Corona Virus Disease-2019, in short called as Covid-19, has resulted in almost stagnation of the activities of the human beings all over the world. The unexpected outbreak of the epidemic and the resultant lockdown in the countries became a bolt from the blue for most of the businesses. Not only did the projections of the businesses become in turmoil, but also the very existence of many businesses was put at stake.
In this backdrop, one of the frequently raised questions among the tenant community was whether the lockdown and the pandemic give them any legal right to withhold payment of rent or to terminate the lease agreement. The question arises primarily because of the lockdown, which prevented the tenants from enjoying the premises for the purposes for which the same were leased out.
Needless to say that the inability of the tenant to pay the rent on account of the loss in business or due to the poor performance of the business is not a ground to claim abstention from paying the rent. It is true that the very occurrence of the pandemic and the resultant declaration of the lockdown affected the functioning of the business, for a reason which cannot be attributable to the tenant. Howsoever, the possession of the leased premises by the tenant is not in any way affected with. The very foundation of the tenancy agreements lies in the possession of the leased premises by the tenant rather than the purpose for which he uses the same. The character of the tenancy agreements does not rest upon the functioning of the business by the tenant, but upon the creation of the possessory rights over the leased premises.
Position under the Transfer of Property Act
Lease is defined under Section 105 of the Transfer of Property Act. Section 108(e) of the Transfer of Property Act says that — if by fire, tempest, 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. This provision is applicable in the absence of any contract or local usage to the contrary.
The event of the outbreak of a pandemic is not expressly covered under the above said provision, but there may arise doubts as to the inclusion of the pandemic under the phrase "other irresistible force." What constitutes irresistible forces is not defined under the Act; and hence, going by the ejusdem generis principles of the laws of interpretation, the pandemic may be included under the phrase "other irresistible force."
And if the pandemic is covered under the phrase "other irresistible force," can the lease be declared as void by the lessee?
Apart from the occurrence of the particular event, Section 108(e) of the Act also requires that any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes of the lease. Hence, going by the second part of the provision, it speaks that the event of the force majeure shall result in the destruction of the material part of the property or shall render the property "substantially and permanently" unfit for the purpose of the lease.
As we all know, the declaration of the lockdown is only for a particular period or until the pandemic situation is put under control. It neither results in the destruction of the leased premises nor renders them substantially and permanently unfit from their usage. Apart from the occurrence of the event, the emphasis is upon the destruction or permanent unfitness of the leased premises and not upon the inability of the lessee to use the premises as intended. Further, it is to be borne in mind that losses in business shall never be a ground for the termination of a lease or for the non-payment of rent, unless the party agrees to the contrary in their agreement. Hence, in the absence of any specific clauses providing for the termination of the lease upon the occurrence of a pandemic, a lessee cannot declare the lease as void.
Conclusion
Although the declaration of the lockdown handicapped the lessees from using the premises for the purpose of the lease, in the absence of any specific provisions in the lease agreements, no law grants authority to the lessee to withdraw from the payment of the rent or consideration for the lease, or to terminate the lease at his option.
Every agreement, including tenancy agreements, is intended to create a win-win situation for both parties. Since the tenants have become unable to enjoy the benefits of the lease, for a reason not attributable to them, the tenants may invite the landlord for a negotiation and revision of the terms of the tenancy agreements on moral grounds. It is unlikely that the landlords will turn their face against such a request, as the unfortunate event affected the entire mankind across the globe, necessitating a rearrangement in every aspect of the life of human beings.