April 13, 1998

With higher rents in the offing, Mumbai's tenants are a harried lot. Having dragged its feet over the issue, the Government gropes for a viable solution.

By Smruti Koppikar

Pushing 80, M.H. Prabhu pays roughly Rs 45 a month for his 600 sq ft tenement in Chikalwadi Blocks in south Mumbai. But he also coughs up 148 per cent property tax and nearly 10 per cent as other taxes for the same premises. Add to that the varying amounts of repair cess, and the pensioner ends up paying Rs 200. Consider this too: in the early 1950s, when Prabhu first moved in, he made a down payment of Rs 570, a princely amount for someone earning Rs 12 a month. That pugree amount ensured for the landlord a return on investment.

Beginning this month, Prabhu will have to pay a higher rent. The question is how much more. Like him, there are nearly two million people in 19,642 buildings in Mumbai waiting for April 17 for the Supreme Court to decide on the issue. Accordingly, they will either pay 5 per cent more for the following year with manifold increases after that. Or, in the worst-case scenario, pay 32 times the present amount, plus taxes. They may no longer be protected under the contentious Rent Act of 1947.

No wonder then that nearly 700 meetings of tenants from various areas have been held in the past 10 weeks. A recent rally at Azad Maidan had about one lakh tenants putting up a spirited fight for a fair deal. "Yes, it's a flashpoint," says state Housing Minister Sureshdada Jain. "We are trying to avoid an uprising."

The efforts notwithstanding, the Shiv Sena-BJP Government seems to have only added fuel to the fire. It was common knowledge that the Rent Act, after 20 extensions over the years, would expire on March 31, 1998. The state Government was expected to rationalise the rental market, protect the small chawl tenants and bring the entire state under one law instead of the three different Acts that exist now. Rationalisation would mean fixing responsibilities for landlords and tenants, deciding on tenancy for legal heirs, providing for repairs of rented premises besides, of course, increasing rent.

As the national debate on the Model Rent Control Bill of 1992 raged, the Maharashtra Assembly was already considering a more comprehensive bill moved by the Sharad Pawar government in 1993 to replace the Rent Act. The bill was subsequently referred to a joint select committee of the state legislature. But the committee has just met four times in the tenure of the present Government. "It's a case of the Government dragging its feet," charges Opposition leader Chhagan Bhujbal. "If it wanted, it could have brought in the new Act earlier and we wouldn't have had any of the present problems."

Landlords were pressing for rent decontrol; tenants wanted protection. Putting the issue on the backburner was easy for the alliance Government, bogged down as it was by internal contradictions. However, it's exacting a heavy price now. A spate of cases that began in 1986-87 in the Mumbai High Court ended up in the Supreme Court last year. The December 19, 1997, judgement -- now under review with the final order expected on April 17 -- put the Government in a tight spot. It ordered a "fair and reasonable" increase in rents and left the Government with little option but to adopt the Model Rent Control Act. The Government hurriedly effected the 5 per cent increase for premises leased before October 1, 1987 -- the cut-off date when rents were decontrolled for new buildings and leases by an amendment -- and extended the life of the Rent Act by a year.

The move has opened a can of worms. "Why only 5 per cent, why not 2 per cent or 20 per cent?" asks landlord S. Saboonchi. Associations of landlords and property owners are gearing up to challenge the increase in the apex court. More important, the larger issue of rented premises has been narrowed down to a problem of rent increase. Says Chandrashekhar Prabhu, urban planner: "It's unrealistic to focus only on rent increase. You have to look at the total of pugree, taxes and rent."

Though archaic, the Rent Act is rooted in the peculiar conditions that prevail in Mumbai. In the past, affordable rents and tenant protection were necessary to attract the middle and working classes, who formed the backbone of the metro's economy. To move into any rental premises today, a tenant under the pugree system must pay the existing market rate in that area, usually an amount equal to what he would pay to buy it. Between 30 per cent and 40 per cent of the pugree goes to the landlord and the rest to the old tenant. This apart from the rent that he will pay every month. With a large majority of tenements changing hands regularly, the landlord makes substantial gains each time a new tenant walks in, . Far from providing affordable accommodation, rents are now considered a return on investments. "Landlords have received huge returns considering they didn't pay to buy the land," says Anil Goenka, convener of the Federation of Tenants Associations.

An equally significant issue is the dismal state of old buildings. Landlords, under the pretext of insufficient revenue, refuse to maintain and repair their premises. As a result, hundreds of buildings are on the verge of collapse. To get around this problem, the Government set up the Repairs Board and began to charge a repair cess from tenants. Landlords are also free to demand what they fancy for premises leased after October 1, 1987.

It is a complex situation, to say the least. A fair solution to the larger issue of rented premises means more than an increase in rent. It depends on the Government's will to do something meaningful. So far, it has put up a weak defence in the Supreme Court, inviting allegations that it is pro-landlord. "The will is missing because whatever it does, it can't endear itself to the landlords," says Murli Deora, MP, who used the rent issue in his election campaign. Now cornered, the Government wants to keep both tenants and landlords happy. That, everyone knows, is not easy.

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