Dear Readers
The Pandemic has put forth the whole nation on standby mode, however, cycle of monthly rentals is not on hold or under moratorium, though, for few categories of households central and state government has given the directions to the relevant District magistrate, regarding, no household can put forth pressure on the tenants. Commercial rent is one of the substantial part of operational expense for any business and for the start-up this category of operational expenses substantially impacts not only the smooth working but in some instance endanger the existence of business.
RENT LAW IN INDIA:
The terms of rented property is governed by the “Rental Agreement” signed between the Landlord and Tenant (Herein Means Company or LLP or Proprietor). Rent law is governed by the Rent Control Act and each state has its own rent law, for instance Rent Control Act (1958) Delhi. The law is guiding force on fair rent and protects the interest of tenant not only from eviction but from the unfair hardship. However, applicability of Rent Control Act is subject to certain conditions and parameters as defined law, among them one of the parameter is Rent Control Act is not applicable to the premises that have been let out to banks, public sector undertakings or any corporation established by or under any state or central act, foreign missions, multinational companies, and international agencies. Further, premises let out to private limited and public limited companies having a paid-up share capital of one crore rupees or more do not come under the ambit of Rent Control Acts. Nevertheless, State Stamp Act and Transfer of Property Act, Commercial Courts Act, Insolvency and Bankruptcy Law (However if rental to be paid are less than one crore) are also applicable law subject to the circumstances and terms of tenancy.
FORCE MAJEURE AND RENT AGREEMENT (FOR COWORKING SPACE ALSO)
As the present circumstance is an epidemic and lockdown is in persistence, therefore, you can rely on force majeure clause for the delay in payment of rent or can terminate the agreement from immediate effect, wherein, you can protect your right over your assets within the premises. Further, in case of termination, you can claim possession of property equal to the amount of security you have paid or can claim your security in certain circumstances. The service of notice to your landlord is the premeditated condition to utilize the said clause or Doctrine of frustration.
STRATEGIES TO COMBAT THE OPERATIONAL COST
Start ups can lend or Share their Work Space Chairs with other Start ups in order to attain fuller utilization of resources as well as to overcome the rental cost challenge with the objective to tackle the economy circumstances post pandemic.
The small companies can strategies their work space limited to home for following three months.
A joint representation should be given to the Start up India, Ministry of Commerce, Ministry of Corporate Affairs, Ministry of Finance regarding aid packages and direction in respect of commercial rent.
“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” —Jimmy Dean
DUCTUS EDGE 