Who Will Pay Rent For Lockdown Period?

Friends, I have been very candid and clear in my previous article regarding the twin issue of ban on liquor sale by the government and paying of salaries to employees for the lockdown period.

First, I told you legally MHA, Government of India, has no power to ban the sale of liquor, this being the state subject and also forming the list of essential food items, as per the Food Safety Standard Act, 2006 and now you can see that sale of liquor was not only allowed but it is also delivered to your home.

In my article on, How to avoid paying off wage for the lockdown period, I very clearly told that there is no law under which the government can compel to pay salaries for the lockdown period. Now, the MHA was compelled to withdraw its advisory asking to pay full salary to your employees and that too on time, otherwise, be ready for legal action.

Now, The Question Is What Is Going To Happen To Rental For The Period Of Lockdown, When You Were Not Able To Operate From Your Rental Premises?

Let’s assume the following –

In a notable judgment, the Delhi High Court has ruled that the doctrine of frustration under section 56 of the Indian Contract Act is not applicable to lease agreement. Hence, there will be no respite from paying full rent for the lockdown period.

The ruling in the case of Ramanand Vs Dr. Gireesh Soni was based on SC precedents which held that Section 56 is applicable only to “executory contracts” and not to “executed contracts”.

A contract for lease whereunder the lessee obtains possession from lessor is an executed contract, noted the HC, from a Division Bench judgment of the Delhi HC in Hotel Leela Venture Ltd vs. Airports Authority of India.

The order has come in the application which sought suspension of rent citing the COVID-19 lockdown.

Principle Under Section 32 of the Contract Act is not applicable.

Referring to SC decision in Energy Watchdog v. CERC and Ors, (2017) 14SCC 80, the HC observed that in case the contract itself contains an express or implied term relating to a force majeure condition, the same shall be governed by Section 32 of the ICA.

“The force majeure clause in the contract could also be 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 Observed.

No Rent Agreement Or Lease Deed

However, if there is no rental agreement, as in this case and hence the Court held that Section 32 was not applicable.

“There is no rental agreement or lease deed between the parties and hence Section 32 of the ICA has no applicability. The case is governed by the provisions of the Delhi Rent Control Act, 1958. Section 56 of the ICA does not apply to tenancies. The Tenants also do not urge that the tenancy is void under section 180 (B) (e) of the TPA.

Temporary Non-use Of The Property Will Not Render The Lease Void

Possible Relief

Contributed by AJAY KUMMAR, LLM, MBA (UK), AIMA
Advocate and Consultants (Litigation, Criminal, Civil, Business, & Legal Consultancy)
Supreme Law International, Delhi & Dubai, Veteran Journalist,
National Spokesperson Lok Janshakti Party, NDA Govt of PM Modi

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