PRESS-RELEASE

Subject: Delhi High Court concludes hearing of petitioners’ arguments in the case challenging the constitutional validity of archaic Delhi Rent Control Act, 1958

The final arguments on the petition challenging the constitutional validity of the Delhi Rent Control Act, 1958 in re:

Writ Petition (Civil) no. 516 of 2010

titled

Shobha Aggarwal & others v. Union of India & Another

commenced on 25 July, 2018 before a division bench comprising of Justice Ravindra Bhat and Justice A. K. Chawla of the Delhi High Court. The petition was filed in 2010 by a group of women property owners. The case was necessitated as hundreds of thousands of property owners in Delhi are being paid pittance as rent under the archaic law. Successive governments at the Centre in the last 25 years have failed to implement their own policy to reform the rent control law under pressure from tenant/trader lobby of old markets in Delhi.

The final arguments continued on Monday, 30^th July, 2018. Petitioner no.1- in-person, Shobha Aggarwal argued for about one and a half hour over a period of two hearings. It was submitted that in the interest of justice and equity the Court should strike down the Delhi Rent Control Act, 1958 as unconstitutional and the government be directed to compensate the landlords for the decades of injustice suffered by them.

A three paged summary of the arguments made before the court is attached.

The case is now listed for Tuesday, 14 August, 2018 when arguments by the respondent, Union of India will be heard.

(Shobha Aggarwal)

Petitioner no. 1-in-person (Lead Petitioner)

Summary of the Final Arguments

1. Rent control legislations and its present day redundancy: History of rent control legislations in Delhi - Temporary nature of rent legislations.

The entire Delhi Rent Control Act, 1958 (DRC Act or the Act for short) is under challenge in this petition as being violative of Article 14, 19(1)(g) and 21 of the Constitution. The Act once thought to be a socially beneficial legislation is one of the most draconian laws on the statute books today. DRC Act came into existence as a special and temporary legislation curtailing the rights of landlords under the general law on transfer of property to meet the specific needs of the time viz “emergency” conditions created first by World War II and later by the partition of India – the conditions which have long ceased to exist. The long passage of time in which the ground reality has completely changed has rendered this temporary law – which has assumed permanence because of executive inaction – unconstitutional. This ‘temporary law’ has resulted in artificially low rents; lifetime tenancy along with succession rights conferred upon an arbitrary population denying landlords any substantive rights in their own property; as also in reduced taxes and destruction of Delhi. DRC Act is a discriminatory legislation which serves no legitimate state interest and is in-fact against the interest of the general public.

2. Structure of the Delhi Rent Control Act, 1958 (the DRC Act): The Original Act - Amendments to the Act and their effects - Unlimited inheritance rights of the tenants under the Act - Object and reasons of the DRC Act and amending Acts not achieved - Most parts of the Act dead law except those relating to eviction of a class of tenants

Most rent control laws which were applicable to Delhi preceding the DRC Act had a sunset clause. However, the DRC Act and the five amending acts have ensured unlimited succession rights to the tenants; even though the object of the 1975 Amendment Act was to limit succession. Presently only provisions relating to control of rent and eviction are in use; rest of the sections of DRC Act, have been either struck down by the courts or have never been used thus falling into desuetude.

3. Unconstitutionality of DRC Act: Fundamental rights of landlords under Article 14, 19(1)(g), and 21 of the Constitution & Human Rights violated

a. Landlords whose properties are under rent control face discrimination vis-à-vis landlords whose properties fall outside the rent control. There are several unreasonable and arbitrary classifications under Sections 2, 3 & 14 of the Act and all of these classifications have no rational nexus with the object sought to be achieved by the Act. The classifications under the DRC Act are not saved by the reasonable restrictions under Article 19(6). The right to business of letting out properties on market rent for livelihood is violated; and this leads to the right to life itself being in jeopardy.

b. Application of unequal laws on renting/rented properties in Delhi does not advance any legitimate State interest and results in arbitrary distribution of unmerited benefits to a class of commercial tenants. It creates a permanent class of tenants and a permanent class of owners whose properties will never come out of the rent control resulting in anomalies like LIC - one of the richest corporations – being a protected tenant under the DRC Act paying Rs. 346.06 as rent per month for prime commercial property in Connaught Place.

c. In Satyawati Sharma the issue before the hon’ble Supreme Court was whether the classification under Section 14(1) e of the DRC Act is ultra vires the Constitution. Taking into consideration matters of common knowledge, matters of common report and the present day history the SC held that a legislation which may have been reasonable at the time of its enactment, may with the passage of time and changed circumstances become unreasonable and violative of the doctrine of equality and the court may strike down the same if it is found that the rationale of classification has become non-existent; same logic applies to the entire Act.

d. Right to property continues to be a constitutional, statutory and a human right. The Universal Declaration of Human Rights, 1948 as also other International Charter/ Declarations / Convention/ Protocol and Supreme Court judgements hold this right to be a human right which is being violated by the DRC Act.

4. Legislative history of the attempts to reform the Act - Reports of various Parliamentary Committees - Development of jurisprudence on rent control & acknowledgment of its negative impacts

The Delhi Rent Act, 1995 enacted to replace the DRC Act has not been enforced till date. The directions of the Committee on Subordinate Legislation, 1999 and the Committee on Petitions, Rajya Sabha, 2004 to notify the 1995 Act stand ignored. In  its judgements during the last two decades – acknowledging the ill effects of archaic rent control laws – the Supreme Court has tried to create a more level playing field for landlords and tenants.

5. Rent Control a Social and Economic Abomination: Reports of various Commissions set up by the Government since 1982 & other expert reports - Policy changes since 1992 and reasons for non-implementation of the policy - Flagship programs of the Government to implement policy and their failure - Destruction of the city (dangerous buildings) - Proliferation of slums - Destruction of the social fabric of the society

a. The L.K. Jha Commission Report, 1982; Jain Commission, 1998; The Planning Commission in Tenth Five Year Plan 2002-07; & The Report on Real Estate Sector, Committee on National Competition Policy, Ministry of Corporate Affairs, January 2012, Report on Policy and Interventions to spur growth of Rental Housing in India, March 3, 2013 have suggested sweeping changes in archaic rent control laws. Policy changes include gradual decontrol as envisaged in Model Rent Act, 1992 based on National Housing Policy, 1992 to total decontrol in National Urban Housing and Habitat Policy, 2007. All the flagship schemes of successive Governments aimed at urban renewal since 1992 viz the Jawaharlal Nehru National Urban Renewal Mission; Rajiv Awas Yojana and Pradhan Mantri Awas Yojana – have/had reform of rent control laws as a mandatory component but have been subverted by the influential tenant-trader lobby in Delhi. The government is behaving like an NGO drafting one model act after another since 1992, the latest being Draft Model Tenancy Act, 2015.

b. Since the rent paid is a pittance the maintenance of the properties under rent control is not possible resulting in proliferation of dangerous buildings; the poor are forced to stay in slums since the large number of properties stay locked up because of rent control. Continuous litigation between landlords and tenants (almost 10.15% of the total civil litigation in Delhi is under rent control) results in assaults, murders and rapes leading to a rupture of the social fabric.

6. Why government should compensate landlords whose properties are trapped for decades under rent control?

a. Rent Control laws and ‘requisition/acquisition’ of property by the government are two sides of the same coin as both result in forcible occupation of private property; owners of the latter category of properties are compensated; so, too, must be owners of rent controlled properties. Citizens are forced to provide subsidy to a class of (presently) undeserving tenants; this burden of subsidy should be borne by the government from taxes. Rent control laws result in permanent physical invasion of landlords’ property without adequate compensation and transfer of value of the property to the tenants. The European Court of Human Rights has already set a precedent of awarding compensation in such cases.

b. The violation of principles of promissory estoppel and legitimate expectations would also entitle the landlords to compensation as the Government has failed to keep its promise to reform the Act. The promise was first made in 1995 when the President of India gave his assent to Delhi Rent Act, 1995 giving rise to legitimate expectations of the landlords of getting back the possession of their property or at least deriving a reasonable income from it. The promise - reiterated in assurances given in Parliament and courts - stay unfulfilled till date.