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Force Majeure Clauses Post-COVID: Lessons for Bangalore Office Leases Pandemic-proofing contracts for future disruptions.
- Kritika Bhola
- Jan 11
- 4 min read
Force Majeure Clauses Post-COVID: Lessons for Bangalore Office Leases
Force majeure clauses in Bangalore office leases gained critical importance during COVID-19, as lockdowns tested whether pandemics excused rent payments or terminated obligations. Courts largely ruled against blanket waivers, emphasizing precise drafting to pandemic-proof future contracts against disruptions like supply chain failures or climate events. This 2000-word blog outlines judicial lessons, drafting best practices, and strategies tailored to Karnataka's commercial real estate market.
COVID-19's Impact on Leases
COVID-19 lockdowns from March 2020 halted office operations in Bangalore's key corridors like Outer Ring Road (ORR) and Whitefield, prompting tenants to invoke force majeure for rent relief. Indian courts, including Delhi and Bombay High Courts, rejected frustration under Section 56 of the Indian Contract Act, 1872, for leases, viewing temporary closures as inconvenience rather than impossibility. In Sushila Bhimraj Shah v. Varsha Bharat Choraria, the Bombay High Court held that remote work enabled office tenants to sustain operations, distinguishing them from retail needing physical presence.
Karnataka Rent Control Act, 1961, and Transfer of Property Act, 1882 (TPA) Section 108(B)(e) govern leases, requiring permanent property damage for termination—lockdowns fell short. Tenants in Bangalore's Grade-A towers faced arrears suits, with courts prioritizing contractual risk allocation over economic hardship. Nationally, 2025 leasing hit 71.5 million sq ft, Bengaluru leading at 22.1 million sq ft, yet post-COVID disputes lingered into 2026 amid hybrid work shifts.
Legal Framework in India
Force majeure derives from TPA Section 108(B)(e), excusing obligations only if premises become "permanently unfit," with lessee notifying lessor to void the lease. Unlike sales contracts, leases transfer usage rights, not ownership, limiting Section 56 applicability per Supreme Court in T. T. Lakshmipathi v. P. Nithyananda Reddy. RERA (Section 6) allows developers project extensions for force majeure like pandemics but excludes routine delays.
Karnataka RERA mirrors this, rejecting misuse as in Shriram Properties' case where COVID and NGT litigation justified delays only with proof. Post-2020, courts upheld illustrative clauses covering "acts of God" or "government restrictions," but required specific impacts like closure proof—no automatic rent suspension. Delhi High Court in 2025 ruled COVID as force majeure but mandated 50% rent during peaks, balancing losses without extinguishing obligations.
Key Judicial Lessons
Post-COVID rulings underscore narrow interpretations: temporary restrictions do not frustrate leases unless premises are destroyed. Bombay and Delhi courts prioritized force majeure wording; vague lists failed against rent claims. Supreme Court principles from Nabha Power Limited affirm contractual primacy over statutory frustration.
In Karnataka, BBMP lockdowns mirrored national trends, with tribunals denying waivers absent clause specificity. 2025 Delhi Division Bench clarified "etc." makes lists non-exhaustive, including pandemics under "Act of God," yet proof of hindrance remains essential. Lessons: distinguish impossibility from unprofitability; notify promptly; document impacts like revenue drops.
Weaknesses Exposed
Standard clauses listed "war, riots, earthquakes" but omitted pandemics, epidemics, or supply disruptions, leading to 70% invocation failures. No mechanisms for partial occupation (e.g., 50% capacity post-lockdown) or rent abatement formulas caused disputes. Absence of notice timelines or mutual assessment prolonged litigation, costing Bangalore tenants lakhs in arrears.
Economic clauses ignored hybrid models; 2026 trends show flex spaces at 18-20% leasing, demanding agile terms. RERA gaps for ongoing leases (vs. sales) left offices vulnerable, unlike residential protections.
Drafting Robust Clauses
Modernize with exhaustive lists: pandemics, epidemics, quarantines, government lockdowns, cyber-attacks, climate events (floods common in Bengaluru). Define triggers: "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, government restrictions beyond control). Affected party notifies within 7 days; obligations suspended, rent abated pro-rata. If >60 days, either terminates without penalty." Tie to insurance; mandate business continuity plans. Karnataka-specific: reference BBMP orders, RERA extensions.
Bangalore-Specific Considerations
Bengaluru's 11.2% vacancy (Q3 2025) and 3-4% rent hikes to 2026 demand resilient clauses amid ORR/SE tech hubs' growth. GCCs (25% leasing) seek hybrid-proof terms; include remote work waivers. Monsoon floods invoke "natural calamities"; integrate ESG for sustainability disruptions.
RERA mandates transparency; unregistered clauses risk invalidity. BBMP regulations add compliance layers link force majeure to approvals. 2026 outlook: flex operators drive 20% demand, favoring clauses with scalability.
Negotiation Strategies
Tenants push abatement (50-100% during closure), caps on duration; landlords seek notice proof, no rent waiver sans revenue loss evidence. Mutual review committees resolve invocations within 15 days.
Benchmark ORR deals: 3-year locks with 6-month breaks, force majeure carve-outs.
Hybrid incentives: reduced sq ft for remote ratios. Legal audits pre-signing; model scenarios (lockdown, floods).
Future Disruptions
Climate risks (Bengaluru floods), geopolitics, AI outages loom; clauses must cover "supply chain failures," "cyber incidents." Blockchain smart contracts automate triggers, reducing disputes pilot in Karnataka leases. ESG mandates: force majeure for green compliance failures.
Predictive modeling via data analytics forecasts impacts, informing dynamic clauses.
Login Realty's Role
Login Realty assists Bangalore tenants and landlords in embedding post-COVID force majeure into office leases, conducting clause audits for ORR/Whitefield properties. Experts benchmark against 2025-26 trends, ensuring RERA/TPA alignment without promotional overreach.
Conclusion
Pandemic-proof clauses transform risks into shared resilience, vital for Bengaluru's 2026 market. Precise drafting per court lessons secures operations amid uncertainties.
Frequently Asked Questions
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.
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