Subsistence of Contractual Tenancy does not debar a landlord from filing for enhanced rent, Supreme Court

The Supreme Court on Thursday observed that a landlord is not precluded from making an application for enhancement of rent during the subsistence of contractual tenancy. The Court also highlighted that Rent Control Legislations protect both tenant and landlord..The judgment was rendered by a Bench of Justices Ashok Bhushan and MR Shah in an appeal filed challenging a verdict of the Telangana High Court. .The central issue in the case was whether an application for determination of fair rent can be moved during the currency of contractual tenancy. The Court has held that,."The Constitution Bench judgment in M/s. Raval & Co.’s case as well as seven-Judge Bench judgment in V. Dhanapal Chettiar’s case are binding which categorically had laid down 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."Supreme Court.The appellants entered into a lease agreement dated 21.08.1990 for a shop with the landowner. This lease agreement was to subsist for 20 years, i.e. till 31.07.2010. The monthly rent was fixed at Rs. 1,840/-..However, the landowner transferred the said premise in favour of the respondents via sale deed in 2008, making them the new landlord(s)..The respondents filed an application for enhancement of rent, stating that the current rate was inadequate in terms of the market rent value of similar premises. It was contended by the respondents that rent of the said premise should be Rs. 29,250/- per month..The Rent Controller, Hyderabad allowed the application of the Respondents and fixed the rent at the rate of Rs. 23,400/- per month. The appellants were directed to pay the fair rent as devised from the date of filing of the petition with future enhancement of 10% for every two years..The appellants challenged the judgment passed by the Rent Controller and filed an appeal in the court of Chief Judge, Small Cause Court, wherein it was dismissed..Against the order dismissing the their petition, the appellants approached the High Court wherein the case was remanded back to the Small Cause Court. The plea was dismissed again thereafter..This prompted the appellants to approach the High Court in a civil revision petition, which was also dismissed..Aggrieved, the appellants approached the Supreme Court in civil appeal..The counsel for the appellants contended that the respondents lacked jurisdiction to file the application for enhancement of rent in light of the subsisting contract for tenancy..It was further submitted that Section 4 of the Telangana Building (Lease, Rent and Eviction) Control Rent, 1960 had no application during the duration of the contractual tenancy. It was argued that the contract would bind the respondent and that Rent Control Legislations ought to be interpreted in such a manner so as to save tenants from exorbitant rent..The appellants also pointed out that the Central Government had circulated Model Rent Control Legislations which stated that landlords must be precluded for making application for enhancement of rent during contractual tenancy..The respondents argued that Section 4 of the Tamil Nadu (Lease, Rent and Eviction) Control Act, 1960 was pari materia to Section 4 of the Telangana Buildings (Lease, Rent and Eviction) Control Act, 1960, which permitted filing of application for fixing of fair rent by the landlord during subsistence of contractual tenancy. It was argued that the Supreme Court had approved of this view in M/S Raval & Co. vs. K.G. Ramachandran, which was later endorsed by a seven judge Bench in V. Dhanapal Chettiar vs. Yesodal Ammal..The Court held that Rent Control Legislations bestowed a right to both parties to make an application for fixing fair rent. Under the Telangana Act, 1960, this right was provided for by way of Section 4. The Court pointed out this provision "cannot be read in a manner that it is not applicable with regard to the contractual tenancy.".The Court explained that the concept of determination of fair rent that this provision entails is meant to operate for the equal treatment of the tenant as well as the landlord. Further that,.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.Supreme Court.The Court also pointed out that the Model Legislations circulated by the Central Government, there were cited by the appellants, were only guidelines and that it had no effect on the statutory provisions. .Therefore, the Bench concluded that the landlord could not be precluded from moving applications for fixation of fair rent even during subsistence of contractual tenancy..With these observations, the Court dismissed the appeal. The appellants were represented by Advocate Yelamanchili Shiva Santosh Kumar. Arguments on behalf of the respondents were led by Senior Advocate Kiran Suri..[Read the Judgment]