On 21 May 2020, the Delhi High Court (“DHC”), in Ramanand & Ors. Vs. Dr. Girish Soni & Anr, dealt with whether COVID - 19 can be pleaded as a force majeure event to allow tenants to waive, defer or relax the payment of the rent.
Background: The appellants (“Tenants”) had taken a shoe store on lease in New Delhi. The lease deed was executed on 1 February 1975 at INR 300/- per month. In 2008, the Respondent (“Landlord”) filed a suit for eviction against the Tenants, under the provisions of the Delhi Rent Control Act, 1958. The DHC passed an interim order on 25 September 2017 putting a stay on the execution of the Eviction Order, on the condition that the Tenants would pay a rent of Rs. 3.5 lakhs per month. Further, any default in payment of the monthly rent by the Tenants would lead to execution of the Eviction Order. Thereafter, the Tenants filed an application before the DHC seeking suspension of the monthly rent due to the Covid-19 outbreak and consequential disruption of business because of the lockdown.
Decision: DHC stated that in the absence of any contractual stipulation, a tenant may seek suspension of rent by invoking equitable jurisdiction, due to temporary non-use of the property. Thus, it would depend on the facts and circumstances of each case whether rent ought to be granted or not. In the present case, DHC noted that there is no contractual stipulation related to force majeure condition or anything about suspension or waiver of rent in case of such an event. DHC held that Tenants are liable to pay use and occupation charges to the Landlord for the rented property. However, some relaxation was provided by DHC in the schedule of payment due to the lockdown.
TL Take: We are likely to see more cases regarding rent suspension/waiver reach the courts due to the ongoing pandemic. Since each rent agreement is different, the interpretation would be different in each case. However, rent negotiation are bound to be challenging for tenants in view of this decision since rent agreements rarely contain force majeure clauses.
This post has been contributed by Ms. Vaneesa Agarwal and Ms. Aditi Vatsa.
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