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Unreasonably low rent

(Querist) 11 March 2012 This query is : Resolved 
A property (Industrial Non Agriculture) falling under City Survey has been given on a Lease for "Unlimited Period" around 50 years back in 1960s for a yearly rent of Rs700.

The minimum Value of the Property (as per Jantri for paying stamp duty if sold) is above Rs 1,20,00,000 in current year i.e. 2012.

I have read that normal rent rate is 1% per month of such Value. Where as currently, even the yearly rent rate is just 0.00583% of its Jantri Value.

There is no provision in the Lease deed provided for Increasing the rent.

[The property is of no use to Landlord as it cant be sold nor is it yielding any Income. The people who entered into the agreement are dead. The property is not in use since last 10+ years nor has the rent been paid in last 10years. The tenant sent money order 12+ years back to clear his dues but the Landlord rejected as it was too low even for the inflation of that period. The Land is not in use nor the manufacturing activity mentioned in the deed is carried out by Tenant. The Building too collapsed long back and its now just a plain land.]

I would like to know:

1. if the Unreasonably Low rent can be challenged in Court?

2. What percent of property value should be demanded as rent?
V R SHROFF (Expert) 11 March 2012
:Q
1. if the Unreasonably Low rent can be challenged in Court? Ans: Lease No

2. What percent of property value should be demanded as rent?

Ans: if rent., yes, can increase. need court approval .
Nikhil (Querist) 11 March 2012
Hello sir. Thank you for a quick response.. But i am being unable to understand you. can you please explain me in 2-3 sentences.. thank u..
Raj Kumar Makkad (Expert) 12 March 2012
Agreement is binding for both parties. If there is no term of increase of tent, you cannot expect to increase it.

It shall be good for you to seek eviction of the property and for this purpose you shall have to serve a notice under section 106 of Transfer of property Act and should declare to rescind the lease by paying the debt/lease money etc. to the legal heirs of the deceased lessee.
Nikhil (Querist) 12 March 2012
Thank you for your feedback Mr. Raj Kumar Makkad. I went through section 106. I have a doubt, The lease specifies that it is for an "Unlimited Period" the word Unlimited is mentioned in the lease. The purpose mentioned in lease was to utilize it for a small manufacturing unit. Now even though the Lessee is not using the Land nor paying any Rent. He is portraying himself to be the Owner of the Land in front of people. he even tried selling it off to some builders of residential properties.

So i would like to know if Section 106 still applies to this scenario?
Nikhil (Querist) 12 March 2012
Apart from the above thing i told, i would like to know if Section 14 : Rule Against Perpetuity (Transfer of property Act) is applicable, because both the persons who entered into the contract are dead.
Deepak Nair (Expert) 12 March 2012
You need to send a notice for eviction first and then file a suit as suggested by Mr.Makkad.
Non-payment of rent is an added advantage.

Consult a lawyer in your locality for help.
Nikhil (Querist) 12 March 2012
"should declare to rescind the lease by paying the debt/lease money etc."

I am the Landlord in the given case. I want to either get possession back officially or atleast get rent as per current rates.

by the above sentence do you mean that i should pay all the legal taxes that the tenant never paid to the municipal authorities and electricity charges?
if yes, i being the landord have recently paid all the pending dues with all authorities which were supposed to be paid by the tenant during all the previous 15+ years.

will this help me in proving no use of property and non payment of rent? and biggest thing bothering me is the word "unlimited period" mentioned in lease deed. will section 106 apply to such lease?
Raj Kumar Makkad (Expert) 15 March 2012
It is high time for you to send notice from your side rescinding the lease agreement as he has even failed to deposit the agreed rent as well as statutory dues of various authorities which you have deposited pertaining to last 15 years. He has also not used the property for the purpose the same was leased out and moreover has tried to declare as if he is owner and even tried to sale it.

All the aforesaid reasons are well convincing and entitle you to take your property back from him. You issue notice and then file civil suit for restoration of possession and also seek injunction so that he may not create third party interest in the property,


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