Meaning of Fair Rent

Introduction

The enactment of the East Punjab Urban Rent Restriction Act, 1949 (the Rent Act) in

Punjab was a fallout of the Second World War. In order to raise additional revenue needed to

meet the expenses of the war, the Punjab Immoveable Property Tax Act, 1940 was brought

on the Statute Book. Under this Act, afresh tax was imposed on urban immoveable property

to mobilise additional finances for the Government. Fearing that the landlords might pass on

this extra burden to their tenants because of the growing shortage of accommodation in the

urban areas, the Punjab Urban Rent Restriction Act, 1941 was brought on the Statute Book.

The object of the Act was explicitly stated and reads as follows:1

An Act to restrict the increase of rent of certain premises situated within the limits of urban areas

and the eviction of tenants therefrom.

The foremost purpose of the Act of 1941 is: (i) to determine the fair rent which tenants

have to pay; (ii) to protect tenants from illegal and unreasonable eviction.

Section 5(1) of the Act' completely prohibited any increase in the standard or agreed rent

after 1st January; 1939. Through this provision, it was ensured that rent was not increased by

the landlords due to the imposition of the new tax.

The expression 'standard rent' was defined to be the rent of the premises as it existed or

would have existed on 1st January, 1939. Thus 1939 was kept as the base year and the rent

payable for the premises as on 1st January, 1939 was to be treated as standard rent payable

by a tenant to his landlord. The expression 'fair rent' was introduced by the Punjab Rent

Restriction Act, 1947 (as further amended by East Punjab Act of 1948), which replaced the

Act of 1941. Keeping in view the fact that the cost of construction was on the increase, the

legislature, through Section 4 of the Act, prescribed the procedure to determine fair rent of

the premises. Under the Act it was provided that, firstly, the basic rent of the premises was to

be determined by keeping 1939 as the base year. Thereafter to neutralise the extra cost of

construction a particular percentage of the basic rent was to be allowed as the increase on it

so as to make it fair rent in the overall context.2

1 Jauhar, Dr. D.N., RENT MATTERS ON TRIAL, 1998 Ed., pp. 99.2 Ibid., pp. 100.

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It is the same Section 4 of the Act of 1947 which continues to be operative for ascertaining

the fair rent even in 1997. The provision, which per se was just, fair and reasonable at the

time it was introduced in the Act, has now turned out to be most in equitable, unfair and

unjust as it fails to give due cognizance to the high costs of construction and other

inflationary trends in the economy of the country. Since a change in the statute is the

exclusive domain of the legislature, the Courts have been helpless spectators of the sheer

apathy of the legislature towards landlord-tenant relations.

Meaning of Fair Rent

The expression “fair rent” is not defined in the Punjab Rent Restriction Act 1947.

However, the expression fair rent would generally mean that a rent payable by the tenant to

the landlord is just and reasonable. It should neither be, oppressive for the tenant nor too

meager for the landlord. The word 'fair' means just equitable, impartial, unbiased,

dispassionate, uncoloured or objective.3 The term 'rent' has been defined as a piece of

property that the owner allows another to use in exchange for a payment in services, kind or

money.4 Putting the two terms together, the expression 'fair rent' would mean a rent payable

by the tenant to his landlord which is just, equitable, and reasonable.

Ordinarily the rent to be paid or received in respect of an accommodation, is purely a

matter of contract, and therefore the ordinary connotation of the term ‘rent’ is agreed rent, or

contractual rent, but the legislatures have stepped into the field of this free contract and have

put certain restrictions in the matter of recovery and realisation of rent, by prescribing the

yardstick on the basis of which alone the rent would be recoverable: Such rent which is to

be fixed and determined within the frame work prescribed by law, is termed as 'fair rent’, or

'standard rent'.5

The prefix standard or fair to the term 'rent' itself denotes that it is something distinct from

a contractual rent. 'Standard rent' means the ideal rent; recognised, and, approved by the

statute as legitimate and lawful considerations to be paid by the tenant for enjoyment of the

demised property to the landlord. It is the rent which the law presumes to be reasonable and

legitimate, fair and honest, an ideal bargain between a willing lessor and willing lossee

uninfluenced by any extraneous circumstances, and which may afford a grounding test of 3 Webster’s Third New International Dictionary, 1986 Vol. 1, pp. 815.4 Ibid., Vol 3, pp. 1923.5 Aggarwal, Sukh Dev, Cases & Material on Rent & Eviction Laws, 2009, pp. 1127.

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reasonableness. An inflated or debated rate of rent, based upon fraud, emergency,

relationship, any such other considerations may take it out of Bonds of reasonableness. By

enacting the provisions relating to determination of fair rent, the legislature, lays down the

norms of reasonableness in regard to the rent payable by the tenant to the landlord. Any rent

which exceeds the norm of reasonableness, is regarded by the legislature as unreasonable or

excessive and is also made irrecoverable and penal also.6

The very word "standard" is indicative that it is a 'model' or 'ideal' in the eyes of law.

Similarly, the expression "fair rent" means the rent which is fair and proper in the eyes of

the law.

Determination of Fair Rent

Section 4 of the Rent Act reads:

Determination of fair rent7- (1) The Controller shall on application by the tenant or

landlord of a building or rented land fix the fair rent for such building or rented land after

holding such inquiry as the Controller thinks fit.

(2) In determining the fair rent under this Section, the Controller shall first fix a basic rent

taking into consideration –

a) the prevailing rates of rent in the locality for the same or similar accommodation in

similar circumstances during the twelve months prior to the 1st January, 1939; and

b) the rental value of such building or rented land if entered in property tax assessment

register of the municipal, town or notified area committee, cantonment board, as the

case may be, relating to the period mentioned in clause (a);

(3) In fixing the fair rent of a residential building8 the Controller may allow, if the basic

rent-

(i) in the case of a building in existence before the 1st January, 1939-

a) does not exceed Rs. 25 per mensem, an increase not exceeding 8-1/3 percent on

basic rent;

b) exceeds Rs. 25 per mensem but does not exceed Rs. 50 per mensem, an increase

not exceeding 12-1/2 percent on such basic rent;

c) exceeds Rs. 50 per mensem, an increase not exceeding 25 percent on such basic

rent;6 Deewan Daultrai v. New Delhi Municipality, AIR 1980 SC 541.7 Multani, Balbir Singh, Rent Restriction Law in Punjab, Haryana, H.P., 2006, pp. 111, 112.8 Any building which is not a non-residential building.

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(ii) in the case of a building constructed on or after the 1st January, 1939-

a) does not exceed Rs. 25 per mensem, an increase not exceeding 25 percent on

such basic rent;

b) exceeds Rs. 25 but does not exceed Rs. 50 per mensem, an increase not

exceeding 37-1/2 per cent on such basic rent;

c) exceeds Rs. 50 per mensem, an increase not exceeding 50 percent on such basic

rent.

(4) In fixing the fair rent of a scheduled building9 the Controller may allow, if the basic rent-

(i) in the case of a building in existence before the 1st January, 1939-

a) does not exceeds Rs. 25 per mensem, an increase not exceeding 13-1/3 percent

on such basic rent;


exceeding 17-1/2 percent on such basic rent;

c) exeeds Rs. 50 per mensem, an increase not exceeding 30 per cent on such basic

rent;

(ii) in the case of building constructed on or after the 1st January, 1939-

a) does not exceed Rs. 25 per mensem, an increase not exceeding 30 per cent on

such basic rent;


exceeding 42-1/2 per cent on such basic rent;

c) exceeds Rs. 50 per mensem, an increase not rxceeding 55 per cent on such basic

rent.

(5) In fixing the fair rent of non-residential building10 or rented land the Controller may

allow, if the basic rent-

(i) in the case of a building in existence before the 1st January, 1939, or in the case of

rented land-

a) does not exceed Rs. 50 per mensem, an increase not exceeding 37-1/2 per cent

on such basic rent;

b) exceeds Rs. 5o per mensem, an increase not exceeding 50 per cent on such basic

rent;

(ii) in the case of a building constructed after the 1st January, 1939-

9 A residential building used by a person who is engaged in profession mentioned in Schedule I, partly for his residence and partly for professional services.10 A building which is solely being used for commercial purposes.

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a) does not exceed Rs. 50 per mensem, an increase not exceeding 50 per cent on

such basic rent;

b) exceeds Rs. 50 per mensem, an increase not exceeding 100 per cent on such

basic rent.

(6) Nothing in this section shall be deemed to entitle the Controller to fix the fair rent of a

building or rented land at an amount less than the rent payable for such building or rented

land under a subsisting lease entered into before the first day of January, 1939.

Sub-section (1) of Section 4 enjoins upon the Controller to fix fair rent of a building or

rented land on an application made by the tenant or the landlord after making such enquiries

as he may think fit. Sub-section (2) enjoins upon the Controller to first determine the basic

rent keeping 1938 as the base year of rent for similar accommodation and also taking in

account the rental value of the premises as reflected in the Municipal records.

Once the basic rent has been determined then the controller may allow certain percentage

of increase on that for residential, scheduled and non-residential building as provided in sub-

sections (3) (4) and (5) respectively. Sub-section (6) restrains the Controller from fixing a

fair rent, for the premises, less than the one payable under a subsisting lease entered into

before 1st January 1939.11

It is to be clearly understood that the determination of fair or standard rent is neither

reduction of agreed rent, nor enhancement of agreed rent. It is a rent which is determined as

a lawful rent, under the provisions of the Rent Control Laws, What it is so determined and

fixed, it supersedes the contractual rent. It may be less or more then the contractual rent,

therefore if a tenant files an application for fixation of fair rent, alleging that the rent agreed

is excessive, the landlord in his reply may also claim that the rent agreed is low and in such

proceedings, initiated by the tenant for reduction of contractual rent, the R. C. A. would be

empowered to determine and fix the fair rent, which may exceed the contractual rent. The

reason being that it is the proceeding for determination of fair rent, and not for reduction or

enhancement of the rent.12

However, it is to be clearly understood that the provision relating to payment of fair rent

would only be operative when it is determined. Till the fair rent is determined, the rent

payable by the tenant to the landlord would be the 'contractual rent' or agreed rent. The

contractual rent is to hold field till fair rent is determined and is substituted for the

contractual rent.11 Jauhar, Dr. D.N., RENT MATTERS ON TRIAL, 1998 Ed., pp. 103.12 Goverdhan v. Phoolchand, AIR 1953 MB 253.

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Who Can Apply for Fixation of Fair Rent?

Landlord as well as the tenant can apply to the Controller for fixation of fair rent. For filing

an application under Section 4 of the Act, the prerequisite is that there must exist the landlord

- tenant relationship between the parties. The tenancy in question may be a contractual

tenancy or a statutory tenancy. The landlord-tenant relationship should emerge from a legal

contract between the parties. The two parties to the lease must be covered by the meaning of

the terms 'landlord'13 and 'tenant'14 as defined in Section 2 of the Act. The parties to the

proceedings under Section 4 of the Act must possess the status of' landlord;' and 'tenant'. Thus

unless a person enjoys the legal status of a tenant, he cannot seek the fixation of fair rent from

the Controller.15

In Dr. ES. Rikhy vs. New Delhi Municipal Committee,16 the Supreme Court has held

that if the person in occupation of a house or a shop is of a status other than a tenant, he will

not be entitled to apply under it Section 4 of the Act even if he is paying a sum of money to

the owner of the building which he is occupying. A licensee has no locus standi under

Section 4 of the Act.

Similarly in TirathRam vs. Dalip Singh,17 the petitioner claiming to be a tenant had

applied for fixation of fair rent under section 4 of the Act. The landlord claimed that the

occupant was merely a licensee and thus ineligible to file an application under section 4 of

the Act. Accepting the plea of the landlord, the Court held that it is a tenant and not a

licensee who can file an application under section 4 of the Act.

Since sub-letting is not permitted under the Act, rather it is one of the grounds for the

eviction of the tenant, except when it is made with written consent of the landlord, a sub-

tenant will not be construed as tenant and hence will not be entitled to ask for the fixation of

fair rent. However, when a sub-tenant has been lawfully inducted by the tenant, then he too

is a tenant within the meaning of the term and will be entitled to ask for fixation of fair rent.

An alleged subtenant claiming and proving that he is directly a tenant under the landlord

will also, be entitled to ask for the fixation-of fair rent.

13Section 2(iii) - “Landlord” is any person who is receiving rent.14 Section 2(x) - “Tenant” is a person holding the land till the expiration of tenancy.15 Jauhar, Dr. D.N., RENT MATTERS ON TRIAL, 1998 Ed., pp. 103.16 (1962)64 P.L.R. 699.17 1981 (1) RCJ 279.

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Mechanism for Fixation of Fair Rent

Section 4 of the Act provides for the method according to which the Controller can

determine and fix the fair rent, but does not define the term 'fair rent’. The Controller cannot

fix the fair rent of a building or rented land suo motu but can do so only on an application

filed by the landlord or the tenant.

When an application, for the fixation of fair rent is made to the Controller, it is mandatory

for him to hold an inquiry, as he thinks fit, and then fix the fair rent. Clause (2) of Section 4

enjoins upon the Controller to first determine the 'basic rent' and then, if he thinks it

reasonable, he may allow the increase of certain percentage over the basic rent. Thus, 'fair

rent' is the 'basic rent' increased by certain percentage varying according to the quantum of

basic rent well as the purpose for which the premises are used and the period of their

construction.

However, as per sub-section (6), "the fair rent cannot be fixed at amount less than the rent

payable under a subsisting lease entered into before 1st January, 1939.18

While ascertaining the basic rent of the building or rented land, the Controller has to take

into consideration two factors –

i. the rent prevalent in January, 1938 in that locality for similar accommodation in

similar circumstances, and

ii. the rental value of the premises as recorded in Property Tax Register of the

Municipal Committee.

The quantum of Property Tax chargeable is directly linked to rental value of that property.

A particular value is fixed as property tax which is to be paid by owner to local bodies. If a

building is occupied by a tenant, value which is payable by the tenant to the landlord is

rental value of that property.

The expression 'similar circumstances' has not been defined 'in the Act. Normally the

expression connotes ‘like-the same', 'close to the same' or 'identical to the same'. In the

context of sub-section 2(a); the three expressions, namely, 'in the locality', 'same or similar

18 Sarin, H.L., RENT RESTRICTION IN PUNJAB, HIMACHAL PRADESH AND CHANDIGARH, 1985, Vol. I, pp. 157.

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accommodation', 'in similar circumstances' have been made use of: To make out a case

under this sub-section, the building to be compared must be situated in the same locality:

secondly, the building, which is to be sample for the prevalent rent in 1938, must be of the

same type or with similar accommodation; and thirdly, the two buildings must be in

existence in similar circumstance.

‘Similar’ would generally mean having ‘sameness’ in essential particulars. It may be

practically impossible to have identical buildings. Some difference of varying degree can

always be there and it may not be possible to lay a hard and fast rule as to cover up that

difference. When it is practically not possible to have two identical buildings which

existed in 1938, then the rule of ‘more or less similar’ can be invoked to determine the

basic rent of the building.

Increase on Basic Rent

Once the basic rent of the building has been ascertained, sub-sections 3, 4 and 5 of

Section 4 permit the Controller to allow certain percentages of increase in case of

residential, scheduled and non-residential buildings, respectively. However, the increase

under these sub-sections is not automatic but discretionary. If the Controller is satisfied

that an increase is called for, then he will fix the fair rent by adding such increase. The

permissible increase about different types of building again depends upon the fact as to

whether the building in question existed prior to 1st January, 1939 or came into existence

on or after 1st January, 1939. The permissible increases are given at the next page:

Residential Building

Building existing prior to1.1.1939

Basic Rent Permissible increase on Basic rent

Building existing on or after

Basic Rent Permissible increase on

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1.1.1939 Basic rent

Upto Rs.25/- Upto 8 1/3 % Upto Rs.25/- Upto 25 %

Exceeds Rs.25/- and upto Rs. 50/-

Upto 12 ½ % Exceeds Rs.25/- and upto Rs.50/-

Upto 37 ½ %

Exceeds Rs.50/-

Upto 25% Exceeds Rs.50%

Upto 50%

Scheduled Building



Building existing on or after 1.1.1939


Upto Rs.25/- Upto 13 1/3%

Upto Rs.25%

Upto 30%

Exceeds Rs.25/- and upto Rs. 50

Upto 17 ½ %

Exceeds Rs.25/- and upto Rs. 50

Upto 42 ½ %

Exceeds Rs.50/-

Upto 30 % Exceeds Rs.50/-

Upto 55 %

Non-Residential Building / Rented Land



Building existing on or after 1.1.1939


Upto Rs.50/- Upto 37 ½% Upto Rs.50/- Upto 50%Above Rs.50/-

Upto 50% Above Rs.50/-

Upto 100%

It is evident from the above that these figures of Rs. 25/- or Rs. 50/- and the increases

thereon from 8 1/3% to 100% were fixed in the forties when inflationary trends had not hit

the rupee value. In the present context, more than seven decades after the Act became

operative, these figures are totally incommensurate with the increasing devaluation of

currency. Even with regard to the old properties which came up in the thirties or the forties,

the fair rent fixed for them must have become irrelevant by the fifties. In view of the high

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rate of inflation, these figures of Rs. 25/- or Rs.50/- for fixing the fair rent are the most

unfair feature of the Act.

Agreed Rent as Fair Rent

If there is sufficient evidence available either establishing the prevailing rent of similar

accommodation in similar circumstances or there is the annual assessment value concerning

the building available in the municipal register as on 1st January, 1938, then the prevailing

rent or the rental value shall be taken as basic rent. On this basic rent the Controller may

allow the permissible percentage of increase, as already discussed above, and fix it as fair

rent.

The difficulty arises in such cases where the party making the application or both the

parties fail to lead evidence as required by clauses (a) and (b) of sub-section (2). In such

cases the Controller, even after making enquiry may be unable to ascertain the basic rent of

the premises. Although the enquiry by the Controller does not mean that he has to go about

the streets of the town to ascertain the basic rent, yet the controller cannot decline to fix the

fair rent for want of evidence or proof under sub-section 2(a) and (b). This is clearly evident

from the opening sentence of Section 4 which makes it mandatory for the Controller to fix

the fair rent by putting it as "The Controller shall on an application..." In view of the term

"shall" used in Section 4(1), the Controller cannot escape his duty to fix the fair rent even

when he has no material on record to determine the basic rent under clauses (a) and (b).

To overcome the difficulty as envisaged above, the Courts have found a way out by

holding that the agreed rent should be treated as fair rent. In Ved Parkash vs. Puran

Singh19, it was held that where the parties fail to adduce evidence to determine basic rent or

fair rent, the Rent Controller could not create evidence one way or the other. It was further

held that in such cases the agreed rent between the parties will be the fair rent of the

building.

Applicability to Chandigarh

19 1977 (2) RCJ 831.

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The City of Chandigarh did not exist before 1952. It was under the Capital Project Act,

1952 that by acquiring a large piece of land comprising of many small villages, the Capital

of Punjab was established and the city was named as Chandigarh. After reorganisation of

1966, Chandigarh, with some 25 adjoining villages, was declared to be a Union Territory.

As the city itself neither existed in 1938 not it has had a local body since its inception in

1952, it is not possible to determine the basic rent for any building under section 4 (2) (a)

and (b) of the Act. In the absence of any basic rent, the agreed rent has to be treated as fair

rent. It is precisely for this reason that there are no cases of fair rent being pursued in the

courts of the Rent Controller.

Constitutional Validity

The growing dissatisfaction with the outdated Punjab Rent Act was evident when the

validity of the Section 4 of the Act was challenged before the Apex Curt in Sant Lal Bharti

vs. State of Punjab20. Firstly the provision was attacked on the ground that it was ultra vires

the constitution and unreasonable in as much as the section provides that rent prevalent in

1938 be the basis for the determination of the fair rent. It was urged that pegging the rent

prevalent in 193 8 as the basic rent was inequitable and unjust in the background of the

tremendous rise in prices.

Repelling the argument, Sabyasachi Mukharji J (as he then was) on the behalf of the

Bench observed:

“But it has to be borne in mind that certain increases have been provided for in S.4

from the rent prevalent in 1938. It must, however, be remembered that the Act was

passed as the preamble of the said Act which states, inter alia, "to restrict the increase

of rent". One of the objects of the Act was to restrict the increase in rent. With that

object the Act has provided certain provisions as to fixation of the fair rent.”

Secondly, it was contended that the provisions of the Rent Act in Tamil Nadu, Assam,

Tripura and the adjoining State of Haryana for fixation of fair rent were far more fair, just

and reasonable in comparison to Section 4 of the Punjab Act.

Dismissing this argument, the Apex Court observed:

20 AIR 1988 S.C. 485.

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“We are unable to so accept this contention because each legislature in the several

States has provided the method of determination of fair rent on the basis of local

conditions, as judged to be, by each such legislature. It is well settled that the

legislative wisdom of such legislation is not a ground for which the validity of the Act

can be challenged.”

The Apex Court then went on to add:

“It must be the function of the legislature of each State to follow the methods

considered to be suited for that State, that would be no ground for judging the

arbitrariness of unreasonabless of a particular legislation in question by comparison.

What may be the problem in Madras may not be the problem in Punjab. It most,

however, be borne in mind that the Act in question was passed in 1949 and it pegged

the rent prevalent in the similar houses in 1938 and as such is not unreasonable per se.

The rises started tremendously after the end of the Second World War after the

partition of the country. In that view of the matter, we cannot say that per se there is

unreasonableness in fixing the prices in 1938 level. Having regard to the specific

preamble of the Act we find nothing unreasonable in the Scheme contemplated under

S.4 of the present Act.”

If we confine our attention to technical grounds, then it has to be agreed that the case

has been correctly decided. But if we take note of the totality of circumstances, then it

would not be wrong to say that the Apex Court missed a great opportunity to remedy the

ills under Section 4 of the Act. In dismissing the petition on technical grounds, the

learned Judges perhaps forgot that the Apex Court had been intervening in the rent

matters to enlarge the scope of various provisions in order to cope with the changing

socio-economic scenario in the country.21

Ancillary Provisions

21 Gulraj Singh Grewal v. Dr.Hardans Signh, 1993 (2) SCC 68; Mohan Lal v. Jai Bhagwan, AIR 1988 SC 1035; Gurdial Batra v. R.K. Jain AIR 1989 SC 1841.

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Sections 5 to 9 of the Act are ancillary to Section 4 under which fair rent is fixed by the

Controller. Section 5 of the Act22 provides that after fixation of fair rent under Section 4, if

the landlord makes additions, alterations or improvements to the rented premises at his own

cost, he may request for a further revision of the fair rent in view of the improvements made

by him. The controller can allow an increase in fair rent keeping in view the rent of similar

premises with similar improvement in that locality.

Section 6 of the Act23 prohibits a landlord from charging any premium or lump sum

payment like Pagri or key-money or Salami from the tenant. The only advance permissible

for the landlord is one month's rent. Any agreement allowing the landlord to charge

anything in excess of fair rent shall be null and void under this Section.

Section 7 of the Act24 prohibits a landlord from charging any fine or premium for the grant,

renewal or continuance of a tenancy. Section 8 of the Act25 provides for the recovery of any

sum paid by tenant to his landlord in violation of the rules under Sections 4 to 7 of the Act.

The time limit to recover any such amount is a period of six months from the date of

payment.

22 S.5 Increase in fair rent in what capes admissible - when the fair rent of a building <or rented land has been fixed under section 4, no further increase in such fair rent shall permissible except in cases where some addition, improvement or alteration has been carried out at the landlord's expense and if the building or rented land is then in the occupation of a tenant, at his request;Provided that the fair rent as increased under this section shall hot exceed the fair rent payable under this Act for similar building or rented land in the same locality with such addition, improvement or alteration and it shall not be chargeable until such addition, improvement or alteration has been completed:Provided further that any dispute between the landlord and tenant in regard to any increase claimed under this section shall be decided by the Controller:Provided further that nothing in this section shall apply to any periodical increment of rent accruing under any subsisting agreement entered into before the first day of January, 1939.

23 Section 6 of the Act reads :6. Landlord not to claim anything in access of fair rent - (I) Save as provided in section 5, when the Controller has fixed the fair rent of a building or rented land under Section 4-

a. the landlord shall not claim or receive any premium or other like sum in addition to fair rent or any rent in excess of such fair rent, but the landlord may stipulate for and receive in advance an amount not exceeding one month's rent;

b. any agreement for the payment of any sum in addition to rent or of rent in excess of such fair rent shall be null and void.c. Nothing in this section shall apply to the recovery of any rent which became due before the first day of January, 1939.

24Section 7 of the Act reads:S.7.Fine or premium not to be charged far grant, renewal or continuance of tenancy — (1) No landlord shall in consideration of the grant, renewal or continuance of a tenancy of any building or rented land require the payment of any fine, premium or any other like sum in addition to the rent.(2) Nothing in this section shall apply to any payment under any subsisting agreement entered into before the first day of January 1939.

25 Section 8 of the Act reads:S.8. Rent which should hot have been paid may be recovered - Where any sum has, whether before or after the commencement of this Act, been paid which sum is by reason of the provision of this Act irrecoverable, such sum shall, at any time within a period of six months, after date of the payment, or in the case of a payment made before the commencement of this Act, within six months after the commencement thereof, be recover able by the tenant by whom it was paid or his legal representative from the landlord who received the 'payment or his legal representative, and may without prejudice to any other method of recovery be deducted by such tenant from any rent payable within such six months by him to such landlord.(2) In this section the expression "legal representative'' has the same meaning as in the Code of Civil Procedure, 1908 and includes also in the case of joint family property, the joint family of which the deceased person was a member.

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Section 9 of the Act26 permits increase in fair rent when a fresh levy, cess or tax is

imposed on the rented property by a competent authority. This provision is attracted in those

cases where either a fresh tax has been imposed or an existing tax rate has been increased by

the local authority. Interestingly, the introduction of this provision was contrary to the

objectives of the Act of 1941 which prohibited the landlords from passing on the burden of

additional taxes to the tenants.

Conclusion

From the analysis of the cases in the Apex court as referred to above, it was noticed that

the conflicting expirations of the landlords and tenants over the quantum of rent are the main

causes of litigation between the two. A tenancy cannot be created in an atmosphere of

distrust or suspicion. No doubt in almost all the cases of prospective tenancies, the landlord

is in a position to dictate terms and the tenant has no option but to agree to all that is being

dernanded by the landlord. At this juncture, equitably speaking, any law governing the

landlord-tenant relations must side with the tenant as he is disadvantageously placed vis-a-

vis the landlord. However, once the tenant acquires the statues of a statutory tenant, the

position reverses. Now it is the landlord who is at the receiving end. In ail tenancies, the

landlord demands and gets the market rent from the tenant at the time of the creation of the

tenancy. With the passage of time, due to inflation, the market rent of similar premises

increases considerably. As a result, the landlord starts feeling that he is receiving a rent

which is far less than the market rent. If he hit tenant to increase the rent then the whole

trouble starts. The tenant will either refuse to increase the rent or will offer an increase which

is so meagre that it means nothing to the landlord. All through this period, the relations

between the two keep on worsening. Finally the landlord starts working in the direction of 26 Section 9 of the Act reads:S.9. Increase of rent on account of payment of rates etc., of local authority, but rent not to be increased on account of payment of other taxes etc.— (1) "Notwithstanding anything contained in any other provision of this Act a landlord shall be entitled to increase the rent of a building or rented land if after the commencement of this Act a fresh rate, cess or tax is levied in respect of the building or rented land by any local authority, if there is an increase in the amount of such rate, cess or tax to be levied at the commencement of the Act:Provided that the increase in rent shall not exceed the amount of any such rate, cess or tax or the amount of the increase in such rate cess or tax as the case may be.(2) Notwithstanding anything contained in any law for the time being in force or any contract, no landlord shall recover from his tenant the amount of tax or any portion thereof in respect of any building or rented land occupied by such tenant by arty increase in the amount of the rent payable or otherwise, save as provided in sub-section (1).

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evicting the tenant. He normally tries extra-legal methods like threats, making false police

cases, assault through goondas, etc. The tenant also counters the landlord on a similar

pattern. If nothing comes out of all this, then a case is filed by the landlord seeking the

eviction of the tenant on one or the other ground under section 13 of the Act. Thus the root

cause of most of the disputes between the landlord and tenant happens to be the factor of

rent. It is normal that the market rent of the day becomes almost marginal or insignificant

after every three to four years with the prevalent rate of inflation.27

It is a matter of common knowledge that these days a tenant will not vacate the rented

premises even when he does not require it. The tenant normally expects the landlord to pay

him lump sum the total of the rent paid by him during the tenancy besides some premium to

vacate the premises.

It needs no emphasis that as a social welfare measure, the purpose of any rent legislation is

to harmoniously regulate the relations between the landlord and the tenant and not to add to

the conflict and hostility between them. But the provisions relating to the rent structure in the

existing Act are the root cause of most of the disputes between landlords and tenants. The

field survey has shown that while there is an acute problem of housing in Chandigarh, the

landlords are keeping their residential buildings, or parts thereof, vacant as they not only

have serious and legitimate apprehensions about the prospective tenants taking advantage of

section 4 of the Act, but also find no incentive in letting out their buildings. This lack of

incentives has also adversely affected the construction activity, adding further to the

acuteness of the paucity of residential buildings to provide housing to the increasing

population in the cities.

It may practically not be possible to eliminate the gap between the landlord's and the

tenant's conflicting aspirations, but a serious effort needs to be made to reduce the gap and

regulate the landlord-tenant relations in a reasonable manner. Only then it may become

possible that unused, locked houses may become available to the prospective tenants

desperately looking for a shelter.

The first step in the direction of overcoming the problems discussed above would become

possible only when sections 4 to 9 of the Act are repealed. This is a necessary pre-requisite

for bringing in or introducing a balanced rent structure which is not only fair but is also seen

as reasonable by the landlords as well as the tenants.

27 Jauhar, Dr. D.N., RENT MATTERS ON TRIAL, 1998 Ed., pp. 134, 135.

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Bibliography

Books referred;

1. Aggarwal, Sukh Dev, CASES & MATERIAL ON RENT & EVICTION LAWS

(1900 to 2099), New Delhi, The Bright Law House, 2009 Ed.

2. Jauhar, DR. D.N., RENT MATTERS ON TRIAL IN PUNJAB, HARYANA,

CHANDIGARH & HIMACHAL PRADESH, Chandigarh, Jain Law Agency, 1998

Ed.

3. Multani, Balbir Singh, RENT RESTRICTION LAW IN PUNJAB, HARYANA &

HIMACHAL PRADESH, Chandigarh, Chawla Publications (P) Ltd., 2nd Ed, 2006.

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Documents

Meaning of Fair Rent