Delhi Rent Control Act 1958 – An Analysis
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 toward each other.
Rent Control measures become necessary when demand for rental property far outstrips the supply and tenants become vulnerable to exploitation by the landlords. These 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, and to protect the tenant from arbitrary eviction.
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 have turned renting almost into a welfare activity for the landlord and act as disincentives to repair and maintain the property, often resulting in building collapse. The quality of housing, therefore, takes a severe beating. Prospective landlords are deterred from entering the rental market, preventing the supply of new stock.
Restricting revision of rent
According to Section 6A of the 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. 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. The law clearly states that all those paying less than this amount will be protected. An amendment in 1988, though, allowed landlords to increase rent by 10 per cent every three years. In effect, a tenant who was paying Rs 10 as rent in 1988 would hit the Rs 3,500 ceiling after 184 years. Even somebody paying Rs 1,000 in 1988 would cross the mark in 2027.
In case the landlord has incurred any 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 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 second weakening effect of Act is the difficulty a landlord faces in evicting a tenant. The conditions under which a landlord can evict a tenant are stringent and strictly monitored, and rarely can the landlord extricate the property. The Delhi Act has provisions that allow dependents of the tenant to continue tenancy after his death, making dissolving the tenancy next to impossible for the landlord.
Another defect of the regime is the mismatch between a tenant’s ability to pay rent and the type of accommodation available. Rent control measures involve substantial administrative costs due to the elaborate mechanism involved in implementing the Act. Tenants are emboldened by the law to resort to subletting and making modifications in the buildings without the consent of the owner.
High cost of maintaining property
Under the controlled regime, rents continue to remain at a low level whereas the cost of maintenance continues to increase. The situation is more severe in case of old tenancies where the rents have been frozen at historical low levels. It is in case of these old properties that the need for maintenance is higher. The older housing stock thus faces premature decay and degradation as the landlord finds it difficult to maintain it.
Eviction from Commercial Premises Permitted
The Delhi Rent Control Act, 1958 restricted eviction of tenants from commercial premises mainly because of the limited commercial space available in the city at that time. But that was a long time back. Now the scenario has undergone a sea change and a fairly large number of buildings and premises were now available on rent for non-residential and commercial purposes.
Reversing a full Bench judgment of the Delhi High Court which had refused to alter the law in favour of the landlords on the ground that it had been in force for more than 45 years, the Supreme Court had said the HC failed to see that the provision in the 1958 Act has outlived its utility. Removing this anomaly and striking down the differential approach in law, a Supreme Court bench comprising Justices B N Agrawal and G S Singhvi said landlords could now seek eviction of tenants from residential as well as commercial premises on the ground of proven personal need.
Tenants Perspective
Several RCAs are products of the World War, which necessitated strict rent control for housing soldiers in available accommodation. 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 four decades.
Students exploited by landlords
While most agree that the 1958 law favours tenants, one section of the tenant community pleads that the defunct state of the law allows landlords to exploit them.
This section is that of outstation students studying at colleges in Delhi. These students, miles away from home, are the most defenceless 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.
However, eviction can now be sought on need and bonafide need and can be claimed not just for the owner of the property but also for his or her dependent family.
Tenants also claim that landlords, desperate to get their property vacated, resort to illegal means such as paying reverse ‘pugree’ (an interest free security deposit) to them to induce them to vacate, or seek the help of organised gangs, or the local police for forceful eviction.
Conclusion
One of the biggest negative fallouts of The Delhi Rent Control Act has been that it has led to stagnation of revenue from property taxes since the base of property tax is standard rent which has been frozen .This has led to emergence of practices like key money. Thus, 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 to rented premises.
The widening divergence between the interests of landlords and tenants has not only led to increased litigation under the Act. A large number of criminal cases have their origin in disputes over rented properties.
The 1995 act would have replaced the archaic law of 1958 that protected the migrant population from arbitrary rent hikes by wealthy landlords. Even as property values skyrocketed, landlords bound by rent control rules continued to get paltry rents. The 1995 act was passed by both houses of Parliament and received Presidential assent, but after street protests by tenants the government lost the will to notify it.
Also read:
