Recovery of Security Deposit due to COVID-19 – Cancellation of Rent Agreement by Tenant

The SARS COVID-19 Coronavirus pandemic has thrown many property rental agreements into disarray. The hardest hit are those who had signed rent agreements but were unable to shift into the flats on account of the lockdown.

If the Tenant is unable to shift into the new flat due to the lockdown, he can send a legal notice to the Landlord under Section 56 of the Indian Contract Act, 1872. Through this legal notice he can seek cancellation of the rental agreement and refund of security deposit.

What is Section 56 of Indian Contract Act?

Section 56 of the Indian Contract Act declares a contract to be ‘void’ or ‘unenforceable’ if its performance becomes impossible. If due to a ‘force majeure’ or ‘Act of God’ event a party is not able to comply with the contract, he or she can invoke Section 56 to declare the contract void.

Therefore if a person signs a house rent agreement and takes the key, but is unable to shift due to lockdown, he can send a legal notice to the landlord under Section 56 and declare the contract as void. He can then claim refund of the security deposit.

Can the Landlord raise Objection? What about ‘Lock-in Period’?

If the possession of the flat has not been handed over to the tenant, it would be difficult for the landlord to raise an objection. This is because handover of possession to the tenant is the essence of any rental agreement. Mere handing over of keys may not amount to occupation of the flat by the Tenant.

If the tenant has received the keys from the landlord, he can address a letter enclosing the keys in an envelope and request that the security deposit be returned and the rent agreement nullified. Under no circumstances should he try to keep the keys for it may lead to the accrual of rent dues.

If Tenant has Occupied the Flat, He is bound to pay Rent:

On the other hand, if the Tenant has already occupied the flat, he would be liable to pay rent. His payment of rent would have no relation to his job or salary income. Payment of house rent is compulsory irrespective of whether the tenant is earning or not.

Therefore the essence of any rent agreement is the occupation of the rental property by the tenant. Occupation of the house is the threshold event, after which the rent becomes payable.

Can Landlord insist on Rent for Lock-In Period?

No. If any force majeure event such as the Coronavirus lockdown prevents the tenant from occupying the rented flat, then the Landlord cannot insist on payment for entire Lock-in period. The tenant can invoke Section 56 to declare the contract void.

If the Tenant is unable to shift into the flat due to lockdown, he can demand the suspension of rent for its duration. Once the lockdown ends, the suspension will end and rent payments will resume.

Rent Payment has no relation with the Tenant’s Job or Income:

It is important to note that under no circumstances can rent payments be linked to the job or income of the tenant. Once the lockdown period ends the tenant is legally obliged to occupy the rented house and start paying the rent.

Further, if the tenant is left unemployed and unable to get a new job after the lockdown ends, he will have to continue rent payments. A leave and license contract is not an income or revenue sharing agreement. If the tenant is not able to pay the rent, the Landlord can get the premises vacated and can even forfeit the security deposit if a lock-in period is provided.

COVID-19: Would payment of House Rent to Landlords continue during the Pandemic Lockdown? Lawyer Aditya Pratap shares his views.

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Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website or view his YouTube Channel to see his interviews. Questions can be emailed to him at