Children -- The Neglected Lot?!

(By Sathyashree Priya E, Advocate, Ernakulam)

Currently, the law governing children is the Juvenile Justice ('Care and ProtectionAct), 20001 (Recently amended and brought into force on 1.4.2001). The rationale behind this Act is to treat children under the age of 18 with special care and protection so that even the child offendors are not brought to trial with ordinary criminals or sent to police stations or jails2 (even when such children are in conflict with law). Hence the Legislature in its wisdom has provided for establishment of 'shelter homes'(S.37) and 'special homes’(S.9) even for children who have committed an offence and thus are in 'confict with law'. It is further provided that such children are not even to be termed as 'offendors' but only as 'Children in conflict with law'(S.5(2)). Needless to say children, who are not in conflict with law but are 'neglected' have to be treated even better! They are not to be put together even with children in 'conflict with law' but have to be maintained and well looked after in 'Children's Homes'(S.34) specially created for this purpose.

According to the Juvenile Justice Act 'Children in conflict with law' have to be 'tried' only by a Juvenile Justice Board(S.4) comprising of a Judicial Magistrate of First Class who has special knowledge or training in child psychology or child welfare, two social workers of whom at least one is a women. The basic premise being that children are not to be treated like ordinary criminals and shall not be brought to trial in the regular Magistrate's Court. So also, 'custody' of neglected children have to be decided only by a Child Welfare Committee (S.29) consisting of a Chair Person and four other members of whom at least one shall be a woman and another an expert on matters concerning children. This committee shall have the final authority to dispose of cases for the care, protection, treatment, development and rehabilitation of the children as well as to provide for their basic needs and protection of human rights. One of the salient features of this Act worth mentioning is that any child in need of care and protection may be produced before the committee by the child himself, or through childline or by any social worker or public spirited citizen (S.32). Thus the child, though a 'minor', can present himself/herself before the committee and seek justice!! A child in need of care and protection would include a child who has a parent or guardian and such parent or guardian is unfit or incapacitated to exercise control over the child! (S.2(d)(iv)) Law provides that when a child who is being or is likely to be grossly abused, tortured or exploited for the purpose of sexual abuse or illegal acts can seek relief under the Act by appearing before the Child Welfare Committee (S.2(d)(vi).

Though the Act was passed in the year 2000, it is a shame that even after a lapse of 5 years, till this date neither the Juvenile Justice Board nor the Child Welfare Committee has been constituted in the State of Kerala. The children are a neglected lot. Even presuming that such neglected children constitute 1% of the population of the State of Kerala there could be at least 2000 such neglected children in this State alone. This is only a presumption. Actual figures may even be higher. Fortunately or unfortunately children are not capable of asserting their rights by forming into groups. They are quite vulnerable!

Of what use is a letter of law if it is not followed in spirit!! Similarly the Act provides for establishment of 'Children's Homes' and Shelter Homes' for maintaining neglected children and ‘Special Homes', 'Special schools' for children in conflict with law'. The law goes one step further to provide for observation homes (S.8) to place the under trials (Children in conflict with law) so that proper treatment is meted out to them pursuant to their age. These laws have been passed based on the hypothesis that children are to be given a different treatment from that of hard core criminals and also to reform these young children at an early age in life.

More than two decades back Justice Subramanian Potti has chided this callous, indifferent and thick skinned attitude of the Government in neglecting children (1982 KLT 915). Of course the judgment referred to the provisions of the Children's Act which was then in force. Most of the provisions of this Act have been clubbed together with the Juvenile Justice Act, 1986 and a new Act Juvenile Justice Care and Protection Act, 2000 has been passed. S.60 of the Act specifically provides that

"The competent authority which makes an order for sending a juvenile or the child to a children's home or to special home of placing the juvenile under the care of a fit person or fit institution may make an order requiring the parent or other person liable to maintain the juvenile or the child to contribute to his maintenance, if able to do so, in the prescribed manner according to income".

This is based on the statutory liability that the primary responsibility of taking care of the infants is on that of the Parents. In fact R.72 of the repealed Children's Act went a step ahead and stated that 'If the parent or such other person fails to remit the amount in each month the defaulted amount shall be recoverable under the Revenue Recovery Act as if it is an arrear of revenue and the Court can order for the discharge. The absence of such a rule in the Juvenile Justice Care and Protection Act, 2000 imposes a heavier burden on the State! Several stringent provisions relating to parents found in the Children's Act (now repealed) are conspicuously absent in the Juvenile Justice Care and Protection Act, 2000. For example. Section 41 of the Children's Act prescribes that if a parent or any other person whomsoever, having the actual charge of, or control over a child, assaults, abandons, exposes or wilfully neglects the child or causes or procures him to be assaulted, abandoned, exposed or neglected in a manner likely to cause such child unnecessary mental and physical suffering, shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both. The Juvenile Justice Act focuses more on the victims i.e. the children rather than dealing with the offendors!! Thus it is infact a soft law!

The State as 'Parens Patriae' has to step into the shoes of the parents if the parents fail in their primary responsibility because 'it is the principle that the State must take care of those who cannot take care of themselves, such as minors who lack proper care and custody from their parents. It is a duty, a secondary responsibility and not an imperfect obligation. However, State shall realise the maintenance costs from the parents proportionate to their income.

192 Countries have been parties to the Child Rights Convention3 (excepting the U.S.A. and Somalia). The United States of America, the so called developed nation, imposes capital punishments even on children under 18. Former Attorney General Shri Soli Sorabjee4 strongly condemns this attitude of the U.S. and welcomes the recent U.S. Supreme Court landmark judgment which has declared this practice as unconstitutional. As a result of the judgment death sentences imposed on 72 Juveniles for the Commission of murder are wiped out.

Let us resolve to act in a more civilized manner! Neglecting the needs of children results in regression than Progress! The Government concerned shall positively take steps to establish the Juvenile Justice Board and the Child Welfare Committee at least to show that it cares and is better civilized!!

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Foot Notes

1. An Act to consolidate and amend the law relating to juvenile in conflict with law and children in need of care and protection, by providing for proper care, protection and treatment by catering to their development needs, and by adopting a child-friendly approach in the adjudication and disposition of matters in the best interest of children and for their ultimate rehabilitation through various institutions established under enactment.

2. Formerly the Children's Act was in force which had special provisions for children. Pursuant to this Central Act all the States had framed their Acts and Rules in detail. This Children's Act has been repealed in 1986 when Juvenile Justice Act, 1986 came into force. This Act was further modified and now the Juvenile Justice (Care and Protection) Act, 2000 has been enacted.

3. The General Assembly of the UN has adopted the Convention on the Rights of the Child on the 20th November, 1989. The Government of India has ratified the convention on the 11th December, 1992.

4. In his ‘Soliloquies’ published in the Indian Express dated 13^th March, 2005. He further goes to say in this that “Critics argue that there is striking evidence that criminal gangs in America’s Cities are already employing 15,16,17 year old assassins to commit the gang’s murders in those States that don’t execute juveniles. What is overlooked by the critics is that although all 72 persons on death row for murders they had committed when they were 16 or 17 are spared their lives, they will instead receive the harshest punishment available, namely spending the rest of their lives in prison.

Felicitations to Hon'ble Chief Justice Mr. Justice Rajeev Gupta

With great pleasure, we extend our respectful and cordial felicitations to Hon'ble Chief Justice Mr. Justice Rajeev Gupta, on his appointment as Chief Justice of Kerala High Court.

Chief Justice Rajeev Gupta is a harmonious blend of genius, overflowing goodness and exceptional integrity. He is truly great, of deep erudition and mighty intellect, but with all, Simple as a child, loyal to the Bar, of considerable personal charm of manner inborn and not put on.

With a large store of learning, experience and forensic ability, your Lordship became one of the humble servitors of the temple of justice, where sit enshrined man's eternal quest andeverlasting hope about ten years ago. It could undoubtedly be stated of his Court as was said of Lord Cockburns's Court," a Court where every man felt himself in the presence of a gentleman, whose genial courtesy made all things genial, whose exquisite learning captured all men's love, whose sunbright Justice brightened every cause and sent even him who has lost away content. Your Lordship believed then as now that courtesy begets courtesy and that the high watermark of a gentleman is to extent courtesy to all around.

It is said that a Judge may pass through three stages of development in his career. When his is first appointed the Judge is very anxious that he should do justice in all the cases that come before him. In the second stage, he is quite sure that he is doing only justice and nothing but justice. In the third stage, he does not care whether he is doing justice or not. We are sure Mr. Justice Rajeev Gupta will throughout his tenure of office remain in the first stage itself doing justice without fear or favour, in fear of God and in fear of no man.

The fine qualities exhibited as a Judge, coupled with the long and varied experience will no doubt, stand your Lordship in good stead in the performance of the onerous task bestowed on you. Our very best wishes go to the new Chief Justice. May his new career as Chief Justice be crowned with success.

"Not forgetting those things which are behind

and reaching fourth unto these things

which are before,

He would press towards the mark........."

Requiem For a Legal Collosus

A tribute to Justice P. Subramanian Potti, his life and message

(By Advocate Govindh K. Bharathan)

What is one to write about a colossus who strode through annals of the judiciary and left his imprint forever on the legal psyche of the State? What is one to write in praise of a master craftsman who shaped several legal careers, into his mould of activism in the field of law and taught them to use it for the benefit of those to whom the courts were the last resort. What can I write about one who blazed a trail like a comet through my life when my legal career was at its infant stage and gave me courage and confidence to face a new path, a new future? Justice P. Subramanian Potti, my master in the field of law saw in me what I could not see in myself, the making of a lawyer and having set me on my path he gave me the boost which he had given many of his ex juniors, establishing them firmly in the legal firmament.

Justice P. Subramanian Potti lived a life which, though centered in law, with the severe restrictions placed on social contact and activities of Judges, was resplendent and many hued. As District Governor of the Lions he shattered the elitist image of the organization and started a revolution, which popularised the Lions movement, bringing its immense resources down to the realm of the common man. I was member of the Lions Club of Cochin East when he was elected District Governor after a bitter and hard fought election. The Club was understandably agog anticipating the Governor's visit, since one of its Past Presidents had become the District Governor. All of us turned up in formal suits. To our dismay, Justice P. Subramanian Potti appeared in a silk jubba and dhoti for the function. Never before had a District Governor attended a Club, which he was formally visiting, other than in formal attire. He also delivered the District Governor's address in Malayalam. With this he heralded an era where Club meetings throughout the District could be conducted in Malayalam. Needless to say, this threw open the Lions movement to several areas in Kerala where it would not have otherwise spread, since most of those who were imminently suited to be Lions were not conversant with English. I had watched him closely in the social and cultural organizations that he had headed and found this strain of compassion in every project he sponsored and executed. He had this inherent trait of leadership, which took him effortlessly to the top of any service, cultural or fraternal organization that he joined.

On the Bench his decisions were flavoured with a subtle touch of humanism. The Westminister System of justice was, as far as he was concerned, only the background against which Indian Law had to find its own individual path and expression. Law as far as he was concerned was meaningless if it did not accommodate the aspirations of the common man. No litigant went empty handed from his Court. It was his concept that having come to the Court, which was the last resort of the common man, he should be given some relief however small it be. His mastery of the law was such that he used to shape it to meet new situations and moulded to fashion new reliefs. He was perhaps the only Judge to pronounce a Judgment in Malayalam.

Justice Subramanian Potti's landmark decision in what is known as "The Rajan Case" (Eachara Varrier v. Secretary, Ministry of Home Affairs -1977 KLT 335) forever changed the face of Habeas Corpus Petitions throughout the land. The Court was left with the momentous task of taking a decision whether evidence could be let in support of a Habeas Corpus Petition. This was because the Court was satisfied that Rajan, a young Regional Engineering College student had been taken into custody and that there was no positive averment from either the Police or the State as to his whereabouts. The Bench before whom the case came up, i.e., Justice P. Subramanian Potti and Justice V. Khalid found itself in the unenviable situation of finding no judicial precedent, where in a petition of Habeas Corpus, the High Court had to undertake the task of finding out the truth or otherwise of the very fact of detention itself. Instead of proclaiming the helplessness of the Court under these circumstances, Justice Subramanian Potti laid down as follows for the Bench:

"We have not been referred to any authority nor have we been able to locate any case where the court had to undertake the task of finding out the truth or otherwise of the plea of the detention itself. But such a situation has arisen here. But so long as it is the duty of this court to protect the freedom of a citizen and his immunity from illegal detention we cannot decline to exercise our jurisdiction merely because a dispute has arisen on the issue of the detention."

Relying on two decisions of the Supreme Court, Mohammed Hussain's Case (AIR 1964 SC 1625) and Jage Ram v. Hans Raj (AIR 1972 SC 1140) which had opened the way for an enquiry into facts in Habeas Corpus petitions, but which (with great respect) had not gone far enough, Justice. P. Subramanian Potti decided to take evidence in the matter and from the evidence established beyond doubt that Rajan was indeed taken into custody. The Court then issued a writ of Habeas Corpus to top ranking officials of the Police Department, the Secretary, Home Affairs and the Chief Minister to produce Rajan in Court on a particular day. The Court concluded by laying down that if for any reason the respondents were not able to produce Rajan on that day the Court would pass further orders and to that extent the Court need not treat the petition as closed. Justice Potti's Judgment ended with these momentous words :

"We know that we are adopting a very unusual procedure for which there is no parallel or precedent. But our power to do so cannot be in question, for, it is to enforce the object of finding out the truth and giving relief that we are adopting this procedure. We cannot think of a better device by which the Court's conscience would be satisfied:

"It is unfortunate that the respondents have not viewed the matter with the sense of responsibility expected of them at least when their attention was drawn to the serious situation. We once again reiterate that such responsibility cannot be disowned as if it is some stray act of some police officers somewhere. We do fervently hope that the guilty would meet with punishment though it is not our province to impose any."

What followed was history. The indomitable upsurge of public consciousness resulted in the Chief Minister of the State stepping down. The arrogance of the Executive had been reined in by the Judiciary, which stood by the citizens right to freedom, breaking new ground in the annals of the fight for human rights.

It was this capacity to mould the law to the cause of human dignity, freedom and justice that distinguished Justice P. Subramanian Potti's Judicial pronouncements. Sri. M.K. Damodaran,. Former Advocate General in his reference before the High Court after Justice Potti's demise said:

"When he entered the portals of the ivory tower that judiciary was, he threw open the doors to the citizens. He believed that Judges cannot and must not doubt their strength to conserve, without the sacrifice of any, all of the guarantees of justice and fairplay and simple human dignity, which have made our land what it is. Throughout his career on the Bench, he crusaded for the cause of the individual vis-a-vis the might of the State. This he did with his characteristic power of persuasion and personal charm - qualities that established his strong reputation - which he brought to bear on his colleagues in the Bench",

"There was a time, when the higher education in the State was in the grips of the elite of this land, who with their economic power could doctor even the mark lists of University examination. With his inimitable knack of cutting the Gordian knot, Justice Potti waded into the cess pool of University examinations and commenced a cleansing operation. Thanks to Justice Potti, the Entrance Examinations came to stay and the brilliant children of the not so rich, belonging to the common class, can also now aspire to realize their dreams of higher professional education."

Justice P. Subramanian Potti left Kerala albeit reluctantly to take over as the Chief Justice of the High Court of Gujarat. On his retirement he started practice before the Supreme Court of India. He had mellowed with age and his step was slower, but his spirit remained indomitable to the end. When he left us we felt the void of his physical absence but vowed to ourselves that we would carry on his legacy of courage to seek to shape the law if necessary to meet the ends of justice.

As a Judge, his commitment to the poor and the down trodden led him to add new facets to the law, to align it more with the realities of the life of those who were normally outside its precincts. To him the law was not a Procrustean bed but a rich pliable and highly adaptable base where reliefs could be moulded to suit situations to meet the ends of justice. He had experienced deprivation when he was young, and had perhaps sworn that he would prevent anyone else from experiencing the trauma of being unwanted.

His message was that the Constitution had placed authority in the Courts to protect the citizens rights to justice, liberty, equality and fraternity and it was the obligation of the Higher Judiciary of the land to act as sentinels of human rights whenever and wherever any serious threat arose to it. His Judgments will bear testimony to the fact that he had dedicated his life to upholding these principles.

Comments on Kerala Buildings (Lease & Rent Control) Act, 1965

(By P. Bhaskaran, Advocate, Guruvayoor)

The Kerala Buildings (Lease & Rent Control) Act 1965 (hereinafter called the said Act) is a beneficial piece of legislation. The said Act is intended to protect the tenants against unreasonable eviction by landlords. The said Act also gives reasonable protection to landlords for getting fair rent and to get back possession of the tenanted premises on the grounds as contained in the said Act.

As the name of the said Act indicates, the same is applicable to the whole of the State of Kerala. Today the State of Kerala consists of several villages. Panchayats, Townships, Municipalities and Corporations etc., and whereas when the said Act was enacted there were mainly villages, Panchayats and few Municipalities, and only two Corporations namely, Trivandrum and Calicut. Many Panchayats, Municipalities and Corporations emerged thereafter basing on increase in population. On account of increased demands for housing in all the areas and changed habits of living occasioned on account of environmental changes, old houses vanished replacing with multistoreyed buildings/high rises. .

Economic conditions of tenants have also undergone changes thereby increasing the capacity of the tenants to pay higher rents basing on the comforts he gets from the tenanted premise/accommodation provided to him by the landlords in multistoreyed buildings/high rises.

When the said Act was enacted by the Legislature in the year 1965, the provisions contained therein were meant to protect the poor tenants. Today the concept of multistoreyed buildings have replaced the old and outdated houses. People from different parts of the State move from villages to towns, besides people from other States and even from overseas countries come and settle in different towns and cities in the State and look for comfortable accommodation according to their pockets. Accordingly it has become necessary to amend the said Act to suit the present day requirements.

The provisions as contained in the said Act is being followed by the Rent Control Courts, Appellate Courts etc. supported and supplemented by the decisions of the High Court and Supreme Court. Admittedly the said Act was enacted about 40 years back. By efflux of time, lot of changes have taken place, warranting amendment or repealing and re-enacting the said Act as was done in other States to compact with the present day needs, but it is pertinent to note that the said Act and the provisions made there under remains the same supplemented by decisions of the High Court and Supreme Court.

It is also pertinent to note that the Courts have its own limitations in interpreting and applying the provisions of the said Act.

As has been observed by the Hon'ble Supreme Court of India ((1987) 4 SCC 1) that "there is no presumption in all cases the tenants are weaker section. By elapse of time the tenants (atleast many of them) doing business in Commercial Buildings taken on rent are far more affluent financially than the owners of the buildings. Though the rent control legislation is stated to be a beneficial one, it must be reasonably just and fair".

The National Housing Policy approved by the Central Government recommended that appropriate amendments in existing laws and regulations be carriedout for creating an enabling atmosphere for housing activities in the Country. A number of expert bodies such as, the Economic Reforms Administration Committee and the National Commission on Urbanisation had recommended reforming the rent legislation in a way that balance the interests of both the landlords and tenants and also that stipulates future construction to meet the growing demands for housing.

On the basis of the various recommendations of the experts and also after a series of consultations with the State Governments, the Ministry of Urban Development, Government of India had prepared a Model Rent Control Legislation and had sent to the States for consideration.

Accordingly, it is necessary particularly in view of the changed circumstances as stated herein above, the said Act needs either amendment or repealing and re-enactment with the object of regulating further the incidence of tenancies and relationship between landlords and tenants.

In S.11 of the said Act dealing with eviction of tenants, provision has been made for issue of notice by the landlord to the tenant in respect of default in payment of rent (See S.11(2)(b)) and for transfer of tenancy or sub-letting the tenanted premises or part thereof to any person without written consent from landlord (see S.11(4)(i)). Several sub-sections under S.11 of the said Act provides other grounds under which the landlord can get the tenant evicted. The said section or any other sections contained in the said Act makes any provision for notice of eviction or a notice of suit determining the tenancy and relinquishing the relationship between the landlord and tenant before filing a petition for eviction of the tenant under any of those grounds. In all fairness, eviction proceedings under any of the grounds ought to be commended following a notice to quit by the landlord to the tenant. As there is no provisions in the said Act for issue of any notice (either mandatory or otherwise) by the landlord to tenant, except under the grounds stated hereinabove, expressing intention of the landlord to evict the tenant and the grounds thereof, the tenant has no opportunity to know the grounds or the case the landlord is going to allege against him, until he is served with a summons along with the copy of the eviction petition from the Rent Control Court.

On the basis of the model rent control legislation many of the States have either amended the existing Act or repealed and re-enacted the Rent Control Act, incorporating the suggestions as contained in the model rent control legislation, which inter alia contains (1) provision for notice before commencement of any proceedings for eviction of the tenant by landlord (2) fixation of fair rent (3) periodical enhancement of the rent and (4) payment of service and maintenance charges etc.

In all fairness, an eviction proceedings under any grounds should follow by a notice to the tenant by the landlord, expressing his intention to evict the tenant and the grounds thereof. The said Act being a beneficial piece of legislation, non-incorporation of the provisions in the said Act for issuance of notice to quit and the grounds thereof prior to commencement of eviction proceedings, is as such amounts to denying the right of the tenant to know the grounds of his eviction.

There are several decisions by the High Court and the Supreme Court relating to notice under S. 106 of Transfer of Property Act, some of which are stated below:

1) (1981) 3 SCC 127 lays down that notice under S.106 of Transfer of Property Act is not necessary, in case of self-contained Rent Act in States.

2) AIR 1976 SC 500 lays down that eviction de hors the grounds in State Rent Act. So notice under S.106 of Transfer of Property Act is necessary.

3) AIR 1979 SC 45 lays down that in view of parallel provisions in the State Act, the notice u/S. 106 of T. P. Act on the landlord has become redundant.

4) 1991 (2) KLT 862 Notice is not mandatory for eviction u/S.11(3) of the said Act.

5) 1997 (2) RCR 716 SC. In this Case landlord sent two notices. Eviction Petition was filed on the basis of the second notice. The Court held that the landlord ignored the first notice and the claim can be allowed.

6) 1994 (2) RCR 236 SC - Non-mentioning of the ground of the eviction in the notice disentitle the landlord's claim.

7) 1972 KLT 223 - It is not a jurisdictional condition to issue notice to quit the building by the tenant. So if the tenant feels that the notice issued to him is insufficient or no notice was issued, it should be raised before the Rent Control Court. It is not possible for the tenant to raise such issue for the first time before the High Court.

8) 1972 KLT 720 - Plea of want of notice contemplated u/S. 106 of T. R Act cannot be raised first time before the Revisional Authority.

9) 1972 KLT 720 - Notice of termination of lease is necessary in the case of the contractual tenancy.

The decisions of the Supreme Court and High Court are based on given facts of particular cases. So to make the Act more friendly between the landlords and tenants and to achieve the objects of the said Act, a notice determining the tenancy and intention of a suit being instituted i.e. filing of eviction petition against the tenant, in case of default of compliance of the requisition as contained in the said notice should be made mandatory.

As has been held in 1990 (1) KLT 104 the procedural provisions of Civil Procedure Code may be made applicable to Rent Control proceedings, in view of the C.P.C. Amendment Act 1999 (amended by C.P.C. Amendment Act of 2002), in the absence of any express provision to the contrary or in the absence of a conflict between the provisions of C.P.C. and the Rent Act and the Rules made thereunder.

The notice is a condition precedent for filing a suit, within the meaning of Order 6 Rule 6 of C.P. Code and should be implied in the pleadings as also in cause of action. For filing a petition under Rent Control Act, such notice should also contain the grounds of eviction and intention of suit.

A valuable right of the tenant to know the grounds of eviction and/or defaults committed by him, if any, which the landlord is going to allege in his eviction petition should be made known to the tenant, prior to commencement of eviction proceedings, otherwise such right is taken away by non-issuance of the notice of eviction.

In fact, if a notice is issued to the tenant by the landlord prior to commencement of eviction proceedings, the tenant gets an opportunity to comply with the demands as contained in the said notice, and upon receipt of the notice the tenant may even quit and vacate the tenanted premises and deliver back possession thereof to the landlord, which will avoid unnecessary litigation between the parties., and of course, such a notice is neither going to delay the proceedings nor takes away any right of the landlord.

Ss.5, 6 and 7 of the said Act deals with (1) determination of fair rent, and (2) enhancement in fair rent etc. Rent Control Courts have been given power to fix fair rent on the basis of property tax or house tax and if there is no property or house tax available for fixing fair rent, the Rent Control Court may consider prevailing tax in the locality for similar accommodation. So the ingredients for fixation of fair rent is only the rates and/or taxes. The said Sections further lays down that once the fair rent is fixed enhancement in rent can be effected only when increase in house tax or property tax as the case may take place or alterations/developments/ improvements etc. are carried out by the landlord to the tenanted property.

It is pertinent to note that where the old and existing rent being paid by the tenants is very low comparing with the present market conditions, no prudent landlord will invest further money for development of the tenanted premises. Obviously the landlords expect reasonable return on his investments and where there is no reasonable return on investments, not only landlords will develop his tenanted property, but others will also hesitate to invest in housing industry. This is the reason for many old houses remaining in the same condition they were lot out, for decades together.

Other States who have adopted Model Rent Legislation, in Cities/towns etc. where the concept of multi-storyed building have come up, the allottees/occupants are made to pay the services/maintenance charges for maintenance of the common areas and common parts provided in the building for common use and enjoyment, besides payment of rates and taxes in respect their units/apartments in proportion to the area occupied. In respect of single /double storyed buildings, where there are more rooms/flats/units etc, there also the tenants/occupants are made liable to pay service maintenance charges and municipal rates and charges proportionately. The aforesaid provisions for payment of service/maintenance charges and rates/taxes are clearly incorporated in the Rent Act as well as Municipal Act, so as to make the same binding on the parties.

The need for accommodation is increasing daily and to attract investment in building industry it is necessary that legal protection be there to the landlords for proper return on investment. The Fair Rent for a year may be fixed on the basis of investment on construction in a particular year in which the building is constructed, instead and in place of the existing system of determination of Fair Rent, because the construction cost varies from year to year and increase in property tax is very meagre and not enough to cover the increase in value of the property.

Fair Rent once fixed may by legislation be automatically enhanced at a fixed rate/percentage periodically, pay 5% after completion of every 5 years, making it obligatory on the part of the tenant to pay increased rent periodically. Provision may also be made in the Act for payment of service/maintenance charges by tenants and also make the landlord liable to maintain the rented houses in habitable condition. In this process, disputes between landlords and tenants will automatically be reduced and the relationship will also remain cordial and healthy.

In the changed circumstances, it is time for the Legislature to consider the following aspects to keep the said Act in parity with Model Rent Control Legislation to maintain cordial landlord-tenant relationships and also to attract investments in house building industry.

1) Whether S.11 of the said Act is to be amended in order that the tenant may know the grounds of his eviction, by a mandatory notice by the landlord to the tenant calling upon the tenant to vacate and hand over vacant possession on the expiry of notice period;

2) Whether Ss.5,6 and 7 of the said Act is to be amended specifying the method of fixation of fair rent;

3) To make provisions for payment of service/maintenance charges and rates/taxes by the tenants in proportion to the area occupied, fixing liability on the landlord for proper maintenance of the house.

4) Whether to repeal the said Act and bring out new legislation to compact with the changed circumstances instead of amending the said Act.

Last but not the least the rights and obligations of the landlords and tenants to be further streamlined so as to maintain harmonious relationships and to secure better returns on investments in Building Industry, which will ultimately reduce the burden on the Rent Control Courts.

‘VAT’ – LAW AND IMPLICATIONS

(By K.P. Pradeep, Advocate, High court of Kerala)

The French born value Added Tax System, in 1954, is much popular around more than 160 countries in all over the world. Its roots could be traced to the writings of F Von Siemens, who proposed it as a substitute for then newly introduced German Turnover Tax, in 1918.

Two significant features of progressive taxation systems are economic efficiency and transparency. A transparent tax system shows the correct incidence of tax and thus serves the objectives of equity of the tax. VAT assures the transparency and the transparency in the incidents of tax causes its popularity along with other features of taxonomy and administrative expediency.

Value Added Tax is an indirect tax on consumption. VAT is multi-stage tax levied as a proportion of the value added (i.e., sales minus purchases which is equivalent to wages plus interest plus rent plus profits) It contemplates rebating tam paid on inputs/(capital goods) and on account of this, it does not have any cascading effect. On account of the rebating system, which requires maintenance of accounts of tax paid on purchases and sales it has got a self-policing effect that may reduce the scope for tax evasion/avoidance. It is collected at each stage of the distribution process, and in principle, its burden falls on the final consumer.

The Indian scenario on VAT legislation stated recently, only in the late nineties of twentieth century. In 1995 a Committee of States’ Finance Ministers mooted the magnitude of VAT, which again came for much deliberation in 1998. The Committee of Chief Minister, in 1999 has put forth its proposals to replace the present sales tax by VAT In a conference of the Chief Ministers and Finance Ministers held on November 16, 1999, the need for an immediate VAT legislation was set out. That led the formation of a Central Empowered Committee of Finance Ministers of the3 States constituted by the Ministry of Finance, Government of India. The committee was convened under the leadership of Mr. Asim Kumar Dasgupta, the Finance Minister of West Bengal. Several State Legislatures drafted and enacted the VAT legislation. But lack of uniformity in the legislation belated its implementation. The Central Empowered Committee at last decided to implement the VAT throughout the nation from 1.4.2005 as declared in its white paper published on 17^th January, 2005.

The Kerala Legislative Assembly enacted the Kerala Value Added Tax Act, 2003 in parity with the national policy, subject to corrections and acquired assent form the President on 10^th December, 2004. The Kerala VAT Act, 2003 came into force as on 1st April 2005. However, the Act is in contravention with the National Policy declared in white paper, in certain extent.

The VAT system replaces the so long commodity taxation system by making taxation on value addition. The rate of taxation based on the commodities, dropped by a multiple rate of taxation of 1%, 4% and a residuary rate of 12.5% in all points according to the importance of goods. In Kerala, the goods like liquors, petroleum products will suffer a higher rate of tax at its single point sale under the Kerala General Sales Tax Act, 1963.

The VAT replaces disadvantage of commodity taxation in certain aspects. The existing scheme of commodity taxation with single point levy is based on the value addition only at the level of the first seller/manufacturer or the importers. The tax evasion at a particular point causes loss of State revenue in toto with respect to the concerned transaction. VAT enables levy in the subsequent level, which will prevent tax evasion at a greater extent.

In principle, the VAT replaces the existing multiple taxation on trade by a Single taxation system. The Task Force on Indirect Taxes with Mr. Vijay L. Kelkar as Chairman has submitted the Consultation Paper on 25th October, 2002 by recommendation of unification of state trade taxes, i.e., Sales Tax, Purchase Tax, Turnover Tax, Works Contract Tax, Entry Tax, Special Additional Tax, etc. The Task Force strongly recommended that VAT should be one tax to replace all taxes on goods and services. The removal of multiplicity of states taxes follows a zero rated tax on export and inter State sales. However, the Empowered Committee ratified the implementation of entry tax in vatable mode. The purchase tax is retained in VAT also, by enforcing payment of tax on the occasion of purchases from unregistered dealer.

In VAT, the incidence of tax is in all point and it will remove the difficulty in identification of the exact incidence of tax. The tax component in any transaction is easily identifiable/computable, thus helping analysis of tax effect on various options of investments/economic choices of producers or consumers.

The expectation is that the wide spread taxation of inputs at every point of sale will encourage the industries to go in for in-house production of their requirements rather out sourcing, which may help the local industries. Though in VAT system in Kerala, the Kudumbasree and Khadi and Village Industries having annual turnover up to 25 lakhs are exempted from levy of tax, the Small Scale Sector is burdened with normal levy of tax. While the Empowered Committee permitted to continue the State incentives, as per the whims of the State, the Kerala Legislature come with a deferment scheme of taxation coupled with 5 years loan in case of small scale industries.

Under VAT, the administration of tax may be much effective than the sales tax system. In the later system, the collection of the major portion of taxes is at the first stage of sale and the concentration of administration is on small number dealers: manufacturers/first sellers in respect of imported goods. A large number of dealers who trade in these commodities in the subsequent levels of distribution get ignored, resulting in evasion too. VAT enables taxing of all dealers liable to be registered under the Act.

The mode of self-assessment replaces the compulsory assessment at the end of each assessment year. The self-assessment is based on the periodical return filed by the dealer. The mandate of statutory compulsory auditing and requirement of submission of audit certificate by the qualified practitioners on turnover limit of 25-40 lakhs and by Chartered Accountant more than `40 lakhs are other features. The dealers are subject to departmental audit, which will check the correctness of self-assessment.

The credit-invoice scheme is one of the main benefits of VAT. It provides an audit trail that makes tax administration easier and supports voluntary compliance with the tax. Documentation by way of issuance of tax invoice, cash memo or bills keeping serially dated, numbered and authenticated counterfoils and periodical filing of returns enables proper policing of collection of tax.

The dropping of multiplicity of rates, according to the nature of commodities will minimize the disputes in the fields of "manufacture" and classification of goods. The major inefficiency of the present taxation system is the multiplicity of rate of tax and the frequent changes in rate of tax according to the whims and fancies of the tax administration.

The system of recording data of entry and exit of goods through border check posts provides some information on inter State sales, consignment transfers, or imports. However the consumption of a commodity sourced from local production is not easily ascertainable. Under VAT, the tax officers are to be well informed on the quantum of tax mobilized on inputs or intermediaries, the likely tax credit or refund claims etc. It shall also be equipped to anticipate the tax receipts at later stages of the value chain of a commodity from an already determined input-output ratio. In VAT, a set off is given for input tax as well as tax paid on previous purchases. If the tax credited exceeds the tax payable on sales, the excess credit will be carriedover. However, the set off is subject to the criteria fixed by the Act.

The dealer having annual turnover upto `50 lakhs is eligible to opt for composition with payment of a percentage of tax, currently 1/2 percent on the gross turnover, called presumptive tax. However, no input credit is available on making such option. The Dealers opting payment of presumptive tax shall not collect tax on sales. Purchases from a presumptive tax dealer is not eligible to input tax credit.

The composition with respect to works contract is retained with some minor changes. Dealers in producing granite metals, Dealers in cooked food and beverages and Video Cassette, CD vendors are other groups eligible for composition. The works contractors other than importers or effecting the first taxable sales in the State is eligible for 2% composition and otherexcluding certain dealers engaged in installation and electrical contracts etc. are eligiblefor 4% composition. The monetary limits of rupees five lakhs and rupees ten lakhs are the major changes, with regard to the registrability and taxability, respectively. Under the former Sales Tax System, the monetary limits were rupees one lakhs and two lakhs respectively.

The time invites some changes. The traditional views may not apt for the current needs. The unification of Appellate and Revisional Authorities is the area needs consideration. The Appellate Authority in the assessment level and the revisional authorities in the other levels are the two different level and the revisional authorities in the other levels are the two different level quasi-judicial authorities under the Act. Such kind of classification is irrelevant considering the nature of works entrusted to them. Both authorities are quasi-judicial functionaries require independence from departmental obedience. However, in practice such authorities lack independence on the fear of departmental transfer or other actions on displeasure.

In the place of statutory appeals and revision the disputes may be brought before the independent arbitrator or such number of arbitrators appointed by the head of the State to avoid departmental bias and to assure proper administration of justice. An award of arbitrator may be subjected to the scrutiny of a pure judicial body.

Of course, Flexibility, Simplicity and Elasticity are the significant features of workable tax system. Flexibility assures modification of tax system according to needs. Simplicity and elasticity guarantees ability to meet the contingencies by way of raising additional revenue. However finality and stability are the predominant requirements for the better performance of a tax system. The recurrent changes in the provisions and numerous and conflicting notifications followed by numberless clarifications create annoyance to the business community to a large extent. Such kind of annoyance should be avoided.

The expectations of the State, Industries, Traders and common men regarding the newborn Value Added System are more. Let the time prove its efficiency.