Model Tenancy Act 2020: A Remedy Subject to Acceptance

By: Abhishek Wadhawan & Mehar Kaur Arora


INTRODUCTION

Under the current rent control legislations and the Transfer of Property Act, 1882, (hereinafter “TPA”) it is the statutory responsibility of a tenant to hand over the vacant and peaceful possession of a leased premise to the land owner upon expiry of the lease by discharge of time under Section 108(q) of TPA. However, generally lessees retain the possession of the leased premises despite termination of the tenancy unless the landlord gets the decree of eviction or ejectment from the concerned authority or the court. The extended possession of the leased premise upon termination of lease is often an outcome of frivolous litigation which also leads to possession at lower rent than that prevalent in the market.

The Model Tenancy Act 2021 (hereinafter “MTA 2021”) aims to remedy this problem by creating a balance between the rights and liabilities of the lessee and the landowner to a lease. By the creation of a three-tier mechanism consisting of Rent authority, Rent Tribunals and Rent Courts for original and appellate redressal of rent related dispute, the MTA 2021 remedies the problem of delayed adjudication of rental disputes. The problem of lengthy litigation and ceiling amount of rent present in the state specific rent control laws disincentivises the land owners’ from renting their premise. The MTA 2021 seeks to achieve access to quality rental premise and formalisation of rental market through the creation of an accountable and transparent ecosystem with regard to renting of premise. The aim of the article is to highlight the motives that drive frivolous litigation on the part of the tenant and how the introduction of MTA 2021 has acted as a blessing to the land owners who are facing these obstacles in renting their premise.

ISSUES AND MOTIVE OF THE TENANT TO RETAIN THE POSSESSION

The eviction of a lessee from the leased premise can only be done through due process of law. Upon the expiry of the lease a tenant may continue possession of the leased premise at sufferance or by holding. When the tenant continues possession of the leased premise after the determination of lease without the consent of the land owner, it is termed as tenancy at sufferance. On the other hand, if the tenant continues possession of the leased premise after the determination of the lease with the consent of the land owner (which may be in the form of acceptance of rent by the lessee), such a renewed tenancy is referred to as tenancy by holding under Section 116 of TPA. The prolonged possession of leased premise at sufferance by the tenant is backed by many motives some of which are identified as follows:

CONTINUED POSSESSION OF PROPERTY AT OLDER RENT

One of the major reasons behind the continued possession by the lessee of the leased premise after determination of lis is to test the patience of the landlord and drive down the price of the real estate property. In the case of Mohammad Ahmad v. Athma Ram Chauhan, the real motivation behind a lease between the tenant and the landlord was identified that the tenant wishes to continue occupation at the rent rates that were determined years ago by the lease instead of the rent rates prevalent in the market.

The MTA 2021 intends to remedy this problem through Section 5(3) which specifies that upon the expiry of the fixed period of tenancy, if the tenant fails to vacate the premise, liability to pay an enhanced rate of rent as specified under Section 23 of the MTA 2021 shall arise. As per Section 23 of MTA 2021, an enhanced rate or rent upon failure to vacate the premise of (a) twice the monthly rate of rent for two months and (b) four times the monthly rate of rent thereafter upon non-vacation of the premise shall be levied.  Another remedy included in the MTA Act 2021 that will strengthen the position of landlords is that they can apply to the Rent Court at any stage of the proceeding so as to direct the tenant to pay the rent as determined by both the parties during the formation of the tenancy agreement under Section 25 of the MTA 2021 and thereby claim the arrears (difference between old rent rate and market rate) upon the adjudication of dispute.

DELAY IN ADJUDICATION OF DISPUTES

It has been held in the case of Satyendar Singh v. Gulab Singh that the Indian Courts are choked with litigation related to false plea due to the frivolous litigation against the land owner which even tests the patience of the landowner. This runs in the favour of the tenant as during the pendency of the tenancy dispute, the tenant is obligated the payment of the old rent rates which are lesser than the prevalent rent rates for the leased premise.

For timely adjudication of dispute, the MTA 2021 under Section 30 strives for the establishment of Rent authorities along with Rent Court and Rent Tribunals under Section 33 and 35 of the MTA 2021 respectively. Moreover, a limitation period of sixty days from the receipt of application or appeal for Rent Courts and Tribunals will ensure speedy adjudication of disputes between the land owner and the tenant. An appeal against the order of the Rent Court before the Rent Tribunal also has to be disposed within sixty days under Section 37 of the MTA 2021.

FRIVOLOUS LITIGATION

Real estate being a highly appreciable sector witnesses’ frequent fluctuation in the rental rates of the leased premise. Once a suit is initiated for tenancy disputes, due to its prolonged pendency, the land owner is compelled to negotiate with tenant for vacating the leased premise. If this is not done, then the land owner loses on the additional rent and appreciation of the premise which he would have received during the pendency of litigation. Therefore, the opportunity cost of increased value of the real estate slip out of the hand of the land owner. The motive of the lessees which is attained through false litigation was precisely identified in the case of Maria Margadia Sequeria Fernandes v. Erasmo Jack De Sequeria.

Section 4 of the MTA 2021 mandates the tenant and the landlord to enter into a written agreement which shall thereby be registered with the Rent Authorities. This provision does away with any possibility of false claims since the agreed terms are in writing and approved by a competent authority.  Further, the Section 5 of MTA 2021provides for the time period for which the tenancy remains valid as specified by both the parties in the agreement which is thereby ratified by Rent Authorities. Therefore, any possession beyond the period of agreed tenancy is unauthorised possession of the leased premise.

LIMITATION OF MTA 2021

It is agreed that the MTA 2021 seeks to bring landmark and appreciable changes to the existing tenancy laws in India yet the Act is not immune from a few limitations that hinder the achievement of the legislative intent behind enacting Model Act.

Firstly, since “Land” is a subject under the Schedule VII State List, Entry 18 of the Indian Constitution, therefore, the implementation of the MTA 2021 rests on the acceptance of states which have the discretion to accept it wholly or partially with proposed amendments to a few sections or completely reject the whole Act.  Secondly, the absence of prescribed time frame for cases that involve questions related to revision of rent, withholding of essential supplies by the landlord etc. are some of the loopholes in the MTA 2021.

Thirdly, in comparison to the number of rising rental and lease disputes, there is a need for the establishment of sufficient number of Rent Authorities, Courts and Tribunals. Fourthly, the bargaining power of the tenant to determine the amount of rent payable as per the agreement stands vitiated as the Model Act only specifies that the rent agreement should be mutually decided by both the parties.

CONCLUSION

The legislative intent behind the rent control legislation has always been to ensure that only fair clauses and reasonable amount of rent is charged in a lease between the lessee and the land owner. However, over the years it has been seen that the lessees have engaged in practices that disrupt this intended balance specially in the case of continued possession of the leased premise despite termination of the lease. In this regard initiation of frivolous litigation becomes the most beneficial choice for the lessee for continued possession along with the added benefit of lesser rental payments that are prevalent in the market. The law should not allow anyone to abuse the process of the court and thereby leading to unjust benefit. In this regard, the motivations driving the lessees to retain their possession of the leased property after the expiry of the lease must be stopped through legislative and judicial measures by limiting the benefits accrued by the lessees through frivolous litigations and pleas which is intended to be achieved through the Model Tenancy Act 2021. However, this legislation also suffers from its own limitations calling for incorporation of similar provisions should also be introduced for leases governed under the Transfer of Property Act so that it is made applicable to all the leases in general and not limited to those leases which are governed by the concerned tenancy or the rent control law.


(Abhishek and Mehar are law undergraduates at Gujarat National Law University, Gandhinagar. The author(s) may be contacted via mail at meharkaurarora19@gmail.com  and/or abhwad1704@gmail.com)

Cite as: Abhishek Wadhawan & Mehar Kaur Arora, ‘Model Tenancy Act 2020: A Remedy Subject to Acceptance’ (The RMLNLU Law Review Blog, 27 September 2021) <https://rmlnlulawreview.wordpress.com/wp-admin/post.php?post=3681&action=edit&classic-editor>   date of access

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