* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 15th February, 2012 + CM(M)4[SECTION]/2011 % SANTOSH VAID & ANR. Petitioners Through: Mr. [ENTITY], Adv. Versus UTTAM CHAND Respondent Through: Mr. [ENTITY], Adv. AND + RSA 11[SECTION]/2011 % AMRIT LAL GHAI Appellant Through: Mr. [ENTITY], Ms. [ENTITY], Advs. with Appellant. Versus DARSHAN SINGH Respondent Through: None. CORAM :- HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE [ENTITY] JUDGMENT
[ENTITY], J.
1. CM (M) 4[SECTION]/2011 under [SECTION] of the [ACT] is preferred impugning the order dated 25 th October, 2010 of the Civil Judge dismissing the suit filed by the petitioners therein as barred by the provisions of the [ACT], 1[SECTION]5[SECTION]. Though technically speaking, a CM(M) Petition under [SECTION] of the [ACT] against such dismissal of suit does not lie, the remedy of first appeal being available thereagainst, but notice thereof was issued. After notice the Learned Single Judge before whom the said CM(M) 4[SECTION]/2011 came up for hearing, being in doubt as to the correctness of the view taken by the another Single Judge of this Court in M/s. [ENTITY] Workshop Pvt. Ltd. v. [ENTITY] 155 (200[SECTION]) DLT 145 ([ENTITY]) and being of the view that the same required looking into by a Larger Bench, vide order dated 12th May, 2011 referred the CM(M) Petition to a Larger Bench. That is how the same is before us.
2. RSA 11[SECTION]/2011 has been preferred impugning the judgment dated [SECTION] th April, 2010 of the Civil Judge rejecting the plaint in the suit preferred by the appellant as well as the judgment dated 4 th March, 2011 of the Learned Additional District Judge dismissing the first appeal preferred by the appellant. The said RSA 11[SECTION]/2011 came up for consideration before the same Learned Single Judge of this Court, who had made the reference aforesaid; finding the legal issue entailed therein to be the same as in CM(M) 4[SECTION]/2011, the said RSA 11[SECTION]/2011 was also directed to be listed before us.
3. Needless to mention, the reference to us is of the legal question. However since the reference order does not frame the said legal question, before framing the same, it is deemed expedient to set out the background facts.
4. The suit subject matter of CM(M) 4[SECTION]/2011 was filed for recovery of possession of immovable property and for arrears of and future damages for use and occupation. It was the case of the petitioners/plaintiffs in the plaint that the said immovable property had been let out to the respondent/defendant therein on 3 rd November, 1[SECTION][SECTION]7 at a monthly rent of `150/-; that the respondent/defendant had not paid rent w.e.f. 1 st July, 200[SECTION]; that they as landlords had determined the tenancy of the respondent/defendant vide notice dated 5 th January, 2010; that the respondent/defendant w.e.f. 1st February, 2010 was liable to pay damages for use and occupation of the premises @ `10,000/- per month. Para 5 of the plaint is significant and is set out herein below:-
"5. That the Defendant has lost protection of the provisions of [ACT], 1[SECTION]5[SECTION] with regard to suit premises after taking into account the inflation, fall in value of rupees, charges (sic changes) in the wholesale price index since 1[SECTION][SECTION]7 till date. If the value of `150/- is considered in this context, this amount would not be less than ` 10,000/-. The MCD has started claiming house tax as per the basis of Unit Area System instead of rent received by the landlord. The provisions of [SECTION] of [ACT] were declared unconstitutional in 1[SECTION][SECTION]2 RLR 14[SECTION]."
5. The respondent/defendant in CM(M) 4[SECTION]/2011 inter alia pleaded that the suit as framed was barred by the provisions of the [ACT]. Accordingly a preliminary issue to the said effect was framed. The petitioners/plaintiffs, to contend that the suit was not so barred, relied on [ENTITY] (supra).
[SECTION]. The Learned Civil Judge in the judgment impugned in CM(M) 4[SECTION]/2011 held the judgment of the Learned Single Judge of this Court in [ENTITY] to be not coming to the rescue of the petitioner/plaintiff since there were no allegations of sub-tenancy in the present case as found in [ENTITY]. It was further held that [ENTITY] itself had observed the need for a mechanism to balance the interest of the tenant and the landlord and for the landlord to claim increase in rent keeping in view the price index; that the Courts could not assume the role of the legislator or of filling in the lacunae in the law. Reliance was placed on [PRECEDENT] v. Mohd. Saied 155 (200[SECTION]) DLT 403 where a Division Bench of this Court held that where the rent of the premises agreed between the parties was below `3,500/- per month, the Civil Court would not have jurisdiction. It was further held that since the petitioners/plaintiffs themselves had admitted the rent to be `150/- per month, [SECTION] of the [ACT] barred the jurisdiction of the Civil Court.
7. The petitioners in CM(M) 4[SECTION]/2011 have pegged their case on [ENTITY] only.
[SECTION]. The case of the appellant in the plaint in the suit from which RSA 11[SECTION]/2011 has arisen, also was that he was the owner/landlord of the immovable property subject matter thereof and the respondent/defendant was a tenant therein since the year 1[SECTION][SECTION]4 at a rent of `2[SECTION]0/- per month; that after increases in rent, the rent at the time of institution of the suit was `4[SECTION]5/- per month; that he was entitled to rent comparable to the valuation of the rupee in the year 1[SECTION][SECTION]4 when the premises were let out; that `2[SECTION]0/- of the year 1[SECTION][SECTION]4 was equivalent to `[SECTION],500/- in the year 200[SECTION] when the suit was filed; that the appellant/plaintiff thus in the year 200[SECTION] was entitled to rent @ `[SECTION],500/- per month from the respondent/defendant; that similar premises were then also being let out at the rent of about `10,000/- per month; that the respondent/defendant had however inspite of demand failed to pay rent at the said rate of `[SECTION],500/- per month. Accordingly suit was filed claiming arrears of rent at the rate of `[SECTION],500/- per month. Reliance was placed on [ENTITY] v. Union of India [SECTION]5 (2002) DLT 50[SECTION] (DB).
[SECTION]. The respondent/defendant in RSA 11[SECTION]/2011 in his written statement took the plea of the claim in the suit being barred by the provisions of the [ACT]. Accordingly a preliminary issue was framed and the Learned Civil Judge held that the Division Bench of this Court in [ENTITY] (supra) had only struck down [SECTION] & [SECTION] of the [ACT] and not the Act in its entirety; that as per [SECTION]/[SECTION] of the [ACT], rent could be increased by the landlord every three years by 10%; that the appellant/plaintiff however instead of claiming such increase was demanding the equivalent value as in the year of letting; that when the law i.e. [ACT] provided for a specific manner to increase the rent, the increase in any different manner could not be claimed. It was thus held that the appellant/plaintiff had no cause of action. The appellant/plaintiff in the first appeal before the Learned Addl. District Judge also invited attention to [ENTITY] v. Special Judge, E.C. Act/Addl. District Judge, Allahabad (2007) 2 RCR Civil 520 (Allahabad) and to [ENTITY] aforesaid. However the first Appellate Court held that [SECTION] of the [ACT] had not been struck down in [ENTITY]; that [ENTITY] (supra) was not applicable; that [ENTITY] was also not applicable since in that case rent of particular amount was not claimed and there was no increase in rent. The judgment of the Learned Civil Judge was thus affirmed.
10. The appellant in RSA 11[SECTION]/2011 has again pegged his case on [ENTITY] and has argued that depriving a landlord from rent equivalent in value to the rent at the time of letting amounts to violation of rights of the landlord. The counsel for the appellant during the hearing has also referred to [PRECEDENT] v. State of UP 2001 (2) RCR (Civil) [SECTION][SECTION][SECTION] (Allahabad), judgment dated 12 th March, 2010 of the same Learned Single Judge of this Court who has pronounced the judgment in [ENTITY], in CM (M) 53[SECTION]/200[SECTION] titled [PRECEDENT] [ENTITY] v. Mohd. Fazil and on Mohd. Ahmad v. Atma Ram Chauhan AIR 2011 SC 1[SECTION]40.
11. In the aforesaid backdrop the legal question for adjudication can be framed as under:-
Whether in the case of premises fetching rent of less than `3,500/- per month, the owner / landlord can claim increase in rent other than as provided under [SECTION] & [SECTION] of the Act or have the rent increased in proportion to the rate of inflation or devaluation of money and if so on what basis and/or to what extent?
12. The [ACT] was enacted to provide for the control of rents and evictions in the Union Territory of Delhi. The same, as originally enacted, applied to all premises in Delhi save premises belonging to the Government; [SECTION] thereof disentitled the landlord from claiming any rent in excess of standard rent of the premises as defined and to be fixed under [SECTION] & [SECTION] of the Act; [SECTION] permitted increase in rent only in the event of the landlord incurring any expenditure on improvement, addition or alteration in the premises and that too with the approval of the Rent Controller; [SECTION] prohibited the landlords from, notwithstanding anything to the contrary contained in any other law or contract, recovering possession from the tenant save on the grounds mentioned therein and after satisfying the Rent Controller (constituted under the Act and as distinct from Civil Courts) that such grounds existed; [SECTION] barred the Civil Court from entertaining any suit in so far as it related to the fixation of standard rent in relation to premises to which the Act applied and/or to any other matter which the Rent Controller was empowered by or under the said Act to decide.
13. The position thus was that even if the premises were let out for say five years and the said time had expired, the landlord could not evict the tenant unless one of the grounds of eviction (viz. non payment of rent, subletting, misuser, non-use, self requirement etc.) specified under the Act was available. There was no provision in the Act for increase in rent also, save if the landlord carried out any improvement in the premises. On the contrary, the tenant if had agreed to pay the rent of say `5,000/- per month could within two years from taking the premises on rent apply to the Rent Controller for fixation of standard rent of the premises and which generally was much lower than the agreed / market rent. Even if the tenant continued in the premises after the term of letting had expired, the landlord had no way to have the rent increased.
14. An amendment to the [ACT] was made w.e.f. 1st December, 1[SECTION][SECTION][SECTION]. The premises, monthly rent whereof exceeded `3,500/- were taken out of the purview of the Act; [SECTION] was incorporated enabling the landlord to have the rent increased by 10% every three years by issuing a notice under [SECTION] intimating to the tenant of his desire to so have the rent increased and the increased rent became due and recoverable after expiry of 30 days from the date on which the notice was given.
15. A Division Bench of this Court in [ENTITY] held that [SECTION] & [SECTION] of the [ACT] relating to standard rent had not taken into account the huge difference between the cost of living in the past and the present time and did not pass the test of reasonableness and had become obsolete and archaic and accordingly struck down the same. However the only effect of the said judgment is that a tenant could not apply to have the standard rent thereof determined and thus could not avoid paying agreed rent, as he was able to before this judgment. Undoubtedly the Division Bench, while so striking down the said provisions, did observe that the said provisions dealing with the standard rent did not take into account the rise in the consumer price index and the huge costs required for maintaining the tenanted premises and there was no justification for not updating the frozen rents but all this was in the context of striking down [SECTION] only. Thus the said judgment cannot be said to be a judgment on the proposition that landlords are entitled to have the rent increased as per the consumer price index or rate of inflation.
1[SECTION]. In [ENTITY], doubts as to the correctness of the view wherein have led to this reference, the premises were let out in the year 1[SECTION]5[SECTION] at a rent of `400/- p.m. and the rent had remained the same. In the year 200[SECTION] the landlord filed a suit in the Court of Civil Judge for recovery of possession of the premises from the tenant and for mesne profits. The said suit was valued for the relief of possession for purposes of court fee and jurisdiction at `4[SECTION]00/- i.e. on the basis of annual rent. The tenant applied under [SECTION] [ACT] contending the suit to be barred by [SECTION] of the [ACT]. The landlord in reply contended that the premises were outside the purview of the [ACT] since the tenant had sublet the premises and the rent paid by the subtenant for the premises, though to the tenant, was in excess of `3500/- p.m. The Civil Judge dismissed the application under [SECTION] [ACT] holding that the question whether the premises were outside the purview of the [ACT] or not was subject matter of evidence. In challenge to the said order by the tenant before this Court, the said finding of the Civil Judge was affirmed. (We may notice that this Court in P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd [SECTION]5 (1[SECTION][SECTION]7) DLT 30[SECTION] and Atma Ram Properties Pvt. Ltd v. Pal Properties (India) Pvt. Ltd [SECTION]1 (2001) DLT 43[SECTION] had already held that in the event rent payable by the subtenant to the tenant is more than `3500/- p.m. the premises would be outside the scope of [ACT] even if the rent payable by the tenant to the principal landlord was less than `3500/- p.m.) While doing so some observations were made to the effect that there was no justification for keeping the rents frozen and not allowing the landlords to reap present value of the rent originally agreed. However, the said observations were also in the context of the tenants while paying old rents subletting the tenancy premises at much higher market rents. It would thus be seen that the said judgment cannot be said to be laying down that a landlord is entitled to have the rent increased to keep pace with inflation or devaluation. Rather, when it was urged that the landlord ought to value the suit and pay court fees as per market rent, the learned Judge observed "If the Court cannot tell a tenant to pay rent at the present day market value of the property or taking into account the present value of rent of ` 400/- fixed in 1[SECTION]5[SECTION], the Court cannot tell the landlord to pay the court fee on the present day market value in order to get the premises vacated".
17. It would thus be seen that [ENTITY] cannot be said to be an authority in favour of the right of a landlord to have the rent increased to bring it at par with the consumer price index or to account for the rate of inflation. It is the settled position in law (See Jitendra Kumar Singh v. State of U.P. (2010) 3 SCC 11[SECTION]) that a judgment is a precedent on what it decides and not on other things. Though certain observations of wide sweep were certainly made in the said judgment but that judgment also towards the end accepts that the Court cannot tell a tenant to pay the rent at the present day market value.
1[SECTION]. In that view of the matter, we feel that the reference to the Larger Bench was not really called for. Be that as it may, since we are seized of the matter it is deemed appropriate to deal with the issue.
1[SECTION]. A Coordinate Bench in [PRECEDENT] (supra) has already held that for landlords who are receiving rent of less than `3,500/- per month there is no provision available to unilaterally increase the rent to bring it at par with market rent. Though [ENTITY] was not noticed but it was observed that notwithstanding the decision in [ENTITY], the legislature had not filled up the vacuum created in law with [SECTION] & [SECTION] of the [ACT] being held ultra vires and had not put any mechanism for increase in rent in place thereof. Unfortunately the provision for increase in rent as introduced by amendment to the Act w.e.f. 1 st December, 1[SECTION][SECTION][SECTION] with insertion of [SECTION] was not noticed by the said Division Bench.
20. A Single Judge of this Court in the order dated 5 th December, 2005 in CM (M) [SECTION]4[SECTION]/2004 titled [ENTITY] v. Mahinder Kaur held:
"Counsel for the respondent submits that although in the plaint the rent has been admitted to be `715/- per month but by legal notice dated 22.04.2003 increase of `20,000/- per month based on the judgment of the High Court in [ENTITY] Vs. UOI 2002 RCR 14[SECTION] where the High court has struck down [SECTION], [SECTION] and [SECTION] of the [ACT]. He also submits that the Court has held that a triable issue has been raised whether [SECTION] of the [ACT] is a bar which can only be deciding (sic decided) after adducing evidence.
Heard counsel for the parties and have carefully gone through the submissions made by the parties and perused the orders under challenge. To my mind, contractual rent below `3,500/- (Rupees Three Thousand Five Hundred) attracts the provisions of the [ACT]. Any contractual rent below the aforesaid figure would be governed under the [ACT]. In that event, a contractual rent of `715/- would squarely bring the case under the [ACT]. Increase of rent from the contractual rent under the [ACT] can only be done by recourse to [SECTION] thereof. A unilateral notice increasing rent beyond ten percent is not permissible under [SECTION] of the [ACT] and cannot be acted upon to take the case out of the purview of the [ACT].
In that view of the matter, the plaint itself reads that the contractual rent is `715/- which has been raised by a notice dated 02.04.2003 to `20,000/- taking the case out of the purview of the [ACT] is not tenable.
The reference made by learned counsel for the respondent of the Delhi High Court judgment does not support the proposition that [SECTION] has also been rendered ultra vires."
We find SLP(Civil) No. 1153[SECTION]/200[SECTION] preferred thereagainst to have been dismissed in limine on 14th July, 200[SECTION].
21. Another Single Judge of this Court in [PRECEDENT] v. M.L. Sethi 1[SECTION]4 (200[SECTION]) DLT 3[SECTION] was also faced with a claim of a landlord, of the rent fixed at `141.75p per month in the year 1[SECTION][SECTION]2, having stood increased in the year 200[SECTION] to `25,000/- per month owing to inflation. It was again held that the landlord, the rent of whose premises was less than `3,500/- per month, could claim increase of rent only in accordance with [SECTION] & [SECTION] of the Act and not otherwise.
22. We put our imprimatur on the judgments of the Single Judges of this Court in [ENTITY] and [PRECEDENT] (supra). The same have correctly interpreted the provisions of the [ACT].
23. In so far as the reliance by the counsel for the appellant in RSA 11[SECTION]/2011 on other judgments supra is concerned:-
i. [PRECEDENT] (supra) struck down the provisions in the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1[SECTION]72 pertaining to standard rent. Again though certain observations anti allowing rent to remain frozen were made but again the said judgment cannot be said to be laying down that a landlord is entitled to unilaterally increase the rent in accordance with the consumer price index and/or the rate of inflation;
ii. [ENTITY] was a case where the Allahabad High Court in exercise of powers under [SECTION] of the [ACT] increased the rent, however that was in the context of [ACT] (supra). As far as Delhi is concerned, as aforesaid, w.e.f. 1st December, 1[SECTION][SECTION][SECTION] a provision for increase in rent does exist. Once the legislature has provided for something to be done in a particular manner, then it has to be done in that manner and not in any other manner (See Chandra Kishore Jha v. Mahavir Prasad (1[SECTION][SECTION][SECTION]) [SECTION] SCC 2[SECTION][SECTION]). The legislature having provided for increase in rent by 10% only and after three years, is deemed to have prohibited increase of more than 10% and before three years.
iii. [PRECEDENT] (supra) was also a case where the Supreme Court gave certain suggestions/laid guidelines to minimize landlord-tenant litigation. The same were again in the context of [ACT]. The same also have no application to the position as prevailing in Delhi.
iv. In [PRECEDENT] [ENTITY] (supra) a Single Judge of this Court exercising powers under [SECTION] of the [ACT], as a matter of fact, found the rent agreed to be `4,000/- per month. The same can also not be read as a precedent for the landlords in Delhi being entitled to so unilaterally increase the rent.
24. The counsel for the appellant in RSA 11[SECTION]/2011 in the list of judgments filed has also referred to :-
(i) M/s Nopany Investments Pvt. Ltd. v. Santokh Singh AIR 200[SECTION] SC [SECTION]73 but we are unable to find any relevance thereto in the present context. The same merely lays down that the landlord can in accordance with [SECTION] (supra) raise rent by 10% every three years but has to serve a notice of increase of rent under [SECTION] to be entitled to such increase.
ii. Aboobacker v. Vasu (2004) 1 RCJ 12[SECTION] where a Division Bench of Kerala High Court held a suit under [SECTION] of the [ACT] for determination of fair rent to be maintainable. However the same was in the context of the Kerala Buildings (Lease and Rent Control) Act, 1[SECTION][SECTION]5 which did not contain any provision for increase in rent as in [SECTION] of the [ACT].
25. The views taken by the Allahabad and by the Kerala High Courts cannot be accepted in Delhi in the face of the legislature in its wisdom having already made a provision for increase in rent and in the face of the bar contained in [SECTION] of the [ACT].
2[SECTION]. Rate of rent is a matter of contract and can be varied in accordance with agreement only and not unilaterally. The Rent Control Legislations enacted in the pre-independence and immediately after independence era to prevent exploitation of tenants provided a statutory mechanism enabling a tenant to, notwithstanding having entered the premises with a promise to pay rent at a certain rate, apply to the Rent Controller/Court for fixation of standard rent which as aforesaid was generally lower than the prevalent market rent. However, with the passage of time, several Courts have found such provisions in the State Rent Legislations entitling tenants to wriggle out of the agreed rent to be archaic and struck down the same. Else the rent agreed between the landlord and the tenant binds both of them and neither is entitled to unilaterally vary the same during the period for which it has been agreed. On the expiry of the said period, if unable to agree on extension / renewal of the lease at a mutually agreed rate, the remedy of the landlord is only to evict a tenant and to for the period of unauthorized occupation recover mesne profits defined in [SECTION] of the [ACT] as profits which the person in wrongful possession actually received or might with ordinary diligence have received. A landlord cannot be heard to while not wanting to evict the tenant, as per his own calculation claim increased rent. However, if the premises are within the purview of the [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 [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.
27. The Apex Court in Chander Kali Bai v. Jagdish Singh Thakur AIR 1[SECTION]77 SC 22[SECTION]2 held that the occupation of a tenant in a premises governed by the Rent Control Legislation becomes unauthorized and wrongful only after an order of eviction under the said legislation is passed against him and mesne profits can be recovered for the period thereafter only and not from the date of determination of tenancy since such a tenant continues to be a tenant (statutory tenant) till order of eviction under the Rent Control Legislation is passed. A Division Bench of this Court in Hindustan Steel Pvt. Ltd. v. Usha Rani Gupta AIR 1[SECTION][SECTION][SECTION] Delhi 5[SECTION] held that in case of property of which rent is controlled by the [ACT] the landlord cannot complain of having suffered any loss by being deprived of possession of the property, beyond the rent for which the property is let out to the tenant holding over except to the extent of any permissible increase of rent under the [ACT] itself.
2[SECTION]. Even though the 10% increase in rent every three years provided for under the [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 (see Union of India v. Deoki Nandan Aggarwal 1[SECTION][SECTION]2 Supp(1) SCC 323). It may be noted that [SECTION] (supra) was inserted in the [ACT] with effect from 1st December, 1[SECTION][SECTION][SECTION] to quell the criticism thereof of being unevenly balanced against the landlord. The Legislature in its wisdom having considered increase in rent as provided in [SECTION] as appropriate to balance the rights of the landlord and the tenant governed by the provisions of the [ACT], it is not for this Court to delve into the validity thereof particularly in exercise of appellate/revisionary jurisdiction.
2[SECTION]. We accordingly answer the question framed by us herein above as under:-
A landlord of a premises governed by the [ACT], 1[SECTION]5[SECTION] is entitled to have increase(s) in rent only in accordance with [SECTION] and [SECTION] thereof and not 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] of the [ACT].
30. The reference is decided accordingly. Axiomatically, the suits, subject matter of both CM(M) No. 4[SECTION]/2011 and RSA No. 11[SECTION]/2011, are found to be not maintainable. CM(M) No. 4[SECTION]/2011 and RSA No. 11[SECTION]/2011 are accordingly dismissed.
No order as to costs.
[ENTITY], J ACTING CHIEF JUSTICE FEBRUARY 15, 2012 pp