Tenant's Rs 10L deposit claim fails; Delhi HC orders payment for unauthorised stay

Whether as a tenant or as a landlord, a proper paper trail is important to avoid disputes in future, and even if they do arise to prove your claim. In a recent ruling, the court asked the tenant to vacate and also pay for what was ruled to be an unauthorised stay.On September 28, 2026, the Delhi High Court directed the tenant to vacate the premises and pay mesne profits to the landlords for the period during which he continued to occupy the shop without authorisation.

What the case is about:

The case involved a tenant, who rented a 238.38 sq. ft shop in 2014 from a couple in Delhi. The agreed monthly rent was Rs 25,500. However, the 11-month rent agreement was never registered.Also Read | Landlords wanted tenant out to open a law office; he said the reason for seeking eviction had changed and other properties were available, why Delhi High Court upheld evictionThe tenant subsequently claimed that he had paid the landlords Rs 10 lakh in cash as a security deposit between November 2016 and March 2017.

However, he could not produce a receipt or any other documentary evidence to establish that the payment had been made.The tenant also told the court that rent agreements had been signed in 2015 at the same monthly rent and another agreement was executed in 2017. According to him, all these unregistered agreements had been prepared by the landlord couple.The dispute escalated in 2018, when another rent agreement was signed.

The landlords maintained that the new agreement increased the monthly rent to Rs 29,000. Like the earlier agreements, this one was also unregistered and covered a period of 11 months.Although the tenant acknowledged that a fresh agreement had been executed in 2018, he disputed the claimed increase in rent. He argued that the monthly rent had actually been fixed at Rs 2,900, rather than Rs 29,000, because he had already paid a security deposit of Rs 10 lakh in the preceding years.

The landlord couple firmly rejected his contention.When the 2018 rent agreement expired in 2019, the landlords asked the tenant to vacate the shop and hand over possession. The tenant, however, refused to leave unless his claimed security deposit of Rs 10 lakh was returned. The disagreement eventually developed into a legal dispute that reached the Delhi High Court.Also Read | Woman buys Rs 1.03 crore 3BHK in Bengaluru, but builder fails to provide specially-enabled parking; Karnataka RERA orders provision within 60 days and audited maintenance accounts

Why did the tenant lose the case?

The Delhi High Court noted that the tenant’s defence was based on his claim that he had paid the landlords Rs 10 lakh as a security deposit between November 2016 and 2017 in exchange for the shop.

He maintained that, following this arrangement, he regularly paid monthly rent of Rs 2,900. The landlady, however, disputed his version and insisted that the rent was Rs 29,000 per month, not Rs 2,900.During her deposition before the District Court, the landlady stated that the monthly rent under the first agreement in 2014 was Rs 25,500 and that it had increased to Rs 29,000 in 2018. She also said that these details were reflected in her income tax return (ITR), according to an ET report.Her statement before the Delhi High Court was different. She said the tenant wanted to avoid paying GST and income tax, which was why the rent was collected in cash without issuing receipts. She further admitted before the High Court that she had not reported this rental income to the tax authorities.The landlord couple produced the 2018 rent agreement before the court. The tenant initially disputed the document, alleging that his signature on it had been forged and that the agreement was fabricated.

However, he later acknowledged before the Delhi High Court that the 2018 rent agreement had been executed. This admission was inconsistent with his earlier denial, the ET report said.Also Read | Retired bank employee got Rs 12.27 lakh leave encashment and claimed Rs 3 lakh exemption in 2020, but government later hiked limit to Rs 25 lakh in 2023; ITAT Chennai allows full tax exemptionWhen the tenant’s mother appeared before the court as a witness, she stated that the shop had been rented in 2014 at a monthly rent of Rs 25,500. She also denied having issued any receipt or paid Rs 4.5 lakh, which was supposedly part of the total Rs 10 lakh security deposit mentioned in her affidavit.Her testimony raised doubts about the tenant’s claim that he had paid the landlords Rs 10 lakh as a security deposit. In particular, the Delhi High Court took note of the fact that his own mother denied the payment of Rs 4.5 lakh referred to in her affidavit.The court further observed that the tenant had not shown that he attempted to record the alleged Rs 10 lakh arrangement in the rent agreements executed in 2016, 2017 and 2018.

None of these agreements had been produced as evidence to substantiate his claim.As a result, the tenant failed to establish that he had paid the claimed Rs 10 lakh security deposit.Saumya Brajmohan, Partner at Solomon & Co, told ET that the tenant’s own statements weakened his defence, while he failed to produce evidence to support the key claims on which his case rested.In particular, he could not establish that he had paid Rs 10 lakh under a mortgage or security deposit arrangement, or that this payment had led to a reduction in the monthly rent to Rs 2,900.Another setback for the tenant was his failure to produce the rent agreements that he had acknowledged signing. He was also unable to demonstrate that any of these agreements documented the alleged Rs 10 lakh mortgage or security arrangement.Brajmohan says: "In other words, Mendiratta (tenant’s) fundamental problem was evidentiary: his pleadings, his cross-examination, and the evidence he led did not establish the alternative version of the tenancy that he relied upon.”The court found that his continued occupation of the shop after the tenancy ended up as being unauthorised and directed him to pay mesne profits for the period during which he remained in possession.Also Read | Sisters sought share in parents’ properties under Hindu Succession law; Madras HC rules for brother over mother’s land on ouster, father’s estate over missing parties