Commercial Court Jurisdiction Prevails Once Rent Exceeds DRC Act Limits: Delhi HC

The Delhi High Court held that once the monthly rent of a commercial property exceeds the statutory threshold of ₹3,500, the protection under rent control laws ceases, and disputes fall within the jurisdiction of Civil or Commercial Courts under general property laws. A Division Bench comprising Justice Nitin Wasudeo Sambre and Justice Anish Dayal dismissed an appeal filed by a tenant, upholding a decree for possession and mesne profits in favour of the landlords.

The dispute centered on whether the appellant, a long-standing tenant of a commercial property in Jhandewalan, remained a statutory tenant under the Delhi Rent Control Act, 1958. The Court scrutinized the impact of periodic rent increases and the subsequent ousting of the Delhi Rent Control Act, 1958's jurisdiction, eventually finding no merit in the tenant's challenge against the Commercial Court’s findings on possession and occupational charges.

Legal Threshold and Jurisdiction under DRC Act

The Court, in its reasoning, observed: "A conjoint reading of both the Sections [6A and 8] would reveal that under the DRC Act, the landlord can increase the rent by 10% every three years, as is permissible under Section 6A, thus, such an increase would be valid, provided that the landlord sends a notice to the tenant to this effect in writing. As such, the increased rent becomes due and recoverable upon the expiry of thirty days from the date on which the notice is given... Section 3(c) [of the Delhi Rent Control Act, 1958]... [provides the Act does not apply] to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees."

Addressing the bar on civil jurisdiction under Section 50 of the Delhi Rent Control Act, 1958, the Bench noted that since the rent had lawfully been enhanced to Rs. 3,826.62 per month via notices issued under Section 6A and Section 8 of the Delhi Rent Control Act, 1958, the property was no longer covered by rent control protections. Consequently, the suit for possession was maintainable under Section 106 of the Transfer of Property Act, 1882.

Assessment of Mesne Profits and Occupational Charges

Rationale on Market Rent Determination

The Court evaluated the Commercial Court's decision to award mesne profits at Rs. 1,20,000 per month. Although the tenant contested these charges as exorbitantespecially considering the COVID-19 lockdown period the High Court found the use of 'guesswork' based on the location and utility of the premises to be justified. It noted that while the property was not on the ground floor (unlike the comparative lease evidence provided by a witness), the assessment of Rs. 40,000 as pre-suit charges and Rs. 1,20,000 for the pendente lite period was reasonable for the 2,000-2,500 sq. ft. area.

Regarding the award of interest, the Court applied Section 34 of the Code of Civil Procedure, 1908. It held that since the transaction was commercial, the 9% interest rate awarded by the lower court was justified under the proviso to Section 34, which allows interest to exceed 6% for commercial liabilities.

Background:

The dispute began with a property at Jhandewalan inherited by the respondents through a Will and Codicil. The appellant company had been a tenant since 1971. Over decades, the landlords issued multiple notices for a 10% increase in rent every three years as permitted under Section 6A of the Delhi Rent Control Act, 1958. When the rent crossed the Rs. 3,500 mark and the tenant failed to vacate despite a termination notice issued in 2020, the landlords approached the Commercial Court.

The tenant argued that they remained a statutory tenant and that Section 50 of the Delhi Rent Control Act, 1958 barred the Commercial Court's jurisdiction. They also raised procedural objections regarding Section 12A of the Commercial Courts Act, 2015, claiming mandatory pre-institution mediation was skipped. The Commercial Court rejected these pleas, decreeing the suit for possession and arrears. The High Court, noting that the landlords had already regained possession during execution proceedings, affirmed the decree in its entirety, including the mesne profits and the 9% interest rate.

Case Details:
Case No.: RFA (COMM) 486/2025 & CAV 313/2025
Case Title: M/S CRI LIMITED vs. PRAN NATH MEHTA & ORS.
Appearances:
For the Petitioner(s): Mr. Darpan Wadhwa, Sr. Advocate along with Mr. Abhay Pratap, Advocate
For the Respondent(s): Mr. Keshav Sehgal, Mr. P.P. Ahuja, Mr. Shivam Gaur, Mr. Vidit Garg, Mr. Shubham Agarwal, Mr. Aryan Kumar, Ms. Rashi Singh and Ms. Shabina, Advocates

Source: 2026 CaseBase(DEL) 336