For millions of Mumbai tenants, the highly politicised voting to extend the validity of the Rent Control Act came as a boon. For landlords, it was a battle lost to raise the ridiculously low rentals fixed almost half a century ago.
Now the tenants can hold on to the flats in residential and commercial premises by just paying another five percent in the rentals which landlords say were fixed in the late 1940s.
The validity of the Act was to expire on March 31, 1998, and this got an extension when the Maharashtra legislature passed an amendment to extent the validity by a year.
The issue had strong political overtones, observes said, who pointed out that the Congress could wrest the Mumbai South parliament constituency from the BJP-Shiv Sena alliance in the recent elections by harping on the state governments failure to protect the tenants.
While the Property Owners Association and several individual landlords felt that their interests were hit, state housing minister Sureshdada Jain said the landlords had made enormous gains over the years. Many owners had recovered their original investments in the properties several times over, he remarked.
The Acts extension was necessitated following the Supreme Court verdict of December 1997, which had ruled out any further extension of the 1948 Act which was to expire on March 31.
The court had stated that the provision relating to the standard rent was unreasonable. It had held that if no amendment was carried out, any further extension would be unconstitutional. And this was the reason the state government had to rush through the bill.
The Act had come into being in February 1948 as a temporary legislation for a five-year period to protect tenants against eviction and demand for unreasonably high rent. Subsequently, the Act was extended 20 times for periods ranging from one to five years.
Lawyers specialising in property matters said the Supreme Court verdict prospectively struck down the provisions relating to the standard rent. The standard rent is the maximum legally permissible rent a landlord can charge as the prevailing rent on September 1, 1940 for the tenanted property. In case the building was built after that date (i.e. September 1, 1940), standard rent would be the first rent paid when the property was let out.
The Property Owners Association as well as individual landlords had challenged the Acts constitutional validity in the Supreme Court. The petitioners had pointed out that the provisions of the Act were arbitrary and unreasonable since it had frozen rents at the 1940 level.
Property owners, who are in a hopeless minority, feel that injustice has been done to them by extending an antiquated piece of law, which was originally described as a temporary legislation. Due to depreciation of the rupee since 1940, the actual rent which landlords were entitled to under the Act was nearly one-hundredth of what they would have got in 1940, the petitioners had told the Supreme Court.
This had led to poor maintenance of buildings that has led to several building crashes.
The Supreme Court had asked the Maharashtra government to legislate fresh provisions that would be fair and reasonable to landlords and tenants. But as the matters stand today, all political parties are openly supporting the tenants.
The five percent hike in standard rent was ridiculous, said landlords. Even this increase will be effective from April 1, 1998 and not with retrospective effect. However, the government claims that this is only an interim hike.
According to government sources, the amendment would protect the interests of tenants and eventually the existing legislation would be replaced by a Model Rent Control Act, which is being studied by a joint select committee.
