Delhi Rent Control Act, 1958 - Tripaksha Litigation

Overview

The Delhi Rent Control Bill came into force on 9th February, 1959 as The Delhi Rent Control Act, 1958. The main purpose of the enactment of the law was to balance the rights of the landlord and the obligations of the tenant toward each other.

Objectives of the Delhi Rent Control Act, 1958

The objectives of the act are two fold:-

Protect the tenant from having to pay more than a standard rent.
To protect the tenant from arbitrary eviction and safeguard the tenant from becoming vulnerable to exploitation by the landlords

Scope of application of the Delhi Rent Control Act, 1958

The act 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 legal protection from the act is extended to those people who pay less than Rs. 3,500 as monthly rent. The legal disputes of more than Rs. 3,500 are governed by the Transfer of Property Act, 1882.

Important Definitions under the Act

Landlord
Under Section 2(e) of the Act , 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.

Tenant

Under Section 2(l) of the Act “tenant” means any person by whom or on whose account or behalf the rent of any premises is, or, but for a special contract, would be, payable, and includes-

a sub-tenant;
any person continuing in possession after the termination of his tenancy; and
in the event of the death of the person continuing in possession after the termination of his tenancy, subject to the order of succession and to this clause, such of the aforesaid person’s-
(a) spouse,
(b) son or daughter, or, where there are both son and daughter, both of them,
(c) parents,
(d) daughter-in-law, being the widow of his pre-deceased son

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.

Protection of interest of Tenant

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.

Key things to know under the Act

Under the Act, a tenant in the absence of a written contract can pay the rent by the 15^th of a month and could demand a written receipt for the same.
The Act has a key focus on the term “standard” with reference to rent amount. On the other hand, ironically, this law is cited as the reason why prime commercial properties in Delhi’s central localities don’t yield good rentals.
Provisions of the Act make it hard for a landlord to force eviction on a tenant if the latter has been punctual in paying the “standard” monthly rent. Due to these provisions, landlords in Delhi have failed to evict tenants who pay negligible in the name of rent.
The Act provides for “the control of rents and eviction, and of rates of hotels and lodging houses, and for the lease of vacant premises to the government, in certain areas” in Delhi. The areas covered under this act include the limits of municipal corporations of the city, the New Delhi Municipal Committee and the Delhi Cantonment Board.
Under the Act, residential premises include units rented out for public hospitals, educational institutions, public library or reading room and orphanages.
Section 7 (1) of the Act says a landlord can hike the annual standard rent if he has done any renovations on the rented premises. This amount should, however, not exceed seven and half per cent of the cost incurred. This rule discourages landlord from renovating their dilapidated properties. There are no incentives for carrying out such works as far as landlords are concerned.
According to the Act, sub-letting, too, is legal. Provisions of the law make it difficult for landlords to object to tenants subletting the rented premises.
Under Section 27 of the Act, the tenant has the right to deposit rent only on refusal of the landlord to accept it or when the landlord refuses or neglects to deliver a receipt or in case of doubt or dispute as to the person entitled to receive it.

Authority to adjudicate over disputes under the Act

In case of a dispute between a landlord and a tenant under the act, the authority to legally intervene in the dispute lies with the Rent Controller where the property in question is situated.

An appeal against the decision of the Rent Controller is made before the rent control tribunal and later on to the concerned High Court of the state.

Conclusion

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.

You may contact me for consultation or advice by visiting Contact Us and Call us