Delhi High Court: Dismisses Mesne Profits Review Petition, Affirms Prior Ruling

• The Delhi High Court dismissed a review petition by landlady Raj Kumari Garg against SBI regarding mesne profits for property occupation.
• Justice Neena Bansal Krishna ruled there was no "error apparent on the face of the record" in the High Court's earlier judgment.
• The court reiterated that a review petition is not a second appeal and cannot be used to re-argue the merits of a case.
• The original ruling found that informal rent increases and an unregistered loan-related undertaking extended the tenancy, limiting the period for which mesne profits could be claimed.
• The bank was deemed an unauthorized occupant only from May 2012, and the awarded mesne profits and interest rates were upheld.

The court underscored that a review petition is not intended to serve as a second appeal, and its scope is strictly limited to correcting errors evident on the record, not re-evaluating the merits of a case.

The Delhi High Court recently dismissed a review petition filed by a property owner, Raj Kumari Garg, seeking enhanced mesne profits from the State Bank of India (SBI) for its occupation of her commercial premises. The court, in a judgment delivered by Justice Neena Bansal Krishna on September 10, 2026, affirmed its earlier decision, stating that there was "no error apparent on the face of the record warranting review" of the previous ruling from July 9, 2026. This decision underscores the stringent criteria for review petitions, emphasizing that they are not a mechanism for re-arguing a case's merits.

The dispute centered on property Nos. 23-24 in Defence Colony Market, comprising 1,600 square feet on the first floor and 1,200 square feet on the second. SBI, as the successor to State Bank of Patiala, initially occupied the premises under a registered lease deed dated March 10, 2003, which was valid until December 31, 2004, at a monthly rent of Rs 62,000. The original deed permitted five three-year renewals, contingent upon a written request from the bank prior to the lease's expiry. However, no such formal renewal requests were made by the bank.

Garg had terminated the tenancy with a notice dated May 9, 2008, and subsequently initiated legal proceedings to recover possession and mesne profits, initially claiming Rs 4 lakh per month. The bank eventually vacated the property on December 31, 2017. A trial court had previously awarded mesne profits at Rs 163 per square foot per month for the period from May 2012 to December 2015, with a 15 percent enhancement thereafter, along with 6 percent interest, but denied profits for the earlier period. Both parties appealed this decision, with Garg seeking a higher rate of Rs 216 and profits for the earlier period, while SBI challenged the awarded rate and interest. The High Court, in its July 9, 2026, ruling, dismissed both appeals.

The landlady's review petition was filed under Section 114 read with Order XLVII Rule 1 of the Code of Civil Procedure (CPC), a legal provision that allows for the review of a judgment or order under specific, narrow circumstances. The primary ground for such a review is the discovery of new and important matter or evidence, an error apparent on the face of the record, or any other sufficient reason. Crucially, the legal standard for an 'error apparent on the face of the record' is very high, preventing litigants from using review petitions as a disguised second appeal.

Mesne profits, a central element of this case, refer to the compensation an owner can claim from an individual who continues to occupy their property without legal entitlement. This compensation is typically calculated based on the rent the property could reasonably have generated during the period of unauthorized occupation. The High Court's initial ruling had determined that while no formal lease renewal occurred, the landlady's letters from January 6, 2005, and December 26, 2007, which increased the rent by 20 percent and were accepted by the bank, constituted an extension of the tenancy on a month-to-month basis. This meant the bank's occupation until December 31, 2010, was not considered unauthorized.

A significant aspect of the High Court's original decision, which the review petition sought to challenge, involved an undertaking dated February 2, 2007. This undertaking was signed when Raj Kumari Garg secured a Rs 25 lakh loan from SBI under its Rent Scheme, a loan that was fully repaid on May 5, 2012. The court had previously held that this undertaking legally bound Garg to extend the tenancy until the loan's repayment date, effectively deeming her argument that the undertaking was solely related to the loan as "absolutely fallacious." The court further clarified that the unregistered nature of this undertaking did not invalidate it as a legitimate extension of the tenancy on a month-to-month basis.

Consequently, the High Court concluded that the bank's status as an unauthorized occupant, liable for mesne profits, commenced only from May 2012. This finding directly impacted the period for which mesne profits were awarded. Regarding the rate of mesne profits, the court found the Rs 163 per square foot per month to be reasonable, citing evidence from neighboring property owners, Ved Prakash Bansal and Jagdish Gupta, and noting the bank's failure to present contradictory evidence. The 6 percent interest awarded under Section 34 of the Code of Civil Procedure was also deemed appropriate and not excessive.

Justice Neena Bansal Krishna, in rejecting the Delhi HC mesne profits review petition, reiterated that the grounds presented by the landlady amounted to an attempt to re-argue the original case, which falls outside the narrow scope of review petitions in India. The court underscored that a review petition is not intended to serve as a second appeal, and its scope is strictly limited to correcting errors evident on the record, not re-evaluating the merits of a case. This ruling reinforces the judicial principle that once a matter has been decided, it should not be reopened unless a clear and undeniable error is present on the face of the judgment itself.

This case, Raj Kumari Garg v SBI, highlights critical considerations for both landlords and tenants, particularly concerning mesne profits overstaying tenant Delhi scenarios. It emphasizes the importance of meticulous documentation for lease renewals and extensions. The court's reliance on informal rent increase letters and an unregistered undertaking to establish a month-to-month tenancy extension demonstrates how informal arrangements can significantly impact the period for which mesne profits can be claimed for unauthorized occupation. The ruling serves as a reminder that the legal effect of an unregistered lease deed extension or other informal agreements can be substantial, even if not formally registered under Section 107 of the Transfer of Property Act, especially when considering the scope of review petition India.

This ruling reinforces that review petitions are not a second appeal and have a very narrow scope, requiring an 'error apparent on the face of the record.' Lawyers advising landlords or tenants must ensure meticulous documentation of lease renewals and be aware that informal extensions or undertakings can significantly impact the period for which mesne profits can be claimed for unauthorised occupation.

Source: Original reporting via legal news outlets