Landlord Not Precluded From Making An Application For Fair Rent Determination During Subsistence Of Contractual Tenancy: SC [Read Judgment]

Interpreting provisions of the Telangana Building (Lease, Rent and Eviction) Control Act, 1960, the Supreme Court has held that a landlord is not precluded from making an application for determination of fair rent during the currency of agreed rent between the landlord and the tenant.

The contention taken in this appeal was that the landlord is bound by the contractual rent and during subsistence of contractual tenancy he cannot be allowed to file application for enhancement of rent. It was contended that permitting the landlord to file application for enhancement of rent even though he is bound by a contract, will be permitting something which is against Rent Control Legislation, which has to be interpreted in a manner so as to save tenant from exorbitant rent.

Referring to the provisions of the Telangana Rent Control Act, the bench of Justices Ashok Bhushan and MR Shah said:

The above provision gives right to both the tenant and the landlord of a building to make an application for fixing fair rent. The provision of Section 4(1) cannot be read in a manner that it is not applicable with regard to the contractual tenancy. The Rent Control Legislations are enacted to protect both tenant and the landlord. In the event the submission of the appellants is accepted that during the currency of the contract of tenancy, no one can file application for fixing of fair rent, the said provision shall operate detrimental to both the tenant and the landlord.

The Court explained this with an illustration:

A tenant, who is in urgent need of premises, entered into a contract with landlord where he had to agree to pay an unreasonable higher rent during the force of circumstances, if the tenant has no right to make an application for fixing of fair rent during the currency of tenancy, the said provision will harshly operate against the tenant. The concept of determination of fair rent is to operate equal for the tenant as well as the landlord. The object of the Act is that neither the landlord should charge more than the fair rent of the premises nor tenant should be forced to pay higher rent than the fair rent. The statutory scheme brought in the statute by way of Section 4 which is a beneficial both to the tenant as well as the landlord.

Referring to a constitution bench judgment in M/s. Raval and Co. vs. K.G. Ramachandran, 1974(1) SCC 424, the Court said that that application for determination of fair rent can be made both by the landlord and tenant which can be made even during currency of contractual tenancy.

Another contention was that the Central Government, Ministry of Housing and Urban Development has circulated a Model Rent Control Legislation to be adopted by all the States which precludes the landlord for making application for fixation of fair rent during the currency of contractual tenancy. The Court said that such Model Legislations are only guidelines, which in no manner, can have any effect on the statutory provisions of 1960 Act which are still occupying the field.  

Case Name: N. MOTILAL vs. FAISAL BIN ALI
Case no.: CIVIL APPEAL NO.710 OF 2020 
Coram: Justices Ashok Bhushan and MR Shah
Counsel for Appellant: Adv Yelamanchili Shiva Santosh Kumar
Counsel for Respondent: Sr. Adv Kiran Suri

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