Previously, the rent was Rs 3 per month, but the new demand notice issued to tenants demanded Rs 1.18 lakh for nine months — about Rs 13,000 per month — as a condition for lease extension
SHILLONG, July 3: After lessees of Shillong Cantonment land moved the High Court of Meghalaya alleging arbitrary hike in monthly rent, the Court has directed that until final demand notices are issued, each of the appellants — including every member of the association of tenants/lessees under the Ministry of Defence in Shillong district — must pay 40% of the arrear demand up to May 31, 2025, by December 31, 2025, either in full or in instalments.
The Division Bench, comprising Chief Justice IP Mukerji and Justice W Diengdoh, was hearing three appeals— one filed by the association of tenants/lessees and two by individual lessees under the Ministry of Defence.
In Shillong district, a vast parcel of land under the custody of the Ministry has been leased to tenants/lessees for over a century. Periodic rent revisions have been made by the government. Regardless of the basis used in the past, until March 2022, the monthly rent for approximately 3,000 square feet (300 square metres) was only Rs 3.
The Ministry of Defence uses a formula known as Standard Rent Determination (STR) to assess the market value of properties, factoring in aspects such as location (main road, motorable or non-motorable access), and usage (commercial, petrol pump, cinema hall, etc.). Two-and-a-half per cent of the market value is considered the annual rent, of which one-twelfth is taken as the monthly rent.
On June 17, 2022, the Shillong Cantonment Board (Respondent No. 3) issued a demand notice to Bala Krishna Thapa, occupant of Holding No. 49 JB, Sy. No. 135/74, Shillong Cantonment, seeking an increased rent in advance for the period April 1, 2022, to December 31, 2022, based on the STR. Previously, the rent was Rs 3 per month, but the new notice demanded Rs 1.18 lakh for nine months — about Rs 13,000 per month — as a condition for lease extension.
A similar notice was issued to Madan Thapa, a member of the association occupying Holding No. 37 JB, Sy. No. 135/88. The court admitted this document as part of the appeal despite its late submission, considering its relevance. This notice listed Rs 4.74 lakh as the total demand from April 1, 2022, to December 31, 2025. It showed rent calculated at Rs 1.15 lakh for the initial nine months, increasing to Rs 1.53 lakh for the year 2025. Other tenants, including Basanti Pandey of Holding No. 6 JB, Sy. No. 135/31, received similar notices.
The appellants challenged these notices, arguing that the STR was determined arbitrarily and erroneously, and that they were not liable to pay the revised amounts. They had filed separate writ petitions before a single judge, who dismissed them on June 5, 2024, leading to the present appeals.
The single judge ruled that the STR was fixed in accordance with the Ministry’s extant policy and guidelines, specifically those outlined in its letter dated January 31, 1976. Approval from the Deputy Commissioner, East Khasi Hills, was obtained for the STR revision for the period January 1, 2018, to December 31, 2020. The monthly rent had been calculated at 2.5 per cent of the total market value as per letters dated January 11, 1973 (residential), and March 10, 2017 (commercial).
The guidelines for STR preparation are detailed in the Ministry’s Notification dated January 31, 1976. According to Schedule-II, shown to the Court in Writ Appeal No. 45 of 2024, cantonment land is divided into zones with distinct values—for example, commercial area, bungalow area, graveyard, waste land, etc. Motorable and non-motorable access are also factored in. Rents for commercial purposes are double that of residential properties, and for “highly lucrative” purposes such as cinema halls or petrol pumps, four times as much. STR is revised every three years for most cantonments, and every two years for “fast-developing” ones.
(Contd on P-7)
HC tells Cantt lessees…
(Contd from P-3) Deputy Solicitor General Dr N Mozika, appearing for the respondents, argued that the STR was set by the Ministry using a well-established and professional methodology, forming part of a long-standing policy immune to challenge. Annual rent was calculated as 2.5 per cent of market value, and monthly rent as 1/12 of that.
Senior counsel for the appellants in WA No. 45 of 2024 countered that the rent — previously Rs 3 per month for 300 sq. metres — was suddenly hiked to over Rs 13,000 without justification in June 2022, effective from April 1, 2022. He termed the increase arbitrary and sought that the demand notices be quashed.
After extensive hearings, the Court held that there was no error in the principle applied by the single judge. It noted that the STR fixed by the defence authorities was binding on all lessees. The relationship between the Ministry and the appellants was that of lessor and lessee, governed by the terms of the lease, including STR-based valuation.
However, the Court emphasised that public law principles must be followed even in contractual dealings involving a public authority. It pointed out that while the STR applied uniformly, it should reflect differences in valuation based on property access and use (e.g., petrol pump vs. residential property).
Fault with demand notices
Crucially, the Court found fault with the demand notices for failing to provide details of the valuation process. It observed that the authorities should have shared the valuation basis with the tenants and allowed them to respond before finalising the demand. “A hearing ought to have been given before issuing the final demand,” the Court noted.
The Bench, therefore, did not strike down the demand notices but treated them as proposed notices.
It directed the respondent authorities to furnish the basis of revised rent calculations to the appellants within six weeks; consider objections from leaseholders, to be submitted within two months of receipt; and hold a hearing with representation from the tenants’ association. Thereafter, they must issue final demand notices detailing current and arrear rents, interest, and any other lawful levies, which must be cleared within three months of receipt, the court said.
Pending issuance of final notices, each appellant must pay 40 per cent of the arrears up to May 31, 2025, by December 31, 2025, either in a lump sum or in instalments. They must also continue paying 40 per cent of current lease rent from June 2025 onwards. Any excess paid will be adjusted once the final demand is issued.
“In case of default,” the Court warned, “the respondents are at liberty to take such legal steps as available to them against the appellants.”