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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Naresh Kumar Sabherwal – Appellant
Versus
Dinesh Gupta & Ors. – Respondents
RFA(COMM) 98 of 2023
Decided On : 19-05-2023
Security Deposit - Lease Dispute - Lease Deed - 18.09.2013 - Paragraph 3 of the Lease Deed - Adjustment of Security Deposit - Mesne Profits - Damages - Rental Value - Possession of Property
Fact of the Case:
The appellant filed an appeal against the judgment and decree passed by the Commercial Court, claiming rent and mesne profits for a property leased to the respondents. The Commercial Court quantified the amount payable to the appellant based on the last rent paid by the respondent and adjusted the security deposit from the amount payable to the appellant.
Finding of the Court:
The court found that the appellant failed to establish the rental value of the property and was not entitled to the mesne profits/damages at the claimed rate. The court also held that the adjustment of the security deposit from the amount payable to the appellant was justified based on the terms of the Lease Deed.
Issues: Dispute over rent and mesne profits, adjustment of security deposit, and failure to establish rental value of the property.
Ratio Decidendi: The court relied on the terms of the Lease Deed and the failure of the appellant to provide evidence of the rental value of the property to make its decision.
Final Decision: The appeal was dismissed, and the decision of the Commercial Court was upheld.
JUDGMENT
Vibhu Bakhru, J. (Oral)
CM APPL. 26829/2023 (condonation of delay in filing the appeal before this Hon'ble Court)
1. For the reasons stated in the application, the same is allowed and the delay in filing the present appeal is condoned.
2. The application stands disposed of.
CM APPL. 26828/2023 (exemption from filing the certified copies of impugned judgment as well as of annexures as well as typed, dim and less margin copies)
3. Exemption allowed, subject to all just exceptions.
4. The application stands disposed of. RFA(COMM) 98/2023 & CM APPL. 26830/2023
5. The appellant has filed the present appeal impugning judgment and decree dated 22.12.2022 passed by the learned Commercial Court in CS (COMM) No. 531/2019 (`the impugned judgment').
6. The appellant had filed the aforementioned suit, inter alia, praying for a decree of Rs.9,20,514/-(Rupees Nine Lakhs Twenty Thousand Five Hundred and Fourteen Only) along with interest at the rate of 18% per annum.
7. The appellant's (plaintiff's) cause of action rested on failure on the part of the respondents to pay rent in terms of the Lease Deed dated 18.09.2013 ( hereafter `the Lease Deed') in respect of Shop No. 44, Old Rajinder Nagar Market, New Delhi (hereafter `the said property').
8. The appellant had leased the said property in terms of the Lease Deed to the respondents. The term of the lease was for the period of two years commencing from 01.09.2013. According to the appellant, the tenancy came to an end on 30.08.2015 by flux of time, however, the lease was verbally renewed from time to time.
9. The appellant claimed that in terms of the Lease Deed, rent was required to be increased by 10% for each subsequent year, and therefore, he is also entitled to the said increase over and above the rent as mentioned in the Lease Deed.
10. According to the appellant, the respondent was liable to pay rent at the rate of Rs.30,800/-per month for the period 01.09.2014 to 30.08.2015 and at the rate of Rs.33,880/-per month for the period 01.09.2015 to 31.08.2016. He claimed that the rent was also required to be enhanced for the subsequent periods on similar basis.
11. The appellant claimed that on failure of the respondents to pay the enhanced rent, an amount of Rs.3,96,067.84/-was due and payable. However, this did not conform to the demand raised by the appellant in its legal notice, which the appellant claimed was erroneous.
12. The appellant also claimed mesne profits at rate of Rs.80,000/ per month for the period commencing from June, 2019.
13. The respondents filed the written statement, however, the same was struck off.
14. The learned Commercial Court proceeded to examine the admitted facts. It noted that there was no dispute that the possession of the property was taken over by the plaintiff on 17.01.2021. The court also noted that the respondents had offered possession of the said property on 03.06.2020.
15. The learned Commercial Court found that appellant had failed to lead any evidence or place any material on record to establish the rental value of the properties in the vicinity. Accordingly, the court held that the appellant was not entitled to the mesne profits / damages at the rate of Rs.80,000/-, as claimed. However, the learned Commercial Court quantified the amount payable to the appellant on the basis of the last rent paid by the respondent for the period 01.06.2019 to 03.06.2020 (the date on which possession was offered to the appellant).
16. The dispositive paragraph of the impugned judgment is set out below:
"15. In the instant case, it is a matter of record that the possession of suit property was offered by the defendants to plaintiff on 03.06.2020, which was refused by the plaintiff. Applying the ratio of the afore mentioned case, the plaintiff cannot claim mesne profits/damages for the period 03.06.2020 to 17.01.2021. In so far as mesne profits/ damages are concerned, the plaintiff has claimed the same @ Rs.80,000/-per month. During the cross-exa
The adjustment of the security deposit and the determination of mesne profits/damages are based on the terms of the Lease Deed and the evidence provided regarding the rental value of the property.
The court established that tenants must compensate landlords with mesne profits during the appeal process, reflecting current market rates, not just contractual rent.
Mesne profits can only be claimed from the date of the eviction decree, not from the date of filing the suit, as possession remains lawful until the decree is passed.
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Court may reassess mesne profits based on market evidence and principles to avoid punitive outcomes.
The main legal point established in the judgment is that claims for higher rent and penal rent must be supported by evidence and the terms of the lease agreement. Additionally, the court clarified th....
Failure to file a written statement, failure to appear and cross-examine witnesses, and absence of defence or claim against the respondent justified the passing of the recovery decree. The court also....
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