Security Deposit Not Returned by Co-living Company – Legal Remedies and Solutions

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by

Adv Sudhir Rao
in

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.

Security Deposit Not Returned by Co-living Company - Legal Remedies and Solutions

Mr. X approached me regarding his security deposit of Rs. 45,000 that was not returned by X.company, a co-living rental service in City A. He had resided at their property for approximately 6-7 months until DD/MM/YYYY. Despite vacating the premises and completing all formalities, the company failed to return his deposit within the promised timeframe. When Mr. X contacted their customer support, they offered vague promises of installment payments without any definitive timeline. After more than a year of follow-ups, the company continued to delay the refund with various excuses. This is a classic case of wrongful retention of security deposits, which is both a civil wrong and can constitute criminal breach of trust under certain circumstances.

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.

  • Document all communications with the company including emails, messages, and call recordings
  • Send a legal notice demanding refund within 15 days before filing any case
  • File consumer complaint for deficiency in service and unfair trade practices

Applicable Sections of Law

Under the Bharatiya Nyaya Sanhita (BNS), several provisions apply to security deposit retention cases. Section 316 deals with criminal breach of trust when property is dishonestly misappropriated. Section 318 covers breach of trust by public servants or agents. The Consumer Protection Act, 2019 is also applicable for deficiency in service. Under BNSS, Section 173 provides for summary trials in such matters. Additionally, the Transfer of Property Act and Contract Act provisions regarding specific performance and damages are relevant for civil remedies.

If You Are the Complainant

  • Gather all rental agreements, receipts, and deposit payment proofs
  • Maintain detailed records of all communication attempts with the company
  • Send legal notice through registered post demanding refund with interest
  • File consumer complaint in appropriate district forum within jurisdiction
  • Consider filing civil suit for recovery of money with damages and interest
Security Deposit Not Returned by Co-living Company - Legal Remedies and Solutions

If You Are the Victim

  • Document the property condition at the time of vacating with photographs and videos
  • Obtain written acknowledgment of peaceful possession handover from company
  • Keep copies of all utility bills clearances and no-dues certificates
  • File police complaint if the amount is substantial and company shows dishonest intentions
  • Approach consumer forum for compensation including mental harassment damages

How the Police Behave in Such Cases

Police generally treat security deposit cases as civil disputes initially. They may suggest approaching consumer forum or civil court first. However, if criminal breach of trust elements are established with evidence of dishonest intention, they register FIR under BNS Section 316. Police often recommend mediation or compromise before formal investigation. In cases involving multiple victims or substantial amounts, police take more serious action and may investigate the company’s business practices comprehensively.

FAQs People Normally Have

Can I get interest on delayed refund? Yes, you can claim interest at 18% per annum from the date deposit should have been returned.

Is consumer court the right forum? Yes, consumer courts handle deficiency in service cases effectively with faster resolution.

What if rental agreement has unfair clauses? Unfair contract terms are void under Consumer Protection Act, and you can still claim full refund.

Can criminal case be filed? Yes, if dishonest intention to permanently deprive is proved, criminal breach of trust case can be filed.

Security Deposit Not Returned by Co-living Company - Legal Remedies and Solutions

What Evidence Is Required?

  • Original rental agreement and deposit payment receipts
  • Bank statements showing deposit payment transaction
  • Email communications and WhatsApp message screenshots
  • Property handover acknowledgment and condition photographs
  • Utility bills clearance certificates and no-dues documentation
  • Audio recordings of customer service calls if legally recorded
  • Witness statements from other tenants facing similar issues

How Long Will the Investigation Take?

Consumer forum cases typically resolve within 6-12 months depending on complexity. Civil suits may take 1-2 years for final judgment. Criminal cases under BNS take 8-18 months for investigation and trial completion. Police investigation for criminal breach of trust usually concludes within 60-90 days. Mediation through consumer forum can provide faster resolution within 2-3 months if company cooperates.

Advocate Sudhir Rao, Supreme Court of India

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