A rent agreement is a written contract between a landlord and a tenant that outlines the terms and conditions of renting a property for a specific period.
It includes details such as rent amount, property condition, address, and provisions related to rent advance cancellation.
According to the Registration Act, if the agreement period exceeds 11 months, it needs to be registered.
The Case and Background
In a specific case, Srinivas Enterprises had rented a property to Nedungadi Bank for a monthly rent of Rs 13,574, with a security deposit of Rs 81,444.
The tenancy was renewed for another 5 years in 1998, with a monthly rent of Rs 23,414.
The agreement allowed for a 20% rent increase every 3 years.
Lower Court’s Decision and High Court’s Ruling
Srinivas Enterprises filed a civil suit in 2006 to recover the rent as per the lease agreement.
However, PNB (merged with Nedungadi Bank) argued that the agreement was not registered or properly stamped, and therefore, the rent increase was not valid.
The lower court initially ruled in favor of Srinivas Enterprises, ordering PNB to pay rent arrears. PNB challenged this decision in the High Court.
The High Court’s Decision and Its Justification
The High Court reversed the lower court’s ruling and emphasized that since the rent agreement exceeded 11 months, it should have been registered.
Failure to do so invalidated the property owner’s right to increase the rent. Additionally, according to Section 52 of the Limitation Act, there is a three-year time limit to file a suit for rent arrears.
Since the plaintiff did not comply with this requirement, they were not entitled to claim the arrears.
Our Thought
So with this article it is clear that if there is no rent agreement, there can’t be any rent hikes. If your a landlord, you must always go for rent agreement before people take your house or shops for rent.
If you are a renter, you should also ask for agreement first. Rent agreement gives you a lot many rights. It is also considered as valid address proof.
Is your rent agreement valid? Check Today!
let us know how you feel about this article. comment below.
