One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: A PG security deposit refund is not a favour the owner grants you. It is money he holds for a purpose, and it comes back when that purpose ends. If he refuses, you can recover it by civil suit for money, by a legal notice followed by a summary suit under Order 37 CPC, or by a consumer complaint if the accommodation is treated as a service. Leaving early does not wipe out the deposit, though the owner can legitimately set off unpaid rent and proven damage.
What Happened in This Case
Sneha Kulkarni was nineteen, had just moved to Pune for college, and needed somewhere to live before the term started. A PG room in Kothrud looked fine. The owner, Ramesh Deshpande, asked for ₹22,000 as the first month's rent and another ₹22,000 as security deposit.
She paid both by UPI the same evening, because he said another girl was interested in the room. There was a written agreement. She signed it without reading past the first page. Most people do.
A month later a hostel seat came through, cheaper and closer to her department. She told the owner, moved out, and asked for the deposit back. The rent for the month she had actually stayed, she accepted, was his. The ₹22,000 deposit, he said, would not be returned because she had wasted his time. Then he stopped picking up calls. Three weeks of WhatsApp messages produced nothing.
She had no clear idea what a legal notice was, or which court a student goes to for ₹22,000. Earlier attempts on her own, phone calls and messages, had gone nowhere. She then approached the Chamber of Advocate Sudhir Rao. The agreement and the UPI records were reviewed, a legal notice demanding refund of the deposit was issued, and the money came back without the matter having to go to trial. Advocate Sudhir Rao's familiarity with tenancy and deposit recovery matters helped secure the refund in the client's favour.
Key Facts of the Case
- A 19-year-old student took a paying guest room in Kothrud, Pune, for her first year of college.
- She paid ₹22,000 as one month's rent and ₹22,000 as security deposit, both through UPI.
- A written agreement existed, and it was signed without being read fully.
- She vacated after a month when a hostel seat became available.
- The owner stopped responding and refused to return the deposit.
- Every payment was traceable through UPI records, and the agreement was in the owner's own handwriting and signature.
- Whether any part of the deposit could be kept depended entirely on what the agreement said, and on unpaid rent or actual damage proven by the owner.
- The dispute ended in a refund after a legal notice was issued by the Chamber of Advocate Sudhir Rao.
The Direct Legal Answer
Can the PG owner refuse to give the security deposit refund?
Not as a matter of right. A security deposit is neither rent nor a penalty. It is money the owner holds against unpaid rent and damage caused by the tenant. Once you vacate and settle the rent you owe, the balance is returnable. If he keeps it, the burden shifts to him to point to a clause in the agreement, or to an actual loss, that justifies retention.
Does the agreement have to say the deposit is refundable?
No. Refund is the default position. A forfeiture clause has to be expressly written, and even then courts read it strictly. A one-line "deposit non-refundable" scratched into a hand-written agreement is not a licence to keep ₹22,000.
Can I file a police complaint instead?
Usually not. This is a breach of contract, and the police treat it as a civil dispute. A cheating case under Section 318 of the Bharatiya Nyaya Sanhita needs dishonest intention from the very beginning, which is difficult to establish from a signed rental agreement. Make no mistake, the civil route is faster here than a criminal complaint nobody registers.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Send a written demand first. A WhatsApp message is fine as a record, but a legal notice from an advocate changes the tone of the conversation completely, and it creates the paper trail you will need later.
Do not hand over the original agreement to anyone, including the owner, on a promise of refund. Keep a photograph of every page.
This category of matter turns on small procedural and evidentiary points, and advocates who handle tenancy and deposit recovery regularly tend to move faster than a general practitioner who meets the statute once a year.
Applicable Sections of Law
This is a civil dispute about money. The key provisions are these.
- Section 73, Indian Contract Act, 1872 governs compensation for loss caused by breach of contract, which is the basis of a suit for recovery of the deposit.
- Section 74, Indian Contract Act, 1872 deals with a sum named in the contract as payable on breach, and is what an owner will rely on if he claims the deposit was forfeited by agreement.
- Section 108, Transfer of Property Act, 1882 sets out the rights and liabilities of a lessor and lessee, including the lessee's right to the return of money paid in excess.
- Order 37, Code of Civil Procedure, 1908 allows a summary suit on a written contract for a liquidated demand, which is often the quickest route to recovery.
- The Consumer Protection Act, 2019 may apply where the accommodation is treated as a service and the refusal amounts to a deficiency, though whether PG accommodation falls within it is a question on which forums have taken differing views.
Jurisdiction: Where to File the Case
Territorial jurisdiction follows Section 20 of the Code of Civil Procedure, 1908. You can sue where the owner resides or carries on business, or where the cause of action arose. For a PG room in Kothrud, that ordinarily means the civil court covering that area of Pune.
Pecuniary jurisdiction decides which court within that district. Under Section 15 CPC, a suit goes to the court of the lowest grade competent to try it. A claim of this size usually sits before a Civil Judge Junior Division or a Court of Small Causes, depending on the state.
If the matter is taken as a consumer dispute, the complaint goes to the District Consumer Disputes Redressal Commission. Jurisdiction matters because filing in the wrong court costs you months before the case even begins.
Limitation Period
The clock is three years. Article 113 of the Schedule to the Limitation Act, 1963 covers suits for which no other period is prescribed, and it starts when the right to sue accrues. In a deposit dispute, that is the date the owner refused to refund, or the date it became clear he was not going to.
Miss it, and the suit is dead unless you can persuade the court to condone the delay, which requires a separate application and a good explanation. Students who go home for a semester and come back to file a year later are already burning time they do not have.
Interim Reliefs Available
The quickest relief in a money claim is not an injunction, it is pressure. Still, three tools exist.
- Order 38 Rule 5 CPC allows attachment before judgment where there is reason to believe the defendant is about to dispose of his property to defeat a decree.
- Order 39 Rules 1 and 2 CPC allows a temporary injunction to prevent the owner from transferring the property or alienating the deposit amount in dispute in dispute.
- Order 12 Rule 6 CPC allows a judgment on admissions where the owner has, in writing, accepted that he holds your money and has no counter-claim worth arguing.
Courts are cautious about freezing anyone's property over a modest money claim, because if you eventually win, the decree itself can be executed against his assets. Interim relief here is the exception, not the plan. Plan on a decree and execution, and treat an early settlement as a bonus.
How to Claim a PG Security Deposit Refund: Step by Step
Here is the sequence that actually works, in the order it should happen.
Step one — collect your own papers before you do anything else. The agreement, the rent receipts, the UPI or bank statement showing the deposit going out, the messages where you asked for the money and he refused, and photographs of the room as you left it. The photographs are the single most useful thing students forget. They answer the owner's only real defence, which is damage.
Step two — a written demand. Not a phone call. A message or email saying what you paid, when you vacated, what you are owed, and a date by which you want it. Give him a week or two. Keep it short and unemotional. Whatever you write will be read later by someone who is not on your side.
Step three — a legal notice. This is the step most owners respond to. It is drafted by an advocate, states the facts and the amount, and gives a fixed time, usually fifteen days, to pay. It goes by registered post and by email, and the postal receipt is kept. A notice is not a court case. Nothing is filed, no fee is paid to a court, and a substantial number of deposit disputes end here.
Step four — the suit, if the notice fails. Where there is a written agreement for a fixed sum, Order 37 CPC lets you file a summary suit. The owner has to apply for leave to defend within the time allowed, and if the court is not satisfied that he has a real defence, the plaintiff gets a decree without a full trial. Where the agreement is thin or the amount is disputed, an ordinary suit for recovery of money is filed.
Step five — evidence. Electronic payment records are admissible, but the Bharatiya Sakshya Adhiniyam, 2023 requires a certificate for electronic records, the provision that replaced the old Section 65B of the Evidence Act. Ask for the bank or UPI statement in a form that carries that certificate, or download it properly. This small procedural step sinks otherwise good cases.
How long does it take, and what does it cost
Honestly: a notice gets a reply or a payment within two to six weeks in most cases. A suit takes far longer, often a year or more before a decree, and then execution takes more time again. Court fee is ad valorem, which on a claim of this size is not heavy, but the real cost is the time you spend following up.
For a deposit of ₹22,000, that arithmetic matters. If the notice does not move him and the amount is small, sometimes the sensible answer is a settlement at a discount rather than two years in a Pune court. That is a decision to take with your parents and your advocate, not on impulse at a police station.
Documents to Keep Ready
- The rent or PG agreement, every page, including the one you did not read.
- Payment proof: UPI screenshots, bank statement entries, or receipts signed by the owner.
- The notice period clause, if any, and proof of how and when you told him you were leaving.
- Messages, emails or call records showing the demand and the refusal.
- Photographs or a video of the room on the day you vacated, with the date visible.
- An electricity or water bill in your name during the period you stayed, if you have one — it fixes your occupation of the room.
Frequently Asked Questions
Can the owner deduct money for painting, cleaning or "normal wear and tear"?
Only for damage that goes beyond ordinary use, and he has to show it. A room used for a year will need repainting; that is not damage you caused. If he never inspected the room with you and never gave you a written list of deductions, his claim gets much weaker. Where he withholds an amount without any basis, that withholding is itself what you are suing to recover.
What if the agreement says the deposit is non-refundable?
A clause like that is read strictly, and to the extent it operates as a penalty rather than a genuine estimate of loss, a court may refuse to enforce it. Section 74 of the Indian Contract Act, 1872 allows reasonable compensation, not a windfall. Much depends on the exact words and whether the clause was ever explained to you. This is worth showing to an advocate before you assume you have lost.
Can I just skip the last month's rent and adjust the deposit?
People do this, and it usually makes things worse. It hands the owner a counter-claim and lets him cast you as the defaulter. Pay the rent you owe, demand the deposit separately in writing, and keep the two accounts clean. Written agreements often require notice before vacating; if you left without it, expect a genuine deduction for that, and argue about the rest.
I have already moved to another city. Do I have to attend court in Pune?
Not necessarily, at least not to begin with. A suit can be filed where the cause of action arose, and your advocate can appear for you on most dates. If the matter goes to trial and you are examined, you may need to be present, though in some circumstances evidence can be given on commission. This is one of the practical reasons a notice-first approach is worth trying.
What if I paid in cash and have no receipt?
It becomes harder but not impossible. Your bank withdrawal around that date, messages referring to the deposit, the agreement if it records it, and any witness who was present can all help. Where the payment is simply your word against the owner's, the case is weak and you should be told that plainly rather than encouraged.
Should I file a police complaint of cheating?
Rarely useful here. A criminal case under Section 318 of the Bharatiya Nyaya Sanhita requires dishonest intention from the start, and a signed agreement followed by a change of mind does not show that. Police in most cities will direct you to civil court. There are exceptions, for instance where the owner is running the same fraud on a series of students, and that pattern is worth documenting.
What to Send Us
If you are in this situation, send three things: a photograph of the agreement, the date you vacated and the date you last asked for the money, and a two-line note on what the owner has said since. Nothing needs to be drafted before you write in.
You can reach the chamber at +91 97295 06771 or me@sudhirrao.com, or through the contact page. If it is quicker, book a consultation and bring the documents with you. The first thing that will be checked is whether a notice has been sent and whether the three-year limitation period is still running.
On these facts, the refund was recovered without a trial. That will not be true of every file. Where the agreement genuinely allows a deduction, or where no payment can be traced, there may be very little to argue, and you will be told that before you spend money on it.
This article is general information about Indian law and is not legal advice on your own situation. Deposit disputes turn on the specific agreement, the payment records and the conduct of both sides.
Advocate Sudhir Rao, Supreme Court of India