What should you do if your rental deposit is illegally retained?

A city-based entrepreneur took to X recently to share that he only received a fraction of his security deposit while moving houses. The post received 12 lakh views and 1,100 shares.

The post was written by Varun Mayya, founder of AEOS, a bootstrapped company. He further shared that he has come across such “illegal retention of deposit” multiple times in Bengaluru.

So what can one do in such a situation? Seeking a lawyer and sending a legal notice to the house owner is the definitive way to go, says advocate Vinay Mishra, founder of the Bengaluru Tenants Association.

Proof you must have

Mishra answers: “One must have their rental agreement in place. It must mention the mode of payment of the deposit. When one is vacating the house, the owner must mention in the agreement the deposit amount returned (with their signature).”

Laws governing such violation

Mishra says that house owners can be sued for refusing to pay back the security deposit. The case can be filed under the Indian Contract Act, 1872 (for breaching of terms and conditions mentioned in the agreement) and The Karnataka Rent Act, 1999 (which defines damages that can cause deductions). If an issued cheque bounces, a case can be filed under Section 138 of the The Negotiable Instrument Act of 1881.

Additional amount can be deducted, in case…

“Any amount deducted apart from what is mentioned in the rental agreement can be considered a breach of contract unless there is valid proof. Aside from regular wear and tear, changes to the layout of the house or other big damages can result in additional deductions,” adds Mishra.

Police don’t interfere

Bengaluru city commissioner B Dayananda, clarifies that the police don’t interfere in such financial transactions. “The court settles such disputes,” he adds.