The maharashtra rent control act 1999 an analysis

The Maharashtra Rent Control Act 1999 - An Analysis The Maharashtra Rent Control Bill 1999 passed with amendments by both the Legislative Assembly and Legislative Council, aimed to unify the three different Rent Control Laws, in operation in the State of Maharashtra. The new Act called the Maharashtra Rent Control Act 1999 brought about several changes in the Bombay Rent Control Act. This Act does not apply to any premises belonging to the Government or a local authority, any premises let or sub-let to banks, or any Public Sector Undertakings or any Corporation established by or under any Central or State Act. Landlord’s perspective Ownership confers both rights and obligations upon the holder. The Maharashtra Rent Control Bill 1999 has clearly spelt out the duties as well privileges of the landlord.

Fixing and increasing rent It is the landlord’s prerogative to fix the rent and increase it at the rate of four per cent per annum from the date of the commencement of the Act. He can also increase the rent at the rate of 15 per cent per annum for improvements and alterations provided 70 per cent tenants consent in writing. The landlord can also increase rent at 25 per cent per annum for special or structural repairs, exclusive of any repairs carried out under the Maharashtra Housing & Area Development Authority (MHADA) Act. He can also increase rent due to any increase in taxes.

Duty to keep premises in good repair According to the Act, every landlord shall be bound to keep the premises in good and tenantable repair. If he neglects to make any repairs, within a reasonable time after a notice of fifteen days is served upon him by post or in any other manner by a tenant or jointly by tenants interested in such repairs, such tenant or tenants may themselves make the same and deduct the expenses of such repairs from the rent or otherwise recover them from the landlord. Provided further that, the amount so deducted or recoverable in

any year shall not exceed one-fourth of the rent payable by the tenant for that year.

Conditions of Eviction Section 16 (1) (I) of the Act provides that the landlord may recover possession subject to the provisions of section 25. Section 25 states that a landlord shall be entitled to recover possession of any premises if the court is satisfied that the premises are reasonably and required bona fide by the landlord.

The landlord can also recover possession of the premises if the tenant has, without the landlord’s consent given in writing, erected on the premises any permanent structure. Also if the tenant, his agent, servant, persons inducted by tenant or claiming under the tenant or, any person residing with the tenant has been guilty of conduct which is a nuisance or annoyance to the adjoining or neighboring occupier, or has been convicted of using the premises or allowing the premises to be used for immoral or illegal purposes.

Rules related to rebuilding premises The landlord, however, will have to give certain undertakings as mentioned in sub-section 6. These are: • He/she must have sufficient funds to carry out the work.

• The plans of the proposed buildings be prepared and approved by the municipal authorities prior to tendering the request for vacation.

• The number of residential tenements in the new building should not less than the number of residential tenements in the old building.

• The carpet area of different premises let in the old building must be the same as in the new building.

• The landlord gives an undertaking that the carpet area of different premises let in the new building will be the same as was let in the old building; the premises in the new building will be offered to the tenants of the old building; • The work of demolition of the old building will be completed within three months and the new building will be completed in 15 months thereafter.

However, under the Maharashtra Rent Control Act 1999 the requirement of prior procurement of a tribunal certificate has been dispensed with and the responsibility now rests with the court to ensure that the tenants will neither be unnecessarily harassed nor evicted.

Leave & License Agreement Section 55 of the Maharashtra Rent Control Act, 1999, provides that any agreement for leave and license or letting of any premises, entered into between the landlord and the tenant or the licensee, as the case may be, after the commencement of this Act, shall be in writing and shall be

registered under the Registration Act, 1908. The responsibility of getting such agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and license or have been let to him, shall prevail, unless proved otherwise. Any landlord who contravenes the provisions of this section shall, on conviction, be punished with imprisonment which may extend to three months or with fine not exceeding rupees five thousand or with both.

Under Section 55(1) it is clear that only the agreement of tenancy or leave and license executed between the landlord and tenant or the landlord and the licensee is required registration.

Tenant’s perspective A tenant is a protected person under the Maharashtra Rent Control Act, 1999 and is often aptly referred to as a statutory tenant. A statutory tenant pays a nominal rent. Upon his death, any relative residing with him at the time of his demise steps into the former’s shoes by law. Only the state of Maharashtra has provisions for mass letting in its Rent Control Act. ‘Pagdi’ system legalised In case of redevelopment of old properties in Mumbai, there’s reference to pagdi properties. The consideration paid to a landlord as a fine, premium or consideration known as pagdi has been legalised by Section 56 of Rent Control Act, 1999.

It is now also lawful for a tenant to receive any amount in consideration of the relinquishment or transfer of his tenancy. Incidentally, in the Rent Act, 1974 giving or receiving pagdi in cash was held ‘illegal’ hence there was extensive use of black money. Now too, in cities like Mumbai, for the transfer of tenancy, 33 per cent of the amount in transaction is paid in cash to the landlord to effect the transfer of tenancy or assignment.

However, when there is redevelopment of the said property, the landlord usually makes a deal with the developer and stakes his claim of his 33 per cent and accordingly takes profit out of the property permanently. Those who are in accommodation or in possession of the said property after redevelopment become the sole owners of the said premises.

Protection against eviction According to the Act the landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the, standard rent and permitted increases, if

any, and observes and performs the other, conditions of the tenancy, in so far as they are consistent with the provisions.

The landlord cannot file any suit against the tenant on the ground of nonpayment of the standard rent or permitted increases due, until the expiration of ninety days next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant.

No decree for eviction shall be passed by the court in any suit for recovery of possession on the ground of arrears of standard rent and permitted increases if, within a period of ninety days from the date of service of the summons of the suit, the tenant pays or tenders in court the standard rent and permitted increases then due together with simple interest on the amount of arrears at fifteen per cent per annum.

Protest against new proposals The Model Residential Tenancy Act, 2011, drafted by the Union ministry of housing proposes to replace archaic rent control legislations that cap rentals.

Rent control is a state subject and the draft legislation is yet to be adopted by states. But once in place, the law will ensure that tenants hitherto paying a pittance as rent for properties in prime localities will have to pay according to the market rate.

Tenant associations in the state have condemned a proposed legislation drafted by the Centre that will bring paltry old rentals on par with market rates. The groups claim that the move does not allow for Mumbai’s unique rental system and might leave lakhs of Mumbaikars homeless.

Prepared by the Union housing ministry, the draft Model Residential Tenancy Act, 2011, intends to replace antiquated rent control legislations that cap rents. These legislations have, over the years, resulted in landlords getting only a pittance for their prime properties in metros.

The draft legislation proposes that the rent for all new tenancies be based on an agreement between the landlord and the tenant. And in cases where the rent was finalized years ago, a freeze be levied on revision for 24 months. In the 22nd month, however, the landlord can seek a revision. And, if there is no agreement, the landlord can terminate the tenancy.

Conclusion Tenant associations claim that the new law would spell disaster for Mumbai, where thousands of old properties are still rented out under the longstanding ‘pagdi’ system. Under this practice, the tenant pays a big nonrefundable lump sum at market rate at the beginning with the understanding that the landlord will charge only a minimal rent. If the new law goes through,

these tenants will have to pay rents at nearer to market rates. However, landlords have welcomed the legislation and the government hopes that the new system will encourage landlords to reinvest in their properties.

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