The Delhi High Court has ruled on issues relating to suspension of payment of rent by tenants owing to the COVID-19 lockdown crisis and the legal questions surrounding the same. It specifically opined on whether the lockdown would entitle tenants to claim waiver or exemption from payment of rent or suspension of rent.
The Court dealt with this issue on the basis of contracts which have a force majeure clause and those that don’t. Contracts that have a force majeure clause would be governed by Section 32 of the Indian Contract Act, 1872 (“ICA”). Where a force majeure event occurs outside the contract, Section 56 of the ICA, which deals with impossibility of performance, would apply.
The Court noted that there are various conditions that have to be fulfilled to satisfy the conditions of `impossibility’ under Section 56. In the context of a tenant’s obligations, it referred to a Supreme Court judgement in the case of Raja Dhruv Dev Chand v. Raja Harmohinder Singh & Anr., AIR 1968 SC 1024, wherein it was held that Section 56 does not apply to lease agreements. The Supreme Court held that “ there is a clear distinction between a completed conveyance and an executory contract, and events which discharge a contract do not invalidate a concluded transfer…………. By its express terms Section 56 of the Contract Act does not apply to cases in which there is a completed transfer. ………… A covenant under a lease to do an act which after the contract is made becomes impossible or by reason of some event which the promisor could not prevent unlawful, becomes void when the act becomes impossible or unlawful. But on that account the transfer of property resulting from the lease granted by the lessor to the lessee is not declared void.
Thus, the Delhi High Court noted that a lease is a completed conveyance/ executed contract and not an executory contract, though it involves monthly payment, and hence Section 56 cannot be invoked to claim waiver, suspension or exemption from payment of rent. This view of the Supreme Court has been reiterated in T. Lakshmipathi and Ors. v. P. Nithyananda Reddy and Ors., (2003) 5 SCC 150, as also in Energy Watchdog . A Division Bench of the Delhi High Court in Hotel Leela Venture Ltd. v. Airports Authority of India, 2016 (160) DRJ 186, also reiterated that “a contract is not discharged merely because it turns out to be difficult or onerous for one party to perform and none can resile from a contract for said reason.”
However, in the absence of contracts or contractual stipulations the provisions of the Transfer of Property Act, 1882 would govern landlord tenant relationships qua Force Majeure. The doctrine of force majeure is recognised in Section 108(B)(e) of the TPA. Section 108 of the Transfer of Property Act deals with the aspect of rights and liabilities of lessor and lessee. Clause (e) of Section 108 reads:
“(e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void….”
Thus, 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. Consequently, temporary non-use of premises due to the lockdown which was announced due to the COVID-19 outbreak cannot be construed as rendering the lease void under Section 108(B)(e) of the TPA. The tenant cannot also avoid payment of rent in view of Section 108(B)(l).
The Court thereafter held that in the absence of a contract or a contractual stipulation, as in the present case, the tenant may generally seek suspension of rent by invoking the equitable jurisdiction of the Court due to temporary non-use of the premises. The question as to whether the suspension of rent ought to be granted or not would depend upon the facts and circumstances of each case. The Court referred to Raichurmatham Prabhakar and Ors. v. Rawatmal Dugar, (2004) 4 SCC 766 wherein the Supreme Court held that suspension of rent may be claimed by the tenant if the lessee has been dispossessed. Thus, mere non use may not always entitle the tenant for suspension of rent. This view has been followed by the Delhi High Court in Aranya Hospitality Management Services Pvt. Ltd. v. K. M. Dhoundiyal & Ors. [Arb. A. (Comm.) 6/2017, decided on 21st March, 2017], where the Court considered the force majeure clause of the contract to hold that the mere non-approval by the concerned authority for running a restaurant would not entitle the tenant to seek suspension of rent.
In light of the above legal position, the Court considered the Tenants’ prayer in the present case for suspension of rent. It noted that there was no rent agreement or lease deed between the parties and hence Section 32 of the ICA had no applicability. Section 56 of ICA also did not apply to tenancies. The case was governed by the provisions of the Delhi Rent Control Act, 1958. The Tenants also did not urge that the tenancy is void under Section 180 (B)(e) of the TPA. The tenants are also not `Lessees’ as an eviction decree has already been passed against them. The Tenants’ plea was for extension of the doctrine of suspension of rent to cases which are covered by lockdown due to COVID-19. The Court noted that the central and state governments, through executive orders. have, from time to time, given protection to some classes of tenants such as migrants, labourers, students, etc. However, it held that the present case was not covered by any of these executive orders. The Tenants’ application for suspension of rent was thus rejected inasmuch as while invoking the doctrine of suspension of rent on the basis of a force majeure event, it was clear from the submissions made that the Tenants did not intend to surrender the tenanted premises. However, the Court did grant some postponement or relaxation in the schedule of payment.
 “32. Enforcement of contracts contingent on an event happening. — Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.”
 These include Order No. 40-3/2020-DM-I (A) dated 29th March, 2020 issued by the Ministry of Home Affairs (MHA), Government of India and Order No. F/02/07/2020/S.1/PT. File/81dated 22nd April, 2020 and Order No. 122-A F/02/07/2020/S.I/9 dated 29th March, 2020 both issued by the Delhi Disaster Management Authority (DDMA), Government of NCT of Delhi.
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