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