HC rejects Tenant's application for 'Suspension of Rent' during COVID-19 Lockdown [Read Judgement]

On Thursday, the Delhi High Court in the case of RAMANAND & ORS.   versus DR. GIRISH SONI & ANR. comprising of Justice PRATHIBA M. SINGH rejected the Tenant’s application for suspension of rent during COVID-19 lockdown and stated that some postponement or relaxation in the schedule of payment can be granted owing to the lockdown.

FACTS

The present revision petition was filed by the Appellants/Tenants challenging the order dated 18th March 2017 passed by the ld. Senior Civil Judge-cum-Rent Controller granting a decree of eviction in respect of Shop No. 30-A, Khan Market, New Delhi.

 The Tenants run a shoe store called ‘Baluja’ in Khan Market where they sell various types of footwear. The Landlord is a Dentist. The tenanted premises were given on rent for commercial purposes through a lease deed executed on 1st February 1975 at Rs.300/- per month. In 2008, the Respondents filed an eviction petition under Section 14(1)(e) of the Delhi Rent Control Act, 1958. Initially, leave to defend was granted by the Rent Controller on 31st March, 2012. However, vide the impugned order dated 18th March,2017 a decree for eviction was passed.

The Tenants filed an appeal against the impugned order which was dismissed by the ld. Rent Control Tribunal  on the ground that the same is not maintainable. Hence, the present petition challenging the eviction order dated 18th March, 2017. The petition was first listed before this Court on 25th September, 2017, on which date, the ld. Single Judge had stayed the order of eviction subject to certain terms. The petition has thereafter remained pending for hearing.

ISSUE
Following the outbreak of COVID-19, an application for suspension of rent has now been moved, during the lockdown period. The stand of the Tenants is that due to the lockdown, there has been complete disruption of all business activities, including the business of the Tenants. It is pleaded that the circumstances are force majeure and beyond the control of the Tenants. Thus, it is claimed that the Tenants are entitled to waiver of the monthly payment directed vide order dated 25th September, 2017, or at least some partial relief in terms of suspension, postponement or part-payment of the said amount.

FINDINGS

The findings were as follows with the binding judgments of Supreme Court.

1. In circumstances such as the outbreak of a pandemic, like the current COVID-19 outbreak, the grounds on which the tenants/lessees or other similarly situated parties could seek waiver or non-payment of the monthly amounts, under contracts which have a force majeure clause would be governed by Section 32 of the Indian Contract Act, 1872.
2. In the absence of a contract or a contractual term which is a force majeure clause or a remission clause, the tenant may attempt to invoke the Doctrine of Frustration of contract or `impossibility of performance’, which however would not be applicable in view of the settled legal position set out below. The said doctrine of `impossibility of performance’ is encapsulated in Section 56 of the ICA.
3. In the absence of contracts or contractual stipulations the provisions of the Transfer of Property Act, 1882 (hereinafter, “TPA”) would govern tenancies and leases. 

JUDGMENT

The High Court of Delhi, held that

1. The Tenants’ prayer for suspension of rent in the present case is to be considered.
2. There is no rent agreement or lease deed between the parties and hence Section 32 of the ICA has no applicability.
3. 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. The tenants are also not `Lessees’ as an eviction decree has already been passed against them.
4. The Tenants’ plea is for extension of the doctrine of suspension of rent to cases which are covered by lockdown due to COVID-19.

The Court, considered the prayer with the following factors as necessary for determining the question as to whether the Tenants herein are entitled to any relief of suspension of rent:

1. Nature of the property
2. Financial and social status of the parties
3. Amount of rent
4. Other factors
5. Any contractual condition(s)
6. Protection under any executive order(s):

The High Court of Delhi further held:

1. and rejected the  Tenants’ application for suspension of rent in addition to invoking the doctrine of suspension of rent on the basis of a force majeure event. While holding that suspension of rent is not permissible in these facts, some postponement or relaxation in the schedule of payment can be granted owing to the lockdown.
2. that the Tenants shall now pay the use and occupation charges for the month of March, 2020 on or before 30th May 2020 and for the months of April, 2020 and May, 2020 by 25th June, 2020. From June 2020 onwards, the payment shall be strictly as per the interim order dated 25th September 2017.

The High Court of Delhi, further disposed of the application.

The judgement has been delivered by Justice PRATHIBA M. SINGH on 21-05-2020.

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