Tenant Offers to Return Keys After Lease Expiry but Landlord Refuses Over Unpaid Dues; Delhi High Court Upholds Mesne Profits Until Actual Possession
Company Offers to Surrender Office After Lease Expires, Landlord Refuses Keys Over Dues; Delhi High Court Upholds Rent and Mesne Profits
Facts
The dispute concerned Flat No. 913, Arunachal Building, Barakhamba Road, New Delhi. Dr. Bhupesh Mangla was one of its landlords/joint co-owners and had also been appointed Receiver in a family partition suit. U.E. Trade Corporation took the premises on lease under a deed dated 2 December 2003 for three years, from 3 November 2003 to 2 November 2006, at a monthly rent of ₹20,125.
In 2006, another co-owner, Rohit Mangla, approached the tenant. The tenant then came to know about the pending partition proceedings concerning the property and sought clarification regarding who was legally entitled to receive rent.
On 17 April 2006, the landlord issued a notice terminating the tenancy for non-payment of rent and demanded vacant possession. The tenant replied that the notice did not validly terminate the lease and stated that it was willing to deposit rent either in Court or with the landlord once the position regarding the other co-owners was clarified.
Later, on 2 September 2006, the tenant informed the landlord that it intended to vacate and hand over possession upon expiry of the lease on 2 November 2006. It also stated that, if possession was not accepted, it would deposit the keys in Court.
The tenant subsequently made several attempts to hand over the keys. On 24 November 2009, however, the landlord refused to accept them because outstanding dues had not been cleared. Ultimately, the keys and vacant possession were handed over in Court on 3 February 2010.
The Trial Court decreed arrears of rent and substantial mesne profits, ranging from ₹51,000 to ₹80,125 per month, together with 9% interest and costs.
The tenant challenged the decree before the Delhi High Court under Section 96 read with Order XLI CPC. The appeal was reserved on 26 May 2026 and pronounced on 21 September 2026.
Issues
The principal questions before the High Court were:
- Whether one co-owner could maintain the proceedings without joining all other co-owners.
- Whether the tenant could dispute the landlord’s title/authority after entering into the lease with him.
- Whether the tenant’s offers to return the keys were sufficient to terminate its liability for mesne profits.
- Whether mesne profits could validly be assessed using certified copies of registered lease deeds relating to comparable premises.
- Whether the rates of mesne profits and 9% interest awarded by the Trial Court were justified.
- Whether the tenant could introduce additional documents for the first time in appeal under Order XLI Rule 27 CPC.
Appellant’s Arguments
The tenant argued that the landlord had failed to disclose the pending partition proceedings and the limited nature of his appointment as Receiver.
It contended that once disputes existed among the co-owners, the landlord could not presume that he was acting as agent of the other owners. According to the tenant, all co-owners ought to have been joined in the proceedings.
The tenant further argued that it had clearly elected to surrender the premises upon expiry of the lease on 2 November 2006, had removed its belongings, and repeatedly attempted to deposit the keys. Since the landlord allegedly avoided taking the keys, the tenant contended that it should not be made liable for mesne profits until 2010.
It also challenged the comparable lease deeds relied upon for calculating mesne profits, arguing that the documents had not been properly proved and concerned differently situated/furnished properties.
According to the tenant, at most, arrears of contractual rent at ₹20,125 per month up to 2 November 2006 could have been awarded.
Respondent’s Arguments
The landlord contended that the tenant admittedly entered the premises through him and paid rent to him. It therefore could not subsequently challenge his status as landlord.
He argued that one co-owner is legally competent to institute proceedings against a tenant, particularly where no other co-owner objects to the action.
On possession, the landlord maintained that vacant and peaceful possession was actually delivered only on 3 February 2010. Earlier offers to surrender the premises were disputed and, according to him, did not amount to an effective delivery of possession.
The landlord further defended the mesne-profit calculation on the basis of registered lease deeds concerning comparable properties in the same building.
Analysis of the Law
1. Tenant Cannot Deny the Landlord’s Title
The High Court applied Section 116 of the Evidence Act.
The tenant had entered into the lease with the respondent, paid rent and other charges to him, and enjoyed possession for years without repudiating his status.
The Court held that a tenant who obtains possession through a landlord cannot, while the tenancy continues, dispute the title of the person through whom possession was obtained.
Importantly, in a landlord-tenant dispute, the Court observed that what matters is the plaintiff’s title as landlord, not necessarily perfect ownership title.
2. One Co-Owner Can Maintain an Eviction Action
The Court rejected the tenant’s contention that all co-owners had to be joined.
Relying upon India Umbrella Manufacturing Co. v. Bhagabandei Agarwalla, the Court reiterated that one co-owner can maintain an eviction action on behalf of the body of co-owners unless it is established that the other co-owners actually disagree with the eviction.
Here, no such opposition was demonstrated. Accordingly:
Impleadment of every co-owner is not a prerequisite for maintaining proceedings against the tenant.
The Court also distinguished cases where the tenancy itself had been jointly created by all co-owners. Here, the lease had been granted by the respondent, who was both a co-owner and Receiver.
3. Mesne Profits Based on Comparable Properties
A significant part of the judgment concerns how market rent can be proved for assessing mesne profits.
The tenant argued that certified copies of registered lease deeds could not be relied upon unless their executants were called as witnesses.
The High Court rejected this.
It held that certified copies of registered lease deeds constitute public documents within the meaning of Section 74 of the Evidence Act and are admissible under Sections 65(e), 65(f) and 77. Their contents can therefore be proved without separately calling the executants.
4. Mathematical Precision Is Not Required
The Court recognised an important practical principle:
Assessment of mesne profits is inherently an exercise of estimation and does not require mathematical certainty.
Some reasonable or “honest guesswork” is permissible, provided it is supported by evidence of prevailing rentals for comparable premises.
The comparable properties in this case were located in the same building, giving them a direct connection with the disputed premises.
The tenant, significantly, produced no competing evidence to establish what the fair rental value of an equivalent unfurnished premises would have been.
5. Trial Court Had Already Adopted the Lower Figure
The Trial Court had not mechanically awarded the highest comparable market rent.
For 2007 and 2008, comparable properties indicated monthly rentals of approximately ₹89,320 and ₹97,750, respectively. Yet the Trial Court restricted mesne profits to ₹80,125 per month, treating Clause 16 of the lease as an upper limit.
For 2009–2010, the award was ₹71,875 per month based on comparable rental material. The High Court found no perversity in this methodology.
Precedent Analysis
The Court relied substantially upon:
India Umbrella Manufacturing Co. v. Bhagabandei Agarwalla — one co-owner can maintain eviction proceedings unless the other co-owners are shown to oppose eviction.
Jaspal Kaur Cheema v. Industrial Trade Links — a tenant cannot deny the landlord’s title while retaining possession obtained under that landlord.
Hindustan Motors Ltd. v. Seven Seas Leasing Ltd. — some honest guesswork is inevitable when determining mesne profits; rentals of comparable properties can legitimately be considered.
Food Corporation of India v. Bal Karan Singh — mesne profits are determined on a preponderance of probabilities, and an appellate court should not interfere merely because another possible assessment exists.
Tomorrowland Ltd. v. HUDCO — interest under Section 34 CPC is discretionary and must be exercised fairly and equitably.
J.K. Lakshmi Cement Ltd. v. Master Avishkar Prakash — interest forms an integral component of mesne profits, and 9% per annum may constitute a reasonable rate depending on the circumstances.
Gobind Singh v. Union of India — additional evidence at the appellate stage under Order XLI Rule 27 is exceptional and permissible only upon satisfaction of the statutory conditions.
Court’s Reasoning
The High Court found no perversity or illegality in the Trial Court’s assessment.
The tenant had voluntarily entered into the lease with the respondent and enjoyed possession under him. It could not subsequently rely upon disputes between the landlord and his family members to defeat the landlord-tenant relationship.
The Trial Court’s assessment of mesne profits was also supported by registered leases concerning premises in the same building. The tenant produced no reliable contrary market-rental evidence.
The Court further upheld the 9% interest, observing that interest on unpaid mesne profits compensates the person entitled to the money for being deprived of its use. The Trial Court’s exercise of discretion was neither arbitrary nor excessive.
Additional Evidence Rejected
The tenant sought to introduce a legal notice dated 28 March 2006 and another letter dated 9 March 2006 during the appeal.
The High Court rejected the application under Order XLI Rule 27 CPC.
The documents had not been refused by the Trial Court; the tenant did not establish that they were previously outside its knowledge despite due diligence; and the High Court did not require them to decide the appeal.
Therefore, none of the three statutory conditions for additional evidence was satisfied.
Conclusion
The Delhi High Court held that the Trial Court had correctly awarded the landlord:
- arrears of rent;
- damages/mesne profits;
- interest at 9% per annum; and
- costs.
The High Court found no merit in the tenant’s appeal and dismissed it in its entirety. The application seeking introduction of additional evidence was also dismissed.
Case Details
Case: U.E. Trade Corporation (India) Pvt. Ltd. v. Dr. Bhupesh Mangla
Court: High Court of Delhi at New Delhi
Case No.: RFA 566/2016 & CM APPL. 31913/2022
Judge: Justice Mini Pushkarna
Reserved: 26 May 2026
Pronounced: 21 September 2026
Result: Appeal dismissed; Trial Court decree awarding arrears of rent, mesne profits, 9% interest and costs upheld.
