Punjab-Haryana High Court
Harbilas Rai Bansal vs State Of Punjab And Anr. on 2 December, 1996
Equivalent citations: (1997)115PLR536
Author: V.S. Aggarwal
Bench: V.S. Aggarwal
JUDGMENT V.S. Aggarwal, J.
1. Petitioner (Harbilas Rai Bansal) is owner and landlord of a shop situated in Mandi Giddarbaha, Ward No. 4, Old Subzi Mandi. Respondent No. 2 Avtar Krishan Arora is a tenant in the said premises. On 11.10.1949 Rent Controller, Muktsar is alleged to have fixed the fair rent of the said premises at Rs. 12/- per month keeping in view (he rates of rent prevalent in the locality for similar shops under similar circumstances for the year 1938. By virtue of the present petition the petitioner challenges the vires of Section 4 of the East Punjab Urban Rent Restriction Act, 1949 (for short 'the Act') to be violative of Articles 14 and 19 of the Constitution of India because as per the petitioner it restricts his rights to increase the rent despite there being a normal increase in the rent prevalent in the locality for similar shops.
2. Needless to say that in the reply filed respondent No. 2 contests the assertions in law alleged by the petitioner. There is no controversy about the facts that respondent No. 2 is a tenant and that fair rent was fixed at Rs. 12/- per month by the Rent Controller, Muktsar but it is denied that provisions of Section 4 of the Act are ultravires of Articles 14 and 19) of the Constitution.
3. To appreciate the said controversy a glance at the relevant provisions of the Act would be advantageous and in the fitness of things. Section 4 of the Act prescribes the scheme to be followed by the Rent Controller to fix the lair rent of the buildings. The said provision reads:-
"4. Determination of fair rent.-
(1) The Controller shall on application by the tenant or landlord of a building or rented land fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit.
(2) In determining the fair rent under this section, the Controller shall first fix & basic rent taking into consideration -
(a) the prevailing rates of rent in the locality for the same or similar accommodation in similar circumstances during the twelve months prior to the Ist January, 1939; and
(b) the rental value of such building or rented land if entered in property tax assessment register of the municipal, town or notified area committee, cantonment board, as the case may be, relating to the period mentioned in clause (a):
(3) In fixing the fair rent of a residential building the Controller may allow, if the basic rent -
(i) in the case of a building in existence before the Ist January, 1939 -
(a) does not exceed Rs. 25 per mensem, an increase not exceeding 8-1/3 per cent on basic rent;
(b) exceeds Rs. 25 per mensem but does not exceed Rs. 50 per mensem, an increase not exceeding 12-1/2 per cent on such basic rent;
(c) exceeds Rs. 50 per mensem, an increase not exceeding 25 per cent on such basic rent;
(ii) in the case of a building constructed on or after the 1st January, 1939 -
(a) does not exceed Rs. 25 per mensem, an increase not exceeding 25 per cent on such basic rent ;
(b) exceeds Rs. 25 but does not exceed Rs. 50 per mensem, an increase not exceeding 37-1/2 per cent on such basic rent;
(c) exceeds Rs. 50 per mensem, an increase not exceeding 50 per cent on such basic rent. (4) In fixing the fair rent of a scheduled building the controller may allow, if the basic rent -
(i) in the case of a building in existence before the Ist January, 1939 -
(a) does not exceed Rs. 25 per mensem, an increase not exceeding 13-1/3 per cent on such basic rent;
(b) exceeds Rs. 25 but does not exceed Rs. 50 per mensem, an increase not exceeding 17-1/2 per cent on such basic rent;
(c) exceeds Rs. 50 per mensem, an increase not exceeding 30 per cent on such basic rent;
(ii) in the case of building constructed on or after the Ist January, 1939 -
(a) does not exceed Rs. 25 per mensem, an increase not exceeding 30 per cent on such basic rent ;
(b) exceeds Rs. 25 but does not exceed Rs. 50 per mensem, an increase not exceeding 42-1/2 per cent on such basic rent;
(c) exceeds Rs. 50 per mensem, an increase not exceeding 55 per cent on such basic rent. (5) In fixing the fair rent of non-residential building or rented land the Controller may allow, if the basic rent -
(i) in the case of a building in existence before the 1st January, 1.939 or in the case of rented land -
(a) does not exceed Rs. 50 per mensem, an increase not exceeding 37-1/2 per cent on such basic rent;
(b) exceeds Rs. 50 per mensem, an increase not exceeding 50 per cent on such basic rent;
(ii) in the case of a building constructed after the 1st January, 1939 -
(a) does not exceed Rs. 50 per mensem, an increase not exceeding 50 per cent on such basic rent;
(b) exceeds Rs. 50 per mensem, an increase not exceeding Rs. 100 per cent on such basic rent. (6) Nothing in this section shall be deemed to entitle the controller to fix the fair rent of a building or rented land at an amount less than the rent payable for such building or rented land under a subsisting lease entered into before the first day of January, 1939."
Once the fair rent of the building is fixed under Section 4 of the Act, no further increase is permissible except in the cases contemplated under the provisions of the Act. Under Section 5 of the case Act, when fair rent of the building or rented land has been fixed under Section 4 of the Act, increase is only permissible in the rent where some addition, improvement or alteration had been effected at the expense of the landlord. Section 6 of the Act restricts the rights of the landlord to claim anything in excess of the fair rent. Any agreement for payment of any sum in addition to rent or of rent in excess of fair rent is null or void. Section 7 prohibits a landlord from charging any fine or premium for grant, renewal or continuance of the tenancy. Similarly Section 8 permits the recovery of rent which should not have been paid.
4. In this process it is crystal clear that once the fair rent has been fixed under the provisions of the Act mentioned above, the landlord cannot increase the rent except as per the provisions of the Act. The criteria for fixing the fair rent has been laid in Section 4 of the Act. There is difference in fixing of the fair rent with respect to buildings which were in existence before 1.1.1939 and buildings which were constructed on or before 11.1.1939.
5. The need for controlling the rents and eviction of certain tenants had arisen as a result of the large exodus of working peoples to urban areas. During the last world War it has increased considerably. The social and economic changes in the country also had their role to play. Rack renting and large scale eviction of the tenants under the guise of the ordinary law made the life of the community unstable and insecure. To circumvent the same, the different States had enacted rent legislations. This purpose had been enunciated and explained by the Supreme Court in the case of Amarjit Singh v. Smt. Khatoon Quamarain, AIR 1987 SC 741. The Supreme Court observed:-
"The Rent Restricting Acts are beneficial legislations for the protection of the weaker party in the bargains of letting very often. These must be so read that these balance harmoniously the rights of the landlords and the obligations of the tenants. The Rent Restriction Acts deal with the problem of rack-renting and shortage of accommodation. It is in consonance with the recognition of the right of both the landlord and the tenant that a harmony is sought to be struck whereby the bona fide requirements of the landlords and the tenants in the expanding explosion of need and population and shortage of accommodation are sought to be harmonised and the conditions imposed to evict a tenant are that the landlord must have bona fide need."
6. The petitioner who appeared in person highlighted the fact that the said legislation particularly by virtue of which fair rent is fixed as prevalent more than 50 years ago is discriminatory and violates his rights under Articles 14 and 19 of the Indian Constitution. He seeks judicial review i.e. power of the court to pronounce a law as invalid as it violates a constitutional provision. But this argument of the petitioner has simply to be stated to be rejected. Much of the thrust of the argument looses its significance because of the precedents on the subject which sway us to take a view to the contrary. The Delhi and Ajmer Mewar Rent Control Act had been enacted in 1,947. Classification was made before or after a particular date. The vires of the same with respect to fixing of standard rent (the expression used in that Act) was challenged. The argument was repelled in the case of Roshan Lal Mehra v. Ishwar Dass, AIR 1962 SC 646 and the Supreme Court approved the observations of the Full bench of this Court to uphold the validity of the enactment. The observations approved include in the following paragraph:-
"For these reasons I am of the opinion that the criteria for the fixation of standard rent for new and old buildings is substantially the same and does not violate Article 14 of the Constitution and there is no valid reason for coming to the connection that the standard rent of old and new buildings of the same type and in the same locality would necessarily be different. The first ground, therefore, fails and is rejected."
In the subsequent decision in the case of M/s Ram Lal Kapur and Sons (P) Ltd. v. Ram Nath and Ors., AIR 1963 SC 1060 the decision in the case of British Medical Stores was followed. In fact the matter is clinched in this regard by the decision of the Supreme Court in the case of Sant Lal Bharti v. State of Punjab, AIR 1988 SC 485. The vires of Section 4 of the present Act had been challenged. It had been urged that this is unreasonable keeping in view the object of the Act. The contention was repelled and the Supreme Court in paragraph 8 held :-
"Shri S.K. Bagga, learned counsel also drew our attention to the observations of this Court in the case of Raval & Co. v. K.G. Ramachandran, AIR 1974 SC 818 : 1974(2) SCR 629. He drew our attention how fair rent should be fixed by relying on the certain observations of Bhagwati, .J. as the Chief Justice then was at page No. 825 of the AIR. In the facts and in the context of this case it is not necessary to refer to these observations. These were made entirely in a different context. It must be the function of the legislature of each State to follow the methods considered to be suited for that State, that would be no ground for judging the arbitrariness or unreasonableness of a particular legislation in question by comparison. What may be the. problem in Madras may not be the problem in Punjab. It must, however, be borne in mind that the Act in question was passed in 1949 and it pegged the rent prevalent in the similar houses in 1938 and as such is not unreasonable per se. The rises started tremendously after the end of the Second World War after the partition of the country. In that view of the matter, we cannot say that per se there is unreasonableness in fixing the prices in 1938 level. Having regard to the specific preamble of the Act we find nothing unreasonable in the Scheme contemplated under Section 4 of the present Act."
It is obvious from the decision of the Supreme Court and establishes without any pale of controversy that Section 4 of the Act is not ultravires. The argument so much thought of by the petitioner must fail.
7. It is true that somewhat a similar question was raised before the Division Bench of the Kerala High Court in the case of Issue Ninan v. State of Kerala, 1996(2) RCR 110. The provisions under consideration were of Kerala Buildings (Lease and Rent Control) Act, 1965. It also provided for fixing of fair rent. The said Court took note of the tremendous increase in the rent and also held that the rent cannot be kept static by fixing the fair rent. The provisions of the Kerala Act were held to be ultravires of Articles 19(1)(g) of the Constitution of India. In paragraph 21 the said Court observed:-
"21. Magnitude of the unreasonableness resulting from a combined operation of Sections 5, 6 and 8 can be explained through a hypothetical illustration: Suppose there are two identical buildings situated close to each other on the same road belonging to two different landlords or to the same landlord, and both were let out to two different tenants. One tenant has applied for fixation of rent in 1965 and the court fixed fair rent by reaching the maximum limit prescribed in Section 5 on the basis of the rental value shown in the property tax register - say Rs. 100/- per month. The tenant of the other building did not apply for fixation of fair rent, but he was good enough to increase the rent periodically. Municipality has also revised the rental of this building from time to time which could have gone upto say Rs. 1,500/- per month by 1995 (as the interval here is 30 years). In 1993 a new tenant was inducted into this building and that tenant has applied for fixation of fair rent in 1995. The court can now determine the fair rent based on the latest rental value fixed by the Municipality which was prevailing during two preceding years. Fair rent then could be fixed from 1,500/- per month. Now it may be remembered that the court cannot increase the fair rent of the former building from Rs. 100/- per month. Even the local authority cannot revise the rental of it in the register. If the illustration becomes a reality (it is quite possible to have such a situation) what unjust consequences the situation would create. For the identical building situated adjacent to it the fair rent is Rs. 100/- per month whereas for the other building it becomes Rs. 1,500/- per month. We cannot think that the above illustration can be ignored as a mere fiction. It is a very plausible consequence if the above three sections would remain in the Statute book."
With utmost respect we are unable to subscribe to the said view point. Not only the Supreme Court has already approved the validity of provisions of Section 4 of the present Act but the very purpose of enacting the alleged Legislation was to control the rents. Unscrupulous landlords could insist for huge payment and frequently insisting for increasing the rent. There appears to be nothing unreasonable or arbitrary in enacting legislation to control the rent and stop the landlord from increasing the same. It would not, thus, be fair to call such a rent as unfair rent. When the restriction is reasonable, the decision in the case of Issac Ninan (supra) indeed is difficult to follow.
8. In that event it had been urged that there has been tremendous increase in the rents and this Court in any case should direct the tenant to pay more rent. Our attention was drawn to certain decisions in this regard Amongst many one decision relied upon was in the case of Narain and Ors. v. Om Parkash Gupta, AIR 1987 SC 1602. This was a dispute under the Haryana Urban Control of Rent (Eviction) Act, 1973. The rent was originally fixed at Rs. 3/-. The Supreme Court directed the tenant to pay Rs. 75/-. In the subsequent decisions referred to namely Raghunathi and Anr. v. Raju Ramappa Shetty, AIR 1991 SC 140 similarly the rent was found to be in ordinary law and was directed to be increased. It was so done by the Supreme Court in the case of R. Appavoo (dead) by his Legal Representatives v. Sree Dharna Vinayakan Dharmaraja Devasthanam, 1991(1) Rent Control Reporter 474 and the Delhi High Court in the case of Dhan Singh v. Bhagwan, 1996(1) Rent Control Reporter 387.
9. The said precedents relied upon and referred to are of little consequence nor cut any eye in favour of the petitioner. In the present case under consideration admittedly fair rent had been fixed by the Rent Controller, Muktsar sometimes in 1949. The legislature bars increase of the rent. In all the decisions quoted by the petitioner fair or standard rent had not fixed. This Court will not usurp the legislative command when the enactment had been held to be valid. The result is clear that the cited decisions are of no consequence.
10. The last submission made in this regard was that a distinction had been made by Section 4 of the Act with respect to premises which were constructed before a specified date and it prescribes different standard for fixing of fair rent. Even on that count the said argument that has been urged cannot be accepted. The answer in this regard is provided by the Supreme Court decision in the case of Roshan Lal Mehra (supra). A similar argument had been advanced and rejected. However, nothing said herein should be taken as an expression of opinion to restrict the legislation from taking note of the subsequent changes and making provisions for enhancement of the rent in certain appropriate cases.
11. As an off shoot of these reasons, the petition being without any merit fails and is dismissed. There will be no order as to costs.