CHENNAI: PVR Cinemas, India’s largest multiplex chain with more than 870 screens, has decided to inform malls and landlords that they would be invoking ‘force majeure’ clause in its rental contract to not pay rent for the entire period of shutdown across the country.
One of India’s top retailers, Reliance Retail, too may invoke the same clause to not pay rent, sources say.
It has been nearly two weeks since malls have been shut in Chennai, while in some cities such as Bengaluru, the shutdown had kicked in before that.
The ‘Act of God’ clause comes into effect during unprecedented circumstances.
“PVR has opted to insist on not paying any rent for the period of closure. PVR does not own properties and all of its screens operate on rent,” said a source in Chennai-based SPI Cinemas which was acquired by PVR in August 2018.
“There have been no operations for the past two weeks. It will be May 15 for things retail space and malls to normalise, even if the lockdown is lifted before schedule. With everything shut, both sides have suffered losses. It’s not just for multiplex operators alone. We need to discuss,” said a source in Ampa Skywalk that houses seven PVR screens.
“The central government’s order itself talks about ‘force majeure’ since these are things beyond anyone’s control. We have nothing specific to add. It is for the Union law ministry to clarify, if there are issues over implementing this for the period of shutdown,” a business development officer with PVR Cinemas said.
Several states including Karnataka and Tamil Nadu ordered the closure of cinemas and malls, much before the 21-day lockdown announced by the Centre which came into force on March 25.
“Not just retail shops and multiplexes in malls, even food court operators and companies maintaining parking spaces are hit. They have zero revenue, but they must pay salaries to their employees as per the directive from the Centre and the state governments,” a retail industry source said.
Kejriwal said mall developers will be keen to retain marquee tenants and will be flexible. “In fact, after the Covid-19 scare is over and retail trade resumes, such tenants will stick to mall developers, who have shown such flexibility,” he pointed out.