Force Majeure Clauses Post-COVID: Lessons for Bangalore Office Leases Pandemic-proofing contracts for future disruptions.

Kritika Bhola
14 minutes ago
5 min read

In Bangalore's office leases, force majeure clauses were crucial during the COVID-19 pandemic, with the disruptions testing the question of whether the pandemic provided an excuse for non-payment of rent or the termination of obligations. It was held by most courts, however, that all-purpose waivers were against the law, therefore underscoring the need for careful drafting to protect contracts going forward from changes such as supply chain failures or climate events.

COVID-19's Impact on Leases

The closure of office buildings along Bangalore's major corridors such as the Outer Ring Road (ORR) and Whitefield, due to COVID-19 lockdowns from March 2020, forced the tenants to declare force majeure for relief from rent. The High Courts of Delhi and Bombay deemed temporary closure as an inconvenience and not impossibility and rejected the application of frustration under Section 56 of the Indian Contract Act, 1872, with respect to leases. The Bombay High Court held in the case of Sushila Bhimraj Shah v. Varsha Bharat Choraria that the ability to work remotely enabled office tenants to continue operations in contradistinction to retail, which requires physical presence.

Leases are governed by the Karnataka Rent Control Act, 1961, and under TPA Section 108(B)(e) require the destruction of property in order for a lease to terminate-despite the fact that the lockdowns were nowhere near that severe. Among Bangalore's newer and conventional Grade-A towers, tenants there have found themselves with arrears lawsuits, where courts were concerned with allocation of contractual risk and not with the economic hardship faced by tenants. Elsewhere in India, 2025 saw leasing uptake of 71.5 million sq ft, Bengaluru taking the lead at 22.1 million sq ft, while disputes lingered even into 2026 on account of the move to hybrid work post-COVID.

Legal Framework in India

Force majeure under TPA Section 108(B)(e) only excuses obligations if the premises become permanently unfit, which will be notified to the lessor by the lessee to void the lease. Since leases deal with the grant of usage rights and not ownership, the scope of Section 56 was limited by the Supreme Court in the case of T. T. Lakshmipathi v. P. Nithyananda Reddy. RERA (Section 6) provides a window for developers for project extension due to force majeure conditions like pandemics, while exclusion is made for regular delays.

Karnataka RERA is in parity with this, rejecting misuse as in the Shriram Properties case against delays covered with proof of such due to COVID and NGT litigation. After the year 2020, courts have been in favor of illustrative clauses covering acts of God or government restrictions, but wanted specific impacts, like closures, as evidence—thus not allowing automatic suspension of rent. In 2025, the Delhi High Court held that COVID is a force majeure but ordered the tenant to pay 50% rent during the pivotal period, thus balancing the losses while not extinguishing the obligations.

Key Judicial Lessons

When the courts in Bombay and Delhi interpreted temporary restrictions in post-COVID jurisprudence, they found that leases were not frustrated unless premises were actually destroyed. As per Supreme Court principles, it reigns under Nabha Power Limited: more contractual than the statutory frustration so any temporary regulation does not frustrate the agreements for a minimum lease period.

In Karnataka, lockdowns were strictly mirrored by B.B.M.P. at the national level, and the tribunals were the same way declining waivers without the specificity of clause. In 2025, Delhi Division Bench clarified 'etc.' makes lists non-exhaustive, including pandemics under 'Act of God'; proof of hindrance still vital. Lessons: separate impossibility and unprofitability; prompt notification; impact documentation, such as receipts from revenue declines.

Weaknesses Exposed

Pandemics and epidemics, as well as disruptions in the supply chain, have for the standard clauses provided under "war, riots, earthquakes", resulted in an invocation failure of around 70%. No provisions were made for instances of partial occupation (for example, 50% occupancy post-lockdown) or, yet again, rent abatement formulas, which have given rise to disputes. Due to no prescribed notice timeline or basis for mutual assessment, the case for tenants in Bangalore dragged on for ages, resulting in lakhs worth of dues in favor of the landlords.

The economic language completely omitted hybrid models; with flex spaces trending at 18-20% occupancy per leasing in 2026, agile terms are required. Ongoing leases, as in those under RERA, were left exposed for the office sector, with residential protections instead.

Drafting Robust Clauses

Modernize with exhaustive lists: pandemics, epidemics, quarantines, government shut-ins, cyber attacks, climate events (floods common in Bengaluru). Define triggers as "prevents 50%+ usage for 30+ days." Include effects: rent abatement (pro-rata downtime), extension options, termination after 90 days.

Sample clause: "Neither party liable for non-performance due to Force Majeure (acts of God, pandemics, governmental restrictions beyond control). Affected party notifies within 7 days; obligations suspended, rent abated pro-rata. If >60 days, either terminates without penalty." State against insurance; mandate business continuity plans. Karnataka-specific: tie to BBMP orders, extension from RERA.

Bangalore-Specific Considerations

Resilience factors have heightened demands from 11.2% vacancy (Q3 2025). Rental rates projected to be in 3-4% increments continue to necessitate solid clauses in wake of the establishing ORR/SE tech hubs. GCCs (which target 25% of existing leases) will seek hybrid-proof terms that also feature waivers for remote work. "Natural disasters" are brought in through monsoon floods, including ESG for sustainability disturbances.

RERA would demand transparency, and any clause one likes would be void if unregistered. BBMP regulations add layers of comprehensiveness-forcing force majeure to be linked to approvals. 2026 National Outlook: Flex operators will drive demand at 20% and favor clauses with scalability on options.

Negotiation Strategies

In shortening the time periods, the tenants demand "an abatement of 50-100 percent during closures," whereas landlords seek proof of notice and that no rent be given up unless one can prove loss of revenue associated with the business. There will be mutual review committees which will resolve all invocation within 15 days. Benchmark ORR deals: 3-year locks 6-month breaks force majeure carve-out.

Hybrid incentives: reduced sq ft for remote ratios. Legal audits pre-signing; model scenarios (lockdown, floods).

Future Disruptions

Floods in Bengaluru due to climate risks, geopolitical tensions, or possibly artificial-intelligence-induced outages; clauses must essentially cover "supply chain failures" or "cyber incidents." Blockchain smart contracts would automate the triggering of events and thus lessen the possibility of disputes—currently being piloted for leases in Karnataka. ESG mandates: force majeure for environmental compliance failure.

Predictive modeling based on data analytics will predict impacts that would facilitate dynamic clauses.

The Role of Login Realty

Login Realty enables tenants and landlords in Bangalore to incorporate post-COVID force majeure into office leases and audit clauses in ORR/Whitefield properties. Experts benchmark against 2025-26 trends while ensuring RERA/TPA compliance with no undue promotional bias.

Conclusion

Pandemic-proof clauses serve to convert risks into a shared resilience, which is critical for the 2026 Bengaluru market. Drafting precisely according to the court's findings will safeguard operations in the midst of uncertainties.

Frequently Asked Questions(FAQs)

Does COVID qualify as force majeure in Indian leases?
Yes, as "Act of God" if clause covers restrictions, but no automatic rent waiver without proof.
Can tenants withhold rent under TPA Section 108?
Only if premises permanently unfit; notify lessor to terminate.
What did Delhi High Court rule post-COVID?
50% rent during peaks; balances losses without full excuse.
How does RERA handle force majeure?
Allows extensions with evidence; no routine delays.
Typical Bangalore office clause remedies?
Pro-rata abatement, 60-day suspension, mutual termination.
Must parties notify for invocation?
Yes, within 7-15 days with impact evidence.
Differences for office vs. retail?
Offices adapt via remote; retail harder but still temporary.
2026 trends affecting clauses?
Flex spaces demand hybrid, climate triggers.
Can economic hardship invoke?
No, only impossibility.
Role of arbitration?
Preferred for quick resolution post-invocation.