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INTRODUCTION OF COVID-19 IN THE COUNTRY
The initial rise of COVID-19, or as commonly known as Coronavirus, in the world began in January 2020 which was quickly recognized by the Government of India (“GoI”) and pro-actively acted upon by implementing quick and early safety measures to combat this fast spreading virus in mid-February 2020 itself. Before invocation of ‘Epidemic Disease Act, 1897’ and ‘Disaster Management Act, 2005’ on 11.03.20201, the Department of Expenditure Procurement Policy Division, Ministry of Finance, Government of India vide its Office Memorandum No. F.18/4/2020-PPD dated 19.02.2020 identified COVID-192 as a natural calamity and also a force majeure event for supply chain arrangements. After the World Health Organization (WHO) declared COVID-19 as a “pandemic” on 11.03.2020, a nation- wide lockdown for a period of 21 days was ordered vide Order No. 40-3/2020-DM-I(A)3 along with ‘Guidelines to contain COVID-19’4 both dated 24.03.2020 issued by the Ministry of Home Affairs, Government of India after observing ‘Janata Curfew Day’ on 22.03.2020.
Force Majeure, literally translating to superior force from French, means any event beyond human control like an act of god or superior force. In business circles, “force majeure” describes such unforeseen events which are beyond the control of the parties (such as war, labor stoppages, or extreme weather) and which make it difficult or impossible to carry out the conditions of the contract or even any normal business activity.
The ripple effect of this virus as well as the swift and sweeping action from government agencies has been the most on the economy of the country. This nation-wide lockdown, even though imposed for the curtailment of the virus, has resulted in creating substantial hardship for businesses and virtually all commerce in the country where in the present market situation, both Central and State Governments have repeatedly requested businessmen to refrain from reducing or deducting salaries of employees and staff members, at a time when no business operations are being carried out and there is no generation of revenues at all and payment of all expenses and charges is also necessary. From large companies to small business owners, all of them are facing some common problems ever since COVID-19 hit India but one major question that is being asked is whether COVID-19 is deemed to be a force majeure event for the purposes of commercial lease deeds? If yes, whether it could possibly yield any benefit to them.
APPLICABILITY OF FORCE MAJEURE
The objective of entering into commercial lease deeds between a lessor and a lessee is to lease out a commercial premise for an amount of consideration usually payable at a monthly interval, which is called the rental value for the premises. However, it is not necessary that all commercial lease agreement include force majeure clause, which gives rise to two situations and the same are as follows— Read Full Article Here
