Managing Rentals

Updated: Sep 22

- Aditya Gaggar


Background overview and objectives:

As factories, businesses and office spaces have been forced to shut down due to the lockdown, people from all walks of lives are increasingly having difficulty in managing their cash flows. This has especially become a pain point in larger metros where a significant number of the migrant population lives and works out of relatively expensive rented accommodations and rental incomes make up a substantial part of their monthly business upkeep or household expenses. As their incomes plummet while these expenses continue to remain on a plateau, tenants have started feeling the heat and are desperately looking to the government and the court for some sort of a respite. It is not as if the government is entirely unaware of this issue either. From the PM’s addresses to various assurances of the various State Governments there are various mixed responses coming from different quarters and this has in fact led to some sort of confusion amongst the tenants as well as landlords as to what is the actual position in law and the remedies available, if any. This section will try to clear up some of this confusion.


Context of the legal issue

The broad context of the legal issue here is that most tenants have contracted with their landlords to take premises on rent for a fixed monthly rental (often also with a periodic increase) for a particular period of time. Most of these rental agreements do not have any special provisions for emergent situations such as the present or force majeure clauses. In such a scenario, the tenants stay bound to their agreements and there is really little in the way of relief that is available to them unless the government or the court intervene with a policy measure or common diktat. There are other problems up and down the chain of the property market too. For example, what of the overheads borne by the landlords such as property tax, electricity and repair bills etc? Many tenants are also defaulting or withholding payment of further rent or heading home after having already abandoned their accommodations. In certain states such as Delhi and Maharashtra, the State Governments have issued instructions to the landlords to defer rent collection from tenants of certain categories for atleast three months and not to evict them.


FAQs and Key Solutions

If you are one such person who finds himself/herself to be such a tenant in a difficult position we advise the following:


1. Some landlords have themselves volunteered to waive or defer or reduce rent for the lockdown period. Please speak to your landlord and humbly request/reason with him/her to make some accommodation. Surveys suggest that most landlords are not oblivious to such requests/petitions from their tenants and are indeed stepping up to extend a helping hand to their tenants, if asked nicely. However, please also bear in mind that unless there is such a specific notification in your state, the landlord is well within his rights to reject your request and continue to charge the full rent.


2. Please revisit your rental agreement and read it carefully to find out whether it contains any Force Majeure clause. In a recent judgment, the Hon’ble Delhi High Court has held that so long as they continue to occupy the rented premises, the tenants cannot invoke Force Majeure claiming complete suspension of rent owing to the lockdown. The Ld. Single Bench however further held that “The fundamental principle would be that if the contract contains a clause providing for some sort of waiver or suspension of rent, only then the tenant could claim the same. The Force Majeure clause in the contract could also be a contingency under Section 32 which may allow the tenant to claim that the contract has become void and surrender the premises. However, if the tenant wishes to retain the premises and there is no clause giving any respite to the tenant, the rent or the monthly charges would be payable.”


3. Since it’s a developing situation, please check with your respective state government’s housing and urban department website or the local news for any past notifications and keep abreast of the latest development to find out whether or not any such relief has been provided in your state and if yes, whether you fall under a covered category. At the time of preparation of this toolkit:

a. The Central Government has provided 4 month rental waiver to small IT units operating out of the Software Technology Parks of India for the period from 01.03.2020 to 30.06.2020. 12 major ports have also been instructed to allow a waiver of lease, rental, license fee and similar charges for 3 months to the extent of the volume of cargo dropped, compared to the monthly average cargo volume of the last calender year.

b. The Government of Maharashtra has instructed landlords to defer rent collections for at least 3 months.

c. The Government of Delhi has issued successive orders first covering migrant workers and then students with a waiver of at least one month’s rent and that makes their forceful eviction a punishable offence under the Disaster Management Act, 2005.

d. Uttar Pradesh Government has issued a magisterial order to imprison or fine landlords who fail to postpone rent collection by a month.

e. Telangana Government has asked the house owners to defer collecting rent from residential tenants for three months with effect from March.


4.So far as landlords are concerned unfortunately there is no news of any deferment or waiver of property tax and other statutory dues for them and therefore, they shall have to continue to bear these.


Where to look next?

  • In case you are facing harassment from your landlord, please dial 100 to lodge a complaint with the police control room.

  • In extreme cases, you may also approach a local area magistrate to seek emergency relief.

  • In case you are unable to find any information, you may also consider calling up the public representative in the housing and urban department in your city/state.

Links


Aditya Gaggar is an Advocate-on-Record at the Supreme Court of India and an independent commercial disputes law practitioner at the Delhi High Court and other commercial tribunals in Delhi

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Justice Adda was a part of the Cambridge Social Ventures Programme in the Cambridge Centre for Social Innovation at Cambridge Judge Business School 2016-17.