Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Del) 234

IN THE HIGH COURT OF DELHI AT NEW DELHI
ANIL KSHETARPAL, AMIT MAHAJAN, JJ.
M/S Ritas Heritage & Ors. - Appellants
Versus
Sangita Gupta & Anr. – Respondents
RFA(COMM) 150 of 2023 and CM APPL. 36777 of 2023
Decided On : 31-01-2026

Advocates Appeared:
For the Appellant : Mr. Arihant Jain, Adv.
For the Respondent: Mr. Rajiv Ranjan Mishra, Mr. Saurabh, Mr. Jitender Kumar, Ms. Suruchi Yadav, Advs.

The escalation clause in a tenancy agreement remains enforceable despite the lease being unregistered when the tenancy continues beyond one year.

Headnote:(A) Commercial Courts Act, 2015 - Section 13 - Tenant-landlord dispute - The Appellants appealed against the Commercial Court's decree awarding Rs.3,90,163/- along with interest @6% per annum - The Court addressed various claims including enhanced rent, electricity charges, water dues, and repairs, finding insufficient grounds for Appellants’ arguments against lower court findings. (Paras 10-49)

(B) Scope of Appellate Review - The appellate court cannot interfere unless the lower court's findings are perverse or based on no evidence - The credibility of evidence must be maintained in light of its reliability, even if unrebutted. (Paras 13-14)

(C) Enhanced Rent Claim - The lower court's reasoning to deny enhanced rent for late tenancy based on lack of a fresh instrument was flawed, as the escalation clause was enforceable when tenancy continued. (Paras 16-26)

(D) Compensation for Loss of User - The lower court reasonably granted one month’s rent for the loss of user after Appellants’ vacation. (Paras 27-31) (E) Electricity and Water Charges - Claims were sanctioned supported by appropriate bills, with the lower court excluding non-related periods of billing. (Paras 32-36) (F) Repair Expenses - The Commercial Court's reduction and adjustment of repair costs based on wear and tear was judicious and supported by evidence. (Paras 37-41) (G) Security Deposit Adjustment and Interest - The Commercial Court's awarded interest rate of 6% was equitable, following adjustments on the security deposit. (Paras 42-44) (H) Final Decision: The appeal is dismissed and the lower court's judgment is affirmed.

Table of Content
1. overview of the case and context. (Para 1 , 2 , 3 , 4)
2. details of the landlord-tenant dispute. (Para 5 , 6 , 7 , 8 , 9)
3. contentions of both parties on the judgment. (Para 10 , 11)
4. scope of appellate interference. (Para 12 , 13 , 14)
5. analysis of enhanced rent claim. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21)
6. assessment of loss of user compensation. (Para 28 , 29 , 30 , 31)
7. determination of electricity and water charges. (Para 33 , 34 , 35 , 36)
8. claims for repairs and renovation expenses. (Para 37 , 38 , 39 , 40 , 41)
9. adjustment of the security deposit. (Para 42 , 43 , 44)
10. final decision on the appeal. (Para 45 , 46 , 47 , 48 , 49 , 50)

JUDGMENT :

ANIL KSHETARPAL, J.

1. The present Appeal, preferred by the Appellants, assails the correctness of the judgment and decree dated 11.01.2023 [hereinafter referred to as ‘Impugned Judgment’] passed by learned Commercial Court whereby the Commercial Court partly decreed the suit for recovery filed by the Respondents [Plaintiffs before the Commercial Court] and awarded a sum of Rs.3,90,163/- along with interest @ 6% per annum from the date of filing of the suit till realization, with costs.

2. The issue which arises for consideration in the present Appeal is whether the Commercial Court committed any error of law, perversity, or infirmity in appreciation of the pleadings and evidence on record while partly decreeing the Respondents’ suit for recovery, warranting interference by this Court in exercise of appellate jurisdiction under Section 13 of the Commercial Courts Act, 2015 [hereinafter referred to as ‘CC Act’].

FACTUAL MATRIX:

3. In order to appreciate the controversy involved in the present Appeal, it is necessary to briefly notice the relevant facts as they emerge from the pleadings and the record of the case.

4. The Appellants were the Defendants before the learned Commercial Court. The Respondents, who are the Plaintiffs in the suit, are the joint owners/landlords of the property bearing No. 15- A/59, built on leasehold Plot No. 59, Block No. 15-A, situated at W.E.A., Karol Bagh, New Delhi-110005 [hereinafter referred to as the ‘suit property’].

5. The dispute between the parties arises out of a landlord-tenant relationship. As borne out from the record, the Respondents had let out the second and third floors of the suit property to the Appellants under an unregistered lease deed dated 12.07.2017 between the parties at a monthly rent of Rs.2,14,935/-, which was stipulated to be enhanced to Rs.2,57,922/- with effect from 01.08.2018. The Appellants had also deposited a sum of Rs.4,45,000/- as security deposit, adjustable against any damages, repairs or arrears.

6. The Respondents instituted a suit for recovery being CS (COMM) No. 73/2019 against the Appellants, seeking recovery of a sum of Rs. 10,25,030/- along with pendente lite and future interest @ 16% per annum, inter alia, on account of alleged unpaid rent, electricity and water dues, and expenses stated to have been incurred towards repairs and renovation of the suit property after the Appellants vacated the same.

7. The Appellants did not file a written statement within the prescribed period and were proceeded ex-parte by the Commercial Court vide order dated 17.09.2019. A counter-claim was also filed by the Appellants; however, the same came to be dismissed in default. An application moved by the Appellants for setting aside the ex-parte proceedings was also dismissed by the Commercial Court.

8. The Respondents led their evidence and examined three witnesses, namely PW-1/Mr. Ajay Gupta, PW-2/Ms. Sangita Gupta and PW-3/Mr. Sagar Gupta, who tendered their affidavits in evidence and relied upon documentary exhibits placed on record. None of the witnesses were cross-examined on behalf of the Appellants.

9. After considering the pleadings, evidence and written submissions of the parties, the Commercial Court, by the Impugned Judgment, partly allowed the suit. While rejecting the claim towards enhanced rent a