(1) The Controller shall, on application by the tenant or landlord of a building or rented land, fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit.
(2) In fixing the fair rent under this section, the Controller shall first determine the basic rent which shall be—
(a) in respect of the building the construction whereof was completed on or before the 31st day of December, 1961, the rent prevailing in the locality for similar accommodation;
(b) in respect of the building the construction whereof is completed after the 31st day of December, 1961, the rent agreed upon between the landlord and the tenant preceding the date of the application.
(3) In fixing the fair rent, the Controller may allow an increase or decrease on the basic rent determined under sub-section (2) in accordance with the prescribed percentages.
Legal Commentary & Landmark Judgments: Section 4
Section 4 of the Haryana Urban (Control of Rent and Eviction) Act, 1973 establishes the statutory mechanism for the determination of fair rent of residential and non-residential buildings or rented lands by the Rent Controller.
Once fixed under this section, the fair rent supersedes the contractual agreed rent, creating a statutory ceiling on the landlord's pecuniary entitlement.
Sub-sections (2) to (5) lay down the mathematical and economic metrics for computing fair rent, distinguishing between buildings constructed before and after the commencement of the Act. The Controller is empowered to inspect the premises, summon municipal assessment records, and evaluate comparative lettings in the immediate vicinity to ensure objective assessment.
In practical rent litigation, applications under Section 4 are predominantly utilized where historical leases contain nominal rents that no longer reflect civic realities, or conversely, where landlords extract exorbitant unconscionable rents. Once determined, the fair rent is operative from the date of the application unless the Controller specifies otherwise. Litigants must establish locality averages through registered lease deeds or property tax assessments.