Lease agreements mandate parties to vacate upon expiration, with courts enforcing this compliance while addressing entitlements to mesne profits.

(PER: HON'BLE DR. JUSTICE K.MANMADHA RAO)

The present Commercial Appeal No.554/2024 is filed by the Appellant/Defendant challenging the judgment and decree dated 10.12.2024 passed in Com.O.S.No.926/2024, by the LXXXVI Addl. City Civil and Sessions Judge, (Commercial Court) Bengaluru (hereinafter referred to as ‘the Commercial Court’).

2. The appellant herein is the defendant and the respondent herein is the plaintiff in Comm.O.S No.926/2014 before the Commercial Court.

3. The respondent/plaintiff filed the Commercial Original Suit seeking for eviction of the appellant/defendant- partnership firm and to direct the appellant/defendant to pay mesne profits for its illegal occupation of the suit property w.e.f. 01.01.2024 and differential in amount in mesne profit from January 2024 to May 2024 with interest at the rate of

18% per annum and such other consequential reliefs.

4. For convenience of reference, the parties are hereinafter referred to as arrayed before the Commercial Court in Comm.O.S.No.926/2014.

5. Brief facts of the case are that the plaintiff claiming to be the absolute owner of a commercial immovable property bearing Municipal Corporation Nos.784 and 785 (PID No.1073/784 and 785), situated at 16^th B Cross Road, 14^th Main, Bus Stand Road, Yelahanka New Town, Bangalore – 560064, along with the buildings constructed thereon. He executed a registered lease deed dated 08.01.2015 in favour of the defendant-firm in which the plaintiff leased out the suit property for a period of 9 years and the same was expired on 30.12.2023. Since 01.01.2024 the defendant-firm is in illegal occupation of the suit property. On expiry of the said lease, the plaintiff had issued a notice on 30.11.2023 under Section 106 of Transfer of Property Act (for short “the T.P.Act”) calling upon the defendant to vacate and handover the said property. On receipt of such notice, the defendant has issued reply dated 07.12.2023 through its advocate admitting the jural relationship of landlord and tenant and did not choose to vacate the suit property. Hence, the plaintiff filed the Comm.

Suit.

6. The defendant filed written statement before the Commercial Court while denying the allegations made in the plaint, admitted the issuance of quit notice under Section 106 of T.P. Act. It is stated that the defendant started a business of a restaurant under the name ‘M/s. Udipi Grand and Vandana Gardenia’, under a registered lease deed dated 08.01.2015 for a term of 9 years and when the defendant picked-up its business the plaintiff has filed the present suit.

The defendant has spent Rs.7,06,27,805/- on the construction and established a hotel on the schedule premises. The valuation of the building is Rs.3.00 Crores. The defendant has paid property tax from 2016-2025 to the tune of Rs.44,72,394/-, the defendant also deposited certain amount while getting the electricity and water connections to the BESCOM, BWSSB in Rs.16,45,000/- and Rs.2,72,030/- respectively. Therefore, the defendant has sought for a counter claim of Rs.3,63,89,424/-.

7. The plaintiff filed counter claim to the written statement filed by the defendant stating that, as per the clauses of the agreement the defendant was authorised to make constructions in the suit property in accordance with its volition to carry out business and after the expiry of the lease time the defendant was required to handover the vacant possession of the suit property to the plaintiff. Since the plaintiff has not agreed in the agreement to pay anything to the defendant at the time of vacating the premises, the plaintiff need not pay the counter claim amount or any part thereof. Therefore prayed to reject the counter claim.

8. Based on the above pleadings, the Commercial Court has framed the following issues :

1. Whether the plaintiff is entitled for peaceful possession o