Financial Statements and TDS Certificates Estoppel Landlord-Tenant Relationship Despite Disputes Over Title or Ownership Formalities

Respondent No. 1 (Plaintiff), as the proprietor of ‘Jagdish and Company’, was allotted an industrial plot (suit property) by DSIIDC

In 2004, the Appellant company was incorporated with Respondent No. 1 and Respondent No. 2 as directors/shareholders

Respondent No. 1 leased the property to the Appellant; rent was paid until December 2022, after which the Appellant defaulted

Respondent No. 1 terminated the tenancy via legal notice on 07.08.2023

In the underlying suit, the Appellant failed to file a written statement, leading to its defence being struck off

The Trial Court decreed eviction, arrears of rent (₹7,15,000), and damages

The Appellant challenged the decree, claiming the property had been "taken over" along with the business of the proprietorship and that Respondent No. 1 lacked title

1. Whether a relationship of landlord and tenant existed between Respondent No. 1 and the Appellant

2. Whether the Appellant was entitled to challenge the title of Respondent No. 1 despite the payment of rent

3. Whether the alleged transfer of business from a proprietorship to a private limited company automatically transfers leasehold rights in immovable property

The court applied Section 13 of the Commercial Courts Act, 2015, read with Section 96 of the CPC regarding appeals

It relied on the established principle of landlord-tenant law that a landlord is not required to prove absolute ownership to seek eviction, but only the existence of a tenancy and its valid termination

The court referenced Section 188 of the Companies Act, 2013, regarding related party transactions

The legal distinction between a proprietorship and a corporate entity, noting that a proprietorship has no independent juridical identity separate from the proprietor

The court found that the Appellant’s defence had been struck off for failing to file a written statement, meaning it could not introduce new factual pleas on appeal

Regarding the tenancy, the court held that the Appellant’s own financial statements and TDS certificates (2011–2022) recorded payments of “rent” to Respondent No. 1, which created an estoppel against the Appellant denying the relationship

The court rejected the Appellant’s argument that transfer of business (TIN/ESIC numbers) implied a transfer of leasehold rights, ruling that such a transfer requires the written consent of the paramount lessor (DSIIDC) and formal legal documentation, which were absent

Since Respondent No. 1 was the original allottee and the Appellant occupied the premises as a tenant, the Appellant had no standing to question the landlord's title

The court directed the Registry to release the deposited damages (approx. ₹19.48 Lakhs) to Respondent No. 1 and ordered the Appellant and Respondent No. 2 to comply with the eviction decree and clear all outstanding dues