Thanks.
I found the following from Wikipedia :
http://en.wikipedia.org/wiki/Antecedent_%28grammar%29
"....... A common stylistic problem in writing, often leading to ambiguity, is the use of a pronoun for which the antecedent is not clear, as in the following example:
"I met John at Mike's party. He told me about his new girlfriend."
Did John tell the speaker about his own new girlfriend? Did John tell the speaker about Mike's new girlfriend? Did Mike tell the speaker about his own new girlfriend? Or did Mike tell the speaker about John's new girlfriend?
Strictly speaking, "he" should refer only to "John" (a rule of prescriptive grammar states that pronouns in the nominative case, like "he" and "she," cannot refer to an antecedent in the genitive case), but in ordinary speech, listeners are still confused by such sentences....."
Hence, am I correct to refer "he" to "Peter" in "Peter kisses Tom. He feels happy." ?