SHOBHA AGGARWAL Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners [in W.P.(C) 516/2010] are co-owners along with other heirs, of late Sharbati Devi, of property, being No. 4/14A, Asaf Ali Road; they mount a wholesale challenge to the provisions of the Delhi Rent Control Act, 1958 (hereafter "DRC Act" or "the Act" for short) as violative of Articles 14, 19(1) (g) and 21 of the Constitution. The Shri Raghubir Saran Charitable Trust (hereafter "the trust") filed a suit [CS (OS) No. 3518/2012], seeking declaration that Section 6A of the DRC Act is void and unconstitutional, as violative of the said articles of the Constitution of India. This suit was referred to the Division Bench on the question of validity of a law by order dated 12-12-2013. In W.P.(C) 7489/2012, Shri Mahinder Yadav, the petitioner, seeks reliefs identical to what is sought by Ms. Shobha Agarwal and her co-owners in W.P.(C) 516/2010. In all the other proceedings too, provisions of the DRC Act are impugned. Section 14(1)(d) of the DRC Act has been challenged in two writ petitions, i.e. Raj Rani Vs. Union of India - W.P.(C) 7726/14 and Harsh Kumar Aggarwal v Union of India - W.P.(C) No. 4951/14. In Amrit Lal Ghai v Union of India - (W.P. (C) 1622/2012), the petitioner challenges the vires of Section 50(1) of the Act. The validity of Section 1 (2) of the Act so far as the said Section provides for extension of provisions of the said Act to select urban areas within Municipal Corporation of Delhi is impugned in Jagdish Kumar v Union of India - W.P.(C) 5542/14 and in Raj Narain v Union of India - W.P.(C) 3189/14. In Kusum Ansal v Union of India (W.P.(C) 733/2013) provisions of Sections 2(1) and 3 of the Act so far as they confer protection of statutory tenant upon the Government, are impugned.

(2.) It is argued that the Act, once thought to be a socially beneficial legislation, is one of the most draconian laws on the statute books today. DRC Act came into existence as a special and temporary legislation curtailing the rights of landlords under the general law on transfer of property to meet the specific needs of the time viz "emergency" conditions created first by World War II and later by the partition of India - the conditions which have long ceased to exist. The long passage of time in which the ground realities completely changed made this temporary law - which has assumed permanence because of executive inaction unconstitutional. It is argued that this so called temporary law has resulted in artificially low rents, lifetime tenancy along with succession rights conferred upon an arbitrary population denying landlords any substantive rights in their own property. It has also resulted in reduced taxes and destruction of the city of Delhi. DRC Act is a discriminatory legislation which serves no legitimate state interest and is in-fact against the interest of the general public.

(3.) It is argued by the petitioner that the DRC Act has become socially and economically destructive as is evident from the various Government committee reports on the subject over the last thirty years. Ms. Shobha Agarwal, the petitioner who argued one of the writ petitions contended that the Economic Administration Reforms Commission set up under the chairmanship of Shri L.K. Jha in its Report No. 11 presented to the Government in September, 1982 pointed out the negative effects of rent control law. The Jain Commission, 1998, reiterated that Rent Control Act negatively impacts housing supply, investment flow in the housing and increases the housing price. The Planning Commission in its 10th Five Year Plan 2002-07 stated that rent control and tenancy laws prevent the development of rental housing, thus contracting housing stock and also act as barriers of growth of cities and that they are also the single most important reason for proliferation of slums in India. Likewise, The Report on Real Estate Sector, Committee on National Competition Policy, Ministry of Corporate Affairs, January 2012- which concluded that the existing Rent control legislations are restrictive in the sense that it precludes probable home owners from renting out their properties due to control in rent, impedes large scale investment in developing rental properties and renting premises as a business model. It stated that determination of rent should be left to market forces and not be controlled through Government regulations or legislations. The Mckinsey Report on the Economic Performance of India published in 2001 opined that removing land market barriers and eliminating Government ownership will increase growth by 1.3 per cent and 0.7 per cent respectively, was also cited.