Back
2025 Supreme(Online)(KAR) 9131
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
V KAMESWAR RAO, S RACHAIAH, JJ
M/S. RHEOTECH FOUNDRY PVT. LTD. – Appellant
Versus
MRS. SHOBHA VIKRAM – Respondent
Commercial Appeal No. 109 of 2024
For the Appellants/Petitioners: A GUNASEKARAN
For the Respondents: V.B.SHIVAKUMAR
The unregistered lease agreement can support claims for mesne profits based on established rental rates despite lacking evidentiary enforceability.
Headnote:(A) Commercial Court Act - Section 13(1)(A) - The appellant challenged the trial court's judgment in which it decreed the respondent’s suit, ordering payment of rent arrears and mesne profits. Key issues included the lawful termination of tenancy and payment obligations under the unregistered lease agreement. The trial court partly affirmed the plaintiff’s claims on rent and GST. (Paras 1, 90, 87, 88)
(B) Unregistered Lease Agreement - The court held that the unregistered lease agreement, while lacking evidentiary value, could support claims for mesne profits given the tenant’s admitted occupancy and agreed rent rates. (Paras 16, 18)
Facts of the case:
The appellant entered into a lease agreement with the respondent for an industrial property, with disputed rental payments leading to the suit.
Findings of Court:
The trial court found the appellant in arrears for rent and awarded mesne profits based on the established rent rate.
Issues: The court addressed whether the tenancy was lawfully terminated, whether rent was owed, and the validity of the unregistered lease agreement.
Ratio Decidendi: The court upheld that the appellant had an obligation to pay rent despite the non-registration of the lease and supported the calculation of mesne profits at the agreed rate.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. disputes on rental payments and tenancy termination. (Para 2 , 3 , 6) |
| 2. court's observations on evidentiary issues related to rental agreements. (Para 11 , 12 , 15) |
| 3. grounds for dismissing appeal and affirming lower court's decision. (Para 17 , 18) |
ORAL JUDGMENT
(PER: HON'BLE MR JUSTICE V KAMESWAR RAO)
This appeal has been filed by the appellant challenging the judgment and decree dated 19.12.2023 passed in Com.O.S.No.57/2022, whereby the Court of X Addl. District and Sessions Judge, Bengaluru Rural District, Bengaluru (‘Trial Court’ for short) has decreed the suit filed by the respondent herein by stating in paragraph No.90 as under:
“90. Issue No. 5: In view of the findings on issue Nos. 1 to 4 and additional issue Nos. 1 to 6, I proceed to pass the following:
ORDER
The suit filed by the plaintiff is hereby party decreed with cost.
The relief of set off claimed by the defendant as mentioned in its written statement is hereby rejected. The defendant is directed to quit, vacate and handover the vacant possession of the suit schedule property to the plaintiff within 4 months from the date of this order.
Further, it is ordered that the defendant is liable to pay arrears of rent of Rs.56,00,000/- to the plaintiff and directed it to pay the said amount to the plaintiff within 4 months from the date of this order.
Further, it is ordered that the defendant is liable to pay GST at the rate of 18% on the above said arrears of rent. After receiving the said arrears of rent along with GST, the plaintiff is liable to pay the said GST to the concerned Government Department.
Further, it is ordered that the defendant is liable to pay mesne profits to the plaintiff at the rate of Rs.7,00,000/- per month from March 2022 to till handing over the vacant possession of the suit schedule property to the plaintiff.
Further, office of this court is directed to send the unregistered xerox copy of lease agreement dated 26.11.2019 produced by the plaintiff to the Concerned District Registrar to decide the duty and penalty payable on the said document and recover the same from the concerned party and later intimate the same to this court.
Draw decree accordingly.
Office is directed to send copy of the Judgment to both the parties through E-mail as required under Order XX Rule 1 of Code of Civil Procedure.”
2. The facts which are relevant to be considered for the purpose of this order are, it was the case of the respondent in the suit that she is the sole and absolute owner of the Industrial plot No.67D in Sy.No.305 of Bommasandra Industrial Area, Hosur road, Bengaluru. In the month of January 2020, the appellant had approached her and requested her to let-out the schedule property with machinery for rent. After negotiation, monthly rent came to be fixed at Rs.7,25,000/- per month. It was also decided that the appellant-defendant shall pay an amount of Rs.72,00,000/- to the plaintiff-respondent as a security deposit and towards the same, the appellant has paid Rs.60,00,000/- and later paid Rs.12,00,000/- to the respondent herein. It was also agreed that there shall be an enhancement of monthly rent for the first and second year at the rate of 20% and 10% for the third year. It was also agreed between the parties that rent has to be paid within 10th day of every month and in case of delay in payment of rent, interest at the rate of 1.5% per month has to be paid by the appellant to the respondent.
3. The case of the respondent in the suit was that, the appellant had to pay arrears of monthly rent of Rs.7,25,000/- from 29.02.2020 till 31.01.2021 amounting to Rs.87,00,000/- to her. Further, the appellant had to pay rent at the rate of Rs.8,70,000/- from 01.02.2021 to 31.08.2021 amounting to Rs.60,90,000/-. In all, the appellant had to pay an amount of Rs.1,47,90,000/- to the respondent. It was also the case of the respondent-plaintiff that, as per the agreed terms, the appellant had not paid the monthly rent within 10th day of every month, as such the a
