22.2.2012 (UNI) Delhi High Court has ruled that landlords of residential as well as commercial properties cannot ask for more than 10 per cent hike in the rent in three years and demand a raise according to the inflation rate.

Turning down a plea of a landlord who wanted to increase the monthly rent of his tenant from Rs 150 to Rs 10,000, a bench comprising Acting Chief Justice A K Sikri and Justice Rajiv Sahay Endlaw yesterday ruled that the landlords cannot increase the rents in line with inflation or cost price index.

The Court ruled that the 10 per cent increase in rent every three years provided under the Delhi Rent Act may be perceived as inadequate, but that is no reason to provide for a higher or more frequent increase.

'A landlord of a premises, governed by the Delhi Rent Control Act, 1958, is entitled to have increase in rent only in accordance with the rules and not otherwise. Such a landlord cannot approach the civil court contending that the rent stands increased or should be increased in accordance with the inflation or cost price index,' the Court observed.

The Court was hearing the plea of a petitioner Vaid who rented his property to one Uttam Chand in November 1987 at a monthly rent of Rs 150, but Chand has not been paying rent since July 2000 as the rent was increased to Rs 10,000 per month.

The petitioner contended that after taking into account inflation and fall in the value of rupee, the value of the rent of Rs 150 would not be less than Rs 10,000, adding that even the Municipal Corporation of Delhi (MCD) has started claiming house tax on the basis of Unit Area System.

The judges, however, said the rent could not be increased by the landlord more than the stipulated rate of 10 per cent in every three years as per Section 6 read with Section 8 of the Delhi Rent Act.

The Court refused to interfere with the existing rules, saying it was the duty of the legislature. 'The same (amendment of rules) falls in legislative domain. This court cannot step into the shoes of the legislature,' the bench said.

'It was a matter of serious concerns that the practice of increasing rent has been started for mere monetary profit. This trend would result in reducing the Rent Control Legislation to a ‘dead letter’ defeating its purpose. Owing to the prohibition against eviction, the landlord is not entitled to evict the tenant, but is nevertheless entitled to recover profits which cannot be permitted. Thus, in the absence of a provision in the statute, it cannot be held that a landlord is entitled to market rent from a protected tenant,' the Court held.

'The Rent Control Legislations were enacted in the pre-independence and immediately after independence era to prevent exploitation of tenants and provided a statutory mechanism enabling a tenant to pay rent at a standard rate as fixed by the rent controller which was generally lower than the prevalent market rent. The rent agreed between the landlord and the tenant binds both of them and neither is entitled to unilaterally vary the same,' the Court said.

The bench allowed Vaid to charge rent from his tenant at an increase of 10 per cent every three years. UNI