Institutional Receivables & Lease Recovery for Real Estate Promoters, Grade-A Landlords, Malls, Warehouses & Co-Working Operators

Commercial Leases Outside Rent Control Are Arbitrable

Vidya Drolia v. Durga Trading Corporation (Supreme Court 3-Judge Bench, 2021)

Overruling Himangni Enterprises, the Supreme Court held that landlord-tenant disputes governed by the Transfer of Property Act, 1882 (and not protected by special Rent Control eviction bars) are fully arbitrable. Institutional landlords and REITs can combine 15-day Section 106 notices with fast-track arbitration and Section 9 interim asset freezes.

Creditor Action Rule: Draft commercial lease dispute clauses with neutral institutional arbitration rather than relying on outdated civil court assumptions.

Lock-In Rent Recovery Requires Proof of Mitigation & Unamortized CapEx

Indian Contract Act, 1872 s.74 & Delhi/Bombay HC Lock-In Precedents (Tower Vision / Deepak Chopra)

High Courts refuse automatic windfall decrees for the full balance of an unexpired 36-month lock-in if the landlord re-lets the office immediately at equal or higher rent. However, lessors recover 100% of documented actual vacancy lag, unamortized custom fit-out CapEx, brokerage, and rent-free period clawbacks.

Creditor Action Rule: Attach a line-by-line CapEx amortization schedule and re-marketing chronology inside the very first legal notice.

Section 205 Bars Direct Tax Demand Against Landlord When 194-I TDS Is Deducted

Income Tax Act, 1961 s.194-I, s.205, s.271C/276B & Yashpal Sahni / CBDT Circular

When a corporate tenant deducts 10% TDS from monthly rent—paying only 90%—but fails to deposit it with the Government, Section 205 bars the Income Tax Department from recovering that TDS directly from the landlord. Simultaneously, the defaulting corporate tenant and its principal officers face Section 271C penalties and Section 276B prosecution.

Creditor Action Rule: Serve a structured 194-I TDS mismatch notice threatening formal intimation to the Commissioner of Income Tax (TDS) within 7 days.

Promoter Cancellations Must Follow Agreement Cure Timelines & s.19(6)–(10) Discipline

RERA Act, 2016 s.11(5), s.19(6), s.19(7) & s.19(10)

Section 19(6) imposes a binding statutory duty on every allottee to pay construction milestones and maintenance/registration dues on time, while Section 19(7) mandates SBI MCLR + 2% interest on delays and Section 19(10) mandates possession within 2 months of OC. Yet under Section 11(5), RERA Authorities strike down builder cancellations executed without strict Agreement-compliant registered cure notices.

Creditor Action Rule: Replace informal CRM emails with auditable, Architect-stage-backed Speed Post RPAD cure notices across defaulting towers.