All the four revisions are by the same landlord against the various tenants of different shops situate in the same building.
The landlord had instituted separate small causes court suits for eviction of the tenants on the ground of default in payment of rent at the enhanced rate which he alleges he had increased by sending proper notice to that effect to the respective tenants. The suits were dismissed by the court below by separate but identical judgments with the finding that there was no default in payment of rent by any of the tenants as they have been paying rent at the usual rate agreed by the parties and the increase in the rent as alleged by the landlord was not legal.
The revisions were nominated to me by the order of the Chief Justice dated 4.3.2013. After the parties have exchanged the pleadings and have agreed for final disposal of the revisions at the stage of admission, all the revision were clubbed and ordered to be taken up for hearing together.
Sri R.P.Singh, learned counsel for the landlord had advanced one simple argument that in an earlier round of litigation between the same landlord and one of the tenants, now represented by his heirs and legal representatives, this Court in Writ Petition No.33224 of 1998 Milap Chandra Jain Vs. State of U.P. and others decided on 12.9.2001 which decision is reported in 2001 (2) ARC 488 : 2001 ALJ 2656 : 2004 (45) ALR 345 : 2002 (1) R.L.R 41 had struck down Section 3(k) and the corresponding provisions of Section 4(2), 5, 6, 8 and 9 of U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act i.e U.P. Act No.13 of 1972 (hereinafter for short 'Act') as ultra virus to the Constitution of India as a consequence of which fixation and enhancement of rent has to be in accordance with general tenancy law and once the landlord by a due notice demands a fair and reasonable higher rent, the tenant has no option but to pay the rent at the rate so demanded or to vacate. Any default on his part in the payment of the said rent thereafter is sufficient to entail his eviction.
Sri Ashok Mehta, learned counsel appearing for the tenant in Civil Revision No.72 and 73 of 2012 to counter the submissions made on behalf of the landlord contended that the judgment and order of this Court in the case of Milap Chandra Jain (supra) itself lays down sufficient guidelines for increase of the rent and, therefore, enhancement of rent, if any, has to be made in accordance with the said directions. Otherwise, the enhancement could only be by the agreement of the parties or by competent court or authority but not by the Small Causes Court or the revisional court thereto. The enhancement of rent would attract the principles of contract law.
Sri Anoop Trivedi, learned counsel appearing for the tenant in Civil Revision No.74 of 2012 and Sri Madhav Jain, learned counsel appearing for the tenant in Civil Revision No.56 of 2012 have adopted the stand and defence taken by Sri Mehta, referred to above but have added that the pleadings regarding enhancement of rent are not sufficient and that the landlord has no right under law to enhance the rent unilaterally.
In the wake of aforesaid facts and submissions, the precise question which springs up for consideration in these revisions is whether the rent of tenancies stood automatically increased pursuant to notices of enhancement of rent alleged to have been given by the landlord and the failure of tenants to pay the enhanced rent or to vacate the premises made them liable for eviction.
In attempting to answer the above question, I consider it prudent to first deal with the meaning of the word 'rent'.
In Abdul Kader Vs. G.D.Govindaraj Vs. New Delhi Municipality AIR 2002 SC 2442 it has been held the word 'rent' may be taken in its ordinary dictionary meaning as it has not been specifically defined in the Act.
'Rent' in common parlance is consideration paid for use or occupation of a property. It is a fee by way of compensation usually paid periodically for using or occupying a property, land, building and the like. It includes all payments to be made by the tenant to the landlord for the use and occupation of the land, building or its appurtenances including fixtures and fittings or furnishings or amenities provided in connection thereto.
The dictionary meaning of the word 'rent' as contained in the Webster's Comprehensive Dictionary is "compensation made in any form by a tenant to a landlord or owner for the use of land, buildings etc. especially compensation paid in money at regular or specified intervals.
In Dr. H.S.Rikhy Vs. New Delhi Municipal Committee AIR 1962 SC 554 the Apex Court observed that the rent may be used in legal sense as recompense paid by the tenant to the landlord for the exclusive possession of the premises occupied by him.
The precise legal meaning of the rent is contained in Section 105 of the Transfer of Property Act, 1882 which defines a lease. In defining lease, the aforesaid provision explains that the person who transfer his right to enjoy property is the lessor, to whom the said right of enjoyment is given is the transferee or lessee, the price which is paid for the enjoyment of the said right is called premium, and the money, share, service or other thing to be so rendered is called the rent. In short, any periodic payment made by the tenant/lessee to the landlord lessor for the use and enjoyment of the property leased out either in form of money or service or other things is rent.
Tenancy is nothing but lease and is a term generally used to denote lease of a building in contrast to to lease of open land.
The rent payable by the tenant to the landlord is generally one which is fixed by the agreement of the parties. It may sometimes, specially in the case of statutory tenancy may be fixed by the competent authority at some fair and reasonable rate depending upon host of factors. So long the rent is not fixed by a competent authority, the rent agreed by the parties prevail but its fixation or/enhancement cannot be a one sided affair. It cannot be unilaterally fixed either by the landlord or by the tenant. Generally, rent once agreed or fixed may not be varied except with the agreement of the parties or unless it is re- fixed by the authority concern.
The tenancy can broadly be either contractual or statutory. A contractual tenancy is a creation of a contract whereas a tenancy which has been created by any statute is called a statutory tenancy. In a contractual tenancy, fixation or enhancement of rent is governed by the principles of contract law, whereas in a statutory tenancy the determination and payment of rent is dependent upon the statute under which it is created.
The law is well settled that in contractual tenancy which is not governed by statutory law the parties are free to agree for a fair and reasonable rent and for its enhancement periodically or on particular occasion or event. The principle of "offer and acceptance" comes into play. The offer of rate of rent made by one party and accepted by another either expressly or implied would result in settlement of rent.
It is in this context that in AIR 1925 Oudh 189 (3) S. Burge and others Vs. Moulvi Md. Inamullah Khan and AIR 1926 Oudh 79 Baboo Lal Vs. Mirza Mohammad Askari the Court of Additional Judicial Commissioner held that where the landlord had served a notice of demand of rent at a higher rent per month with effect from a particular date and if the tenant had not accepted the proposed enhancement, he was free to vacate the said premises and failure on his part to vacate clearly implies that he agreed to abide by the proposal contained in the notice.
A similar view was taken by the Nagpur High Court in Parakh Nandlal Vs. Anant Govind Jog 1940 Indian Cases 895. In the said case the tenant replied to the notice and refused to pay the enhanced rent. He did not even vacate the premises. It was held that he was bound to do one or the other and as he did not vacate he would be deemed to have accepted the rent demanded inspite of his refusal.
The principle laid down above may be true and correct as far as contractual tenancies are concern but whether the same would be applicable in respect to statutory tenancies also, is a matter of deliberation.
In a statutory tenancy, rent once fixed either with the agreement of the parties or by the authority competent may not be allowed to remain static but it cannot be enhanced otherwise than following the procedure prescribed in the statute.
The procedure for fixation of fair and reasonable rent i.e. standard rent in U.P. was contained in the Act but the same has been declared to be ultra vires to the Constitution of India. Thus, leaving no provision under the Act for determination, fixation or revision of rent already fixed. In such a situation, the normal course would have been to apply the general principles for fixation and enhancement of rent but this Court in declaring the relevant provisions of the Act to be ultra vires to the Constitution of India vide Milap Chand Jain (supra) itself laid down sufficient guidelines for fixation of rent. It specifically provided that fixation of rent has to be in accordance with the legislation proposed and directed to be enacted, but in the meantime, District Magistrate can also fix the rent. Since the legislation has not been enacted as directed, the District Magistrate obviously is the competent authority recognized for the fixation of rent provided he is so approached.
In Mohd. Ahmad and another Vs. Atma Ram Chauhan and others AIR 2011 (7) SC 194 : (2011) SCC 755 their Lordships of the Supreme Court were dealing with question of enhancement of rent pending petitions under Article 226/227 of the Constitution of India in matters arising under the Act and they laid down similar guidelines and schemes so as to minimise the landlord-tenant litigation, especially regarding fixation of rent. The Supreme Court apart from laying down other things, held that the tenant must enhance the rent according to the terms of the agreement or at least by ten percent every three years and the parties are at liberty to get the rent fixed by the official valuer or any other agency having expertise in the matter. It also provided that the rent so fixed should be just, proper and adequate keeping in mind the location, type of construction, accessibility to the main road, parking space facilities etc. The aforesaid decision clearly points that enhancement of rent should not be unreasonable, unjust or a bonanza to the landlord but has to be guided by sound principles depending upon various factors and that it should be fixed by some agency having expertise in the matter, meaning thereby that the fixation of rent is not at the absolute and sole discretion of the landlord or the tenant.
In another case of Pallawi Resources Limited Vs. Porotos Engineering Company Private Limited (2010) 5 SCC 196 applying the principle of harmonious consideration and taking a holistic approach the Supreme Court ruled that even in cases of deemed increase of fair rent or an automatic increase of rent, somebody would have to determine that it has so increased and such an authority would definitely be a Rent Control Officer, who could exercise the power only on receiving the application as unless an application to that effect is filed nobody would know that in fact a case for increase of fair rent has accrued or is sought for by the party concern. In short, it has been suggested that even in case of automatic increase of rent some application to some authority is mandatory, otherwise no one would be able to know that a case of increase of rent has been made out by the party.
A learned single Judge of this Court in a recent judgment in the case of Avadha Raj Singh Vs. A.D.J., Gorakhpur and others 2013(3) ARC 151 in dealing with the provisions for enhancement of rent observed that the Supreme Court in M.V.Acharya Vs. State of Maharashtra AIR 1998 SC 602 heavily condemned the practice of "frozen rents" and that an Act which does not provide for recurring enhancement of rent runs the risk of being struck down as unconstitutional. It further observed that the U.P. Act also envisages freezing of rent and there is hardly any scope of any increase in rent as by virtue of Section 5 of the Act, landlord can only enhance rent by 25% by giving three months notice from the date of enforcement of the Act i.e. 15.7.1972. A landlord thereafter can only enhance rent of tenanted building in occupation of a private tenant in connection of tenancies of Trust property or wherein Government or Government Corporations are tenant by virtue of Section 9-A and 21(8) of the Act respectively. Thus, the court directed that a landlord of a building with rent of less than Rs.2000/- p.m. may file an application for enhancement of rent before Rent Control and Eviction Officer who shall determine and fix rent as per the analogy of Section 21(8) of the Act so that the rent once fixed may not remain static for want of statutory provision in that regard.
The above decision also indicates that the approach of the courts all through had been to get the rent in respect of properties covered by any legislation to be fixed by some competent authority instead of leaving it upon the landlord or tenant unless mutually agreed upon.
In view of the above, if the landlord wants to increase the rent agreed or earlier fixed by the competent authority the proper course available to him is to make an application to the authority concern i.e. District Magistrate and get it determined, re-fixed or enhanced in the presence of the parties rather than drawing any inference or treating the rent enhanced by him to have been impliedly accepted.
In the cases at hand all the tenants were allotted shops by the Rent Control and Eviction Officer under the provisions of the Act and the rent payable by each of them was determined and fixed by the said authority. The relation of the landlord and tenant between the parties thus stood covered by the provisions of the aforesaid Act and the tenancy became statutory tenancy rather than a contractual one.
Accordingly, the rent agreed upon by the parties earlier or which was fixed at the time of allotment can either be enhanced under the provisions of the Act or by the agreement of the parties. Since the provisions of the Act relating to determination and fixation of rent are no longer in existence and the landlord has not applied to any authority or District Magistrate for re-fixation of rent, as permitted while declaring the relevant provisions to be ultra vires to the Constitution of India, the only option is to get it fixed or enhanced by mutual agreement but it cannot unilaterally be enhanced by the landlord.
There is no material on record that any of the tenants have accepted the demand of enhanced rent as raised by the landlord. It is only by implication that it is being contended that the rent stood enhanced. In the case of statutory tenancy there is no scope for drawing any presumption for unilateral enhancement of rent unless there is an express consent or agreement of the parties. There is no such consent of the tenant on record.
In view of the aforesaid facts and circumstances, the rent of the tenancies remained the same as was fixed by the authority at the time of allotment and subsequently agreed to be increased by mutual consent but there is no automatic further increase as per the alleged notices. The landlord on the expiry of the notice periods, unilaterally treated the rent to have been increased and instituted proceedings for eviction on the ground of default in payment of increased rent which is not legally possible in case of statutory tenancy as there is no explicit agreement on such increase or its refixation by any competent statutory authority.
It is important to reiterate that the landlord in Milap Chandra Jain (supra) inter alia claimed that the aforesaid provisions of Section 2 (k), 4(2), 5, 6, 8 and 9 of the above Act be declared ultra vires to the Constitution of India; that the standard rent payable should be one equivalent to prevailing market rate relating to similar buildings in the area which are exempt from operation of the Act; that in the event of failure to arrive at a settlement regarding suitable rate the same may be determined by the District Magistrate considering the criteria as may be laid down by the Court; and the State of U.P. through the Department of Food and Civil Supply be directed to take steps to provide for enhancement of rent in the new rent control legislation on the line of the Model Rent control Legislation. The Court struck down the definition of "standard rent" contained in Section 2(k) of the Act and declared the provisions of Section 4(2), 5, 6, 8 and 9 of the Act as ultra vires to the Constitution of India with the direction to the State Government to redefine "standard rent" or fair rent in accordance with the Model Rent Control Legislation published by the Government of India in July, 1992 with the expect ion that the legislation in this respect shall be enacted at the earliest. The Court refused to determine/fix the rent of the building and left it open to be determined in accordance with the legislation to be enacted in pursuance of the above order and in the meantime, leaving upon the District Magistrate to fix the rent of the disputed shops, if necessary. In other words, fixation of rent of disputed building was left to be decided by the authority concern after the new legislation is enacted by the Legislature in accordance with the directions contained in the judgment and in the meantime permitting District Magistrate to fix the rent. The above judgment and order of the High Court is final and conclusive.
It is admitted to the parties that in pursuance thereof so far no legislation has been enacted. The District Magistrate has also not fixed fair and reasonable rent of the building or any shop or part of the said building. The landlord has not even approached any authority for determination and fixation of fair and reasonable rent.
In view of the aforesaid facts and circumstances, the rate of rent demanded by the land-lord under the impugned notices at a higher rate was not the agreed or fixed rent between the parties and the tenants were not required to pay the same. Accordingly, in my opinion, the Court below has not erred in exercise of its jurisdiction in non suiting the landlord in the suit for eviction of tenants on the ground of default.
In the end, I am unable to refrain myself from expressing my pain to the indifferent attitude shown to the suggestion and advise of the Court in the earlier pronouncements.
This Court in Milap Chand Jain (supra) way back on 12.9.2001 had struck down certain provisions of the Act in relation to "standard rent' and re-fixation of fair rent with the direction for enactment of proper new legislation on the model rent control legislation published by the Government of India in July, 1992. Another Lordship of this Court in Bal Kishan Vs. Additional District Judge 2003 (2) ARC 545 had made strong recommendation to consider for providing a general provision for enhancement of rent but the people of the State have not seen any amendment in the existing Act and the new legislation is also not in sight.
The Act is not applicable to buildings constructed on or after 26th April, 1985 for a period of 40 years and to those tenancies having rent of Rs.2000/- and above. In other words, it covers only old tenancies with meagre rent of less than Rs.2000/- p.m. The landlord of such buildings are the worst suffers as they are not in a position to increase the rent or to get the building vacated from tenants. They are unable to utilise their property in a more appropriate or beneficial method suiting to its value. Therefore, it is imperative and high time for the legislature to give a re-look to the existing statute as had been directed earlier.
The apathy shown by the law makers to the suggestions for improvement in the Act and to the directions of the courts to come out with proper and better legislation, reminds me the decision of the Supreme Court in Union of India Vs. Raghubir Singh AIR 1989 SC 1333 wherein it quoted Lord Reid "There was a time when it was thought almost indecent to suggest that Judges make law. But we do not believe in fairy tales any more", suggesting that time has come when the Courts may under compulsion took over the work of legislation.
If the lawmakers neglect their duty and do not care to enact proper legislation in time or despite directions of the Court, the people would agitate and force them to make the necessary law and even if this fails a day is not far when the courts will have to clothe themselves with the power to enact law.
It would be a grim position causing overlapping of jurisdiction but non the less is a sign of caution to the legislature to wake up and to leave aside governance a little and to serve the people more.
Let a copy of this judgment be placed before the Chairman, Law Commission, U.P. and the Legal Remembrancer who shall prepare a report on the follow up action on the directions of the court in Milap Chand Jain (supra) and Bal Kishan (supra) and to oversee the implementation of the above decision. The report shall be submitted by him to the court within a period of three months of receiving a copy of this judgment.
The revisions have no force and are dismissed with the above caveat.
Order Date :- 3.2.2014 brizesh