Several companies are now having to invoke the force majeure clause or the Act of God provision in their rental agreements amid the uncertainty in business due to the lockdown.
As per an Economic Times report, PVR Cinemas, the country’s leading multiplex chain having 870 screens across the country and Reliance Retail, running the Reliance Fresh, Digital, Trends and other retail outlets across the country are reportedly planning to tell malls and landlords that they won’t be able to pay any rent for the lockdown period.
It may be noted that the actual shutter-down period for these businesses has been longer than the current 21-day lockdown. Many states like Tamil Nadu and Karnataka enforced a lockdown earlier and closed down the malls and large format departmental stores where people were bound to gather in large numbers. There was no way the administration was able to control the crowds in such places and took the decision to close them down.
What is worse, even if the lockdown is fully or partially lifted from April 15, there may be no relief for the malls and the large stores as not many people may step out to public places yet. They may have to wait longer, possibly till May 15.
The plight of these businesses is that they have zero revenue during the lockdown period but the governments at the centre and the states have advised them not to lay-off their employees and to pay them their full salaries. This is a huge burden on them. It is reported that PVR Cinemas hardly own any screens and almost all of them are rented properties.
The Force Majeure clause is inserted in agreements to include those situations which are beyond anyone’s control and it is pointed out that even the government’s order uses this term.
Those badly affected in malls include restaurants in the food courts and even the parking lot contractors.
The only bright spot here is the large mall developers like Prestige and Lodha seem to appreciate the situation and may be accommodative. Their priorities may be not to lose key occupants in the malls, referred to as anchor tenants or marquee tenants. These pull more footfalls into the malls and that benefits the other stores located in the malls.