This article is written by Smaranika Sen from Kolkata Police Law Institute. This article deals with the landlord and tenancy hearings and the effect of the pandemic on it.
Table of Contents
Introduction
Covid 19 has deeply impacted the global economy. Every sphere has been affected by it. One such sphere which holds an important concern during the ongoing pandemic is the issues between the tenants and the landlords. Various problems like rent payments, evictions became huge problems across the country. These problems need to be addressed immediately.
Landlord and tenancy – an overview
Under the Constitution of India, matters relating to housing fall under the State list. The regulation of rent control, or the rights of the tenants and the landlords, or the matters relating to tenancy premises lies at the discretion of the State. Various problems take place between landlords and tenants. The issues can start from disputes in the lease agreements to eviction problems.
There are also certain disputes regarding the maintenance works, etc. This often leads to huge arguments which cannot be resolved within the four walls. At that time, to resolve such disputes, legal help is required. Different states have different laws regarding solving these matters. For example, Delhi has Delhi Rent Control Act, 1958, West Bengal Has West Bengal Land Reforms Act, 1956, West Bengal Tenancy Premises Act, 1997. In Maharashtra, the Maharashtra Rent Control Act, 1999, regulates the laws relating to rent, eviction, repairs of the premises, etc.
The Ministry of Housing and Urban Affairs is the apex at the national level which looks after the formulation of new policies, regulates and sponsors certain programs, monitors all the programs relating to urban development. The Ministry of Housing and Urban Affairs has proposed the Model Tenancy Act, 2019 as India requires a more definite and amended rental Legislation. The various factors that show the need for this Act are lack of a sound rental policy, low rental yield, lack of demand in far-flung areas, the problems faced by migrant workers during Covid 19. This Act mainly aims to bridge the bond of trust between landlords and tenants. This Act also ensures speedy redressal, establishing Rent Courts and Rent tribunals and ultimately creating rental housing stock that will help students, workers, etc to find accommodations especially in times of crisis like COVID 19. Though the Act has been widely welcomed, the implementation of the Act is not so easy. It is because the urban and housing department is still a State subject and it depends on the State if they want to repeal or amend their existing laws and follow this Act.
Impact of pandemic
In March 2020, a nationwide lockdown was announced by the honourable Prime Minister of India, Mr. Narendra Modi to curb the transmission of the ongoing pandemic Covid 19. The lockdown created a huge financial crisis amongst a lot of people. As the movements of the people were restricted, they were unable to go out and earn. Especially the people who have small businesses or work in private firms, factories, etc suffered the most. Due to the financial crisis, a lot of tenants were unable to pay the rent. Also, a major problem that was observed during the pandemic was that many frontline workers were not allowed to live in their rented houses. They were evicted by the landlords just because they were in direct contact. Looking on the other side, many landlords were dependent upon the rent for paying electricity charges, tax charges, maintenance charges, water charges, etc. Their only means of living was the rent. Due to non-payment of rent, they were also undergoing a financial crisis. Eventually, this led to a huge financial crisis cycle among the landlord and the tenant.
Non -payment of rents leads to the eviction of tenants by the landlords. But at these difficult times, Courts upon looking at the outside scenario have put a temporary ban on the process of eviction. The Delhi High Court stated that there will be no eviction of tenants on the ground of non-payment of rents. However, landlords are not completely banned from evicting their tenants. They are allowed to do so only in such cases which need to be heard on an urgent basis. The landlords who might evict any tenant would also find it quite difficult to find a new tenant and sign the agreement. Even the news tenants have to be moved in the houses following all the Covid 19 norms.
One of the landmark cases in this regard is the case of Ramadan and others v. Girish Soni and others (2020). The petition was filed by the tenants in the Delhi High Court challenging the decree that was passed against them. The rent controller granted a decree stating that there would be eviction in respect of shop No.30, Khan Market, New Delhi which is the rented premise. The honourable Justice Pratibha M. Singh of Delhi High Court stated that the tenant’s prayer of rent exemption would be taken into consideration. It was observed that there were no lease agreements between the parties. Thus, Section 32 of the Indian Contract Act, 1872 had no application in this case. This case is governed by the Delhi Rent Control Act. The Tenant’s plea was the suspension of rent during the lockdown effect of Covid 19. The Court needed to determine the issue of suspension of rent based on certain factors. The factors are:
Nature of property
The rented premise was in a very popular commercial area. A good running of the business was observed.
Financial and social status of the parties
It was observed that the landlord was a dentist who wanted to use the tented premises and sought eviction on the grounds of bonafide eviction under Section 14(1)(e) of the Delhi Rent Control Act, 1958. On the other hand, the tenant used to use that tented premise as a shop for his footwear business.
Amount of Rent
The court after passing the decree of eviction had set the rent amount as Rs 3.5 lakhs every month as a condition for grant of stay for continued stay or occupation. The rent amount when compared to other tenancy premises in the Khan market was observed to be on the lower side.
Other factors
It was observed that tenants are unauthorized occupants of the rented premises. This was because a decree of eviction had already been passed against them. As the tenants are continuing to occupy the premises and are also not willing to evacuate it, a reasonable amount of compensation should be given to the landlord to make up for the loss incurred by the landlord. These factors completely tilt the balance in the favour of the landlord.
Any contractual conditions
There is no such contract which states nonpayment or suspension of rents.
Protection under any executive orders
There are certain cases in which the State of the Central Government from time to time has given various protection to the tenants of special classes such as migrant labourers, students, etc. However, it was observed that the present case does not fall under such protection. After determining the above factors, it was held that the tenant”s plea for the suspension of rent was rejected. However, it was held that a certain percent of relaxation or delay in the payment was permitted owing to the lockdown.
Steps taken by the Government during the pandemic
The pandemic had shown us huge economic devastation across the whole country. The Government has taken certain measures to help those people who are unable to pay their rent during this pandemic period. Certain measures are:
- The Government has requested and ordered the landlords to excuse the rent and not to evict the tenants. This has been requested based on the Disaster Management Act, 2005.
- The Covid 19 Response (Urgent Management Measures) Legislation Bill, which came into effect on the 26th of March 2020, created protection against tenants. The Act stated that within six months from the date of commencement of this Act the landlords cannot increase their rents and also impose certain restrictions on the termination of the tenancy.
- The Delhi Government had requested the landlords to accept payments of rents in installments or exempt them from paying rents and not force them to pay rents. This has been specially requested for migrant labourers, or poor tenants, or students. Even the Delhi Disaster Management Authority strictly ordered not to demand rent from migrant labourers and students.
- In Uttar Pradesh, the State Government issued an order stating that if the landlords were caught harassing the tenants, severe punishment would be given to them like imprisonment or fine, or both.
- In Maharashtra, the Housing Department stated that eviction of tenants was temporarily not allowed and landlords could postpone the rent for some time.
- The Reserve Bank Of India extended an EMI holiday for three months and it was further extended for another three months. It was considered to be a relief for those who couldn’t afford to pay rents or loans.
Rent protection measurements by some other countries
- The United States stated that during a period of a 120-day moratorium, the landlords are restrained from evicting tenants on the grounds of nonpayment of rents.
- The Australian Government has issued a waiver effect on the payment of rent for a while across the country.
- In the United Kingdom, the landlords are restrained from taking any legal actions against the tenants for evictions during the pandemic period.
Legal technicalities
The doctrine of force majeure
The term force majeure is derived from a French term that means “greater force”. The concept of Force Majure lies under the concept of the Act of God. It is constituted in the Indian Contract Act. It states that when there is an agreement between the parties, at times a situation may arise which is beyond the control of both the parties like any natural calamity, pandemic, etc. This eventually leads to the performance of the contract as impossible. The Section that lies under the concept of Force Majure is
- Section 32– Enforcement of a contract contingent on an event happening
If there is a clause relating to force majeure in lease agreements or commercial rental agreements, then it can be used as a protection against the nonpayment of rent during the pandemic situation.
The doctrine of frustration
The origin of the doctrine of frustration is from the Roman Laws. The concept of the doctrine of frustration is embodied in the Indian Contract Act. It means that any act that was required to be performed after the contract was made and which could not be performed due to the change in circumstances was beyond the control of the parties. The section that lies under the concept of the doctrine of frustration is
- Section 56 – Agreement to do an impossible act.
In the case regarding whether a lessee can avoid the payment during the lockdown, the doctrine of frustration needs to be read with Section 108(e) of the Transfer of Property Act, 1882. It has been observed that Section 56 of the Indian Contract Act would not answer the issue raised, rather section 108(e) of the Transfer of Property Act would be taken into consideration. However, as per Section 108(e), the nonpayment of rent would not be allowed as there is neither destruction of land nor the land is unfit for occupation.
Conclusion
It is very much clear to us that nobody has been untouched by the effects of the ongoing pandemic. Keeping in mind the present condition the landlords and the tenants can come together hand in hand and solve the issues. The landlords and the tenants can practice mediation. The landlord, if he or she can afford it, may allow the nonpayment of rents for some time or give a discount on the rent amount. However, the tenant must be someone who has good conduct regarding the payments of rents earlier and not use this as an advantage. The landlord and the tenant can go for novation as per Section 62 of the Indian Contract Act, 1872. A moratorium may be imposed on the rents, especially those premises which are used for commercial purposes. Above all, a small act of kindness in times of crisis only makes us believe in the power of humanity.
References
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