THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment Reserved on: 30.11.2010 
Judgment Pronounced on: 03.12.2010

+ CS(OS) No. 241/2010

AJAY AHUJA & ANR. ..…Plaintiff
– versus –
M/S SUBHIKSHA TRADING SERVICES LTD.
…..Defendant

Advocates who appeared in this case:
For the Plaintiff: Mr. Rajesh Yadav 
For the Defendant: None. 
CORAM:-
HON’BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may 
be allowed to see the judgment? Yes 
2. To be referred to the Reporter or not? Yes 
3. Whether the judgment should be reported Yes 
in Digest?
V.K. JAIN, J
1. This is a suit for recovery of possession, arrears of 
rent and mesne profit/damages for use and occupation. The 
plaintiffs are the owners of plot No. 71 comprised in Khasra 
No. 53 in Lal Dora of Village Nangli Puna, Delhi, which has 
a constructed area of 125 sq. feet and office area of 1000 sq. 
feet. The defendant was inducted as a tenant in respect of CS(OS)No.241/2010 Page 2 of 22
the aforesaid property, vide an unregistered lease agreement 
dated 20th October, 2005 at the rent of Rs 89,000/- p.m. 
The month of tenancy commenced from the 15th day of the 
month and ended on the 14th day of the succeeding month. 
The rent was to increase by 15% after three years. A 
supplementary lease agreement was also executed between 
the parties on 1st October, 2007, whereby an additional rent 
of Rs 13,000/- was agreed w.e.f. 1.02.2008 till 14th
November, 2008 which was the last day of the lease. This 
was to increase to Rs 14950/- p.m. after three years. The 
total rent, thereby became Rs 1,02,000/- per month. The 
defendant also agreed to pay a sum of Rs 3,56,000/- as 
interest free security deposit, which was to be refunded at 
the time of vacating the premises, subject to the all 
adjustments. The rent was payable on or before the 10th day 
of each month. The defendant, however, did not pay or 
tender the rent w.e.f. October, 2008. It has been alleged in 
the plaint that though the tenancy expired with afflux of 
time on 14th November, 2008, the plaintiff as a matter of 
abundant precaution terminated the tenancy of the 
defendant by giving 15 day notice dated 11th November, 
2009 w.e.f the midnight of 14th December, 2009. The notice CS(OS)No.241/2010 Page 3 of 22
sent by courier was received back with the remarks 
“shifted”, whereas the notice sent by registered post at the 
suit premises was received back with the remarks “on 
repeated visits, premises found locked”. The notice sent at 
the registered office of defendant company was also received 
back with the remarks “left without instructions”. The 
notice dated 11.11.2009, according to the plaintiff thus 
stood served upon the defendant. Since the defendant has 
neither vacated the suit premises, nor paid arrears of rent 
w.e.f. October, 2008, the plaintiffs have now claimed 
possession of the suit premises besides arrears of rent, 
amounting to Rs 16,42,200/- at the rate of Rs 117300/- per 
month. The plaintiffs have also claimed damages for use 
and occupation at the rate of 10,000/- per day from the 
date of the filing of the suit till the possession of the suit 
premises is handed over to them. 
2. The defendant was proceeded ex parte vide order 
dated 26th October, 2010, as no one appeared for it, despite 
service by publication and affixation in terms of the order 
dated 13th July, 2010.
3. The plaintiffs have filed affidavit of plaintiff No. 1 
Ajay Ahuja by way of ex parte evidence. In his affidavit Mr. CS(OS)No.241/2010 Page 4 of 22
A. Ahuja has supported, on oath, the case set up in the 
plaint. He has identified his own signatures as well as the 
signatures of the plaintiff No. 2 on the lease deed Ex.PW-
1/2. He has also identified the signature of Mr. Parag 
Chaturvedi, representative of defendant company at point 
„C‟ on this document. He has also identified the signature of 
the plaintiffs as well as the signature of Mr G. Udayan David 
authorized Representative of the defendant on the 
supplementary lease agreement Ex. PW-1/3. The notice 
dated 11th November, 2009 sent by the plaintiffs to the 
defendant through their counsel Mr Rajesh Yadav is Ex. 
PW-1/14. Ex. PW-1/15 is the certificate of posting under 
which this notice was sent, whereas Ex.PW-1/16 and PW-
1/17 are the postal receipts, whereby the notice was sent by 
registered post. Ex. PW-1/18 and PW-1/19 are the courier 
receipts, whereby this notice was sent. The returned
envelopes are Exs. PW-1/20 to PW-1/23. According to PW-
1, the defendant neither handed over the possession to 
them nor has it paid arrears of rent w.e.f October, 2008 at 
the rate of Rs 1,17,300/- pm. He has also stated that the 
prevailing market rate of rent for the suit premises would 
not be less than Rs 3 lakhs per month on account of a CS(OS)No.241/2010 Page 5 of 22
sharp price in the rentals and property prices in last 2-3 
years. 
4. A perusal of the lease agreement Ex.PW-1/2 which 
is an unregistered document would show that the suit 
premises was let out by the plaintiffs to the defendant at the 
rate of Rs 89,000/- per month. The premises were let out 
initially for a period of three years. Thereafter, for next three 
years, the rent was to be increased by 15 % and thereby 
become Rs 102350 per month. The rent was payable in 
advance before the 10th day of each month. The total lease 
period was fixed at 9 years and the rent was to become Rs 
117702.50 per month on expiry of 6 years from the date of 
commencement of tenancy. This document also provided
that the lessor would be entities to terminate the agreement 
after giving three months written notice only in the events 
specified in clause 9. One of the grounds on which the 
lease could be terminated by giving three months notice was 
default in payment of lease amount for more than two 
months. It also provided that if the lessee fails to deliver the 
vacant peaceful possession of the premises to the lessor, it 
shall pay damages to the tune of Rs 10,000 /- per day to the 
lessor till the date of handing over the vacant possession. CS(OS)No.241/2010 Page 6 of 22
5. The supplementary lease agreement Ex. PW-1/3 
provides for payment of additional rent of Rs 13,000/- per 
month w.e.f 1st February, 2008 till 14th November, 2008 
and, thereafter, at the rate of Rs 1,4950/- per months for 
next three years, which was to further increase to Rs 
17,192.50 after three years from the date of the first 
increase. Thus, the total rent payable by the defendant 
became Rs 1,02,000/- w.e.f. 1st February, 2008 to 14th
November, 2008 and Rs 1,17,300/- w.e.f 15th November, 
2008. 
6. A perusal of the notice Ex.PW-1/14 would show 
that vide this notice, the tenancy of the defendant was 
terminated w.e.f. the midnight of 14th December, 2009. It 
was further stated in the notice that if the defendant felt
that the tenancy did not commence on the date stated in the 
notice, the tenancy would stand terminated, on expiry of 
month of tenancy, as understood by the defendant, which 
would expire next after 15 days from the service of the 
notice. 
7. Section 107 of Transfer of Property Act, to the 
extent it is relevant, provides that a lease of immoveable 
property from year to year, or for any term exceeding one CS(OS)No.241/2010 Page 7 of 22
year or reserving a yearly rent, can be made only by a 
registered instrument, whereas all other leases of 
immoveable property may be made either by a registered 
instrument or by oral agreement accompanied by delivery of 
possession
8. Neither lease agreement Ex.PW-1/2 nor the 
supplementary deed of lease agreement Ex.PW-1/3 is a 
registered document, though they purport to create lease for 
more than one year and, therefore, were required to be 
compulsorily registered. 
9. Section 17(1)(b) of Registration Act provides that 
non-testamentary instruments which purport or operate to 
create, declare, assign, limit or extinguish, whether in 
present or in future, any right, title or interest, whether 
vested or contingent, of the value of one hundred rupees 
and upwards, to or in immovable property shall be 
compulsorily registered. Section 49 of Registration Act, to 
the extent it is relevant, provides that no document required 
by Section 17 or by any provision of the Transfer of Property 
Act, 1882 to be registered shall affect any immovable 
property comprised therein, unless it has been registered. 
Thus, since the lease deeds executed between the plaintiffs CS(OS)No.241/2010 Page 8 of 22
and the defendant being for more than one year were
required to be compulsorily registered and has not been got 
registered, it does not confer any right on the defendant to 
continue to be a tenant for the term stipulated in these 
deeds. As a result, the tenancy of the defendant in respect 
of the suit premises became a month to month tenancy,
which could be terminated by giving notice to the defendant 
under Section 106 of Transfer of Property Act, which to the 
extent it is relevant provides that in the absence of a 
contract or local law or usage to the contrary, a lease of 
immovable property, for any purpose other than agricultural 
or manufacturing purposes, shall be deemed to be a lease 
from month to month, terminable on the part of either 
lessor or lessee by 15 days notice. The above-referred 
provision of Section 106 of Transfer of Property Act would 
apply only if there is no contract to the contrary between the 
parties. The question which comes up for consideration is 
as to whether the term of tenancy stipulated in the lease 
deed Ex.PW-1/2 and supplementary deed Ex.PW-1/3 can 
be looked into, despite the fact that these documents, 
though compulsorily registrable, were not got registered.
10. The proviso to Section 49 of Registration Act CS(OS)No.241/2010 Page 9 of 22
provides that an unregistered document affecting 
immovable property and required by that Act or the Transfer 
of Property Act to be registered may be received as evidence 
of any collateral transaction not required to be effected by 
registered instrument. The next question which therefore 
comes up for consideration is as to whether the term of 
tenancy stipulated in the lease deed Ex.PW-1/2 and 
supplementary deed Ex.PW-1/3 can be said to be a 
collateral transaction not required to be compulsorily
registered or what is generally termed as a collateral
purpose. 
11. The collateral transaction referred in the proviso to 
Section 49 of Registration Act must necessarily be 
independent of or divisional from the transaction, to effect 
which the law required registration and such collateral 
transaction must be a transaction which by itself is not 
required to be effected by a registered document, meaning 
thereby that it should not be a transaction creating any 
third right, title or interest in immovable property of the 
value of Rs 100/- and more. If a document is inadmissible 
in evidence for want of registration, it cannot be used for the 
purpose of proving an important clause contained in the CS(OS)No.241/2010 Page 10 of 22
document. This proposition of law is well-settled and was 
approved by Supreme Court in State of Punjab Vs. 
Raninder Singh and Anr. 2008 (8) SCC 564. 
12. The requirement of registration stipulated in 
Section 106 of Transfer of Property Act for registration is 
related to (i) the term of the lease and (ii) the yearly rent, if 
any, reserved in the lease. Therefore, the term of tenancy is 
one of the most important component of a lease. If the term 
is up to one year, the lease is not required to be 
compulsorily registered, unless it reserves of yearly rent, 
whereas, if the term of the lease exceeds one year, it has to 
be compulsorily registered irrespective of whether a yearly
rent is reserved or not. The notice of termination of tenancy 
has a direct bearing on the right of the tenant to continue to 
be in possession of the tenancy premises. If the notice, 
wherever required is not issued or is not valid, the tenant 
continues to be entitled to retain the tenancy premises in 
his right as its lawful tenant. If it is valid and is properly 
issued, the tenant thereafter becomes a trespasser, unless 
he becomes a statutory tenant on account of the protection 
provided to him by a rent control legislation. Therefore, it 
can hardly be disputed that the period of a notice for CS(OS)No.241/2010 Page 11 of 22
termination of tenancy, being an important and essential 
component of the lease deed, cannot be said to be a 
collateral transaction or a collateral purpose in a 
transaction for leasing out an immovable property.
13. This issue also came up for consideration before 
this Court in Jagatjit Industries Ltd. Vs. Sh. Rajiv Gupta
18 (1980) DLT 434, where this Court, disagreeing with the
view taken by the Allahabad High Court in Lala Fateh 
Chand v. Mst. Radha Rani and Ors., 1956 Allahabad Law 
Journal, 625 held that the term of the lease cannot be 
looked at to find out the period of notice to quit to determine 
the tenancy. It was held that the term regarding notice of 
eviction is a term which affects immovable property and, 
therefore, cannot be said to be a collateral transaction. 
During the course of judgment, it was observed that the 
main purpose of the term regarding notice of eviction is as 
to when the tenant can be required to deliver the possession 
of the tenancy premises. In that case, one of the terms of 
the lease deed provided that the lease was for a period of 11 
months with two years option with the lessee and could be 
terminated or extended by giving two months‟ notice by 
either side after expiry of lease or option period if exercised. CS(OS)No.241/2010 Page 12 of 22
The contention before the Court was that the lease could be 
terminated by giving two months‟ notice by either side in 
terms of the aforesaid clause and for this purpose the 
aforesaid term in the lease deed could be looked into. This 
contention was expressly rejected by this Court. I see no 
good reason to take a contrary view and, therefore, hold that 
the irrespective of the requirement of 3 months‟ notice 
stipulated in the unregistered lease deed, the tenancy of the 
defendant could be terminated by giving notice envisaged in 
Section 106 of Transfer of Property Act. 
14. The next question which comes up for 
consideration in this case is as to whether the notice, 
whereby the tenancy of the defendant was sought to be 
terminated by the plaintiffs, can be said to have been duly 
issued to/served on them. Admittedly, the notice was not
actually received by the defendant-company either at its 
corporate office or at the suit premises. The notice sent by 
courier was received back with the remarks “shifted”, 
whereas the notice sent by registered post at the suit 
premises was received back with the remarks “on repeated 
visits premises found locked”. As noted earlier, the notice 
sent at the registered office of defendant-company was also CS(OS)No.241/2010 Page 13 of 22
sent with the remarks “left without instructions”.
15. The contention of the learned counsel for the 
plaintiff is that the plaintiffs did whatever they could 
possibly have done to serve the notice upon the defendants 
and if the defendants chose to lock the suit premises and 
either shift its registered office or altogether stop its 
functioning and close down its operations and its registered 
office, without any intimation to the plaintiffs, that would 
amount to deliberate avoidance to receive the notice and 
consequently constitute a valid service. 
16. In M/s. Madan and Co. Vs. Wazir Jaivir Chand 
AIR 1989, SC 630, the notice sent by the landlord to the 
tenant by registered post was received back with the 
endorsement “left without address returned to sender”. The 
relevant statutory provision which in the case before 
Supreme Court was Section 12 of J&K Houses and Shops 
Rent Control Act, 1966 provided for receipt of a notice of 
demand of rent by the tenant. The question which came up 
for consideration before the Court was as to whether the 
notice sent by registered post could be said to have been 
served and the tenant could be said to have received it. It 
was observed by the Court all that a landlord can do to CS(OS)No.241/2010 Page 14 of 22
comply with the requirement of sending notice is to post a 
pre-paid registered letter, containing the tenant‟s correct 
address, and once he does this and the letter is delivered to 
the post office, he has no control over it. It is then 
presumed to have been delivered to the addressee under 
Section 27 of General Clauses Act. It was further observed 
that a tenant can so many manipulate the matters that the 
notice gets returned to the sender with vague endorsement 
such as “not found” “not in station”, “addressee has left”
and so on. It was contended before the Court that a 
landlord knowing that the tenant is away from the station 
for some reasons, could go through the motions of posting a 
letter to him which he knows will be served. Recognizing
such a possibility, the Court was of the view that if a 
registered letter, addressed to a person at his residential 
address does not get served in the normal course and is 
returned, it can only be attributed to the addressee‟s own 
conduct and that if he is compelled to be away for some 
time, all that he has to do is leave necessary instructions 
with the postal authorities either to detain the letters 
addressed to him for some times until he returns or to 
forward them to the address where has gone or to deliver CS(OS)No.241/2010 Page 15 of 22
them to some other person authorized by him.
17. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan 
and Another, (1999) 7 SCC 510, the notice sent under 
Section 138 of Negotiable Instruments Act, was returned 
with the endorsement “addressee absent” and “intimation 
served on addressee‟s house”. Observing that giving of 
notice is distinguished from receiving of notice, it was 
observed by Supreme Court that a person gives notice to 
another by taking such steps as may be reasonably required 
to inform the other in the ordinary course, whether or not 
such other actually comes to know of it. It was further 
observed that if a strict interpretation is given that the 
drawer should have actually received the notice, for the 
period of 15 days to start running, no matter that the payee 
sent the notice on the correct address, a trickster cheque 
drawer would get the premium to avoid receiving the notice 
by different strategies and he could escape from the legal 
consequences of Section 138 of the Act. It was held that
when a notice is returned by the sender as unclaimed such 
date would be the commencing date for reckoning the period 
of 15 days contemplated in Clause (c) to the proviso of 
Section 138 of the Act. Of course such reckoning would be CS(OS)No.241/2010 Page 16 of 22
without prejudice to the right of the drawer of the cheque to 
show that he had no knowledge that the notice was brought 
to his address.
In the case before this Court the defendant has not 
come forward to contest the suit and to claim that it had no 
knowledge of the notice sent by the plaintiffs and was not in 
any manner responsible for its non-service. 
18. In D. Vinod Shivappa Vs. Nanda Belliappa (2006)
6 SCC 456, Supreme Court while dealing with a notice 
issued under Section 138 of Negotiable Instruments Act and 
sent by registered post inter alia observed as under: 
“This leaves us with the third situation 
where the notice could not be served on 
the addressee for one or the other reason, 
such as his non availability at the time of 
delivery, or premises remaining locked on 
account of his having gone elsewhere etc. 
etc. If in each such case the law is 
understood to mean that there has been 
no service of notice, it would completely 
defeat the very purpose of the Act. It 
would then be very easy for an 
unscrupulous and dishonest drawer of a 
cheque to make himself scarce for 
sometime after issuing the cheque so that 
the requisite statutory notice can never 
be served upon him and consequently he 
can never be prosecuted.”
In V. Raja Kumari Vs. P. Subbarama Naidu and 
Anr 2004 8 SCC 774, dealing with a case where the notice CS(OS)No.241/2010 Page 17 of 22
could not b served on account of the fact that the door of 
the house of the drawer was found locked, Supreme Court 
held that the principle incorporated in Section 27 of General 
Clauses Act will apply to a notice sent by post and it would 
be for the drawer to prove that it was not really served and 
he was not responsible for such non-service. 
In State of M.P. Vs. Hiralal and Ors 1996 (7) SCC 
523, the respondent managed to have the notice returned 
with postal remarks “not available in the house”, “house 
locked” and “ shot closed”. It was held that the notices had 
been served on the respondents. 
In C.C. Alavi Haji Vs. Palapetty Muhammed and 
Anr. 2007 6 SCC 555, a Three-Judges Bench of Supreme 
Court was called upon to re-consider an earlier decision of 
Two-Judges Bench in the case of D. Vinod (supra), Supreme 
Court reiterated that where the payee despatches the notice 
by registered post with correct address of the drawer of 
cheque, the principle incorporated in Section 27 of General 
Clauses Act would be attracted. During the course of the 
judgment, the Court, inter alia, observed as under:-
“Section 27 gives rise to a presumption 
that service of notice has been effected 
when it is sent to the correct address by CS(OS)No.241/2010 Page 18 of 22
registered post. In view of the said 
presumption, when stating that a notice 
has been sent by registered post to the 
address of the drawer, it is unnecessary 
to further aver in the complaint that in 
spite of the return of the notice unserved, 
it is deemed to have been served or that 
the addressee is deemed to have 
knowledge of the notice. Unless and until 
the contrary is proved by the addressee, 
service of notice is deemed to have been 
effected at the time at which the letter 
would have been delivered in the ordinary 
course of business.”
19. In the case before this Court also, it was for the 
defendant-company, if it decided to lock the suit premises 
which it had been taken on rent from the plaintiffs, to make 
necessary arrangements for service of the letters, etc that 
could be sent to it, either by instructing the postal 
authorities to re-direct those letters to another address or to 
make some other arrangement for receipt of letters, etc. on 
its behalf. Same would be the position with respect to the 
registered office of the defendant-company, if it had decided 
to change its registered office or to altogether close down its 
operations as well as its registered office, without shifting 
the same to another place, (though as long as a company 
exists, it must have a registered office), it ought to have 
either provided an alternative address to the postal CS(OS)No.241/2010 Page 19 of 22
authorities for re-directing its letter to that address or 
should have made some alternative arrangement for receipt 
of letters, etc. sent to its registered office. Another option 
available to the defendant-company was to give public 
notice communicating its new address to the public at large 
and/or to all those with whom it had transected any 
business, including its debtors and creditors as well as the 
landlords of the premises which it had taken on rent. If the 
defendant-company decided not to adopt any of these 
courses available to it, the plaintiffs cannot be blamed for 
non-receipt of the notice by the defendant-company. The 
plaintiffs did the best they could have done by sending 
notice by registered post not only at the suit premises, but 
also at the registered office of the defendant-company and in 
these circumstances, the statutory presumption under 
Section 27 of General Clauses Act with respect to service of 
notice sent by registered post cannot be denied to the 
plaintiffs.
20. I, therefore, have no hesitation in holding that by 
sending the notice dated 11th November, 2009 which was 
returned back with the remarks “shirted” “on repeated visits 
premises found locked” and “left without instructions” the CS(OS)No.241/2010 Page 20 of 22
plaintiffs have duly complied with the requirement of 
Section 106 of Transfer of Property Act. 
21. Since the tenancy of the defendant stands validly 
terminated, the plaintiff is entitled to a decree for possession 
of the suit premises. The evidence produced by the plaintiff 
also proves that in view of the lease agreement Ex.PW-1/2 
read with supplementary agreement Ex.PW-1/3, the rent 
payable by the defendant was Rs 1,02,000/- per month with 
effect from 1st February, 2008 and stood increased to Rs 
1,17,300/- w.e.f 15 November, 2008. The evidence 
produced by the plaintiff also proves that the arrears of rent 
payable by the defendant to the plaintiff come to Rs 
16,42,200/-. The plaintiffs are entitled to recover that 
amount from the defendant. 
22. The plaintiff has also claimed mesne 
profit/damages at the rate of Rs 10,000/- per day from the 
date of filing of the suit. It has come in the affidavit of 
plaintiff No.1 Shri Ajay Ahuja that the prevalent market rate 
of rent of the suit premises would not be less than Rs 3 lac 
per month, since there has been a sharp increase in the 
rental and property prices in last 2-3 years. No property
dealer has been produced by the plaintiffs to prove the CS(OS)No.241/2010 Page 21 of 22
market rent of the suit premises, with effect from the date 
the tenancy of the defendant was terminated. No lease deed 
of any property in the locality or any oral evidence any has 
been produced by the plaintiffs to prove the current market 
rent of such properties. As noted earlier, the total rent 
payable by the defendant was Rs 1,17,300/- w.e.f. 15th
November, 2008 and this rent was not to increase for three 
years from the date of increase. Had the defendant 
continued to pay rent regularly, the plaintiff would have 
received Rs 1,17,300/- p.m. and not Rs 3,00,000/-, from it. 
In these circumstances, I hold that the plaintiff is entitled to 
damages for use and occupation of the suit premises, at the 
rate of Rs 1,17,300/- per month w.e.f. the date of the filing 
of the suit till the possession of the suit premises is 
delivered to the plaintiffs. 
ORDER
The suit is hereby decreed for recovery of 
possession of the suit premises and recovery of Rs. 
16,42,200/- towards arrears of rent, with costs. The 
plaintiffs will also be entitled to recover mesne 
profits/damages for use and occupation of the suit 
premises, at the rate of Rs. 117300/- p.m. from the date of CS(OS)No.241/2010 Page 22 of 22
filing of this suit till they recover possession of the suit 
premises from the defendant.
(V.K. JAIN)
JUDGE
DECEMBER 03, 2010
BG