Synopsis

Tenant ordered to pay Rs 3.27 crore with 6% annual interest to the landlady for notvacating the property despite an expired rent agreement and eviction notice;Delhi HC order. Know how teanant lost the case.

A tenant becomes liable to pay mesne profits if he/she overstays in the premises after expiry of the rent agreement and an eviction notice. The Delhi High Court delivered this judgement recently, ordering a tenant (a bank) to pay Rs 3.27 with 6% annual interest to his landlady for not vacating the property after the agreement period.



Let’s know this tenant eviction case in detail. Mrs Garg is a Delhi-based landlady. In 2002, she put his property in Defence Colony Market on rent. The property has two floors and a terrace, but she rented out only the first and second floors to the tenant for Rs 62,000 a month.



The rent agreement was registered with the tenancy period staring from January 1, 2002, to December 31, 2004 (for a total three years). The agreement provided for a 20% rent escalation clause for renewal of agreement after December 31, 2004.

However, even on January 1, 2005, the tenant did not renew the agreement and did not vacate the property, but from 2005, the tenant continued to pay enhanced rent, so from this day the tenancy became a month-on-month tenancy since the old rent agreement had expired.



(Actually, the tenant vacated the property much later, on December 31, 2017).



Also read: Landlord wanted to start law office, sought tenant’s eviction; Delhi HC upheld it for this reason



On May 9, 2008, Mrs Garg (landlady) sent a legal notice to the tenant asking to evict the property and pay her mense profits of Rs 4 lakh per month from June 1, 2008, till the time the property is vacated. Even after that, the tenant did not vacate the property.



So, Mrs Garg filed a case in the court against the unlawful occupation by the tenant. On July 9, 2026, the Delhi High Court delivered the judgement of Mrs Garg’ and ordered the tenant to pay a specified mesne profit to Mr Garg. Advocate G.S. Raghav represented the landlady.

Why did the landlady win the case and got mesne profits?

What is mesne profit and when tenants have to pay it to landlord?

Sharma says that mesne profit is not rent it's compensation payable by someone who is in wrongful or unauthorised possession of a property, meant to compensate the true owner for the loss of use and enjoyment during that period, or the profit the occupant unlawfully derived from it. It only becomes payable once possession turns "unauthorised" that is, after a valid rent agreement or tenancy has actually come to an end and the tenant refuses to hand over possession.



Sharma explains that a few conditions matter here for mesne profits:

• First, there has to be a clear termination point either the rent agreement expiring on its own terms, a valid notice ending a month-to-month tenancy, or (as in this case) a condition being fulfilled that automatically ends the arrangement. If any valid tenancy is still subsisting even an informal, unregistered one recognised by conduct the occupant cannot be called "unauthorised," and no mesne profit arises, only ordinary rent.
• Second, the mesne profit rate awarded isn't the old contracted rent; courts look at the prevailing market rate for comparable property in the area, usually proved through independent evidence like nearby lease deeds and witness testimony, as happened here with two neighbouring shopkeepers' rental rates being used as benchmarks.
• Third, courts have discretion under Section 34 of the CPC to add interest on the mesne-profit amount, but this isn't automatic it has to be exercised "fairly and judiciously," and courts can even decline interest altogether depending on the facts.

Landlady filed appeal for an even higher mense profit and lost it in September 10, 2026

The landlady's subsequent review petition, filed on narrow technical grounds, was also dismissed in September 2026, with the court noting that the landlady was essentially trying to reopen findings already decided, which a review petition cannot do.



Garg had appealed before the court for more money (mesne profits), but he lost the appeal on September 10, 2026. So, the amount of mesne profits that the Delhi High Court had directed in July 2026 was maintained.



In its September 10, 2026, judgement, the Delhi High Court held that a verdict might be reviewed on three grounds: an error apparent on the face of the record, discovery of new and important facts or evidence, or any other valid reason.



However, the grounds taken in the Review Application by Mrs Garg (landlady) are beyond the scope of review, as there is no error apparent on the face of the record.



The Delhi High Court, in its September 2026 judgement, said that the three grounds are a challenge to the findings and the observations made in the high court judgement dated July 9, 2026.



The Delhi High Court ruled on September 10, 2026: “There is no error apparent on the face of the record warranting review of the impugned judgement.”



The court did not ask the tenant to pay mesne profits for the period 2007 to April 2012 (five years), as Mr Garg had taken a loan of Rs 25 lakh from the tenant and the loan instalments were deducted from the rent. Mr Garg took that loan on February 2, 2007, and in the loan agreement, there was a clause saying if Mr Garg defaulted in the loan, the tenant could recover it by lawful methods, including auction of his property under Section 13 of the SARFAESI Act, 2002. The EMI (equated monthly instalment) for repayment was Rs 55,925 for 60 months (five years).

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