Statutory Tenancy Ceases and Civil Jurisdiction Revives Once Rent Exceeds DRC Act Threshold via Section 6A Enhancements

The Respondent-plaintiffs, owners of the suit property (1st and 2nd floors of 2E/26 Jhandewalan, New Delhi), sought possession, arrears of rent, and mesne profits from the Appellant-defendant.

The property was originally let out in 1973; through successive notices under Section 6A of the Delhi Rent Control Act (DRC Act), the rent was allegedly increased to ₹3,826.62 by 2018.

The Appellant contested the Suit, arguing that the Civil Court lacked jurisdiction under Section 50 of the DRC Act as the rent allegedly did not exceed ₹3,500, and that pre-institution mediation under Section 12A of the Commercial Courts Act was not followed.

The Trial Court decreed the suit in favor of the Respondents, awarding possession and occupation charges ranging from ₹40,000 to ₹1,20,000 per month.

During the pendency of this appeal, possession was recovered by the Respondents via execution.

1. Whether the suit was barred by Section 50 of the Delhi Rent Control Act, 1958.

2. Whether the suit was liable for rejection for non-compliance with Section 12A of the Commercial Courts Act, 2015.

3. Whether the assessment of occupational charges at ₹40,000 (pre-suit) and ₹1,20,000 (pendente lite) was legally sustainable.

Section 6A of the DRC Act permits a 10% rent increase every three years, and Section 8 mandates a 30-day written notice for such increases.

Section 3(c) of the DRC Act exempts premises with monthly rent exceeding ₹3,500 from the Act’s protection.

Section 50 of the DRC Act bars civil courts from matters the Rent Controller is empowered to decide, but this bar is lifted once rent exceeds the statutory limit.

Section 34 of the CPC allows reasonable interest up to 6% generally, but permits higher rates for commercial transactions.

The Court observed that the Respondents had issued valid notices for rent enhancement under Sections 6A and 8 of the DRC Act. By the time of the third notice in 2018, the rent reached ₹3,826.62, thereby exceeding the ₹3,500 threshold under Section 3(c) and removing the tenancy from the ambit of the DRC Act and the jurisdictional bar of Section 50.

Regarding mesne profits/occupational charges, the Court rejected the Appellant’s objection to the ₹1,20,000 monthly rate. Although the evidence of PW-2 (a neighbor receiving ₹2,00,000 for a ground-floor unit) was based partly on hearsay, the Court held that a "degree of guesswork" was permissible.

The Court balanced factors like the property’s age (since 1971), its location (Jhandewalan commercial hub), and the COVID-19 lockdown period to find the Trial Court’s assessment of ₹40,000–₹1,20,000 justified for a 2,000-2,500 sq. ft. commercial space.

The High Court dismissed the appeal and upheld the Trial Court's judgment, affirming the decree for mesne profits at ₹40,000/month (pre-suit) and ₹1,20,000/month (pendente lite) for 44 months, along with 9% pendente lite and future interest, noting the commercial nature of the transaction justified the interest rate under Section 34 CPC.