Stayed beyond lease? HC says higher rent applies even without registered agreement; orders tenant to pay Rs 3.9 lakh plus interest in unpaid dues

On January 31, 2026, the Delhi High Court ruled that even if a rent agreement is not registered, the rent increase clause can still be enforced especially if the tenant has asked to stay on after the expiry of the rent agreement. The high court thus ruled that the rent escalation clause in an unregistered lease is valid if the tenancy continues beyond the original lease term.

This judgement came after the tenants appealed against a commercial court order which told the tenant to pay Rs Rs 3.9 lakh plus 6% interest per year from the date the case was filed till realization, along with costs to the landlord for unpaid rents and other damages.

The dispute arose out of a landlord -tenant relationship involving the Gupta family).


The Gupta family (landlords) rented out the second and third floor of their Karol Bagh, New Delhi commercial property to tenants under an unregistered lease deed on July 12, 2017 for a monthly rent of Rs 2,14,935. According to the unregistered lease, the rent was stipulated to increase to Rs 2,57, 922 with effect from August 1, 2018. The tenants had also deposited Rs 4.45 lakh as security deposit with the landlords.

Although the tenants ultimately vacated the property in October 2018, they had asked for more time after the original lease agreement expired on August 1, 2018. Secondly the landlord claimed that they had to spend lakhs of rupees for repairs due to damages made by the tenants.

After August 1, 2018, the tenants asked for more time to vacate the property and did so in October 2018. The Commercial court had termed this period as notice period and held that there was no reason to demand increased rent during this time.

The Delhi High Court noted that the unregistered rent agreement stated that the rent will go up 20% after August 1, 2018 and it is an acknowledged fact that since the tenant enjoyed the property till October 2018, they are required to pay enhanced rent from August 2018 till October 2018.

The Delhi High Court said: “The escalation clause was not contingent upon execution of any fresh instrument, but was to operate automatically during the subsistence of the tenancy.”

Thus on January 31, 2026, the landlord family won the case in Delhi High Court. This is a case involving unpaid rent and damages and not a tenant-eviction case.

Also read: Tenant staying after lease expiry? When landlords can evict with just 15 days’ notice

Summary of the judgement

The Court clarified that a rent escalation clause in an unregistered lease deed can be enforced if the tenancy continues beyond the original end date.

In this regard, the Delhi High Court cited the Supreme Court judgement in the Siri Chand (Dead) v. Surinder Singh ((2020) 6 SCC 288) case, where the Supreme Court held that if a rent note or lease deed does not prescribe a fixed-term of more than one year and operates as a tenancy terminable on short notice, simply having a clause for yearly rent enhancement does not mean the document has to be registered compulsorily under Section 17(1)(d) of the Registration Act, 1908.

The Supreme Court in that case had further held that such an rent enhancement clause depends on the continuance of the tenancy and does not automatically change the tenancy into one for a term longer than one year. Therefore, not registering this type of document doesn’t make the rent increase clause unenforceable, because the lease itself is not required to be registered.

Hence in this case, even though no new rent agreement was signed by the tenant after August 1, 2018, the fact that the tenant stayed in the property till October 2018 meant he had to pay the enhanced rent.

Finding no perversity, illegality, or arithmetical error in the adjustment of the security deposit or the award of 6% interest, the Delhi High Court dismissed the tenants’ appeal and affirmed the money decree (Rs 3,90,163) in its entirety.

An extract of the rent agreement said: (escalation part)
…AND whereas the Lessors have agreed to give the said property entire Second Floor and Third Floor, on rent agreed to the same on rent at a monthly rent of Rs 2,14,935 till 01.08.2018. The rent shall increase @20% from 2,57,922/- (Rupees Two lac fifty seven nine hundred twenty-two only) Exclusive of electricity, water and maintenance charges….

Also read: Tenants sold property bought from landlord’s wife on the basis of a Will, son raised disputes against Will; Delhi HC stays property sale till final trial

Why the landlord won this unpaid rent case?

Prof. (Dr.) Rahela Khorakiwala, BITS Law School, said to ET Wealth Online that the landlord won because they were able to successfully prove the unpaid rent, utility charges, and repair expenses through evidence.

Khorakiwala says: "The judgment is significant because it clarified that a rent escalation clause in an unregistered lease deed can still be relied upon, relying on the Supreme Court decision in Siri Chand v. Surinder Singh. The presence of such a clause does not automatically make the document compulsorily registrable if the tenancy is not for a fixed term exceeding one year."

Can landlords ask tenants to pay for repairs made to the building after the tenant has vacated the property?

Khorakiwala from BITS Law School says :"Yes, a landlord can ask a tenant to pay for certain repair expenses after the tenant vacates the property, but only if the damage is beyond normal wear and tear and is attributable to the tenant’s conduct."

Khorakiwala says that the routine maintenance such as whitewashing, painting, or general upkeep is normally the responsibility of the landlord unless the tenancy agreement clearly provides otherwise.

Khorakiwala says: "The judgment clearly explains this principle that in landlord-tenant law, the tenant is generally required to return the premises in the same condition as when it was taken, subject to normal wear and tear."

According to Khorakiwala, if the tenant causes damage that goes beyond ordinary use, such as removing fixtures, breaking fittings, or causing structural damage then the landlord may recover the cost of repairing such damage.

Delhi High Court analysis and findings

The Delhi High Court gave this judgement (2026: DHC: 743- DB) on January 31, 2026.

Issue No. (a): Claim for Enhanced Rent (August 2018 to October 2018)

The respondents (Gupta family, landlords) claimed a sum of Rs 1,28,961 towards rent escalation with respect to the second and third floors of the property, computed at the rate of Rs 42,987 per month for three months (August 2018 to October 2018), on the premise that the agreed rent stood enhanced from Rs 2,14,935 to Rs.2,57,922 with effect from August 1, 2018.

The Commercial Court had declined this claim of the landlords, however, the Delhi High Court disagreed.

The Delhi High Court said that it is not in dispute that the Appellants (tenants) continued to remain in possession of the property beyond August 1, 2018 and, in fact, vacated the premises only thereafter.

The Delhi High Court said: “The mere fact that the Respondents (Gupta family, landlords) had called upon the Appellants (tenants) to vacate the premises in July 2018, or that the Appellants sought time to vacate till October 31, 2018, does not, by itself, lead to the conclusion that the tenancy stood terminated with effect from August 1, 2018.”

Admittedly, the Appellants continued to enjoy use and occupation of the premises during the period August 2018 to October 2018.

The Delhi High Court said that a plain reading of the lease deed dated July 12, 2017 makes it clear that upon completion of one year from the commencement of tenancy, the agreed monthly rent of Rs 2,14,935 was liable to be enhanced by 20%, resulting in an enhanced rent of Rs 2,57,922 per month.

The rent escalation clause was not contingent upon execution of any fresh instrument, but was to operate automatically during the subsistence of the tenancy.

Delhi High Court said: “Merely because the Respondents (landlords) had expressed their intention to have the premises vacated, or had called upon the Appellants (tenants) to vacate by a future date, does not, by itself, absolve the Appellants (tenants) of their obligation to pay rent applicable for the period of actual use and occupation.”

Delhi High Court said that having consciously continued to occupy the premises beyond the initial one-year period, the Appellants (tenants) could not avoid their liability to pay rent at the rate contractually applicable during such continued occupation.

The Delhi High Court said that once it is accepted that the Appellants (tenants) continued in possession of the premises beyond the completion of one year from the commencement of the tenancy, the liability for paying rent for such continued occupation necessarily follows.

Also read: Tenant can’t tell landlord which property to use: Supreme Court restores eviction order

The question then arises is whether the enhanced rate of rent, as stipulated between the parties, could be applied for the said period.

The Delhi High Court said that the Commercial Court appears to have proceeded on the assumption that since the lease deed dated July 12, 2017 was unregistered, the clause providing for enhancement of rent could not be relied upon.

This approach, in the considered view of Delhi High Court, is legally untenable.

The issue is no longer res integra. In Siri Chand (Dead) through Legal Representatives v. Surinder Singh1 , the Supreme Court has held that where a rent note or lease deed does not prescribe a fixed term exceeding one year and operates as a tenancy terminable on short notice, the mere presence of a clause providing for yearly enhancement of rent does not mean the document has to be compulsorily registered under Section 17(1)(d) of the Registration Act, 1908.

The Supreme Court further held that such an enhancement clause is contingent upon the continuance of the tenancy and does not, by itself, convert the tenancy into one for a term exceeding one year. Consequently, non-registration of such a document does not render the enhancement clause unenforceable, because the lease itself is not required to be registered.

The Delhi High Court said that applying the same principles to the facts of the present case, the lease deed dated July 12, 2017 ought not be treated as a lease for a term exceeding one year merely because it contains an escalation clause.

The Delhi High Court said: “The escalation clause operates automatically upon completion of one year, and is enforceable so long as the tenancy subsists. The continued occupation of the premises by the Appellants beyond August 1, 2018 attracted the contractual obligation to pay rent at the enhanced rate applicable during such period of occupation. “

The Delhi High Court said that the reasoning of the Commercial Court that the mere issuance of a notice to vacate or the agreement to vacate by a future date, by itself, disentitled the Respondents (landlord family) from claiming enhanced rent is misconceived.

The Delhi High Court said: “Unless the tenancy had actually come to an end by surrender of possession, the liability to pay rent, at the rate applicable during the relevant period of occupation, could not be unilaterally avoided.”

The Delhi High Court said that in view of the above discussion, it is evident that the Commercial Court reasoning in rejecting the Respondents’ (landlords) claim for enhanced rent for the period August 2018 to October 2018 does not fully accord with the settled legal position governing escalation clauses in tenancies continuing beyond one year.

Also read: Tenants constructed two extra floors in rented property without consent; landlord wins eviction case in high court due to this reason

Issue No. (b): Rent for Loss of user after vacation of the property

The Respondents (landlord family) had claimed rent for the months of November 2018 and December 2018 on the ground that they were unable to re-let the suit property on account of the condition in which the Appellants (tenants) allegedly vacated the premises.

The Commercial Court examined this claim in detail on the basis of the pleadings and evidence adduced by the parties.

The Commercial Court noticed inconsistencies in the respondents’ (landlord family) version regarding the date on which possession of the premises was handed back by the appellants (tenants).

While the respondents (landlord family) asserted that possession was not delivered until November 11, 2018, their own evidence demonstrated that the security cheque was issued on November 2, 2018 and that the respondents (landlord family) had inspected the premises on November 4, 2018.

Delhi High Court said that in view of this evidence, the Commercial Court rightly concluded that, at the very least, the premises were available to the Respondents (landlord family) by November 4, 2018.

The Commercial Court further observed that although the Respondents (landlord family) claimed loss of rent for a period of two months, no documentary or other cogent evidence was produced to establish that the premises were in fact re-let only after December 2018 or that earnest efforts were made to re-let the same during the said period.

At the same time, the photographs placed on record indicated that the premises were left in a condition requiring repairs and could not have been immediately put to use or re-let without remedial work.

Taking an overall view of the evidence on record, the Commercial Court granted compensation towards loss of user for a reasonable period of one month, confined to November 2018, at the rate of the admitted rent of Rs 2,14,935/- per month.

The grant of compensation for loss of user for the said period is premised on the Appellants’ (tenant) continued occupation beyond the period of tenancy.

The Delhi High Court said that as noticed while dealing with Issue No. (a), on principle, the rate of rent applicable during the relevant period of occupation would have a bearing on the computation of compensation for loss of user.

However, as already noted above, Delhi High Court is not called upon to revisit the quantification or rate at which such compensation has been awarded.

In the absence of any challenge by the respondents (landlord family), the compensation awarded towards loss of user for the month of November 2018, as determined by the Commercial Court, is accordingly upheld.

Issue No. (c): Claims towards electricity and water charges

The respondents (landlord family) claimed recovery of electricity charges for the period September 2018 to November, 2018.

The Commercial Court carefully scrutinised the electricity bills placed on record and restricted the claim to the period during which the Appellants (tenant) were found to be in occupation of the subject property.

The Commercial Court specifically allowed electricity charges for the billing periods September 15, 2018 to October 12, 2018 and October 1, 2018 to November 10, 2018, amounting to Rs 58,300 and Rs 2,99,080 respectively. The Court excluded periods beyond the Appellants’ (tenant) occupation and allowed only those amounts which were supported by documentary evidence.

The contention urged on behalf of the Appellants (tenant) that the electricity charges pertained to the entire building and not exclusively to the suit property was not substantiated by any evidence.

No material was placed on record to demonstrate that the electricity meter was common to the entire building or that the bills did not relate to consumption attributable to the suit premises. Delhi High Court said that in the absence of any such proof, the Commercial Court rightly rejected the said contention.

With respect to water charges, the respondents (landlord family) relied upon documentary evidence showing unpaid water bills. The Commercial Court noted that although the water bills initially reflected a higher amount, the Respondents (landlord family) themselves restricted their claim to Rs 17,845 after adjustment.

The Commercial Court accepted the reduced claim as supported by the record and allowed recovery of Rs. 17,845 towards unpaid water charges. This finding is based on documentary evidence and does not suffer from any infirmity warranting appellate interference.

The Delhi High Court said that in the absence of any rebuttal evidence from the Appellants, and having regard to the fact that the Commercial Court itself restricted the claims to the period of actual occupation, Delhi High Court found no perversity or error of law in the allowance of electricity and water charges.

The findings recorded by the Commercial Court on this issue, therefore, do not warrant interference in this Appeal.

Issue No. (d): Expenses towards repairs and renovation

The Respondents (landlord family) claimed that they had incurred expenditure amounting to approximately Rs 7 lakh towards repairs and renovation of the building, out of which a sum of Rs 4.5 lakh was stated to have been spent on the second and third floors constituting the property.

In support of this claim, reliance was placed on invoices, receipts, and photographs depicting the condition of the suit property after the Appellants (tenant) vacated the same.

The Commercial Court did not accept the said claim in its entirety. It correctly observed that expenses attributable to normal wear and tear of the tenanted premises, including routine items such as whitewashing and painting, are ordinarily to be borne by the landlord and cannot be fastened upon the tenant.

At the same time, the Commercial Court took note of the photographic evidence, which indicated removal of electrical fittings and damage of such nature that could not be attributed to normal wear and tear.

The Commercial Court further noticed that the building comprised four floors, namely the Ground Floor to the Third Floor, and that the claim of Rs 7 lakh pertained to the entire building.

Proceeding on a reasonable and pragmatic basis, the Commercial Court deducted a lump sum amount of Rs 2 lakh (calculated at Rs 50,000 per floor) towards normal wear and tear, thereby restricting the admissible expenditure for the entire building to Rs 5 lakh.

Out of the said amount, the Commercial Court apportioned and allowed a sum of Rs 2.5 lakh towards repairs and renovation attributable to the suit property comprising the second and third floors.

The Delhi High Court said that they find that the approach adopted by the Commercial Court reflects a balanced and judicious appreciation of the evidence on record. The assessment is based on reasonable estimation and cannot be characterised as arbitrary, perverse, or suffering from any patent error of law. No ground is made out for interference with the said finding in Appeal.

Issue No. (e): Adjustment of the Security Deposit & Interest

The Delhi High Court said that it is an admitted position on record that the Appellants (tenants) had deposited a sum of Rs 4.5 lakh as security with the Respondents (landlords) at the commencement of the tenancy.

The Commercial Court has taken note of the said amount and adjusted the same against the total sums determined to be payable by the Appellants (tenants) under the Impugned Judgment.

The computation of the decretal amount, after adjustment of the security deposit, has been expressly set out by the Commercial Court.

The Delhi High Court said that the Appellants (tenants) have not been able to demonstrate that the said computation suffers from any arithmetical error, legal infirmity, or perversity warranting interference in Appeal.

Delhi High Court said: “In the absence of any challenge by the Respondents (landlords), this Court is not called upon to examine whether any higher or additional amounts could have been awarded.”

The Delhi High Court said that insofar as the award of interest is concerned, the Commercial Court declined the Respondents’ (landlord family) claim for interest at the rate of 16% per annum, finding the same to be on the higher side, and instead awarded interest at the rate of 6% per annum from the date of filing of the suit till realization.

Delhi High Court said that the rate so awarded is reasonable, equitable, and in consonance with settled principles governing the grant of interest. The exercise of discretion by the Commercial Court does not call for interference.

Delhi High Court judgement

• Having carefully considered the submissions advanced on behalf of the Appellants and examined the record, this Court finds no merit in the present Appeal.
• Although certain aspects of the reasoning adopted by the Commercial Court have been examined hereinabove, it is material to note that the present Appeal has been filed by the tenants alone.
• No appeal, cross-appeal, cross-objections, or even oral submissions have been made on behalf of the Respondents seeking enhancement of any amount awarded or challenging the findings returned against them.
• In the absence of any such challenge at the instance of the Respondents, this Court is not required to examine whether the Respondents were entitled to any higher or enhanced amounts than those awarded by the Commercial Court.
• The scope of the present Appeal is, therefore, confined to examining whether the Impugned Judgment warrants interference at the instance of the Appellants. Finding no perversity, illegality, or patent error in the conclusions reached by the Commercial Court, this Court declines to interfere.
• Resultantly, the present Appeal is dismissed. The Impugned Judgment is affirmed in its entirety. The pending application also stands closed.