Covid-19 & Real Estate Laws- By Harshit Goyal

As per World Health Organisation, Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus. Older people, and those with underlying medical problems like cardiovascular disease, diabetes, chronic respiratory disease, and cancer are more likely to develop serious illness. It is pertinent to note that in present situation of spread of coronavirus disease, lot of commercial legal disputes are expected to arrive in future era, therefore it is important to study laws relevant and related to present situation. The Government of India and State Governments has passed various notifications, orders and regulations for effective implementation of preventative measures which as follows: 1) Self Imposed Curfew on 22.03.2020, It is pertinent to note that it is self imposed in nature meaning thereby No Official Notification and Order 2) Limited Lockdown whereby various Notifications and Regulations were passed under Epidemic Disease Act by respective State Governments for instance The Government of NCT of Delhi issued Delhi Epidemic Diseases Covid 19 Regulations 2020 and 3) National Lockdown via Ministry of Home Affairs order dated 24.03.2020 operational for a period of 21 days. 

COVID 19 situation is covered within the ambit of “Force Majeure”. “Force Majeure”  and “Act of God” should not be used interchangeably. The Act of God includes all inevitable accidents caused by nature and which are not connected with human agency whereas Force Majeure is a broader concept where the accident is not necessarily connected with nature and can be connected to human agency. Almost all commercial contracts have an express or implied Force Majeure clause. The Force Majeure concept is recognised by section 56 of Indian Contract Act in the form of Doctrine of Frustration. 

Expected Legal Disputes 

By way of this article, I am focusing on the legal aspects of the disputes which are expected to arise in the Indian Real Estate Industry.

Lessor Lessee Disputes 

As per section 105 of Transfer of Property Act 1882, Lease is a transfer of right to enjoy an immovable property for a certain time in consideration of price paid or promised to be paid. In present scenario where most of the commercial establishments operate on rented premises and are closed in compliance of MOH order dated 24.03.2020 with few exceptions, the disputes which is most likely to arise is non payment of agreed Rentals by the Lessee. The other disputes which are expected to arise are Unlawful and forced eviction of tenants, Non Maintenance and Deterioration of the rented premises due to prolonged closure of operations, Non payment of statutory dues of minimum electricity and water bills by the tenant and Delayed delivery of possession by the Developers.

Lessee Legal Perspective 

As per section 4 of Epidemic Diseases Act read with section 75 of Disaster Management Act, 2005 no legal proceedings can be initiated against a person for anything done in compliance of the provisions of the Act. Therefore meaning thereby the tenant is immune to legal proceedings initiated by the landlord for recovery of rent arrears accrued for the period of lockdown.

 Another problem faced by tenants is unlawful and forced eviction by the landlords due to suspicion of corona virus disease infection. This problem is commonly faced by the Doctors, Paramedical Staff and Health care personnel. As per Government of NCT of Delhi, Health and Family welfare Department order dated 24.03.2020, such behaviour of landlord amounts to obstructing public servant in discharging their duties and punishable under section 188 of Indian Penal Code. 

Lessor Legal Perspective

The major problem faced by the Landlords is that Tenants are trying to unlawfully escape from their contractual obligation of operating lease for agreed lease term on the grounds of Forced Majeure. However the tenant can claim waiver of payment of rental dues only for the period of lockdown and cannot escape from their contractual liability of paying agreed rental on timely basis after resuming operations. Tenants are bound to abide the lock In Period if incorporated in their lease agreement and cannot terminate the lease agreement before completion of lock In Period and without service of contractual notice of termination.

Developer Legal Perspective

The developers are seeking extension of committed timelines for construction of realty projects. As per Maharashtra RERA order dated 02.04.2020 bearing no 13/2020, For all Maha RERA registered projects where completion date, revised completion date or extended completion date expires on or after 15 March 2020, the period of validity for registration of such projects shall be extended by 3 months. Further the time limits of all statutory compliances in accordance with the Real Estate (Regulation and Development) Act, 2016 and Rules & Regulations made there under which were due in March/April/May are extended to 30 June 2020. The said Maha RERA order is applicable to realty projects based in the state of Maharashtra only. However other Real Estate Regulatory Authorities are also expected to issue similar orders in coming days.

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Harshit Goyal is the founder of Harshit Goyal Law Offices and a member of the Supreme Court Bar Association . Mr. Goyal has expertise in Real Estate and Business Laws. He is also the founder of Legal Companion NGO (A Pro Bono Legal Initiative). Mr. Goyal has received a Certificate of Appreciation by Dr. Kiran Bedi.  

Disclaimer: The views or opinions expressed are solely of the author.