• Will I be forced to pay my entire lock in period of rent when I am in a loss making business?

Dear Sir, I had rented a property in Bangalore for showroom purpose from may 2017 with rent starting from August, lock in period of 3 year and if vacated before lockin period then we have to pay entire lockin period rent.
It's a registered agreement .
In March 2018 I approached the owner that due to business loss I cannot use the premises as agreed.
The owner decided to take all be security deposit , the interiors of the building that I had spent on and also the entire stock that was available as settlement.
Now my question is this. 
1. If the owner has adjusted all my investment towards the lockin period rent , then can u use the showroom for the balance lockin period months? As I have payed 33 months rent in advance to them. 
2. When my business is under loss can the owner force me to pay entire lockin period rent?

Kindly advice
Asked 4 years ago in Property Law
Religion: Hindu

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13 Answers

Terms of agreement are sacrosanct

2) you have to pay rent for lock in period as per terms of contract

3) you can use the showroom for the balance period

Ajay Sethi
Advocate, Mumbai
87897 Answers
6207 Consultations

5.0 on 5.0

Dear Sir,

My answers are as follows:

1. If the owner has adjusted all my investment towards the lockin period rent , then can u use the showroom for the balance lockin period months? As I have payed 33 months rent in advance to them.

Ans: In rent agreement there could not be any lock period and even if it is mentioned in it due to ignorance it cannot be claimed as of right. It appears such agreement is un-registered as such it cannot be executed on such ground also. Let him go to the Civil Court to claim rent for the lock in period months. Any how you have informed the owner well in advance about your loss in business and your inability to continue. It is sufficient. Some agreements and contracts though mutually agreed by both the parties, but cannot be stand to the touch stone of judiciary, if the same are illegal or opposite to commercial customs and against the public policy. Thus the claim of your land owner cannot be sustainable in the Court. If you receive any notice then answer the same appropriately and if files a suit then you can resist the same. The relevant sections of Contract Act are reproduced below for your ready reference.

2. When my business is under loss can the owner force me to pay entire lockin period rent?

Ans: The clauses of the agreement are opposite to the usual practice of business and also opposite to law.

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Section 23 in The Indian Contract Act, 1872

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23. What consideration and objects are lawful, and what not.—The consideration or object of an agreement is lawful, unless— —The consideration or object of an agreement is lawful, unless—" it is forbidden by law; 14 or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. Illustrations

(e) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void, as its object is unlawful. (e) A, B and C enter into an agreement for the division among them of gains acquired or to be acquired, by them by fraud. The agreement is void, as its object is unlawful."

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Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

If you have paid advance rent and if he has adjusted all accounts for next 33 months you can use the premises for remaining 33 months. Also it's immaterial if your running in loss or profit in terms of agreement you are bound to pay so many months rent as agreed between you both.

Swarnarka Chowdhury
Advocate, Mysore
1878 Answers
5 Consultations

5.0 on 5.0

As you had already paid for the lockin period you can use the premises for the rest of the time left In agreement.

Also though the agreement terms are harsh but you both have agreed upon them as it is business transition and if the agreement donot mention termination before the time.period than you have to pay for complete period.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

If you have send notice for the surrender of the property and adjusted all the lock in period rent you will not be able to use the premises for the balance period.

In an agreement where the lock in period is you have the right to use the property on payment of rent as per the agreement. The adjustment of security and any fitout is the part of end of the agreement.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

Dear sir

You are in week foot. Yes you are liable to pay for lock in period. Following are advise

You negotiate hard with owner with so many issues like personal/business/property you are vacating

1. Refund the entire security deposit

2. you find a client to replace your business place to mitigate the loss

3. you ask landlord to rent it out and difference will be paid by you to mitigate huge loss

There are several ways we need to look into this to mitigate the losses. For that we need to you document, place of business and land lord to study his mentality.

Feel free to reach us for mitigating your loss and getting out of this issue.

Shettar SS
Advocate, Bangalore
182 Answers
1 Consultation

4.4 on 5.0

1) He is not authorized to take your stock for settlement for lock in period.

2) You may have sold your stock and furniture. Have to start new food business or restaurant type etc how the shop is available in which local area etc.

3) your business is in loss, for this its not concern of owner, he has concern with rent.

Ganesh Kadam
Advocate, Pune
12335 Answers
191 Consultations

4.9 on 5.0

Yes you can use the premises now. You can try to negotiate with him as you re in loss. As per the agreement you are liable to pay the lock-in period amount

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

Dear Client,

This is not business of landlord, if u r facing loss. You are bind by the terms of agreement.

But when u r forced and already paying 33 months rent, at least u should not vacate the property, and utilize for any other purpose if not restricted in the agreement.

And, if landlord wants to recover possession before lock period than u r not liable to pay rent and can recover through court.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

1. IRRESPECTIVE of business loss or whatever, IF the contract /agreement specifies the Lock-In period terms, THEN the terms have to be honored, without any exceptions. HOWEVER, on humanatarian grounds, both the parties, jointly with consent can re-negotiate the terms and arrive at new terms, amicable to both of them. PERIOD.

2. IF full rent is paid in advance, for the 33 months period, THEN you are entitled to use the premises, without any further reference, BUT before documentarily surrendering the permises.

Keep Smiling .... Hemant Agarwal

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

1. If you have paid the amount for the lock in period then definetly you can use the said premises

2. yes the owner can force you to act as per the terms of the agreement that you have made with the owner of the premises

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. No, that's because you've given him the option to do this under the Rental Agreement.

2. Yes, he can legally recover rent for the lock-in period, despite the losses being faced by you.

Vibhanshu Srivastava
Advocate, New Delhi
9426 Answers
245 Consultations

5.0 on 5.0

1. It is as good as being a tenant however this action if taken as per the terms and conditions of the lease agreement hence you cannot do anything about it except to approach court of law seeking solution, relief and remedy to this situation.

2. The profit or loss in your business will not be a reason for not paying rent to the owner, you have to abide by the conditions which was agreed and signed by you at the time of entering into tenancy.

T Kalaiselvan
Advocate, Vellore
78050 Answers
1543 Consultations

5.0 on 5.0

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