Rent Control – an update

Rent Control – an update
By A T Bureau

The Maharashtra Rent Control Bill, 1999 (L.C.Bill No.VI of 1993) passed with amendments by both the Legislative
Council and the Legislative Assembly aims to unify the three different Rent Control Laws, in operation in the State
of Maharashtra. The Bill has brought about several changes in the existing Bombay Rent Control Act which expired
on 31-3-2000.
The new Act called the Maharashtra Rent Control Act, 1999 extends to the whole of the State of Maharashtra and
shall come into force on the date notified by the State Government in the Official Gazette.
Exemptions (Sec.3):
The Act shall not apply to:
• Any premises belonging to the Government or a local authority or against the Government but shall apply
in respect of premises let out to the Government or a local authority; – any premises let or sub-let to banks,
Public Sector Undertakings (PSU), foreign missions, international agencies, multinational companies,
private and public limited companies having paid-up share capital of Rs. 1 crore or more.
• The State Government may direct that all or any of the provisions of the Act shall, subject to such
conditions and terms as it may specify, not apply to premises held by religious or charitable institutions
administered by a local authority and to premises held by an university, provided the tenancy rights of the
existing tenants in such premises are not adversely affected.
The Act does not apply to the premises, which are let or given on license for less than 12 months.
Definitions (Sec.7):
Standard Rent means standard rent fixed by the Court plus an increase of 5%; or the rent at which the premises were
first let on or after 1-10-1987.
Tenant includes deemed tenant, sub-tenant, heir, legal representative & assignee. Transmission of tenancy shall not
be restricted to the death of the original tenant, but shall apply even on the death of any subsequent tenant.
Rent in excess of Standard Rent is illegal & any contravention is punishable with imprisonment up to 3 months or
fine up to Rs. 5000/- or with both.
Increase in rent (Sec. 11):
• 4% p.a. from the date of the commencement of the Act;
• 15% p.a. for improvements and alterations other than tenantable repairs which the landlord is required to carry
out, provided 70% pf the tenants consent is in writing;
• 25% p.a. for special or structural repairs, exclusive of any repairs carried out under the MHADA Act;
• Due to any increase in taxes to the extent of increase.
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Recovery of Possession:
No eviction suit can be filed on the ground of arrears until the expiration of 90 days next after notice of demand is
served upon the tenant.
No decree for eviction shall be passed in an eviction suit on the ground of arrears, if the tenants pays up within 90
days from the date of service of the summons of the suit with the arrears of rent with 15% interest and continues to
pay the standard rent and permitted increases till the suit is finally decided and also pays the costs of the suit.
Landlord entitled to recover possession from licensee:
On expiry of license; in default one can apply to the Competent Authority. Such licensee is liable to pay damages at
double the rate of the license fee. An arrangement of license in writing shall be conclusive evidence of the fact stated
therein.
Time Limit for disposal of suits/appeals:
• For suits: 12 months from the date of service of summons;
• For appeals: 6 months;
• Pending Suits: Pending suits and proceedings will not to be affected by the new Act and to be heard and disposed
of as if the new Act had not been passed.
Section 13A
Bombay Rent Act, 1947 — Sec 13A-2 — Leave and license agreement — Possession of premises — Claim of
tenancy — Constitution of India, 1950 — Article 227.
1) Premises given on license — Failure of licensee to deliver the possession on expiry of the period of license —
Agreement of license in writing shall be conclusive evidence of the fact stated therein — No evidence can be
adduced to contradict it — Competent authority err in relying upon the claim to tenancy urged on behalf of the
Respondent — Order of Competent Authority quashed and set aside — Respondent liable to pay the license fee at
double the rate of agreed license fee from the date of the expiry of the license until possession is handed over to the
Applicant.
2) Leave and license agreement — Use of word “rent” while referring to the payment of compensation —
Agreements expressly stating occupation of premises by landlord purely on a temporary basis on leave and license
— Mere use of words “rent” or “compensation” would not be dispositive of the legal relationship between the
parties — Agreement held to be of leave and license.
3) Leave and license agreement — Reference to the fact that the licensee will not let or sublet the premises —
Cannot be construed to mean that a right of tenancy was created in favour of the licensee.
4) Premises given on license — Recovery of possession of premises — Pendency of declaratory suit — Licensee
cannot claim an immunity from the obligation cast upon him by section 13A-2 to vacate the premises upon the
expiry of the license by the institution of a Declaratory Suit in the Small Causes Court.
Result: Revision Application allowed.
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Offences (Sec.53)
• Charging rent in excess, Non cognizable:- Imprisonment for 3 months or Fine 5000/- or both (Sec.10);
• Failure to commence the work of repairs after the tenant has vacated by the date specified in the decree or fails
to comply with the Court’s Order of repossession after repairs:- Cognizable imprisonment for 3 months or Fine
for Rs.1000/- or both (Sec.17);
• Failure to occupy the premises recovered on the ground of bonafide requirement, Cognizable:- Imprisonment 3
months or fine for Rs. 5000/- or both (Sec.18) ;
• Failure to carry out any undertaking given to Court or failure to comply with Court’s Order under a decree
obtained on the ground of bonafide requirement by the landlord for demolishing the premises for the immediate
purpose of erecting new building, Cognizable:- Imprisonment 30 days? fine 5000/- or both (Sec.19);
• Failure to intimate to tenant the date on which the erection of the erection of the new building shall be
completed, Cognizable :- Imprisonment for 3 months / fine 5000/- or both (Sec. 21);
• To cut-off withhold essential supply or service up to Rs. 100/- for each day during which the default continues
(Sec.29);
• Failure to restore any essential supply or service:- Imprisonment for 3 months, fine of Rs.1000/- or both
(Sec.29);
• Conversion of residential into commercial premises by landlord : – imprisonment for 6 months or fine of
Rs.10000/- or both (Sec.30);
• Failure to issue the rent receipt:- fine 100/- for each day of default (Sec.31);
• Failure to enter into a written agreement of tenancy or leave & license or have the same registered:-
Imprisonment 3 months? Fine 5000/- or both (Sec.55).
Tenancy agreement to be compulsorily registered (Sec.55):
• Agreement of tenancy or agreement of leave & license to be in writing and shall be registered. Responsibility of
getting such agreement registered shall be on the landlord and in the absence of the written registered
agreement; the contention of the tenant about the terms and conditions on which the premises were given shall
prevail, unless proved otherwise.
Stamp duty on Tenancy Agreement (Art. 5 of Stamp Act)
• For non-residential premises = 1000/- per sq.metre;
• For residential premises = 100/- per sq.metre. (In Mumbai).
Right of Tenant & Landlord to received lawful charges (Sec.56) (i.e.PUGDI):
• It is lawful for the tenant to receive any pugdi as a condition of relinquishment, transfer, assignment of his
tenancy;
• It is lawful for the landlord to receive any pugdi for grant or renewal of a tenancy or for giving his consent to
transfer the tenancy to any other person.