In this case, the landlord leased the property to the appellants for commercial purposes vide a lease deed that was executed in 1975. In 2008, the landlord filed an eviction petition under Section 14(1)(e) of Delhi Rent Control Act, 1958, which was granted against the tenants. In 2017, they moved the Delhi High Court against this order, wherein the High Court stayed the eviction decree on the condition that the tenants will have to pay a sum of Rs. 3.5 lacs per month every month.
In the event of COVID-19 crisis, the tenants had moved an Urgent Application in the Delhi High Court for suspension of rent on the ground that the lockdown has interrupted their business activities. The application was dismissed by the High Court.
The single-judge bench of Delhi High Court held that tenants cannot invoke the doctrine of suspension of rent on the basis of “a force majeure event as they do not intend to surrender the tenanted premises and continue to occupy it”. It added that the suspension of the rent cannot be permitted even in the lockdown, however, the landlords and grant some relaxation. Therefore, the delay of the payment of rent is permitted but not the suspension. The court held that the doctrine of suspension of rent cannot be invoked on the basis of a force majeure event. Since, the tenants do not wish surrender the premise, rather they want to the occupancy of the same.
Force majeure is a contractual provision which allocates the risk of loss, if performance becomes impracticable, due to an unanticipated or uncontrolled event. And therefore, this case of suspension of rent is liable to be rejected as it is clear that the tenants do not intend to surrender the rented premises.
The Delhi High Court pronounced the principle for four situations:
i. Where a contract has the provision for force majeure situations that would provide a relief on payment of rent.
For this, the court held that if the contract provides for a clause for waiver of rent, only then the tenants can claim suspension of payment of rent. The force majeure clause generally provides that the contract has come to an end which will require the tenants to surrender the premises, it will depend on the language of the contract.
ii. Where the contract has no force majeure clause.
For the contracts which don’t have a force majeure clause, it will be governed by the principle of frustration of contracts under Section 56 of Indian Contract Act. The bench also added that this principle won’t apply to lease agreements. Frustration means that the contract has become impossible to perform.
iii. Where no contract exists.
In cases where no contract exists, the court held that the provisions of Transfer of Property Act would apply. But to get benefit under this act, there has to be complete destruction of the property, by a force majeure event which must be permanent in nature. Temporary non-usage of the premise due to lockdown cannot be interpreted as rendering the contract void under Section 108(B)(e) of the Act.
iv. Where there is a profit-sharing agreement.
Where profit-sharing arrangement exists for monthly payment on the basis of sales turnover, relief to the tenant will be strictly in terms of the clause. The tenant could claim that there were no sales, no profits and thus the monthly payment is not liable to be made.
The order further added that, if none of these grounds exists, tenants can still seek relief by invoking the court’s equitable jurisdiction. In this case, on the basis of this power, the court relaxed the payment schedule for the tenant.
The court also added that the present case of Khan Market does not come under the executive orders passed by the central and the Delhi governments which gave protection to some classes of tenants.
