The Bombay Rents, Hotel and Lodging Houses Rates Control Act 1947 (commonly referred to as the Bombay Rent Act) was enacted by the Bombay Presidency Legislative Assembly in 1947 as a temporary measure. The Act was promulgated to check and control the burgeoning city rents in the aftermath of partition of the country involving mass exodus of population from north and east India to the metropolis in search of work and livelihood.

The original Bombay Rent Act came into force on February 13, 1938, for a period of two years but was extended time and again till its successor act i.e. The Bombay Rents, Hotel and Lodging House Rates Control Act was promulgated in 1947.

This Act sought to freeze the rents to September 1940 level. Thereafter, the Rent Act has been extended at least 20 times in the past 50 years. Only a few minor modifications have been enacted in the interim period and it has continued to be heavily weighted in favour of the tenants. The clause relating to determination and fixation of standard rent has not been amended.

Even though a few minor increases in the rent payable by the tenant have been granted from time to time, the net effect has been diminishing returns for the landlords. Increases in the cost of living, the cost of building materials and imposition of additional levies/ property taxes etc. by the local, self and the state government have not been fully neutralised.

The landlords aggrieved with the continual state of non-action by the successive state governments coupled with fast erosion of their returns due to the presence of galloping inflationary pressures in the economy were left with no option but to seek relief through the courts of law.

The relief finally came in the shape of Supreme Court ruling on December 19, 1997, with a clear direction to the Maharashtra state government to amend the Rent Control Act. The court directed the state government to adopt an unbiased approach to balance the interests of the tenants and the landlords.

The state government was given time up to March 31, 1998, to either make the subsisting legislation a balanced one or introduce a new Act altogether. However, the opposition in the assembly was quick to politicise the issue and the state government was caught in a proverbial catch nine situation.They, therefore, as of April 1, 1998, notified an across the board increase of 5 per cent in rentals of properties leased before October 1, 1987.

Simultaneously the state government informed the Supreme Court that in keeping with the courts directive, it had commenced work on a comprehensive new legislation which after due process of consultation and vetting would be enacted and promulgated in due course. Meanwhile, the elections followed and the BJP Shiv Sena coalition government was voted out of power. The responsibility to pilot the new legislation had consequently devolved unto the present Congress-led coalition government.

This government had made a commitment to the Supreme Court through their standing council Ashok Desai on October 26, 1999, that the new Maharashtra Rent Control Act would be enacted by the middle of January 2000. The obsolete and delinquent clauses of the Bombay Rent Control Act (amended up to 1987) were highlighted by the advocates representing the property owners before the Supreme Court bench that comprised Justice B N Kirpal, Justice N Srinivasan and Justice Santosh Hedge. It was pointed out that under the Bombay Rent Act, the rent as on September 1, 1940, or the first rent at which the premises were let out continues to be the standard rent. However, there is no provision under the Act for revision of the same or for taking into consideration the rapidly increasing repair and maintenance expenses and the imposition of new taxes and imposts by the local and state government.

The present Act also lacks a correcting mechanism to offset the impact of galloping inflation that in the past three decades has indeed resulted in a severe erosion in the value of the rupee.

The judges of the Supreme Court had rightly stressed in their 1997 judgment that the law must not only strike a balance between rival interests but should also try to be just to all. The law ought not be unjust to one and give a disproportionate benefit or protection to another section of the society. They, therefore, stressed that it is the responsibility of courts to look at the legislation from the alter of Article 14 of the constitution. This article has been embodied in the constitution to check the tendency of giving an undue preference to some over others.

It would be recalled that the issue of balancing the interests of the landlords and the tenants has been engaging the attention of both the central and the state governments for the past 20 years. Even the recommendations from the various committees, specifically constituted for the purpose, were received and considered by the central government who even circulated a draft of the model rent control legislation to the states in 1992.

The various state governments, because of their own political compulsions, however, have failed to address this vital issue. Consequently, the interests of the landlords in a city like Mumbai where more than 70 per cent of the dwelling units are owned by persons belonging to the middle and lower middle income category personnel have continued to suffer.

Furthermore, investment into creation of housing stock for renting has virtually come to a standstill. Even repairs and maintenance of the existing rental housing stock is being neglected by the landlords due to diminishing returns and this is leading to further depletion in the availability of suitable houses for renting. The virtual freeze in rents is also leading to the debilitation of resources of the municipal bodies as the commonly adopted norm for determination and levy of property taxes continues to be standard rent that a property commands.

The frozen rents have also resulted in the perpetuation of the practice of `key money', which apart from creating a black market in rental housing, has reduced the accessibility of low-income groups to rental housing. Low and middle income groups just cannot mobilise adequate resources to pay large deposits and many months' rent in advance. This has also given rise to unchecked growth of jhugi jhompri clusters and slum dwellings in most metropolises.

It is in the light of this background, the Maharashtra Rent Control Act was finally passed by the State Assembly in December 1999. However, the state government, following the governor's assent, has yet to promulgate the Act. The salient implications of the new legislation are: