Law Web: Delhi HC: Tenant can not seek suspension of payment of rent owing to COVID-19

In Raichurmatham Prabhakar and Ors. v. Rawatmal Dugar,

(2004) 4 SCC 766 the Supreme Court held that suspension of rent may be

claimed by the tenant if the lessee has been dispossessed. Thus, mere nonuse

may not always entitle the tenant for suspension of rent.

28. This view has been followed by a ld. Single Judge of this 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. The Court held that

under circumstances wherein the tenant cannot use the property for the

purpose for which it was leased, the tenant would have no right to continue

enjoying the property and seek suspension of rent at the same time.

29. In relation to some contracts which are not classic tenancy or lease

agreements, where the premises is occupied and a monthly pre-determined

amount is paid purely as `Rent’ or `Lease amount’, the manner in which

pandemics, such as COVID-19, can play out would depend upon the nature

of the contract. In contracts where there is a profit-sharing arrangement or an

arrangement for monthly payment on the basis of sales turnover, the

tenant/lessee may be entitled to seek waiver/suspension, strictly in terms of

the clause. Such cases would purely be governed by the terms of the contract

itself, and the tenant’s claim could be that there were no sales and no profits

and thus the monthly payment is not liable to be made. Thus, the entitlement

of the client in such a situation is not governed by any overriding force

majeure event but by the consequence of the said event, being that there

were no sales or profits.

Conclusions:

30. In light of the above legal position, the Tenants’ prayer for suspension

of rent in the present case is to be considered. There is no rent agreement or

lease deed between the parties and hence Section 32 of the ICA has no

applicability. 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.

31. The Tenants’ plea is for extension of the doctrine of suspension of

rent to cases which are covered by lockdown due to COVID-19. Insofar as

this prayer is concerned, this Court considers the following factors as

necessary for determining the question as to whether the Tenants herein are

entitled to any relief of suspension of rent:

i. Nature of the property: The tenanted premises are located in the

prime commercial area of Khan Market for running of a shop. It is

well-known that the commercial area of Khan Market is a sought-after

location for business purposes.

ii. Financial and social status of the parties: The Landlord is a dentist

who wishes to use the tenanted premises and has sought eviction on

the ground of bonafide use under Section 14(1)(e) of the DRC Act.

The Tenants, on the other hand, run a footwear shop on the tenanted

premises, which they have been in possession of since 1975 at a

monthly rental of merely Rs.300/-.

iii. Amount of rent: The monthly payment of Rs.3.5 lakhs has been

fixed by this Court, as a condition for grant of stay for continued use

and occupation, after the decree of eviction was passed. The Tenants

do not wish to vacate the property due to the lockdown but wish to

continue to occupy the property. The amount being paid, when

compared to the prevalent market rent in the area, is on the lower side.

This is clear from a perusal of the lease deed of a neighbouring

property placed on record by the Landlord. Even if the said lease deed

is to be ignored and not taken on record, judicial notice can be taken

of the fact that the prevalent rent in Khan Market is amongst the

highest in the whole of Asia. The amount being paid by the Tenants,

though substantial, is on the lower side as compared to other

properties in Khan Market.

iv. Other factors: The Tenants are `unauthorised occupants’ of the

tenanted premises as a decree of eviction has already been passed.

The monthly payment of rent being made has been fixed by this Court

vide the interim order dated 25th September, 2017 in view of the

judgment of the Supreme Court in Atma Ram Properties (P) Ltd. v.

Federal Motors (P) Ltd., (2005) 1 SCC 705. The use and occupation

charges have to be determined in a manner so as to fully compensate

the Landlord as if the Landlord had let out the property to a third

party. The Tenants are continuing to occupy the premises and do not

intend to vacate the same. In any case, the compensation ought to be

reasonable and should make up for the loss caused to the Landlord

due to delay in execution of the eviction decree. These factors

completely tilt the balance in favour of the Landlord.

v. Any contractual condition(s): There is no contractual condition that

permits non-payment or suspension of rent.

vi. Protection under any executive order(s): There are cases where the

central and state governments may have, from time to time, given

protection to some classes of tenants such as migrants, labourers,

students, etc. 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/81

dated 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. Without going

into the legality and validity of such Executive orders, suffice it to say

that the present case is not covered by any of these executive orders.

32. The Tenants’ application for suspension of rent is thus liable to be

rejected inasmuch as while invoking the doctrine of suspension of rent on

the basis of a force majeure event, it is clear from the submissions made that

the Tenants do not intend to surrender the tenanted premises. 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.

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 21st May, 2020

RC. REV. 447/2017

RAMANAND Vs DR. GIRISH SONI

CORAM:

JUSTICE PRATHIBA M. SINGH

1. This is an application for exemption from filing the duly affirmed

affidavit and the requisite court fee. With an undertaking to deposit the court

fee within 72 hours from the date of resumption of regular functioning of

this Court, exemption is allowed, subject to all just exceptions. Undertaking

filed by the Appellants is accepted.

2. Application is disposed of.

Brief Facts

3. The urgent application under consideration, raises various issues

relating to suspension of payment of rent by tenants owing to the COVID-19

lockdown crisis and the legal questions surrounding the same. The COVID-

19 pandemic has had large-scale implications for human life. Contractual

relationships and jural relationships between parties are severely affected

due to the lockdown. The question as to whether the lockdown would entitle

tenants to claim waiver or exemption from payment of rent or suspension of

rent, is bound to arise in thousands of cases across the country. Though there

can be no standard rule that can be prescribed to address these cases, some

broad parameters can be kept under consideration, in order to determine the

manner in which the issues that arise can be resolved.

Background facts

4. The present revision petition was filed by the Appellants/Tenants

(hereinafter, “Tenants”) challenging the order dated 18th March, 2017

passed by the ld. Senior Civil Judge-cum-Rent Controller (hereinafter,

“RC”) granting a decree of eviction in respect of Shop No. 30-A, Khan

Market, New Delhi (hereinafter, “tenanted premises”). The Tenants run a

shoe store called ‘Baluja’ in Khan Market where they sell various types of

foot wear. The Landlord i.e., Respondent No.1 (hereinafter, “Landlord”) is

a Dentist. The tenanted premises was 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 (hereinafter, “DRC Act”). Initially, leave

to defend was granted by the RC 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 (hereinafter, “RCT”) vide order

dated 18th September, 2017 on the ground that the same is not maintainable.

Hence, the present petition challenging the eviction order dated 18th March,

2017.

5. 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 relevant observations in the said order are set

out below:

“9. I have enquired from the counsels, the effect if any of the

landlord, after institution of the petition for eviction under

Section 14(1)(e) of the Act, having entered into an

agreement to sell and which agreement to sell has admittedly

not fructified. It prima facie appears that it is not into the

domain of the Rent Control Act to decide even prima facie

whether there was any such agreement to sell or not. It has

further been enquired, as to what will be the effect, if any, on

the petition for eviction under Section 14(1)(e) of the Act

which has to be decided at least at the first stage summarily,

having remained pending at the stage of leave to defend

itself for nearly four years and what will be the effect of the

landlord for his urgent requirement, having in the

interregnum at one stage considered sale of the property.

10. Since there are allegations with respect to several

documents and new documents which were obtained under

the Right to Information Act, 2005, have also been filed, it is

deemed appropriate to call for the Trial Court record.

11. The counsel for the respondents also states that all the

documents have not been placed on record.

12. The Trial Court record be requisitioned forthwith.

13. Issue notice.

14. Notice is accepted by the counsel for the respondents.

15. Subject to the petitioners, with effect from the month of

October, 2017, paying to the respondents a sum of Rs.3.5

lakhs per month, month by month, in advance for each

month by the 10th day of the English Calendar month, there

shall be stay of the order of eviction.

16. If there is any default in payment, the stay of execution of

the order of eviction shall stand vacated and the respondents

shall be entitled to execute the order of eviction.

17. Needless to state that the aforesaid payments are subject

to the final adjudication of this petition and are repatriable

in the event of the petitioners succeeding in this petition.

18. CM No.35119/2017 is disposed of.

19. List on 29th November, 2017.”

The petition has thereafter remained pending for hearing.

6. 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.

Submissions of parties

7. Mr. Rajiv Talwar, ld. counsel for the Tenants, submits that he has

moved the present application by way of abundant caution as, vide the

interim order dated 25th September, 2017 this Court had directed that any

default in payment would lead to execution of the eviction decree. Ld.

counsel submits that his clients are willing to make part-payment of the

monthly amount. Alternatively, he prays that the rent be suspended for at

least one month. He submits that since there has been no business during the

lockdown period, his clients are entitled to some form of remission.

8. On the other hand, Mr. Sanjeev Mahajan, ld. counsel appearing for

the Landlord, submits that the Tenants have been enjoying the tenanted

premises since 1975 for a poultry sum of Rs.300/- per month. Ld. counsel

submits that the Tenants are well-to-do business persons who have also

purchased a neighbouring shop in Khan Market. He further submits that the

amount fixed by this Court i.e., Rs.3,50,000/- per month, is a very meagre

amount compared to the prevalent market rate. He cites the example of Shop

No.33 in Khan Market for which the monthly rent is approximately Rs.22

lakhs for a 1,456 sq. feet property. A photocopy of the lease deed of the said

property has also been submitted. Thus, it is submitted that the tenanted

premises would earn much more than the amount fixed by this Court. Ld.

counsel submits that force majeure does not apply as the case is governed by

the DRC Act. He further submits that the Landlord is a Dentist who needs

the shop for his own bona fide use. Ld. counsel contends that mere

disruption of the business cannot exempt the Tenants from making the

monthly payments as the Landlord also depends on the income from the

tenanted premises.

9. On behalf of the Tenants, it is submitted that some rebate may be

given only for the period of the lockdown and that otherwise the Tenants are

willing to regularly make the monthly payments.

Analysis and Findings

10. This Court has considered the submissions of the parties. The

relationship between a Landlord and Tenant, a Lessor and Lessee and a

Licensor and Licensee can be in multifarious forms. These relations are

primarily governed either by contracts or by law. In the realm of contracts,

the respective rights and obligations of the parties would be determined by

the terms and conditions of the contract itself.

11. Contracts of tenancy and leases could be of different kinds including–

(i) Oral tenancies with a month to month payment of rent;

(I i) Short term tenancy agreements with a monthly rent payable;

(iii) Long term leases with force majeure clauses;

(iv) Lease agreements which are structured as revenue sharing

agreements and;

(v) Lease agreements which are in the nature of monthly payments

as a percentage of the sales turnover.

The above list is however not exhaustive. The question of waiver,

suspension or any remission in the rental payments would operate

differently for each category of agreements. Where there is a contract,

whether there is a force majeure clause or any other condition that could

permit waiver or suspension of the agreed monthly payment, would be

governed by the contractual terms. If, however, there is no contract at all or

if there is no specific force majeure clause, then the issues would have to be

determined on the basis of the applicable law.

12. 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 (hereinafter,

“ICA”). This section reads as under:

“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.”

13. `Force Majeure’ is defined by Black’s Law Dictionary as “an event

or effect that can be neither anticipated nor controlled”. As per the

dictionary, “The term includes both acts of nature (e.g. floods and

hurricanes) and acts of people (e.g. riots, strikes and wars)”.

14. The Supreme Court in Energy Watchdog v. CERC & Ors., (2017) 14

SCC 80 has clearly held that in case the contract itself contains an express or

implied term relating to a force majeure condition, the same shall be

governed by Section 32 of the ICA. Section 56 of the ICA, which deals with

impossibility of performance, would apply in cases where a force majeure

event occurs outside the contract. The Supreme Court observed:

“34. “Force majeure” is governed by the Contract Act, 1872.

Insofar as it is relatable to an express or implied clause in a

contract, such as the PPAs before us, it is governed by Chapter III

dealing with the contingent contracts, and more particularly,

Section 32 thereof. Insofar as a force majeure event occurs dehors

the contract, it is dealt with by a rule of positive law under Section

56 of the Contact Act.”

Thus, in agreements providing for a force majeure clause, the Court would

examine the same in the light of Section 32. The said clause could be

differently worded in different contracts, as there is no standard draft,

application or interpretation. The fundamental principle would be that if the

contract contains a clause providing for some sort of waiver or suspension of

rent, only then the tenant could claim the same. The force majeure clause in

the contract could also be a contingency under Section 32 which may allow

the tenant to claim that the contract has become void and surrender the

premises. However, if the tenant wishes to retain the premises and there is

no clause giving any respite to the tenant, the rent or the monthly charges would be payable.

Section 56 – Frustration of Contract

15. 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, which reads as under:

“56. Agreement to do impossible act. — An

agreement to do an act impossible in itself is

void. Contract to do an act afterwards

becoming impossible or unlawful. — A

contract 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.

Compensation for loss through nonperformance

of act known to be impossible or

unlawful. — Where one person has promised

to do something which he knew, or, with

reasonable diligence, might have known, and

which the promisee did not know, to be

impossible or unlawful, such promisor must

make compensation to such promisee for any

loss which such promisee sustains through the

non-performance of the promise.”

16. There are various conditions that have to be fulfilled to satisfy the

conditions of `impossibility’ under Section 56. However, in the context of a

tenant’s obligations, the Supreme Court had the occasion to consider this

doctrine in the case of Raja Dhruv Dev Chand v. Raja Harmohinder

Singh & Anr., AIR 1968 SC 1024 where the tenant who had rented

agricultural lands in Punjab which he could not utilise due to the 1947

Partition, sought refund of the rent paid by him for the said land for Kharif

season 1947 and Rabi season 1948. The Supreme Court, after considering

the law on `impossibility of performance’ from various jurisdictions, held

that in the Indian context Section 56 “lays down a positive rule relating to

frustration of contracts and the Courts cannot travel outside the terms of

that section”. The Court held that Section 56 does not apply to lease

agreements. The Court drew a distinction between a `completed conveyance’

and an `executory contract’ and observed:

“9. We are unable to agree with counsel for the

appellant in the present case that the relation

between the appellant and the respondents

rested in a contract. It is true that the court of

wards had accepted the tender of the appellant

and had granted him a lease on agreed terms of

lands of Dada Siba Estate. But the rights of the

parties did not after the lease was granted rest

in contract. By Section 4 of the Transfer of

Property Act the chapters and sections of the

Transfer of Property Act which relate to

contracts are to be taken as part of the Indian

Contract Act, 1872. That section however does

not enact and cannot be read as enacting that

the provisions of the Contract Act are to be

read into the Transfer of Property Act. 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.

10. By its express terms Section 56 of the

Contract Act does not apply to cases in which

there is a completed transfer. The second

paragraph of Section 56 which is the only

paragraph material to cases of this nature has a

limited application to covenants under a lease.

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.

11. By the agreement of lease the appellant

undertook to pay rent for the year 1947-48 and

the Court of Wards agreed to give on lease the

land in its management. It is not claimed that

the agreement of lease was void or voidable.

Nor is it the case of the appellant that the lease

was determined in any manner known to law.

The appellant obtained possession of the land.

He was unable to continue in effective

possession on account of circumstances beyond

his control. Granting that the parties at the date

of the lease did not contemplate that there may

be riots in the area rendering it unsafe for the

appellant to carry on cultivation, or that the

crops grown by him may be looted, there was

no covenant in the lease that in the event of the

appellant being unable to remain in possession

and to cultivate the land and to collect the

crops, he will not be liable to pay the rent.

Inability of the appellant to cultivate the land or

to collect the crops because of widespread riots

cannot in the events that transpired clothe him

with the right to claim refund of the rent

paid.…”

17. The above judgment laid down unequivocally that a lease is a

completed conveyance 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 (supra).

18. Recently, a ld. Division Bench of the Delhi High Court in Hotel Leela

Venture Ltd. v. Airports Authority of India, 2016 (160) DRJ 186,

observed:

“34. The consideration for the lease being one;

albeit having two constitutive elements, the law

declared by the Supreme Court in the decision

reported as (1968) 3 SCR 339 Raja Dhruv Dev

Chand Vs. Raja Harmohinder Singh & Anr

would squarely be applicable; and if it was the

claim by the lessee that the consideration for

the lease failed or became oppressed, the claim

would fail because neither the doctrine of

frustration applies to a lease nor broad

principles thereof to a lease. The reason being

that executory contracts alone are capable of

being frustrated and not executed contracts.

For example, 'A' a retailer of shoes purchases

shoes from 'B' who is the manufacturer of

shoes. The agreed quantities of shoes are

delivered and part sale consideration paid. On

account of change in import policy the market is

flooded with imported shoes which are much

cheaper vis-a-vis the price payable by 'A' to 'B'.

'A' cannot plead frustration requiring the Court

to reduce the price and relieve him the

obligation to pay the balance sale consideration

to 'B'.

35. A contract for lease whereunder the lessee

obtains possession from the lessor is an

executed contract and during the duration of

the lease, since it is a term of the agreement

that consideration shall be rendered

periodically, the agreed consideration has to be

paid and it hardly matters that rents have fallen

in the meanwhile. The result of a lease is the

creation of a privity of estate inasmuch as lease

is the transfer of an interest in immovable

property within the meaning of Section 5 of the

Transfer of Property Act, 1882, as was held in

para 20 of the decision reported as 2003 (5)

SCC 150 T. Lakshmipathi & Ors. Vs. P.

Nithyananda Reddy & Ors. That apart, as held

in the decisions reported as (1960) 2 SCR 793

Alopi Prashad Vs. UOI and (1975) 2 SCC 633

Panna Lal Vs. State of Rajasthan 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.”

From the above judgments and the settled law, it is clear that Section 56 of

the ICA would not apply to a lease agreement and other similarly situated

contracts which are `executed contracts’ and not `executory contracts’.

Provisions of the Transfer of Property Act, 1882 governing landlordtenant

relationships qua Force Majeure

19. In the absence of contracts or contractual stipulations the provisions

of the Transfer of Property Act, 1882 (hereinafter, “TPA”) would govern

tenancies and leases.

20. The doctrine of force majeure is recognised in Section 108(B)(e) of

the TPA. Section 108(B)(l) also enumerates the `Rights and Liabilities’ of

the lessee. The relevant clauses of the TPA are as under:

“108. Rights and liabilities of lessor and

lessee.—In the absence of a contract or local

usage to the contrary, the lessor and the lessee

of immoveable property, as against one

another, respectively, possess the rights and are

subject to the liabilities mentioned in the rules

next following, or such of them as are

applicable to the property leased:—

(A) Rights and liabilities of the lessor-

…

(B) Rights and liabilities of the lessee-

…

(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:

Provided that, if the injury be occasioned

by the wrongful act or default of the lessee, he

shall not be entitled to avail himself of the

benefit of this provision: …

(f) to (k)…….

(l) the lessee is bound to pay or tender, at the

proper time and place, the premium or rent to

the lessor or his agent in this behalf;”

A perusal of the above shows that the provision itself would apply only in

the absence of a contractual stipulation. Further, on the occurrence of any of

the situations contemplated under (e) above, which would render the

property `substantially and permanently unfit’ to be used for the purpose for

which it was leased, at the option of the lessee, the lease would be void.

21. In Raja Dhruv (supra) the Supreme Court, while interpreting as to

what constitutes `substantially and permanently unfit’ held that temporary

non-use by the tenant due to any factors would not entitle the tenant to

invoke this section. The relevant observations of the Court are:

17. The case strongly relied upon by counsel

for the appellant was Gurdarshan

Singh v. Bishen Singh [ILR 1962 Punjab 5]. In

that case a lease was executed on January 8,

1947 in respect of agricultural land situated in

an area which on partition of India fell within

West Pakistan. The Court found that possession

of the demised land was not given to the lessee,

and the landlord was on account of riots unable

to deliver possession. Obviously on that finding

the tenant was entitled to claim refund of the

rent paid. But the Court proceeded to consider

the question “whether the doctrine of

frustration applies to a contract of lease of

agricultural lands” and recorded an answer

that the doctrine of frustration applies to

leases. The Court observed at p. 13 — “that the

doctrine of frustration does apply to leases, but

even if it does not apply in terms to a contract

of lease of agricultural land the broad principle

of frustration of contract applies to leases”. We

are unable to agree with that observation, and

the observation at p. 11 that “According to

Indian law, sales of land as also leases are

contracts”. Under a lease of land there is a

transfer of right to enjoy that land. If any

material part of the property be wholly

destroyed or rendered substantially and

permanently unfit for the purpose for which it

was let out, because of fire, tempest, flood,

violence of an army or a mob, or other

irresistible force, the lease may, at the option of

the lessee, be avoided. This rule is incorporated

in Section 108(e) of the Transfer of Property

Act and applies to leases of land, to which the

Transfer of Property Act applies, and the

principle thereof to agricultural leases and to

leases in areas where the Transfer of Property

Act is not extended. Where the property leased

is not destroyed or substantially and

permanently unfit, the lessee cannot avoid the

lease because he does not or is unable to use

the land for purposes for which it is let to him.”

22. In T. Lakshmipathi (supra), on the question of what constitutes

permanent destruction of a property, the Supreme Court cited with approval

Woodfall’s Laws of Landlord and Tenant (28th Edition, Vol.1):

“21. In Woodfall's Laws of Landlord and

Tenant (28th Edn., Vol. 1) the relevant law is so

stated:

“Where the lessee covenants to pay rent

at stated period (without any exception in case

of fire), he is bound to pay it, though the house

be burnt down; for the land remains, and he

might have provided to the contrary by express

stipulation, if both parties had so intended. And

this rule applies, although the lessee's covenant

to repair contain an exception in case of fire.

Similarly, an action for use and occupation still

lies in respect of the whole period of the

tenancy notwithstanding the destruction of the

premises by fire.”

(para 1-0778)

“In a lease of land with buildings upon it the

destruction of even the entirety of the buildings

does not affect the continuance of the lease or

of the lessee's liabilities under it, unless so

provided by express contract.”

(para 1-2055)

“A demise must have a subject-matter, either

corporeal or incorporeal. If the subject-matter

is destroyed entirely, it is submitted that the

lease comes automatically to an end, for there

is no longer any demise. The mere destruction

of a building on land is not total destruction of

the subject-matter of a lease of the land and

building, so the demise continues. But if by

some convulsion of nature the very site ceases

to exist, by being swallowed up altogether or

buried in the depths of the sea, it seems clear

that any lease of the property must come to an

end.”

(para 1-2056)”

23. In Shaha Ratansi Khimji & Sons v. Kumbhar Sons Hotel Pvt. Ltd. &

Ors., (2014) 14 SCC 1 the Supreme Court clarified that in cases concerning

a lease agreement, Section 108(B)(e) of the TPA cannot be interpreted by

assuming that when a building or structure is leased out, it is only the

superstructure that is exclusively leased out. The lease is also a lease of site.

In view of the law laid down in T. Lakshmipathi (supra), it was held that

even though the tenanted premises had been demolished and destroyed, the

tenancy cannot be said to have been determined.

24. More recently, this view has been reaffirmed by this Court in

Sangeeta Batra v. M/s VND Foods & Ors., (2015) 3 DLT (Cri) 422

wherein it has been held that the fact that the leased premises, intended to be

run as a restaurant, was sealed on two occasions is of no relevance as the

tenants did not choose to avoid the lease. Interpreting Section 108 of the

TPA, the ld. Single Judge of this Court observed:

“26. Section 108 of the Transfer of Property Act

deals with the aspect of rights and liabilities of

lessor and lessee. The rights and liabilities of

the lessee are enumerated from clause (d)

onwards upto clause (q). Clause (e) of Section

108 reads:

“(e) if by fire, tempest or flood, or

RC. REV. 447/2017 Page 17 of 18

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:

Provided that, if the injury be

occasioned by the wrongful act or default

of the lessee, he shall not be entitled to

avail himself of the benefit of this

provision;” (Emphasis supplied)

27. Thus, if the leased premises is rendered

substantially and permanently unfit for the

purpose for which it was let, the lessee has the

option to avoid the lease. Unless the lessee so

avoids the lease, he cannot avoid his obligation

contained in clause (l) of Section 108, which

states that “the lessee is bound to pay or tender,

at the proper time and place, the premium or

rent to the lessor or his agent in this behalf;”.

25. 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. Until and unless there is a complete

destruction of the property, Section 108(B)(e) of the TPA cannot be

invoked. In view of the above settled legal position, 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).

Suspension of Rent

26. Finally, 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

as held by the Supreme Court in Surendra Nath Bibran v. Stephen Court,

AIR 1966 SC 1361. In the said case, the Court directed payment of

proportionate part of the rent as the tenant was not given possession of a part

of the property.

27. In Raichurmatham Prabhakar and Ors. v. Rawatmal Dugar,