GOVERNMENT SHOULD COME OUT WITH A BALANCED AND PEOPLE-FRIENDLY LAW ON RENTALS

Press Release
“The issue of rent act in Delhi is hanging fire since last 18 years because the tenants have been demanding a fair play and justice and to make the act a balanced legislation. It is regretted that the issue has been termed as a disputed issue between Landlords and Tenants whereas factual position is that both the sections in large numbers of cases enjoys status of the landlords and tenants in respect of different premises. Therefore, the issue needs to be debated and legislated in a broader perspective. Since Delhi Rent Act will affect Rent laws of other states in the Country, it has assumed much importance and as such a careful consultation is needed” -said Mr. Praveen Khandelwal, National Secretary General of the Confederation of All India Traders (CAIT), apex body of the trading community of the Country, while addressing a Press Conference at New Delhi today.

The Press Conferences was attended by trade leaders which comprised of trade leaders of prominent trade associations from Walled City, Kamla Nagar and North Delhi, Rajouri Garden and West Delhi, Lajpat Nagar and South Delhi, Connaught Place, Trans Yamuna area, Sadar Bazar, Karol Bagh and other commercial areas of Delhi.

Amid reports of repealing Delhi Rent Act, 1995 by the Central Government and bringing a fresh law, the CAIT has demanded that prior to framing the law serious consultations must be held with stakeholders and as such an Expert Committee should be constituted by the Government comprising of senior officials of the Government and representatives of stakeholders to ensure a balanced act purported to safeguard genuine interest of landlords and tenants and taking into consideration that it has vital bearing on the livelihood of lakhs of people in Delhi.

Arguing the tenants case, Mr. Khandelwal said that “why rents are low” is having a straight answer that since post Independence till 1995, when Delhi Rent Act was introduced, Delhi mainly comprised of leasehold properties which could not be divided and sold in parts. To overcome this restriction and to dispose of the property in parts, a practice evolved whereby “pugree” or “key money” which was equivalent to the then market price of the property was paid by the tenant to the landlord, making the tenant a defacto owner of the premises. A nominal amount was fixed as rent of the premises with the understanding that the premises could not be got vacated especially under the then prevailing rent act. Whenever a tenancy changed hands, “pugree” was paid by the new tenant to get the rent receipt issued in its name and the amount was shared between the old tenant and the landlord. The concept of “pugree” has been acknowledged by not only the landlords and the tenants, but the Courts and the legislature as well. In the year 1988, the then Government while taking cognizance of the report of Economic Administration Reforms Commission and National Commission on Urbanization, amended the Rent Act and provided a clause of a 10% increase in rents every three years.

Mr. Ramesh Khanna, President, Rajouri Garden Main Market Association said that it is an accepted fact that trader tenants have contributed a lot to the overall commercial development of Delhi and as such having taken premises on rent after paying huge pugrees, the tenants invested their enormous physical and mental labour and put in all financial resources to develop the area thereby enhancing the value of the property. This fact has been admitted by the Central Government in the Supreme Court in year 2006 in case of M.C. Mehta v/s Union of India by filing an affidavit that in last four decades it could develop only 16% commercial space in Delhi. It is also to be noted that under Section 113 of the Delhi Municipal Corporation Act, 1957, due recognition has been given to concept of development and enhancement of value where MCD is authorized to charge betterment tax for such services. Therefore, traders’ need to be equated with this accepted principle.

CAIT Delhi State President Shri Narender Madan and Shri Vijay Pal, Chairman, Federation of Rohini Traders Association demanded absolute clarity on “bonafide need”, the CAIT argued that under the garb of bonafide need, eviction notices have been issued to large number of tenants and numerous properties have already been vacated. A property which has changed hands from one person to another cannot claim bonafide need. Rather on the other side trader-tenant bonafide need has to be taken into account since the said tenant is sourcing livelihood of not only his own family but the families of other persons as well who are dependent upon him for their earnings. The economic justice guaranteed in the Preamble of the Constitution of India needs to be protected.

The CAIT has demanded the Government to work out a proper formula to make the Rent Act a balanced act and not look like tilting on either side. The principle of natural justice, economic justice guaranteed under Indian Constitution should be adhered to. Further, the ground realities of the old time when tenancy was taken on pugree till present regime, the contribution of tenants to develop the area and enhance the value of the property combined with their bonafide need and right to livelihood should also be considered and if any trader is uprooted, the Government must provide them viable alternatives prior to their eviction.