Delhi High Court Holds Tenant Cannot Escape Liability by Handing Keys to Co-Owner Who Was Also Its Director; Appeal Dismissed
Facts
The respondent, Ashok Duggal, instituted two civil suits seeking possession, recovery of rent arrears and damages in respect of the basement and a flat in Gagandeep Building, Rajendra Place, New Delhi, jointly owned by him and his brother-in-law Pradeep Mehra. Both premises had been leased to M/s Shakun & Company (Services) Pvt. Ltd., of which Pradeep Mehra was a Director.
The respondent alleged that the tenancy had been terminated by legal notice dated 26 May 2000, but the tenant neither vacated the premises nor paid his share of rent. The tenant company claimed that it had vacated both premises on 30 June 2004 after issuing notice and handing over possession to Pradeep Mehra, who was a co-owner. The Trial Court decreed the suits for possession, rent arrears and damages, and the First Appellate Court affirmed the decree. The tenant company and its Director challenged those concurrent findings before the Delhi High Court.
Issues
- Whether a tenant validly surrenders leased premises by handing over possession to one co-owner who is simultaneously a Director of the tenant company.
- Whether the tenant could avoid liability for rent, mesne profits and damages on the basis of such alleged surrender.
- Whether the concurrent findings of the Trial Court and First Appellate Court warranted interference in second appeal.
Appellants’ Arguments
The appellants argued that there was no legal requirement for handing over possession jointly to both co-owners. Since notice dated 12 June 2004 had been issued informing both owners that possession would be delivered on 30 June 2004, and Ashok Duggal failed to appear, the company validly handed over possession to Pradeep Mehra as one of the co-owners.
They further contended that surrender to one co-owner amounted to surrender to all co-owners and therefore no further liability for possession, damages or mesne profits could survive. They also relied upon certificates obtained from the Flat Owners’ Association and BSES to establish that the premises had in fact been vacated.
Respondent’s Arguments
The respondent denied receiving any valid notice regarding the alleged surrender of possession and disputed that the tenancy had ever been lawfully surrendered.
He contended that Pradeep Mehra was not merely a co-owner but also the Director of the tenant company, making the alleged delivery of possession ineffective and self-serving. Since the respondent was excluded from possession and continued to seek delivery throughout the litigation, the tenant remained in unauthorised occupation and liable for rent arrears and damages.
Analysis of the Law
The High Court held that the dispute was essentially one between landlord and tenant, irrespective of internal disputes between directors of the tenant company.
The Court observed that the burden of proving valid surrender rested upon the tenant. Since the alleged notice of surrender had been sent merely under UPC (Certificate of Posting) and not by registered post, and its service was specifically denied, the tenant failed to establish that Ashok Duggal had ever been notified to receive possession.
The Court further held that although surrender to one co-owner may, in appropriate circumstances, amount to surrender to all, that principle could not apply where the co-owner receiving possession simultaneously represented the tenant company itself and the parties were admittedly on hostile terms.
Precedent Analysis
The Court relied upon:
- State of Maharashtra v. Rashid B. Mulani (2006) 1 SCC 407—holding that a Certificate of Posting (UPC) carries little evidentiary value where service is disputed because no official postal record is maintained.
The Court distinguished the authorities relied upon by the appellants on surrender by one co-owner by holding that the peculiar facts of the case—particularly Pradeep Mehra’s dual capacity as both co-owner and Director of the tenant company—made those principles inapplicable.
Court’s Reasoning
The Court found that the alleged surrender was not genuine. Pradeep Mehra, who allegedly accepted possession, was simultaneously a co-owner of the property and the Director of the tenant company. Even after the alleged surrender, the premises remained locked with the keys continuing to remain in his possession.
The Court observed that nothing prevented Pradeep Mehra from ensuring that both co-owners obtained joint access if genuine possession had truly been surrendered. Instead, the alleged arrangement merely enabled the tenant company to retain effective control over the premises while claiming to have vacated them.
Considering the strained relationship between the parties, the absence of valid notice, and the continued exclusion of Ashok Duggal from possession, the Court concluded that the alleged surrender had been stage-managed and could not legally terminate the tenant’s liability.
Conclusion
The Delhi High Court dismissed both Regular Second Appeals and affirmed the concurrent judgments of the Trial Court and First Appellate Court. It held that the tenant company had failed to establish valid surrender of possession, remained in unauthorised occupation, and was therefore liable to deliver possession and pay the decreed rent arrears, mesne profits and damages.
Case Details
Case: M/s Shakun & Company (Services) Private Ltd. & Anr. v. Ashok Duggal
Court: High Court of Delhi
Case Number: RSA 134/2017 and RSA 135/2017
Judge: Hon’ble Ms. Justice Neena Bansal Krishna
Date: 31 July 2026
Result: Appeals Dismissed; the High Court upheld the decrees for possession, rent arrears, mesne profits and damages, holding that the alleged surrender of possession to a co-owner who was also the tenant company’s Director did not constitute a valid surrender of tenancy.
