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The Delhi High Court has rejected a plea by a Khan Market tenant, seeking suspension of rent on account of force majeure due to COVID-19 lockdown. (Ramanand & Ors vs Dr Girish Soni & Anr)
While doing so, the Court has in detail discussed the law applicable to suspension of rent due to force majeure.
The judgement was passed by a Single Judge Bench of Justice Prathiba M Singh.
A revision petition was filed by a Tenant against an order of eviction passed by the Senior Civil Judge-cum-Rent Controller with respect to a shop in Khan Market (Baluja), Delhi.
The shop was given on rent by the landlord (Respondent) for commercial purposes through a lease deed executed in February, 1975 at Rs.300 per month.
In 2008, the Respondent filed an eviction petition under Section 14(1)(e) of the Delhi Rent Control Act, 1958 and a decree of eviction was passed.
When the revision petition was first listed before the Court, the order of eviction was stayed, subject to payment of a sum of Rs.3.5 lakhs per month as rent.
Following the outbreak of COVID-19, an application was moved by the Tenants for suspension of rent during the lockdown period.
The Tenants claimed that due to the lockdown, there was complete disruption of all business activities.
Since circumstances were force majeure and beyond the control of the Tenants, it was contended that the Tenants were entitled to waiver of the monthly payment, or at least some partial relief in terms of suspension, postponement or part-payment of the said amount.
The Respondent, on the other hand, argued that the Tenants had been enjoying the tenanted premises since 1975 for a paltry sum of Rs. 300 per month and even the amount fixed by the Court was a very meagre amount compared to the prevalent market rate.
It was further said that mere disruption of the business could not exempt the Tenants from making the monthly payments as the Landlord also depended on the income from the tenanted premises.
After considering the submissions, the Court discussed in length, the laws applicable to the case.
The Court said that in the realm of contracts, the respective rights and obligations of the parties was determined by the terms and conditions of the contract itself.
Thus, if there was no contract at all or if there was no specific force majeure clause, then the issues would have to be determined on the basis of the applicable law, the Court said.
The Court said that in circumstances such as the outbreak of a pandemic, like the current COVID-19 outbreak, the grounds on which the tenants/lessees or other similarly situated parties could seek waiver or non-payment of the monthly amounts, under contracts which have a force majeure clause, was governed by Section 32 of the Indian Contract Act, 1872 (ICA).
Section 56 ICA, which deals with the impossibility of performance, would apply in cases where a force majeure event occured outside the contract and the same did not apply to lease agreements, the Court said as it relied on Supreme Court’s judgement in Raja Dhruv Dev Chand v. Raja Harmohinder Singh & Anr.
The Court further stated that the force majeure clause could be differently worded in different contracts and could also be in the form of a contingency under Section 32 which may allow the tenant to claim that the contract has become void and surrender the premises.
“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 Court said.
The Court explained that in the absence of contracts or contractual stipulations the provisions of the Transfer of Property Act, 1882 governed tenancies and leases.
It was clarified that the doctrine of force majeure was recognised in Section 108(B)(e) TPA and was applicable to circumstances which would render the property “substantially and permanently unfit” to be used for the purpose for which it was leased, thus making the lease void.
Further relying on Supreme Court’s case in Raja Dhruv Dev Chand v. Raja Harmohinder Singh & Anr, the Court iterated that temporary non-use by the tenant due to any factors did not entitle a tenant to invoke this section.
Stating that for a lessee to seek protection under sub-section 108(B)(e), there has to be complete destruction of the property, which is permanent in nature due to the force majeure event, the Court observed,
The Court stated that in the absence of a contract or a contractual stipulation, a tenant may generally seek suspension of rent by invoking the equitable jurisdiction of the Court due to temporary non-use of the premises.
Thus, whether the suspension of rent ought to be granted or not would depend upon the facts and circumstances of each case, the Court said.
In the present case, the Court observed that there was no rent agreement or lease deed between the parties, hence Section 32 of the ICA had no applicability.
Since the Tenants had also not urged that the tenancy was void as they continued to be in possession of the property, the Court added that Section 180 (B)(e) TPA was not applicable either.
The present case was thus governed by the provisions of the Delhi Rent Control Act, 1958, the Court held.
Thus, to determine whether the Tenants were entitled to any relief of suspension of rent, the Court considered a variety of factors, such as nature of property, financial and social status of parties, amount of rent, protection extended by Executive orders etc.
The Court further recorded that the Tenants were "unauthorised occupants" in view of the decree of eviction and there was no contractual condition that permited non-payment or suspension of rent in the present case.
In view of the facts at hand, the Court concluded that a case for suspension of rent was not made out.
It, however, extended some relaxation in the schedule of payment due to the lockdown.
The Teanants were represented by Advocates Rajiv Talwar, Tarun Rana.
The Landlord was represented by Advovate Sanjeev Mahajan.
Read the Judgement: