Can You Adjust Final Month Rent Against Security Deposit? Tenant Rights in India Explained

Rohan Gupta, a software professional working in Pune, had moved into a rented flat in the Baner area around early February 2024. He had paid a security deposit of two months' rent to his landlady, Savita Deshpande, at the time of moving in. There was no formal rent agreement signed — only a verbal understanding. Rohan had heard from a neighbour that the previous tenant, also a young professional, had vacated the flat eight months earlier and never received the deposit back despite repeated follow-ups. The flat itself showed signs of neglect — peeling walls, broken fittings — but Rohan had been in a tight spot and needed accommodation quickly.

By October 2024, Rohan decided to move out and gave his landlady verbal notice. Savita flatly refused to adjust the last month's rent against the security deposit, insisting she would return the money only after Rohan vacated and "inspected" the property. Rohan was understandably worried. He had seen what happened to the previous tenant. His first attempt at resolving the dispute was through a neighbour who knew Savita, and that conversation went nowhere. A friend referred him to a general civil lawyer, but the advice he received was vague and gave him no practical road map.

He then approached Advocate Sudhir Rao. The matter was assessed carefully — the absence of a formal agreement, the deposit amount, the documented pattern of the landlady's conduct, and Rohan's position as a tenant in lawful possession. A formal legal notice was sent under the Transfer of Property Act, 1882, and the Indian Contract Act, 1872, placing Savita on record. Rohan withheld the final month's rent and cited the security deposit as set-off. The matter was resolved with Savita accepting the adjustment and issuing a no-dues letter within three weeks of the notice. Rohan moved out without financial loss.

You can read about this case in detail at https://sudhirrao.com/adjust-final-month-rent-against-security-deposit-tenant-righ/