Force Majeure: Tenant-landlord Conflict in the Time of Coronavirus Legally Explained; To Pay, or Not to Pay?
We are witnessing an unprecedented situation, which not only has disrupted all our economic and organizational norms hereto, but also has deeply affected our relationships – both interpersonal and social. In almost all the big cities where there is relatively more concentration of migrant workforce, a simmering unease and discontent is palpable in connection with the issue of non-payment of rent by tenants/lessee and the landlord/ lessor. This article aims at analyzing this peculiar situation from the legal point of view and to come up with some probable solutions- out of Court as well as political. Force Majeure: Tenant-landlord Conflict in the Time of Coronavirus Legally Explained; To Pay, or Not to Pay?
The Present Scenario
The various State Governments and the Government of India, ever since February end and March, 2020 beginning, have been issuing advisories, guidelines and Orders under the provisions of the Epidemic Disease Act 1897 provisions of the Code of Criminal Procedure, 1973 and the National Disaster Management Act, 2005 gradually putting minor to complete restriction on the movement of people and functioning of the industries and establishments across the country, leading to a crippling and stalling effect on business and normal life in the entire country.
The Probable Solutions
Looking at the above peculiar factual situation and the settled legal position, the solution to these issues seems to lie with the parties themselves and with the executive and fairly not with the judiciary. The need of the hour for the parties (landlords/lessors & the tenants/ lessees) is to become realistic and to look at the present and emerging future scenario practically. Since the economy is going into recession with little or no chance of recovery in the next 1-2 years, the earning and the general paying capacity- including rental, of a residential premise and especially of the commercial premises, is going to be drastically cut down.
Further Work From Home (WFH) is going to be the new normal, which directly is going to hit the requirement for commercial space by organizations across the sectors- so there is almost no or at the maximum a very bleak possibility, for the lessors/ landlords, of getting a new tenant/ lessee at the same monthly rental/ yearly lease amount or even at a lesser amount which their present lessee/tenants are paying, for a long time to come.
The parties, particularly the landlords/ lessors, must not forget that in the times to come, to get a new tenant/ lessee that too at the rates at which the Agreements have already been executed with their present tenants/ lessee, is a pure and simple day dream. If a tenant/lessee is going to vacate and handover the possession to the landlord/ lessor, the possibility of the premises lying vacant for a long period of time in want of a tenant/ lessee even at a throwaway rental, is real.
It is therefore, advisable for the parties to themselves come forward and negotiate and agree to a reduced rental, apart from amicably and out of court resolution of the issue of payment of the rental for the period of operation of the FM period and sometime thereafter, say till December, 2020 to begin with, and to again take stock at the end of 2020 and thereafter either shift to the original rental (as per the Agreement) or take a call whether to continue with this temporary arrangement and or to further negotiate to reduce the rentals.
If the lessee/ tenant has gone bankrupt or has refused to continue his/her business from a leased premises because of the various financial reasons beyond its control and has shown its inability to pay the entire rental for the lock in period, the parties must also resolve this issue with a human touch as Court intervention may not give the lessor/landlord an immediate relief, that too when the tenant/ lessor is a legal entity with limited liability clause in its Article of Association.
The parties may execute an Addendum with the help of a legal person or try to negotiate and put it in writing and execute. The strict requirement of compulsory Registration of such pandemic time Addendums or novation of contracts, during these hard times, must be dispensed with by the governments so that there is no unnecessary hassle – both financial burden as well as requirement to physically travel to the concerned Sub Registrar’s office- to the willing parties. Services of trained Mediators and Conciliators and Organizations may be used by the parties, if agreement seems difficult to arrive at by and between the parties.
Out of box situations do demand out of Court settlement-mediation, conciliation and negotiation– as Courts have their own limitations, we must be conscious of. And to deal with an event of this unprecedented magnitude, the last resort and the ultimate saviour could only be the State and its practical policies. Force Majeure: Tenant-landlord Conflict in the Time of Coronavirus Legally Explained; To Pay, or Not to Pay?
