Legal Blog: Effect of Sub-Letting : Relevant Rate of Rent under Delhi Rent Control Act: The Law

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Saturday, November 20, 2010

Effect of Sub-Letting : Relevant Rate of Rent under Delhi Rent Control Act: The Law

Justice A.K. Sikri
Delhi High Court
An interesting question was raised in the instant case (M/s. Atma Ram Properties (P) Ltd. vs M/s. Pal Properties (India) Pvt. Ltd. And Others), where the Premises in question was let out to the tenant for a rent less than Rs. 3500/- per month and the said tenant further sub-let the Premises for an amount exceeding Rs. 3500/- per month. The question that arose for the consideration of the Bench was which rate of rent would be applicable to determine the question regarding jurisdiction of the Civil Court in view of S. 50 of the Delhi Rent Control Act.


The Bench held that once the tenant sublets the property for a rent exceeding Rs. 3500/- per month, then the relevant rent for the consideration of the Court would be the amount exceeding Rs. 3500/- per month. The Court held that once the premises fetches a rent exceeding Rs. 3500/- per month, the tenant loses the protection afforded by the Delhi Rent Control Act. The relevant Para(s) of the judgments are reproduced hereinbelow;

14. The last question which calls for determination is as to whether the tenancy of the defendants is protected under the provisions of Delhi Rent Control Act and the suit is not maintainable in view of Section 50 of the said Act. On this aspect facts are not in dispute. Defendants 1 to 3 are paying the rent of Rs. 1540/-. However, they have sub-let a part of the tenanted premises to defendant No. 4 and defendant No. 4 is paying the rent of Rs. 24,701.25 paise to defendants 1 to 3. Therefore, no evidence is required and legal question which calls for determination is as to whether it is a rent of Rs. 1540/- paid by tenants to the landlord or it is a rent of Rs. 24,701.75 paise paid by sub-tenant to tenants which would be a determinative factor in such proceedings. This issue is no more res integra. Identical question came up for consideration before the Division Bench of this Court in the case of P.S. Jain Company Ltd. Vs. Atma Ram Properties (P) Ltd. & Ors. . In para-5, the question which fell for consideration was posed. It reads as under:
"The point for consideration in the appeal is: Whether a tenant who is paying a rent of Rs. 900/- p.m. Section 3(c) of the Delhi Rent Control Act, 1958) can be evicted by a simple notice under Section 106 Transfer of Property Act, through the civil Court if he has lawfully sub-let there premises to two tenants, one for Rs. 40,000/- p.m. and another for Rs. 4,500/- p.m. (in each cases for more than Rs. 3,500/- p.m.)?
15. The answer to this question is found in paras 8, 9 and 12 of that judgment. After relying upon for Supreme Court judgments dealing with purposeful construction of a statute rather than adopting mechanical approach, in para-12 the Court observed as under:
"12. In our view, the intention behind Section 3(c) is that a premises which fetches a rent of Rs. 3,500/- p.m. should be exempt and that protection should be restricted to buildings fetching a rent less than Rs. 3,500/- p.m. In case a tenant paying less than Rs. 3,500/- p.m. to his landlord has sublet the very same premises may be lawfully for a rent above Rs. 3,500/- p.m., then the question naturally arises whether such a tenant can be said to belong to weaker sections of society requiring protection. By sub-letting for a rent above Rs. 3,500/- p.m., the tenant has parted with his physical possession. He is receiving from his tenant (i.e. the sub-tenant) more than Rs. 3,500/- p.m. though he is paying less than Rs. 3,500/- p.m. to his landlord. The above contrast is well illustrated by the facts of the case before us. The appellants tenant is paying only Rs. 900/- p.m. to the plaintiff, while one for Rs. 40,000/- p.m. and another for Rs. 4,500/- p.m. In regard to each of these units, the sub-tenants have no protection of the Rent Act. In our view, the purpose of Section 3(c) is not to give any protection to such a tenant.
16. Thus it is clear that the relevant rent is the one which is paid by sub-tenant to the tenant. In the instant case it is more than Rs. 3,500/- PM and, therefore, no protection under the Delhi Rent Control Act would be available to the defendants and the present suit is not hit by Section 50 of the Rent Control Act.

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