2021 LHC 8153
The relationship between a landlord and tenant or a lessor and a lessee are primarily governed either by the agreement, which the parties execute and/or by and under the law. Qua the agreements between the parties, their respective rights and obligations would be determined by the terms and conditions of the agreement itself. The present matter primarily raises the issue relating to default in payment of rent by the appellant owing to the force majeure event in form of COVID-19 lockdown and the legal questions ancillary thereto. The availability of the relief on the basis of doctrine of force majeure is contingent on the availability of the relevant clause in the contract and the interpretation of applicable law on the subject. Therefore, the term force majeure as well as its applicability in the present case needs to be analysed in the light of relevant provisions of the Contract Act 1872 (“the Act 1872”) and the terms and conditions of the Rent Agreement on the basis of which the appellant was inducted as a tenant in the first place.
A ‘force majeure’ situation or an event, has not been defined in any enactment in vogue in Pakistan. Force majeure is defined by Black's Law Dictionary, Eleventh Edition as an event or effect that can be neither anticipated nor controlled by the parties and includes both acts of nature (e.g., floods and hurricanes) as well as acts of people (e.g., riots, strikes and wars). Effect of COVID-19 lockdown as a force majeure event and its effect on the rights and obligations of parties to a license agreement has been examined by this Court in “Abdul Waheed v. Additional District Judge and others (PLD 2021 Lahore 453) by referring to various pronouncements of superior courts in Pakistan as well as India and England. In Abdul Wahid, supra, a licensee who was awarded a contract to run a hostelry by the petitioner therein instituted a suit for permanent injunction wherein he prayed for grant of interim injunction against recovery of rent due under the contract on the basis of COVID-19 lockdown, which was allowed by the learned trial court whereas the appellate court below in the said case reversed the order of the trial court and the judgment of appellate court was upheld by this Court holding that notifications issued in the wake of COVID-19 nowhere put a restraint upon the landlords to seek eviction in accordance with law.
Rules governing application of principle of force majeure as well as doctrine of frustration, on contracts in general and tenancy agreement, like the Rent Agreement in present case, in particular, which are spelled out as under:
i. If an agreement between the parties have a force majeure clause, Section 32 of the Act 1872, comes into play. Energy Watchdog v. Central Electricity Regulatory Commission and others (2017) 14 SCC 80) is referred in this regard;
ii. The force majeure clause in the contract could also be a contingency under Section 32 of the Act 1872, 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 as agreed between the parties;
iii. In the absence of a force majeure clause in the agreement between the parties, a party thereto may attempt to invoke the doctrine of frustration embedded in Section 56 of the Act 1872, which deals with impossibility of performance and applies to cases where a force majeure event occurs outside the contract;
iv. There are various conditions that have to be fulfilled to satisfy the conditions of ‘impossibility’ envisaged under Section 56 of the Act 1872 and the Courts cannot travel outside the terms of that section. Case of Raja Dhruv Dev Chand v. Raja Harmohinder Singh & another (AIR 1968 SC 1024) is referred;
v. Section 56 of Act 1872 does not apply to lease agreements as there is a distinction between a ‘completed conveyance’ and an ‘executory contract’ and a lease or a tenancy created under a rent deed is a completed conveyance though it involves monthly payment and hence, Section 56 cannot be invoked to claim waiver, suspension or exemption from payment of rent. Raja Dhruv supra is referred;
vi. A contract is not discharged merely because it turns out to be difficult or onerous for one party to perform and no one can resile from a contract for the said reason. “Alopi Prashad and sons, Ltd. v. Union of India” (1960) 2 SCR 793) and “Panna Lal and others etc. v. State of Rajasthan and others” (1975) 2 SCC 633), are referred;
vii. In the absence of contracts or the covenants relating to force majeure situation, provisions of the Transfer of Property Act, 1882 (“TPA”) would govern tenancies and leases where the doctrine of force majeure is recognised in terms of Section 108 (
(e) while contemplating the ‘Rights and Liabilities’ of a lessee whereby it has been envisaged that if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void;
viii. Temporary disruption in enjoyment of demise premises is not a ground to avoid and delay the payment of rent when the tenant does not chose to avoid the lease/tenancy. Sangeeta Batra v. M/s Vnd Foods & Ors., (2015) 3 DLT (Cri) 422) is referred;
ix. Even if the leased premise is rendered substantially and permanently unfit for the purpose for which it was let, the lessee has the option to avoid the lease and unless the lessee so avoids the lease, he cannot avoid his obligation contained in clause (l) of Section 108 of the Transfer of Property Act, 1882 to pay or tender the rent to the lessor.
First Appeal Against Order-Order 43 Rule 1 CPC-Cantonments Rent Restriction Ordinance
8-21
BASHIR AHMAD VS SHAHEEN WAHEED ETC.
Mr. Justice Anwaar Hussain
14-07-2021
2021 LHC 8153
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