Rent Agreement- Rent agreement is a written agreement between the tenant and the landlord. It is not necessary to register the rent agreement up to 11 months. However, the rental name for the period above this should be registered.
The Karnataka High Court has given an important decision regarding the increase in property rent. The High Court has said that if the rent agreement made for more than 11 months is not registered, then the landlord is not entitled to increase the rent. There is no need to register the rent deed up to 11 months. Reversing the lower court’s order, the High Court rejected the demand for rent hike and arrears by the property owner.
Rent agreement is a written agreement between the tenant and the landlord in which the concerned house, flat, room or any commercial premises etc. is given to the tenant for a fixed period. This agreement contains the details of rent, condition of the house, address and terms and conditions related to cancellation of rent advance. Under Section 17(1) of the Registration Act, 1908 the tenancy is required to be registered if the period is more than 11 months.
This was the case
According to media report, Srinivas Enterprises had given the property to Nedungadi Bank on a monthly rent of Rs 13,574. The tenant had also deposited Rs 81,444 as security deposit. Nedungadi Bank was the first private bank in South India. It was later merged with PNB. In 1998, the tenancy was renewed for another 5 years with a monthly rent of Rs 23,414.
The rent agreement also states that the tenancy can be extended up to 5 years with a 20% increase in the rent every 3 years. In 2006, Srinivas Enterprises filed a civil suit to recover the rent as per the lease agreement. PNB argued that Srinivas Enterprises was not entitled to do so as the rent agreement was neither registered nor properly stamped. But the lower court did not accept the arguments of PNB and in the year 2018 ordered PNB to pay Rs 5.8 lakh to Srinivas Enterprises as rent and rent arrears.
PNB challenged in the High Court
PNB challenged the decision of the lower court in the High Court. Reversing the decision of the lower court, the High Court said that the rent agreement was made for more than 11 months. That’s why it was necessary to register it. But, this was not done. Therefore the property owner is not entitled to increase the rent.
Also, according to Section 52 of the Limitation Act, a suit has to be filed to recover rent arrears due for 3 years. But, the plaintiff did not do so. Therefore he is not entitled to appeal for arrears.
