RAGHUNANDAN SARAN ASHOK SARAN (HUF) V. UNION OF INDIA 95 (2002) DLT 508
FACTS
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.
ISSUE
Whether Section 4,6,9 of Delhi Rent Control Act, 1958 are violative of Article 14,19(1)(g) and 21 of the Constitution of India?
JUDGEMENT
The Court observed,
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.
In Malpe Vishwanath Acharya v. State of Maharashtra, the Supreme Court has dealt with the question and found the statute being justified when enacted but becoming arbitrary and unreasonable by passage of time, as they have kept the standard rent yoked to the levels of the past, including the levels prior to the year 1944.
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.
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.
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.
The Supreme Court in Prabhakaran Nair v. State of Tamil Nadu [1987 (4) SCC 238] stressed the need for rationalising the rent legislation.
The Court therefore held that,
“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.”
Huge difference between the cost of living in the past and the present time, do not pass the test of reasonableness. They contain no mechanism to compensate the landlords to offset inflation. 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.
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.