With the spread of Coronavirus, whole world seems to have shaken. It feels like there was no existence of such deadly virus yesterday, and all of a sudden it turned into a global pandemic with millions of infected lives worldwide.
This deadly infectant is not only costing people their lives but it also has stoked up business uncertainty, leading to contractual disputes between companies. Among all the effects, rental contracts can be considered to be the worst. Tenants have been knocking the door of the justice system of India to seek exemption from the rental obligations for the lockdown period.
We must acknowledge that the tenant-landlord or lessee-lesser relationships are legally pure and simply a contractual bond governed on free will of the parties. This relationship is maintained by the assurance of landlord and the tenant (when noted down in writing, forms an agreement.) This agreement or deed is supervised and governed by the Indian Contract Act, 1872, which also deals with offer, acceptance, consideration, term, breach and frustration. The parties of that contract are allowed to include and agree to possible present conditions of the agreement, which later provides them the remedies in the case of non-performance of an obligation.
The Legal Side.
In this economic crisis, tenants are seeking to the doctrine of ..Force Majeure for waiving off their obligation. Force Majeure, is a legal maxim which can be explained as an extraordinary event or a circumstance beyond the control of the mankind. Which releases both the parties from contractual obligations. As far as the Indian Contract Act is concerned, the mentioned doctrine is missing but can be traced through Section 32 and Section 56 of the Act.
Section 56 Protects the contracts which fall outside of a Force Majeure clause, but in a circumstance where the contract is embodied with the clause will be regulated by Section 32 of the Act. The performance of the contract gets discharged under Section 32, if the circumstances mentioned in the contract are met.
However, the occurrence of a Force Majeure event cannot excuse tenants from paying the rents. As held by the Supreme Court of India in the case of The Divisional Controller, Ksrtc vs Mahadeva Shetty (2003), “An Act of God does not operate as an excuse from the liability if there is a reasonable possibility of anticipating their happening”. In the same way, tenant cannot take refuge under the clause merely on the ground of economic stress if alternative methods of fulfilling the contract are available to the tenant.
The tenants can also take the defence mentioned under Section 108(e) of Transfer of Property Act, 1882. The mentioned Section states certain circumstances under which the lessee can escape contractual liability. It overshadows doctrine of frustration which is a general law under Indian Contract Act, as it is special law which governs property disputes only as earlier held in the kidar lall seal case. However, Section 108(e) may also not be able to safeguard the tenants in this current scenario as the Indian Jurisprudence lacks the inclusion of a pandemic under this section.
The Reality
The Court used to believe that the tenants can waive off rental obligations under Section 32 of Indian Contract Act, if the contracts contains a Force Majeure clause which cannot be incorporated in the present case. The court also denies the application of Section 108(e) of Transfer of Property Act, which requires permanent and absolute destruction of property caused due to Force Majeure. This section could not protect the tenant the current case, as the lockdown only restricts using the property for a limited period of time. [1]
Following which, the Delhi High Court in the case of Ramanand & Ors. v. Dr. Girish Soni on 21 May 2020, contemplated the nature of the property, financial and social status of the parties and rent amount as a basic factor for determining the question as to whether the tenants requires any relief of exemption of rent along with a few other factors, contractual terms and condition or any executive order.
The Court terminated the pleas requested by the tenants and held that business disruption cannot free the tenants from paying the periodic rents as the landlords too are dependent on the tenant’s income.
Conclusion
In the middle of this global crisis, tenant-landlord issue seems to be trivial but we must not forget the fact that almost every person or business or organisation at some point of time go through this process, as we can’t just own the world. And the person who is willing to give you the permission to live at his property or utilize the things he owns, he need some consideration for his needs. The spread of coronavirus has created a global chaos but the monetary needs of an individual has not ended and it never will.
Would you let someone stay at your property and expect nothing from them? Why would anyone?
Case Reference.
[1] Ramanand & Ors. v. Dr. Girish Soni , (Delhi High Court) 2020
Navneet Chandra
Central University of South Bihar
