Rent waiver only if contract has ‘force majeure’ clause

Remigio Civitarese
Mag 23, 2020

The Covid-19 lockdown can not be a ground for tenants to seek rent waiver by invoking the "force majeure" - act of God - clause, Delhi high court said on Friday.

"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". In its absence, Justice Singh said, the only concession can be deferred payment of rent.

"The fundamental principle would be that if the contract contains a clause providing for some sort of waiver or suspension of rent, only then the tenant could claim the same", the High Court said, adding, "However, if the tenant wishes to retain the premises and there is no clause giving any respite to the tenant, the rent or the monthly charges would be payable".

The order said that impossibility of performance, as provided under the Contract law, "would not apply to a lease agreement and other similarly situated contracts". 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. It further held that if there is a contract and in that contract there is a force majeure clause or any condition that could permit waiver or suspension of rent then the contract will govern such situation and a tenant/ lessee could seek such a waiver.

"'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.

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The High Court held that the Tenants' application for suspension of rent is thus liable to be rejected inasmuch as while invoking the doctrine of suspension of rent on the basis of a force majeure event, it is clear from the submissions made that the Tenants do not intend to surrender the tenanted premises. It had been made clear in the said Order that if the leased premises is rendered substantially and permanently unfit for the objective for which it was let, the lessee has the option to avoid the lease and unless the lessee so avoids the lease, he can not avoid his obligation as to the payment of rent as contained in clause (l) of section 108 of the TPA. "The tenant can not also avoid payment of rent", the judge said.

The High Court placed reliance on the Judgement of Supreme Court passed in Raja Dhruv Dev Chand v. Raja Harmohinder Singh, AIR 1968 SC 1024, wherein it was held that a lease is a completed conveyance though it involves monthly payment and hence, Section 56 can not be invoked to claim waiver, suspension or exemption from payment of rent. The tenants had now come to the HC challenging the said eviction decree dated 18.03.2017 and the same was pending before the HC and it was during the course of disposal of the said appeal that on 25 September, 2017 the HC was pleased to stay the execution of the eviction proceedings institutes by the landlord against the tenants.

The March 18, 2017 eviction order had come on the plea of the landlord, a dentist, who had given the premises on rent back in Februrary 1975 for Rs 300 via a lease deed. Following the outbreak of COVID-19, an application for suspension of rent has now been moved, during the lockdown period.

In the application, the tenants had taken the stand that due to the lockdown, there has been complete disruption of all business activities, including theirs.

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