CASE LAW

• Case Name: Raghunandan Saran Ashok Saran vs. Union of India
• Case No.: Civil Writ Petition No. 139 of 1998
• Petitioner: Raghunandan Saran Ashok Saran
• Respondent: Union of India
• Court: Delhi High Court
• Date: January 12, 1998
• Bench: Anil Dev Singh, JJ., O.P Dwivedi

Facts:

This is a writ petition whereby the petitioner primarily challenges the provisions of Sections 4, 6, 9 of Delhi Rent Control Act, 1958 being violative of Articles 14, 19(1)(g) and 21 of the Constitution of India. The petitioner also seeks a direction to the first respondent to rationalise the provisions of Delhi Rent Control Act so that the petitioner is assured of receiving reasonable rent for his properties let out to the tenants. The petitioner is the owner of a building bearing No. 40-42, Janpath, New Delhi. It is claimed that the said building was completed in the year 1938 at a cost of Rs. 2,50,362.50 and the same was let out to various tenants about 40-50 year back. The grievance of the petitioner is that under the provisions of the Delhi Rent Control Act, 1958 the rent is pegged at a very low level which is highly unjust, unfair and unreasonable. The petitioner claims that his rights under Articles 14, 19(1)(g) and 21 of the Constitution have been abridged by Sections 4, 6 and 9 of the Delhi Rent Control Act, 1958.

Issue:

Whether the provisions relating to standard rent (Section 4, 6, and 9) of the Delhi Rent Control Act, 1958 violates Article 14, 19(1)(g) and 21 of the Indian Constitution?

Judgment of the court:

In the case of Raghunandan Saran Ashok Saran vs. Union of India the Delhi High Court held that Section 4, 6, and 9 of the Delhi Rent Control Act, 1958 are Ultra Vires to the Article 14, 19(1)(g) and 21 of the Indian Constitution. According to which the Writ Petition succeeds and the Rule made absolute.

Analysis:

Firstly, we’ll go with the meaning of each section and article.

1. Section 4:  This section simply says that no tenant shall be liable to pay to his landlord any excessive amount of standard rent of the premises unless such amount is a lawful increase according to the provisions of the act.

• Section 6: This section simply talks about the Standard Rent.

Section 6(1)(A) simply states that in cases of residential premises let out before the 2nd day of June, 1944 the standard rent means:

• The basic rent of the premises in case it does not exceed Rs. 600 per annum
•  In case the basic rent of the premises exceeds Rs. 600 per annum, then, the basic rent plus 10% of such rent 

Section 6(1)(A)(2) states that in case where the premises have been let out on or after the 2nd day of June, 1944, the standard rent means:

1. If the rent of such premises has been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947, or the Delhi and Ajmer Rent Control Act,1952:    
2. The rent so fixed in case it does not exceed Rs. 1200 per annum.     
3. In case the rent so fixed exceeds Rs. 1200, then, the rent together with 10% of such rent.

1. In every other case, the rent shall be calculated on the basis of 10 percent of the aggregate of the actual cost of construction and the market value of the land comprised in the premises on the date of the commencement of the construction.

• Section 9: This section simply says that, on an application made to him by either the landlord or the tenant, the rent controller shall fix the standard rent in accordance with the provisions mentioned under section 6. however, if for any reason, it is not possible to determine the standard rent of any premises on the principles set forth under section 6, the controller may fix the such rent as would be reasonable having regard to the situation, locality and condition of the premises. He shall also look into the amenities provided therein and where there are similar or nearly similar premises in the locality, having regard also to the standard rent payable in respect of such premises.

• Article 14: Simply states that “The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India”.
  Basically, it ensures the guarantees to every citizen the right to equality before law & equal protection of the laws.

• Article 19(1)(g): Simply allows citizens “to practice any profession, or to carry on any occupation, trade or business”.

• Article 21: Simply states “Protection of life and Personal Liberty: No person shall be deprived of his life or personal liberty except according to procedure established by law”.

Now, by keeping all of these meanings in our mind we are of the opinion that yes there may have been a justification for enacted of section 4, 6, and 9 of the Delhi Rent Control Act, 1958 but due to the passage of time circumstances also have been changed and that’s the provision of the act were held ultra vires to the Article 14, 19(1)(g) and 21 of the Indian Constitution. We can also clearly see that the Delhi Rent Control Act, 1958 is majorly tenant friendly and landlords are the ones who usually face problems in removing a tenant usually. Even the conditions under which a landlord can remove a tenant are strictly monitored.

Another issue is that rents are very low and the maintenance of the properties are very high. The consequences of section 4, 6, and 9 of the Delhi Rent Control Act, 1958 are such that the quality of housing options in Delhi has gone down, as landlords do not have any interest in maintaining the properties or improving the quality of facilities for the tenants, due to the lack of returns. This has also resulted in poor supply of quality housing.

The situation of landlords in respect of old tenancies are very different than the position of today’s landlords in respect of tenancies. It must be pointed out that it is not always correct that all tenants are poor or all landlords are rich. Poor and rich are evenly divided amongst landlords and tenants. Therefore, there is a need to rationalise the rents and treat both the sides fairly and evenly. No one should gain at the cost of the other.

As already noticed, the prices of goods and commodities have been continuously on the rise, but rents of premises to which Delhi Rent Control Act, 1958 applies have remained more or less static.

Reasonable increase in rents will not only generate income for the landlords but it will also generate increased taxes as higher rental income will help to give rise to higher collection of property taxes and other taxes from the landlords, it will be helpful for the economic environment of the country.

The main problem with the provisions of the Delhi Rent Control Act, 1958 is that, these were fixed a few decades ago and these are very old. We cannot stick to these provisions for a long period of time because as we already see that circumstances have been completely changed and will continue to change in the future as well, in that situation there is a need to make some modification in the provisions according to the societal needs where each individual’s concern will be keep in mind and not to give any special privilege to anyone. Basically, to maintain the equality, by keeping equality in mind these provisions should be made.

These old provisions regarding rents bear very little relation to the present day’s maintenance costs, returns, investments in respect of new accommodation.

All that needs to be done is to provide a formula for updating the old provisions of the Delhi Rent Control Act,1958 in respect to rents, and thereafter periodically revising them. We have suggested that the periodical revision of rents should be based on a partial neutralization of the effects of inflation.

There is a serious need to balance the rights of the sides, tenants as well as the landlords. The provisions of section 4, 6, and 9 do violates the Article 14 and 19 of Indian Constitution as they are keeping the rents chained to low level which render them arbitrary. This unreasonable and unfair restrictions need to be eliminated from the provisions dealing with Standard Rent.

With the rapid increase in the expenses and the decreasing amount of rent which remains with the landlord, clearly shows that the non-provision in the Act for reasonable increase in the rent, with the passage of time, is clearly leading to arbitrary results. Tenants are now getting an unwarranted benefit.

It is also the responsibility of the Courts to look at the Act from the angle of Article 14 of the Indian Constitution. This article is intended, as in obvious from its words, to check this tenancy, as it is giving an undue preference to some over others.

By passage of time the tenants (at least many of them ) doing business in commercial buildings taken on rent are far more doing well financially than the landlords of the building in which they do business. Though the rent control legislation is stated to be a beneficial one but it must be reasonable, just and fair.

Difference between the cost of living of the rupee vale in 1958 and 1998 is so massively vast and huge that it is absolute unrealistic to act on the former for final estimation as for the latter. If a building was leased out in 1958, the property tax would have been, from the angle of today’s money value is inadequate and insufficient.

Section 4, 6 and 9 of the Delhi Rent Control Act, 1958, dealing with determination and fixation of Standard Rent, which have not taken into account the huge difference between the cost of living in the past and the present time, and as well do not the pass the test of reasonableness. They contain no mechanisms to compensate the landlords to offset inflation.

The landlords are being treated arbitrarily, unreasonably and unfairly affecting their livelihood. There should be a mechanism to increase the agreed rents keeping in view the price index. These provisions relating to Standard Rent, therefore, violates Article 14, 19(1)(g) and 21 of the Indian Constitution.