Analysis of Delhi Rent Control Act,1958

The Author, Harleen Kaur, is 4th year student of University School of Law and Legal Studies. She is currently interning with LatestLaws.com.

Introduction

The main purpose of introducing the Rent Control Act, 1958 in India is to protect the rights of tenants, give them security and restricts the landlords in their ability to evict their tenants. This Act has been designed for each and every state in India separately. Therefore, here we are discussing some significant points of the Delhi Control Act, 1958.

The Delhi Rent Control Bill was been passed by both the Houses of Parliament and received the assent of the President on 31st December, 1958. It came into force on 9th February, 1959 as The Delhi Rent Control Act, 1958. It extends to the areas included within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and to such urban areas within the limits of the Municipal Corporation of Delhi. The courts are under a legal compulsion to harmoniously read the provisions of the Act so as to balance the rights of the landlord and the obligations of the tenant and landlord toward each other.

Rent Control Acts (RCAs), including The Delhi Rent Control Act 1958, are meant to fulfill two main purposes:

protect the tenant from having to pay more than a standard rent.
to protect the tenant from arbitrary eviction.

If the amount of rent albeit a property is less than Rs. 3,500/- then the provisions of the Delhi Rent Control Act, 1958 will apply; however, if the amount of rent albeit a property is more than Rs. 3,500/- then, the provisions of the Transfer of Property Act, 1882 will apply. If the amount of rent charged is Rs. 3,500/- exact, then the provisions of the Delhi Rent Control Act, 1958 will apply.

The provisions of this act shall apply to all the hotels and lodges covering in the jurisdiction and the controller shall have all the rights to fix the fair rate to be charged for any boarding/lodging.

Important Terms in the Act

Landlord- A person who is either being entitled to receive the rent (trustee, guardian) or receiving the rent on account of premises that has been lent to the tenant. (section 2(e) of Delhi Rent Control Act, 1958).
Standard Rent-As defined under Section 6 of the Delhi Rent Control Act, 1958,

Section 6(1) (A) (1) 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 percent 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:

If the rent of such premises have been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947, or the Delhi and Ajmer Rent Control Act,1952.

The rent so fixed in case it does not exceed Rs. 1200 per annum.
In case the rent so fixed exceeds Rs. 1200, then, the rent together with 10 percent of such rent.

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

The basic rent plus 10 percent of such rent. In case such rent calculated exceeds Rs.1200 per annum, then the basic rent plus 15 percent of such rent.

Section 6(1) (B) (2) states that in cases of non residential premises let out on or after the 2nd day of June, 1944 the standard rent means:

If the rent of such premises have been fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947, or the Delhi and Ajmer Rent Control Act,1952.

The rent so fixed in case it does not exceed Rs. 1200 per annum.
In case the rent so fixed exceeds Rs. 1200, then, the rent together with 15 percent of such rent.

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.

The term landlord not only includes the owner but also the person who collects the rent on behalf of the owner, and moreover this definition includes the legal representatives of the owner of the premises, as has been held in the case of Pukhraj Jain v. Padma Kashyap, AIR 1990 SC 1133.

In the case of Imtiaz Ali v. Nasim Ahmed, AIR 1987 Delhi 36, it was held that even a person holding a general power of attorney, and thus, empowered to collect the rent on behalf of the owner of the premises, will come within the ambit of the expression ‘landlord’.

In the case of Emperor v. Dattatraya Sitaram, AIR 1948 Bom 239, it was held that, even a clerk empowered to collect rent comes within the periphery of the expression ‘landlord’.

Jurisdiction

It extends to the areas included within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and to such urban title, extent areas within the limits of the Municipal Corporation of Delhi as are specified in the First Schedule and the Central Government can extend the limits of this act to any other urban area by specifying through the Notification in the Official Gazette.

The proceedings under the provisions of the Delhi Rent Control Act, 1958 take place before the Rent Controller.

Central Government appoints rent controller by notification in the Official Gazette under section 35 of Delhi Rent Control Act, 1958

Section 50 of the Delhi Rent Control Act, 1958 bars the jurisdiction of the Civil Court, but however states as follows by virtue of sub-section (4):

“Nothing in sub-section (1) shall be construed as preventing a civil court from entertaining any suit or proceeding for the decision of any question of title to any premises to which this Act applies or any question as to the person or persons who are entitled to receive the rent of such premises.”

In the case Mitter Sen Jain v/s Shakuntala Devi, 85(2000)DLT658(SC); (2000)9SCC720, it was held that even if any new area is included within the urban area of Municipal Corporation of Delhi, a further notification is required to be issued under proviso to Sub-section (2) of Section 1 of the Delhi Rent Control Act. Unless the area is so specified in the Schedule by a notification, the provisions of the Delhi Rent Control Act cannot be made applicable to that area.

It is quite essential to ascertain whether the person to whom the rent is deposited is actually the landlord or not. This is because, the very basis of the jurisdiction of the rent controller lies on the premise that there should be a landlord-tenant relationship existing between the parties to the dispute. If no such relationship exists then, it might oust the court of its jurisdiction under the concerned rent control legislation. In the case of Gomti Devi v. Om Prakash & Anr, 15 (1979) DLT 291, it was held that the landlord-tenant relationship can be proved by oral evidence and documentary evidence is not necessary.

Circumstances where the Act shall not be Applied [ Section 3, Delhi Rent Control Act, 1958]

to any premises belonging to the Government;
to any tenancy or other like relationship created by a grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government.

Unlawful Charges not to be Claimed or Received [ Section 5, Delhi Rent Control Act, 1958]

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.
No person shall, in consideration of the grant, renewal or continuance of a tenancy or sub-tenancy of any premises,
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
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.
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 or sub-tenancy, as the case may be, of any premises.
Nothing in this section shall apply-
to any payment made in pursuance of an agreement entered into before the 1st day of January, 1939: or
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.

Lawful increase of Standard Rent in certain Cases [Section 7, Delhi Rent Control Act, 1958]

Where a landlord has at any time, 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 year by an amount not exceeding seven and one-half per cent, of such cost.
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.

Notice of Increase in Rent [Section 8, Delhi Rent Control Act, 1958]

Where a landlord wishes to increase the rent of any premises, he shall give the tenant notice in writing of his intention to make the increase and in so far as such increase is lawful under this Act, 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, 1882.

Eviction of Tenants [Section 14, Delhi Rent Control Act, 1958]

The landlord cannot evict any tenant without any valid reason. The circumstances under which a tenant can be evicted are mentioned below, but in those cases also the landlord has to make an application to the Controller for the recovery of the possession on the below mentioned grounds:

The tenant has neither paid nor tendered the whole of the arrears of the rent legally recoverable from him within two months of the date on which a notice of demand for the arrears of rent has been served on him.
Without obtaining the consent of the landlord in writing, the tenant has sub-let, assigned or parted with the possession of the premises.
The premises were let for use as a residence and neither the tenant nor any member of his family has been residing therein for a period of six months immediately before the date of the filing of the application for the recovery of possession thereof.
That the premises let for residential purposes are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation. The premises let for residential purposes which having been let for use as a residence are, without the consent of the landlord, used incidentally for commercial or other purposes.
The premises have become unsafe or unfit for human habitation and are required bona fide by the landlord for carrying out repairs which cannot be carried out without the premises being vacated.
The premises are required bona fide by the landlord for the purpose of building or re-building or making thereto any substantial additions or alterations and that such building or re-building or addition or alteration cannot be carried out without the premises being vacated
The premises were let to the tenant for use as a residence by reason of his being in the service or employment of the landlord, and that the tenant has ceased, , to be in such service or employment.

The landlord requires the premises in order to carry out any building work at the instance of the Government or the Delhi Development Authority or the Municipal Corporation of Delhi in pursuance of any improvement scheme or development scheme and that such building work cannot be carried out without the premises being vacated.

In Freddy Fernandes v. P. L. Mehra, 1973 R.C.R. 53(2), the case-law on the meaning of the expression bona fide as used in clause (e) was reviewed and it was held that the bona fides of the claim could be subjective only insofar as the landlord has the right to choose between alternative accommodations according to his convenience. If one of them is more convenient to him than the other, he is entitled to choose the one which is more convenient. But the extent of his need cannot be left to his fancy. It has to be reasonable in the circumstances of the case. In that sense the need has to be objectively judged.

In Ram Narain v. Lakshmi Dass Kundra, AIR 1971 Delhi 268 the landlord lived on the first floor and wanted the additional accommodation from the tenant on the first floor. The ground floor was used for commercial purposes. The landlord was not bound to convert the accommodation on ground floor into residential purpose but was justified in wanting the residential accommodation on the first floor adjoining his own accommodation for a residence. A landlord cannot be precluded from claming back possession of a portion of his property merely because he has lived uncomfortably in the past and has decided to now live more comfortably, leading to the institution of a petition for eviction by him on the ground of personal requirement.

In Madan Lal vs Hema Wati, ILR 1970 Delhi 519 merely because the wife of the landlord is earning her independent living, and, therefore, is not dependent on him cannot mean that while considering the needs of the landlord the needs of his wife have to be ignored. Likewise, the needs of the adult independent son, who normally is accustomed to live with his father, cannot be ignored, when considering the needs of the father. The words "for himself" have to be interpreted to mean "for himself as living along with his family members, with whom he is normally accustomed to live." This interpretation has to be adopted when there is nothing to cast any doubt on the bona fides of the landlord, when he makes such a claim. The phrase "or for any member of his family dependent on him", occurring in the clause is designed to meet an altogether different objective. If the landlord himself is not to reside in the premises, as for instance, when he lives outside Delhi, he still is entitled to claim ejectment of his tenant, if the premises are required "for any member of his family dependent on him" or "for whose benefit the premises are held".

In V. Dhanapal Chettiar v. Yesodai Ammal, AIR 1979 SC 1745, a seven judge bench of the Supreme Court of India, held that, In order to get a decree for eviction against the tenant, the notice is not necessary. The tenant continues to be a tenant even thereafter, that post the serving of the eviction notice. The landlord is under a duty to make out a case from the grounds mentioned under the concerned rent control legislation, and it shall be sufficient to have the eviction thereafter.

In the case of Priya Bala Ghosh v. B.L. Singhania, AIR 1992 SC 639, it was held that rent can be tendered by money order, and in case if the money order is sent within time but it reaches late to the landlord, then, it would be deemed as a valid tender.

Sub-Tenancy

According to section 17 of the Delhi Rent Control Act, 1958, the tenant has to give notice to the landlord of the creation of the sub-tenancy within one month of the date of such sub-letting and notify the termination of such sub-tenancy within one month of such termination.

In the case Raghubir Singh Vs. Savitri Devi and ors., AIR1974Delhi108; 9(1973)DLT352; 1973RLR331 it was stated by the court that, “as a matter of construction of the relevant provisions of the 1958 Act, there is abundant authority for the proposition that even a deemed lawful sub-tenant has to serve the requisite notice in order o acquire the status of a tenant and to claim protection from eviction in execution of a decree for eviction passed against the tenant on any of the grounds mentioned in Section 14 of the Act.”

In Shri Roshan Lal v. Bhagwati Devi and others, 1969 the Delhi High Court held that a sub-tenant in lawful occupation of the premises, on eviction of the tenant, does not become tenant automatically under Section 18 of the 1958 Act. It was further observed that notice under Section 17 of the Act is necessary as a condition precedent for claiming the status of a tenant.

In the case of, Hiralal Kapur v. Prabhu Choudhury, AIR 1988 SC 852, it was held that if the landlord accepts the rent from the sub-tenant, it does not create a sub- tenancy.

Deposit of Rent [Section 27, Delhi Rent Control Act, 1958]

Every tenant shall pay rent by the time fixed by the contract or in the absence of such contract, by the fifteenth day of the month next following the month for which it is payable.
The landlord is liable to provide the written receipt for the amount paid by the tenant as rent and in case the landlord refuses to give such receipt to the tenant, then the tenant has the right to approach the controller who as a consequence of this application can direct the landlord to provide the receipt within two months from the date of payment made by the tenant.
The tenant has to deposit the rent within 21 days from the due date mentioned in the agreement or from 15 days limit fixed thereon.

Landlord’s Perspective

The Delhi Rent Control Act 1958 is largely considered tenant-friendly and hasn’t helped the cause of landlords.
The low rates of return act as disincentives to repair and maintain the property, often resulting in building collapse.
Prospective landlords are deterred from entering the rental market, preventing the supply of new stock.
Restricting revision of rent - The 1958 Act has no mechanism to bring the historical rent to the present market rate and gives a tenant the luxury to pay less than Rs 3,500 per month in perpetuity. An amendment in 1988, though, allowed landlords to increase rent by 10 per cent every three years. In case the landlord has incurred any expenditure for any improvement, addition or structural alteration in the premises and the cost of the improvement, addition or alteration has not been taken into account in determining the rent of the premises, he may lawfully increase the standard rent per year.
Difficulty in evicting tenant - The conditions under which a landlord can evict a tenant are stringent and strictly monitored, and rarely can the landlord extricate the property.
High cost of maintaining property - Under the controlled regime in case of old tenancies where the rents have been frozen at historical low levels the cost of maintenance of these old properties is higher. The older housing stock thus faces premature decay and degradation as the landlord finds it difficult to maintain it.

Tenants Perspective

The Delhi Rent Control Act 1958 was also meant to protect tenants’ interests and although it has served them well, the law became a tool to harass landlords over the next decades.

Outstation students studying at colleges in Delhi pleads that the defunct state of the law allows landlords to exploit them. These students, miles away from home, are the most defenseless lot of tenants and do not possess any choice but to heed to the demands of their landlords.
Protection against Eviction –

A tenant cannot be arbitrarily asked by a landlord to vacate his premises.
Only non-payment of rent or discreet subletting are the two technical defaults committed by a tenant that allowed a landlord to take back his property.
Heirs of statutory tenant are entitled to same protection against eviction as affordable to tenant under the Delhi Rent Control Act.

Conjoint reading of the following two case-laws: Damadilal & Ors v. Parashram & Ors, 1976 (4) SCC 855 and Gian Devi Anand v. Jeevan Kumar & Ors, 1985 (2) SCC 683, settles the position of law on this score, stating that, statutory tenancies under both- commercial and residential tenancies can be inherited.

Model Tenancy Act 2019

The housing ministry on July 10, 2019 placed in public domain for suggestions, a policy that would act as the model act for states and union territories (UTs) to regulate this segment.
The Model Tenancy Act, 2019, takes forward what was proposed in the Draft Model Tenancy Act, 2015.
The policy also does not have any retrospective effect. It means existing rental contracts remain outside the purview of the policy.
There are two notable changes that have been made in the 2019 policy;

In order to bring transparency, fix accountability and promote fairness in the rental housing segment, the policy proposes setting up of a rent authority.
In case of a dispute, landlords and tenants will have to approach the rent authority for settlement. In case they are not satisfied with the order of the authority, they can challenge it in the rent court/rent tribunal within 30 days from the date of the order. The court/tribunal should not take more than 60 days to dispose the case, adds the policy.

Security deposit: Landlords cannot seek an amount more than two month’s rent as security deposit. This deposit would be returned to the tenant.
Rent revision: The policy states that if a rent agreement is made for a specific period, the landlord cannot increase the rent amount within this period, unless a provision to that effect has been expressly stated in the agreement. The landlord will have to give a written notice, three months in advance before revising the rent. Landlords can increase the rent if they have incurred expenditure on account of improvement, addition, or structural alteration which does not include ‘repairs.’
Entering the rented premises: The landlord must give the tenant a notice of 24 hours in advance (this could be sent using any electronic medium) to enter the premise. The visiting time has to fall between 7 am to 8 pm.
Maintenance of the rented premises: The responsibility to maintain the premises lie with both the parties. The rent agreement will have to specifically mention who takes care of what, in case of damages. If the responsibility lies with the landlord and he refuses to do the needful, the tenant can deduct the money he spent on the same in the monthly rent. In a reverse situation, the landlord can deduct the amount from the security deposit. In case the amount is larger than the deposit, the tenant will be liable to pay the balance.
Subletting: Tenants cannot sublet part of whole of the rented building without the prior permission from the landlord. If they have permission to do so, tenants cannot charge an amount more than the rent they pay themselves.
Compensation for overstay: After the termination of the rent period, the landlord will be liable to get double the monthly rent for two months and four times the monthly rent thereafter, for the use and occupation by the tenant.
Eviction: The landlord could move the rent court in case the tenant does not pay rent for two months. If the tenant corrects the situation within one month of the matter reaching court, they will be allowed to stay, if this is their only default in the course of that year. In case the premises are not fit for habitation, the tenant would be within his right to leave it after serving a 15-day notice period.