Landlords can evict shop tenants: SC

50-Yr-Old Law Protecting Tenants Goes

For 50 years, tenants in shops and commercial premises in many prime areas of Delhi have had the upper hand over landlords. They lived without fear of eviction and paid a paltry rent as they were protected by laws that froze the amount negotiated decades ago.

This special protection was because the law said that a tenant could be asked to vacate only residential premises, and not commercial property even if the premises were required for personal use. But all this has changed.

The Supreme Court has given a judgment that changes a 50-year-old law and would help landlords evict tenants in prime commercial zones like Connaught Place, Karol Bagh, South Extension and Walled City who, in most cases, have been paying a few hundred rupees as rent for decades.

The rent law — Delhi Rent Control Act, 1958 — was a handicap for the landlord as he could seek eviction of the tenant only from residential premises, that too provided he proved this was required for his personal need.

Removing this anomaly and striking down the differential approach in law, a Supreme Court bench comprising Justices B N Agrawal and G S Singhvi said landlords could now seek eviction of tenants from residential as well as commercial premises on the ground of proven personal need.

Through the judgment, the court came to the rescue of the family of a landlady who wanted to demolish the premises, part of which was let out for shops. She wanted to build a new structure to accommodate a family growing in size over the years.

RENT CONTROL

Delhi Rent Control Act allowed landlord to seek eviction of tenant only from residential premises for personal need

SC allows landlords to evict tenants from commercial premises too on the same ground Court removes ‘residential’ from relevant section of Delhi Rent Control Act, making it applicable to all rented premises

This will help landlords evict tenants who pay a paltry rent in prime commercial areas like CP, Karol Bagh, South Extension and Walled City Earlier, traders’ lobby had forced the government to put Delhi Rent Control Act, 1995, which had a similar provision, in deep freeze SC reverses HC order on Act

1958 Law On Tenants Had Outlived Its Utility, Rules Apex Court

In a landmark judgement the Supreme Court has empowered landlords to evict tenants in the Capital’s commercial areas.

The attempts to evict the tenants from the shops had been frustrated for nearly 30 years as the rent law did not permit recovery of the premises let out for shops even on the ground of bonafide personal need.

The court said the restriction on eviction of tenants from commercial premises was inserted in the law 50 years ago mainly because of the limited commercial space available in the city at that time. But that was a long time back.

Now the scenario has undergone a sea change and a fairly large number of buildings and premises were now available on rent for non-residential and commercial purposes. Restricting landlords from seeking eviction of tenants from shops was no longer justified, the Bench said.

The 1995 Delhi Rent Control Act, which had a similar provision in favour of landlords, could not be notified despite receiving presidential assent as the government was pressured by the powerful traders lobby.

Section 14(1)(e) of the 1958 Act allowed a landlord to make an application for recovery of possession of a residential premises on the ground that “the premises let out for residential purposes are required by the landlord for occupation as a residence for himself or any other member of his family dependant on him... and that the landlord has no other reasonably suitable residential accomodation”.

The new law would now read: “That the premises are required bonafide by the landlord for himself or for any member of his family dependant on him... and that the landlord has no other reasonably suitable accommodation”. Crucially, the apex court has deleted the word ‘residential’. This makes the tenant eviction process apply with same rigour to rented premises — both residential and commercial.

Though the court removed the word ‘residential’ from Section 14(1)(e) of the Delhi Rent Control Act, it tried to strike a balance by laying down thatrecovery of rented premises still needed the landlord to prove that he needed it for his use and lacked alternate suitable accommodation.

Reversing a full Bench judgment of the Delhi High Court which had refused to alter the law in favour of the landlords on the ground that it had been in force for more than 45 years, the apex court said the HC failed to see that the provision in the 1958 Act has outlived its utility.

Writing the 64-page judgment for the Bench, Justice Singhvi said the high court failed to notice the differential treatment in law for residential and commercial premises, even though the rationale for it had long ceased to exist.

Upset traders to seek govt help

There are over two lakh traders in the city who operate from rented properties in commercial areas. Most of them pay less than Rs 3,000 a month as rent for shops in prime locations. The Supreme Court order could lead to their eviction.

The market areas where a large number of such shops are located include Connaught Place, Karol Bagh, Walled City, Chawri Bazar, Kashmere Gate, Paharganj, Daryaganj, Ajmeri Gate, Asaf Ali Road, South Extension and Kalkaji. There are about one lakh such properties in the city.

The shopkeepers functioning from these rented properties, however, are not willing to go without putting up a fight. Said Praveen Khandelwal, president of the Confederation of All India Traders: ‘‘This decision affects 45% of the shopkeepers in the city, and just like in the case of sealings, the judgment pertaining to one case has been extended to the entire city. In the past three years, traders have been affected negatively by various decisions taken by the government and courts but not once has anyone spoken of rehabilitation for us. There are still 6,000 to 7,000 traders who have been unemployed for a year now due to sealings.’’

He said traders would ask the government to intervene and, if need be, even approach the Supreme Court. ‘‘To save the livelihoods of lakhs of traders, we may take to the streets once again,’’ he said. The traders say the Supreme Court’s argument that more commercial space is available now ignores the fact that the rentals at such places are too high for most traders. They say they are paying low rents now as they had paid a security deposit at the time of renting the shop.

Said Muri Mani, president of Karol Bagh traders association: ‘‘The new Delhi Rent Act, which had got the approval of Parliament and the President in 1995 was opposed by us and was not notified. It favoured the landlords, which will be the case even now. This will have a very negative effect on trade in the city, especially wholesale trade, and will be a hindrance to development of the city.’’

The Times of India 18th April 2008 P. 1 Delhi
With thanks from The Time of India
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