Facts of the Case

Mr. Ramesh, a resident of Delhi, was the owner of a residential property located in the upscale
neighborhood of South Delhi. On 5th June 2023, Mr. Ramesh decided to lease his property to Ms.
Kavya, a software engineer, for a period of three years. The lease agreement was duly executed, and
Ms. Kavya moved into the property on 10th June 2023. According to the lease agreement, the monthly
rent was set at ₹50,000, and a security deposit of ₹2,00,000 was paid by Ms. Kavya.
Six months later, Mr. Ramesh approached the local court seeking an eviction order against Ms.
Kavya, alleging that the lease agreement was void ab initio because she was misusing the property for
commercial purposes by running a software training institute from the premises without obtaining his
consent. Ms. Kavya, on the other hand, contended that she was working from home, and there was no
commercial activity taking place.
The trial court ruled in favor of Mr. Ramesh and ordered the eviction of Ms. Kavya. Aggrieved by the
decision, Ms. Kavya appealed to the High Court, which upheld the trial court’s decision, stating that
the use of residential premises for any activity, including software training, constitutes a breach of the
lease agreement. Ms. Kavya then appealed to the Supreme Court.
The Supreme Court, while deciding the case, addressed several legal issues, including:
1. Whether the use of residential premises for professional activities like software training
constitutes a "commercial purpose" under the law.
2. Whether the eviction of Ms. Kavya, based on the above understanding, was justified.
3. The impact of the purported commercial use on the validity of the lease agreement.
4. Whether the interpretation of “commercial use” should be determined by the nature of the
activity or its impact on the neighborhood.
Extracts from the Supreme Court’s Judgment
1. Para 9: "It is imperative to first understand the purpose of zoning laws, which is to maintain
the character and quality of different zones within a city. Residential areas are primarily
meant for dwelling purposes, and any activity that threatens to disrupt this character must be
viewed critically. This objective, however, must be balanced against the changing nature of
professional work, where certain activities do not necessarily degrade the residential character
of a neighborhood."
2. Para 10: "The primary issue before us is whether the use of residential premises for software
training qualifies as 'commercial use.' It is well-established that activities like running a clinic
or office from residential premises do not amount to commercial use if they do not alter the
residential character of the area. In our view, software training falls within a similar category
as it does not involve large-scale activity or public movement, thereby not disrupting the
residential nature of the locality."
3. Para 13: "Further, any decision on what constitutes a 'commercial purpose' must consider not
only the nature of the activity but also its scale and impact on the neighborhood. Small-scale
professional activities that do not involve public interaction, or lead to increased foot traffic,
should not be automatically categorized as 'commercial.' Such an interpretation would
unfairly limit the evolving nature of work in residential areas."
4. Para 15: "The lease agreement between the parties specifically mentions that the premises
are to be used for residential purposes. Any deviation from this agreed purpose would
 constitute a breach of contract. In light of the facts, the use of premises for training purposes,
without explicit permission, may be construed as a breach."
5. Para 18: "We must clarify that not all professional activities carried out from home would
constitute a 'commercial purpose.' The determining factor should be the impact on the
neighborhood. If an activity disrupts the residential character or results in a nuisance, it
should be considered commercial. This interpretation is consistent with the objectives of
maintaining residential sanctity in urban planning."
6. Para 19: "This Court in ABC Developers v. Mohan Singh (2018) held that not all deviations
from a lease agreement should lead to forfeiture of tenancy, unless such deviation
substantially alters the use and character of the premises. While the facts of that case involved
sub-letting, the principles laid down therein apply to cases involving allegations of improper
use of premises as well."
7. Para 21: "In the present case, there is no evidence to suggest that Ms. Kavya’s activities have
altered the residential nature of the neighborhood. The training sessions were conducted
online with minimal visitors. Thus, it would be unjust to treat this as a commercial use of
property and evict Ms. Kavya."
8. Para 23: "It is pertinent to note that technological advancements have blurred the lines
between residential and commercial usage. With the advent of work-from-home setups and
online services, the strict definitions of residential and commercial use have become outdated.
The law must evolve to accommodate these changes."
9. Para 25: "In conclusion, we hold that the eviction order based on alleged commercial use is
set aside. However, we reiterate that property owners are entitled to protect their rights and
prevent actual commercial exploitation of residential premises."
10. Para 27: "Finally, while the eviction order is set aside, we caution tenants that such leniency
should not be misconstrued as a blanket permission to use residential premises for all
professional activities. Any activity that causes undue disturbance or inconvenience to
neighbors or alters the residential character will still fall within the ambit of commercial use,
subject to eviction."
Questions
1. Identify the ratio decidendi of the Supreme Court's judgment from the above paragraphs.
Which paragraphs form the binding precedent, and why?
2. Identify any obiter dicta in the judgment. Which paragraphs contain observations or
interpretations that are not essential to the decision?
3. If a similar dispute arises in the future where a property is being used as a private clinic,
which parts of this judgment would be binding and why? Which observations, if any, would
not be binding?
4. Suppose a case arises where a tenant is using a residential property to host yoga classes
attended by multiple people. Applying the principles from this case, would it constitute a
commercial use? What portions of the judgment would guide this determination?