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N. Motilal & Ors. v. Faisal Bin Ali & Anr.

Civil Appeal · 2020 INSC 114Decided 30 Jan 2020
Civil Appeal No. 710 of 2020
Justice Ashok Bhushan · Justice M.R. Shah

Background

The appellants were tenants of a non-residential shop in Hyderabad under a 20-year lease agreed in 1990. After new owners purchased the property in 2008, they applied to the Rent Controller for enhancement of rent, and the Rent Controller fixed a higher "fair rent." The tenants argued that since their fixed-term contractual tenancy (running until 2010) was still subsisting, the landlord had no right to apply for fair rent enhancement during that period. Their appeal and revision against the Rent Controller's order were both dismissed by the lower forums and the High Court, leading to this appeal before the Supreme Court.

Decision Breakdown

The Supreme Court held that Section 4 of the Telangana Buildings (Lease, Rent and Eviction) Control Act, 1960 allows either the landlord or the tenant to apply for fixation of fair rent even during the subsistence of a contractual tenancy, and is not limited to cases where the contract has ended. The Court relied on a binding Constitution Bench ruling in M/s. Raval and Co. vs. K.G. Ramachandran, further affirmed by a seven-judge Bench, holding that such Rent Control provisions exist to protect both landlords and tenants and operate independently of private contracts. The Court rejected the tenant's reliance on a minority judgment and an unproven government circular, finding no merit in the argument that enhancement could not be sought mid-contract. The appeal was accordingly dismissed, upholding the fair rent fixed by the Rent Controller.

Lesson Learnt

Under rent control laws like the one considered here, a landlord (or tenant) can apply to have "fair rent" judicially fixed even while an existing lease agreement is still running: a private rental contract does not automatically block either side from invoking the statutory fair-rent procedure.

Official source (sci.gov.in)View Judgment (PDF)

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