Rent Laws

While rent laws were enacted, mostly in the 1950s, by states to protect tenants, the Supreme Court has recently in a slew of cases displayed an increasingly favourable disposition towards landlords, helping them reclaim their commercial premises.Consider the various ways in which the SC this month liberally interpreted the expression “bonafide requirement”, which is statutorily the only circumstance in which landlords can seek eviction of tenants from non-residential or commercial properties.On September 11, the SC upheld the landlords’ contention in Shamshad Ahmad vs Tilak Raj Bajaj that they were entitled to claim the benefit of bonafide requirement despite being wealthy and not any running the proposed readymade garment business for which they had sought eviction of the tenant from their shop in Dehra Dun. Accordingly, the SC rejected the tenant’s plea of “comparative hardship” saying that the prospect of an increase in rent in a new location “would not preclude the landlords from getting possession of the shop once they had proved genuine need of the property.” On September 15, the concept of bonafide requirement became even more expansive when the SC order the tenant in K Puttaraju vs A Hanumegowda to shift out of his Bangalore shop although the landlord was already “in possession of reasonable, suitable accommodation as he is the owner of shopping malls and 10 other shops in the area in question.” This is because the landlord claimed that he needed that particular shop to set up a stationery business for his physically handicapped son. On September 16, SC ruled in Ajit Singh vs Jit Ram that even if the Punjab law specified that the landlord could reclaim a commercial property only “for his own use”, his son too could be allowed to seek eviction of the tenant provided he was not already occupying another shop in Chandigarh .Thanks to such activism displayed by the SC, the balance of the rent laws is now clearly tilting in favour of landlords. This is a far cry from the pro-tenant rulings that were routinely made by courts for over four decades. The plea of bonafide requirement could then be taken only with regard to residential premises; there was hardly any scope to evict the tenant of a non-residential or commercial property. The SC finally broke the impasse in 1996 when it struck down a Punjab law provision that discriminated between residential and non-residential premises in the matter of eviction. The 1996 verdict in Harbilas Rai Bansal vs State of Punjab held that the discrimination was unconstitutional as it violated the commercial property owner’s fundamental right to equality. Since SC rulings are deemed to lay down the law of the land, the plea of bonafide requirement should have become available to landlords of all categories across the country after 1996. That did not however happen as evident from a 2003 verdict of the Delhi high court, which said that SC’s 1996 ruling in the Bansal case did not apply to the Capital as the Punjab law had been enacted in different circumstances. “Legislative intent may change from state to state,” HC said, leading to an anomalous situation in which the very provision that was held to be unconstitutional by the SC in the context of one state was upheld by the HC of another state. It was only in April this year that SC’s verdict in Satyawati Sharma vs Union of India corrected the anomaly as it partially struck down the provision of the Delhi rent control Act 1958 that discriminated against the landlords of commercial premises. Applying the principle of the 1996 verdict to Delhi, the SC has made it possible for a Delhi landlord also to seek eviction from a commercial premises citing bonafide requirement for himself or any family member dependent on him. In a related development last month, the SC held in Leelabai Gajanan Pansare vs Oriental Insurance that government companies such as Oriental Insurance and Bharat Petroleum were capable of paying rent at the market rates in Mumbai and therefore not entitled to the protection of the Maharashtra rent control Act. This is yet another indication that the new generation of judges in the SC is taking a more liberal and realistic approach to landlord-tenant relations.

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