Rajasthan Rent Control Act: Analysis Of The Playing Level Field

Coverage of this Article

KEY TAKEAWAYS

-The Rajasthan Rent Control Act, 2001 repealed the Control of Rent and Eviction Act, 1950 and was extended to all Municipal Areas by the Rajasthan Rent Control (Second Amendment) Act, 2005.

INTRODUCTION

-Rent control laws have largely been used as a measure of public policy in India.

RAJASTHAN RENT CONTROL STATUTES

-The State of Rajasthan has Rajasthan Rent Control Act which was passed in 2001. It repealed the Control of Rent and Eviction Act, 1950.

REVISION OF RENT UNDER THE ACT

-Section 7 of the Act provides that the annual rent cannot be increased by more than 5% and any agreement violating this provision would be void.

JURISDICTION OF RENT TRIBUNALS

-It is pertinent to note that under Section 18 of the Rent Control Act, Rent Tribunals have the jurisdiction to entertain disputes between the tenants and landlords.

2017 AMENDMENT TO THE RAJASTHAN RENT CONTROL ACT

-In 1948, a Rent Control Act was passed by the Parliament which was applicable to the whole country. On the basis of this Act, the various States passed their own Rent Control statutes. However, in 2015, the Draft Model Tenancy Act was introduced as a model for the states and it encouraged the various States to modify their States rent control laws.

STATUTORY TENANCY

-Section 3(vii)(b) of the Act expressly states that where a tenant dies, his surviving spouse, daughter, son, or any other legal heir who had been residing with him up to the tenant's death in case of residential tenancy or who had been doing business with him up to the tenant's death, would become the statutory tenant. 

DRAWBACKS OF THE ACT

-The primary drawback with the Rajasthan Rent Control Act is that it does have a lot of incentives for landlords.

CONCLUSION

-The landlords have for long complained that the rent control laws in India are extremely lopsided in the favour of tenants.

KEY TAKEAWAYS

• The Rajasthan Rent Control Act, 2001 repealed the Control of Rent and Eviction Act, 1950 and was extended to all Municipal Areas by the Rajasthan Rent Control (Second Amendment) Act, 2005.
• It stipulates the setting up of Rent Tribunals and Appellate Rent Tribunals.
• Section 7 of the Act provides that the annual rent cannot be increased by more than 5% and any agreement violating this provision would be void.

INTRODUCTION

Rent control laws have largely been used as a measure of public policy in India. These laws seek to protect the tenants from any form of exploitation by their landlords. The primary aim of rent control is social welfare. Considering the high illiteracy rates in the country and the large number of people living as tenants, these laws hold immense significance. These laws aim at curbing instances where exorbitant rent is charged from tenants or where innocent tenants are manipulated to enter into unfair rent agreements and unscrupulously evicted.

The various states in India have their own rental laws which govern and regulate the relations between the landlord and the tenant. Since housing is a subject that, under the Indian Constitution, comes within the jurisdiction of the various states, different states have passed their respective rent control laws. Albeit these laws are largely similar to each other and are based on the model prescribed by the Central Government, the various State rental laws take into account the local conditions of these states such as availability of adequate housing, per capita income, etc.

Usually, the tenant and the landlords enter into a rent agreement on mutually agreed terms. The Indian laws mandate that there must be a written agreement between the two parties and similarly, any changes to the party must also be made in writing. The purpose of this requirement is to avoid any ambiguity and confusion. However, if there is any disagreement then it is to be litigated in accordance with the provisions of the State Rent Control Laws. These laws include both residential as well as commercially rented properties within their domains.

RAJASTHAN RENT CONTROL STATUTES

The State of Rajasthan has Rajasthan Rent Control Act which was passed in 2001. It repealed the Control of Rent and Eviction Act, 1950. When the Act came into force, it was only applicable to such Municipal areas which comprised the district headquarters. It was extended to all Municipal Areas by the Rajasthan Rent Control (Second Amendment) Act, 2005. Section 1(2) of the Act empowers the State Government to extend the Act to such areas as it seems fit.

Under Section 3 of the Act, only state and Central government buildings are exempted from the provisions of this Act. The primary reason behind exempting government buildings from the rent control laws is that the government does not evict tenants for want of revenue nor is it expected to raise rents. Hence, there is no need to bring the government premises under these laws.

In the case of Puran Indoria v Balashram Society 2012 SCC OnLine Raj 2648, the Court interpreted Section 13(1)(i) of the Rajasthan Rent Control Act and held that it was pari materia to Section 14(1)(h) of the Delhi Rent Control Act includes both commercial as well as residential premises. Furthermore, the Court held that the two clauses of Section 13(1)(I) are independent of each other, and as such the Act makes no distinction between residential and commercial properties.

The Act also aims at regulating the instances of eviction. The Law Commission of India in its 129th report stated that a large number of eviction cases were pending in the judiciary. Thus, Section 9 of the Rajasthan Rent Control Act, which deals with circumstances under which eviction may be ordered, assumes special significance. Under Section 9 of the Act, the Rent Tribunal can order the eviction of the tenant in the following circumstances

1. If the tenant has not paid the rent for 4 months;
2. If the tenant has wilfully caused or permitted substantial damage to the rented property;
3. If the tenant, without permission of the landlord in writing, has caused or permitted such construction on the premises that it has materially altered or devalued the premises;
4. If the tenant causes such nuisance which adversely affects the landlord's interest;
5. If the tenant has renounced his character or denied the landlord's title and the same has not been condoned by the landlord;
6. If the premises were rented to the tenant during his course of employment with the landlord and such employment has ended;
7. If the premises were rented for residential purposes but have been used for commercial purposes;
8. If the tenant has acquired possession of suitable premises for his needs;
9. If the premises have not been used in a reasonable way for the purpose for which they were rented. Such reasonable use must not have been made in the preceding six months of the petition;
10. If the landlord is required by any authority to evict the tenant due to overcrowding of premises, in pursuance of any development scheme by the State Government or because the rented premises have been rendered unsafe for human habitation.

Default in payment of rent must be made for 4 months before the Tribunal can order eviction. Since this statute has expressly stated the grounds on which a tenant can be evicted, it provides protection and a sense of certainty to both the tenant and the landlord.

REVISION OF RENT UNDER THE ACT

Section 7 of the Act provides that the annual rent cannot be increased by more than 5% and any agreement violating this provision would be void. The significance of Chapter II of the Act, regulating the revision of rent, was highlighted by the Supreme in the case of Harbans Kaur v. Iqbal Singh 2019 SCC OnLine SC 94, where the court drew a distinction between the provisions of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 and the Rajasthan Rent Control Act, 2001. The Court pointed that while under the former, the landlord could approach the Court for the increment of the rent and the tenant could approach the Court when aggrieved by excessive rent, the latter does not provide any such right to the tenant but restricts the annual increase in rent to a maximum of 5%. However, in the cases where the premises were rented before the enforcement of the 2001 Act, the rent payable at the time of the coming into force of the Act can be annually increased at a rate of 7.5% annually and after a period of 10 years, the increase in rent must be added to the rent and then again an increase of 7.5% is permitted. This process is to be continued up to the year of commencement of the Act.

Under Section14, the landlord can seek the revision of rent by making an appeal before the Rent Tribunal and submitting the affidavit and concerned documents.

JURISDICTION OF RENT TRIBUNALS

It is pertinent to note that under Section 18 of the Rent Control Act, Rent Tribunals have the jurisdiction to entertain disputes between the tenants and landlords. In the case of K Ramnarayan v. Shri Pukhraj 2017 SCC OnLine Raj 4178, the Court held that once the Rent Control Act was extended or made applicable in a particular area, the Civil Courts would no longer have jurisdiction to entertain disputes pertaining to disputes between landlords and tenants. Furthermore, the Court held that even in instances where the Civil Court had ordered the eviction of tenants and an appeal was pending before the Civil Court, the proceedings would lapse once the Rent Control Act is made applicable. Furthermore, the Court held that, once the Act is extended to an area, tenants can be evicted only by the Rent Tribunal and not the Civil Courts and such an eviction can only be based on the grounds mentioned in Section 9.

The Rent Tribunals certainly help in the speedy disposal of cases. This is because of two reasons: firstly, these Tribunals are less burdened as compared to Civil Courts which have to deal with a plethora of cases; and secondly, these Tribunals specialize in dealing with disputes relating to rent. Section 13(4) of the Act prescribes that the Presiding Officer of the Rent Tribunal must be a member of Rajasthan Judicial Services and must have at least 10 years of experience.

The intention of the legislation with regards to the speedy disposal of cases was highlighted by the Rajasthan High Court in the case of Kamla Devi Bohra v. the State of Rajasthan, 2017 SCC OnLine Raj 2570. The Court, while expressing its disappointment over the fact that an eviction petition was pending for 7 years in the instant case, stated that Section 15(5) of the Act, despite being a directory provision, required that a petition must be disposed of within a maximum of 240 days. The Court held that the tenant has no right to file frivolous appeals and such inordinate delays in disposing of the petitions "belittles the rule of law". The Code of Civil Procedure is not made fully applicable to the Rent Control Act to speed up justice and hence, only the provisions of natural justice have to be strictly followed in the cases of rent disputes.

Section 19 of the Act stipulates the setting up of Appellate Rent Tribunals. An appeal against the order of the Rent Tribunals can be made before the Appellate Rent Tribunal.

The Appellate Rent Tribunal is also empowered, under Section 19(10) to pass any interlocutory order as it may deem fit during the pendency of the proceedings. However, a revision appeal for the order of the Appellate Tribunal cannot be made under the Act.

2017 AMENDMENT TO THE RAJASTHAN RENT CONTROL ACT

In 1948, a Rent Control Act was passed by the Parliament which was applicable to the whole country. On the basis of this Act, the various States passed their own Rent Control statutes. However, in 2015, the Draft Model Tenancy Act was introduced as a model for the states and it encouraged the various States to modify their States rent control laws.

In line with these suggestions, the Rajasthan Rent Control (Amendment) Act, 2017 was passed. The amendment stipulates the setting up of Rent Authority (Section 22A) which would perform the administrative functions which had to be performed by the presiding officers of the Rent Tribunals. This is likely to boost the speedy disposal of cases. It is pertinent to note that in order to keep a check on the exploitative practice of the landlords to evict the tenants on the grounds of non-payment of rent, the 2017 amendment allows the tenants to pay the rent directly to the rent control authority. Moreover, where the rented premise is in dispute and the tenant is unsure of the actual landlord, he has to pay the rent to the Rent Authority.

Similarly, the 2017 amendment also takes note of the mischief committed by the tenants by filing frivolous petitions and not paying rent till the matter is settled in a Court of law, which in some instances takes years. Section 19(A) of the Act provides that the Rent Tribunal is empowered to order the payment of all arrears of rent by the tenant during the pendency of the application. Prior to the 2017 amendment, a tenant could hold the payment of the rent during the pendency of the legal proceedings. This resulted in a loss to the landlord and the 2017 amendment has rectified this loophole.

Under Section 23, the power to decide on the discontinuance of amenities had been bestowed on the Rent Authority. An appeal against the order of the Rent Authority can be made before the Rent Tribunals within 60 days.

The 2017 amendment mandates a written agreement before renting out any premises and provides that the particulars of the agreement must be communicated to the Rent Authority by both the landlord and the tenant. Thus, the agreement can be undisputedly referred to in the event of any dispute or legal proceedings.

STATUTORY TENANCY

Section 3(vii)(b) of the Act expressly states that where a tenant dies, his surviving spouse, daughter, son, or any other legal heir who had been residing with him up to the tenant's death in case of residential tenancy or who had been doing business with him up to the tenant's death, would become the statutory tenant. This view was explained by the Supreme Court in the case of Tara Chand & Anr. v. Ram Prasad (1990) 3 SCC 526, where the Court held that in order to claim statutory tenancy under Section 3(vii)(b) of the Act, the only requirement for the heir is to prove that either he was residing with the deceased, in the ordinary course, up to his death or he was doing business, in the ordinary course, with the deceased up to his death.

DRAWBACKS OF THE ACT

The primary drawback with the Rajasthan Rent Control Act is that it does have a lot of incentives for landlords. The law provides no encouragement to the landlords to renovate their rented property. Furthermore, many landlords consider the rental rates to be disproportionately low and hence have moved their property out of the rental market. Since a tenant must have outstanding rent of 4 months before eviction can be ordered by the Rent Tribunal, landlords have to often suffer the loss of the rent of these 4 months. Furthermore, where a tenant refuses to vacate the premises despite being ordered to do so, further expenses have to be borne by the landlords to avail the legal remedies. Even though Section 5 of the Act provides that every tenant is entitled to a signed receipt of the rent paid, in several cases no such receipt is provided. Strict implementation of the statute is needed to ensure the effectiveness of the statute.

Moreover, some of the provisions of the Rent Control Act are in contradiction to the provisions of the Transfer of Property Act, 1882. For example, under Section 106 of the Transfer of Property Act, a landlord can initiate eviction proceedings after the expiry of the eviction notice. However, under the Rajasthan Rent Control Act, 2001, the landlord has to prove that one or more of the grounds mentioned under Section 9 is applicable in order to initiate eviction. Eviction for non-payment of rent also required 4 months of rent arrears. Thus, in the areas where the 2001 Act is applicable, a decree under Section 106 of the Transfer of Property Act cannot be passed. However, the Rajasthan Rent Control Act, 2001 will be applicable only prospectively and not retrospectively. In the case of K. Ramnarayan v Shri Pukhraj 2015 SCC OnLine Raj 7185, the Court held that if a decree is passed under Section 106 of Transfer of Property Act before the Rent Control Act became applicable in the concerned area, then such a decree will be valid as the appeal is to be governed by the "law prevailing on the date of institution of the suit".

CONCLUSION

The landlords have for long complained that the rent control laws in India are extremely lopsided in the favour of tenants. All attempts to amend the outdated 1948 Central law have been unsuccessful till now. However, the Central Government has now approved the Model Tenancy Act, 2021.

The Rajasthan State Rent Control Act, 2001 must be amended to bring it in line with the provisions of the 2021 Model. Since the 2021 model attempts to create a playing field between the landlords and the tenants, it would encourage the landlords to rent their properties. A separate provision must be made for including a reasonable cost of maintenance in the rent and this cost must be utilized by the landlords in carrying out repair works of the rented premises. Not only will this relieve the landlords of the burden of bearing all the expenses relating to the repair of premises, but this would also ensure that the tenants live in safe premises.