Real estate rental agreements and contracts will continue to prevail during Covid-19 scenario: Former Judge, Supreme Court of India

May 21, 2020

NEW DELHI, 21 May 2020: Mr Justice Arjan Kumar Sikri, Former Judge, Supreme Court of India & International Judge, Singapore International Commercial Court (SICC), today said that the real estate rental agreements and contracts will continue to prevail during the current Covid-19 scenario and the Force Majeure will continue to be applicable as mentioned in the contract.

Addressing the webinar on 'Assessing the impact of COVID-19 on Rental Contracts' organized by FICCI in association with Indian Council of Arbitration (ICA), Mr Sikri said that real estate rental agreements and contracts are between two parties and the government cannot enforce any notification. He added that in Covid-19 scenario, Section 108, the transfer of property act, which has a very high threshold may not apply.

Mr Sanjay Dutt, Joint Chairman, FICCI Real Estate Committee and Managing Director and CEO, Tata Realty and Infrastructure Ltd, raised pertinent queries on the importance of rental agreement and Force Majeure in an agreement. He added that global office markets like Tokyo and Hong Kong have waived off rent, which stands at $600 per sq ft per annum for office space. In India, the top office markets stand at $15 per sq feet per annum.

Mr Raj Menda, Joint Chairman, FICCI Real Estate Committee and Corporate Chairman, RMZ Corp said that commercial parks are operational, and they are working hard to function seamlessly. He added that his organization has convinced its clients to pay the rent.

Mr R K Sanghi, Advocate, said that to provide relief to both landlords and tenants, the Indian government can look at coming out with a temporary law as being done by some of the countries today like the US and Singapore.

Mr Sudip Mullick, Partner, Khaitan & Co said that the key is the agreement and the notifications of the government on deferment or non-payment of rent by tenants are primarily moral obligations and not legal obligations. He added in Covid-19 situation, the contract between the landlord and tenant will prevail.

Mr P V Kapur, Senior Advocate & Bar at Law, said that the best solution in a situation like COVID-19 is that the landlord and tenant find a way out with mutual negotiations. He added that in case of triggering Force Majeure in an agreement, the party will have to give a notice.