Overstaying Tenants Are Liable For Mesne Profits, After Lease Has Expired And Eviction Notice Was Served: Delhi HC Rules, Rejects Review

The Delhi High Court has dismissed a review petition by a property owner seeking mesne profits for nearly four years of a bank's occupation of her Defence Colony Market premises, holding that the grounds amounted to re-arguing the case and fell outside the narrow scope of review.

Mesne profits are the compensation an owner can claim from someone who continues to occupy the property without legal right, usually measured by the rent the property could have earned.

Justice Neena Bansal Krishna, in a judgment pronounced on September 10, 2026, ruled that there was "no error apparent on the face of the record warranting review" of the court's earlier judgment dated July 9, 2026, passed in RFA No. 73/2023.

The petition was filed under Section 114 read with Order XLVII Rule 1 of the Code of Civil Procedure (CPC) by Raj Kumari Garg, the appellant and decree holder. She acted through her son and attorney, Deepak Garg. Advocate G.S. Raghav appeared for her, while no counsel appeared for the bank.

The dispute concerns property Nos. 23-24, Defence Colony Market, with 1,600 square feet on the first floor and 1,200 on the second. SBI, as successor to State Bank of Patiala, occupied it under a registered lease deed dated March 10, 2003, running until December 31, 2004 at Rs 62,000 a month. The deed allowed five renewals of three years each, but only on the bank's written request made before expiry.

Garg terminated the tenancy by notice dated May 9, 2008, and sued for possession and mesne profits of Rs 4 lakh a month. The bank vacated on December 31, 2017. The trial court awarded mesne profits at Rs 163 per square foot per month from May 2012 to December 2015, with 15 per cent enhancement thereafter and 6 per cent interest, but denied them for the earlier period. Garg appealed for that period and a higher rate of Rs 216, while SBI challenged the rate and interest in RFA No. 100/2023.

On July 9, the High Court dismissed both appeals. It found there was no renewal, since the bank never made a written request and no fresh lease deed was executed. However, relying on Supreme Court rulings distinguishing renewal from extension, it held that Garg's letters of January 6, 2005 and December 26, 2007, raising the rent by 20 per cent, which the bank paid, amounted to an extension and a month-to-month tenancy. The bank's possession until December 31, 2010, it held, could not be called unauthorised.

The court then examined an undertaking dated February 2, 2007, signed when Garg took a Rs 25 lakh loan from the bank under its Rent Scheme, repaid on May 5, 2012. It held she had bound herself to extend the tenancy until then, calling her plea that the undertaking related only to the loan "absolutely fallacious." Being unregistered did not defeat it, since it was a valid extension on a month-to-month basis. "Having already committed herself to an extension, she cannot turn around and deny the same," the court had said.

The bank thus became an unauthorised occupant only from May 2012, making the mesne profits from that date proper. On the rate, the court weighed the evidence of two neighbouring property owners, Ved Prakash Bansal and Jagdish Gupta, and held that Rs 163 was not unreasonable, particularly as the bank led no contrary evidence. The 6 per cent interest under Section 34 of the Code of Civil Procedure was also not excessive.

Garg then sought review under Section 114 read with Order XLVII Rule 1 of the CPC on three grounds. First, unregistered documents could not extend a lease beyond one year under Section 107 of the Transfer of Property Act and Section 49 of the Registration Act, making the bank a tenant by sufferance. Second, the court had overlooked Anil Kumar Khanna & Ors. vs The Indian Tourism Development, which recognised 15 per cent annual increases in prime locations, and mesne profits were wrongly denied for 44 months. Third, no interest was awarded after December 31, 2017.

The court rejected each ground. On the first, it said, "This contention is completely fallacious because cogent reasons have been given for holding that there was an extension of tenancy by five years." It added that the ground was "a challenge to the finding of this Court, which is beyond the scope of a Review Petition."

The second ground, it said, "essentially seeks to re-agitate the merits of the findings in the impugned Judgment." On the third, it noted that interest under Section 34 CPC lies within the court's discretion and could not "again be made a subject matter of the Review Petition."

Recalling that review lies only for an error apparent on the face of the record, new and important evidence, or any other sufficient reason, the court held that "the three grounds are a challenge to the findings and the observations made in the impugned Judgment." The petition was dismissed, and the pending application was disposed of.

The ruling is a fresh reminder that review is not a second appeal.

Case Title: Raj Kumari Garg vs State Bank of India

Judgment Date: September 10, 2026

Bench: Justice Neena Bansal Krishna