Best Commercial Lease Disputes: Rent, Lock-in, Deposit and Eviction Lawyer

Commercial leases for offices, shops, malls, warehouses and factories often run for many years with large deposits and fixed escalations. When the tenant's business changes, it may want to leave early, during a lock-in period, and the landlord will claim rent for the remaining lock-in. When the lease ends, the landlord may withhold the deposit against claims for damage or arrears. Sometimes the tenant simply stops paying and refuses to leave. Many commercial leases contain arbitration clauses, and the Supreme Court has confirmed that most such disputes can be arbitrated.

This page is for landlords and tenants of commercial premises. In short: leases governed by the Transfer of Property Act are arbitrable, but tenancies protected by state rent control laws are not; lock-in clauses are generally enforceable, but the amount recoverable may be tested as reasonable compensation; security deposits must be refunded on handover, less amounts actually due; and urgent orders can secure possession, deposits or use and occupation charges while the dispute is decided.

Most lease disputes settle once both sides see the numbers clearly. The ones that do not are usually about possession, which needs swift action.

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Common commercial lease disputes

Which leases can be arbitrated

In Vidya Drolia v Durga Trading Corporation (2020), the Supreme Court overruled its earlier view in Himangni Enterprises (2017) and held that landlord-tenant disputes governed by the Transfer of Property Act are arbitrable. They involve rights in personam between the parties, and the Act does not create a special forum or protection that excludes arbitration. Eviction or tenancy matters governed by special rent control laws, where the legislature has given exclusive jurisdiction to a rent controller or a special court and protects tenants, are not arbitrable.

Most modern commercial leases in metropolitan areas fall outside rent control protection, either because the premises are exempt (for example by rent level or date of construction) or because the state law does not apply. The Delhi Rent Control Act, for instance, does not apply to premises let at a monthly rent above ₹3,500. Uttar Pradesh replaced its old law with the Uttar Pradesh Regulation of Urban Premises Tenancy Act, 2021, which sets up rent authorities and tribunals. Check the applicable state law before choosing the forum.

How we handle lease disputes

Time and typical cost range

Our fees are agreed in writing at the start, stage by stage, and are not linked to the outcome.

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Lock-in and early exit: how claims are usually assessed

Lock-in clauses

A lock-in clause prevents either or both parties from ending the lease during an initial period, often three years, and usually says that if the tenant leaves early it must pay rent for the rest of the lock-in. Courts and tribunals have generally enforced lock-in clauses in commercial leases as a legitimate allocation of risk, since the landlord may have spent on fit-outs or turned down other tenants.

But a lock-in payment is a sum stated as payable on breach, so Section 74 of the Contract Act applies: the landlord may recover reasonable compensation not exceeding the stated amount. After Kailash Nath Associates v DDA (2015), a tribunal will look at whether the landlord actually suffered loss and whether it could have re-let the premises. Where the landlord re-let within a few months, a claim for the full lock-in may be reduced. Where the market was weak and the premises remained vacant, the full amount is more likely to be awarded.

Unregistered leases

Under Section 107 of the Transfer of Property Act and Section 17 of the Registration Act, a lease of immovable property from year to year, or for a term exceeding one year, can be made only by a registered instrument. Many commercial leases are signed but not registered, to save stamp duty. An unregistered lease that should have been registered cannot be used to prove the terms of the lease, though under the proviso to Section 49 of the Registration Act it can be relied on for collateral purposes.

Courts have treated the nature of the tenancy under an unregistered lease as a month-to-month tenancy, and have debated whether the lock-in and similar terms can be enforced. The arbitration clause itself may still be relied on as a collateral term in some circumstances. If your lease is unregistered, expect this point to be argued, and take advice early on how it affects the claim. Leave and licence agreements in Maharashtra have their own compulsory registration requirement.

Laws that apply

How we work

We are a litigation and advisory practice led by Advocate BK Singh, with offices in Dwarka (New Delhi) and Vaishali (Ghaziabad). This is what you can expect:

• Forum check: rent control law or arbitration, decided at the outset.
• Clean accounts: rent, escalation, maintenance and deposit reconciled.
• Realistic claims: lock-in claims assessed against actual loss.
• Swift possession: urgent orders where a tenant holds over.
• Written fee terms: agreed stage by stage, never linked to the outcome.

Mistakes in lease disputes

Leave and licence agreements

Many commercial premises are let under a leave and licence agreement rather than a lease. A licence does not create an interest in the property; it is a permission to use it, governed by Section 52 of the Indian Easements Act. Whether an agreement is a lease or a licence depends on its substance, not its title: exclusive possession for a term at a rent usually indicates a lease, whatever the document is called.

The distinction matters because licensees have weaker rights against removal, and rent control protections apply to tenants but usually not to licensees. Disputes under leave and licence agreements are arbitrable if the agreement contains a clause. In Maharashtra, Section 24 of the Maharashtra Rent Control Act provides a special route for landlords to recover possession from licensees after expiry, before the competent authority.

Rent escalation and its calculation

Commercial leases usually provide for escalation of rent, commonly 5% every year or 15% every three years, sometimes compounded and sometimes on the base rent. Disputes arise when the landlord applies escalation to maintenance charges, compounds when the lease says simple, or applies escalation from a different date. Read the clause carefully: on what amount the escalation applies, from what date, and whether it is cumulative.

Prepare a month-by-month table of the rent due under the clause and the rent actually paid. This often shows that the dispute is smaller than either side thought. Where the tenant has paid at the escalated rate without protest for years, it may be harder to dispute later.

Common area maintenance in malls and office parks

In malls, IT parks and business centres, tenants pay common area maintenance (CAM) charges in addition to rent, usually based on the leased area. Disputes concern the basis of calculation, the inclusion of items such as capital expenditure, the developer's own costs, and the failure to provide services such as air conditioning, security and parking.

A tenant whose services are cut, or who is charged CAM for services not provided, may withhold or adjust charges only if the lease allows; otherwise, the safer course is to pay under protest and claim back. Ask the landlord for the CAM accounts and the audit report, which many leases require to be shared.

Holding over after expiry

When a lease expires or is validly terminated and the tenant stays on, the landlord can claim possession and damages for use and occupation, usually at market rent, from the date of expiry until possession is handed over. Under Section 116 of the Transfer of Property Act, if the landlord accepts rent after expiry, a tenancy may be renewed from year to year or month to month, depending on the purpose. So landlords should be careful about accepting payments after expiry without making clear that they are accepted as damages, not rent.

In arbitration, the tribunal can order the tenant to hand over possession and to pay use and occupation charges. A Section 9 application during the arbitration can seek an order for the tenant to deposit use and occupation charges, at the last rent or a higher amount, while the case is decided. Courts commonly make such orders, which reduce the incentive to delay.

Stamp duty on leases

Commercial leases attract stamp duty under the state Stamp Act, usually as a percentage of the average annual rent, with deposits and premiums sometimes added. An insufficiently stamped lease can be impounded when produced as evidence, and the party relying on it must pay the deficit duty and penalty before it can be used. After In re Interplay (2023), insufficient stamping does not prevent the appointment of an arbitrator, but the tribunal will deal with the stamp duty question before relying on the document.

If you are about to start an arbitration on an under-stamped lease, consider paying the deficit duty voluntarily at the outset, which may reduce the penalty and removes an argument from the other side.

For tenants: protecting your fit-out

Tenants often spend heavily on fit-outs: interiors, air conditioning, electrical work and fixtures. When the lease ends early, especially because of the landlord's breach, the question of who owns the fit-out and whether the tenant can remove it becomes important. Read the reinstatement and fixtures clauses. Where the tenant must leave the fit-out behind and the landlord benefits from it, a claim for the unamortised value may be possible if the landlord's breach caused the early exit.

Before exit, document the fit-out with invoices and photographs, and agree in writing what will be removed and what will stay. Where the landlord is re-letting to a tenant who will use the fit-out, negotiate a payment for it.