In absence of independent market evidence, contractual rent is an appropriate measure of mesne profits.

The Respondent-landlord claimed ownership of property bearing No. C-183, Surajmal Vihar, Delhi, and alleged that the Appellant was inducted as a tenant under a Rent Agreement dated 8 November 2019 at a monthly rent of ₹42,000, upon payment of ₹84,000 as security and ₹42,000 as advance rent.

The Appellant allegedly defaulted in rent payments from January 2020.

After serving a legal notice dated 14 July 2020, the Respondent instituted a suit for possession, arrears of rent, mesne profits/damages and permanent injunction.

The Appellant admitted the landlord-tenant relationship but denied execution of the 8 November 2019 Agreement.

He relied on an alleged Rent Agreement dated 22 January 2020, asserting that the rent was ₹500 per month, the tenancy was for three years, and that he had paid ₹25 lakhs as security.

The Trial Court rejected this defence, decreed possession, awarded ₹4,20,000 towards arrears of rent for January–October 2020, and awarded mesne profits at ₹42,000 per month from November 2020 until delivery of possession; it also directed adjustment of the ₹84,000 security deposit towards arrears.

In appeal, the Appellant challenged the genuineness of the 8 November 2019 Agreement, the rejection of applications to summon and examine additional witnesses, the non-production of the alleged original 22 January 2020 Agreement, the finding regarding rent and security deposit, the mesne-profit award, and the alleged applicability of the Delhi Rent Control Act.

Whether the Respondent proved that the Appellant was inducted as a tenant under the Rent Agreement dated 8 November 2019 at a monthly rent of ₹42,000?

Whether the Appellant established the genuineness and legal effect of the alleged Rent Agreement dated 22 January 2020 stipulating rent of ₹500 per month and security of ₹25 lakhs?

Whether the suit for possession was barred by the Delhi Rent Control Act, 1958 on the basis of the alleged monthly rent of ₹500?

Whether the Appellant was denied a fair opportunity to lead evidence by rejection of his applications under Orders XVI Rule 1A, XVIII Rule 17 and XI Rule 14 CPC?

Whether the Respondent was entitled to arrears of rent and mesne profits at ₹42,000 per month from November 2020 until possession?

Whether the Appellant had proved payment of a security deposit of ₹25 lakhs, and whether the ₹84,000 security amount was liable to be adjusted against arrears?

The Court exercised appellate jurisdiction under Section 96 read with Order XLI Rule 1 CPC.

Under Section 2(12) CPC, mesne profits comprise the profits actually received or which might, with ordinary diligence, have been received by a person in wrongful possession, together with interest, excluding profits attributable to improvements.

Relying on Bureau of Indian Standards v. Goodwill Theatres Pvt. Ltd., 2018 (1) RCR (Civil) 400, the Court held that mesne profits represent the value or benefit of use of the property to the wrongful occupant.

Relying on M/s Sahara India v. M.C. Agrawal HUF, 2011 SCC OnLine Del 3715, it held that, where no independent evidence of prevailing market rent is produced, the last-proved contractual rent may serve as the measure of mesne profits.

The Court further applied the principle that an unregistered agreement purporting to create a tenancy for a period requiring compulsory registration cannot create the fixed-term tenancy claimed, but may evidence a month-to-month tenancy.

The party asserting the alleged ₹500 rent and ₹25 lakh security deposit bore the burden of proving those facts, which it failed to discharge.

The Court found that the 8 November 2019 Rent Agreement was proved through the Respondent, his wife and an attesting witness, and that it was executed on stamp paper purchased on the date of execution, expressly describing the transaction as a lease with security.

The Appellant’s argument regarding variation in his signatures was insufficient to displace the otherwise consistent and corroborated evidence.

By contrast, the alleged 22 January 2020 Agreement was only marked, its original was not produced, its photographs appeared superimposed, and its attesting witnesses were not examined.

The proposed additional witnesses were not witnesses to that Agreement and their affidavits contained materially identical, unexplained assertions regarding payment of ₹1.90 lakhs each; their names were also absent from the Written Statement.

The Appellant failed to explain the source of the alleged ₹25 lakh security deposit, and the evidence regarding the January 2020 bank transfers of ₹42,000 supported the Respondent’s case regarding the contractual rent.

Since the proved rent exceeded the statutory threshold under the DRC Act, the plea of rent-control protection failed.

The Court held that the unregistered two-year agreement could not create a fixed-term tenancy, but the evidence established a month-to-month tenancy validly terminated by the notice dated 14 July 2020.

As no independent evidence showed a different market rate, ₹42,000—the proved contractual rent—was appropriately adopted as mesne profits.

The Court affirmed the decree for possession, arrears of rent amounting to ₹4,20,000 for January–October 2020, and mesne profits at ₹42,000 per month from November 2020 until the Appellant handed over possession.

The direction to clear outstanding electricity, water and IGL charges and to adjust the ₹84,000 security deposit against the arrears was also upheld.

The Appellant failed to prove the alleged ₹500 monthly rent, ₹25 lakh security deposit, or any procedural prejudice warranting interference.

Pending applications were disposed of accordingly.