Delhi District Court
Satya Pal Singh And Anr vs Vishal Grewal And Ors on 18 December, 2024
IN THE COURT OF SH. SUMIT DALAL
DISTRICT JUDGE - 04
SOUTH WEST DISTRICT
DWARKA COURTS : NEW DELHI
CS DJ ADJ : 403/2021
CNR DLSW01-005761-2021
1. Sh. Satya Pal Singh
S/o Sh. Khazan Singh
2. Smt. Santosh Devi
W/o Sh. Satya Pal Singh
Both R/o: C-6B/11, Janakpuri,
New Delhi - 110058
....PLAINTIFF
VERSUS
1. Mr. Vishal Grewal
S/o Late Kuldeep Singh
R/o: H.No. C-6B/16
8, Third Floor, Janakpuri,
New Delhi - 110058.
Also at
H.No. B-1/524, Second Floor,
Janakpuri, Near Standard Chartered Bank,
New Delhi - 110058.
Presently residing at
H.No. 732, Group Pocket - C,
DDA Flats, Hastal, Uttam Nagar,
New Delhi - 110058.
2. Ms. Akansha Rathi
W/o Mr. Vishal Grewal
R/o: H.No. C-6B/168, Third Floor,
Janakpuri, New Delhi - 110058
Digitally
signed by
SUMIT
SUMIT DALAL CS DJ ADJ 403/21 Page 1 of 51
DALAL Date:
2024.12.23
17:17:20
+0530
Also at
H.No. B-1/524, Second Floor,
Janakpuri, Near Standard Chartered Bank,
New Delhi - 110058.
Presently residing at
Flat No. 6006/3, Santushti Apartment,
D-6, Vasant Kunj, New Delhi - 110070.
....DEFENDANT(s)
SUIT FOR POSSESSION, RECOVERY OF ARREARS OF
RENT, PERMANENT INJUNCTION AND DAMAGES FOR
UNAUTHORISED USE AND OCCUPATION CHARGES AND
MESNE PROFIT.
DATE OF INSTITUTION : 17.06.2021
DATE OF ARGUMENTS : 13.11.2024
DATE OF JUDGMENT : 18.12.2024
JUDGMENT
1. The Plaintiff has filed the present suit, against the Defendant, for seeking decree of permanent injunction and possession in respect of suit property bearing no. C-6B/168, third floor, Janakpuri, New Delhi - 110058. The plaintiff has also sought decree of arrears of use and occupation charges/ rent for the period from 25th February, 2021 to 24th April, 2021 @ Rs. 20,500/- per month along with interest @ 18% per annum. The plaintiff has also sought decree of damages/ mesne profits unauthorized use and occupation charges @ Rs. 40,000/- per month along with interest @ 18% per annum, pendente lite with effect from 25th April 2021.
Digitally FACTS STATED IN THE PLAINT signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:17:33 +0530 CS DJ ADJ 403/21 Page 2 of 51
2. The facts, as set out in the plaint, are summed up in brief hereinbelow:
a. The plaintiffs are elderly individuals who own and reside in the property bearing No. C-6B/168 in Janak Puri, New Delhi. The suit property specifically refers to the third floor of this building, which they rented out to the defendants in October 2020. This rental income is the plaintiffs' primary source of livelihood.
b. Defendant No. 1, who is the husband of Defendant No. 2, approached the plaintiffs in October 2020, requesting temporary accommodation in Janak Puri due to ongoing renovations at his residence located on the second floor of another property in the same locality. He requested to rent the third floor of the plaintiffs' property for residential purposes, assuring the plaintiffs of timely payment of rent.
c. The plaintiffs agreed to let out the property on a monthly rent of ₹20,500 (excluding water and electricity charges), with a tenancy agreement formalized and notarized on 22.10.2020, for an 11-month period from 25.10.2020, to 25.09.2021. The defendants' information was registered at the local police station upon the plaintiffs' request.
d. The tenancy agreement, dated 22.10.2020, required advance payment of rent by the 25th of each month, as well as payment of utility charges. Both parties agreed to the terms under which the plaintiffs would have the right to terminate the Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 tenancy on breach of rental payments or any other terms. 17:17:43 +0530 CS DJ ADJ 403/21 Page 3 of 51 e. Defendants initially paid the rent up to 24.02.2021, after which they stopped making payments. Repeated calls and messages from the plaintiffs to Defendant No. 1 went unanswered, and by late February, Defendant No. 1 had allegedly switched off his phone.
f. Additionally, the defendants defaulted on paying electricity bills from the start of their tenancy. Although they cleared an outstanding bill of ₹5,070 for March 2021 after receiving a legal notice, further dues remained unpaid.
g. Defendant No. 1 issued a cheque (No. "053168") dated 25.02.2021 as advance rent for the following month i.e. March, which was returned unpaid due to "Funds Insufficient," as indicated by the bank memo dated 01.03.2021. Plaintiffs being senior citizens and the rental income from the suit property being their only source of income, the incident of dishonour of cheque, combined with continued non-payment of rent, prompted the plaintiffs to issue a notice dated 26.03.2021 terminating the tenancy.
h. Due to the defendants' repeated defaults, the plaintiffs invoked Clause 13 of the tenancy agreement dated 22.10.2020, which allowed them to terminate the tenancy in case of non-payment. The plaintiffs sent a legal notice dated 26.03.2021, terminating the tenancy and demanding the return of the property within 15 days. It has been clearly stated in the legal notice dated 26.03.2021 that if the Defendants fail to Digitally hand over the vacant possession within 15 days of receipt of signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:17:53 +0530 CS DJ ADJ 403/21 Page 4 of 51 the notice, the defendants shall be considered as unauthorized occupants in the suit property and thus, will be liable for unauthorized use and occupation @ Rs. 40,000/- per month with effect from 25.04.2021 till the handing over the vacant possession of the suit property. However, the defendants responded with a vague and evasive reply, refusing to vacate the premises.
i. Following the termination of tenancy, the plaintiffs allege that the defendants continued to occupy the property unlawfully, making them unauthorized occupants. As compensation for this unauthorized occupation, the plaintiffs claim damages at ₹40,000 per month from 25.04.2021, onwards, until the defendants vacate the property.
j. The plaintiffs wish to sell the property and have identified a potential buyer. They allege that the defendants' refusal to vacate and their ongoing harassment are obstructing the sale, causing the plaintiffs substantial financial harm. The defendants' actions, according to the plaintiffs, have now become dishonest and malicious.
k. The plaintiffs allege that the defendants not only refused to vacate but also locked the premises and threatened to sublet or assign the property to a third party. This act, they argue, further violates their rights and heightens their apprehension that the defendants may attempt to create third-party interests in the property.
Digitally l. Reliefs Sought by the Plaintiffs:
signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:18:15 +0530 CS DJ ADJ 403/21 Page 5 of 51
1. Plaintiffs seek a decree for vacant possession of the suit property, requesting the court to direct the defendants and their associates to vacate and hand over peaceful possession of the third floor of the property.
2. Plaintiffs seek arrears of ₹20,500 per month for the period from February 25, 2021, to April 24, 2021, along with 18% interest per annum.
3. Plaintiffs claim damages of ₹40,000 per month, with 18% interest, for the defendants' unauthorized use of the property from April 25, 2021, until they vacate.
4. Plaintiffs request a permanent injunction to restrain the defendants and their associates from selling, mortgaging, or creating any third-party interest in the property.
5. Plaintiffs seek litigation costs, including attorney fees, to be awarded against the defendants.
6. The plaintiffs request any additional relief that the court deems just and appropriate in light of the defendants' alleged conduct and breach of trust.
FACTS STATED IN THE WRITTEN STATEMENT:
3. Both the Defendants filed their separate written statements. The averments, made in the written statement of Defendant No. 1, are summed up in brief as follow:
a. The suit is without cause of action against him. Defendant No. 1 has surrendered his tenancy on February 26, 2021, following his forced eviction by Defendant No. 2 (his wife) on February Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 CS DJ ADJ 403/21 Page 6 of 51 17:18:27 +0530 5, 2021. The plaintiffs were aware of these events but filed the suit regardless.
b. The plaintiffs are concealing key facts about his eviction due to marital disputes with Defendant No. 2. Defendant No.1 informed the plaintiffs about his eviction and formally surrendered the tenancy in February 2021, expecting the plaintiffs to take back possession. The plaintiffs have initiated legal action at Defendant No. 2's behest.
c. Defendant No. 1 is not liable for rent after February 26, 2021, the date of his tenancy surrender, and requests the return of seven post-dated cheques he provided for rent.
d. To assist the plaintiffs, Defendant No. 1 has filed a separate suit (CS No. 626 of 2021) for perpetual and mandatory injunction against Defendant No. 2 and her family members, seeking to prevent them from transferring or subletting the suit property and to compel them to vacate it. This case is pending before the Civil Judge at Dwarka Courts, Delhi.
e. The plaintiffs' suit does not meet the verification standards under the Code of Civil Procedure (CPC) and should be dismissed.
f. The rent agreement lacks adequate stamp duty under Section 35 of the Indian Stamp Act. He claims that no rights can be derived from it until the duty is paid.
g. Defendant No. 1 does not contest the facts stated in Digitally signed by SUMIT Paragraphs 1-4 of the plaint, acknowledging them as a matter SUMIT DALAL DALAL Date:
2024.12.23 17:18:53 CS DJ ADJ 403/21 Page 7 of 51 +0530 of record. Thus, Defendant No. 1 admits the rent agreement and the tenancy but asserts that he surrendered the tenancy in February 2021.
h. Defendant No. 1 asserts he paid rent up to the date of his eviction on February 5, 2021. He disputes the plaintiffs' claim that he defaulted on rent or utility payments, stating that he even covered all dues until March 2021 out of goodwill, despite no longer occupying the property.
i. Defendant No. 1 maintains he verbally informed the plaintiffs on February 26, 2021, of his tenancy surrender and requested that the plaintiffs refrain from presenting his rent cheques.
j. Defendant No. 1 refutes claims of harassment or intent to seize the plaintiffs' property, maintaining that he has had no control over the property since his eviction and could not have locked the premises or interfered with the plaintiffs' access.
k. Defendant No. 1 contests the accusation of habitual default in rent payment, stating that he regularly paid rent until his eviction.
l. Defendant No. 1 denies responsibility for damages or unauthorized occupation charges at ₹40,000 per month, arguing that he was out of the property from February 5, 2021, onwards. He asserts that Defendant No. 2 should bear responsibility if damages are awarded.
m. Defendant No. 1 does not contest the plaintiffs' intent to sell the property but denies obstructing the sale or failing to Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:19:01 +0530 CS DJ ADJ 403/21 Page 8 of 51 vacate. He claims to have already left the property and asserts no liability for any delays in the sale process.
n. Defendant No. 1 denies any refusal to vacate or threats to sublet or create third-party interests, emphasizing that he surrendered his tenancy on February 26, 2021. He argues that Defendant No. 2's conduct is the source of the plaintiffs' apprehension.
o. Defendant No. 1 concludes by reiterating his surrender of tenancy rights on February 26, 2021, and claims that the suit lacks a valid cause of action against him. He views the plaintiffs' allegations as unfounded and emphasizes his lack of involvement in ongoing occupancy or rental obligations.
4. The averments, made in the written statement of Defendant No. 2, are summed up in brief as follow:
a. The suit filed by the plaintiffs is an abuse of the legal process, lacking merit, and should be dismissed. b. The plaintiffs' suit lacks cause of action regarding her, as there is no landlord-tenant relationship between her and the plaintiffs, with Defendant No. 1 being the sole tenant. She seeks dismissal under Order VII Rule 11 CPC for lack of cause of action.
c. The plaintiffs have not approached the court with clean hands, suppressing material facts about the tenancy relationship, which exists only with Defendant No. 1. Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 CS DJ ADJ 403/21 Page 9 of 51 17:19:09 +0530 d. Defendant No. 2 has no contractual relationship with the plaintiffs since the rent agreement, dated 22.10.2020, was executed solely with Defendant No. 1. e. The suit is motivated and filed in connivance with Defendant No. 1 to harass her, pointing to the sequence of events where she was forced out of the house and subsequently served notice in this suit.
f. Defendant No. 2 was ousted by Defendant No. 1 and his family and is now dependent on her parents for shelter. Her personal belongings, including jewelry, are still in the suit property and were allegedly misappropriated by Defendant No. 1's family. She highlights her cooperation with the court, stating she had no objection to breaking locks on the property to retrieve her belongings.
g. Defendant No. 2 references tenant registration documents filed by the plaintiffs, which list only Defendant No. 1 as the tenant, with no mention of her, thus invalidating the plaintiffs' claims against her.
h. All financial obligations, including bounced rent checks, are the responsibility of Defendant No. 1 alone as per the rent agreement.
i. The plaintiffs have included her in the suit merely to harass and extort money from her, taking advantage of her relationship as Defendant No. 1's wife. j. Defendant No. 2 denies being a tenant of the plaintiffs or having entered any rental agreement. She reiterates that the suit property was rented exclusively to Defendant No. 1, as Digitally signed by documented in the tenant verification form. SUMIT SUMIT DALAL DALAL Date:
2024.12.23 CS DJ ADJ 403/21 Page 10 of 51 17:19:17 +0530 k. Defendant No. 1 disputes that the plaintiffs agreed to let the property to both Defendants No. 1 and 2, emphasizing that the tenancy was solely with Defendant No. 1. l. Defendant No. 2 denies any assurances regarding rent payment, stating that she never took the suit property on rent and has no landlord-tenant relationship with the plaintiffs. m. Defendant No. 2 rejects any claim that terms of tenancy or rent obligations applied to her, citing the rent agreement as solely applicable to Defendant No. 1. n. Defendant No. 2 frequently refers to the tenant verification and rent agreement as proof that Defendant No. 1 is the only tenant, with no obligations extending to her. o. Defendant No. 2 denies any responsibility for outstanding utility bills or maintenance fees, stating these obligations fall on Defendant No. 1 as the tenant.
p. Defendant No. 2 asserts she has no liability to pay rent or damages for unauthorized occupation, noting that she was ousted from the property by Defendant No. 1 and his family and is not in possession of the property. q. Defendant No. 2 maintains that the plaintiffs have no cause of action against her, as she was never a tenant and has no privity of contract with the plaintiffs.
FACTS STATED IN THE REPLICATION
5. The Plaintiff has filed the replication, wherein the Plaintiff has traversed the contents of the written statements of the Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:19:25 CS DJ ADJ 403/21 Page 11 of 51 +0530 Defendants and has made the necessary denials, reiterating the contents of the plaint.
ISSUES
6. On the basis of the pleadings of the parties, the following issues were framed on 05.11.2022
1. Whether the plaintiffs are entitled to decree of arrears of use and occupation charges w.e.f. 25.02.2021 to 24.04.2021 @ Rs. 20,500/- per month along with interest @ 18% per annum? O.P.P.
2. Whether the plaintiffs are entitled to decree of damages @ Rs.
40,000/- per month w.e.f. 25.04.2021 till handing over of the possession? O.P.P.
3. Whether defendant no. 1 had surrendered tenancy rights on 26.02.2021? If so, its effect? O.P.D-1.
4. Whether rent agreeing dated 22.10.2020 is liable to be impounded as the same is not appropriately stamped in accordance with provisions of Indian Stamp Act? O.P.D.
5. Whether suit is liable to be dismissed for non-joinder of necessary parties? O.P.D-1.
6. Whether there is no cause of action qua defendant no. 2 as she is not a contracting party? O.P.D.-2.
7. Relief.
THE PLAINTIFF'S EVIDENCE
7. The Plaintiff has led its evidence and has examined two witness in support of his case. The details of the Plaintiff's witnesses SUMIT are as follows:
DALAL Digitally signed by SUMIT DALAL Date: 2024.12.23 17:19:33 +0530 CS DJ ADJ 403/21 Page 12 of 51 a. PW-1 Sh. Satya Pal Singh, the plaintiff himself. b. PW-2 Sh. Anurag Tanwar.
8. The Plaintiff himself appeared as PW-1 and deposed in line with the plaint of the suit and tendered his evidence affidavit which is Ex. PW1/A and relied upon the following documents:
S. No. Exhibit/Mark Description
1. Ex. PW1/1 Site plan
2. Ex. PW1/2 (colly) Copy of rent agreement
dated 22.10.2021 and copy
of request for registration of
tenant information and
acknowledgment of request
dated 28.10.2021.
3. Ex. PW1/3 Cheque bearing no. 053168
dated 25.02.2021 and
returning memo dated
01.03.2021
4. Ex. PW1/4 Office copy of notice dated
26.03.2021
5. Ex. PW1/5 Bayana Receipt
9. Thereafter, PW-1 was cross examined by Ld. counsel for the Defendant no. 1 on 03.05.2023 and by Ld. Counsel for the Defendant no. 2 on 04.05.2023.
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:19:40 +0530 CS DJ ADJ 403/21 Page 13 of 51
10. PW2 Sh. Anurag Tanwar s/o Sh. Pitam Singh, r/o D/2/5, Vashisht Park. Pankha Road, New Delhi 46 appeared as a summoned witness. His examination in chief is reproduced below:
"I am summoned witness in the present case. I entered into an agreement to sell/Bayana on 01.06.2021 with plaintiff Satya Pal Singh. I had given a sum of Rs.3,10,000/- to the plaintiff in respect of purchase of property No. C 6B/168, Janakpuri, New Delhi 58. Plaintiff failed to handover vacant peaceful possession of the said property on or before 15.07.2021 and due to same sale transaction was cancelled and I received double of the Bayana amount te. Rs.6,20,000/- back from plaintiff as per terms and conditions of Bayana receipt. I have seen document already Ex. PW1/5 which bears my signatures at point A. I even identify signatures of plaintiff no.1 at point B on Ex.PW1/5 who had signed in my presence."
PW-2 was cross examined by the ld. Counsel of Defendant No. 1 on 23.08.2023 and by the ld. counsel for Defendant No. 2 on the same day i.e., 23.08.2023. Thereafter, on the statement of Plaintiff, Plaintiff's evidence was closed on 23.08.2023.
THE DEFENDANT'S EVIDENCE
11. The Defendant No. 1 led his evidence and he himself Digitally signed by SUMIT entered the witness box and deposed as D1W1. Defendant No. 1, SUMIT DALAL DALAL Date:
D1W1, deposed in line with the pleadings in his written statement 2024.12.23 17:19:49 +0530 CS DJ ADJ 403/21 Page 14 of 51 and tendered his evidence affidavit which is Ex. D1W1/A and relied upon the following documents:
S. No. Exhibit/Mark Description
1. Ex D1W1/1 Copy of reply dated
12.04.2021 to the legal
notice
D1W1 was cross examined on behalf of the ld. counsel for the plaintiff on 28.03.2024 and thereafter Defendant No. 1 closed his evidence on 15.05.2024.
12. On behalf of Defendant No. 2, her SPA holder Smt. Sneh Lata W/o Sh. Raj Singh Rathi, age: 54 years, R/o: Flat No. 6006/3, Santusthi Apartment, D- 6, Vasant Kunj, New Delhi-110070 entered the witness box and deposed as D2W1. Smt. Sneh Lata, D2W1 deposed in line with the pleadings in the written statement filed on behalf of the Defendant No. 2 and tendered her evidence affidavit Ex.D2W1/A and also relied upon the following documents:
S. No. Exhibit/Mark Description
1. Ex D2W1/1 (OSR) Copy of Special Power of
Attorney executed by
defendant no. 2 in her
favour.
2. Ex. D2W2/2 (OSR) Copy of first page of CAW
Cell complaint
Digitally
signed by
SUMIT
SUMIT DALAL
DALAL Date:
2024.12.23
17:19:56
+0530
CS DJ ADJ 403/21 Page 15 of 51
Smt. Sneh Lata, D2W1 was cross examined on behalf of the ld. counsel for the plaintiff on 15.05.2024 and thereafter Defendant No. 2 closed his evidence on 15.05.2024.
ARGUMENTS
13. In order to adjudicate upon this suit, this Court heard detailed submissions of Sh. Arvind Kumar, Ld. counsel for the plaintiff, and Sh. Nitin Mittal, Ld. counsel for Defendant no. 1 and Sh. Dinesh Priani, ld. Counsel for Defendant no. 2. The arguments presented by the parties were comprehensive and covered various aspects of the case. While the specific arguments on behalf of each party are not separately detailed here, they have been thoroughly considered and addressed under the respective issues discussed in the judgment.
ISSUE WISE FINDINGS Issue No. 4: Whether the rent agreement dated 22.10.2020 is liable to be impounded on the ground that it is not duly stamped in accordance with the provisions of the Indian Stamp Act?
14. This issue is taken up for determination at the outset because the rent agreement dated 22.10.2020 (Ex. PW1/2) is central to various other issues in the suit. The parties' rights, liabilities, and claims hinge significantly upon this document i.e. Ex. PW1/2. Before proceeding with other issues that assume the validity and admissibility of this agreement, it is essential to ascertain whether the agreement is sufficiently stamped. An instrument that is not duly Digitally signed by SUMIT stamped may have implications on its admissibility and could SUMIT DALAL DALAL Date:
2024.12.23 17:20:11 +0530 CS DJ ADJ 403/21 Page 16 of 51 necessitate compliance with the statutory mandate of impounding under the Indian Stamp Act, 1899.
15. For clarity, the Court frames two sub-questions:
a. Whether the rent agreement dated 22.10.2020 (Ex. PW1/2) is not properly stamped?
b. If the answer is in the affirmative, whether the rent agreement is liable to be impounded?
16. The ld. counsel for the plaintiffs contends that the rent agreement (Ex. PW1/2), having a fixed term of only 11 months, does not require compulsory registration under the Registration Act, 1908. Since it is not compulsorily registrable, the plaintiffs believe that extensive stamping, on par with long-term leases, is not mandated. According to the ld. counsel for the plaintiffs, the existing stamp of Rs. 50/- is adequate and satisfies the legal requirement for a lease of less than one year.
17. The ld. counsel for defendant no. 1, while not disputing that a lease of less than one year may not require compulsory registration, assert that this exemption from mandatory registration does not equate to exemption from appropriate stamping. It is argued that even a lease deed of less than one year must be stamped in accordance with the prescribed schedule under the Indian Stamp Act. The ld. counsel for the defendant no. 1 maintain that the current stamp duty paid is insufficient, and hence, the document ought to be impounded.
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:20:19 +0530 CS DJ ADJ 403/21 Page 17 of 51
18. It is a settled principle of law that the requirements of registration and the requirements of stamping operate in distinct legal spheres. Whether or not a document requires compulsory registration is determined by the Registration Act, 1908, specifically Sections 17 and Section 107 of the Transfer of Property Act for leases. On the other hand, the quantum and necessity of stamp duty are governed by the Indian Stamp Act, 1899 (hereinafter 'the Stamp Act'), and the relevant State amendments or schedules applicable to the territory.
19. The Hon'ble Supreme Court of India in Satish Kumar v. Zarif Ahmed, (1997) 3 SCC 679, has authoritatively clarified that a lease for a period not exceeding one year is not compulsorily registrable. The relevant portion is reproduced as follows:
"7. The question, therefore, that arises is: whether a lease of immovable property from month to month or for 11 months is a compulsorily registrable document, though it was reduced to writing as an instrument defined under Section 2(14) of the Stamp Act? A conjoint reading of the first part of Section 107 read with Section 17(1)(d) of the Registration Act as extracted hereinbefore, does indicate that a lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent should be made only by a registered instrument and all other instruments, though reduced to writing and possession is delivered thereunder, are not compulsorily registrable instruments."
20. Thus, the law on registration is straightforward: a lease of less than one year's duration is optionally registrable and not mandatorily so. However, this addresses only the aspect of Digitally signed by SUMIT registration, not stamping.
SUMIT DALAL DALAL Date:
2024.12.23 17:20:26 +0530 CS DJ ADJ 403/21 Page 18 of 51
21. The Stamp Act, 1899, as applicable to Delhi, prescribes stamp duties through Schedule 1-A. Article 35(a)(i) of Schedule 1-A applies specifically to leases not exceeding one year. It stipulates that the stamp duty for such a lease shall be the same as that on a bond under Article 15. Article 15, in turn, prescribes a rate of duty generally at 2%. Therefore, leases which are less than one year must bear stamp duty at the prescribed rate. The absence of compulsory registration does not negate the obligation to pay proper stamp duty.
22. In the present case, the plaintiffs have not paid the requisite stamp duty as per Article 35(a)(i) read with Article 15, which mandates a duty of @2%. The stamp duty of Rs. 50/- is insufficient to meet this statutory requirement. Therefore, the rent agreement dated 22.10.2020 (Ex. PW1/2) is found to be inadequately stamped.
23. Therefore, answer to the first question - " Whether the rent agreement dated 22.10.2020 (Ex. PW1/2) is not properly stamped?" is, yes, the rent agreement dated 22.10.2020 (Ex. PW1/2) is not properly stamped in accordance with the Stamp Act.
24. Having established that the rent agreement is not duly stamped, the second question pertains to its impounding. Section 33 of the Stamp Act, 1899 confers upon the Court a mandatory duty to impound any instrument that is chargeable with duty and is found not to be duly stamped when it is produced before the Court.
25. Even when a document has already been tendered in evidence without initial objection, Section 33 of the Stamp Act can SUMIT DALAL still be invoked. Section 35 of the Stamp Act, which deals with the Digitally signed by SUMIT DALAL Date: 2024.12.23 17:20:34 +0530 CS DJ ADJ 403/21 Page 19 of 51 inadmissibility of unstamped or insufficiently stamped documents, is often raised to contest admissibility. However, once the document is admitted in evidence, Section 35 of the Stamp Act, confers a degree of finality to its admissibility. Crucially though, this finality does not inhibit the Court from invoking Section 33 of the Stamp Act to safeguard revenue interests. The legislative intent is clear, protecting the revenue stream of the State by ensuring that any deficit in stamp duty is rectified.
26. This position is reinforced by the judgment of the Hon'ble Bombay High Court in Deepak Corporation Bombay v. Pushpa Prahlad Nanderjog, 1995 (1) Mh.L.J. 489. The relevant portion is reproduced as follows:
"22. In the case of Deepak Corporation Bombay v. Pushpa Prahlad Nanderjog, 1995 (1) Mh.L.J. 489, the respondent therein had filed a Suit against the petitioners therein for permanent injunction restraining them from interfering with her peaceful use and enjoyment of Suit premises and from taking any steps to dispossess her therefrom except by due process of law. The said Suit was settled between the parties and consent terms were filed. By the said consent terms, the petitioners (original defendants) agreed and undertook to offer to the respondent (original plaintiff) a self contained Flat of 600 sq.ft. in the new building to be constructed by the petitioners to the Suit property at the rate of Rs 225/- per sq.ft. and to deliver possession of the said Flat within two years from the date of commencement of the construction. The above Suit was decreed by the Court on 20-12-
Digitally signed by 1984 in accordance with said consent terms. SUMIT SUMIT DALAL DALAL Date:
2024.12.23 Thereafter, on 21-2-1989, the parties signed 17:20:51 +0530 CS DJ ADJ 403/21 Page 20 of 51 fresh consent terms in modification and part adjustment of the above decree. An application was filed on 21-2-1989 before the Bombay City Civil Court under Order 21, Rule 2 of the Civil Procedure Code for recording the fresh consent terms and relieving the petitioners from the undertaking given by them to the Court under Clause 5 of the original consent terms and the decree passed in terms thereof. Fresh consent terms dated 21-2-1989 were tendered to the Court along with the above application for the purpose of recording the part adjustment of decree to the satisfaction of the plaintiff. The Court took cognizance of the said document. The plaintiff as well as partner of the defendants who had put their signatures on the said document admitted their respective signatures and contents of the document. However, before acting upon the said document, the Court made a query to counsel for the petitioners (original defendants) whether the document was sufficiently stamped and whether it attracted the provisions of the Indian Registration Act. Counsel for the petitioners instead of answering query, informed the Court on 24-2- 1989 that the petitioners wanted to withdraw their application dated 22-2-1989 itself and do not wish to press for order thereon. On the above prayer, the trial Court passed the following order on 24-2-1989:--
"Advocate for the defendant states that he wants to withdraw the application i.e. 22-2- 1989 and therefore he does not press for orders.
With the above, I am not passing any orders but it will be considered whether it is necessary to impound the document by sending it to the Collector of Stamps as the parties have used it Digitally signed by SUMIT SUMIT DALAL as evidence and tendered the consent terms as DALAL Date:
2024.12.23 17:20:58 +0530 CS DJ ADJ 403/21 Page 21 of 51 their agreement before this Court. In this respect separate orders will be passed. Mr. Rambhia wants to argue on this point. Adjourned to 10-3-1989 for orders at 2:45 p.m. (Emphasis supplied) "
23. The order so passed by the City Civil Court was challenged before the High Court alleging the same to be illegal and without jurisdiction. The High Court, however, upheld the order passed by the City Civil Court by observing that:--
"that a duty has been cast on the authority or Court to impound a document under section 33 if any such document which is inadequately stamped is produced before it to be acted upon and that duty does not come to an end on withdrawal of the document by the party liable to pay additional duty and penalty. The powers, duties and jurisdiction of the Court to pass orders on the application of the party for modification of the decree on the basis of such application and the document produced therewith and the powers, functions and jurisdiction of the Court under section 33 of the Stamp Act to impound the inadequately stamped document produced or coming before it are two distinct and different powers and jurisdictions. For the purpose of modification of the decree the Court might become functus officio on withdrawal of the application but for the purpose of taking action under section 33, it cannot become functus officio. A reference to sections 35 and 58 of the Stamp Act shows that section 35 only gives finality to the decision in regard to the admissibility of the document in evidence. It does not operate as a bar to impounding of the same. Order impounding document confirmed. "
24. It appears to me that the same course was liable to be adopted in the present matter also. It appears that Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:21:06 +0530 CS DJ ADJ 403/21 Page 22 of 51 the trial Court failed in appreciating and understanding the object of section 33 of the Stamp Act. The object of this section is to safeguard the revenue. As has been held by this Court in the aforesaid Judgment, section 35 of the Stamp Act only gives finality to the decision in regard to the admissibility of the said (document in evidence, it however does not operate as a bar for impounding of the said document. The trial Court in the impugned order has observed that filing of an application by the present petitioner for impounding of document in question was only with the intention to protract the trial. If that be so, the trial Court could have taken appropriate care in that regard also. There was no impediment to forward the original document to the Collector to impound the same by keeping on record the attested or certified copy of the document in question. It need not be stated that the trial Court may not be required to wait for the decision of the Collector on the issue of impounding and can very well proceed further with the trial of the Suit. Since the agreement of sale dated 4-5-2009 has been admitted in the evidence, it would not be open for the present petitioner to call in question such admission at any stage of the Suit or proceeding on the ground that it has not been duly stamped."
27. The judgment underscores the principle that the Court's duty to ensure proper stamping and impounding under Section 33 of the Stamp Act is independent of its role in deciding admissibility under Section 35 of the Stamp Act. Even if the document was initially admitted without objection, the Court is empowered, and indeed obligated, to impound it if it finds that the stamping is inadequate.
28. In the present matter, the rent agreement dated 22.10.2020 has been exhibited. The defendants' initial lack of Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:21:14 +0530 CS DJ ADJ 403/21 Page 23 of 51 objection to its admissibility does not absolve the Court of its statutory duty under Section 33 of the Stamp Act. The Court cannot overlook the insufficient stamping simply because the document is already on the record. The paramount objective of Section 33 of the Stamp Act, is to protect the revenue by ensuring that correct stamp duty is paid.
29. Therefore, this Court holds that the rent agreement dated 22.10.2020 (Ex. PW1/2) is liable to be impounded. The original rent agreement dated 22.10.2020 (Ex. PW1/2) shall be forwarded to the Collector of Stamps for proper assessment and realization of the deficient stamp duty along with any penalty that may be imposed under the applicable provisions. A certified copy of the agreement dated 22.10.20201 (Ex. PW1/2) be retained on record, enabling the proceedings to continue without undue delay and without waiting for the Collector's determination on the stamp duty deficiency.
30. Therefore, the conclusion on the second question - " If the answer is in the affirmative, whether the rent agreement is liable to be impounded?" - is yes, the rent agreement is liable to be impounded. The process of impounding does not prevent the Court from proceeding with the trial, as the adjudication of other issues can continue, keeping on record a certified copy of the impounded document.
31. As far as admissibility of the rent agreement dated 22.10.2020 (Ex. PW1/2) is concerned, there is no bar on the Digitally signed by SUMIT SUMIT DALAL admissibility of the said document even if it not properly stamped as DALAL Date:
2024.12.23 17:21:22 +0530 CS DJ ADJ 403/21 Page 24 of 51 no objection as to its admissibility was raised by the Defendants at the time when the document was tendered in evidence and exhibited as (Ex. PW1/2). The law is settled on this aspect. Hon'ble Supreme Court in Javer Chand v. Pukhraj Surana, 1961 SCC OnLine SC 22 , while dealing with a question raised as to the admissibility of document on the ground that it has not been stamped or has not been properly stamped and the impact of Section 36 of Stamp Act observed as follows:
"....Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped it has to be decided then and there when the document is tendered in evidence. Section 35 is in the nature of a penal provision and has far- reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case..... It is not, therefore, one of those cases where a document has been advertently admitted, without the Court applying its mind to the question of its admissibility. Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross- examination of their witnesses, Section 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court Digitally itself or to a Court of Appeal or revision to go behind that order. Such an order is not one of those signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:21:34 +0530 CS DJ ADJ 403/21 Page 25 of 51 judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction."
32. To conclude, the adjudication as to Issue No. 4 is that the rent agreement dated 22.10.2020 (Ex. PW1/2) is found to be inadequately stamped under the Indian Stamp Act, 1899, and hence is liable to be impounded. The original shall be forwarded to the Collector of Stamps, and a certified copy shall remain on record. The Court is proceeding with the pronouncement of the judgment without awaiting the Collector's final determination on the stamp duty shortfall as there is no issue with the admissibility of the said document.
Issue No. 3: Whether Defendant No. 1 surrendered the tenancy rights on 26.02.2021? OPD1
33. This issue arises from the claim made by Defendant No. 1 that he surrendered the tenancy of the suit property on 26.02.2021. The burden of proof for this issue is on the Defendant No. 1. The plaintiffs dispute this claim, asserting that no valid surrender took place on that date and that the tenancy was only terminated later on 25.04.2021 as per the terms of the rent agreement. To adjudicate this issue, it is necessary to consider the pleadings, admissions, evidence, and the applicable terms of the rent agreement (Ex. PW1/2).
34. As per the pleadings in Paragraph Nos. 2, 3, and 5 of the plaint, Defendant No. 1 approached the plaintiffs in October 2020 seeking suitable accommodation for himself and his wife. Consequently, a rent agreement dated 22.10.2020 (Ex. PW1/2) was executed, creating the tenancy. Defendant No. 1 admits these facts in Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:21:46 +0530 CS DJ ADJ 403/21 Page 26 of 51 his written statement, thereby acknowledging the existence of a landlord-tenant relationship between himself and the plaintiffs, as well as the execution of the rent agreement (Ex. PW1/2).
35. Although Defendant No. 2 admits that she is the wife of Defendant No. 1, she denies being a tenant of the plaintiffs or having entered into any rent agreement with them. Her defense is that there is no privity of contract between herself and the plaintiffs. This, however, does not negate the admitted tenancy between the plaintiffs and Defendant No. 1.
36. Defendant No. 1 contends that he surrendered his tenancy rights orally on 26.02.2021 and thus ceased to be liable for rent, utility charges, or mesne profits thereafter. The plaintiffs refute this, stating that no valid surrender took place on 26.02.2021 and that the tenancy continued until it was subsequently terminated on 25.04.2021 by the legal notice sent by the Plaintiffs to the Defendant No. 1 dated 26.03.2021 (Ex. PW1/4).
37. The plaintiffs maintain that the tenancy was terminated via a legal notice dated 26.03.2021 (Ex. PW1/4) due to the defendants' default in paying rent and electricity/water charges, in accordance with Clause 13 of the rent agreement (Ex. PW1/2). They categorically deny that any surrender occurred on 26.02.2021.
38. According to Defendant No. 1, he was allegedly ousted from the suit property by Defendant No. 2 on 05.02.2021 due to matrimonial disputes. After being ousted, he claims to have orally informed the plaintiffs on 26.02.2021 that he was surrendering his Digitally signed by SUMIT SUMIT DALAL tenancy rights. He further states that the plaintiffs assured him that DALAL Date:
2024.12.23 17:21:58 +0530 CS DJ ADJ 403/21 Page 27 of 51 the plaintiffs would take possession from Defendant No. 2 once he gave his consent for surrender. Defendant No. 1 asserts that this oral intimation on 26.02.2021 constituted a valid surrender of tenancy.
39. Despite his assertion, Defendant No. 1 has not brought on record any evidence to corroborate that he informed the plaintiffs about surrendering the tenancy on 26.02.2021. During his cross- examination, Defendant No. 1 admitted that he has "not filed any document/proof regarding surrendering of tenancy of the suit property as mentioned by me in Para. 2 of my affidavit." This admission is critical, as it shows a complete lack of corroboratory evidence to support his claim. Merely, his own statement in his evidence affidavit Ex. D1W1/A is not sufficient to inspire the confidence of this court.
40. Furthermore, no questions were put to PW-1 (Plaintiff No. 1) in cross-examination regarding any oral surrender on 26.02.2021. If Defendant No. 1 genuinely believed such oral surrender took place, he could have confronted the plaintiff or sought corroboration during cross-examination. The absence of any such effort diminishes the credibility of Defendant No. 1's claim of oral intimation on 26.02.2021 to the Plaintiffs regarding surrendering of tenancy.
41. Even assuming, for the sake of argument, that Defendant No. 1 orally intimated the plaintiffs on 26.02.2021 about his intention to surrender, a valid surrender of tenancy typically requires the landlord to regain possession. In this case, it is Digitally undisputed that the plaintiffs did not receive vacant possession of the signed by SUMIT SUMIT DALAL DALAL 2024.12.23 Date:
17:22:05 +0530 CS DJ ADJ 403/21 Page 28 of 51 suit property until 26.09.2021, when, pursuant to the Court's order dated 25.09.2021, a Local Commissioner was appointed. Possession was handed over to the plaintiffs in the Local Commissioner's presence on 26.09.2021.
42. Surrender of tenancy is not merely about expressing intent; it requires the tenant to relinquish vacant physical possession to the landlord. The retention of property by Defendant No. 2, as claimed by the Defendant No. 1, or the failure of Defendant No. 1 to ensure its return to the plaintiffs, indicates that no effective surrender took place on 26.02.2021.
43. The rent agreement dated 22.10.2020 (Ex. PW1/2) prescribes specific modes for determining the tenancy:
a. First: As per Clause 1 of the rent agreement (Ex. PW1/2), by efflux of time upon completion of 11 months (i.e., by 25.09.2021), if not renewed. Relevant portion reproduced.
"1. That the said tenancy has commenced w.e.f. 25/10/2020 for a period of eleven months only i.e. upto 25/09/2021. And this agreement can be renewed for further period with the increase of 10% in the monthly rent and a fresh agreement will be executed for the same."
b. Second: By giving one-month advance written notice as per Clause No. 11 of the rent agreement (Ex. PW1/2) if the tenant wishes to vacate before the expiry of the tenancy period. Relevant portion reproduced.
Digitally signed by SUMIT "11. That both the parties shall give one month advance written notice to each other, if they want SUMIT DALAL DALAL Date:
2024.12.23 17:22:12 +0530 CS DJ ADJ 403/21 Page 29 of 51 to vacate the same prior to the expiry of the tenancy period."
c. Third: By automatic cancellation under Clause No. 13 of the rent agreement (Ex. PW1/2) if rent remains unpaid for one month from the due date. Relevant portion reproduced.
"13. That the tenancy will automatically be treated as cancelled if the monthly rent is not paid for a period of one month from the due date of payment and the tenant will be considered unauthorized occupant of the said premises and tenant shall hand over the vacant peaceful possession of the said premises to the owner."
44. Defendant No. 1's alleged oral surrender on 26.02.2021 does not fall under any of these conditions. The tenancy period had not lapsed on that date (Clause 1 not met), no one-month written notice of surrender was given by Defendant No. 1 (Clause 11 not satisfied), and the purported surrender was not triggered by the automatic cancellation clause (Clause 13 relates to default, not oral surrender).
45. Had Defendant No. 1 genuinely intended to surrender, he was required to comply with the procedure laid down in the agreement--most notably, providing a written notice. Without any such communication, the claim of oral surrender fails to meet the contractual standards established by the parties themselves.
46. On 25.09.2021, Defendant No. 1 recorded a statement before this Court which is reproduced below:
"I am tenant in the suit property bearing No. Digitally signed by SUMIT SUMIT DALAL C-6/B-168, Third Floor, Janakpuri, New Delhi and I DALAL Date:
2024.12.23 17:22:20 +0530 CS DJ ADJ 403/21 Page 30 of 51 state that I am ready to hand over the peaceful vacant possession of the suit property and have no objection to handover the possession to the Plaintiff in presence of Local Commissioner who may kindly be appointed by this Hon'ble Court"
47. It was only after making this statement that the actual handover of possession took place on 26.09.2021.
48. This conduct clearly indicates that Defendant No. 1 recognized himself as a tenant even on 25.09.2021, thereby contradicting his claim of surrender on 26.02.2021. Had the tenancy been surrendered on 26.02.2021, there would have been no need for such a statement in September 2021 acknowledging his tenancy status and expressing willingness to hand over possession in the presence of a Local Commissioner.
49. In view of the above:
a. Defendant No. 1 has failed to provide any documentary or reliable oral evidence corroborating an oral surrender of tenancy on 26.02.2021.
b. No questions were put to the plaintiffs during cross- examination to support the alleged oral surrender, and no explanation is given for the absence of written notice or other documentary proof.
c. The rent agreement (Ex. PW1/2) outlines clear modes of terminating the tenancy. The alleged oral surrender does not align with these contractual requirements. d. Actual handing over of the possession only occurred on Digitally signed by SUMIT SUMIT DALAL 26.09.2021, when vacant possession was delivered to the DALAL Date:
2024.12.23 17:22:27 +0530 CS DJ ADJ 403/21 Page 31 of 51 plaintiffs in the presence of the Local Commissioner, and Defendant No. 1's own statement on 25.09.2021 indicates he recognized his tenancy status until that time.
50. Thus, the Court holds that Defendant No. 1 did not surrender the tenancy rights on 26.02.2021. Therefore, Issue No. 3 is decided against Defendant No. 1 and in favour of the Plaintiffs.
Issue No. 1: Whether the plaintiffs are entitled to a decree for arrears of use and occupation charges from 25.02.2021 to 24.04.2021 at the rate of Rs. 20,500/- per month along with interest @ 18% per annum? O.P.P.
51. This issue pertains to the plaintiffs' claim for arrears of use and occupation charges at the agreed monthly rate of Rs. 20,500/- for the period commencing from 25.02.2021 to 24.04.2021. To determine this, the Court must first ascertain the status of the tenancy during the relevant period and whether it was validly terminated, thereby rendering the defendants liable for use and occupation charges.
52. At the outset, the Court has already adjudicated Issue No. 3 in favor of the plaintiffs, holding that the Defendant No. 1 did not surrender the tenancy on 26.02.2021 as claimed. This finding confirms that the tenancy continued beyond 26.02.2021 until it was lawfully terminated by the plaintiffs.
53. The plaintiffs assert that the tenancy was terminated by a legal notice dated 26.03.2021 (Ex. PW-1/4). This notice SUMIT DALAL Digitally signed by SUMIT DALAL specifically invoked Clause 13 of the rent agreement (Ex. PW-1/2), Date: 2024.12.23 17:22:35 +0530 CS DJ ADJ 403/21 Page 32 of 51 which provides for automatic cancellation of the tenancy upon the tenant's failure to pay rent for one month from the due date. The legal notice (Ex. PW-1/4) clearly informed the defendants that due to continuous defaults in rent and utility charges, their tenancy stood terminated under Clause 13, and any occupation beyond 25.04.2021 would be deemed unauthorized.
54. Defendant No. 1 has not denied the plaintiffs' claim that no rent was paid from February 2021 onwards. Instead, Defendant No. 1, in his reply (Ex. D1W1/1) to the legal notice (Ex. PW-1/4), attempted to justify non-payment by stating that he was allegedly ousted from the suit property by Defendant No. 2, his wife.
55. As no rent was tendered after February 2021, Clause 13 of the rent agreement (Ex. PW1/2) squarely applies. The defendants' default in payment triggered the automatic cancellation mechanism, thereby converting their status into unauthorized occupants upon completion of the notice period prescribed by the legal notice.
56. The legal notice (Ex. PW1/4) gave a clear timeline: the defendants were required to vacate the premises by 25.04.2021. By operation of Clause 13, once rent remained unpaid for a month past the due date, the tenancy stood terminated. The defendants failed to remedy this default, confirming the validity of the termination of tenancy by the plaintiffs.
57. Since the tenancy was never surrendered by the defendants on 26.02.2021, and since the defendants remained in possession until the termination date set out in the legal notice, the plaintiffs are entitled to arrears of the rent for the period in which the Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:22:43 +0530 CS DJ ADJ 403/21 Page 33 of 51 defendants remained in possession without paying rent. For the period from 25.02.2021 to 24.04.2021, the defendants continued to occupy the property without remitting any rent, thus attracting liability for use and occupation charges at the previously agreed rate of Rs. 20,500/- per month.
58. Conclusion on Issue No. 1 is as follows:
a. The tenancy was lawfully terminated on 25.04.2021 via the legal notice dated 26.03.2021 (Ex. PW-1/4) due to the defendants' admitted non-payment of rent. b. There was no valid surrender of tenancy rights by Defendant No. 1 on 26.02.2021.
c. The plaintiffs are, therefore, entitled to recover arrears of use and occupation charges at Rs. 20,500/- per month for the period from 25.02.2021 to 24.04.2021. d. As to the question of interest at 18% per annum, the Court shall decide the rate and award of interest separately based on the circumstances of the case and any applicable legal standards.
59. This issue is decided in favor of the plaintiffs, holding them entitled to a decree for arrears of use and occupation charges at the rate of Rs. 20,500/- per month for the period from 25.02.2021 to 24.04.2021. The aspect of interest will be adjudicated subsequently.
Issue No. 2: Whether the Plaintiffs are entitled to a decree of damages (mesne profits) at Rs.40,000/- per month from 25.04.2021 until handing over of possession, or any other amount? O.P.P. Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:22:51 +0530 CS DJ ADJ 403/21 Page 34 of 51
60. This issue arises from the termination of the tenancy on
25.04.2021 (as concluded under Issue No. 3 and Issue No. 1) and the Defendants' continued occupation of the suit property thereafter until 26.09.2021. This Court by way of its findings to Issue No. 1 and Issue No. 3 has concluded that the tenancy terminated on 25.04.2021. Once the tenancy stood validly terminated, the Defendants' continued possession became unauthorized. Under such circumstances, the Plaintiffs are entitled to mesne profits or damages to compensate them for being deprived of the lawful use of their property.
61. Mesne profits are designed to ensure that a person in wrongful possession cannot benefit from delaying the return of the property. They serve both as compensation to the owner and a deterrent against unscrupulous attempts to prolong litigation and delay the rightful owner's access to their property.
62. The concept of mesne profits is defined under Section 2(12) of the Code of Civil Procedure, 1908 (CPC), as "those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits..."
63. In the absence of direct documentary evidence of the prevailing market rent, courts are permitted to take judicial notice of increasing rental trends, the rising demand for urban properties, and the general escalation of rents, thereby allowing a reasoned approximation of mesne profits.
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:22:58 +0530 CS DJ ADJ 403/21 Page 35 of 51
64. The Hon'ble Delhi High Court in Suman Verma & Ors. v. Sushil Mohini Gupta & Ors., 2014 (10) DRJ 595, acknowledged that the calculation of mesne profits often involves some amount of approximation and guess work and that the Court may take judicial notice of the prevailing rental values in the city.
65. Similarly, in M.C. Agrawal v. Sahara India & Ors., 183 (2011) DLT 105, the Hon'ble Delhi High Court took judicial notice of the annual increase in rents in urban areas, granting a 15% increment per annum to the contractual rent in the absence of direct evidence of the prevalent market rent.
66. In National Radio and Electronic Co. Ltd. v. Motion Pictures Associations, 122 (2005) DLT 629 (DB), the Division Bench of the Hon'ble Delhi High Court emphasized that while the Court may not have exact evidence of market rent, it must do substantial justice by acknowledging escalating rent trends. The Court stated that it is permissible to take judicial notice of the fact that in metropolitan cities like Delhi, rents have shown a marked upward trajectory over time.
67. The Hon'ble Delhi High Court in Santosh Arora v. M.L. Arora, 2014 (201) DLT 312 (DB), further held that the quantum of mesne profits is a matter of judicial discretion guided by fairness and reasonableness. The Court is not bound by the initial figure claimed by the plaintiff if evidence or judicial notice suggests another sum is more appropriate. Even if a larger amount than initially claimed in the plaint can be justified, the Court may grant it to prevent injustice Digitally signed by to the landlord.
SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:06 +0530 CS DJ ADJ 403/21 Page 36 of 51
68. The Plaintiffs have sought damages at Rs.40,000/- per month from 25.04.2021 until 26.09.2021. However, they have not produced any market rent comparables or documentary evidence establishing that Rs.40,000/- per month reflects the prevalent rental value of similarly situated properties.
69. It has also been argued by the Plaintiffs' ld. counsel that since Defendant No. 1 deposited a sum of Rs.40,000/- as security, the same was intended to serve as a measure of damages or mesne profits in the event of default. However, a careful perusal of the rent agreement (Ex. PW-1/2) reveals that the clause pertaining to the security amount states:
"3. That the second party has already deposited a sum of Rs. 40,000/- (Rupees Forty Thousand only), as security amount with the first party which shall be refunded without interest at the time of the vacation of the said premises, after deducting dues, if any."
70. This clause unequivocally indicates that the Rs.40,000/- was taken as a refundable security deposit, not as a pre-agreed measure of damages or mesne profits upon termination of the tenancy. There is no provision in the agreement suggesting that this amount could be treated as a fixed rate of compensation or that it could establish the basis of mesne profits. Rather, it is intended to cover unpaid rent, utility charges, or any damage to the property at the time of vacating the premises. Consequently, the mere existence of this refundable security cannot be construed as proof or indication that Rs.40,000/- should be the measure of monthly mesne profits or damages post-termination.
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:13 +0530 CS DJ ADJ 403/21 Page 37 of 51
71. The agreed monthly rent prior to termination was Rs.20,500/-. Considering the period of unauthorized occupation (approximately five months), a fair and reasonable method-- supported by judicial precedents--is to incrementally increase the agreed rent by a reasonable percentage to arrive at mesne profits. This approach finds support in M.C. Agrawal v. Sahara India & Ors. (supra), where a 15% annual increase was deemed a fair measure.
72. By applying a 15% increment to the last agreed rent of Rs.20,500/-, the mesne profits work out to Rs.23,575/- per month (20,500 + 15% of 20,500 = 20,500 + 3,075 = 23,575).
73. This increment serves multiple purposes:
a. It acknowledges that the landlord would likely have been able to re-let the property at a higher rent had it been vacated timely.
b. It compensates for the wrongful occupation, without arbitrarily inflating the amount to the Rs.40,000/- claimed. c. It follows the principle of taking judicial notice of rent escalation and aligns with the reasoned approach endorsed by the Hon'ble High Courts.
74. As laid down in several judgments, interest can be considered an integral component of mesne profits. The Hon'ble Delhi High Court in Consep India Pvt. Ltd. v. CEPCO Industries Pvt. Ltd., (2010) ILR 3 Del 766 , recognized that interest should be granted on mesne profits because the wrongful occupant effectively withholds money that should have been paid earlier, causing Digitally signed by SUMIT SUMIT DALAL continuous financial loss to the landlord. DALAL Date:
2024.12.23 17:23:20 +0530 CS DJ ADJ 403/21 Page 38 of 51
75. The rate and period of interest shall be subsequently dealt in the judgment after considering all the facts and circumstances, ensuring that the Plaintiffs receive full and proper compensation for the delay and deprivation caused by the Defendants' unauthorized occupation.
76. The conclusion on Issue No. 2 is that the Plaintiffs are entitled to mesne profits/damages for the period of unauthorized occupation from 25.04.2021 until 26.09.2021. While the Plaintiffs claimed Rs.40,000/- per month, in the exercise of its discretion and guided by the case law cited above, this Court grants mesne profits at Rs.23,575/- per month, representing a 15% increment over the last agreed rent of Rs.20,500/-.
77. Accordingly, Issue No. 2 is decided in favor of the Plaintiffs to the extent that they are awarded mesne profits at Rs.23,575/- per month for the period in question, along with interest as may be determined subsequently.
Issue No. 6 - Whether there is no cause of action qua defendant no. 2 as she is not a contracting party? OPD2
78. This issue requires the Court to determine whether the plaintiffs have any legal right to seek relief against Defendant No. 2. In essence, the plaintiffs' claims for arrears, occupation charges, and damages arise from the tenancy agreement (Ex. PW1/2) executed with Defendant No. 1. The question is whether Defendant No. 2, who admittedly resided in the suit premises but was never a signatory to the rent agreement (Ex. PW1/2), can be held liable under the same cause of action.
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:26 +0530 CS DJ ADJ 403/21 Page 39 of 51
79. At the heart of this issue is the principle of privity of contract, a cornerstone of contract law. Privity dictates that only those who are parties to a contract--i.e., those who have given consent and assumed obligations under its terms--can enforce the contract or be held liable for breaches or defaults arising from it. Outsiders to a contract generally cannot be sued under that contract.
80. In the present case, the tenancy agreement dated 22.10.2020 (Ex. PW1/2 Colly) clearly identifies Defendant No. 1 as the tenant and the plaintiffs as the landlords. Even in the tenant registration form with the Delhi Police (Ex. PW1/2 Colly), the name of Defendant No. 1 is shown as the tenant to whom the premises is let out and the name of the Defendant No. 2 is shown as family member residing with Defendant No. 1. There is no indication, either express or implied, that Defendant No. 2 ever assumed any tenant-like obligations--such as paying rent, maintaining the premises, or agreeing to vacate upon termination.
81. The rent agreement (Ex. PW1/2 Colly) is explicit in outlining the roles and responsibilities. Defendant No. 1 alone requested the premises, negotiated terms, and was identified as the tenant in both the agreement and the tenant verification form filed with the Delhi Police. The plaintiffs confirmed during cross- examination that all tenancy conditions were finalized solely with Defendant No. 1, and that they always regarded him as their tenant. The relevant portion of the cross examination of the Plaintiff by the ld. counsel for the Defendant No. 2 dated 04.05.2023 is reproduced Digitally signed by below:
SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:32 +0530 CS DJ ADJ 403/21 Page 40 of 51 "I and Plaintiff No. 2 were approached and requested by defendant no. 1 to let out the suit property. All terms and conditions of tenancy were finalised only with defendant no. 1 and tenancy of suit property was also created only in favour of defendant no. 1 which was reduced into writing vide rent agreement already Ex. PW1/2. As per rent agreement Ex. PW1/2 it was only defendant number no. 1 who was tenant of the suit premises. For police verification with regard to tenant in suit property, I and my wife had given the name of defendant no. 1 as the tenant and his photograph as our tenant and the name of defendant No. 2 was only given in the details of family members of defendant no. 1/tenant."
82. Therefore, this Court is of the view that Defendant No. 2's presence in the suit property was purely incidental to her marital relationship with Defendant No. 1. While it is undisputed that she lived there, her occupancy does not equate to assuming the legal persona of a tenant. Had the plaintiffs intended to make Defendant No. 2 a co-tenant, they could have included her name in the rent agreement (Ex. PW1/2) and obligations in the agreement. They did not.
83. There is no evidence--no written contract, no separate agreement, no oral understanding--indicating that Defendant No. 2 ever agreed to pay rent or bear any rental liabilities. The plaintiffs never served notice upon Defendant No. 2 as a tenant, nor did they treat her as one during the tenancy.
84. The entire cause of action in this suit is predicated on the existence and subsequent breach of a tenancy arrangement. The Digitally signed by plaintiffs seek arrears of rent, use and occupation charges, and SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:40 +0530 CS DJ ADJ 403/21 Page 41 of 51 damages for unauthorized occupancy after the termination of the tenancy. Each of these claims derives from the contractual obligations initially undertaken by Defendant No. 1.
85. These obligations stem from the agreement to pay monthly rent. Defendant No. 1 alone agreed to pay rent. When the rent went unpaid, Defendant No. 1 alone became liable. Defendant No. 2, not being a party, had no such obligation.
86. Once the tenancy was terminated, the tenant (Defendant No. 1) was responsible for restoring possession to the plaintiffs. If the possession remained with Defendant No. 2 afterward, this does not create a cause of action against her for the plaintiffs. Instead, it remains a default by Defendant No. 1, who failed to deliver vacant possession. The plaintiffs' relationship is with the tenant-- Defendant No. 1--not with his family members. The obligation to hand back the property in a timely manner after termination is inseparable from the original tenancy agreement (Ex. PW1/2), to which only Defendant No. 1 was bound.
87. Defendant No. 1 attempted to shift liability to Defendant No. 2 by arguing that if the tenancy ended on 25.04.2021, then Defendant No. 2, allegedly in possession thereafter, should pay damages. This line of reasoning is flawed for several reasons:
a. Contractual Accountability of the Tenant: It is a well-settled principle that when a tenancy ends, the tenant must restore the property to the landlord. If the tenant fails to do so--whether due to sub-tenants, family members, or any other occupant-- Digitally signed by SUMIT SUMIT DALAL the tenant remains liable. The presence of a third party in DALAL Date:
2024.12.23 17:23:51 +0530 CS DJ ADJ 403/21 Page 42 of 51 possession does not relieve the tenant of his obligations to the landlord.
b. Separate Legal Relationship: If Defendant No. 1 suffered any economic loss because Defendant No. 2 continued to occupy the property, that might give rise to a separate cause of action by Defendant No. 1 against Defendant No. 2. It does not, however, create a direct cause of action for the plaintiffs against Defendant No. 2. The plaintiffs had no agreement with Defendant No. 2 and cannot enforce obligations against her that she never undertook.
c. Defendant No. 1's Acknowledgement of Responsibility: On 25.09.2021, Defendant No. 1 himself stated before the Court that he is the tenant and would hand over vacant possession. His statement was duly recorded before the Court on 25.09.2021. This acknowledgment reaffirms that Defendant No. 1, and not Defendant No. 2, was ultimately answerable to the plaintiffs. His own admission contradicts any suggestion that liability should shift to Defendant No. 2. The admitted statement of the Defendant No. 1 is reproduced below:
"I am tenant in the suit property bearing no. C-6/B-168, Third Floor, Janakpuri, New Delhi and I state that I am ready to hand over the peaceful vacant possession of the suit property and have no objection to hand over the possession to the plaintiff in presence of Local Commissioner who may kindly be appointed by this Hon'ble Court."
88. Since the plaintiffs' legal rights and claims originate from a contract to which Defendant No. 2 was never a party, there Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:23:57 +0530 CS DJ ADJ 403/21 Page 43 of 51 can be no enforceable claim against her. Without a contractual nexus or some other recognized legal relationship (such as sub-tenancy or assignment of rights), Defendant No. 2 does not owe the plaintiffs any duty to pay rent, mesne profits, or damages. Hence, no cause of action arises against her.
89. The plaintiffs' cause of action stems solely from their contractual relationship with Defendant No. 1. Defendant No. 2's status as a family member and occupant does not create or imply any contractual liability. Since no privity of contract existed between the plaintiffs and Defendant No. 2, the plaintiffs cannot seek arrears, occupation charges, or damages from Defendant No. 2 under the same cause of action. Liability remains with Defendant No. 1 alone.
90. The issue is decided in favor of Defendant No. 2. There is no cause of action against her as she is not a contracting party, and she bears no liability for the plaintiffs' claims arising from the tenancy agreement. The liability towards the Plaintiff is solely of Defendant No. 1.
Issue No. 5: Whether the suit is liable to be dismissed for non-joinder of necessary parties? O.P.D.1
91. Defendant No. 1, in his written statement under Para 5 of the preliminary objections, has alleged that the suit is bad for non- joinder of necessary parties. He contends that certain family members of Defendant No. 2, namely her father (Raj Rathi), mother (Sneh Lata), and brother (Yash Rathi), were also occupying the suit property, and thus, according to him, they should have been Digitally signed by impleaded as necessary parties.
SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:24:04 +0530 CS DJ ADJ 403/21 Page 44 of 51
92. The suit primarily arises out of a tenancy relationship between the Plaintiffs and Defendant No. 1. The rights, obligations, and liabilities flow directly from this contractual tenancy. As established in related issues adjudicated by this Court in this matter, no privity of contract existed between the Plaintiffs and Defendant No. 2, and a fortiori, none with her extended family members. The Plaintiffs' cause of action, which includes claims for possession, arrears, and mesne profits/damages, stems entirely from the landlord-tenant relationship with Defendant No. 1.
93. Under Order I Rule 10 of the CPC, a "necessary party"
is one in whose absence no effective decree can be passed. The presence of Defendant No. 2's family members is not essential to the effective and complete adjudication of the suit. The Plaintiffs can obtain the relief of possession and mesne profits against Defendant No. 1 without the presence of these additional persons. If Defendant No. 1 or Defendant No. 2 allowed other individuals to occupy the property, that does not alter the contractual obligations owed by Defendant No. 1 to the Plaintiffs.
94. As reasoned in the adjudication of the other issues, merely residing in or occupying the suit property does not create a legal relationship or contractual obligation between such occupants and the Plaintiffs. Hence, these individuals are neither necessary nor proper parties for the resolution of the present dispute.
95. The burden of proving that certain non-parties were necessary to the suit lies on Defendant No. 1. He was required to Digitally show how the absence of these alleged occupants prevents the Court signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:24:11 +0530 CS DJ ADJ 403/21 Page 45 of 51 from passing an effective and complete decree. However, Defendant No. 1 has not produced any evidence or advanced any substantial argument to establish that these individuals are indispensable for the determination of the issues at hand. The record is silent on any factual or legal necessity to implead the said family members of Defendant No. 2.
96. Moreover, at the stage of final arguments, learned counsel for Defendant No. 1 did not even press this argument or provide any reasoning as to why these non-parties were crucial to the suit's outcome. This lack of proof underscores that Defendant No. 1's plea of non-joinder is without merit.
97. Since the Plaintiffs' cause of action relates solely to the tenancy with Defendant No. 1 and the reliefs can be granted effectively against the defendants who are already on record, the absence of Defendant No. 2's family members does not render the suit bad for non-joinder of necessary parties. Defendant No. 1 has failed to discharge the burden of proving that their presence is necessary for the suit's adjudication.
98. Issue No. 5 is decided against Defendant No. 1. The suit is not liable to be dismissed for non-joinder of the alleged family members of Defendant No. 2.
Question of Interest
99. In view of the findings under Issue Nos. 1 and 2, the Plaintiffs have established their entitlement to recover from Defendant No. 1:
Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:24:17 CS DJ ADJ 403/21 Page 46 of 51 +0530 a. Arrears of use and occupation charges for the period 25.02.2021 to 24.04.2021 at Rs.20,500/- per month, and b. Damages/mesne profits at Rs.23,575/- per month from 25.04.2021 until the handing over of possession on 26.09.2021.
100. Having determined these substantive entitlements, the question that remains is the appropriate rate of interest to be awarded on these amounts. In their plaint, the Plaintiffs sought interest at 18% per annum. However, no agreement between the parties stipulating such a high rate of interest has been proven. Furthermore, in the absence of any agreement, while the Plaintiffs are entitled to interest, the rate at which such interest is granted lies within the discretion of the Court, as elucidated by the Hon'ble Supreme Court in Central Bank of India v. Ravindra, AIR 2001 SC 3095 . Moreover, the Interest Act, 1978 and Section 34 of the Code of Civil Procedure, 1908, both contemplate interest at a rate of 6% per annum in the absence of any proven agreement or compelling reason for a higher rate. As the Plaintiffs have not adduced any evidence or agreement justifying 18% per annum, that claimed rate appears excessive under the circumstances.
101. Balancing the need to fairly compensate the Plaintiffs for the prolonged withholding of their rightful dues against the absence of a contractual interest clause and the established statutory guidelines, it is just and equitable to grant interest at a rate of 6% per annum. Such a rate aligns with statutory norms and established judicial practice, ensuring that the Plaintiffs are compensated Digitally signed by SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:24:27 +0530 CS DJ ADJ 403/21 Page 47 of 51 without imposing an unjustifiable financial burden on Defendant No. 1.
102. Accordingly, interest shall be awarded at 6% per annum on both components of the decree:
a. 6% interest per annum from 25.04.2021 till realization of the amount on the arrears of use and occupation charges at Rs.20,500/- per month from 21.02.2021 till 24.04.2021. b. 6% interest per annum from 26.09.2021 till realization of the amount on the damages/mesne profits at Rs.23,575/- per month from 25.04.2021 till 26.09.2021
103. This determination of interest adequately serves the ends of justice in the present matter.
Issue of Security Deposit of Rs. 40,000/-
104. Clause 3 of the rent agreement dated 20.10.2020 stipulates that the sum of ₹40,000/- provided by Defendant No. 1 constitutes a security deposit to be refunded "without interest at the time of vacation of the suit property after deducting dues, if any." This provision makes clear that the security deposit is strictly for the purpose of offsetting any pending dues and is not intended as an advance measure of damages or penalty.
105. The learned counsel for the Plaintiffs contends that the deposit ought to be forfeited in lieu of damages caused to the plaintiffs due to failure of the Agreement to Sell of the suit property with a third party because of non vacation of the suit property by the Digitally signed by SUMIT Defendant No. 1. However, Clause 3 plainly delineates the scope of SUMIT DALAL DALAL Date:
2024.12.23 CS DJ ADJ 403/21 Page 48 of 51 17:24:34 +0530 the deposit as covering only any outstanding rent, utility charges, or other liabilities directly relating to the tenancy. No mention is made of forfeiture for the kind damages argued by the ld. counsel for the plaintiffs, and indeed, the Plaintiffs have neither pleaded damages in their pleadings nor sought any corresponding relief. Therefore, there is no legal or contractual basis for forfeiting the deposit as damages.
106. The logical question then arises: What becomes of this security deposit of ₹40,000/-? Since its function is to settle the tenant's obligations at the time of vacating the property, it is only proper to adjust the deposit against any amount determined to be due from Defendant No. 1. Pursuant to the findings under Issue Nos. 1 and 2, it is established that the Plaintiffs are entitled to:
a. Arrears of use and occupation charges at ₹20,500/- per month from 25.02.2021 to 24.04.2021, and b. Mesne profits at ₹23,575/- per month from 25.04.2021 to 26.09.2021, c. Along with interest at 6% per annum on these sums.
107. Because these liabilities significantly exceed the ₹40,000/- security deposit, any refund is moot; the entirety of the deposit must be appropriated toward the decreetal amount. In other words, the sum of ₹40,000/- is effectively exhausted once applied to the adjudicated dues, thereby leaving no surplus for reimbursement.
SUMIT DALAL FINAL RELIEF Digitally signed by SUMIT DALAL Date: 2024.12.23 17:24:40 +0530 CS DJ ADJ 403/21 Page 49 of 51
108. In light of the findings on the various issues adjudicated:
a. The Plaintiffs shall be entitled to recover arrears of use and occupation charges from Defendant No. 1 at the rate of Rs.20,500/- (Rupees Twenty Thousand Five Hundred only) per month for the period from 25.02.2021 to 24.04.2021, along with simple interest at 6% per annum from the 24.04.2021 till the realization of the amount.
b. For the period of unauthorized occupation from 25.04.2021 until 26.09.2021, the Plaintiffs shall be entitled to recover mesne profits from Defendant No. 1 at the rate of Rs.23,575/- (Rupees Twenty Three Thousand Five Hundred Seventy Five only) per month, along with simple interest at 6% per annum from 26.09.2021 till the realization of the amount. c. The Security Deposit of Rs. 40,000/- paid by Defendant No. 1 to the Plaintiffs as per Clause 3 of the Rent Agreement (Ex. PW-1/2) be appropriated and adjusted toward the aforementioned decreetal amount.
d. The suit against Defendant No. 2 stands dismissed for want of privity of contract. No relief is granted against Defendant No.
2. The objection regarding non-joinder of alleged additional parties is rejected.
e. Considering the facts and circumstances, costs of the suit are awarded in favor of the Plaintiffs and against Defendant No. 1. f. The ld. counsel for the Plaintiffs has supplied the Pleader Fee Digitally signed by Certificate. Let the said pleader's fee be also included in the SUMIT SUMIT DALAL DALAL Date:
2024.12.23 17:24:48 +0530 CS DJ ADJ 403/21 Page 50 of 51 Decree as per law to be paid by the Defendant No. 1 to the Plaintiffs.
g. It is noted that the rent agreement dated 22.10.2020 (Ex. PW-1/2) was found to be inadequately stamped. Accordingly, the said rent agreement is hereby impounded and shall be forwarded to the Collector of Stamps for assessment and recovery of the deficient stamp duty and penalty, if any, in accordance with law. A certified copy of the impounded document shall remain on the court record.
109. Decree Sheet be prepared accordingly. Thereafter the case file be consigned to record room after compliance of necessary legal formalities.
JUDGMENT PRONOUNCED IN THE OPEN COURT ON 18.12.2024 AND SIGNED/DIGITALLY SIGNED ON 23.12.2024 AND UPLOADED ON 23.12.20241.
Digitally signedSUMIT byDALAL SUMIT DALAL 17:25:01 +0530 Date: 2024.12.23 (SUMIT DALAL) DISTRICT JUDGE - 04 DWARKA COURTS : NEW DELHI 1 The judgment in the present matter was pronounced in open court on 18.12.2024. However, the same was digitally signed and uploaded on 23.12.2024 due to administrative constraints. During the week of the pronouncement, one of the stenographers was on leave, which led to a delay in finalizing the typed version of the judgment. Furthermore, the board of the undersigned was particularly heavy, with 35-40 matters listed daily, which required significant judicial time and attention.
It is emphasized that the delay in uploading the digitally signed judgment does not impact the judicial determination of the matter, as the judgment was duly pronounced on the scheduled date. The subsequent procedural delay in uploading the document is regretted and is attributed solely to the above-mentioned administrative circumstances. Every effort is made to ensure timely issuance and uploading of orders and judgments, and necessary measures are in place to avoid such delays in the future.
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