Punjab Rent Act, 1995: history objectives and salient features

At the very onset, in this context, the first requirement is that there be a premise that is being let
out. The landlord or owner is someone who has acquired this immovable property either through
inheritance or via purchase or gift. The landlord is the person or entity to whom rent is paid.

A tenant is the one who pays the rent to the landlord in exchange for occupying the property. The
relationship between an owner and tenant in India is often thought of as contentious and
antagonistic, but fundamentally it is driven by need.

No relationship starts with acrimony, and it is, therefore, paramount to set the covenants that will
be followed by either party so that it is pleasant, fruitful, and economically remunerative, for a
balance has to be struck, and the pendulum should not swing too far towards either party as the
same person who is a landlord could also be a tenant in another city or another area in the same
city or town.

A well-known UN study conducted in 1986 estimated that almost 42% of the city dwellers
worldwide were tenants, with rapid urbanization that has ensued, especially in India and
increasing migration from rural areas to cities for better prospects, this number would have seen
a massive increase and a majority of these migrants are tenants although the data from the 2011
Census conducted in India across the top 6 metros indicated that 60% of the residents live in
properties that they owned.

Emergence of the need for Rent Control and Statutes globally 

Rent Control imposes a legal restriction as to what the maximum rent can be, or in other words,
it caps the rent as seen fit under the rules set forth by the State. 

During World War I, there was a severe shortfall of housing in New York as the resources
required for construction had to be diverted for the wartime efforts; construction was stalled
entirely during and after the First World War. Thus, no new inventory of housing was coming
up. At the same time, the demand was unmet, and the house vacancy rates went to a nadir of a
fraction of 1%, which sent rents skyrocketing, and widespread protests ensued, accusing
landlords of ‘exploitative’ practices, which led to the New York State Legislature passing a
‘Rent Control Program’ which would provide relief from baseless evictions and keep rents in
check.

This program was strictly a wartime measure and expired in 1929 when the state of emergency
was over. It established the concept of rent control and was revived during the Second World
War, and exists even today in some form.

Emergence of Rent Control in India

In India, like the United States of America, the beginning of the call for rent controls can be
traced to the First World War as inflation was surging, and tenants were in distress. The Rent
Control Act, 1918 was passed in the Bombay Presidency in order to keep rents within reasonable
limits, and a similar Act was also enacted in Kolkata in 1920. The Delhi Act was born in 1938
under the Defense of India Rules at the onset of the Second World War and was intended as a
temporary measure given the extenuating circumstances.

In India, like the United States of America, the beginning of the call for rent controls can be
traced to the First World War as inflation was surging, and tenants were in distress. The Rent
Control Act, 1918 was passed in the Bombay Presidency in order to keep rents within reasonable
limits, and a similar Act was also enacted in Kolkata in 1920. The Delhi Act was born in 1938
under the Defense of India Rules at the onset of the Second World War and was intended as a
temporary measure given the extenuating circumstances.

However, what started as a temporary relief measure continued, and a Central Rent Control Act
was passed in 1948 by Independent India and was carved out as an exception to the Transfer of
Property Act, 1882.

Since the provision of housing is a State subject under the Indian Constitution, all states are
therefore duty-bound to enact and enforce rent control as they see fit making it a quagmire for
anyone trying to delve through the intricacies of the Acts passed by different State Legislatures
of India.
The underlying principle of these enactments are:

1. Protection of the tenant from eviction by the landlord unless it is bona fide and under
specific conditions as prescribed under the Act.

2. To set the fair or standard rent in order to prevent the Landlord from charging
egregious rents.
For eviction under a contractual tenancy or lease agreement, as per Section 106 of the Transfer
of Property Act, 1882, the Landlord can file a notice for possession from the tenant without
giving any specific reason after giving a fifteen-day notice.

Under the Rent Control Act, a completely different set of standards are put forth, wherein a
landlord can file for eviction:

1. Willful default in payment of rent.

2. Subletting without the consent of the landlord.

3. Breach of any conditions of tenancy like unlawful conduct or causing disturbance to

other occupants of the building.

4. Denial of title by the tenant due to malicious intent.

5. The tenant is not occupying the building.

6. Landlord seeking possession for self with genuine reasons.

7. Eviction due to demolition or reconstruction needed due to the deteriorating condition

of the building, after the reconstruction of the building, the landlord is free to use and
enjoy its property with the only exception to this in Andhra Pradesh Buildings (Lease,
Rent and Eviction) Control Act, 1960 wherein the landlord must offer the tenant the
first right to rent the reconstructed building at the then-prevailing fair market rents and
only if the tenant chooses not to exercise his right can the landlord occupy or let out
the building.    
The Rent Control Act shall not apply in some instances, namely:
 1. Property that is let out to Private Ltd. and Public Ltd. companies with a paid-up capital
of Rs one crore or more.

2. Property let out to Government Companies or PSUs, Banks, or any such Corporation
that has been established under any Central or State Act.

3. Property that is let out to Foreign Companies or International Agencies.

4. A few States have also exempted Temples, Charitable Trusts and Wakfs.
The concept of Rent Control is rooted in socialism, and it hugely favors the tenants.

Applicability of Punjab Rent Act 1995

Under the Indian Constitution, the enactment and implementation of rent control laws
is the responsibility of the individual States. In the State of Punjab in particular, the
British enacted The Punjab Rent Restriction Act 1941.The said Act was replaced by
The Punjab Urban Rent Restriction Act 1947. After the partition of the country in
1947, the East Punjab Rent Restrictions Act 1949 was enacted. This Act remained in
force for almost 64 years and saw several transformations and modifications due to
legislative amendments and judicial interpretations until it gave way to The Punjab
Rent Act 1995 in the year 2013. The 1949 Act faced severe criticism due to several
reasons which included flawed provisions, onerous and limited grounds of ejectment,
ineffective provisions, the lengthy legal process involved, unrealistic rent fixation
etc. 

Salient Features Of The Punjab Rent Act 1995-

To overcome the shortcomings of the earlier Act, the revised Act was originally
conceived in 1995, however, the Government had been sitting on implementation of
the Act despite President assent since 1998 and the Act was never notified. The Act of
1995 finally came into effect on 30.11.2013 with the following Statement of objects &
reasons:
“The National Housing Policy recognises the importance of expanding the availability
of rental housing in urban areas. It is recognised that the rent control legislation in
different States has resulted in stagnating rents, low returns on investment in rental
housing, the difficulty for landlords to resume possession in genuine cases, and
deteriorating housing stock. In order to solve the above problems and ensure a
balance of interests of landlords and tenants, the Government of India, Ministry of
Urban Development, have formulated the Model Rent Control Legislation and advised
the States to amend their Rent Control Acts or enact new laws on the lines of the
above-referred Model Rent Control Legislation. Hence this Bill.”

 The Act provides for the regulation of rents, repairs and maintenance and
eviction relating to premises and matters connected therewith in the State of
Punjab. The Act applies only to the tenancies which have been created after the
commencement of the new Act (except in case of NRI landlord). Further, as per
section 4, all new tenancies after the commencement of the Act are required to
be through a registered agreement. Further, under section 3(2), contractual non-
residential tenancies will be governed by the terms of the contract during the
subsistence of the contract.
 The right of inheritance of tenancy of residential premises is governed by
section 5 which lays down that inheritance is now limited to 10 years from the
death of the tenant and is restricted to the heirs who are dependent upon and
residing with the tenant, who have no other alternative accommodation. In the
case of non-residential tenancies, the property is required to be vacated within
one year of death of the tenant or dissolution of the tenant firm as the case may
be.
 The outdated and redundant concept of fair rent under the old Act had been
discarded and as per section 6 the agreed rent shall be increased by five per
cent of the last rent for two years and third-year increase shall be based upon
the increase in the Consumer Price index over the corresponding three years.
 The Act for the first time lays down the duties and obligations of the landlord
and the tenant as stated in section 17 and 18
 The scope of ejectment of the tenant has been widened with the introduction of
new grounds of eviction under sections 20 and 26 which provide for the
grounds of ejectment as follows: 

 Arrears of rent
 Change of user 
 Misuse
 Ceasing to occupy the premises
 Premises having become unfit and unsafe (with a right   of election to re-enter
on reconstruction)
 Premises required for development works or repairs or additions   (with a right
of election to re-enter on completion of works)
 Availability of alternate accommodation with tenant or family member
 Substantial damage or alteration subject to repairs by the tenant
 The tenant has ceased to be an employee of the landlord
 Conviction of tenant for nuisance or immoral or illegal activity
 Denial of the title of the landlord, when such denial is not bona fide
 Failing to vacate on the agreed date under an agreement
  Breach of the condition imposed by the Government
 The personal necessity of the landlord or any member of his family if the
landlord or such person has no other reasonable suitable accommodation, after
3 years of purchase or transfer. 
 Subletting without the previous consent in writing of the landlord. The Act also
provides for fine and imprisonment in case of subletting.

 Section 21 to section 24 enumerates the special category of landlords entitled to

immediate ejectment of premises let out by landlord, spouse or dependent son
or daughter as under-
  A landlord whose allotment has been cancelled by   Government agencies in
case of residential premises
 A retiring member of armed forces or dependent of a martyr
 Central and State Government employees
 Widow 
 handicapped persons, 
 old persons,
 freedom fighters, his widow or dependent son or daughter  
 non-resident Indians

 Act also introduces fixed term tenancy for a period of fewer than 5 years with
the prior permission of rent controller under section 30 with the remedy of
ejectment on the expiry of the period of the tenancy.

 Partial ejectment has been permitted pursuant to the consent of the landlord
under section 20(3)

 Under section 32 special provisions have been incorporated for recovery of

possession in respect of corporate bodies or a public institution as the landlord.

 The Act provides for summary proceedings for ejectment along with the time
frame to be followed at all stages of the proceedings.

Lack of Foresight –

Already the Act has seen two massive amendments vide the Punjab Rent (Amendment)
Act, 2013 (Punjab Act No. 33 of 2013) and the Punjab Rent (Amendment) Act, 2014
(Punjab Act No. 23 of 2014) whereby about 1/3rd of the provisions of the Act were
repealed. Initially, the Act provided that the Rent Authority/tribunal will have the
power to determine the dispute under the new Act. 

However, after a PIL titled as   Bar council of Punjab and Haryana vs

State of Punjab filed in the High Court, the operation of provisions providing such
procedure was stayed by the Court. Thereafter the Government came up with various
amendments and the old existing mechanism of adjudication by Rent Controllers
/Appellate Authority comprised of judicial officers was retained.   That besides the
advantage of having the adjudication by judicial officers, the effectiveness of
maintaining the same mechanism which was the bane of the old Act, would determine
the future course of the Act of 1995.   

Further, despite the notification of the 1995 Act, there is confusion about the
applicability of the provisions of the 1995 Act to the existing proceedings. Section 75
provides that all cases in respect of the premises, other than owned by a non-resident
Indian, let out prior to the commencement of this Act shall be governed and disposed
of in accordance with the provisions of the old Act so repealed. The High Court
in Krishan Kumar v. Kamla Devi, 2016(1) R.C.R. (Rent) 525  held that NRI
landlords seeking ejectment under the special category will have to file fresh petitions
under the new Act or amend the existing petitions to bring them in consonance with
the new Act. A similar view was expressed in another decision of the High court
in Randhir Singh v. Ranjodh Singh Mudhar, 2018(1) R.C.R. (Rent) 189 . However,
in Adess Singh Vs Manpreet Singh, 2020 (1) PLR 158  the court has made contrary
observations.

Still further in M/s Puran Singh v. Komal Sharma 2019(2) R.C.R. (Rent)
380 the court held that ordinary eviction petitions (other than NRI landlord) which
have been pending prior to the commencement of the Act of 1995 will be governed
and decided under the old Act. This anomaly due to the language of section 75 has
created two categories in respect to pending petitions and needs to be rectified as it is
likely to cause enormous confusion and wastage of court hours.  

The procedure under the new Act still remains cumbersome. All orders, even interim
orders have been made appealable. The tenant has been provided multiple remedies
which will delay the eviction process. E.g. Section 38(7)(e) provides that tenant will
be entitled to file a review petition within ten days of the rejection of the application
for leave to defend.  The observations of the court in Krishan Kumar v. Kamla Devi,
2016(1) R.C.R. (Rent) 525 give an impression that that final order of ejectment is to
be passed after the expiry of 10 day period of filing of review and decision thereof.
On the other hand in Civil Revision No.236 of 2019 Inderpreet Kaur and another
Vs Manjit Kaur Shahi through her GPA-Kuldeep Singh , decided on 28.5.2020,
though this argument was raised by the tenant, the revision was dismissed by the court
without going into the merits of the argument as an appeal was pending before the
Appellate Authority. This leaves us with the question as to whether the Rent
Controller is obligated to put the proceedings in abeyance till the expiry of the 10 day
period before passing the final order or it is just a limitation period provided for
availing the remedy of review. This issue is bound to arise in every case and needs to
be deliberated and settled as early as possible.

Section 2(l) defined SFC as two different premises. This will again make the
ejectment difficult and increase the cost of litigation as two petitions will be required
to be filed for eviction from complete SCF. 

Still further, as per section 24(3) dealing with NRI landlords the term used is “returns
to India for permanent residence”.  This could be interpreted to mean that the
permanent return of the NRI is a condition precedent before he can file an ejectment
petition. This is again likely to give rise to an intense debate in as much as in the
absence of similar expression in the old Act, the courts have held that NRI is not
required to permanently return to India before seeking ejectment under the special
provision.

Yet again, no provision has been made for imposing market rent or mesne profits
during the operation of an interim order in appeal after ejectment. Provisions of CPC
are applicable to the Rent authorities under the Act for limited purposes as laid down
under section 37 of the Act. This difficulty was faced by the courts under the old Act
however the same was redressed by judicial precedents. It seems a similar course
would be required to be adopted under the new Act.   
The blanket restriction of 3 years on the landlord, from the date of acquisition of the
property by transfer, for seeking eviction in case of personal necessity is highly
unreasonable. The legislature ought to have provided for an exemption in suitable
cases. This restriction will cause unnecessary hardship to landlords in genuine and
deserving cases. 

Surprisingly the statute lacks any clear provision for seeking eviction from vacant
land except when required for construction as the definition of term “premises” only
refers to a building or a part of the building and not to vacant land.  

No provision has been incorporated regarding recognising and regulating rental

management agencies that can professionally manage and rent out properties on behalf
of the owners. This is a new concept which is likely to crop up in the future.  

The Way Forward –

The Punjab Rent Act 1995 as a legislation has made tremendous changes to the rent
regulations in the State of Punjab. However, it is still at a nascent stage. The Courts
will have to ensure that they are not trapped in the endless gamut of rules of CPC as
was the situation in the proceedings under the old Act. There is negligible case law to
support the intended implication of the various provisions of the new Act at the
moment which makes the task of the courts all the more difficult, as provisions and
the expressions contained in the Act will be put to scrutiny through innovative legal
arguments. Although subsequent amendments have further tweaked the Act for the
better, it will be years before the legislation is fully developed and all disputes
regarding interpretation of the statute are decisively settled but nevertheless, this is a
step in the right direction though treading on thin ice.

Conclusion
For any relationship to be long-lasting and fruitful, it ought to be underscored by mutual respect,
equity, and fairness. Some landlords tend to look down upon tenants as they feel they have a
higher social status than Tenants. Tenants form a large part of the popular vote bank and are
armed with the Rent Control Act provisions that give them tremendous leverage in this
relationship.

It is tough to enumerate a landlord’s troubles that extend from taxes to rising maintenance and
renovation costs; the helplessness of a Landlord is aptly described by a famous maxim, “Fools
build houses, and wise people live in them.”

There was a shortage of rental housing due to the First and Second World Wars, and the
governments at that time, as a temporary measure, instituted Rent Control Statutes to ensure the
balance of power between tenants and landlords, things are no longer the same and the time has
come to overhaul the archaic provisions of Rent Control completely, and the Model Tenancy Act
is a step in the right direction.