Delhi High Court
Raghunandan Saran Ashok Saran (Huf) vs Union Of India And Ors. on 18 January, 2002
Equivalent citations: 2002IIAD(DELHI)261, 95(2002)DLT508, 2002(61)DRJ457, 2002RLR149
Author: O.P. Dwivedi
Bench: O.P. Dwivedi
JUDGMENT Anil Dev Singh, J.
1. 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.
2. 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,
3. In order to resolve the controversy it will be necessary to notice the impugned provisions and the provisions having a bearing thereon. These provisions read as under:
"2. Definitions.-- In this Act, unless the context otherwise requires,
(a) 'basic rent', in relation to premises let out before the 2nd day of June, 1944, means the basic rent of such premises as determined in accordance with the provisions of the Second Schedule;
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(k) 'standard rent', in relation to any premises means the standard rent referred to in Section 6 or where the standard rent has been increased under Section 7, such increase rent.
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3. Act not to apply to certain premises.--Nothing in this Act shall apply,
(a) .....
(b) .....
(c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or
(d) to any premises constructed on or after he commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period of ten years from the date of completion of such construction."
4. Rent in excess of standard rent not recoverable.--(1) Except where rent is liable to periodical increase by virtue of an agreement entered into before the 1st day of January, 1939, no tenant shall, notwithstanding any agreement to the contrary, be liable to pay to his landlord for the occupation of any premises any amount in excess of the standard rent of the premises, unless such amount is a lawful increase of the standard rent in accordance with the provisions of this Act.
(2) Subject to the provisions of Sub-section (1) any agreement for the payment of rent in excess of the standard rent shall be construed as if it were an agreement for the payment of the standard rent only.
5. Unlawful charges not to be claimed or received.--(1) Subject to the provisions of this Act, no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary.
(2) No person shall, in consideration of the grant, renewal or continuance of a tenancy or sub-tenancy of any of premises,
(a) claim or receive the payment of any sum as premium or pugree or claim or receive any consideration whatsoever, in cash or in kind, in addition to the rent; or
(b) except with the previous permission of the Controller, claim or receive the payment of any sum exceeding one month's rent of such premises as rent in advance.
(3) it shall not be lawful for the tenant or any other person acting or purporting to act on behalf of the tenant or a sub-tenant to claim or receive any payment in consideration of the relinquishment, transfer or assignment of his tenancy of sub-tenancy, as the case may be, of any premises.
(4) Nothing in this section shall apply-
(a) to any payment made pursuance of an agreement entered into before the 1st day of Junary, 1939; or
(b) to any payment made under an agreement by any person to a landlord for the purpose of financing the construction of the whole or part of any premises on the land belonging to, or taken on lease by, the landlord, if one of the conditions of the agreement is that the landlord is to let to that person the whole or part of the premises when completed for the use of that person or any member of his family.
Provided that such payment does not exceed the amount of agreed rent for a period of five years of the whole or part of the premises to be let to such person.
Explanation : For the purposes of Clause (b) of this sub-section, a 'member of the family' of the person means, in the case of any undivided Hindu family, any member of the family of that person and in the case of any other family, the husband, wife, son, daughter, father, mother, brother, sister or any other relative dependent on that person.
6. Standard rent.--(1) Subject to the provisions of Sub-section (2), 'standard rent', in relation to any premises means-
(A) in the case of residential premises-
(1) where such premises have been let out at any time before the 2nd day of June, 1944,
(a) if the basic rent of such premises per annum does not exceed six hundred rupees, the basic rent; or
(b) if the basic rent of such premises per annum exceeds six hundred rupees, the basic rent together with ten per cent, or such basic rent;
(2) where such premises have been let out at any time on or after the 2nd day of June, 1944,--
(a) in any case where the rent of such premises has been fixed under the Delhi and Ajmer Rent Control Act, 1947 (19 of 1947), or the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952),--
(i) if such rent per annum does not exceed twelve hundred rupees, the rent so fixed together with ten per cent of such rent;
(b) in any other case, the rent calculated on the basis of (ten per cent) per annum of the aggregate amount of the (actual) cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction.
(B) in the case of premises other than residential premises-
(1) where the premises have been let out at any time before the 2nd day of June, 1944, the basic rent of such premises together with ten per cent of such basic rent:
Provided that where the rent so calculated exceeds twelve hundred rupees per annum, this clause shall have effect as if for the words "ten per cent", the words "fifteen per cent" had been substituted;
(2) where the premises have been let out at any time on or after the 2nd day of June, 1944,--
(a) in any case where the rent of such premises has been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947 (19 of 1947) or the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952),--
(i) if such rent per annum does not exceed twelve hundred rupees, the rent so fixed; or
(ii) if such rent per annum exceeds twelve hundred rupees, the rent so fixed together with fifteen per cent of such rent;
(b) in any other case, the rent calculated on the basis of ten per cent per annum of the aggregate amount of the actual cost of construction and the market price of the land comprised in the premises on the date of the commencement of the construction:
(2) Notwithstanding anything contained in Sub-section (1)-
(a) in the case of any premises, whether residential or not, constructed on or after the 2nd day of June, 1951, but before the 9th day of Jun, 1955, the annual rent calculated with reference tot he rent at which the premises were let for the month of March, 1958, or if they were not so let, with reference to the rent at which they were last let out shall be deemed to be the standard rent for a period of seven years from the date of the completion of the construction of such premises;
(b) in the case of any premises, whether residential or not, constructed or after the 9th day of June, 1955, including premises constructed after the commencement of this Act but before the commencement of the Delhi Rent Control (Amendment) Act, 1988, the annual rent calculated with reference to the rent agreed upon between the landlord and the tenant when such premises were first let out shall be deemed to be the standard rent for a period of five years from the date of such letting out.
(c) in the case of any premises, whether residential or not, constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988 and to which the provisions of this Act are made applicable by virtue of Clause (d) of Section 3, the rent calculated on the basis of ten per cent per annum of the aggregate amount of the actual cost of construction of the premises and the market price of the land comprised in the premises on the date of commencement of the construction of the premises shall be deemed to be the standard rent.
(3) For the purposes of this section, residential premises include premises let out for the purposes of a public hospital, an educational institution, a public library, reading room or an orphanage.
6A. Revision of rent.--Notwithstanding anything contained in this Act, the standard rent, or, where no standard rent is fixed under the provisions of this Act in respect of any premises, the rent agreed upon between the landlord and the tenant, may be increased by ten per cent every three years.
7. Lawful increase of standard rent in certain cases and recovery of other charges.-
(1) Where a landlords has at any time, before the commencement of this Act with or without the approval of the tenant or after the commencement of this Act with the written approval of the tenant or of the Controller, incurred expenditure for any improvement, addition or structural alteration in the premises, not being expenditure on decoration or tenantable repairs necessary or usual for such premises, and the cost of that improvement, addition or alteration has not been taken into account in determining the rent of the premises, the landlord may lawfully increase the standard rent per yearly by an amount not exceeding ten per cent of such cost.
(2) Where a landlord pays in respect of the premises any charge for electricity or water consumed in the premises or any other charge levied by a local authority having jurisdiction in the area which is ordinarily payable by the tenant, he may recover from the tenant the amount so paid by him; but the landlord shall not recover from the tenant whether by means of an increase in rent or otherwise the amount of any tax on building or land imposed in respect of the premises occupied by the tenant.
Provided that nothing in this sub-section shall affect the liability of any tenant under an agreement entered into before the 1st day of January, 1952, whether express or implied, to pay from time to time the amount of any such tax as aforesaid.
8. Notice of increase of rent--(1) Where a landlord wishes to increase the rent of any premises, he shall give the tenant notice of his intention to make the increase and insofar as such increase is lawful under this Ac,t it shall be due and recoverable only in respect of the period of the tenancy after the expiry of thirty days from the date on which the notice is given.
Every notice under Sub-section (1) shall be in writing signed by or on behalf of the landlord and given in the manner provided in Section 106 of the Transfer of Property Act, 1982 (4 of 1882).
9. Controller to fix standard rent, etc.--(1) The Controller shall, on an application made to him in this behalf, either by the landlord or by the tenant, in the prescribed manner, fix in respect of any premises-
(i) the standard rent referred to in Section 6; or
(ii) the increase, if any, referred to in Section 7.
(2) In fixing the standard rent of any premises of the lawful increase thereof, the Controller shall fix an amount which appears to him to be reasonable having regard to the provisions of Section 6 or Section 7 and the circumstances of the case:
Provided that in working out the cost of construction of any premises or the market price of the land comprised in such premises for the purposes of Section 6, or the cost of improvement, addition, or alteration referred to in Section 7, the Controller may take the assistance of any valuer approved by the Central Government in accordance with such rules as may be prescribed and the assessment shall be made by such valuer in the manner prescribed (3) In fixing the standard rent of any premises part of which has been lawfully sub-let, the Controller may also fix the standard rent of the part sub-let.
(4) Where 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 such rent as would be reasonable having regard to the situation, locality and condition of the premises and 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.
(5) The standard rent shall in all cases be fixed for a tenancy of twelve months:
Provided that where any premises are let or re-let for a period of less than twelve months, the standard rent for such tenancy shall bear the same proportion to the annual standard rent as the period of tenancy bears to twelve months.
(6) In fixing the standard rent of any premises under this Section, the Controller shall fix the standard rent thereof in an unfurnished state and may also determine an additional charge to be payable on account of any fittings or furniture supplied by the landlord and it shall be lawful for the landlord to recover such additional charge from the tenant.
(7) In fixing the standard rent of any premises under this section, the Controller shall specify a date from which the standard rent so fixed shall be deemed to have effect:
Provided that in so case the date so specified shall be earlier than one year prior to the date of the filing of the application for the fixation of the standard rent.
xxx xxx xxx" THE SECOND SCHEDULE [See Sections 2(a) and 6(1)] Basic Rent
"1. In this Schedule, 'basic rent' in relation to any premises let out before the 2nd June, 1944, means the original rent of such premises referred to in paragraph 2 increased by such percentage of the original rent as is specified in paragraph 3 or paragraph 4 or paragraph 5, as the case may be.
2. 'Original rent', in relation to premises referred to in paragraph I, means-
(a) where the rent of such premises has been fixed under the New Delhi House Rent Control Order, 1939, or the Delhi Rent Control Ordinance, 1944 (25 of 1944), the rent so fixed; or
(b) in any other case,--
(i) the rent at which the premises were let on the 1st November, 1939, or
(ii) if the premises were not let on that date, rent at which they were first let out at any time after that date but before the 2nd June, 1944.
3. Where the premises to which paragraph 2 applies are let out for the purpose of being used as residence or for any of the purposes of a public hospital, an educational institution, a public library or reading room or an orphanage, the basic rent of the premises shall be the original rent increased by-
(a) 12 1/2 per cent thereof, if the original rent per annum is not more than Rs. 300;
(b) 15-5/8 per cent thereof, if the original rent per annum is more than Rs. 300 but not more than Rs. 600;
(c) 18-3/4 per cent thereof, if the original rent per annum is more than Rs. 600 but more than Rs. 1,200;
(d) 25 per cent thereof, if the original rent per annum is more than Rs. 1,200.
4. Where the premises to which paragraph 2 applies are let out for any purpose other than those mentioned in paragraph 3, the basic rent of the premises shall be the original rent increased by twice the amount by which it would be increased under paragraph 3, if the premises were let for a purpose mentioned in that paragraph.
5. Where the premises to which paragraph 2 applies are used mainly as a residence and incidentally for business or profession, the basic rent of the premises shall be the mean of the rent as calculated under paragraph 3 and 4."
4. The aforesaid are the relevant provisions of the Delhi Rent Control Act, 1958, which are material for determination of the point in issue. As is apparent from above, the definition of 'basic 'rent' under Section 2(a) and 'standard rent' under Section 2(k) are not inclusive definitions but are exhaustive in nature. Section 2(a) defines 'basic rent' in relation to premises let out before June 2, 1944 to mean the basic rent of such premises as determined in accordance with the provisions of the Second Schedule. Section 2(k) defines 'standard rent', with reference to any premises, to mean the standard rent referred to in Section 6 or where the standard rent has been increased under Section 7, such increased rent. Section 4 lays down that rent in excess of the standard rent is not recoverable. In other words, Section 4 imposes a statutory prohibition on the landlord not to charge any amount in excess of the standard rent. Section 4 goes to the extent of overriding any agreement for the payment of rent in excess of the standard rent. Section 6 enunciates various formulae for working out the standard rent in respect of different classes of premises. Sub- section (1)(A)(1) of Section 6 lays down the formula for determination of standard rent in the case of residential premises where such premises have been let out at any time before June 2, 1944. It provides that where the basic rent of a premises per annum does not exceed Rs. 600/-, the basic rent would be the standard rent. But in case the basic rent of the premises per annum exceeds Rs. 600/-, the basic rent together with ten per cent of such basic rent would be the standard rent. Sub-section (1)(A)(2) of Section 6 deals with the standard rent of residential premises which have been let out at any time on or after June 2, 1944 in respect of which rent has been fixed under the repealed Delhi and Ajmer-Merwara Rent Control Act, 1947 (19 of 1947), or the repealed Delhi and Ajmer Rent Control Act, 1952 (38 of 1952). This sub-section has two Clauses (a) and (b). While Clause (a) provides that if in respect of a premises rent per annum does not exceed Rs. 1,200/- the rent so fixed will be the standard rent, or if the rent per annum exceeds Rs. 1,200/-, the rent so fixed together with ten per cent of such rent would be the standard rent, Clause (b) lays down that in any other case, the rent calculated on the basis of ten per cent annum of the aggregate amount of the actual cost of construction and the market price of the land comprised in the premises on the date of the commencement of the constructions, would be the standard rent.
5. Section 6, Sub-section (1)(B)(1) provides for fixation of the standard rent of non-residential premises which have been let out at any time on or after June 2, 1944. As per this provision, the basic rent of such premises together with ten per cent of such basic rent is the standard rent. The proviso to the said provision deals with the case where the rent exceeds Rs. 1,200/- per annum. According to the proviso, in case the rent exceeds Rs. 1,200/- per annum, the basic rent of such premises together with fifteen per cent is the standard rent.
6. Sub-section (1)(B)(2)(a) of Section 6 lays down that where the non-residential premises have been let out at any time on or after the 2nd day of June, 1944 and in respect of which rent has been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947, or the Delhi and Ajmer Rent Control Act, 1952, and if such rent per annum does not exceeds Rs. 1,200/- the rent so fixed shall be the standard rent. Where such rent exceeds Rs. 1,200/- the rent so fixed together with fifteen per cent of such rent shall be the standard rent. As per Sub-section (1)(B)(2)(b) of Section 6, in any other case, the rent calculated on the basis of ten per cent of aggregate amount of the actual cost of construction and market price of the land comprised in the premises on the date of commencement of the construction is be considered as the standard rent.
7. Sub-section (2) of Section 6 starting with the non-obstante clause deals with three contingencies -- (a) in the case of any premises, whether residential or otherwise, constructed on or after 2nd day of June, 1951, but before the 9th day of June, 1955, the annual rent calculated with reference to the rent at which the premises were let for the month of march, 1958, or if they were not so let, with reference to the rent at which they were let out, is to be deemed to be the standard rent for a period of seven years from the date of completion of such premises, (b) in the case of any premises, whether residential or not, constructed on or after the 9th day of June, 1955, including premises constructed after the commencement of the Act but before the commencement of the Delhi Rent Control (Amendment) Act, 1988, the annual rent calculated with reference to the rent agreed upon between the landlord and the tenant when such premises were first let out is to be deemed to be the standard rent for a period of five years commencing from the date of such letting out, (c) in the case of any premises, whether residential or otherwise, constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988 and to which the provisions of the instant Act are made applicable by virtue of Clause (d) of Section 3 thereof, the rent calculated on the basis of ten per cent of the aggregate amount of the actual cost of construction of the premises and the market price of the land comprised in the premises on the date of commencement of the construction of the premises is to be deemed to be the standard rent.
8. Clause (c) of Sub-section (2) of Section 6 of the Act covers any premises, residential or other wise of recent vintage, constructed on or after the commencement the Delhi Rent Control (Amendment) Act, 1988 to which the provisions of the Act are made applicable by virtue of Clause (d) of Section 3 of the Act. According to this clause, standard rent in regard to such a premises will be ten per cent of the aggregate amount of the actual cost of construction of the premises and the market price of the land utilised in the premises on the date of commencement of the construction of the premises. Sub-section (1) of Section 7 permits accretion to the standard rent on account of expenditure incurred for any improvement, addition or structural alteration carried out in the premises. Under Section 8, the landlord wishing to increase the standard rent on account of improvement, etc. is required to issue a notice to the tenant and in case such increase is lawful under the Act it shall be due and recoverable in respect of the period of tenancy on the expiry of thirty days from the date of the issuance of the notice. Under Sub-sections (1) and (2) of Section 9, the Controller is empowered to fix the standard rent of any premises "having regard to" the principles set out in Section 6 or the provisions of Section 7 and 'any other relevant circumstances of the case'. It has been held in Balbir Singh and Ors. v. M.C.D. and Ors., , that the words "having regard to" and "any other relevant circumstances of the case" leave a certain measure of discretion to the Controller in fixing the standard rent. But this discretion is not such an unfettered or unguided discretion as to enable the Controller to fix any amount as standard rent which he considers reasonable. He is required to fix the standard rent (SIC) accordance with the 'principles laid down in Section 6 or Section 7 and these principles cannot be ignored by him. Even Sub-section (2) of Section 9 does not detract from these provisions. It, however, confers a marginal discretion to the Controller to mitigate the rigours of the formula where the circumstances of the case so require. Thus, the Supreme Court has clearly delineated the power of the Controller to fix the standard rent and this power is circumscribed by the provisions of Sections 6 and 7 of the Act. A contingency may arise where it may not be possible to determine the standard rent of any premises in consonance with the principles (SIC) forth in Section 6. In that eventuality the provisions of Sub-sections (1) and (2) of Section 9 will not be applicable. Such a situation would then fall within the parameters of Sub-section (4) of Section 9 according to which the Controller is empowered to fix reasonable rent having regard tot he situation, locality and condition of the premises and the amenities provided therein. Even this power of the Controller is hedged in by limitations. He is required to take into account the standard rent payable in respect of similar or nearly similar premises in the locality. The provisions dealing with standard rent, however, are not applicable where monthly rent of a premises, whether residential or otherwise, exceeds a sum of rupees thirty five hundred since the application of the Rent Act to such premises is excluded by Section 3 of the Act.
9. The situation which emerges from the aforesaid provisions is that prior to (SIC) coming into force of the Rent Control (Amendment) Act 57 of 1988, once the standard rent was fixed as per the principles laid down in Section 6 of the Act it could not be increased save and except on account of expenditure incurred for improvement, addition or structural alterations in the premises as contemplated under Section 7 of the Act. Even increase in the standard rent on that score was hardly of any significance being negligible. For all practical purposes standard rent was more or (SIC) static. This situation was sought to be remedied by insertion of Section 6A vide the Delhi Rent Control (Amendment) Act, 57 of 1988 6A starting with the non obstante clause provides that the standard rent, or where no standard rent is fixed under the provisions of this Act in respect of any premises, rent agreed upon between the landlord and the tenant, may be increased by ten per cent every three years. Even this provision has not been able to provide real succour to a landlord whose premises are fetching standard rent. The increase in the rent of a premises as a result of invocation of Section 6A is not commensurate with the fast dwindling money value. In real terms it has not been able to mitigate the rigour of Sections 4, 6 and 9 of the Act relating to standard rent, which have kept the rent at a low level. This has been exemplified by the petitioner by placing on record a chart marked C- 3, by means of an affidavit dated January 7, 2000. The chart, assuming rent of a hypothetical premises as Rs. 100/- in the year 1939-40, details the impact of Sections 6(1)(B)(1) read with second schedule and Section 6A thereon during a period 51 years as per below:
Rent in 1939-40 Rs. 100 Rent in 1947 unchanged Rs. 100 Rent in 1958 as per Section 6(1)(B)(1) Rs. 172.50 Rent in 1964 Rs. 172.50 Rent in 1980 Rs. 172.50 Rent w.e.f. 1.12.1988 when Section 6A was Rs. 198.75 inserted by the Delhi Rent Control (Amendment) Act 57 and 1988. Rent in 1994 as per Section 6A (revisable Rs. 208.72 after every three years) Rent in 1997 under Section 6A Rs. 229.59 Rent in 1998 Rs. 229.59
Thus, it is evident from the aforesaid example, that rent in a period of more than five decades recorded an increase of Rs. 129.59, out of which Rs. 57.09 accounted for addition under Section 6A of the Act. This appreciation is inconsequential. This will be reflected from the following date derived from Statistical Outline of India 1996- 1997 compiled by Tata Services Ltd., Department of Economics & Statistics, and relied upon in the aforesaid affidavit of the petitioner, which shows how over the years the value of rupee has fallen in relation to the wholesale price index, which has risen by leaps and bounds from 1939 onwards :
Rs. 100 in 1939 Rs. 100 of 1947 = Rs. 38.26 of 1939 Rs. 172.50 of 1958 = Rs. 46.47 of 1939 Rs. 172.50 of 1964 = Rs. 34.60 of 1939 Rs. 172.50 of 1975 = Rs. 12.95 of 1939 Rs. 172.50 of 1980 = Rs. 9.17 of 1939 Rs. 172.50 of 1988 = Rs. 5.31 of 1939 Rs. 189.75 of 1991 = Rs. 4.42 of 1939 Rs. 208.72 of 1994 = Rs. 3.66 of 1939 Rs. 229.59 of 1997 = Rs. 3.29 of 1939 Rs. 229.59 of 1998 = Rs. 2.97 of 1939
10. It is evident from above that buying capacity of Rs. 2.97 of 1939 is equivalent to buying capacity of Rs. 229.59 of 1998. In other words, Rs. 229.59 of 1998 has a value equivalent to Rs. 2.97 of 193. Therefore, the landlord in terms of actual money value is getting Rs. 2.97. This is a pittance and all because of Sections 4, 6 and 9 of the Act.
11. It may be noted that the respondents have not filed any reply to the affidavit of the petitioner dated November, 7, 2000. It appears that the respondents are not in a position to contradict the steep erosion in the value of rupee and the progressive increase in the wholesale price index during the years mentioned above. The position as of now has not improved. Rather the value of rupee has depreciated further. It is, therefore, apparent that the increase in rent under Section 6A is not commensurate with the fast dwindling value of rupee. There is a huge difference between the value of rupee of 1939, 1944, 1947 and 1958, etc. on one hand and as of today on the other hand. Yet the standard rent determined under Section 6 of the Act is tied to the past without there being any mechanism for raising the same to a reasonable extent to offset the erosion in the value of rupee. The so-called increase under Section 6A of the Act is an eye-wash. It does not dilute or neutralise the shackling effect of Sections 4, 6 and 9 of the Act on rents. It appears to us that Section 4, which bars recovery of rent of any premises in excess of standard rent except in certain circumstances, Section 6 of the Act, which lays down the principles for determining the standard rent, and Section 9, which empowers the Rent Controller to fix the standard rent to any premises on the basis of the principles set out in Section 6 of the Act, unduly and unreasonably fetter the rights of the landlords under Articles 14, 19(1)(g) and 21 of the Constitution.
12. The control of rents and evictions, which were initiated in the wake of partition and population explosion in Delhi, served a salutary purpose in the then prevailing situation. Over the years the restrictions and limitations imposed and continued by various rent control legislations, namely, the New Delhi House Rent Control Order, 1939; the Punjab Urban Rent Restriction Act, 1941; the Delhi Rent Control Ordinance, 1944; the Ajmer-Mewar Control of Rent and Eviction Order, 1946; the Delhi and Ajmer-Merwara Rent Control Act 19 of 1947; and Delhi and Ajmer-Merwara Rent Control Act 38 of 1952, the Delhi Rent Control Act, 1958, have curtailed the growth of housing in general and rental housing in particular. Even amendment of the Delhi Rent Control Act, 1958 by Act No. 57 of 1988 did not provide any incentive for construction of buildings for rental housing and failed to provide solutions to the problems. It was in this background that the Delhi Rent Control Bill, 1994 was tabled in the Parliament. The Bill was passed by both the Houses of Parliament and it was enacted on August 23, 1995 on receipt of the assent of the President of India, but did not come into force as the Central Government did not issue a notification as required by Sub-section (3) of Section 1 thereof. The statement of objects and reasons appended to the Bill read as follows:
"The relations between landlords and tenants in the national Capital Territory of Delhi are presently governed by the Delhi Rent Control Act, 1958. This Act came into force on the 9th February, 1959. It was amended thereafter in 1960, 1963, 1976, 1984 and 1988. The amendments made in 1988 were based on the recommendations of the Economic Administration Reforms Commission and the National Commission on Urbanisation. Although they were quite extensive in nature, it was felt that they did not go far enough in the matter of removal of disincentives to the growth of rental housing and left many questions unanswered and problems unaddressed. Numerous representations for further amendments to the Act were received from groups of tenants and landlords and others.
2. The demand for further amendments to the Delhi Rent Control Act, 1958 received fresh impetus with the tabling of the National Housing Policy in both Houses of Parliament in 1992. The Policy has since been considered and adopted by Parliament. One of its major concerns is to remove legal impediments to the growth of housing in general and rental housing in particular. Paragraph 4.6.2 of the National Housing Policy specifically provides for the stimulation of investment in rental housing especially for the lower and middle income group by suitable amendments to rent control laws by State Government. The Supreme Court of India has also suggested changes in rent control laws. In its judgment in the case of Prabhakaran Nair v. State of Tamil Nadu, the Court observed that the laws of landlords and tenants must be made rational, humane, certain and capable of being quickly implemented. In this context, a Model Rent Control Legislation was formulated by the Central Government and sent to the States to enable them to carry out necessary amendments to the prevailing rent control laws. Moreover, the Constitution (Seventy-Fifth Amendment) Act, 1994 was passed to enable the State Governments to set up State-level Rent Tribunals for speedy disposal of rent cases by excluding the jurisdiction of all Courts except the Supreme Court.
3. In the light of the representations and developments referred to above, it has been decided to amend the rent control law prevailing in Delhi. As the amendments are extensive and substantial in nature, instead of making changes in the Delhi Rent Control Act, 1958, it is proposed to repeal and replace the said Act by enacting a fresh legislation.
4. To achieve the above purposes, the present Bill, inter alia, seeks to provide for the following, namely:
(a) exemption of certain categories of premises and tenancies from the purview of the proposed legislation;
(b) creation of tenancy compulsorily to be by written agreement;
(c) compulsory registration of all written agreements of tenancies except in certain circumstances;
(d) limit the inheritability of tenancies;
(e) redefine the concept of rent payable and provide for its determination, enhancement and revision;
(f) ensure adequate maintenance and repairs of tenanted premises and facilitate further improvement and additions and alterations of such premises;
(g) balance the interests of landlords and tenants in the matter of eviction in specified circumstances;
(h) provide for limited period tenancy and automatic eviction of tenants upon expiry of such tenancy;
(i) provide for the fixing and revision of fair rate and recovery of possession in respect of hotels and lodging houses;
(j) provide for a simpler and speedier system of disposal of rent cases through Rent Authorities and Rent Tribunal and by barring the jurisdiction of all Courts except the Supreme Court; and
(k) enhance the penalties for infringement of the provisions of the legislation by landlords and tenants."
13. thus, it appears that the Parliament was conscious of the shortcomings in the Delhi Rent Control Act, 1958. It was also realised that the amendments made in 1988 did not boost the growth of rental housing and left many question and problems unaddressed including the problems stemming from pegging the rents at low levels. From a rational and humane angle a change was required.
14. When Sections 4, 6 and 9 of the Delhi Rent Control Act, 1958 were enacted there may have been a justification, but with the passage of time the provisions have fallen foul of Articles 14, 19(1)(g) and 21 of the Constitution due to changed circumstances. Even Section 6A has not been able to cure the defects.
15. The Supreme Court in Malpe Vishwanath Acharya and Ors. v. State of Maharashtra and Anr., 1997 (7) SCALE 786, has dealt with the question of a statute being justified when enacted but becoming arbitrary and unreasonable by passage of time. Relying upon the earlier decisions of the Supreme Court in State of Madhya Pradesh v. Bhopal Sugar Industries, ; Narotam Kishore Dev Varma and Ors. v. Union of India and Anr., ; H.H. Shri Swamiji of Admar Mutt, Etc. v. The Commissioner, Hindu Religious & Charitable Endowments Department and Ors., ; Bhaiyalal Shukla v. State of Madhya Pradesh, (1962) Suppl. 2 SCR 257; Rattan Arya and Ors. v. State of Tamil Nadu and Anr., (1986) 3 SCC 386; and Synthetics and Chemicals Ltd. and Ors. v. State of U.P. and Ors., , it came to the following conclusion:
"The aforesaid decisions clearly recognize and establish that a Statute which when enacted was justified may, with the passage of time, become arbitrary and unreasonable....
".....It is not necessary to examine the correctness of these details except to note that what was reasonable on 1st September, 1940 or in 1950s or in 1960s can no longer be regarded as reasonable at this point of time."
16. Since the fact situation prevailing in the year 1958 has undergone a sea change, Sections 4, 6 and 9 relating to standard rent have been rendered unjust, unreasonable and unfair as they have kept the standard rent yoked to the levels of the past, including the levels prior to the year 1944 [see Section 6 of the Act]. Even if Section 6A is applied to a situation where a landlord was getting Rs. 50/- per month as standard rent in respect of his premises, the increase would be only Rs. 5/- every three years. With such a meagre increase how would the landlord maintain himself, his family and the property. Obviously for fair, just and reasonable increase in rents will act as an incentive for people to build and maintain their premises.
17. The National Housing Policy of 1992 which was considered and debated in the Parliament provides for giving stimulus to investment in rental housing. One of its major aims is to remove legal impediments in the growth of housing in general and rental housing in particular. Just, fair and reasonable increase in the rents will certainly give impetus to rental housing. It is a misconception that only wealthy people construct houses. On the contrary, persons of modest means an those serving in the Government and public and private sectors also build houses by taking loans in the hope that they will be able to pay off the loans by letting out their premises. It is a well known fact that majority of flats and apartment buildings in Delhi have been allotted to persons belonging to low and middle income groups. They hardly fit in the mould of landlords. Their financial position is worse than some of the tenants.
18. The situation of landlords in respect of old commercial tenancies is no different than the position of landlords in respect of old residential tenancies. It is not uncommon that commercial properties rented long back are fetching very meagre rents, while the tenants running their trades in those properties are earning huge profits. This is an unjust and unreasonable situation. 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, the need to rationalise the rents and treat both sides fairly. 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. The Government and the employers in the public and private sectors in order to offset the effect of inflation compensate their employees by giving them dearness and other allowances which are increased from time-to-time, but the landlords who have let their properties since long and who are not in a position to get them back due to legal impediments are not lucky enough to be considered for grant of reasonable rents to minimise the effect of inflation. Since frozen rents are contributing to lack of interest in the people to build houses, it is contributing to growth of slums. This situation must be remedied. In case the present situation is allowed to continue it will also amount to wasting the much needed capital of the country. Reasonable increase in rents will not only generate income for the landlords, it will also generate increased taxes as higher rental income will give rise to higher collection of property tax and income tax from the landlords.
19. The Supreme Court, while dealing with the vires of the Bombay, Rents, Hotel and Lodging House Rates Control Act, 1947 as amended by Act 18 of 1987, in Malpe Vishwanath Acharya and Ors. v. State of Maharashtra and Anr. (supra), highlighted the baneful effect of frozen rentals in the context of dwindling money value and inflation. In this regard it kept in view the recommendation of various conferences, and reports and resolutions of Commissions and Committees including the report of the Economic Administrative Reforms Commission on Rent Control, commonly known as L.K. Jha Committee, which reads as follows:
"We now turn to the problem of existing tenancies. Many of these are very old and the rents were fixed a few decades ago. These old and frozen rents bear little relation to the present day maintenance costs, or to the current returns from alternative investments, or to the prevailing market rents in respect of new accommodation. In the case of new construction we have suggested that the periodical revision of rents should be based on a partial neutralisation of the effects of inflation. Applying the same principle to existing tenancies where rents have remained frozen for at least 5 years, what needs to be done is to update those rents by neutralising 50 percent of the inflation which has taken place from the time of initial determination of those rents up to the present time."
xx xx xx "Similarly in the case of existing tenancies, all that needs to be done is to provide a formula for updating the old frozen rents, and thereafter periodically revising them.
The Supreme Court also took note of Resolution No. 4 passed at the Conference of the Housing Ministers of all States held on May 21/22, 1987 which inter alia recommended as follows:
"xx xx xx 4.2.This conference urges upon the Government of India to formulate and communicate to the State Governments for necessary action suitable guidelines as soon as possible during the current year for their consideration so as to provide for the expeditious amendment of Rent Control Laws with a view to providing for:
(a) a reasonable return on investment in housing which will be comparable to, if no more favorable then, the return from and other avenues of investment,
(b) periodical upward revision of rents to neutralise the erosion in the real value of rents.
xx xx xx"
The Supreme Court referred to the unanimous recommendations of the Conference of the Chief Ministers of all States held at New Delhi in 1992 where one of the items for discussion related to static rents and the problems arising there from. Paras 4.3 and 4.4 of the recommendations, which were extracted therein read, as follows:
"4.3 The frozen rents have led to emergence of practices like key money. This apart from creating a black market in rental housing, the Act has reduced the accessibility of low income groups to rental housing, as they cannot afford to pay large deposits for rented premises."
"4.4. The widening divergence between the interests of landlords and tenants has not only led to increased litigation under Rent Control Acts (the rent control cases make for a majority of the case in Courts) but also to increased crimes.
A large number of criminal cases have their origin in disputes over rented properties."
xx xx xx "The important principle is that while the tenant will enjoy security of tenure in controlled premises, he should agree to pay a rent that provides adequate return on investment and provides for proper maintenance and taxes, so that he does not enjoy an unfair advantage over the landlord."
Besides, the aforesaid material the Supreme Court alluded to para 91 of the 12th report of Maharashtra State Law Commission on the rent control legislation which reads as follows:
"The Commission does not want the rents to be static for long. The inflationary trend reflected by the rising consumer price index numbers an all centres in the State makes it imperative to make an objective assessment of the situation at regular intervals so that the remedial action may be possible by periodical variation in rents according as the situation demanded. Suggestions for such periodical survey was also made to the Commission by various representatives in evidence. The Commission feels that such a periodical survey would be much helpful in maintaining the balance between the landlord and the tenant. The possibility of the inflationary trend receding in future -- though such possibility is not easy to entertain -- cannot be totally ruled out, in which case the rents could be brought down to a reasonable level. If on the other hand, the inflationary trend continues unabated, then a reasonable rent increase may have to be resorted to, it is true that the Government can always stake stock of the situation and came up with an appropriate measure to meet the situation at any given time. But he Commission does not want to leave the matter to an action being thought of by the Government. The Commission thinks that it would be proper to make a specific provision in the unified Act which would cast an obligation on the Government to hold periodical reviews and to take effective actions for rent variations according as the circumstances may warrant."
xx xx xx "In big cities like Bombay, a large number of slums have come into existence. If the rigours of the Rent Act had not been there, new house would have been constructed. At present 30 lakhs of people in the city of Bombay stay in slums and 1 1/2 lakhs on payment. If new buildings had been constructed, people who stay in slums today might have been a position to get some decent accommodation."
xx xx xx "The increase in the standard rent must be considered from the point of view of the Consumer Price Index.
It was pointed out to the Commission that 46 percent of the land belong to low income group, 27 percent belong to middle income group, and only 25 percent belong to the higher income group. These figures will indicate that 75 percent of the so-called landlords are really people who depend upon the rent of the property for their livelihood. To designate them as 'landlords' itself is undesirable. When one considers the financial position of the tenants, compared to the positions in 1940s, one clearly sees that the monthly income of these tenants has gone up from 100 to 400 at least. However, there has not been a proportionate increase in the rents."
Keeping in view the aforesaid reports and resolutions, the Supreme Court observed as follows:
"17. A perusal of the aforesaid extracts of reports and resolutions clearly demonstrates that since the last two decades the authorities themselves seem to be convinced that the pegging down of the rents to the pre war stage and even thereafter, is no longer reasonable. Unfortunately apart from lip service little of note has been done. Even the Rent Control Bill introduced in 1993 has not yet become law."
20. The aforesaid observations of the Supreme Court base don the recommendations, reports and resolutions of the various Commissions and Committees squarely apply to the situation which is prevailing in Delhi due to stranglehold of Sections 4, 6 and 9 of the Delhi Rent Control Act, 1958 on the rents.
21. The provisions dealing with standard rent do not take into account the ever rising consumer price index and the huge costs required for maintaining the tenanted premises. There is also no justification for not updating the near frozen rents in view of he returns from alternative investments. Frozen rents and difficulty of securing eviction of tenants have resulted in illegal transactions like key money and pugree. One of the ramifications of static rents is that people belonging to lower income groups are unable to pay large sums on account of key money and pugree thereby reducing their accessibility to rented premises. Despite the fact that the Delhi Rent Control Act was amended by Act No. 18 of 1987, pegging of rents to low levels, where the rent of a premises is less than Rs. 3,500/- per month, still persists. While the salaries of the employees and house rent allowance of the Government employees have gone up, no real relief has been given to the landlords for offsetting inflation.
22. The Supreme Court in Prabhakaran Nair etc. v. State of Tamil Nadu and Ors., , stressed the need for rationalising the rent legislation. In this regard the Supreme Court observed as follows:
36. It is common knowledge that there is acute shortage of housing, various factors have led to this problem. The laws relating to letting and of landlord and tenant in different States have from different States' angles tried to grapple the problem. Yet in view of the magnitude of the problem, the problem has become insoluble and the litigations abound the people suffer.
More houses must, therefore, be built, more accommodation and more spaces made available for he people to live in, the law of landlord and tenant must be made rational, human, certain and capable of being quickly implemented. Those landlords who are having premises in their control should be induced and encouraged to part with available accommodation for limited periods on certain safeguards which will strictly ensure their recovery when wanted. Men with money should be given proper and meaningful incentives as in some European countries to build houses, tax holidays for new houses can be encouraged. The tenants should also be given protection and security and certain amount of reasonableness in the rent. Escalation of prices in the urban properties, land materials and houses must be rationally checked. This country very vitally and very urgently requires a National Hosing Policy if we want to prevent a major breakdown of law and order and gradual disillusionment of people. After all shelter is one of our fundamental rights. New rational housing policy must attract new buildings, encourage new buildings, make available new spaces, rationalise the rent structure and rationalise the rent provisions and bring certain amount of uniformity though leaving scope for sufficient flexibility among the States to adjust such legislation according to its needs. This Court and the High Court should also be relieved of the heavy burdens of these rent litigations. Tier of appeals should be curtailed. Laws must be simple, rational and clear. Tenants are in all cases not the weaker sections. There are those who are weak both among the landlords as well as the tenants. Litigations must come to end quickly. Such new Housing Policy must comprehend the present and anticipate the future. The idea of a National Rent Tribunal on an All India basis with quicker procedure should be examined. This has become an urgent imperative of today's revolution. A fast changing society cannot operate with unchanging law and preconceived judicial attitude.
23. Thus, it is apparent that there is an acute need to balance the rights of the tenants on the one hand and the landlords one the other. Besides, it cannot be disputed that the need of the hours is to give fillip to construction for rental housing. In case the rents remain shackled to low levels or they are hiked beyond proportion, the desired results will not be achieved. The provisions of Section 4, 6 and 9 cannot be upheld as they are keeping the rents chained to low level which render them arbitrary. This unreasonable and unfair restriction needs to be eliminated from the provisions dealing with standard rent.
24. Ms. Geeta Mittal, learned Counsel for the Union of India submitted that the Supreme Court in D.C. Bhatia and Ors. v. Union of India and Ors., , has upheld the provisions of the Delhi Rent Control Act, 1958, and, therefore, the challenge to Sections 4, 6 and 9 thereof must be rejected. She also submitted that the provisions are reasonable and the grievance of the petitioner is not well founded.
25. In so far as the judgment of the Supreme Court in D.C. Bhatia (supra) is concerned, the same dealt with vires of Section 3(c) of the Delhi Rent Control Act which has exempted premises fetching monthly rents exceeding Rs. 3,500/- from the operation of the Act. In that case the Supreme Court was not dealing with the vires of Sections 4, 6 and 9 of the Act.
26. The Supreme Court in Malpe Vishwanath Acharya v. State of Maharashtra (supra) highlighted the deleterious effect of the non provision in the rent legislation for reasonable increase in the rentals. In this regard, it was observed as follows:
".....Even so with the rapid increase in the expenses for repair and other outgoing and the decreasing net 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 the time, is leading to arbitrary results..."
xx xx xx That the tenants are, by and large, now getting an unwarranted benefit or windfall can also be illustrated by taking an example of a hypothetical tenant, i.e. an Assistant in the Government of India posted at Bombay in the year 1948. At that time the pay scale of the Assistant was Rs. 160-10-300-15-450+20% H.R.A.=Rs. 15.50 C.A.A. On the basis that he was drawing the maximum of scale, his total monthly emoluments would be Rs. 485.50 and if he had in 1948 taken premises on rent at Rs. 100/- per month, he would be paying approximately 20% of his total emoluments by way of rent, without taking into consideration any deduction for repairs. That Assistant in 1997, after the report of 5th Pay Commission, would get a maximum basic salary of Rs. 9000 + 30% H.R.A. + Rs. 200 p.m. as CCA making the total emoluments of Rs. 11900/- p.m. After taking into consideration the 1987 increase in rent, he would be paying about Rs. 170/- p.m. in respect of the same premises instead of Rs. 100/- which he was paying in 1948. This enhanced rent, would, however, represent only 0.9% of his salary. With the passage of time, the percentage of rent which would be paid by that hypothetical tenant would have gone down from 20% of his total salary to only 0.9% and this would be the case of most of the tenants as we can take judicial notice of the fact that from 1948 till now, incomes have increased considerably, whereas the rent has increased only from Rs. 100/- p.m. to Rs. 170/- p.m."
"On the other hand, in the aforesaid example, the hardship to the landlord is that it was only in 1940 that he had agreed to accept rent of Rs. 100/- p.m. That was the real income from rent which he had agreed to receive. Now with the increase in taxes, etc., he gets only Rs. 54/- p.m. whereas in 1940, he got Rs. 100/- minus Rs. 21.54 (municipal tax) i.e. Rs. 78.46. So not only is he getting lesser amount in hand but in terms of real value, after taking inflation into account, he is getting only a pittance. For Rs. 100/- p.m. of gross rent which he was getting in 1940, he now in 1997 gets a gross rent of about Rs. 170/- which in real money terms, after taking the inflation into account, will be only about Rs. 2/- p.m. of the 1940 value. Had the Rent Control Act not been in force the landlord today may have been able to get todays equivalent of Rs. 100/- of 1940s rent i.e. about Rs. 6,600/- p.m."
xx xx xx "It is true that whenever a special provision, like the Rent Control Act, is made for a section of the society it may be at the cost of another section, but the making of such a provision or enactment may be necessary in the larger interest of the society as a whole but the benefit which is given initially if continued results in increasing injustice to one section of the society and an unwarranted largesse or windfall to another, without appropriate corresponding relief, then the continuation of such a law which necessarily, or most likely leads to increase in law lessness and undermines the authority of the law no longer be regarded as being reasonable. Its continuance becomes arbitrary.
The Legislation itself, as already noticed hereinabove, has taken notice of the fact that puggrie system has become prevalent in Mumbai because of the Rent Restriction Act. This Court was also asked to take judicial notice of the fact that in view of the unreasonably low rents which are being received by the landlords, recourse is being taken to other methods to seek redress. These methods which are adopted are outside the four corners of the law and are slowly giving rise to a state of law lawlessness where, it is feared, the Courts may become irrelevant in deciding disputes between the landlords and tenants. This should be a cause of serious concern because if this extra judicial backlash gathers momentum of main suffers will be tenants, for whose benefit the Rent Control Acts are framed.
In so far as social legislation, like the Rent Control Act is concerned, the law must strike a balance between rival interest and it should try to be just to all. The law ought to be unjust to one and give a disproportionate benefit or protection to another section of the society. When there is shortage of accommodation it is desirable, nay, necessary that some protection should be given to the tenants in order to ensure that they are not exploited. At the same time such a law has to be revised periodically so as to ensure that a disproportionately larger benefit than the one which has intended is not given to the tenants. It is not as if the Government does not take remedial measures to try and offset the effects of inflation. In order to provide fair wage to the salaried employees the Government provides for payment of dearness and other allowances from time-to-time. Surprisingly this principle is lost sight of while providing for increase in the standard rent--the increase made even in 1987 are not adequate, fair or just and the provisions continue to be arbitrary in todays context.
When enacting socially progressive legislation the need is greater to approach the problem from a holistic perspective and not have a narrow or short sighted parochial approach. Giving a greater than due emphasis to a vocal section of society results not merely in the miscarriage of justice but in the abdication of responsibility of the Legislative Authority. Social legislation is treated with deference by the Courts not merely because the Legislature represents the people but also because in representing them the entire spectrum of views is expected to be taken into account. The Legislature is no shackled by the same constraints as the Courts of Law. But its power is coupled with a responsibility. It is also the responsibility of he Courts to look at legislation from the alter of Article 14 of the Constitution. This Article is intended, as is obvious from its words, to check this tenancy, giving undue preference to some over others."
27. In Issac Nina v. State of Kerala, 1995 (2) KLT 848, the Kerala High Court while dwelling nt he issue of the vires of the Buildings (Lease and Rent Control) Act, 1965 (Kerala) held as follows:
".....what was once a non-discriminatory piece of legislation may in course of time become discriminatory and be exposed to a successful challenge on the ground that it violated fundamental rights of the Constitution."
".....As held by the Supreme Court in Inder Mohan Lal v. Ramesh Khanna, , there is no presumption in all case that the tenant are weaker sections. By lapse of time the tenants (at least many of them) doing business in commercial buildings taken on rent are far more affluent financially than the owners of the building in which they do business. Though the rent control legislation is stated to be a beneficial one, it must be reasonable, just and fair. It is true that there is a presumption as to the constitutionality of the provision of a legislative enactment and the Act should be so read as to prevent it from being exposed to the vice of unconstitutionality. But the presumption will stand rebutted if the scrutiny of the impugned provision would unmistakably establish that it violates a fundamental right."
".....The Supreme Court held in State Madras v. V.C. Row, , that reasonableness of the restriction is to be considered both from the point of substantive law as well as procedural law. In deciding the reasonableness of the restriction several circumstances such as the purpose of the Act, the condition prevailing in the country at the time enactment, duration of the restriction, extent and nature of the restriction, are to be taken into consideration."
"Disparity between the cost of living or the rupee value in 1965 and 1995 is so massively vast it is absolutely unrealistic to act on the former for any final reckoning as for the latter. If a building was leased out in 1950, the property tax would have been, from the angel of today's money value, a piffling. The requirement in Section 5(2) that the Court shall take into consideration the property tax fixed at the time of lease, if to be followed in 1995 in respect of a building leased in 1950, the result would be ostensibly unjust and unreasonable. We bear in mind that no provision is included in the Act for updating according to the rupee value while fixing the fair rent."
"Nor can we shut our eyes to the other side of the picture. A tenant who took the building for commercial purposes in 1950 could increase turnover of his business many times and as a corollary his margin of profit would have enhanced leaps and bounds. But the person who built the building (in which the tenant conducts the business) is entitled to get a rent based on 1950 money value. Similar position arises in the case of a residential building. The tenant who occupies the building would have augmented the resources or at least his income today is on par with the present money value. But the man who invested money to build a house in which the tenant is residing is entitled to get rent only at the rate based on the money value which prevailed at the time of letting."
"Apart from the fact that the impugned provisions are unjust and unreasonable as they offend Article 14 of the Constitution, we may say that those provisions would offend Article 19(1)(g) also."
"We are, therefore, of the opinion that the impugned provisions do not stand the test of reasonableness. Accordingly, we declare that provisions relating to fair rent, i.e., Sections 5, 6 and 8 of the Act, put together are ultra vires the Constitution of India and are void."
28. Applying the same rationale as was applied by the Supreme Court in Malpe Vishwanath Acharya (supra) and the Kerala High Court in Issac Nina (supra), we are of the view that Sections 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, do not pass the test of reasonableness. The provisions are archaic. They contain no mechanism to compensate the landlords to offset inflation. There ought to be a mechanism to increase the agreed rents keeping in vie the price index. The landlords are being treated arbitrarily, unreasonably and unfairly affecting their livelihood and in turn right to life and avocation. These provisions relating to standard rent, therefore, offend Articles 14, 19(1)(g) and 21 of the Constitution.
29. Accordingly, the writ petition succeeds. The rule is made absolute and Sections 4, 6 and 9 of the Delhi Rent Control Act, 1958, are held ultra vires the Constitution.
30. Writ Petition allowed. Rule made absolute.