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Delhi High Court terms Covid-19 as Act of God, directs plaintiff to recover arrears till July 9, 2020 in property case

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The High Court of Delhi, while calling the Covid-19 as an Act of God, which affected the hospitality industry as well as the world, directed a plaintiff in a property case to recover arrears till July 9, 2020.

The Single-Judge Bench of Justice Chandra Dhari Singh passed the orders on Wednesday on a petition filed by one Sarawjeet Singh.

As per the case, defendant (Asian Hotels (North) Limited) was a company incorporated under the provisions of the Companies Act, 1956 and was engaged in the business of operation and management of hotel and serviced apartments.

Plaintiffs and defendant entered into a Perpetual Lease Deed (First Lease Deed) on September 25, 2017 for an aggregated area ad measuring super area of 2009 sq. ft. and having a covered area of 1205 ft. situated on
the second floor bearing residential Service Apartment No. 2004 of Block
A/New Tower.

As per the plaintiffs, they paid an amount of Rs 6.7 crore as a
consolidated one-time consideration for the lease of the premises and as
one time rent amount.

The plaintiffs also paid an agreed annual rent reserved of Rs. 1 in advance for a period of 99 years simultaneous with the execution of the lease.

It was also agreed that the lease will
automatically renew for a successive term of 99 years till perpetuity.

Plaintiffs and defendant also entered into a Sub-Lease Deed (Second Lease Deed) of the suit property on October 4, 2017 for a period
of 11 years from the lease at a monthly rent of Rs 9.58 lakh with
commencement date of October 1, 2017 by which the defendant took
back the premises on rent from the plaintiff.

As per the terms agreed between the parties, laid therein, the Sub-Lease Deed could not be terminated by the defendant during the initial 11 years of the execution of the deed and even after that the same could be terminated by giving a notice of 6 months in advance.

The deed could be terminated prior to the expiry of the lock-in period only in the case of violation and breach of the terms of the deed by the plaintiffs which if not cured by the plaintiff within 30 days of receipt of notice from the defendant in this regard.

Relying on the Clause 15.2 of the Sub-Lease Deed, which enumerates the termination of the Contract on the Force Majeure Clause, the defendant terminated the lease by Notice of Termination dated June 27, 2020 referring to the government regulations passed during the Covid-19 pandemic leading to the closure of non-essential activities, hospitality sector in the present case.

The major contention of the defendant is that the restriction to the access to the leased premises due to governmental regulations in the pandemic period led to the frustration of the Contract.

Due to this frustration of Contract, the defendant did not pay the rent mandated under the Sub-Lease Deed for the remaining lock-in period and claims that the lease was terminated on June 27, 2020 only.

Aggrieved by the said termination, the present suit has been filed by the plaintiffs for the recovery of the arrears of rent from the defendant and to declare that the Sub-Lease Deed is continuing, subsisting and binding upon the parties. Further, the plaintiffs claim that the maintenance charges are payable by the defendant as per the lease.

The High Court noted that since the plaintiffs had received the Notice of Termination dated June 27, 2020 and were aware of the defendant’s call for the plaintiffs to
take possession of the premises, the constructive possession of the
premises was handed over to the plaintiff on June 27, 2020 only.

Hence, from the discussion above, this Court comes to the conclusion that the Sub Lease was terminated vide Notice of Termination letter dated June 27, 2020.

Resultantly, the defendant is not liable for the arrears of rent to the tune of Rs 5,38,75,117/.

At the same time, it is important for the Court to take note of the representation filed by the defendant to pay the rent of the leased premises up to July 9, 2020.

The defendant in his written submissions has stated that the claim of the Plaintiffs seeking rent for the
period of April 2020 to April 2023 is baseless and devoid of merit. Without prejudice, the Defendant undertakes to pay the Plaintiff the rent up to July 9, 2020 in accordance with the Second Lease Deed.

Since the defendant on his own accord has offered to pay the
arrears of rent till 9th July 2020 the plaintiffs may recover the arrears of
rent till July 9, 2020.

Senior Advocate Anil K. Airi, along with Advocates Ravi K. Chandra, Karan Chhibber and Mudit
Ruhella represented the plaintiff.

Advocates Sidhant Kumar and Shivankar Rao appeared for defendant Asian Hotels (North) Limited.

Case title: Sarawjeet Singh & Anr vs Asian Hotels (North) Limited

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