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The Draft Model Tenancy Act, 2020

Ashima Obhan & Bambi Bhalla
8 Dec 2020 4:27 AM GMT
The Draft Model Tenancy Act, 2020
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The Ministry of Housing and Urban Affairs ("Ministry") has prepared a Draft Model Tenancy Act, 2020[1] ("MTA") with the objective of balancing the interests and rights of landlords and tenants and to create a more efficient and transparent system for renting premises, both residential and commercial barring those for industrial use. According to a background note[2] issued by the...

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The Ministry of Housing and Urban Affairs ("Ministry") has prepared a Draft Model Tenancy Act, 2020[1] ("MTA") with the objective of balancing the interests and rights of landlords and tenants and to create a more efficient and transparent system for renting premises, both residential and commercial barring those for industrial use. According to a background note[2] issued by the Ministry in respect of the MTA, the Government wishes to promote the growth of the rental market by creating a more sustainable and inclusive rental market in India. While there are various State laws and regulations governing tenancy in India, presently there exists no codified legislation for rent matters. According to the Ministry, it is expected that State tenancy laws based on the MTA will be beneficial to both landlords and tenants. A codified regulation such as the MTA which among other things proposes a speedy dispute redressal mechanism for rent disputes is a step in the right direction. This article briefly summarizes the key highlights of the MTA.

  1. Tenancy Agreement

The MTA states that no person shall let or take on rent any premises except by an agreement in writing, which shall be informed to the rent authority by the landlord and tenant jointly in the form specified under the MTA, within a period of two (2) months from the date of the tenancy agreement. After receiving information about the execution of the tenancy agreement, the rent authority shall provide a unique identification number to the parties and upload the details of the tenancy on its website in local vernacular language or the language of the State/Union territory.

  1. Security Deposit

The MTA caps the security deposit payable by the tenant to a maximum of two (2) months in the case of residential premises and to a maximum of six (6) months in the case of non-residential premises.

  1. Withholding Essential Supply or Service

No landlord or property manager shall either by himself/herself or through any other person, withhold any essential supply or service in the premises occupied by the tenant. In case of any contravention and upon receiving an application made by the tenant in this regard, the rent authority after examining the matter, may pass an interim order directing the restoration of supply of the essential service. An enquiry in this regard shall be completed by the rent authority within one (1) month of receiving the application. Further, after giving reasonable opportunity to be heard, the rent authority may award compensation not exceeding two (2) months' rent to be paid by the landlord/person responsible for withholding the supply. Further, in case of any frivolous applications received by the rent authority, a penalty of an amount not exceeding twice the monthly rent shall be imposed on the tenant.

  1. Rights and Obligations of Successor

The MTA proposes that the terms of the agreement executed between the landlord and tenant shall be binding upon their successors in the case of death of the landlord or tenant. In such case, the successors of the deceased landlord or tenant, as the case may be, shall have the same rights and obligations as agreed to in the tenancy agreement for the remaining period of the tenancy.

  1. Restriction on Sub-Letting

After the commencement of the MTA, no tenant shall sub-let in whole or part the premises held by him/her as a tenant or transfer or assign his/her rights in the tenancy agreement without executing a supplementary agreement to the tenancy agreement. Further, upon execution of the supplementary agreement, the landlord and tenant shall jointly inform the rent authority about the sub-tenancy within a period of two (2) months from the date of execution of such agreement in the form specified under the MTA.

  1. Rent Authority, its Powers and Appeals

The district collector or district magistrate shall with the previous approval of the State Government/Union territory appoint an officer not below the rank of deputy collector, to be the rent authority within his jurisdiction. The rent authority shall have the powers vested in a rent court under the MTA in respect of proceedings initiated under the sections pertaining to the tenancy agreement, revision of rent, determination of revised rent in case of dispute, deposit of rent with rent authority, repair and maintenance of property, duties of property manager and consequences of violation of duties and withholding essential service or supply. The procedure to be followed by the rent court and rent tribunal shall be followed in this regard. Further, a person aggrieved by the order of the rent authority may appeal to the rent court having territorial jurisdiction within thirty (30) days from the date of the order of the rent authority.

  1. Rent Courts and Rent Tribunals

The district collector or district magistrate shall, with the previous approval of the State Government/Union territory administration, appoint an additional collector or additional district magistrate or an officer of equivalent rank, to be the rent court for the purposes of the MTA, within his jurisdiction.

The State Government/Union territory administration in consultation with the jurisdictional High Court, may by notification, appoint a district Judge or additional district Judge as rent tribunal in each district.

  1. Procedure to be Followed

The MTA establishes rent courts and rent tribunals for speedy redressal of disputes. It is to be noted that the civil courts shall not have the power to entertain such disputes. The rent courts and tribunals shall have the power to regulate their own procedure in the following manner:

  • The landlord or the tenant may file an application or appeal before the rent court or, as the case may be, the rent tribunal accompanied by affidavit and documents, if any;
  • The rent court/rent tribunal shall then issue notice to the opposite party, accompanied by copies of application or appeal, affidavit and documents;
  • The opposite party shall file a reply accompanied by affidavit and documents, if any, after serving a copy of the same to the applicant;
  • The applicant may file a rejoinder, if any, after serving the copy to the opposite party;
  • The rent court/rent tribunal shall fix a date of hearing and may hold such summary inquiry as it deems necessary.
  • The rent court/rent tribunal shall decide the dispute within a period of sixty (60) days.
  1. Powers of the Rent Court and Rent Tribunal

The rent court/rent tribunal shall have the same powers of a civil court under the Code of Civil Procedure, 1908 for the purpose of:

  • Summoning and enforcing the attendance of any person and examining him on oath;
  • Requiring the discovery and production of documents;
  • Issuing commissions for examination of the witnesses or documents;
  • Issuing commission for local investigation;
  • Receiving evidence on affidavits;
  • Dismissing an application or appeal for default or deciding it ex- parte;
  • Setting aside any order of dismissal of any application or appeal for default or any other order passed by it ex-parte;
  • Execution of its orders and decisions under the MTA without reference to any civil court;
  • Reviewing its orders and decisions;
  • Revision of orders and decisions of rent authority and rent court; and
  • Any other matter, which may be prescribed.

An order made by the rent court or an order passed in appeal or revision or review under the MTA shall be executable by the rent court as a decree of a civil court and for this purpose, the rent court shall have the powers of a civil court.

  • Appeal to Rent Tribunal

Any person aggrieved by an order passed by the rent court can appeal to the jurisdictional rent tribunal within the local limits of which the premises is situated, within a period of thirty (30) days from the date of the order. The rent tribunal shall thereafter serve a notice along with a copy of the appeal to the respondent and fix a hearing no later than thirty (30) days from the date of service of notice of appeal on the respondent. The appeal shall be disposed of within a period of sixty (60) days from such date of service.

Conclusion

The MTA inter alia contains provisions in respect of the rights and obligations of the landlord and tenant, duties of the property manager and consequences of violation of duties and eviction and recovery of possession of premises by landlord. If rightly enforced by the States, the MTA could strengthen tenancy laws in the country and stabilise the rental and housing market in the country. What remains to be seen is the extent to which the States shall adopt the guidelines proposed by the Centre. Considering that people at large do not enter into written agreements or that landlord-tenant disputes which are quite common often lead to lengthy litigation, the guidelines proposed by the MTA would help in ensuring the speedy redressal of tenancy disputes and transparency in the system.

Ashima Obhan is a Partner and Bambi Bhalla is an Associate at Obhan and Associates. Views are personal.


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