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Bombay tenants protest against new rent act

Syed Firdaus Ashraf in Bombay

Nearly 70 per cent of the shops, hotels, and wholesale trading establishments remained shut today in support of a bandh (general strike) call given by the Tenants Associations. The general strike was observed to protest against the adoption of the New Rent Act in Bombay.

The New Rent Act, which will come into force from April 1, states that owners will have the right to increase existing rents by a minimum of 20 per cent and bar tenants from passing on the property to their children.

It is estimated that the New Rent Act, if it comes into force, will directly affect three million people in Bombay alone. It will also hit people in New Bombay and the rest of Maharashtra.

The genesis of the present dispute between tenants and owners in Bombay goes back to the outbreak of World War II. The Bombay Rent Control Act froze rents in the city at the 1940 levels. It was decided by the courts then that property rents will not be increased. The 1940 act was extended 20 times, with no government willing to anger the powerful tenants lobby. This led to the paradoxical situation that certain apartments in Bombay, considered the world's most expensive real estate, are today rented out for as little as Rs 200 per month (the 1940 price) whereas the market rate is Rs 15,000 per month!

However, last December, the Supreme Court, in a historic judgement, declared the 1940 rent act outdated, and ordered the state to implement the new rent act from the first week of April 1998.

The tenants and traders association in the state blame the Maharashtra government for losing the case in the Supreme Court. They accuse the government of not fielding a lawyer good enough to take on Fali Nariman, a well-known and successful advocate in the Supreme Court, who represented the owner's association.

Says S G Joshi, secretary, Federation of Associations of Maharashtra which opposes the new rent act, "I blame the state government for the current mess. They have never protected the tenants' interest and have always favoured the owners' lobby."

Interestingly, the rent act was a major issue in the elections in the Bombay South constituency. Congress candidate Murli Deora held the Shiv Sena-Bharatiya Janata Party government in the state responsible for losing the tenants' case. Deora was elected.

Interestingly, the Delhi assembly last year brought in the new rent act which led to an outbreak of violence between owners and tenants. This forced the government to bring back the old bill.

Says Anil Goenka, Chairman, Federation of Old Buildings Cooperative Housing Society, "If the New Rent Act comes into affect, poor tenants will not be able to pay the high rent and will have to leave their homes. This will result in large-scale violence."

The tenants association have not lost hope completely. A review petition is coming up for hearing in the Supreme Court on March 19 which might go in their favour.

The Maharashtra government, in its review petition, has sought a nine-month extension for the old rent act. Tenants also feel optimistic since this time they are represented by noted lawyer Ashok Desai.

Warns Raichandbhai Shah, president, Federation of Retail Traders Association, "Even before the new law has come into existence, 70 per cent of the business have downed their shutters. I am sure the agitation will turn violent if the new rent act comes into effect."

The owners maintain that rents cannot be frozen permanently. The tenants, on the other hand, feel that owners earn sufficiently by way of pagdi (non-returnable deposit). The tenants also point out that the owners do not repair the often-dilapidated buildings, convert residential areas into commercial shops, and earn 33 per cent of the amount of the total money if a rented flat is sold.

"The only permanent solution to the current problem," says Shah, "is to make tenants the owners, while reaching an amicable solution with the owners of the flats and shops."