• If rent renegotiation (due to Covid19) with landlord fails, in lock-in period, what to do?

We had leased out a bungalow in Kandivali West Mumbai for running a playschool franchise. Rent is upwards of Rs. 1 lakh a month, structured separately as rent agreement + facilitation / maintenance charges (paid to owners wife). 6% annual escalation.

We had a 3 year lock-in on the property, of which 1 year got over in March 2020. The rental agreement does not have a force majeure clause somehow, am not sure how it got missed. Our property owner is a bit of a maniac, which we realized only after registering the agreement. He is far too money minded and does not live up to his own promises (he took 6 month rent as deposit, did not do all the work which he had agreed to get done, fought with both his and our contractors, architect etc. - we have proofs and witnesses, misbehaved with me and my wife - have proofs, and delayed the work due to being finicky and non-cooperative), we had a lot of clashes with him in early period due to his nature, but somehow have managed to stay on normal terms for last few months. We had lost a lot of admissions in our first year due to delay in site getting completed (pre schools have a fixed academci calendar and therefore admissions window) and this led to heavy economic loss for us. Now, in the second year, we have again been hit by Corona virus issue, in peak admission season (March-May). 

Due to Covid19, our business has got severely impacted and we are in no position to pay the high rent. We have requested owner multiple times for rent renegotiation, but he has not responded so far. We fear that he may not agree to a renegotiation, and we may be forced to vacate the property, but given the lock in clause we cannot vacate it also without economic impact. 

I need a quick view on what could be our options (legal and otherwise) if the owner does not agree to our request for rent renegotiation? Can we break the agreement without giving the rent for remaining 2 years as penalty? Is there a provision in Maharashtra Rent Control Act (or any such Act) that allows us to not pay rent claiming force majeure? Or any other way that we can force the owner to negotiate terms with us? And worst case scenario, if there is indeed litigation, can we pursue the line that we had economic loss in first year due to the owner, and the harassment charges etc, to defend our case?

Thanks and Regards
Tushar
Asked 4 years ago in Property Law
Religion: Other

First answer received in 10 minutes.

Lawyers are available now to answer your questions.

21 Answers

1) terms of contract are sacrosanct 

 

2) lock in period is binding upon you 

 

3) if you vacate premises landlord can claim re t for lock in period 

 

4) due to pandemic you can seek waiver of rent due to force majeure conditions during lock down period 

Ajay Sethi
Advocate, Mumbai
94520 Answers
7485 Consultations

5.0 on 5.0

The clause of Force majuere being left out is a serious matter. The courts dwcide on tge basis of agreements. He could take you to court.

But there is another thing. The force majuere clause is nothing but impossibility of carrying out the contract as agreed upon by the parties. Therefore in case pf litigation you can state the impossibility.

Moreover the problems you faced before with the landlord, should have been complained by you. You should send the legal notice now foe this.

Rahul Mishra
Advocate, Lucknow
14081 Answers
65 Consultations

5.0 on 5.0

See firstly it's a commercial lease local rent control act will not apply. 

In your case the the owner may deny to renegotiate the rent also if you fail to pay he may deduct the deposit and file for eviction suit. In your case only chance is that you stop paying rent in case landlord ask for same say you want to leave the premises and cancel the agreement if he agrees it's would be better for you if not anyway leave premise in case he files suit for damages you can contest on ground of actual damages to the land lord as he has already deducted the deposit.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Whole world is facing problem with COVID-19 and no one has left from it. So you can send a normal request letter to cancel the agreement by giving COVID-lock down reason and not able to pay any single rent hence forth as you have not received any new admission and do mention his last year behavior towards you that's why you could not able to gain any new admission.

 

So kindly send email to him and of cancellation of rent agreement. If he do not listen than can send legal notice to him. As per the COVID-19 Law you have rights to talk about it.

Ganesh Kadam
Advocate, Pune
12910 Answers
253 Consultations

4.9 on 5.0

No you can't force owner to renegotiate the rent. If you can't afford you can evict by paying notice period rent. Secondly you can't mandatory waive the rent by any provision. Even supreme Court has denied the request of rent waiver. 

Prashant Nayak
Advocate, Mumbai
31805 Answers
175 Consultations

4.1 on 5.0

As per the order of the Home Ministry which issued under the Disaster Management Act, A landlord should stop from demanding rent from poor workers and migrant laborers for one month., and further strict action against the landlords who force evict their tenants, wherever the workers, including the migrants, are living in rented accommodation. 

- Hence , as per this direction , it is clear that , this direction/order would be applied with the poor workers, and migrant labors , and not for all , and a business man cannot claim for the same on the ground of force mejeure. 

1. No the tenant cannot claim for force majeure , if the said agreement not having a clause for the same or even the same is mentioned in the agreement as well. 

- Since, you are unable to pay the rent to the landlord , hence you should amicably settle the dispute , otherwise, the landlord after the break of lockdown may file an eviction case . 

- You are bound with the agreement ,and there is no provision to exit from the lock in agreement , except with the consent of both the parties. 

Mohammed Shahzad
Advocate, Delhi
13095 Answers
195 Consultations

5.0 on 5.0

Send him  a legal notice,  no one would want to be in legal battle in this pandemic. 

If legal notice doesn't work than file a petition in civil court to renegotiate the rent and for amendments in the present agreement 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

4.8 on 5.0

1. Owner cannot force you to pay rent for lockdown period due to forced Majeure event that is COVID 19 lockdown even if he doesn't agree for negotiations.

2. Yes you can take defend that you suffered losses due to owners behaviour and delay in completion of school due to owner clashes with contractor and architect.

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

5.0 on 5.0

You are bound to pay the rent. Negotiate with owner for rent waiver. If you are not paid the rent he has every right to evict the tenant .

 

A force majeure provision in a commercial arrangement is an express provision of circumstances in which performance under the contract will be excused or suspended temporarily. Doctrine of frustration as enshrined in Section 56 of the Indian contract act 1872 deals with those cases where the performance of contract has been frustrated and the performance of it has become impossible to perform due to any unavoidable reason or condition. This doctrine is treated as an exception to the general rule which provides for compensation in case of breach of contract. But section 56 only deals with cases of subsequent impossibility as opposed to cases of initial impossibility.

Under Indian law, one of the decisions to deal with the concept of force majeure was the Madras High Court decision in Edmund Bendit And Anr. vs Edgar Raphael Prudhomme. In this case, the court opinion that whenever the possibility of performance is referred to in commercial contracts, what must be considered and contemplated is the possibility in a commercially reasonable sense and not merely suppositious possibility.

 

Ajay N S
Advocate, Ernakulam
4072 Answers
110 Consultations

5.0 on 5.0

Hi, since the educational institutions have been severely impacted under covid -19 lockdown ,under such conditions force majeure clause comes in to consideration..If the owner approaches the court for eviction or rent recovery, above said clause will be taken as a defence 

Hemant Chaudhary
Advocate, Gurgaon
4630 Answers
67 Consultations

4.9 on 5.0

The current crisis cannot be claimed as an excuse for not paying the rent or for reduction in the agreed rental payment. 

Supreme court in its latest judgment has rejected the plea of tenants for waiver of rent.

Meaning the payment of rent cannot be refused and is mandatory for the tenant for any property that they occupy. 

For your information,  the force majeure clause even if available in the rental agreement,  cannot be invoked in the given circumstances. 

You can request for delayed payments. 

Any case you may intend to file or challenge may not be maintainable. 

 

T Kalaiselvan
Advocate, Vellore
84711 Answers
2172 Consultations

5.0 on 5.0

1. If the rent agreement does not contain Force Majeure clause then it shows it has been drafted in a very cavalier manner, and perhaps has not been drafted by a lawyer.

2. Since there is no Force Majeure clause in the agreement you cannot derive benefit of it.

3. Delhi High Court has already ruled that lockdown is prima facie Force Majeure, but for this to apply the clause has to be part of the contract. You missed your trump card.

4. The landlord is not bound to renegotiate the rent. If you 'break' the agreement then the consequences of breach of agreement specified in the form of liquidated damages in the agreement will ensue. You cannot get away by breaching your contractual obligations.

 

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

Dear Tushar

 

Please let me see a copy of your rent agreement, then you can be advised more holistically. But you can make an application to the court under section 8 of the MRCA Act.

Balaji Iyer
Advocate, Bengaluru
18 Answers
2 Consultations

5.0 on 5.0

1. In the described & given Circumstances, you will not be able to claim any relief, more specifically for the Lease Rent component, further more so since you are a "commercial user" and not a "residential user" and still further more so since a latest HC judgment has refused any relief to waive off any Rent for any type of premises.

2. Only twisted remedy remains for you is to issue a strategic legal notice to Landlord, creating a tenable dispute for improper maintenance /repair of premises coupled with other nuisances, which should be arranged /supported with documentary evidences & witnesses. This will entitle you for damages & compensation for relevant losses, in a Civil Court dispute. AFTER legal notice, discontinue lease rent and do not part with possession of property and let court decide, which may take years. With a little twisted strategy, you can turn the tide positively in your favor.

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

Dear querist, 

1. The rent agreement can be discontinued on the account of non-supportive hand and misbehavior by the landlord. A legal notice to this effect will suffice your requirement. 

2. in case you are leaving the agreement without completing the lock in period, the effect will be to pay the amount mentioned in the agreement. But, on the ground of lack of promise as per agreement and misbehavior ground by sending a legal notice might bring your landlord to the table for negotiations. 

 

You can contact me , in case you require my assistance. 

Regards, 

YUGANSHU SHARMA 

ADVOCATE 

Yuganshu Sharma
Advocate, Delhi
433 Answers
1 Consultation

5.0 on 5.0

Dear Sir, 

You are suggested to serve him a legal notice to the owner informing all your intentions of rent negotiation due to COVID 19 pandemic. The conditions of force majeure is also required to considered by the Court. You are suggested to pen down all the things, do discuss all the things and take all pleas during all legal actions. 

Ganesh Singh
Advocate, New Delhi
6757 Answers
16 Consultations

4.5 on 5.0

you may invoke section 56 of Indian Contract Act  which contains the provision regarding the doctrine of frustration due to which it becomes impossible for a contracting party to honour his contractual obligations

if the owner does not agree for a rent negotiation, i suggest go for a deferred payment option with staggered payment

for instant if the rent has remained outstanding for 2 months due to COVID, then that rent can be paid to the owner after the lockdown is lifted [deferring of payment] by splitting it into some agreeable parts [say for instance 6 installmens] which can then be paid with the regular monthly rentals [staggering of payment]

this will ease the burden both for you and the owner

not wise to litigate which will entail further costs 

so be practical and smart 

Yusuf Rampurawala
Advocate, Mumbai
7483 Answers
79 Consultations

5.0 on 5.0

Hello,

  1. If the landlord refuses to renegotiate, and there is absence of specific force majeure clause in the Agreement, it becomes exceedingly difficult to wriggle out of the contract.
  2. Therefore under circumstances, you may break the agreement without giving the rent for remaining 2 years as penalty by writing to him that you are unable to perform the contract owing to the current circumstances. 
  3. In litigation, that is if he initiates one, you can get the protection under section 56 of the Indian Contract Act. "56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void. —An agreement to do an act impossible in itself is void." Contract to do 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."
  4. Your incurring economic loss and harassment on his part causing it can not come to your rescue in the current scenario.

S J Mathew
Advocate, Mumbai
3545 Answers
175 Consultations

5.0 on 5.0

Stop payign rent. He will adjust from deposit for sure but don`t vacate the building. He cannot enter in building. Will be trespass. Complain to police if he enters in the building or crates nuisance of any kid.

Force majeure dose not apply on LL - tenant unless specifically mention in rent agreement. He himself will come for negotiation when you will create problem for him.

Yogendra Singh Rajawat
Advocate, Jaipur
22596 Answers
31 Consultations

4.4 on 5.0

Basic document will be your Agreement, the terms and conditions have a final say and binding on both the parties.

If you are forced to vacate the premises (due to various reasons) your land lord will enforce T&C of Agreement and demand lock-in-period payment. 

However, (There is an outside chance here, show your Agreement to your local Advocate who in turn assess and guide you in finding any clause against Land Lord and try to use same which pushes him to come to terms with you).

Further, you can use the proofs which you referred in your post, which caused delay in handing over premises and he did not comply with his contractual obligations.  Thus, you have an outside chance.

Going by non taking of Force Majeure Clause it is having negative impact on your problem.

Best option is, not to go into litigation mode, try and get the matter settled outside.

S Srinivasa Prasad
Advocate, Hyderabad
2876 Answers
9 Consultations

5.0 on 5.0

Relief from payment of rent due to a ‘Force Majeure’ event can only be availed if such a relief is explicitly provided under the lease agreement..

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer