NOTES AND COMMENTS

THE PUNJAB RENT ACT : A TREND SETTER

I Introduction
SHELTER IS one of the basic necessities for human living apart from food and
clothing. The problem of housing is more acute in the developing countries as
compared to developed ones. The population explosion in these countries, lack of
proper planning for development, unsystematic tackling of growth issues, neglect
of education, etc., have significantly contributed towards the present state of
affairs that more than half of the population remains without proper shelter even
when we are on the verge of entering into the twenty-first century. In India, apart
from the above reasons, the various Rent Acts operative in different states of the
Union have singularly contributed in a big way towards the collosal failure in
providing a proper shelter for every citizen.
As long as a building is enjoying exemption from the operation of the Rent
Act, popularly known as 'Rent Holiday', the landlord-tenant relationship is
governed by the Transfer of Property Act 1882. Once the leased premises fall
within the purview of the Rent Act, the tenant acquires the states of a statutory
tenant. As a statutory tanent, he is covered by the protective umbrella of the Rent
Act.
The present paper is devoted to identifying the ills under the existing rent law
wfrich are responsible for converting the initial protective umbrella to a crown of
thorns on the tenants and how the new Rent Act in Punjab is expected to transform
this thorny crown into a protective head gear.

II Historical perspective
Rent control legislation in all parts of the world was uniformaly the fall out
of a war. The destruction of buildings, caused by warfare, always led to a shortage
of accommodation. This shortage led to a spurt rise in rents for those affected by
the war. Rent Control legislations provide an immediate relief to the victims by
freezing the rents at a particular level. In England, for example, the first was
caused large scale destruction of buildings and this created a shortage of accom-
modation. The Legislature was quick enough to bring the Rent and Mortgage
Interests (War Restrictions) Act 1915 on the statute book. Through this piece of
legislation the rents and interest rate on mortgages were frozen at the 1915 level.
The concept of 'controlled tenancies' was the underlying feature of this Act. After
the war was over and construction activity picked up, the process of decontrol was
started in 1920. The Acts of 1920 and 1923 led to the gradual release of houses
from the control of the Rent Act. The Acts of 1933 and 1938 provided for
automatic decontrol. The onset of the Second War made the legislature to put the
:lock back to the 1915 position. For the second time, once the war was over, the
legislature initiated the exercise of decontrolling the tenancies. The 1946 Act

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68 JOURNAL OF THE INDIAN LA W INSTITUTE [Vol. 39 : 1

introducted the system of rent tribunals to fix rents for furnished premises. The:
tribunals could assess 'reasonable rents' for certain controlled tenancies under yet
another Act of 1949. The Act of 1954 provided an impetus for the construction
of more houses, thel957 Act introduced the concept of 'regulated tenancies' for
certain classes of tenancies which ushered in a new era in the landlord-tenant
relations. The next milestore came in 1972 when the process of transfer froni
'control' to 'regulation' was started for all tenancies. The subsequent Act of 1973,
1974 and 1977 consolidated the previous enactments to check the effects of high
inflation on British economy. The Acts of 1980 and 1986 made radical changes
for releasing tenancies from regulation to laissez-faire.1

Ill Rent legislation in India

The rent legislation in India was also the fall out of war as in case of England.
As a result of the First World War, the provincial rent legislation came first of allj
in Bombay.Xa This was followed by the Rent Acts in Calcutta2 and Rangoon.3 The
position in rest of British India remained the same, as was prior to the war, that
the landlord-tenant relationship was govered by the Transfer of Property Act
1882.4
The Second World War was mainly responsible for the rent legislation in
other provinces of British India. The first one was the New Delhi House Rent
Control Order of 1939. In 1941, came the Punjab, Mysore (Karnataka) and Madras
(Tamil Nadu) Rent Control orders. The Bihar House Rent Control Order of 1942
was followed by the Rent Control Order in Madhya Pradesh, Uttar Pradesh and
Assam in 1946. Orissa, Rajasthan and Kerala had their Rent Control Orders in
1947, 1948 and 1950 respectively.
The historical background of the rent legislation in Punjab and its subsequent
limitations need to be seen in the context and special circumstances arising otiti
of the Second World War. In order to partly off-set the costs of the war by raising/
additional revenue, the British Government imposed a new tax under the Punjab
Immoveable Property Tax Act 1940.5 The provincial government was conscious
of the fact that the burden of the new tax on urban properties may be passed on
by the landlords to their tenants. Another fact which contributed for the enanctment
of Rent Act was the acquisition of residential buildings in large number by the
administration, specially in Lahore, to accommodate the families of civil and
army officers engaged in the war efforts in some capacity or the other. Because
of paucity of accommodation landlords started evicting their tenants and offering
premises to others at higher rent.
The British officers, being well conversant with the time tested therapy of renti
legislation in their own country introduced the Punjab Urban Rent Restrictions

1. R.E. Megurry, The Rent Acts vol. I, pp. 1-3, 9-28 (11 ed.).
\a. The Bombay Rent (War Restrictions) Act 1918 dated 10th April 1918 replaced by the Bombay
(War Restrictions No. 2) Act dated 11 November 1918,
2. The Calcutta Rent Control Act 1920.
3. The Rangoon Rent Act 1920.
4. Henceforth referred to as T.P. Act.
5. Punjab Act No. XVII to 1940.

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1997] THE PUNHAB RENT ACT: A TREND SETTER 69

Act 1941.6 Through this short piece of legislation, the rents were frozen at 1939
level. The Act being a wartime measure was to remain in force for five years only.
On the expiry of five years, it was extended for one year more. In April 1947, when
the independence and the impending partition of the country was round the corner
and the province was without a Ministry, the Governor of Punjab was pleased to
enact the Pubjab Urban Rent Restriction Act 1947 through an ordinance. 7 The
1947 Act was more comprehensive than the 1941 Act. It introduced the formula
for fixation of fair rent by taking 1939 as the base year. Provision was made for
appointing rent conroller and appellate authority for rent cases. Summary proce-
dure was to be followed by these courts under the Act and not the one under the
Civil Procedure Code. The decision of the appellate authority was to be final. No
further appeal or revision could lie against the order of the appellate authority.
Section 13 of the Act incorporated a list of the grounds on which a landlord could
seek the eviction of the tenant. Contravention of any provision of the Act was
made punishable.
After the partition of Punjab, the Act of 1947 continued to be in force in East
Punjab which remained part of India. In 1949 when the two year term of the
Government's Act of 1947 was to expire, it was felt that the Rent Restriction Act
should remain on the statute book for some more time because of the large scale
uprooting and migration of population from West Punjab (Pakistan) to East Punjab
(India) has led to acute housing problem in the urban areas. In this backdrop, the
1947 Act was replaced by the East Punjab Urban Rent Restriction Act 1949.8 All
the provisions of 1947 Act were retained as such in the 1949 Act.
During the last 47 years of the 1949 Act being in force, only two amendments
of any consequence have been made. One was in 1956, through which the ground
of bona fide requirement was made non-available to the landlord in relation to
non-residential (commercial) building and the second was in 1985 through which
a retiring/retired government employee could evict a tenant from his residential/
scheduled building in a summary manner. These two amendments seem to have
been made under the pressure of tenants and the landlords respectively. The 1956
amendment has been declared as ultra vires by the Supreme Court recently in
Harbilas Rai Bansal v. State of Punjab9 holding that there is no nexus between
the amendment made and the object of the Act.
From the above comparative analysis, it becomes abundantly clear that in
India, in general and the State of Punjab in particular, the Legislature as compared
to their conterparts in England, has remained totally insensitive to the needs and
aspirations of the people who had elected them. Whereas in England the rent law
has been changing so as to keep pace with the changing needs of the society, the
Rent Act here has remained static for half a century. The failure of Legislature is
patent in view of the changing socio-economic scenario in the society. Whereas
on one hand there is the acute housing problem facing the masses. On the other

6. Punjab Act No. X of 1941.

7. Punjab Act VI of 1947 gazetted on 14 April 1947.
8. East Punjab Act No. 3 of 1949 (henceforth referred to as the Act of 1949).
9. A.T.t. 1996 S.C. 857.

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70 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 39 ; 1

hand, we continue to be governed by the outdated rent law based on outdated

concepts which have become irrelevant in the present set up of the society. The
Legislature and the administrators have failed to keep pace with the changing
needs of the time, The National Housing Policy of 1992, singularly blamed the
outdated Rent Acts as the cause of housing problem. It also identified the outdated
Rent Acts as an impediment on investment in buildings. The Government of India
proposed a model Rent Act through the 1992 Housing Policy. It is well understood
that the 1992 effort by the Government of India is not because of any new found
love for the masses but has been initiated under pressure from the World Bank and
the I.M.F. In the face of liberalisation, multi-national companies want to reap a
rich harvest from construction activity in this country and that is what is forcing
the government to repeal their rent laws. The M.N.Cs. cannot choose to invest in
contruction and lease them out to the needy with the present rent laws.

Ill Ills of existing law

(1) Outdated rent structure

An ironical feature of the Act are the provisions relating to fair rent. The word
'fair' would normally mean just, equitable impartial, dispassionate or objective.
The term 'rent' has been defined as a piece of property that the owner allows
another to use in exchange for a payment in services, kind or money.10 Putting the
two terms together, the expression 'fair rent' would mean a rent payable by the
tenant to his landlord which is just, equitable and reasonable. But over the last five
decades, Section 4 of the Act relating to determination of fair rent has come to be
seen as the most unreasonable, unrealistic, inequitable and unjust provision.
Section 4 makes it mandatory to take 1938 as the base year to determine the basic
rent of a building. The basic rent envisaged by the section is in the range of Rs.
25 to Rs. 50 per month and the permissible increase ranges from 8 per cent to 100
per cent. Whereas section 5 prohibits the landlord from charging anything more
than a month's advice rent, section 6 puts a total embargo on any future hike after
the fixation of fair rent.11 What was per se just, fair and reasonable in 1939 has
now turned out to be most inequitable, unfair and unjust and fails to take
cognisance of high costs of construction and inflationary trends.
The apex court upheld section 4 of the Act as not violative of article 14 of the
Constitution in Sant Lai Bharti v. The State of Punjab}2 The argument that this
provision is oppressive for the owner qua a tenant and that other Rent Acts
including the Haryana Rent Act envisaged a better rent structure did not find merit
with the Apex Court. The court ruled that it is the domain of the Legislature to
see as to what is best suited for the people and the court will not encroach upon
the domain. The courts including the apex court have remained indifferent

10. Webster's Third New International Dictionary vol. Ill, p. 1923.

1 1. For detailed discussion, see D.N. Jauhar, "Exploring Unfairness of the Fair : Paradoxes of Fair
Rent Fixation under Punjab Rent Act", 37J.I.L.1209-21 (1995).
12. A.I.R. 1988 S.C. 485.

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1997] THE PUNHAB RENT ACT: A TREND SETTER 71

spectators to the growing cost of living and the meagre fair rent received by a
landlord in the teeth of the law.13
The outdated rent structure under the Act has also caused serious damage to
the revenue collection by the local bodies like a Municipal Committee in the urban
areas. In view of the decisions of the Apex court in Dewan Daulat Rai Kapoor v.
N.D.MC.14 and Balbir Singh v. Municipal Corporation Delhi}5 the assessment of
house/property tax is to be made on the basis of fair rent under the Rent Act. Even
in cases of buildings occupied by the owners themselves, the test of a 'deemed
tenant' under the Rent Act is to be applied. The irrational formula for fair rent has
thus reduced the revenue of the local bodies to be so meagre that they cannot even
pay the salaries of their employees, what to talk of providing amenities and
services to the residents of city. Additionally, the poor return and in fact no return
in the form of rent has discouraged the owners from maintaining their property.
For want of proper investment which is required from time to time to make
necessary repairs, it has led to the decay and destruction of buildings much earlier
than their normal life span. This in turn further adds to the existing acute shortage
of accommodation in the urban areas.

(2) Role of dispute settlement machinery

The 1947 Act, adopted in 1949, has envisaged the litigation under the Act to
be a brief affair. The Act provided for the court of controller (commonly known
as rent controller) as the trial court and one court of appeal to be known as
appellate authority. These two courts under the Act were not to be civil courts but
designated courts. Any person could be appointed by the state government as
controller or appellate authority. As early as in 1950, a Full Bench of the East
Punjab High Court (as it was known then) had held in Pitman's Shorthand
Academy v. B. Lila Ram and Sons16 that the courts under the Act are persona-
designata. Section 15(4) of the Act specifically provided that the order of the
controller or that of the appellate authorithy (in those cases only where appeal
could lie against the order of the controller) shall be final The provision further
reaffirmed that no appeal or revision shall lie in any court against the order of the
controller or the appellate authority as the case may be. The Act also specified that
the Civil Procedure Code shall be applicable only for the summoning of the parties
and the witness and for execution of the orders of the designated coutrs. For all
other purposes, the designated courts under the the Act were to evolve and follow
their own summary procedure.
What was envisaged to be a brief affair of litigation between the landlord and
the tenant has in reality turned out to be a very prolonged rather an almost
unending affair for the parties. This can be gauged from the harsh reality that

\3.MirartDeviv.BirbatDass,A.l.R. 1977 S.C. 2\9\\ MstBehalKaurv. NikkaMal, 1985 (1) R.C.J.

«8S.C.
14. A.I.R. 1980 S.C. 541.
15.A.I.R. 1985 S.C. 339 followed in Banarsi DassMahajanv. State of Punjab, 1990 (1) R.C.R. 169
P&H(F.B.).
16. A.I.R. 1950 East Punjab 181 (F.B.).

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72 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 39 : 1

almost in all the rent cases reported from the Supreme Court or different High
Courts, sometimes both the litigants or at least one of them is invariably named
in the title to the case with a suffix 'deceased through LRs\ The field survey in
Punjab and Chandigarh has shown that it takes anywhere between 20 to 30 years
for the final disposal of a case under the Rent Act. It is the chilling effect of the
well anticipated prolonged litigation which makes the landlords to refrain from
letting out their premises to the needy when they themselves do not require it. It
also forces the property owners to devise new methods of avoiding the Rent Act
by creating a tenancy in the garb of a mortgage in his favour. This device helps
the landlord not only to save him from the Rent Act but also receive lumpsum
payment as key money in the form of mortgage money from his tenant which is
otherwise prohibited under various Rent Acts.

(i) Causes for delay

One of the causes of the prolonged litigation in landlord-tenant relations is the
hierarchy of courts now available to the parties. Although this is not the creation
of the Act but under the Constitution the High Courts and the Supreme Court have
come to play a role in rent cases. After 1950, when the Constitution came into
force, the High Court started intervening in rent cases under article 227. (High
Court's power of superintendence over all courts/tribunals in its jurisdiction). The
apex court started intervening in rent cases under article 136 of the Constitution
(Special leave Petition to the apex Court in any matter). Whereas the Act provided
for the order of the controller or of the appellate authority (only under four
provisions of the Act, where appeal could lie) to be final, the opening of two new
fora i.e., the High Court and the Supreme Court has made the rent litigation to be
a time consuming affair.
Secondly, the Act envisages the controller and the appellate authority as
designated courts. Their powers have come to be vested in the sub-judges and
District judges respectively. It is these judicial officers who have been designated
as Rent authorities under the Act. A sub-judge who exercises juridiction in other
twenty types of cases also functions as rent controller. The sub-judges or the
District judges are already so much overworked that it is humanly not possible for
them to decide rent cases speedily. It is a common sight that a long list of 80 cases
is daily displayed in the court of a sub-judge to taken up on a particular day and
this includes rent cases too. Rent cases are taken as other routine cases and thus
it takes anywhere between three to five years for disposal of such case like any
other civil suit. The position of the district judges, working as appellate authority
under the Act, is no different.
Thirdly, the judicial officers working as designated courts under the Act keep
on following the procedure under the Civil Procedure Code as if a rent case is a
civil suit. The judicial officers are expected to be well conversant with the
provisions of the Civil Procedure Code as day in and day out they have to follow
it in all civil suits. It is this frame of mind of theirs which cannot and does not
change to quickly put aside Civil Procedure Code for deciding Rent Cases. In
practice, they follow the Code in rent cases as religiously as in civil suits. This
can amply be gauged from the fact that the High Court in 1953 in the case fo Moti

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1997] THE PUNHAB RENT ACT: A TREND SETTER 73

Ram v. Ram Sahaixl had declared that the appellate authority had no power to
remand a case to the controller under the Rent Act. Despite intermittent remind-
ers1* by the High Court to the effect that there is no power of remand with the
appellate authority, the practice did not stop thus forcing a Division Bench of the
High Court in 1980 to order the circulation of the fact to all appellate authorities
under the Act that they do not have the power of remanding a case to the Controller
under the Rent Act.19
Further the frequent strikes by the lawyers at all levels, for one cause or the
other, also.contribute towards the delay not only in rent cases but in all types of
litigation. The lawyers in Chandigarh District Courts remained on strike for four
months from October 1992 to February 1993, ultimately leading to a spilt in'the
Bar.
The factors identified above have made the role of the dispute settlement
machinery under the Rent Act to be substantially contributing in prolonging the
litigation between landlords and tenants. This is what made Chief Justice E.S.
Venkatramaih (as he then was) to comment that "every fourth case pending in the
Supeme court and High Courts is a case under the Rent Act". 20 He also favoured
the Supreme Court's power under the Rent Acts to be transferred to the district
judges. 21

(ii) The Chandigarh experiment

The problems of lingering on of rent cases in Chandigarh Session's Division
was discussed by this writer with the senior-most puisne judge of the Punjab and
Haryana High Court who was the inspecting judge for this Session's Division. The
honourable judge could be convinced with the help of data that some of the
subordinate judges be entrusted exclusively with rent cases. The High Court
ordered on 16 July 1993 that two sub-judges, out of the total of eight, will be
exclusively working as rent controllers. The total cases pending under the Rent
Act before different sub judges on this date were 3282 out of the total of 10192
pending civil cases. Consequently all rent cases were transferred from other
officers to these two courts on trial basis. This experiment has shown the desired
results. The field survey has shown that despite the filing of new cases under the
Rent Act which range between 1400 to 1700 per year, the number of pending cases
had come down to 1277 in April 1995. The field survey has also revealed that it
was for the first time that the cases of specified landlords were decided by the
controllers in less than six months time of their filing. This successful experiment
of Chandigarh if tried in other parts of the country can go a long way in reducing
the misery of prolonged litigation between the landlords and tenants.

17. C R . No. 641 o f l 9 5 3 .

18. Krishan Lai v. Pritam KumarL 1961 P.L.R. 865; Amar Singh v. Buta Singh 1973 R.C. J.44; Tulsi
Ram v. Mohan Krishan, 1979 (1) P.L.R. 308.
19. Raghu Nath Jatota v. Ramesh Duggal, 1980 (1) R.C.J. 404 P. & H. (D.B.).
20. "C J . for S.C. Powers to District Judge", The Tribune, 27 Aug. 1989.
21. Ibid.

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74 JOURNAL OF THE INDIAN LA WINSTITUTE [Vol. 39 : 1

(3) Few grounds for eviction of tenant

Another serious drawback in the existing Rent Act is the very few grounds
available to a landlord for seeking the eviction of his tenant. Broadly the grounds
available are that of the non-payment of rent, sub-letting, change of user, material
alterations, non-occupancy, nuisance, dilapidation and personal necessity. Of
these eight grounds, the grounds of nuisance, non-occupancy and dilapidation are
seldom invoked by a landord because the cause can be made non-existent by the
tenant by the time the case is instituted by the landlord. The ground of material
alteration is generally invoked in case of commercial property because in case of
residential premises, serious changes are not made by the tenant. The ground for
sub-letting, the change of user are not frequently available in case of residential
premises and in case of commercial premises the tenants prefer to sublet the
premises in the garb of partinership with the alleged sub-tenant. Ultimately a
landlord is left with the option of invoking the ground of non-payment and bona
fide personal requirement. He has to first evade the payment of rent and then seek
eviction on that count. The tenant can easily frustrate the design of the landlord
by making a first hearing tender of the arrear claimed by the landlord. The
landlord lastly resorts to fall upon the ground of his personal necessity which uptil
the decision in Harbilas Rai BansaVs case22 was not available for commercial
premises.The field survey in Chandigarh has shown that in 98 per cent of the Rent
cases the plea of non-payment of rent is taken by the landlords and in 92 per cent
cases of residential buildings the plea of bona fide need is taken in addition to one
or the other ground pleaded in the petition. Now with the decision in Harbilas Rai
BansaVs case, amendments to the pending rent petitions for commercial premises
are being sought and are being granted to add the ground of personal necessity.
Thus, a landlord for all practical purposes has to fall on the plea of his bona fide
need of the building to seek eviction of the tenant. This grass root reality of only
one ground being available to a landlord to evict the tenant forces him to fabricate
his need even when it really does not exist.

(4) Scheduled building

The fourth irritant under the Rent Act is the concept of a scheduled building.
The Act provides that a residential building if let out to a professional included
in Schedule I will be known as scheduled building. The professionals included in
Schedule I are lawyers, engineers, architects, dentists, vetenary surgeons and
medical practitioners. The expresson scheduled building originally used in the
ground of personal necessity was deleted alongwith the term non-residential
building in 1956. Since then it came to be held that the plea ofbona fide need is
not available to a landlord in relation to a scheduled building.22A The field survey
in Chandigarh has shown that no landlord is ready to let out his house to a lawyer
or a doctor or any other professional included in Schedule I. This trend amongst

22. Supra note 9.

22a. Durga Dass v. Devi Dass Nayyar, 1961 P.L.R. 640; Ranjit Singh v. Anup Singh. CR. No. 249
of 1964; Smt. Om Devi v. Nand Kishore Advocate, 1980 (1) R.C.J. 605.

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1997] THE PUNHAB RENT ACT: A TREND SETTER 75

landlords is understandable in the light of their disability to evict such a tenant

even in the case of their bona fide need of the house. It is found in the survey that
out of these six categories of professionals, the lawyers had contributed the
maximum for creating this panic amongst the landlords. The Apex Court in Guljar
Singh Grewal v. Dr. Harbans Singh23 has now held that the ground of bona fide
requirement of the landlord for eviction of his tenant is also available with regard
to a scheduled building despite the amendment of 1956 because a scheduled
building is basically and essentially a residential building. The survey has shown
that this decision has been largely welcomed by members of the legal profession
with the hope that no house may be let out by the landlords to them also. But there
was no change noticed in the approach of the landlords in not letting their houses
to lawyers despite being informed about this decision of the Supreme Court.
The accumulative effect of these cases has been that the Rent Act has operated
an impediment on construction activity. It has led to reluctance on the part of
landlords to let out their premises if they can afford to keep it vacant. The
moneyed class is not prepared to invest in construction of buildings and make
them avilable for tenancies because of the genuine fear of their losing the property
to their tenants.

IV The new Act

24
The Punjab Rent Act 1995, awaiting enforcement through the Notification
to be issued by the Punjab Government, seeks to remedy the ills under the existing
Rent Act. The Punjab Act has been followed by a new Rent Bill for Delhi. The
Delhi Rent Act,25 also awaiting enforcement through a notification by the Union
Government, has substantially incorporated the provisions of the Punjab Act.
Apart from the provisions relating to hotels and loding houses in the Delhi Act,
the remaining provisions are identical to the ones under the Punjab Act. The
Punjab Act, being the first new Rent Act in the country attempts to envisage the
landlord-tenant relations from the grass root reality perception. Some of the
salient features of this trend setting piece of legislation are as follows:
(/) The object of the rent law has been changed from 'control' under the
existing law to that of 'regulating' the landlord-tenant relations. The
preamble to the Act reads:
A Bill to provide for the regulation of rents, repairs and mainte-
nance and eviction relating to premises and matters connected
therewith in the State of Punjab.
The shift from 'Control' to 'Regulate' brings in a sea change in the law
as conceptually the whole perception of landlord-tenant relations will
stand changed. The preamble, which walks before the statute and is the

23. 1993 (l)R.C.R. 270 S.C.

24. Bill No. 12-PLA of 1995 dated 28th March 1995, assented to by the President of India in Nov.
1995.
25. Bill No. LXVIII-C of 1994 passed by the Rajya Sabha on 29 May 1995 and the Lok Sabha on
2 June 1995 and assented to by the President of India alongwtth the Punjab Rent Bill in Nov. 1995.

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76 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 39 : 1

key to read the provisions of the Act, will help the courts to interpret and
apply the provisions in accordance with the object of only regulating the
landlord-tenant relations. The preamble also omits the term 'urban'
from the old Act so as to make it applicable to tenancies outside the so-
called urban areas.

(//) The concept of scheduled building which has been a source of misery
for the landlords uptil the decision of the apex court of Guljar Singh
Grewal v. Harbans Singh26 has been done away with. The concept of
'rented land' has also been dropped. Instead the Act included a new term
'premises' which in turn may be residential or non-residential. The
concept of 'urban area', has been enlarged by including the area
adminstered by a nagar panchayat as urban area in addition to the area
administered by a Municipal Corporation or Council or Cantonment
Board.
(Hi) The list of the premises exempted from the operation of the Rent Act has
been enlarged many folds. The Act shall not apply:

(a) to any premises belonging to the government or a local authority;

(b) to any premises fetching an agreed or deemed rent exceeding an
amount ranging between Rs. 1500 to Rs. 3500 per month as may
be specified by the state government through a notification;
(c) to newly constructed premises for a period of fifteen years;
(d) to premises constructed between 1988 and commencement of the
Act for ten years;
(e) to any premises not let out within seven years before letting out
the same for a period of fifteen years from the date it is let out;
(/) to any premises let out to a citizen of a foreign country or
Embassy/High Commission or any international organisation speci-
fied by the state government;
(g) to any premises belonging to such religious, charitable or educa-
tional trusts as may be notified in the official Gazette\
(h) to any registered tenancy created before or after the commence-
ment of the Act for a period of twenty years or more.
Additionally the Act now provides for exclusive contract renting
of non-residential premises. Such premises are to be governed
solely by the terms of the contract and not by the Rent Act. A
tenant violating any terms of such contracted tenancy shall be
liable for immediate dispossession and pay double of the agreed
rent for the period of violation. A landlord doing so would be
deprived of this right to get any rent during the period of violation.

26. Supra note 23.

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1997] THE PUNHAB RENT ACT: A TREND SETTER 77

(z"v) Writing and registration of all leases has been made compulsory.
Registration will be mandatory not only for future tanancies but also for
the existing tenancies. Schedule XV appended to the Act provides the
specified format of the lease to be executed by the parties. The registra-
tion of the lease unde the Registration Act is to be made for the nominal
payment of Rs. 100 only.
(v) The right of the legal heirs to inherit the tenancy rights after the death
of the tenant has been taken away. In case of residential premises, the
spouse of the deceased tenant, his son, parents and the widowed daugh-
ter in law, in that order of preference, can inherit it for 10 years provided
that they do not have alternate accommodation in that urban area. But
in case of non-residential (commercial) premises, the vacant possession
shall have to be delivered to the landlord within one year of the death
of the tenant or the dissolution of the firm if the firm was a tenant.
(vi) The outdated and irrelevant rent structure under the existing law has
been done away with. The new rent structure envisages a reasonable
return to the landlord on his investment. Standard rent can be fixed for
existing and furtue tenancies. The premises for which fair rent has been
fixed under the existing law, it will be reassessed and refixed as per the
provisions of the new Act. Standard rent is to be fixed at ten per cent per
annum of the aggregate amount of the cost of construction and the
market price of the land comprised in the premises on the date of
commencement of construction. Cost of construction is to include the
cost of fixtures as electricals, water pump, overhead and storage tanks,
sewerage and other permanent fixtures. The standard rent so fixed would
be increased further with the increase in consumer price index as
detailed out in Schedule I. In addition to the rent, the tenant has to pay
to the landlord 10 per cent of the rent as maintenance charges. The
property tax shall be payable by the tenant on pro rata basis. The Rent
Authority is authorised to take assistance of an approved valuer to work
out the cost of the land and construction.
Issuance of rent receipt by the landlord is made mandatory. Alterna-
tively the tenant can deposit the rent in the bank account of the landlord
and if no such account is given to him by the landlord, then to the rent
authority.
(v/'O The Act introduced for the first time a chapter on the duties of the
landlord and tenant. Structural repairs, except those by damage caused
by the tenant, are to be carried out by the landlord. On the other hand,
day to day repairs are to be carried out by the tenant. An exhaustive list
of the repairs to be carried out by the landlord and tenant respectively
has been put in Schedule II. Whereas structural repairs including white-
washing, painting of doors/windows once in the three years, changing
and plumbing pipes, internal and external wiring and related mainte-
nance will be the responsibility of the landlord, the tenant will be

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78 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 39 : 1

responsible for all day-to-day repairs like that of drain clearing, chang-
ing of washers, and taps, bath tub and geyser repair, switches and socket
repair, replacement of flynets, knobs, locks, etc.
(v/7'z) The number of grounds on which a landlord can seek the eviction of his
tenant has been increased from the present eight to fifteen. The grounds
for the eviction of tenant from any premises under section 20 of the new
Act are as follows:
(a) that the tenant is guilty of non-payment of rent to the landlord. The
landlord has to serve a notice on the tenant under section 106 of
the T.P. Act to this effect. The valid tender then has to be made
by the tenant within two months. The benefit of the service of
notice will be available to the tenant only once.A second default
will attract his immediate dispossession;
(b) that the tenant has used the premises for a purpose other than that
for which they were let out (change of user);
(c) that the tenant is guilty of non-occupancy of the premises for a
period of six months;
(d) that the premises or a part thereof have become unit and unsafe for
human habitation;
(e) that the premises have been ordered to be immediately demolished
by the government or local authority;
if) that the landlord is to carry out such repairs which cannot be done
without the tenant vacating it;
(g) that the landlord requires the premises to build or rebuild (recon-
struction) and the same cannot be done with the tenant in it;
(h) that the premises of not more than two floors are to be demolished
and rebuilt by the landlord;
(/) that the tenant or his spouse or dependent son or daughter have
acquired or have been allotted alternate accommodation;
(j) that the tenant has ceased to be the employee of the landlord and
premises were given to him as such employee;
(k) that the tenant has caused substantial damage or such alternations
in the premises which has the effect of changing its identity or
diminishing its value;
(/) that the tenant has been convicted fot causing nuisance or for using
the premises for illegal or immoral purpose;
(m) that the tenant has committed a breach of any condition imposed
upon the landlord by the government or any other authority which
allotted the premises to the landlord;
(n) that the tenant is guilty of disclaiming the landlord's title and the
denial is not bona fide\

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1997] THE PUNHAB RENT ACT: A TREND SETTER 79

(o) that the tenant has failed to prove that he is a bona fide tenant;
ip) that the tenant has committed breach of a written agreement with
his landlord to vacate the premises by a certain date;
(q) that the premises are required by the landlord or for any member
of his family for their own use and occupation. In case of personal
requirement of the landlord or for his family member the Rent
Authority shall presume that the premises are so required.
(viii) The right to recover immediate possession of a premises by a classified
or specified landlord wil now cover a sizeable section of the landlords.
The following categories can not ask for immediate possession of their
premises:

(a) A landlord asked by the government or local authority to vacate

offical accommodation and shift to his own premises;
(b) A landlord released or retired or killed in action in any armed
forces;
(c) Retired /retiring government employees;
(d) a widow;
(e) Handicapped persons;
if) Senior citizens above 65 years of age;
(g) Non-resident Indians returning to India for good;
(h) Freedom fighter, his widow or dependent son or daughter.
(ix) Sub-letting as ground for the eviction of a tenant has been put separately
under section 26 of the Act. The Act puts a total embargo not only on
sub-letting but also the assignment of tenant's right without the previous
consent in writing of the landlord. The restriction on any type of
assignment of the tenant's right will take care of the mischief of sub-
letting in the garb of a license.
(JC) The concept of 'limited tenancy' has been introducted in the Act. A
landlord who does not require his premises for a specific period can let
it out to a tenant for that limited period after obtaining the permission
of the rent authority to do so. That measure is expected to do consider-
able benefit to the expected tenants.
(xi) The dispute settlement machinery in landlord-tenant relations has been
rationalised and streamlined. The authorities under the Act shall be the
Rent authority (trial court) and the rent tribunal. The rent authority shall
be persona designata (designated court) under the Act. It will have
powers to the exclusion of all other courts in tenancy disputes between
the landlord and tenant. It would have jurisdiction not only for the
premises under the Act but also those governed by the Transfer of
Property Act and the premises exempted from the operation of the Act.
Thus the rent authority would be the sole arbitrator in all disputes

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80 JOURNAL OF THE INDIAN LA WINSTITUTE [Vol. 39 : 1

pertaining to the premises let out to tenants irrespective of the fact that
the Rent Act is applicable to these or not.
The litigation before the Rent Authority would be of a summary nature.
It would follow the summary procedure of the court of small causes. The
different steps to summon the parties and witness would be taken in one
go. The case could be contested by the parties mainly through affidavits.
The Civil Procedure Code would not be followed during the proceed-
ings. The rent authority was to follow the time and schedule given in the
Act for hearing at different stages and decide the matter within the given
time frame.
There would be no first appellate court under the Act. An appeal could
be preferred to the rent tribunal against an order of the rent authority
within one month. The rent tribunal to be set up under the amended
article 323-B of the Constitution would have the same powers which the
High Court had under the existing law. Thus the powers of the High
Court would now be vested in the Rent Tribunal. The order of the rent
authority of rent tribunal would be final. No other court except the
Supreme Court would have the power to intervene in any matter under
the Act. All pending Rent cases before different courts and the High
Court stand transferred to the Rent Authority and the Rent Tribunal
respectively. Jurisdiciton of civil courts to entertain cases relating to
dispute between landlords and tenants has been specially barred. The
tribunal shall not follow the Civil Procedure Code. It would not grant
any adjournment without recording reasons for the same. It would be
guided by the principles of natural justice subject to other provisions of
the Act. It has been reiterated in section 59 of the Act that no court
except the Supreme Court would intervene in any rent case apart from
the rent authority and the rent tribunal.
(xii) The penalties for contravening different provisions of the Act have been
enhanced so as to provide for a minimum fine of Rs. 1000 to 5000 and
/ or imprisonment upto six months.

VI Fate of new Act

The above salient features of the new Act are indicative of the landmark
changes now appearing in the legislation governing landlord-tenant relations.
But the new legislation, both in Punjab and Delhi, has run into rough weather
pven before its implementation. The tenants lobby has itaken it to the streets by
forcing bandhs and strikes to stall implementation of the Act. The landlord's
lobby is trying to get the Act enforced through a direction from the higher
judiciary to this effect. The politician adminstrators have started calculating the
gains and losses of the new Act from the stand point of their vote bank. The Act
has, for the time being, been put in cold storage by the politicians as it has to come
into force from the date the government will issue a notification to this effect in
the official Gazette even after the Bills having been assented to by the President
of India.

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 1997] THE PUNHAB RENT ACT: A TREND SETTER 81

The casual approach of total disconcern for the welfare of the society by the
politicians can be gauged from the fact that the Punjab Rent Bill of 57 printed
pages was passed by the State Legislature within six minutes out of which three
minutes were consumed by the minister piloting the Bill. With brief intervention
of two M.L.As from the opposition, the Bill was recorded as passed by voice vote.
The politician's treatment to the Delhi Rent Act in the Lok Sabha was no different.
The Bill in print as circulated amongst Lok Sabha members was having faulty
numerical order of pages as page 12 followed by page 17, page 20 followed by
page 13, page 16 followed by page 19. Thus it was not possible to read the Bill
cohesively. None of the M.Ps present in the house reportedly pointed out this snag.
This was presumably for the reason that none of the honourable members of the
house, who are the elected representatives of the people and are supposed to exist
for their welfare, had cared even to read the Bill. The Bill was passed in both
houses of Parliament by voice vote. The irony of the situation is that now these
w y politicians of all shades very vying with each other to condemn the Act as
totally irrelevant for society. This posture of trying to aprobate and reprobate is
being adopted with an eye on the vote bank which is the ultimate target of every
politician. Since the vote bank of the tenant's lobby is stronger, it has led to a race
amongst the elected representatives of different shades to be jointly condemning
a piece of legislation which they themselves had enacted.

VII Proposal for further reform

One of the projected irritants for this hue and cry is abolition of the rights of
inheritance of the tenant's interest by his successors. In the course of the field
survey in Chandigarh, a pointed question was put to the litigating tenants as to
whether they know or have cared to know as to what Rent Act is all about. 92 per
cent of the tanants of commercial premises responded by saying that they have
never bothered to know as to what is there in the Rent Act for them but they
definitely know that the commercial premises can never be got vacated by the
landlord - even after their death. (Hamare marne he bad bhi dookan khali nahin
ho sakti). Now the denial of this privilege, although unduly enjoyed by the tenants
for more than half a century, is posing serious problems for them, specially for
those occupying commercial premises.
To remove this irritant, it is proposed that while retaining the provision for
abolishing the inheritance of tenant's interest, a new provision for commercial
premises only may be added whereby a tenant of commercial premises may
purchase the premises after twenty years of tenancy by paying half of the then
market price of that premises and in case the tenancy is thirty years old or more,
the tenant shall purchase that permises by paying two third of the then market
price of it to the landlord or vacate. The period of thirty years will ensure the
passage of the property to the next generation which may or may not be interested
in keeping it. It will also take care of the crisis which a tenant may face for
uprooting his established business for which he must have taken pains during the
initial period of tenancy.
It will be equally fruitful to incorporate a provision for issuance of 'Rent
Tags' for every premises whether let out or not. The obtaining of the Rent Tag

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82 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 39 : 1

should be made compulsory on the same pattern as obtaining of severage or

electric connection or a completion certificate from the competent authority. The
Act should propose the setting up of a Rent Assessment Committee headed by the
rent authority with a civil engineer, an architect, a valuer and a person from law
(academics or profession) as its members. The committee should assess the rental
of every premises and issue a Rent Tag for a nominal fee of Rs. 200 to Rs. 500
depending upon the size of the premises from its owner.
The Act should also provide for an annual increase of 5 per cent and 10 per
cent in the rent specified in the Rent Tag for the residential and commercial
premises respectively irrespective of the fact whether the premises are actually let
out or not. It is expected to go a long way in solving the problem of bargaining
for the quantum of rent. The rent of evey premises shall thus be predetermined and
there will not be undue heegling for the same. Although unscruplous elements may
still try to circumvent such a provision, but by and large it can help in smoothening
the landlord-tenant relations.
With the concept of nuclear family becoming an accepted norm, specially in
the urban areas, the grass root requirement is that the landlord and tenant should
be living as good friends in the same premises. With their one or two children
moving out to other places in pursuit of their careers, they will require each other's
help more than ever. Instead of praying for each other's death, as is happening
under the existing law, they should be acting as helping hands to each other. In
this backdrop, It may be appropriate that the object of the Act is amended to the
effect that the Act is not only to regulate but also harmonise the landlord tenant
relations.
If this trend setting legislation is brought out by some courageous and well
meaning politician, from the files awaiting approval and enforced after incorpo-
rating the above proposals, it can legitimately be expected to usher in a new era
in the landlord-tenant relations,
D.N. Jauhar*

* B.A. (Hons). LL.M., Ph.D., Reader, Department of Laws, Punjab University, Chandigarh.

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