Lockdown is no ground for rent waiver: Delhi HC

NEW DELHI: TheCovid-19 lockdown cannot be a ground for tenants to seek rent waiver by invoking the ‘force majeure’ — act of God — clause, Delhi high court said on Friday.

Rejecting a plea by a Khan Market tenant to waive off rent during the lockdown, Justice Prathiba M Singh laid down parameters to deal with various issues regarding rent suspension due to the Covid-19 crisis, interpreting Indian Contract Act and Transfer of Property Act (TPA) — the laws that govern tenancy and leases and also have the ‘force majeure’ clause.

The pandemic “has had large scale implications for human life. Contractual relationships and jural relationships between parties are severely affected due to the lockdown. The question as to whether the lockdown would entitle tenants to claim waiver or exemption from payment of rent or suspension of rent is bound to arise in thousands of cases across the country”, Justice Singh noted.

The tenant had sought waiver on the ground that the commercial premises remained shut on the government’s orders, which itself described it as a ‘force majeure’ event. However, the court said the clause didn’t apply in his case as there was no contract. Moreover, under TPA, “there has to be complete destruction of the property, which is permanent in nature, due to the force majeure event”, it pointed out.

If a tenant wishes to retain the premises and there is no clause giving any respite in the contract between him and the landlord, the rent or the monthly charges would be payable, the judge observed. The “fundamental principle” will be that if the contract has any relief clause, “only then the tenant can claim the same”, she emphasised. In its absence, Justice Singh said, the only concession can be deferred payment of rent.

‘Force majeure” is defined as “an event or effect that can be neither anticipated nor controlled” and according to a dictionary, “the term includes both acts of nature (e.g. floods and hurricanes) and acts of people (e.g. riots, strikes and wars)”, the court explained.

“Temporary non-use of premises due to the lockdown... cannot be construed as rendering the lease void under TPA. The tenant cannot also avoid payment of rent,” the judge said.

Only Delhi Rent Control Act will apply in the case and the plea is liable to be rejected as while seeking suspension of rent on the basis of a force majeure event, the tenant doesn’t intend to surrender the premises, the court observed.

However, “some postponement or relaxation in the schedule of payment can be granted owing to the lockdown”, the court added and directed that the use and occupation charges for March would be paid on or before May 30, 2020 and for April and May, by June 25, 2020.

In 2017, a court ordered the eviction of the tenant on the plea of the landlord who had given the premises on rent in Februrary 1975 for Rs 300 via a lease deed. Following the Covid-19 lockdown, the tenant moved the waiver application.

Source: https://realty.economictimes.indiatimes.com/news/regulatory/lockdown-is-no-ground-for-rent-waiver-delhi-hc/75910958

May 23, 2020

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