In a ruling that is bound to have an effect in cities across India, a Chennai court has said that landlords can only take one month's advance from tenants.

A Chennai court, citing a previous precedence set by the Supreme Court of India, underlined that the landlord is lawfully entitled to only month's rent advance.

The XIII Small Causes Court cited the 1996 Supreme Court verdict: "The landlord is entitled to receive only one month's agreed rent by way of advance and any amount paid in excess of agreed rent... shall be refunded or adjusted towards rent," while passing the order, the Indian Express reported.

The Chennai court passed the ruling last week while hearing an eviction petition filed by a landlord under the Tamil Nadu Buildings (Lease and Rent Control) Act.

The landlord, Niamuthullah, reportedly told the court that he had rented out his house to an advocate, Hariharan Rajan. The tenant, however, defaulted on the rent and electricity bills for 11 months (from 1, February, 2007 to 31, January, 2008). He said in his appeal that the tenant should be evicted on the basis of "wilful default".

The tenant, in his counter argument, told the court that he had paid Rs 25,000 as advance to the house owner. The problem began when Rajan tried to deposit the rent to the owner's bank account instead of paying cash. Following this, Rajan tried to pay the rent by money order, but the landlord refused.

The tenant argued that the house owner, in violation of the SC rule, collected more than one month's rent as advance and hence any pending amount should be adjusted from the advance.

Judge C Sasikumar, favouring Rajan's argument, said that the tenant had submitted the rental receipts as evidence, which shows that rent for May 2007 and July 2007 were not paid.

"The contention of Niamuthullah that Rajan had committed wilful default is not acceptable," the judge said dismissing the petition, according to the Times of India. Judge Sasikumar then asked the owner to adjust the arrears from the advance.

The issue of rent-advance is become a major problem for the residents of metro cities. In Bengaluru, tenants are expected to cough up 12 months' rent as security deposit for a house. "Even after paying so much money, the tenant ends up being at the mercy of the landlord, who at times even mistreats them," a city resident said.