In Smt. Raj Kumari Garg v. State Bank of India, the Delhi High Court was asked to work out exactly when a long-running, once-perfectly-lawful tenancy over a Defence Colony Market shop crossed into unauthorised occupation — and what the bank-tenant owed for the years it stayed on the wrong side of that line. Justice Neena Bansal Krishna's ruling turned less on the age-old question of whether the lease had expired, and more on an unusual twist: the landlady herself had once promised, in writing, to keep the tenancy running.

What Was the Dispute About?

The landlady, Raj Kumari Garg, had let out a two-floor commercial space (1,600 sq ft on the first floor and 1,200 sq ft on the second, plus a terrace) in Defence Colony Market, New Delhi, to a bank, at an original monthly rent of Rs 62,000. The written agreement ran from 1 January 2002 to 31 December 2004, with a clause providing for a 20% rent escalation on renewal.

No formal renewal was ever signed after the 2004 expiry. But the landlady sent rent-increase letters in 2005 and 2007, which the bank paid without objection — conduct that itself created a month-to-month tenancy on the revised terms, even without a fresh written lease.

The case's real complication arrived in February 2007. The landlady borrowed Rs 25 lakh from the bank-tenant and executed a notarised undertaking promising to keep the tenancy running until the loan was repaid. The bank recovered the loan through 60 monthly instalments of Rs 55,925, adjusted against the rent otherwise payable, with the loan fully repaid by May 2012.

In between, in May 2008, the landlady issued a legal notice seeking to terminate the tenancy and claiming damages of Rs 4 lakh a month from June 2008 — a notice that sat awkwardly against her own binding undertaking to maintain the tenancy until the loan was cleared. The bank eventually vacated the premises only on 31 December 2017.

The Key Question Before the Court

From what point, if any, did the bank's continued occupation of the premises stop being lawful tenancy and become unauthorised possession — and what compensation, distinct from ordinary rent, was the landlady entitled to for that later period?

Why the 2008 Eviction Notice Changed Nothing

The Court's first finding cuts against the landlady's own case: despite her May 2008 legal notice purporting to terminate the tenancy and claim enhanced damages, the tenancy remained authorised right through to May 2012. The reason was simple — her own notarised undertaking, given in exchange for the Rs 25 lakh loan, bound her to maintain the tenancy until the loan was repaid. A landlady cannot issue a notice inconsistent with a binding commitment she herself had given, and expect that notice to take legal effect while the underlying obligation still runs. For this entire period, the bank's occupation stayed authorised, and only the agreed rent — not mesne profits — applied.

Why May 2012 Was the Real Turning Point

The moment the Rs 25 lakh loan was fully repaid in May 2012, the landlady's undertaking to maintain the tenancy was spent — there was no longer any binding promise keeping the tenancy alive. The Court held that continued occupation by the bank from that point onward was no longer backed by any subsisting right, and therefore became unauthorised possession, attracting mesne profits rather than contractual rent.

This is the heart of the ruling's doctrinal contribution: mesne profits are not rent. As the Court explained, mesne profits are compensation payable by a person in wrongful or unauthorised possession of property, meant to compensate the true owner for the loss of use and enjoyment of that property during the period of such possession — a distinct legal measure from the contractually agreed rent that governs a lawful tenancy.

How the Rs 3.27 Crore Figure Was Calculated

Having fixed May 2012 as the start of unauthorised possession, the Court calculated mesne profits with reference to prevailing market rates for comparable space in the same commercial market, benchmarked against neighbouring shopkeepers' lease deeds — rather than simply continuing the old contractual rent figure, which would have understated the property's real rental value by 2012.

• From May 2012 to December 2015, mesne profits were computed at Rs 163 per sq ft per month.
• From January 2016 to 31 December 2017 (when the bank finally vacated), a 15% enhancement was applied to that rate, reflecting the further rise in market rents over those two years.
• The resulting total, at roughly Rs 3.27 crore (Rs 3,26,78,240), was ordered to carry 6% annual interest under Section 34 of the Code of Civil Procedure, running from the date the amount fell due until actual payment.

The Landlady's Review Petition — and Why It Failed

Unsatisfied even with a 3.27-crore award, the landlady filed a review petition seeking still higher compensation and a higher rate of interest. The Delhi High Court dismissed the review on 10 September 2026, holding that a review under Order XLVII Rule 1 of the Code of Civil Procedure is not an opportunity to re-argue the merits of a decision the court has already reached on evidence. Justice Krishna held that the landlady's grievance amounted to nothing more than disagreement with the findings on quantum and interest — not an error apparent on the face of the record, which alone can justify reopening a judgment in review. The original award, and its underlying reasoning, was left undisturbed.

The Court's Order

The Delhi High Court upheld the trial court's approach in substance: no mesne profits for the period the landlady's own undertaking kept the tenancy authorised (2008–2012), mesne profits benchmarked to market rates from the date that undertaking was spent (May 2012) until the bank actually vacated (December 2017), and 6% annual interest on the resulting sum under Section 34 CPC. The landlady's subsequent review petition for an enhanced amount was dismissed as an impermissible attempt to reopen the merits.

Why This Judgment Matters

• It draws a sharp, practical line between rent (owed under a subsisting tenancy) and mesne profits (owed for unauthorised possession) — a distinction that decides not just the amount payable, but the legal character of what is being paid.
• It shows that a landlord's own conduct — here, a notarised undertaking given for an unrelated loan — can keep an otherwise-terminable tenancy alive and authorised, regardless of an eviction notice issued in the meantime.
• It confirms that mesne profits are properly benchmarked to real, current market rates for comparable premises, not frozen at whatever rent last applied under the expired contract.
• It reinforces the narrow scope of review jurisdiction under Order XLVII Rule 1 CPC — a party dissatisfied with a considered finding on quantum cannot use review to get a second bite at the merits.

What Should Advocates Take Away From the Judgment?

For Landlords and Landladies

• Be careful with side commitments — a notarised undertaking given for an unrelated purpose, such as securing a loan, can bind and override an otherwise valid eviction notice for as long as that undertaking subsists.
• Once any such undertaking is discharged, act promptly to document the change and assert a claim for mesne profits from that precise date, supported by comparable market rent evidence.
• Collect and preserve evidence of neighbouring lease rates early — it is exactly this kind of comparable evidence that a court will use to benchmark mesne profits.

For Tenants

• Track precisely when any special arrangement that extends occupancy (such as a loan-linked undertaking) comes to an end — continuing in possession afterward, without a fresh basis, risks exposure to mesne profits at current market rates, not the older contractual rent.
• Where vacating is delayed, maintain a clear record of any efforts made to hand back possession, as this can bear on the exact period for which mesne profits are computed.

For Litigation Counsel Generally

• Plead and prove the precise date on which lawful possession turned unauthorised — the entire mesne profits computation flows from that single date.
• Do not treat a review petition as a second appeal on facts already considered; Order XLVII Rule 1 CPC requires an error apparent on the face of the record, not mere disagreement with the outcome.

Key Takeaways

Frequently Asked Questions

No. Rent is payable under a subsisting tenancy agreement. Mesne profit is compensation for wrongful or unauthorised possession of property after any lawful right to occupy it has ended, typically assessed at prevailing market rates rather than the old contractual rent.

Because the landlady had separately given a binding, notarised undertaking — in exchange for a Rs 25 lakh loan from the tenant — to maintain the tenancy until that loan was repaid. That undertaking kept the occupation authorised despite the notice, until the loan was fully repaid in May 2012.

The court benchmarked the figure against lease deeds of neighbouring shopkeepers in the same Defence Colony Market, reflecting the actual prevailing commercial rental value of comparable space, rather than continuing the older, now-outdated contractual rent.

Only in very limited circumstances. A review under Order XLVII Rule 1 CPC requires an error apparent on the face of the record — it cannot be used simply to re-argue a quantum finding the court has already considered and decided on the evidence, as the landlady in this case discovered.

Conclusion