The Respondent (the Landlord) had given the concerned shop on rent for commercial purposes vide a lease deed on 1st February 1975 to the Appellants (the tenants). The Respondent thereafter filed for eviction of the Appellants under Section 14 (1) (e) of the Delhi Rent Control Act, 1958, and the order for eviction was passed on 18th March 2017 by the Ld. Senior Civil Judge – cum – Rent Controller.

The Appellants filed an appeal against the Order before the Ld. Rent Control Tribunal, however, the same was dismissed on 18th September 2017. The Appellants had, therefore, approached the High Court of Delhi challenging the said decision. The Single Judge of the High Court of Delhi on 25th September 2017 granted a stay on the order of eviction and directed to pay a rent of Rs. 3.5 Lakhs per month by the 10th of English Calendar month. An urgent application was filed in light of the several issues in regard to suspension of payment of rent by tenants owing to the COVID – 19 crisis and the legal questions arising in regard to contracts and non-performance of obligations within those contracts.

Therefore, the Appellants seek for waiver of the monthly payment of rent as directed on 25th September 2017 or partial relief in terms of suspension, postponement, or part-payment of the rent amount as the situation was beyond the control of the parties and their business was disrupted.

Issues

The issue in the present case was Whether the lockdown would entitle tenants to claim waiver or exemption from payment of rent or suspension of rent?

Judgment

The Appellants submitted that since because of the lockdown, the business operations are shut down, the Appellants are entitled to some remission.

Whereas, the Respondent submitted that the Appellants were enjoying the possession of the property since 1975 and the Appellants are well-to-do business persons, the rent of the shop is way less compared to the prevalent market rate. The Respondent also contended that force majeure did not apply as the lease deed was governed by the Delhi Rent Control Act, 1958. The Appellants had requested a rebate for the period of lockdown. The Court discussed the contractual relationship between a landlord and a tenant or a lessor and lessee where the obligations and rights of parties are determined by the terms of the Agreement. The Court mentioned that waiver or suspension of the rental payments would be different for different types of rental agreements. For example; Contract having a force majeure clause – the contract shall be governed by the clause and can permit wavier or suspension within the said clause; and Contract without a force majeure clause – the contract will have to consider the applicable laws to determine the issue.

The Court further discussed Section 32 and 56 of the Indian Contract Act, 1872, definition of Force Majeure, and the relevant judgments to ascertain the situation. The case of Energy Watchdog v. CERC & Ors., (2017) 14 SCC 80 was referred which discussed Section 32 and 56 of the Indian Contract Act, 1872 in consonance with force majeure.

Under Section 32 of the Indian Contract Act, 1872, parties can include a force majeure clause that can exempt the parties from payment of monthly rent during the occurrence of the event and the clause can also lead to declaring the Agreement void thereby, surrendering the premises. However, if the tenant is willing to keep the premises and the Agreement ongoing, the payment of rent becomes mandatory.

On the other hand, Section 56 of the Indian Contract Act, 1872 suggests invocation of the doctrine of frustration because of the situation of ‘impossibility’. The Court referred to the case of Raja Dhruv Dev Chand v. Raja Harmohinder Singh & Anr., AIR 1968 SC 1024 where the Supreme Court laid down that; “...a lease is a completed conveyance though it involves monthly payment and hence, Section 56 cannot be invoked to claim the 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.”

Thereafter the Court observed the instant issue in light of situations like the present pandemic of COVID– 19 and stated that the waiver or suspension of rent would depend upon the nature of the contract. The Court opined that such facts and circumstances will not be governed by any force majeure event however, the consequence of the said event has led to the Appellants not earning any profits or not making any sales.

The High Court, therefore, took into account the Appellants’ prayer without the applicability of Section 32 of the Indian Contract Act, 1872 as the same is governed by the Delhi Rent Control Act, 1958. Therefore, considering the situation and factors, the application of the Appellants was rejected. The Court concluded that suspension of rent was not in question however, certain relaxation of the schedule of payment can be granted.