Non-payment of rent during lockdown

With the entire country in a state of lockdown and relocation becoming an impossibility during COVID-19 outbreak, tenants, co-living, and student housing firms are all in negotiation mode with landlords, trying to arrive at a consensus on extending existing rental agreements until the time the pandemic ends.

Recently, the central government decided to allow employees, who were due to vacate their official premises, to retain their accommodation for another 75 days until May 31. The Noida Administration on March 28 passed an order asking landlords to collect rent from their worker tenants only after a month. Delhi Chief Minister Arvind Kejriwal on March 29 also asked landlords in Delhi not to force their tenants to pay rent for two to three months. He even went to the extent of stating that his government would pay rent if tenants were unable to do so.
In light of these scenarios, the Ministry of Home Affairs has also released an order dated 29 March 2020 that says:

Wherever the workers, including the migrants, are living in rented accommodation, the landlords of those properties shall not demand payment of rent for a period of one month.

If any landlord is forcing labourers and students to vacate their premises, they will be liable to action under the Disaster Management Act, 2005.

However, the obligation of a tenant to pay the rent during lockdown would depend upon the directives issued by the Union and the respective state governments and in absence of the same, the governing laws.
 

What happens if you are unable to pay rent during lockdown?

Since the landlord-tenant relationship is a contractual one, it would be liable to be governed as per the rental agreement executed between the two parties. Therefore, in case if a tenant is not able to provide rent to the landlord due to any losses suffered to his/her business as a result of the coronavirus outbreak, he/she can take shelter under the force majeure clause in the agreement.

Force majeure events include an Act of God or natural disasters, war or war-like situations, labour unrest or strikes, epidemics, etc. The intention of a force majeure clause is to save the performing party from consequences of something over which it has no control. It is an exception to what would otherwise amount to a breach of contract. Whether a particular contractual obligation can be avoided would however depend upon the factual analysis of each situation. The courts would examine, whether in a given case, impact of the COVID-19 epidemic prevented the party from performing its contractual obligation.

However, it is also important to determine whether COVID-19 will be considered as a ‘Force Majeure’ event. In India, the Department of Expenditure, Procurement Policy Division, Ministry of Finance issued an Office Memorandum on February 19, 2020, in relation to the government’s ‘Manual for Procurement of Goods, 2017’, which serves as a guideline for procurement by the government. In the Memorandum, the ministry has stated that the COVID-19 outbreak could be covered by a force majeure clause on the basis that it is a natural calamity. Therefore, the tenants can take defence under force majeure for not performing their contractual obligations of paying rent during the lockdown.

Moreover, in case the contract does not include a force majeure clause, the parties who are unable to carry out their contractual obligations can ask for relief under the doctrine of frustration under Section 56 of the Indian Contract Act, 1872. Doctrine of frustration refers to a situation where the performance of a contract is possible when the contract is made but becomes impossible or unlawful upon happening of an event which could not have been prevented.
 

How can a lawyer help you?

In case you have been asked to vacate your rented place due to non-payment of rent or if you are subjected to harassment by your landlord due to your inability to pay rent during the lockdown, it is very important for you to understand your rights and the steps you can take to redeem your lost status. This is why it is important to consult a lawyer that deals with landlord-tenancy related issues who can guide you with the relevant steps and can help you with the procedures involved. Owing to his years of experience in the field, he will be able to analyse the situation better and can assist you in coming up with an effective strategy to resolve your legal issue.