Delhi District Court
Dharamvir Singh vs Knewton Academy Softech Solution Pvt ... on 11 December, 2025
IN THE COURT OF MS SAVITA RAO, DISTRICT JUDGE
COMMERCIAL COURT-01, SOUTH ,
SAKET COURTS, DELHI
CS (COMM) No. : 236/2023
DLST010038572023
In the matter of :
Dharamvir Singh
S/o Sh. Mangal Singh
Zaildar Farms, Farm No. 1
Opp. Alphonsa's Church
Green Avenue Lane, Vasant Kunj
Delhi - 110070
..... Plaintiff
Versus
1. M/s Knewton Academy Softech Solution Pvt. Ltd.
Through its Director
Flat no. 904, Sector - 3, MB Road Pushp Vihar
Govt. Quarters, New Delhi
Also At:
Khasra No. 264, Plot no. 4, Westend Marg
Near Saket Metro Station, New Delhi - 110017
2. Director
M/s Knewton Academy Softech Solution Pvt. Ltd.
Flat no. 904, Sector - 3, MB Road Pushp Vihar
Govt. Quarters, New Delhi
CS (COMM) No. : 236/2023 1/34
Also At:
Khasra No. 264, Plot no. 4, Westend Marg
Near Saket Metro Station, New Delhi - 110017
........ Defendants
Date of Institution : 24.04.2023
Date of Arguments : 16.10.2025, 10.11.2025, 19.11.2025,
10.12.2025 and 11.12.2025
Date of Judgment : 11.12.2025
JUDGMENT
1. This is suit for possession, recovery of arrears of rent, damages and mesne profits, filed by plaintiff against the defendants on the claim of ownership of property bearing Khasra No. 264, Plot no. 4, Westend Marg, Near Saket Metro Station, New Delhi consisting of lower basement and upper ground floor, jointly admeasuring 20,000/- sq. ft alongwith the right to use 4 Servant Quarters on the back and rear lawn for parking.
2. As stated, property in question was let out to the defendants under the oral lease agreement dated 01.04.2021 at the monthly rent of Rs. 4,00,000/- plus GST w.e.f. 01.01.2021, with provision for increase of rent as detailed in the plaint. Defendants were put in possession of the suit premises on 01.01.2021. Since then the Coaching Academy under the name and style of ' Knewton Academy' is being run at the suit premises. Defendants failed to make the payment of security amount of Rs. 12 lacs though were put in possession of the suit premises believing the assurance made by them and thereafter defaulted in regular payment of rent.
CS (COMM) No. : 236/2023 2/343. As further stated, out of Rs. 1,88,00,000/- due till February 2023, defendants made payment of only Rs. 73,50,000/- . Legal notice issued upon the defendants also did not yield any result, compelling the plaintiff to file the suit against them seeking recovery of possession of the suit premises as well as the arrears of rent, damages and mesne profits.
4. Plaint was filed alongwith application under Order 12-A of Commercial Courts Act seeking exemption from pre-institution mediation. Considering that an application seeking urgent interim relief had been filed, request for exemption from pre-institution mediation was allowed by Ld. Predecessor of this court vide order dated 24.04.2023.
5. In written statement filed on behalf of defendants, it was stated that plaintiff has not impleaded co-owners of the property in question and plaintiff himself has no locus standi to file the suit against the defendants, besides that, property in question has already vested in Gaon Sabha. It was stated that as defendants wanted to set up a coaching centre, therefore entered into an oral agreement to sell with the plaintiff and Ms. Naveen Balhara. As the rear portion of 1000 sq. yards had not yet been mutated, therefore documentation was not done. Defendants agreed to purchase the property in question against sale consideration amount of Rs. 4,00,00,000/- (Rs. Four Crore Only). Bayana payment of Rs. 12 lacs was transferred into the account of Mr. Satyavir Singh, Dharamvir Singh and Mrs. Naveen Balhara. Defendants were put in possession of the suit property without execution of any document for want of mutation in name of owners.
CS (COMM) No. : 236/2023 3/346. Defendants got to know that the rear portion admeasuring 1000 sq. yards was a Government Land, therefore re-negotiation of the deal was offered and the defendants agreed to purchase front portion of the suit property admeasuring 1000 sq. yards against total consideration of Rs. 2,50,00,000/- (Rs. Two Crores Fifty Lacs only). Out of the total sale consideration of Rs. 2,50,00,000/-, defendants paid Rs. 1,25,00,000/- (Rs. Once Crore Twenty Five Lacs only) by way of bank transfers and cash, in the accounts and manner suggested by the plaintiff. Plaintiff also offered the defendant to use the rear portion admeasuring 1000 sq. yards, though no amount was fixed towards usage charges of said rear portion. Defendants in June 2022, were forced to make payment of Rs. 15,50,000/- to the plaintiff towards the usage charges of the rear portion of 1000 Square Yards @ 1,00,000/- per month for the period between 01.04.2021 to 30.06.2022 alongwith penalty of Rs. 50,000/- for delayed payment.
7. It was further stated that plaintiff insisted on payment of balance sale consideration which was refused by the defendants as the property in question had vested in Gaon Sabha, therefore, plaintiff started resorting to illegal means to forcibly dispossess the defendants from the suit premises, which was followed by police complaints made by both the parties against each other.
8. In replication, it was submitted on behalf of plaintiff that no portion of the suit premises was the public land nor was vested in Gaon Sabha. It was stated that SDM vide its order dated 13.08.2019 had dropped the said proceedings and vesting order dated 04.09.2018 was set aside. Therefore, the allegation of defendants that the suit property was vested in Gaon Sabha is absolutely incorrect and contrary to the records of the case. Suit CS (COMM) No. : 236/2023 4/34 property, as stated, was under the exclusive and absolute ownership of the plaintiff and other co-owners.
9. During the course of proceedings, application under Order 13-A CPC was filed by plaintiff, which was allowed vide order dated 20.02.2024, qua passing of the decree of possession against the defendants for the suit property and defendants were directed to vacate the suit premises within a period of two months. Pertaining to remaining controversy between the parties, following issues were framed:
(1) Whether the property in question was let out to the defendants with monthly rent of Rs. 4 lacs and thereafter with increase, as claimed by plaintiff in para 5 (B) of plaint? OPP (2) Whether the plaintiff is entitled for recovery of the arrears of rent, as claimed? OPP (3) Whether the plaintiff is entitled for mesne profits/damages? If so, quantum of the same? OPP (4) Whether the plaintiff is entitled for interest amount, as claimed? OPP (5) Relief.
10. In plaintiff's evidence, plaintiff Sh. Dharamvir Singh examined himself as PW1. He filed affidavit of evidence Ex. PW1/A and relied upon following documents:-
1. Attorney executed by Sh. Mangal Singh, Sh. Subhash Chandra and Ms. Naveen Balara in favour of the plaintiff as Ex. PW1/1 to Ex. PW1/3.
2. The site plan of the demised premises as Ex. PW1/4
3. Photographs of the demised premises as Ex. PW1/5 (colly.)
4. The Master Data of the defendant no.1 company as Ex. P-1.
(Admitted document) CS (COMM) No. : 236/2023 5/34
5. Copy of details of payment made by defendants as Ex. PW1/6
6. Copy of the receipt dated 17.06.2022 as Ex. PW1/7
7. Copies of Whats App messages as Ex. PW1/8 (colly.)
8. Copy of telephonic conversation/transcripts between plaintiff and defendant no.2 as Ex. PW1/9
9. Copy of Legal Notice dated 16.02.2023 as Ex. P-2
10. Copy of reply to the legal notice as Ex. P-3.
11. Copy of the Revenue Record qua the Khasra No. 264 showing the ownership as Ex. PW1/10
12. Copy of order dated 13.08.2019 passed by Ld. SDM/RA as Ex. PW1/11
13. Copy of judgment and order dated 21.11.2023 as Ex. PW1/12.
14. Copy of Registered Lease Deed dated 12.12.2011 executed by Sh. Yudhvir Singh as lessor in favour of M/s. ACE Engineering Academy in respect of portion admeasuring 1600 sq. Yards ie. Approximate 14500 sq. Feet of the property being plot no. 3 of khasra no. 264 of village Saidulajab, New Delhi at monthly rent of Rs. 10,50,000/- as Ex. PW1/13
15. Lease Deed dated 10.11.2023 executed by Sh. Yudhvir Singh as lessor in favour of M/s. Physic Wala Pvt. Ltd. in respect of portion admeasuring 16000 sq. Feet of the property being plot no. 3 of khasra no. 264 of village Saidulajab, New Delhi as Ex. PW1/14 .
16. Copies of rent agreements excuted for the other properties situated is same khasra as Mark 'C' to Mark 'F'.
11. Sh. Yudhvir Singh examined as PW2 filed affidavit of evidence Ex. PW2/A and relied upon Lease Deeds dated 12.12.2011 and 10.11.2023 already exhibited as Ex. PW1/13 and CS (COMM) No. : 236/2023 6/34 Ex. PW1/14 respectively. He further relied upon ITRs for financial years 2017 to 2024 and bank statement as Mark ' A' and Mark 'B' respectively.
12. In Defendant's evidence, Sh. Manish Kumar, Director of Knewton Academy Softech Solution Pvt. Ltd. was examined as DW1. He filed affidavit of evidence Ex. DW1/A and relied upon following documents:
1. Original Resolution as Ex. DW1/1
2. Pendrive containing the video clipping as Ex. DW1/2
3. The photographs as Ex. DW1/3
4. Certificate U/s 65B of Indian Evidence Act in respect of electronic evidence as Ex. DW1/4
5. Copies of complaints filed by the defendants as Mark DW1/5.
Issue-wise findings are as under :
13. Issue No. 1 : Plaintiff claimed that the suit premises was leased out to defendants initially at monthly rent of Rs. 4,00,000/- plus GST. It was also mutually agreed between the parties that the rent shall be subject to increase in the following manner:
TIME PERIOD MONTHLY RENT PAYABLE (In
Rupees) - GST Not included
April 2021- June 2021 4,00,000/-
July 2021 - September 2021 6,00,000/-
October 2021 - March 2022 8,00,000/-
April 2022 Onwards 10,00,000/-
14. Lease between the parties was based upon the oral agreement. Plaintiff contended that defendants were to run a coaching academy, therefore, the lease term was fixed at 24 months, beginning from 01.04.2021, however, defendants were put in possession on 01.01.2021 and period of 03 months was provided CS (COMM) No. : 236/2023 7/34 as Fit Out period. Plaintiff also contended that at the time of negotiations for lease, it was represented by the defendants that they were engaged in the business of running a coaching institute, and in the initial months, their student strength and revenue would be limited. On the request of defendants, plaintiff/lessors agreed to begin the tenancy on a lower rent for the initial period, with a structured enhancement linked to growth in student enrollment and business expansion. It was specifically agreed that as the number of students and profitability of the venture increased, the monthly rent would be progressively enhanced up to Rs. 10,00,000/- per month as per the mutually accepted escalation table. It was submitted that the rent structure thus agreed upon between the parties was fair, reasonable, and directly tied to the defendant's business expansion plan.
15. Ld. counsel for plaintiff submitted that acting on the representation of defendants, plaintiff allowed the defendants to commence operations at a lower rent of Rs. 4,00,000/- per month in the initial phase, believing in good faith that the defendants would increase rent as their business flourished. However, despite substantial student enrollment and significant commercial use, defendants defaulted in making regular rent payments and failed to honor the agreed rent escalation, resulting in the present claim for arrears.
16. Ld. counsel for defendants submitted that the rent was alleged to have increased by 50% per month after first three months, by 33% per month after next three months and by 25% per month after next six months . There was no provision of further enhancement after completion of one year of tenancy. Ld. counsel for defendants further submitted that there was no clear pattern of CS (COMM) No. : 236/2023 8/34 enhancement of rent. Neither the rate of enhancement nor the period after which the rent was to be enhanced was showing the clear pattern and even the document Ex. PW1/6 relied upon by the plaintiff did not show the clear pattern of payment of rent.
17. No lease deed had been executed between the parties and the property was let out to the defendants on basis of oral lease agreement. PW1 admitted that he had not filed any document on judicial record specifying the period of tenancy/lease, monthly rent of the suit property or the rate of enhancement of rent. He stated that the said discussion was oral and denied that no such terms were ever discussed or agreed orally between the parties.
18. During cross examination of PW1 and also the own examination of DW1, defendant sought to maintain that the property in question was not let out and there was no landlord tenant relationship between the plaintiff and defendant. It was stated that defendant was willing to buy the property in question and plaintiff offered to sell the entire property of 2000 sq. yards for sum of Rs. 4,00,00,000/- (Rs. Four Crore only). Since defendants were informed that the property in question including rear portion of 1000 square yards was yet to be mutated in their name, therefore no written agreement to sell could be executed. Therefore, on insistence of plaintiff, defendants paid sum of Rs. 12 lacs upon which defendants were put in possession of the premises in question. Defendants thereafter came to know that the rear portion admeasuring 1000. sq. yards of the property was not part of Khasra No. 264, upon which and in pursuance to the re-negotiation between the parties, plaintiff agreed to sell only front portion of property admeasuring 1000 sq. yards against total sale consideration of Rs. 2,50,00,000/- . Out of total sale consideration CS (COMM) No. : 236/2023 9/34 amount of Rs. 2,50,00,000/-, defendants paid Rs. 1,25,00,000/- and rest of the amount was payable at the time of execution of sale deed.
19. Said defence of defendants had already been discussed and discarded with the disposal of application under Order 13-A CPC. It was noted that defendants had not disputed having been put in possession of the suit premises by the plaintiff. The contention that possession of the suit premises was handed over to the defendants as part of agreement to sell was found unsubstantiated on record. There was no written agreement to sell between the parties and the plea of defendants with regard to entering into contract of sale, in absence of registration, was hit by the provisions of section 54 and 53-A of Transfer of Property Act and did not confer any title or transfer of interest for any immovable property. Defendants were held to be precluded from pleading with regard to any agreement to sell between the parties for want of written agreement coupled with registration bearing the prescribed stamp duty on total agreed sale consideration. Defendants were also estopped from challenging the title/right of the plaintiff in the suit premises . Possession of the property was directed to be handed over to the plaintiff within a period of two months and pertaining to the remaining controversy between the parties, issues were framed.
20. Order on the application under Order 13-A CPC dated 20.2.2024 was challenged before Hon'ble High Court. Before Hon'ble High Court, after some arguments, defendants sought to withdraw the appeal with caveat that time be granted for vacating the suit property, which was allowed and the appeal was accordingly disposed off. As brought on record, defendants vacated the suit premises on 15.07.2024.
CS (COMM) No. : 236/2023 10/3421. Despite the defence of defendants having been discarded, pertaining to plaintiff's lack of ownership and the property having been offered for sale and not on rent to the defendants by plaintiff, questions were put to PW1 in cross examination on the said aspect as well as DW1 also sought to reiterate the same again and again. Defendants despite advice to them to confine the cross examination only on the issues framed, sought to put questions to PW1 with regard to ownership of the property in question, which were declined. Challenge made by defendants against the said order before Hon'ble High Court was disposed off vide order dated 09.01.2025 with direction to the defendant that only such questions which were relevant as to decide the question of payment of arrears of rent shall be put to the witness.
22. During cross examination of DW1, it was also noted that although the issues had been framed only pertaining to the entitlement of plaintiff with regard to arrears of rent, quantum of rent and the mesne profits and interest, whereas in the evidence affidavit of DW1, most of the contents were pertaining to the previous controversy between the parties which had already been decided and also attained finality by virtue of the orders of Hon'ble High Court. It was submitted by Ld. counsel for defendant that the affidavit was prepared prior to disposal of previous controversy, therefore the evidence affidavit contained the contents which were now not relevant for the purpose of disposal of the matter.
23. Contention of Ld. counsel for defendant though is not correct on record as the evidence affidavit of DW1 bears the date of preparation on some day of February 2024 and bears the date of attestation as 16.07.2025, whereas the application under Order 13- A CPC had been disposed off vide order dated 20.02.2024.
CS (COMM) No. : 236/2023 11/34Challenge to the said order had been disposed off vide order of Hon'ble High Court dated 30.04.2024 and subsequent challenge to the order dated 06.11.2024 for permission for cross examination of PW1 was disposed off vide order dated 09.01.2025 and thereafter the matter was listed for DE on 31.05.2025. Nevertheless, it was noted that the contents pertaining to the previous controversy which are not relevant for the disposal of the case, now in the affidavit of evidence, shall not be read in evidence.
24. PW1 asserted that the rent was payable @ Rs. 4,00,000/- and with increase after every three months in the rental amount as per the slab i.e. at Rs. 6,00,000/-, Rs. 8,00,000/- and lastly at Rs. 10,00,000/-. DW1 disputed the said assertion. In the eventuality of there being no written agreement between the parties and the rival submissions on the aspect of rental amount, the court has to rely upon the comparable rental prevailing in the vicinity for the similarly placed properties. For the said purpose, plaintiff placed reliance upon lease deeds Ex. PW1/13 and Ex. PW1/14 and the copies of rent agreements Mark C, D, E and F. Property in question is forming part of Khasra No. 264, Westend Marg, Near Saket Metro Station, consisting of Lower Basement and Upper Ground Floor admeasuring 20,000 sq. ft alongwith right to use 4 servant quarters on the back and rear lawn for parking.
25. Ex. PW1/13 is the Lease Deed dated 12.12.2011 executed between Sh. Yudhvir singh, Sh. Lakhbir Singh as Lessors and M/s Ace Engineering Academy as Lessee, for property out of same Khasra No. 264, admeasuring approximately 1580 sq. yds, with following details:
" The entire portion of the Ground Floor, consisting of Hall, size 60' x 170' approx. (total area on Ground Floor is 10200 sq. feet ) out of which a 1200 sq. feet area is common area) and a Hall size 60' x 80 ' (total area approx. 4800 CS (COMM) No. : 236/2023 12/34 sq. feet) on the back portion of 1st Floor, out of which a 700 sq. feet area is common area, in the property mentioned above i.e. Plot No. 3, measuring 1680 sq. yds, Khasra No. 264, Kohinoor Enclave, Westend Marg, Village Saidulajab, New Delhi - 110017".
Property descripted in Ex. PW1/13 was let out w.e.f. 01.12.2011 to 30.11.2017 at rental amount of Rs. 10,50,000/- per month at Rs. 70/- per sq. feet alongwith escalation of 5% on the last rent paid after every year during the tenancy period, as noted therein.
26. Vide Ex. PW1/14, lease was created for the property out of Khasra No. 264, admeasuring 10450 sq. feet, (5668 Sq. feet covered carpet area on ground floor, and 4782 sq. feet covered carpet area on first floor) and Open Space Front and Back portion of the Building 938 sq. feet. Carpet Area was rented out at the rate of Rs. 105/- per sq. feet and Open Space Front and Back portion of the Building 938 sq. feet, was let out @ Rs. 26.50/- per sq. feet. Lease deed was executed for 5 years commencing from 05.11.2023 to 04.11.2028.
27. Mark C is the Rent Agreement dated 27.03.2017 for 6400 Sq. Feet area, out of Khasra no. 264 at rent of Rs. 6,48,000/- per month. Mark D is the rent agreement dated 27.03.2017 for property admeasuring 3600 Sq. Feet, out of Khasra No. 264 rented out at the rent of Rs. 1,80,000/- per month . Mark E is Lease/Rent Agreement dated 11.01.2018 for area measuring 6400 sq. feet, out of Khasra no. 264 , rented at Rs. 7,60,800/- per month and Mark F is Lease/Rent Agreement dated 11.01.2018 for area measuring 3600 sq. feet, out of same Khasra No. which was rented at rent of Rs. 1,50,000/- per month.
28. Executant of Ex. PW1/13 and Ex. PW1/14 was examined before the court as PW2. He stated that he owns plot no. 3 out of CS (COMM) No. : 236/2023 13/34 Khasra no. 264 adjacent to the plot of plaintiff. He stated about execution of the lease deed which continued on month to month basis from 01.12.2017 till end of 2021 or 2022. He stated that he could provide ITR showing that the tenancy continued beyond 1.12.2027. According to him, rent received was reflected in his ITR as well as in his bank statement. He was asked to show ITRs for financial years 2017-2018 till 2023-2024 which were brought on record as 'Mark A' and bank statement was brought as 'Mark B'.
29. ITR and bank statement produced by PW2 belonged to his wife Ms. Monika Solanki and his mother Ms. Phoolwati Devi. He admitted that neither Ms. Monika Solanki nor Ms. Phoolwati Devi were mentioned as lessors in Lease Deed, however, he stated that they were his assignees and were included in the term 'lessor', although he alongwith his brother were recorded as absolute owners of the property leased out vide said lease deed.
30. This witness conceded that there was no document vide which he assigned right to receive rent by Ms. Phoolwati and Ms. Monika Solanki, however stated that he had issued a letter to the tenant assigning to give the rent in his wife's and mother's name. This witness denied the suggestion that the amount shown as credited in bank account of Ms. Monika Solanki and Ms. Phoolwati was not the amount paid by M/s Ace Engineering Education India Pvt. Ltd. nor the TDS shown to be deducted as per Mark A was in respect of alleged rent. However, the TDS was reflected in the ITR of Ms. Phoolwati and Ms. Monika Solanki deducted by M/s Ace Engineering Education India Pvt. Ltd. contrary to the suggestion put by Ld. counsel for defendant.
CS (COMM) No. : 236/2023 14/3431. It was admitted by this witness that as per ITRs of financial years 2019-2020 and 2020-2021 of Ms. Phoolwati and Ms. Monika solanki, TDS of Rs. 8,04,058/- and Rs. 3,01,524/- respectively was deducted by M/s Ace Engineering Education India Pvt. Ltd. This witness denied that there was steep fall in rent from financial year 2020-2021 in view of onset of Covid 19 or that most of the educational and coaching institutes had vacated the rented premises due to closure of business on account of Covid 19. He stated that he got half of his property vacated to start his own business and that is why the rent was reduced. He denied that tenancy of M/s ACE Engineering Education India Pvt. Ltd. did not continue in terms of lease deed Ex. PW1/13 w.e.f. financial year 2020-2021. This witness conceded that as per lease deed Ex. PW1/13, there was provision for escalation of rent by 5% on the last rent paid every year during the tenancy period.
32. Ld. Counsel for defendants submitted that though the plaintiff has produced PW2 and proved two rent agreement of the adjacent building, they were of no help to the plaintiff as the plaintiff had himself admitted to have entered into rent agreement with defendant no.1 at a rate of rent which was much lower than the rent fetched by PW2 Yudhvir Singh allegedly for similar property. It was submitted that in these circumstances, it is clear that property of plaintiff and that of PW2 were not getting similar rent at any point of time.
33. Ld. Counsel for defendant further submitted that the rent agreements Ex. PW1/13 and Ex. PW1/14 can only be relied for the purposes of determining the rate of enhancement of rent and the period after which it is to be enhanced. It was submitted that as per Ex. PW1/13, rent had to be enhanced by 5% every year and as per CS (COMM) No. : 236/2023 15/34 Ex. PW14 also the rent had to be enhanced by 5 % every year. Thereby, arrears of alleged rent could be calculated only @ Rs. 4 lacs per month with enhancement of the rent by 5% every year.
34. Ld. Counsel for plaintiff submitted the following:
(a) That Plaintiff witness PW2, the cousin brother of plaintiff no.1 and co-owner of adjoining land in Khasra No. 264, produced and proved two registered lease deed executed by him for adjacent properties, both within the same revenue estate and commercial cluster near Saket Metro. These are:
(i) Lease Deed dated 12.12.2011 executed by Sh. Yudhvir Singh in favour of M/s ACE Engineering Academy for a built up area of approximately 14,500 sq. ft. at a monthly rent of Rs. 10,50,000/- ; and
(ii) Lease Deed dated 10.11.2023 executed by Shri Yudhvir Singh in favour of M/s Physics Wallah Pvt. Ltd. for a built up area of about 16,000 sq. ft. at a monthly rent of Rs. 11,22,107/-.
(b) That both these lease deed have been exhibited as Ex.
PW1/13 and Ex. PW1/14 respectively. The witness, in his deposition, confirmed that both the leased properties form part of the same khasra no. 264, Village Saidulajaib, where the demised premises of the plaintiffs are also situated. These documentary proofs clearly establish that properties of comparable size and location within the same Khasra number are commanding rental values exceeding ₹10 lakh per month, thereby validating that the rent claimed in the present case reaching ₹10,00,000/- per month from April 2022 onwards is both commercially justified and consistent with prevailing market rates.
(c) That the comparison further underscores that the Plaintiff's claim is not exaggerated or arbitrary but firmly supported CS (COMM) No. : 236/2023 16/34 by documentary evidence of market benchmarks. The rent escalation agreed upon by the parties was gradual and in line with prevailing commercial norms. The defendants' occupation of a 20,000 sq. ft. structure for their coaching and school business at such rent is demonstrably reasonable.
(d) Furthermore, it is an undisputed fact that the Defendants have continued to occupy and commercially exploit the premises since January 2021, deriving significant commercial benefit therefrom without honoring the corresponding rent obligations. The use of the premises as a fully operational educational establishment confirms that the property has been utilised at full commercial capacity, further justifying the rent level agreed and the arrears now claimed.
(e) That the market-based evidence produced by the Plaintiffs also rebuts any implied suggestion that the rent claimed was excessive or unsubstantiated.
(f) That on the contrary, the Plaintiffs' case demonstrates a convergence between agreed rent and actual market rent, lending credibility to the suit claim and reinforcing the Plaintiffs' entitlement to the outstanding arrears. Hence, the comparative evidence not only establishes the fairness and credibility of the rent schedule but also strengthens the plaintiff's right to recover arrears of Rs. 1,14,50,000/-, exclusive of GST and interest, for the period April 2021 to February 2023.
35. In Suman Verma & Ors. vs Sushil Mohini Gupta & Ors. , RFA 384/2013, CM No.12718/2013, CM No.12719/2013& CM No.12720/2013 , it was observed that :
" 21................
(d) the calculation of mesne profits always involves some amount of guess work, as held by this court in International Pvt. Ltd. Vs. Saraswati CS (COMM) No. : 236/2023 17/34 Industrial Sundictes Ltd. (1992) 2 RCR 6, M.R. Sahni Vs. Doris Randhawa MANU/DE/0352/2008 and reiterated in Consep India Pvt. Ltd. supra and applicability of prevalent rents in the city and of which the Judges manning the Courts and who are born and brought up in the same city, are generally aware of.
(e) The Division Benches of this court in Vinod Khanna Vs. Bakshi Sachdev AIR 1996 Delhi 32 and S.Kumar Vs. G.K. Kathpalia 1991 (1) RCR 431, taking judicial notice, refused to interfere with the rate of mesne profits even where the landlord had not led any documentary evidence. Notice of such increase has also been taken by the Supreme Court in Saradamani Kandappan Vs. S. Rajalakshmi (2011) 12 SCC 18" .
36. In Fab India Overseas Private Limited vs S.N. Sheopori RFA (OS) NO. 118/2011 & CM No. 6572/2012, it was observed that:
" 39. Mesne profit is nothing but the damages which the erstwhile tenant after determination of the lease has to pay. The landlord is compensated for the loss caused because he is denied and deprived of the possession of the property. A person in wrongful possession has to pay compensation on the basis of profit he actually received or with ordinary diligence might have received. ( Fateh Chand vs. Bal Kishan AIR 1963 SC 1405). The market rate of rent is a good measure and standard to compute the same. What would be market rate of rent requires undertaking comparative assessment of the nature, location, age and condition etc. of a property and similar premises in the surrounding areas which have been given on rent during the period in question. There is some element of guess work and no uniform or standard pattern of assessment can be applied".
37. In RFA No.20/2016 & CM Nos. 3865/2019, 8187/2019, 8188/2019 & 1791/2019 titled as HINDUSTAN PETROLEUM CORPORATION LTD Vs. MOHANJIT SINGH (DECEASED) THROUGH LEGAL HEIRS, it was observed that :
" 40...........
Even otherwise, the calculation of mesne profits always involves some guess work and the Courts have, hitherto in several cases, taken judicial notice of the prevalent market rents of different areas within the city while awarding mesne profits. In this regard, reference may be made to paragraphs 22 (a) to (e) of Suman Verma (supra), relied upon by the respondents, in which it was held as under:-
(a) though undoubtedly the Division Bench of this Court in National Radio & Electronic Co. Ltd. supra has held that judicial notice, only of a general increase in rent in the city of Delhi and not of the rates of rent, in the CS (COMM) No. : 236/2023 18/34 absence of proof thereof can be taken but it cannot be lost sight of that the Courts are for doing justice between the parties and not for, on hyper technicalities, allowing the parties to suffer injustice.
(b) The property of the respondents/plaintiffs which the appellants/defendants are admittedly in unauthorized occupation of, is situated in one of the poshest colonies of the city of Delhi, properties wherein fetch high rentals and which only the elite, affluent, expats and foreigners are able to afford.
(c) the said property is a independent bungalow constructed over 400 sq. yd. of land and comprising of two and a half floors.
(d) the calculation of mesne profits always involves some amount of guess work, as held by this court in International Pvt. Ltd. Vs. Saraswati Industrial Sundictes Ltd. (1992) 2 RCR 6, M.R. Sahni Vs. Doris Randhawa and reiterated in Consep India Pvt. Ltd. supra and applicability of prevalent rents in the city and of which the Judges manning the Courts and who are born and brought up in the same city, are generally aware of.
(e) The Division Benches of this court in Vinod Khanna Vs. Bakshi Sachdev AIR 1996 Delhi 32 and S.Kumar Vs. G.K. Kathpalia 1991 (1) RCR 431, taking judicial notice, refused to interfere with the rate of mesne profits even where the landlord had not led any documentary evidence. Notice of such increase has also been taken by the Supreme Court in Saradamani Kandappan Vs. S. Rajalakshmi (2011) 12 SCC 18.
41. Further reference may be made to paragraphs 31-33 of the decision in National Radio (supra), on which reliance has been placed by the appellant itself, where the Division Bench has, after referring to some of the earlier decisions of this Court, observed as under:
"31. We find that this Court has in several cases taken judicial notice of the factum of increase of rent and made awards of mesne profits and damages. Noteworthy in this behalf is a judicial pronouncement of the Division Bench reported at (supra) entitled Vinod Kumar v. Bakshi Sachdev. This judgment was delivered by a Division Bench of which one of us (Dr. M.K. Sharma, J.) had delivered the judgment. It was held as under: "21. The learned Counsel for the appellants also urged before us that the learned Trial Court was not justified in taking a judicial notice of the fact of increase of rents like the suit property and also in providing Rs. 10,000/- per month as fair amount towards damages/mesne profits in favor of the plaintiff. It is true that no substantial evidence has been led by the plaintiff in respect of the CS (COMM) No. : 236/2023 19/34 increase of rent in the properties like that of the suit property. However, it is a well known fact that the amount of rent for various properties in and around Delhi has been rising staggeringly and we cannot see why such judicial notice could not be taken of the fact about such increase of rents in the premises in and around Delhi which is a city of growing importance being the capital of the country which is a matter of public history. At this stage we may appropriately refer to the Court making judicial notice of the increase of price of land rapidly in the urban areas in connection with the land acquisition matters. Even the Apex Court has taken judicial notice of the fact of universal escalation of rent and even raised rent of disputed premises by taking such judicial notice in case of D.C. Oswal v. V.K. Subbiah".
38. Ex. PW1/13 is the registered lease deed. There is nothing on record to discard or disbelieve the contents of registered lease deed Ex. PW1/13 and the testimony of PW2 in this respect. As per Ex. PW1/13, in year 2011, the property which was similarly placed as the demised premises, was rented out at Rs. 70/- per sq. feet. With increase of 5% every year in the above noted market rent, the market rent of demised premises in the year 2021 which was measuring 20,000/- square feet area besides right to use 4 Servant Quarters on the back and rear lawn for parking, works out to at least not less than Rs. 110 (approx) per square feet . No controversion was offered to PW2 with regard to execution, contents or veracity of Ex. PW1/14 . Vide Ex. PW1/14 , carpet area was rented out at the rate of Rs. 105/- per sq. feet besides different rates charged for Open Space Front and Back portion of the Building in year 2023. With regard to rent agreements Mark C, D, E and F, it was sought to be clarified by Ld. counsel for plaintiff that all the lease deeds Mark C to F were executed in favour of same lessee for different portions , therefore, rate of rent was different, however, the CS (COMM) No. : 236/2023 20/34 cumulative rate of rent per sq. feet was Rs. 77.5 in the year 2017- 2018.
39. The prevailing rental thereby varied from Rs. 77/- to Rs. 110/- (approximately) per square feet, depending upon the location and specification of portion/area in the year 2017-2018. Whereas in the year 2023, in terms of Ex. PW1/14, carpet area was let out at rate of Rs. 105/- per sq. feet. Plaintiff has not brought on record any lease deed which had been executed in the year 2021, however, PW2 was categorical in his submission that the lease which was executed vide Ex. PW1/13 had been extended till 2021. Said submission of PW2 was duly substantiated by documents in form of ITRs and bank statement filed on record whereby the said property was fetching rent more than Rs. 100/- per sq. feet. Although it may be considered that said rate of rent was for the property already under lease whereas for a property which was let out during the covid period, the rate of rent might have been different and lesser than the existing rentals.
40. Defendants themselves did not file any document on record to show the prevalent rate of rent in the market for the suit property while admitting that the suit property was occupied by the defendants for running the Coaching Institute .
41. Property in question had been let out at rate of Rs. 50/- per square feet, aggregating to Rs. 10,00,000/- considering the carpet area being 20,000 square feet, besides the right to use 4 Servant Quarters on the back and rear lawn for parking. Prior thereto, the rate of rent was much less i.e. Rs. 4 lacs from April 2021 to June 2021, Rs. 6,00,000/- from July 2021 to September 2021 and Rs. 8,00,000/- from October 2021 to March 2022. Considering prevalent market rent during the relevant period for the similarly CS (COMM) No. : 236/2023 21/34 placed properties and also considering that the property in question was let out in the year 2021 which was during Covid-19 period, therefore, the different slabs of rent permitted by plaintiff seems to be plausible explanation for variation and escalation in rent from Rs. 4 lacs to Rs. 10 lacs in a span of one year.
42. According to plaintiff, it was represented by the defendants that they were engaged in the business of running a coaching institute, and in the initial months, their student strength and revenue would be limited, therefore, on the request of defendants, plaintiff/lessors agreed to begin the tenancy on a lower rent for the initial period, with a structured enhancement linked to growth in student enrollment and business expansion. Defendants themselves referred to the increase in business though in different context that plaintiff started pressurizing defendants to pay usage charges for the rear portion . Nevertheless, it is understandable that during the year 2021 due to covid prevailing condition and on the representation of defendants, as so asserted by plaintiff, plaintiff had agreed to accept the payment at the lesser rate than the prevailing market rent for a specified duration. Accordingly, plaintiff is held to be successful in establishing its claim with regard to quantum of the rent. This issue is decided in favour of plaintiff and against the defendant.
43. Issues No. 2 , 3 and 4 : PW1 asserted that defendants were not regular in making payment of monthly rent from the very beginning, citing one or the other excuse for not making the payment of rent in time. In fact, defendants never made the full payment of monthly rent for any of the months under tenancy. Defendants would always make staggered payments qua the monthly rent, that too after multiple reminders by plaintiff. As CS (COMM) No. : 236/2023 22/34 deposed by PW1, total monthly rent due for the period April 2021- February 2023 was Rs. 1,88,00,000/-, out of which defendants made payment of only Rs. 73,50,000/- and balance sum of Rs. 1,14,50,000/- continued to remain outstanding towards rent for the period April 2021 to February 2023.
44. Details of payments made by defendants were brought on record as Ex. PW1/6. PW1 stated that he had not maintained any ledger account but relied upon Ex. PW1/6 i.e. Expense Building Rent for the year 2021 & 2022 wherein the details of the payments made by defendants were given, according to which Rs. 58 lacs had been paid by defendants through cheque/Online transactions, whereas Rs. 1,550,000/- had been paid in cash on different dates, thereby the total rent was received in sum of Rs. 73,50,000/-. As claimed by PW1, Ex. PW1/6 had been signed and acknowledged on behalf of defendants. PW1 was put question whether he had taken any authority letter of the signatory of Ex. PW1/6 to the effect that she was authorized to sign the document on behalf of defendants, to which PW1 answered that he had not taken any such authority letter as defendant no.2 himself had asked the receptionist to give a print out of the total payment made by defendants and signed the same on behalf of defendants. PW1 denied the suggestion that Ex. PW1/6 did not contain details of all the payments made by defendants to plaintiffs or that it was forged or fabricated document.
45. PW1 was put questions that the payments were made by defendants through cash as well as banking transactions, to which witness answered in affirmative. He also admitted that plaintiffs had not issued separate written receipts to the defendants in respect of each and every payment received by them from the defendants and CS (COMM) No. : 236/2023 23/34 denied the suggestion that plaintiff had deliberately not issued the receipt of amount paid by the defendants in order to conceal the exact amount of payment made by defendants. PW1, sought to clarify that when he asked defendants about the source of cash which he had handed over, receipt for amount of Rs. 15,50,000/- was given by the defendant no.2. Receipt of Rs. 15,50,000/- dated 17.06.2022 issued by defendant company was filed on record as Ex. PW1/7. DW1 admitted that Ex. PW1/7 was executed on letter head of defendant no.1 company. PW1 denied that Ex.PW1/7 did not find mention as to in respect of which property, the said payment was made and answered that address of the property was printed on the receipt itself . This witness was put question that Ex. PW1/7 did not contain the description as to for which period, the amount mentioned in the same had been paid, to which he answered that it was receipt of the total amount which had been given by the defendants in parts in cash and also denied the suggestion that Ex. PW1/7 had been issued in respect of user charges of an open lawn at the backside of the suit property.
46. Ex. PW1/7 is the receipt issued on letter head of defendant as also admitted by DW1 which is the payment receipt against rent dated 17.6.2022. Although, it was pleaded by defendants that sum of Rs. 15,50,000/- had been paid to the plaintiff towards the usage charges of rear portion of 1000 sq yards at the rate of Rs. 1 lac per month for the period i.e. from 1.4.2021 to 30.6.2022 alongwith penalty of Rs. 50,000/- for delayed payment. However, the rent receipt Ex. PW1/7 does not contain any such mention or differentiation.
47. According to plaintiff, he had paid GST in respect of payments received from defendants through banking transactions. It CS (COMM) No. : 236/2023 24/34 was stated that defendants had told that they shall give cheques in place of the cash payments and therefore GST in respect of cash payment was not paid but lateron defendants did not issue cheques against the payments made in cash. He denied the suggestion that he neither requested the defendants to provide the GST number and the bills nor deposited GST because the amount was not received towards the rent but towards the part consideration of sale of property. After consultation from CA, PW1 informed that the bills regarding the payments received by defendants were not issued by them as GST number was not disclosed by the defendants, therefore, GST could not be deposited.
48. Defendants per contra, maintained that they had paid total amount of Rs. 1.5 Crores to the plaintiff, though it was towards part payment of sale consideration amount and not against the payment of rent. Nevertheless, since the defence of defendants with regard to any payment having been made against the part sale consideration amount has already been discarded, the amount as paid by defendants has to be considered against the payment of rent, which according to defendants was Rs. 1.25 Crores. However, the said contention also does not find substantiation on record in form of any documentary evidence.
49. DW1 who was Director of defendant no.1 company did not even know whether defendant no.1 company was an Income Tax Assessee or not. He stated that the amount of Rs. 1.25 Crores was paid by defendant no.1 company. Amount of Rs. 80 lacs approximately was paid through banking channel from account of defendant no.1 . The payment of Rs. 1.25 Crore was paid by the defendant company in parts after every gap of 3-4 months.
CS (COMM) No. : 236/2023 25/3450. No document was filed by defendants nor any evidence was brought on record reflecting the payment of Rs. 1.25 Crores paid by defendants either towards the part sale consideration of the suit property as claimed by defendants or against the payment of rent. DW1 conceded that defendants have not filed any document on judicial record to show that amount of Rs. 1.25 Crores was paid by defendant no.1 towards the alleged part sale consideration for suit property nor did they have any document to show that sum of Rs. 12 lacs paid by defendant no.1 was towards the earnest money. DW1 admitted that he or defendant no.1 company had not got issued any public notice stating that defendant no.1 was prospective purchaser of the suit property at any point of time. He admitted that defendants had not instituted any suit for specific performance/recovery of money against plaintiff. He conceded that defendants had not given any written notice/message to the plaintiff showing readiness and willingness to pay the alleged balance consideration and calling upon them to execute sale deed in respect of suit property.
51. DW 1 referred to the complaints made to the police, however admitted that in none of the complaints, factum of defendant no.1 company or defendant no.2 having purchased the suit property was mentioned. He also admitted that it was not stated that he or defendant no.1 had paid sale consideration amount to the plaintiff or were in possession of the suit property in capacity of prospective purchaser, which complaints only pertained to act of trespassing . He admitted that no FIR was registered against the plaintiff regarding trespass nor he had filed any application before court of competent jurisdiction seeking registration of FIR against plaintiff. DW 1 was asked about steps taken by him against the plaintiff when plaintiff allegedly withheld amount of Rs. 1.25 Crores, to CS (COMM) No. : 236/2023 26/34 which he replied that he stopped making further payments after that. DW1 was again asked whether he filed any police complaint or any case against the plaintiffs that they illegally withheld amount of Rs. 1.25 Crores paid by the defendants to which DW1 replied in Negative.
52. Whatsapp chat between the parties were filed on record as Ex. PW1/8. In terms of Ex. PW1/8, on May 11,2021, plaintiff made demand for the rent to which defendant replied that:
" Abi office bnd h jaise hi lockdown khulega m office aunga or apko call kr dunga cheque le jana".
On June 8, 2021, plaintiff again asked defendant " office aany lg gya kya", to which defendant replied that:
" ...office khol lia hai ajana aap time nikal k".
On August 23,2021 plaintiff again asked:
" Manish bety office ho kya rent ke cheque leny aana hai kb aau", followed by message sent on August 31,2021 whereby it was conveyed that :
" Manish bety kb milogy m 3,4 bar chkker lga chuka hu rent ke liy aap se mulakat nhi ho pa rhi ha bda bhai or mera partner gussa ho rhe h".
On September 7,2021 defendant conveyed that "
" Abi cheque mt lgana".
On November 8,2021, plaintiff again asked:
" Office m kis time milogy mny aaj us trf ana hai.
Rent ke chqek lene ke liy".
Defendant reverted that :
" Rent k cheque k liye 15 k as pass ana ajj nhi.
Diwali ki chutiyo ki wjah s abi fees collection nhi hua h 15 tak ho jaega", to which plaintiff conveyed that " Pichly month ke bi rh rhe h 15 ke date ke bna dena".
On December 1,2021, defendant conveyed that:
" Abi 1 tarik wala cheque mt lgana Account m balance ni h bounce ho jaega Jaise hi acc m fund aega m bta dunga fir daal dena".CS (COMM) No. : 236/2023 27/34
On November 14,2022 Plaintiff conveyed that :
" Manish bety aapka koi phone ya SMS nhi aya m aapke phone ka entjar kr rha tha ap ne jo bi time dety ho kbhi us pr nhi rhty na rent dy rhe ho or na electricity bill bra hai ase kaise kb tk kaam chlega rent bi kafi ho gya hai m jb bi aata hu aap next date dy dete ho aap hi mujy btao m kya kru ase kb tk chlga ager aapka kaam nhi chl rha to khali kr do kyoki aap bhi preshan ho or mujy bi kr rhe ho".
On November 26,2022, plaintiff again asked:
" Manish m office aapke aaya hu kab tak aayga m kis time tak intjar kru aap phone pick nhi kr rhe ho".
53. DW1 denied about any whatsapp chat between the parties. Statement of DW1 was recorded under Order 10 CPC wherein he stated that :
" My phone number is 8178888912. Whatsapp chat on record with the abovesaid number does not belong to me. I have two phone numbers. Above number is my official mobile number and my personal number is 8800978204. The whatsapp chat from the above number i.e. 8178888912 was done by my staff namely Arun. I don't check the whatsapp chat made by my staff. I do not know whether there was any whatsapp chat made by my staff with plaintiff . I cannot even answer whether the whatsapp chat made by my staff was on my instructions.
I had entered into oral agreement to sell with plaintiff Dharambir . I was informed that property was in name of father and brothers of father of Dharambir and the property so far had not been mutated, therefore, no written agreement to sell was executed. I got the possession of the suit property against payment of Rs. 1,25,00,000/- (Rs. One Crore Twenty Five Lacs only) (approximately) . I made most of the payment through bank transfers/cheques in the bank accounts of Dharambir, Naveen Balara and Satyaveer Singh. I cannot give segregation of the payments made in respective accounts of above named persons. I am not sure whether I have filed my bank statement on record.
I was not aware about the whatsapp chat between plaintiff and my staff. After getting to know about the said whatsapp chat after filing of the suit, I have not taken any action against the said staff. I cannot answer any question pertaining to the whatsapp chat from the abovesaid number as available on record".
54. Though the contents of whatsapp chat reveal that the whatsapp chat was with defendant no.2 himself and not with the employee of defendant no.2. Even otherwise the phone number as CS (COMM) No. : 236/2023 28/34 admitted by Defendant no.2 himself, belongs to him, therefore, any such communication from the phone belonging to defendant no.2 even if made by his staff, has to be construed upon his instructions and binding upon him. The conversation is with Whatsapp number of the defendant, whether available with him or with his staff and the contents of the same reveal, defendants being in arrears of rent and plaintiff desperately requesting them to make payment of arrears of rent.
55. Plaintiff himself has stated about the receipt of amount of Rs. 73,50,000/- out of the total arrears in sum of Rs. 1,88,00,000/- till February 2023. Defendants continued to be in possession of the suit premises despite the issuance of legal notice and termination of the tenancy, without payment of rent. Defendants themselves in written statement stated about non payment of user charges since February 2023 although failed to establish on record complete payment of rental/user charges even till February 2023. As brought on record, possession of the suit premises has been received by plaintiff as on 15.07.2024. Defendants are thereby liable to clear the arrears of rent till the date of handing over of the possession.
56. Defendants not having vacated the suit premises despite the termination of the tenancy and compelling the plaintiff to initiate legal proceedings against defendants, renders the defendants liable for damages/mesne profits. Plaintiff nevertheless has restricted his claim of damages only to the last rental amount claimed at Rs. 10,00,000/- per month till the date of receipt of possession alongwith interest. Considering the concession offered by plaintiff himself in not insisting for the damages/mesne profits for the period of unauthorized user by the defendants, plaintiff deserves the interest to be awarded including the amount of arrears of rent as the CS (COMM) No. : 236/2023 29/34 defendant has utilized the said amount at the cost of loss to the plaintiff. Plaintiff is accordingly held entitled for recovery of balance arrears of rent of Rs. 1,14,50,000/-(Rs. One Crore Fourteen Lacs and fifty Thousand only) due as on February 2023 and further payment of arrears of rent at the rate of Rs. 10,00,000/- per month till the date of handing over of possession alongwith interest @ 12% per annum from the respective due dates of payments.
Issues no. 2, 3 & 4 stand answered as above.
57. Ld. Counsel for defendants sought recusal of defendant no.2 citing his no personal liability for the affairs of defendant no.1 company. It was submitted that it is neither the case of the plaintiff that they were induced to rent out the property to the defendant no.1 under misrepresentation nor that defendant no.2 ever personally undertook or agreed to clear any liability of defendant no.1 outstanding against the plaintiff. Reliance was placed upon Tristar Consultants Vs. Vcustomer Services India Pvt. Ltd. and Ors. MANU/DE/7339/2007 and Rajendra Sachdeva Vs. A.C. Engineering Private Limited and Ors. MANU/DE/1175/2025, wherein interalia, it was observed that :
" It is trite that a company is a juristic entity, which acts through living human beings, collectively referred to as the Board of Directors of the company. Unless specifically authorized, no individual Director has the power to act on behalf of the company. Director of a company can act on behalf of the company only if empowered to do so by the Articles of the company or a specific resolution passed by the Board of Directors. The Directors are understood as agents of the company because qua the company, they act in fiduciary capacity, thereby acting to the benefit of the company, and those acts have only to be to the extent they are authorized to act. Such fiduciary duty owed by the Directors are to the company and not to the third party, dealing with the company. The Directors cannot be treated as agents of the company in the contraventional sense of an agent vis-a-vis third party. In this regard, section 230 of the Indian Contract Act, 1872 stipulates that unless he personally binds himself, an agent is not personally liable for contracts entered into by him on behalf of his principal".CS (COMM) No. : 236/2023 30/34
58. Ld. Counsel for plaintiff referred to submission in written statement wherein it was mentioned that :
" Defendant no.2 in order to set up coaching centre was looking for the property in vicinity of .......................".
" On finding the location of the property suitable for setting a coaching institute, defendant no.2 showed his willingness to buy the property in question".
59. Reference was also made to complaints lodged by defendant no.2 with the police in his personal capacity wherein it was mentioned that :
" I Manish Kumar...... would like to inform that I run an Educational Academy in name of Knewton Academy Softech Solution Pvt. Ltd. from property bearing no...................
That in order to dispossess me from the said property through his men forcefully.................."
60. Based upon the said reference on behalf of defendant no.2, Ld. counsel for plaintiff submitted that defendant no.2 was involved in the commercial transaction with plaintiff in his personal and individual capacity. According to him, he had showed his willingness to purchase the property and in communication with the plaintiff and in complaint to the police, he did not communicate as Director of Defendant no.1 company but in his personal and individual capacity. It is correct that the company has a separate legal entity as was also observed in Mukesh Hans & Anr. Vs. Uma Bhasin & Ors. RFA no. 14/2010 and CM No. 495/2010 and Sanuj Bathla and Anr. Vs. Manu Maheswhari & Anr. CRP 166/2018 and CM Appeal No. 32378/2018 :
"11. Indubitably, a company incorporated under the Companies Act, whether as a private limited company or a public limited company, is a juristic entity. The decisions of the Company are taken by the Board of Directors of a Company. The Company acts through its Board of Directors, and an individual Director cannot don the mantle of the Company by acting on its behalf, unless he is so authorized to act by a special resolution passed by the Board or unless the Articles of Association so warrant. It is equally well settled that a Director of a Company though he owes a fiduciary duty to CS (COMM) No. : 236/2023 31/34 the Company, he owes no contractual duty qua third parties. There are, however, two exceptions to this rule. The first is where the Director or Directors make themselves personally liable, i.e., by execution of personal guarantees, indemnities, etc. The second is where a Director induces a third party to act to his detriment by advancing a loan or money to the Company. On the third party proving such fraudulent misrepresentation, a Director may be held personally liable to the said third party. It is, however, well settled that this liability would not flow from a contract, but would flow in an action at tort, the tort being of misrepresentation and of inducing the third party to act to his detriment and to part with money".
61. Ld. counsel for plaintiff also referred to doctrine of lifting of corporate veil and placed reliance upon Ajay Gupta and Anr. Vs. Amit Sales Corporation Pvt. Ltd. and Anr. CRP 303/2024, wherein reference was made to observation in Balwant Rai Saluja Vs. AIR India Ltd. (2014) 9 SCC 407.
"74. Thus, on relying upon the aforesaid decisions, the doctrine of piercing the veil allows the court to disregard the separate legal personality of a company and impose liability upon the persons exercising real control over the said company. However, this principle has been and should be applied in a restrictive manner, that is, only in scenarios wherein it is evident that the company was a mere camouflage or sham deliberately created by the persons exercising control over the said company for the purpose of avoiding liability. The intent of piercing the veil must be such that would seek to remedy a wrong done by the persons controlling the company. The application would thus depend upon the peculiar facts and circumstances of each case."
It was observed that :
19. While it is not in doubt that a company has a separate legal entity, and that the corporate veil cannot be lifted in a routine manner, the same can be pierced if the corporate structure is misused to perpetrate fraud or shield the wrongdoers from the consequences of their actions. In terms of the dictum of the Hon'ble Apex Court in Balwant Rai Saluja vs Air India Ltd (supra), the intent of piercing the veil must be such so as to remedy a wrong done by the persons in control of the company. In that regard, the deceitful conduct of the petitioners in first issuing the cheques and then shifting to UAE and not joining the proceedings, makes it imperative to pierce the corporate veil".
62. However, the observations of Hon'ble Court as noted (supra), were pertaining to execution proceedings wherein for non payment of dues, lifting of coroporate veil was CS (COMM) No. : 236/2023 32/34 necessacitated. A company being a juristic entity has to be represented through human beings/Directors of the company. Despite the reference by Ld. counsel for plaintiff to the contents of written statement and the police complaint, whereby defendant no.2 had referred himself in his name instead of as Director of Defendant no.1 company, nevertheless, in terms of own case of plaintiff, oral lease deed had been executed with defendant no.1 company. As mentioned in the plaint itself, defendant no.1 through its director defendant no.2 approached the plaintiff. Rent amount was also paid by defendant no.1.There are no allegations in the pleadings or otherwise with regard to personal liability or personal guarantee furnished by defendant no.2 . There are also no allegations against defendant no.2 being personal guarantor for any liability on behalf of the company or fraud or misfeasance on his part.
63. It was observed in Sanuj Bathla and Anr. Vs. Manu Maheswhari & Anr. (supra) that :
" 17. ....11. The effect of the registration of a company under section 34 of the Companies Act is that it is a distinct and independent person in law and is endowed with special rights and privileges; a person distinct from its members. Consequently, the company is enabled to contract with its shareholders also, to use commons seal and acquire and hold property in its corporate name. The company is distinct from its shareholders and its directors. Neither the Shareholders nor the director can treat the companies assets as their own. Directors of Company are liable for misappropriation of company's funds and other misfeasance, but not for an ordinary contractual liability of the company. The liability of the members or the shareholders or the directors is limited to the capital invested by them. So long the liability is not unlimited under section 322 and 323 of the Companies Act and no special resolution of the limited company making liability of the directors or the managing directors unlimited is alleged. The doctrine of lifting of the corporate veil could be applied in cases of tax evasion, or to circumvent tax obligation or to perpetuate fraud or trading with an enemy are concerned........
19. It is well settled that fraud, if alleged, must be pleaded meticulously and it detail and proved to the hit. A mere assertion that fraud has been committed is neither here nor there. Precisely and in what manner fraud has been committed, is required to be delineated by the party alleging CS (COMM) No. : 236/2023 33/34 the same plea of fraud is to be made the basis of a decree against the other party. Bald assertions and vague allegations will not be countenanced by the Courts. Rule 4 of Order VI specifically lays down that the particulars of the fraud alleged (with dates and items, if necessary) shall be stated in the plaint.".
Resultantly, suit is decreed only against defendant no.1.
64. Relief : Instant suit is accordingly decreed with cost in favour of the plaintiff and against defendant no.1 for payment of arrears of rent of Rs. 1,14,50,000/- (Rs. One Crore Fourteen Lacs and fifty Thousand only) due as on February 2023 and further payment of arrears of rent at the rate of Rs. 10,00,000/- (Rs. ten Lacs only) per month till the date of handing over of possession alongwith interest @ 12% per annum from the respective due dates of payments.
65. Decree sheet be prepared accordingly. After completion of formalities, file be consigned to record room.
Digitally signedsavita by savita rao Date: 2025.12.11 rao 16:09:57 +0530 Announced in the open (SAVITA RAO) court on 11.12.2025 DISTRICT JUDGE (COMMERCIAL COURT)-01 SOUTH, SAKET COURTS, DELHI CS (COMM) No. : 236/2023 34/34