Dismissing an appeal in Associated Journal Limited v ICRA Limited, Delhi High Court held that a lessor is deemed to have constructive possession of a property as soon as a lessee vacates the property and offers possession of it to the lessor.
The two-judge bench also held that “vacation of a leased property by the lessee together with a notice to the lessor to take delivery of the possession would sufficiently discharge the lessee of any further obligation to pay the rent”.
Associated Journal leased a property to ICRA in May 1996 and obtained a refundable security deposit. According to the lease deed, ICRA could terminate the lease by giving three months’ notice in writing or three months’ rent in lieu of it.
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In November 1997, ICRA informed Associated Journal it was terminating the lease and asked for refund of the deposit. Associated Journal offered to rectify the problems with the property and asked ICRA to continue with the lease. ICRA declined and urged Associated Journal to take possession of the property.
In December 1998, ICRA filed a suit for recovery of the deposit. Simultaneously, ICRA deposited a key of the property with the court. Associated Journal filed a counterclaim contending it was entitled to rent until December 1998, as possession of the property had been only handed over then.
A single judge of Delhi High Court earlier ruled in ICRA’s favour, holding that it had validly terminated the lease and offered possession to Associated Journal. The division bench affirmed the single judge’s reasoning. It added that while section 108(q) of the Transfer of Property Act, 1882, provides that the lessee is bound to put the lessor in possession of the property on termination of a lease, the landlord should accept the possession of the property whenever it is delivered.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
