V.K.JAIN, J. (ORAL)
1. This appeal is directed against the judgment and decree dated 14.03.2012, whereby an application filed by the respondent under Order 7 Rule 11 (d) of the Code of Civil Procedure for rejection of the plaint was allowed and consequently the plaint was rejected.
2. The facts giving rise to the filing of this appeal can be summarized as under:-
The appellant is the owner/landlord of property No.6298, Gali Batasian, Khari Baoli, Delhi and the respondent is a tenant under it in respect of a shop in the aforesaid property. The shop was let out at the rent of Rs.80/- per month, exclusive of electricity and water charges. The appellant demanded rent from the respondent RFA No.257/2012 Page 1 of 14 @ Rs.16,000/- per month on the ground that the market rent of similar premises was about Rs.20,000/- per month. Since the respondent failed to pay rent @ Rs.16,000/- per month, the appellant filed a suit for recovery of Rs.5,76,000/- being arrears of rent for a period of three years @ Rs.16,000/- per month. The learned Trial Judge took the view that the jurisdiction of the civil court was barred in view of Section 50 of the Delhi Rent Control Act. The plaint having been rejected, the appellant is before this Court by way of this appeal.
3. Section 4 of the Delhi Rent Control Act to the extent relevant for our purpose, provided that except where rent is liable to periodical increase by virtue of an agreement entered into before the 1st day of 1939, no tenant, shall, notwithstanding any agreement to the contrary, be liable to pay to his landlord, any amount in excess of the standard rent of the premises, unless such amount is a lawful increase of the standard rent in accordance with the provisions of the Act. It further provided that any agreement for payment of rent in excess of the standard rent shall be construed as if it were an agreement for the payment of the standard rent only. Thus, as per the aforesaid statutory provision, a landlord, irrespective of his agreement with the tenant, cannot recover more than a standard rent of the tenancy premises.
4. The constitutional validity of Sections 4, 6 and 9 of the Delhi Rent Control Act all of such deal with standard rent was challenged before this Court by way of CWP 2783/1997. Vide judgment dated 18.1.2002, a Division Bench of this Court, RFA No.257/2012 Page 2 of 14 held the aforesaid provision to be ultra vires Articles 14, 19(1)(g) and 21 of the Constitution. In the course of judgment, the Division Bench, inter alia, observed as under:-
"11. It may be noted that the respondents have not filed any reply to the affidavit of the petitioner dated November, 7, 2000. It appears that the respondents are not in a position to contradict the steep erosion in the value of rupee and the progressive increase in the wholesale price index during the years mentioned above. The position as of now has not improved. Rather the value of rupee has depreciated further. It is, Therefore, apparent that the increase in rent under Section 6A is not commensurate with the fast dwindling value of rupee. There is a huge difference between the value of rupee of 1939, 1944, 1947 and 1958, etc. on one hand and as of today on the other hand. Yet the standard rent determined under Section 6 of the Act is tied to the past without there being any mechanism for raising the same to a reasonable extent to offset the erosion in the value of rupee. The so-called increase under Section 6A of the Act is an eye-wash. It does not dilute or neutralise the shackling effect of Sections 4, 6 and 9 of the Act on rents. 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.
14. When Sections 4, 6 and 9 of the Delhi Rent Control Act, 1958 were enacted there may have been a justification, but with the passage of time the provisions have fallen foul of Articles 14, 19(1)(g) and 21 of the Constitution due to changed circumstances. Even Section 6A has not been able to cure the defects.
18. 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. It must be pointed out that it is not always correct that all tenants are poor or all landlords are rich. Poor and rich are evenly divided amongst landlords and tenants. Therefore, the need to rationalise the rents and treat both sides fairly. No one should gain at the cost of the other. As already noticed, 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. This situation must be remedied. In case the present situation is allowed to continue it will also amount to wasting the much needed capital of the country. 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.
21. The provisions dealing with standard rent do not take into account the ever rising consumer price index and the huge costs required for maintaining the tenanted premises. There is also no justification for not updating the near frozen rents in view of he returns from alternative investments. Frozen rents and difficulty of securing eviction of tenants have resulted in illegal transactions like key money and pugree. One of the ramifications of static rents is that people belonging to lower income groups are unable to pay large sums on account of key money and pugree thereby reducing RFA No.257/2012 Page 4 of 14 their accessibility to rented premises. Despite the fact that the Delhi Rent Control Act was amended by Act No. 18 of 1987, pegging of rents to low levels, where the rent of a premises is less than Rs. 3,500/- per month, still persists. While the salaries of the employees and house rent allowance of the Government employees have gone up, no real relief has been given to the landlords for offsetting inflation.
23. Thus, it is apparent that there is an acute need to balance the rights of the tenants on the one hand and the landlords one the other. Besides, it cannot be disputed that the need of the hours is to give fillip to construction for rental housing. In case the rents remain shackled to low levels or they are hiked beyond proportion, the desired results will not be achieved. The provisions of Section 4, 6 and 9 cannot be upheld as they are keeping the rents chained to low level which render them arbitrary. This unreasonable and unfair restriction needs to be eliminated from the provisions dealing with standard rent."
5. The contention of the learned counsel for the appellant is that Sections 4, 6 and 9 of the Delhi Rent Control Act having been held unconstitutional, Section 50 of the Act to the extent it bars jurisdiction of civil court to entertain any suit or proceeding in relation to the fixation of a standard rent in relation to any premises to which the Act applies is no more applicable and therefore it cannot be said that a civil court does not have jurisdiction to fix a fair and reasonable rent in respect of the premises to which the provisions of the Delhi Rent Control Act apply.
6. Order 7 Rule 11 of the Code of Civil Procedure, to the extent it is relevant provides that the plaint shall be rejected (i) where it does not disclose a cause of action; (ii) where the suit appears from the statement made in the plaint to be barred by any law.
7. It was contended by the learned counsel for the appellant that since Section 4 of the Delhi Rent Control Act which prohibited recovery of rent in excess of standard rent has been held to be unconstitutional, the suit filed by the appellant was not barred by Section 50 of the Delhi Rent Control Act which oust the jurisdiction of civil court only with respect to such matters which the Rent Controller, under the provisions of the said Act has been empowered to entertain and decide. He further submitted that in any case, the suit filed by the plaintiff was not for fixing standard rent but was for a declaration that it was entitled to revise the rent to Rs.16,000/- p.m. with effect from 1.4.2007.
8. The issue involved in this case came up for consideration before a Division Bench of this Court in Model Press Pvt. Ltd. v. Mohd. Saied 155(2008) Delhi Law Times 403. In that case, basing their case on quashing of Sections 4, 6 and 9 of the Delhi Rent Control Act in the case of Raghunandan Saran Ashok Saran(HUF) (supra), the appellant before this Court claimed that they were entitled to receive rent at the prevailing market rate and since the market rate of rent was more than Rs.3,500/- p.m. their tenants were liable to be ejected by the civil courts, the tenancy having already been determined. Plaints filed by them were, however, rejected being barred by Section 14 of the Delhi Rent Control Act. It was urged before this Court that since Sections 4,6 and 9 of the Delhi Rent Control Act had been struck down, there was no embargo on the landlords to recover the standard rent as determined by the said provisions and hence the rates at which rent could be RFA No.257/2012 Page 6 of 14 realized by them, as on date when the suits were filed, would determine the question whether the civil suit had jurisdiction and since it had been pleaded by them that the market rent was much more than Rs.3500/- p.m., the plaints could not be rejected at the threshold. Rejecting the contention, the Division Bench, inter alia, observed and held as under:-
"12. But, with respect to the agreed rent, wherever the same is less than Rs. 3,500/- per month and the tenant willingly paid the same, the question of fixation of standard rent does not arise. In such scenario, the issue of Section 4, 6 and 9 becomes irrelevant. The only issue which can be urged by the landlord is that the agreed rent was limited to the duration of the lease and after the same was over, the landlord would be entitled to increase the rent.
13. But, unfortunately, for the landlords who are receiving a rent of less than Rs. 3,500/- per month, there is no provision available for them to unilaterally increase the rent.
14. It would not be out of place to note that in para 28 of its decision in Raghunandan Saran's case (supra), after giving reasons as to why Section 4, 6 and 9 of the Delhi Rent Control Act 1958 were ultra vires the Constitution, the Division Bench held:
The provisions are archic. They contain no mechanism to compensate the landlords to offset inflation. There ought to be a mechanism to increase the agreed rents keeping in view the price index.
15. Thus, even the Division Bench which penned the decision in Raghunandan Saran's case (supra) made it clear that a mechanism has to be put in place for the landlords to increase the agreed rent keeping in view the price index.
20. It is unfortunate that after the decision in Raghunandan Saran's case, the legislature has not filled up the vacuum created in the law with Sections 4, 6 and 9 of the Delhi Rent Control Act 1958 being held ultra vires the Constitution. The mechanism required to be put in place, as observed by the Division Bench in para 28, has yet to find its place. But, since under the garb of interpretation, this Court cannot legislate, the inevitable consequence has to be that the appellants can claim no more rent from their tenants other than the agreed rent which the tenants are happily paying. Since the agreed rent in both cases is far below Rs. 3,500/- per month, we hold that the learned Trial Judges were correct in rejecting the plaints as indeed the claim for recovery of possession against the respondents was not maintainable before a Civil Court."
9. There is no practical distinction between the case before this Court and the cases which were considered by the Division Bench of this court in the case of Model Press Pvt. Ltd.(supra). In those cases, the agreed rent was Rs.1285/- p.m. in one case and Rs.89.60 in other case. The landlords in those cases took the plea that the market rent at the time of filing of the suit was more than Rs.3500/- p.m. In the case before this court, admittedly the rent agreed at the time of letting out of the suit premises was Rs.80/- p.m. and the plea taken by the appellant is that market rent of the said premises is not less than Rs.20,000/- p.m. The only difference is that in the cases before the Division Bench, the landlords had directly instituted the suit for recovery of possession of the premises whereas in the case before this Court, the landlord is seeking a declaration that it is entitled to recover market rent from the respondent. But, the ratio of the decision is that in the absence of a statutory provision to this effect, the rent cannot be increased without RFA No.257/2012 Page 8 of 14 consent of the tenant. But, the Division Bench, in para 13 of the judgment has expressly held that the landlords who are receiving less than Rs.3,500/- p.m. are not entitled to any unilateral increase in rent. Therefore, in the absence of an agreement to this effect, the appellant before this Court is not entitled to claim rent at the rate of Rs.16,000/- p.m. and consequently it had no cause of action to file a suit seeking a declaration which will entitle it to the enhanced rent claimed by it.
10. The issue involved in this appeal came up for consideration before a Division Bench of this Court in Santosh Vaid v. Uttam Chand 2012(188) DLT 29. In one of the matters before the Division Bench, the case of the appellant/plaintiff was that the respondent/defendant was a tenant under him since the year 1984 at the rent of Rs.260/- p.m. and that he was entitled to rent comparable to the valuation of the rupee in the year 1984 when the premises were let out. He claimed that the value of Rs.260/- in the year 1984 was equivalent to Rs.6500/- in the year 2009 and therefore he was entitled to recover rent at Rs.6500/- p.m. He also claimed that similar premises were being let out on rent at Rs.10,000/- p.m. In support of his case, he placed reliance on Raghunandan Saran Ashok Saran(supra). The learned Trial Judge held that as per Section 6(A) read with Section 8 of Delhi Rent Control Act, the rent could be increased every three years by 10% but the appellant/plaintiff, instead of claiming such increase was demanding equivalent value as in the year of letting, therefore he had no cause of action to file that suit. The first appeal filed by the plaintiff/appellant having been RFA No.257/2012 Page 9 of 14 dismissed, he had approached this Court by way of RSA No.116/2011. Rejecting RSA No.116/2011 as well as connected matters, the Division Bench, inter alia, observed and held as under:-
"26. Rate of rent is a matter of contract and can be varied in accordance with agreement only and not unilaterally....
However, if the premises are within the purview of the Rent Act which prohibits the landlord from evicting the tenant for the reason of expiry of the term for which the premises were let out, the landlord cannot while being so prohibited be permitted to claim mesne profits or increase in rent unless permitted under the Rent Act. If the eviction is prohibited, the possession cannot be said to be unauthorized and the question of mesne profits does not arise. If it were to be held that though owing to the prohibition against eviction contained in the Rent Control Legislations, the landlord is not entitled to evict the tenant but is nevertheless entitled to recover mesne profits for the period after the expiry of the period for which the premises were let out, the same would result in reducing the Rent Control Legislation to a dead letter and defeating its purpose. The same cannot be permitted. Thus, in the absence of a provision in the statute it cannot be held that a landlord is entitled to market rent from a protected tenant....
28. Even though the 10% increase in rent every three years provided for under the Delhi Rent Act may be perceived by some as inadequate but that is no reason for this Court to provide for a higher or more frequent increase. The same falls in legislative domain. This Court cannot step into the shoes of legislature....
29. We accordingly answer the question framed by us herein above as under:-
A landlord of a premises governed by the Delhi Rent Control Act, 1958 is entitled to have increase(s) in rent only in accordance with Section 6A and 8 thereof and not RFA No.257/2012 Page 10 of 14 otherwise; such a landlord cannot approach the Civil Court contending that the rent stands increased or should be increased in accordance with the inflation or cost price index; the jurisdiction of the Civil Court in this regard is barred by Section 50 of the Delhi Rent Act."
11. In my opinion, the plaint is also liable to be rejected for the reason that it discloses no cause of action for revision of the rent to Rs.16,000/- per month. This is not the case of the appellant that the agreement between the appellant/its predecessor and the respondent provided for payment of rent at the rate of Rs.16,000/- p.m. Admittedly, the agreement between the parties provided for payment of rent only at the rate of Rs.80/- p.m. The lease of immovable property in view of the provisions contained under Section 105 of the Transfer of Property Act is nothing but a contract between the lessor and the lessee and the parties to the lease are, therefore, bound by the terms and conditions agreed by them at the time of creation of the lease. The rent, being an essential term of the lease contract, it cannot be changed unilaterally either by the lessor or by the lessee, unless there is a contractual or statutory provision providing for such an increase. Sections 4, 6 and 9 of the Delhi Rent Control Act having been held unconstitutional by a Division Bench of this Court, there is no statutory backing for a unilateral increase in rent by the lessor and decrease in rent by the lessee. In the absence of any statutory provisions to regulate the payment of rent, the parties have necessarily to abide by the terms of the contract entered into by them in this regard, at the time of creation of the lease. A declaration can be sought by a person with respect to any legal RFA No.257/2012 Page 11 of 14 character or to any right as to any property. Therefore, in order to succeed in a suit seeking declaration with respect to enhancement of rent, the lessor has necessarily to base his case on a statutory or contractual right to such enhancement. If there is neither a legal nor a contractual right available to the lessor for enhancement of rent, he would have absolutely no cause of action to file a suit seeking a declaration that he is entitled to payment of enhanced rent.
12. It can hardly be disputed that a void has been created in the legislation on account of Sections 4, 6 and 9 of the Delhi Rent Control Act having been declared unconstitutional and no alternative mechanism having been provided by the Legislature for fixing of a fair and reasonable rent. It was however for the Legislature to step in to fill the vacuum created on account of Sections 4,6 and 9 of the Delhi Rent Control Act having been declared ultra vires and evolve a statutory mechanism to address the concern expressed by the Division Bench of this Course in the case of Raghunandan Saran (supra). The Legislature has not taken any steps to address the handicap which the landlords are facing on account of there being no statutory provision providing for a reasonable increase in the agreed rent. On the one hand, the statutory protection available to the tenant under Section 14 read with Section 50 of the Delhi Rent Control Act continues to be available to them.
13. The Division Bench of this Court in the case of Raghunandan Saran Ashok Saran (supra) had noticed that old tenancies, whether residential or RFA No.257/2012 Page 12 of 14 commercial, were let out long back at very meager rent. It also noticed that commercial properties fetching meager rents were being used for running trades bringing huge profits to the tenants was an unjust and unreasonable situation. The Division Bench noted that it is not always correct that all the landlords are rich and all the tenants are poor, these being rich as well as poor in both the categories and therefore there was an imperative need to treat both the sides fairly and reasonably. Unfortunately, the position continues to be the same despite more than 10 years having been passed since Sections 4, 6 and 9 of the Delhi Rent Control Act were held unconstitutional by this Court. Unless remedial steps are taken by the Legislature, the misery of the landlords getting rent which is not adequate even to meet the cost of maintenance of the tenancy premises would continue to persist. In the absence of revision of rents, there would be no incentive for the landlords to carry out even basic repairs in these premises. Despite an alarming situation, highlighted by this Court in the case of Raghunandan Saran Ashok Saran (supra), the statutory bar on eviction of the tenants, continues to subsist without simultaneously bringing some succour to the landlords by providing for a reasonable increase in rent. However, in the absence of a statutory provision providing for increase in rent, neither the landlord can unilaterally increase the agreed rent nor can the civil court step in and grant enhanced rent to the landlord. RFA No.257/2012 Page 13 of 14
14. For the reasons stated hereinabove, I am of the view that since the plaint did not disclose any cause of action to file the suit, it was liable to be rejected in view of Order 7 Rule 11of the Code of Civil Procedure.
The appeal is hereby dismissed.
V.K.JAIN, J July 04, 2012 rb/ks RFA No.257/2012 Page 14 of 14