immediately following expiry,
without more, cannot be treated as conclusive proof of an
agreement to renew the lease in terms of Clause 9.
Likewise, the continuation of dealership-related activities
or the presence of the plaintiff’s equipment in the
premises does not, by itself, establish mutual agreement
to create a fresh lease for five years. The material relied
upon by the plaintiff does not establish the essential
contractual foundation for the specific performance
sought.

15. It is also relevant that this Court, by order
dated 03.02.2026 in Com.A.P.No.645/2025, set aside the
earlier order dated 09.10.2025 rejecting the plaint under
Order VII Rule 11(a) of the CPC and restored the suit. The
said order enabled the suit to proceed; it did not
determine the enforceability of Clause 9 or declare that

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the plaintiff was entitled to renewal. The subsequent
application under Order XIII-A of CPC, filed by the
defendants on 18.02.2026, therefore, had to be
1
considered on its own merits. On the material placed
before the Commercial Court, the plaintiff’s case rested
principally on its alleged notice and the subsequent receipt
of rent, neither of which established the defendants’
agreement to renew the lease on mutually agreeable
terms.

16. The law laid down by the Supreme Court in
Shanti Prasad Devi v. Shankar Mahto, has a direct
bearing on the controversy involved in the present appeal.
In the said case, the Supreme Court emphasised that the
right to renewal of a lease must be examined with
reference to the terms agreed upon by the parties and
that the mere existence of a renewal clause does not
dispense with compliance with its conditions. Where
renewal is contemplated on terms to be mutually agreed

1
(2005) 5 SCC 543

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upon, the lessee cannot insist upon renewal without
establishing the agreement required under the contract.
The said decision also clarifies that acceptance of rent
after expiry of the lease, by itself, does not establish the
lessor’s consent to renewal or continuation of the lease.

17. In these circumstances, the Commercial Court
was justified in examining whether the plaintiff had a real
prospect of succeeding in its claim for specific
performance. The dispute concerning delivery of the letter
dated 25.03.2024 does not, by itself, resolve the decisive
issue, namely, whether the contractual requirement of
mutual agreement for renewal had been satisfied.

18. In the absence of material establishing such
agreement, the plaintiff cannot obtain a decree compelling
the defendants to renew the lease merely because it had
expressed its intention to continue in the premises.

19. Applying the principle laid down in Shanti Prasad
Devi (supra) , this Court finds no sufficient ground to

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interfere with the order dated 27.07.2026, the appeal is
liable to be dismissed. Accordingly the following:
ORDER
(i) The Appeal is dismissed.
(ii) The order on I.A.No.5/summary judgment
dated 27.07.2026 passed by the LXXXVI
Additional City Civil and Sessions Judge,
Commercial Court, Bengaluru (CCH -87) in
Com.O.S.No.832/2025 is set aside.


Sd/-
(D K SINGH)
JUDGE


Sd/-
(H.SHANTHI BHUSHAN)
JUDGE


BVK
List No.: 1 Sl No.: 4