Almost every rental in Mumbai is on a leave and licence agreement, usually for 11 months to a few years, with a refundable security deposit. Two disputes come up again and again: the owner who will not return the deposit, and the occupant who will not leave. This guide covers both sides.
Key facts
- Law
- Section 55, Maharashtra Rent Control Act, 1999: the agreement must be written and registered
- Deposit
- Refundable on handover, less only deductions the agreement allows
- Recovering the deposit
- Written demand, then legal notice, then a suit (generally the Small Causes Court)
- Licensee not leaving
- Owner applies to the Competent Authority (Section 24); a licensee who stays on pays double the licence fee
- Do not
- Change locks, remove belongings, or cut water or electricity
The basics
- Under Section 55 of the Maharashtra Rent Control Act, 1999, a leave and licence agreement must be in writing and registered. Online registration is common. The responsibility to register is on the owner, and under Section 55(2), if there is no registered agreement, the licensee’s version of the terms prevails unless proved otherwise. An unregistered agreement is therefore risky for the owner.
- A licence does not create a tenancy. The licensee must hand back possession when the licence ends.
- The deposit is refundable when the premises are handed back, subject only to deductions permitted by the agreement (unpaid licence fee, unpaid bills, damage beyond normal wear and tear).
If the owner will not return your deposit
- Document the handover: photographs or video of the flat on the day you leave, keys returned against acknowledgement, and final meter readings and bills paid.
- Ask in writing for refund within a fixed time, attaching the agreement and handover proof.
- Send a legal notice demanding the deposit with interest and costs. A legal notice sometimes leads to payment without further proceedings. See legal notices.
- File a suit for recovery if there is no payment. Disputes between licensors and licensees in Mumbai are generally heard by the Small Causes Court. Where the claim rests on a written agreement for a fixed sum, a summary procedure may be available.
Deductions must be justified. A blanket refusal, or deductions for repainting or normal wear and tear not provided in the agreement, can be challenged.
If the licensee will not vacate
Section 24 of the Maharashtra Rent Control Act gives owners of residential premises a fast, special remedy:
- On the licence expiring, the licensee must deliver possession. If not, the owner can apply to the Competent Authority under the Act, which, on being satisfied that the licence period has expired, shall order eviction.
- A licensee who stays on after expiry is liable to pay damages at double the licence fee until dispossessed (Section 24(2)).
- The procedure is summary. A licensee who wants to contest must seek leave to defend within the time allowed under Section 43.
- Appeals from the Competent Authority’s order go to the Additional Divisional Commissioner, Konkan Division, and further challenge lies before the High Court.
Owners should not change locks, remove belongings, or cut water and electricity to force a licensee out; doing so can lead to criminal and civil liability. Use the legal process.
Before signing: avoid disputes
- Register the agreement and keep the registered copy.
- Record the deposit amount, mode of payment, and the conditions for deductions.
- Attach an inventory of fittings and photographs of the flat’s condition.
- Agree a notice period and lock-in period in writing.
- Complete police verification of the licensee as required in Mumbai.
Frequently asked questions
The owner says he will return the deposit only after a new licensee pays. Is that valid?
Unless the agreement says so, the deposit is due on handover. Finding the next licensee is the owner’s concern.
Can the licensee claim to be a tenant after 11 months?
A licensee does not become a tenant merely because the licence is renewed or extended. Acceptance of payments after expiry does not by itself create a tenancy.
Can I stop paying the last two months’ fee and adjust it against the deposit?
Only if the agreement allows it. Otherwise it can be treated as a default, though in practice parties often agree to this in writing.
See also: leave and licence agreements: registration and basics, housing society disputes and property matters.
Free download: Leave and licence agreement checklist (PDF) · all free formats
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This guide describes general law as understood in October 2026. It is not legal advice; the terms of your agreement matter, so take advice before acting.