[This guest post by Mr. Pascal Sasil R, student, School of Law, CHRIST University, compiles prominent decisions by Indian courts on Covid19 and Force Majeure. The compilation is a useful material for those researching on this area.]
Compilation of Force Majeure Cases
Here is a detailed analysis of cases that have come up for hearing in various High Courts of India during the period of March-July 2020. The said cases have thrown some light on COVID-19 as a Force Majeure event and the description/applicability/ambit of Force Majeure in general. Apart from contractual clauses, the aspect of Force Majeure has also been considered in general. Few criminal cases too find the mention of COVID-19 as a Force Majeure event, when the said Court has gone into discussions pertaining to reasons for grant of bail and Right to liberty in the event of a Force Majeure. The table of the case, the issues raised, and the outcome of the said cases have been presented herein these documents.
Month of March:
|
S. No. |
Court |
Name of the Case [Citation] |
Facts/Issues/Claims |
Outcome |
|
1 |
GAUHATI HIGH COURT |
Raitani Engineering
Works Pvt. Ltd. v. The Union of India and Anr. [Arb.P. 12/2018] |
The Arbitral Tribunal failed to consider Clause 17 of the GCC of 1998.
(The Force Majeure Clause) |
The impugned award passed by the learned Arbitral Tribunal is against
Public Policy of India and as such the same is liable to be set aside. Hon'ble Mr. Justice P. C. Phukan (retired) of the Gauhati High Court
is appointed as the sole Arbitrator. |
|
2 |
MANIPUR HIGH COURT |
Simplex Projects Ltd.
through its Director Office v. State of Manipur through its Chief Secretary [MANU/MN/0048/2020] |
Termination of Contract by the Respondent despite invocation of the FM
Clause and request for an extended period of time to perform the obligations. |
Termination was upheld since a reasonable period of time was given to
the Petitioner and the Petitioner failed to comply with the same and was not
keen on executing the obligations. |
|
3 |
HIGH COURT OF BOMBAY |
Standard Retail Pvt.
Ltd. and Ors. vs. G.S. Global Corp. and Ors. [MANU/MH/0528/2020] |
Termination of Contract by the Petitioner on grounds of COVID-19 lockdown
and thereby invoked the Force Majeure Clause. |
FM clause was applicable only to the respondents, according to the
Contract. The steel from South Korea had already been shipped, essential
services allowed at Mumbai Port and Steel falls under essential services. Invocation of Force Majeure clause invalid and was escapism on part of
the Plaintiff to refrain from executing those obligations. |
Month of April:
|
S. No. |
Court |
Name of the Case
(Citation) |
Issues |
Outcome |
|
1 |
HIGH COURT OF BOMBAY |
Integral Industries
Pvt. Ltd vs Gs Global Corp And Others [COMMERCIAL
ARBITRATION PETITION (L) NO. 406 OF 2020] |
Termination of Contract by the
Petitioner on grounds of COVID-19 lockdown and thereby invoked the Force
Majeure Clause. |
FM clause was applicable only to the
respondents, according to the Contract. The steel from South Korea had
already been shipped, essential services allowed at Mumbai Port and Steel
falls under essential services. Invocation of Force Majeure clause
invalid and was escapism on part of the Plaintiff to refrain from executing
those obligations. |
|
2 |
HIGH COURT OF BOMBAY |
Vinayaga Marine Petro
Ltd And Anr vs Gs Global Corp. and Others [COMMERCIAL
ARBITRATION PETITION (L) NO. 405 OF 2020] |
Termination of Contract by the
Petitioner on grounds of COVID-19 lockdown and thereby invoked the Force
Majeure Clause. |
FM clause was applicable only to the
respondents, according to the Contract. The steel from South Korea had already
been shipped, essential services allowed at Mumbai Port and Steel falls under
essential services. Invocation of Force Majeure clause
invalid and was escapism on part of the Plaintiff to refrain from executing
those obligations |
|
3 |
HIGH COURT OF BOMBAY |
Haryana International
Pvt. Ltd. v. Hyundai Corporation And 2 Ors [COMMERCIAL
ARBITRATION PETITION (L) NO. 404 OF 2020] |
Termination of Contract by the
Petitioner on grounds of COVID-19 lockdown and thereby invoked the Force
Majeure Clause. |
FM clause was applicable only to the
respondents, according to the Contract. The steel from South Korea had
already been shipped, essential services allowed at Mumbai Port and Steel
falls under essential services. Invocation of Force Majeure clause
invalid and was escapism on part of the Plaintiff to refrain from executing
those obligations |
|
4 |
HIGH COURT OF DELHI |
Halliburton Offshore
Services Inc. vs Vedanta Limited & Anr. [MANU/DE/0957/2020] |
Petitioner invokes FM Clause of the
Contract. Respondent does not consent to the same, keen on invoking or
encashing eight bank guarantees. |
Ad interim stay on invocation and
encashment of the eight Bank guarantees granted, following invocation of
Force Majeure Clause by the Petitioner. |
|
5 |
HIGH COURT OF DELHI |
Jr Toll Road Private
Limited v. Yes Bank Limited [W.P.(C) 2970/2020] |
Petitioner’s Account listed as
Non-Performing Assets following non-payment of dues. Loan granted for
contract. Contract stalled briefly as the FM clause was invoked. |
Status quo ante granted on status of
Bank Accounts. Earlier delays in payment of dues until
the 31st of December 2019 cannot be brought under the ambit of Force Majeure
and hence petitioner directed to liquidate the amounts due and payable within
five weeks from the date on which the said assets became functional. (The
Toll Plazas in this said case) |
|
6 |
HIGH COURT OF DELHI |
MEP Infrastructure
Developers Ltd. v. South Delhi Municipal Corporation and Others [W.P. (C) No.
2241/2020] |
Petitioner found liable for non-payment
of amounts prior to the lockdown and hence Force Majeure cannot be a valid
claim for postponing Notice Inviting Tenders. |
The existing Force Majeure situation
has to be taken into account while deciding on effect to the termination of
the Toll Tax Collection Agreement. Respondents shall go ahead with its NIT
and finalize the tender; the effective date of the termination would stand
postponed. Mere Non-payment does not explicitly amount to default of
payments. |
|
7 |
HIGH COURT OF DELHI |
PKSS Infrastructure
Private Ltd. v. South Delhi Municipal Corporation [MANU/DE/1056/2020] |
Petitioner claims for postponement
Notice Inviting Tenders owing to Force Majeure Situation. |
Respondents shall go ahead with its NIT
and finalize the tender; the effective date of the termination would stand
postponed. Government has to function even during such emergency situations. Petitioner’s act of not participating
and lack of intention to participate in the bid, courtesy of non-payment of amounts
questioned and hence petition stands dismissed. Genuine interest and interest needs to
be shown even though circumstances that exist in the country evoke a
sympathetic approach at the first instance. |
|
8 |
HIGH COURT OF DELHI |
Indrajit Power
Private Limited vs Union Of India [MANU/DE/0979/2020] |
Request for stay on the encashment and
appropriation of Bank Guarantee and the request for renewal at a later date
due to prevailing Force Majeure
situation. |
Petitioner company found in
non-compliance of Milestones since April-June 2018 and further despite
extension of 12 months, its position remained the same. Thus, the orders passed by the Hon’ble
Supreme Court and the High Court of Delhi pertaining to the Force Majeure and
subsequent Lockdown situation are not applicable in this present case. Force
Majeure clause cannot be invoked as means for escapism. |
Month Of May:
|
S. No. |
Court |
Name of the Case
(Citation) |
Issues |
Outcome |
|
1 |
HIGH COURT OF ALLAHABAD |
Rinku Gupta v. State
of U.P. [CRIMINAL MISC. BAIL APPLICATION No. - 55618 of 2019] |
Bail on grounds of existing Force
Majeure Situation, |
Looking to impediments in arranging
sureties because of lockdown, while invoking powers under Article 226 and 227
of the Constitution of India, the Hon’ble High Court deemed it appropriate to
order that all the accused-applicants whose bail applications came to be
allowed on or after 15th March, 2020 but have not been released due to
non-availability of sureties as a consequence to lockdown may be released on
executing personal bond as ordered by the Court or to the satisfaction of the
jail authorities where such accused is imprisoned, provided the
accused-applicants undertakes to furnish required sureties within a period of
one month from the date of his/her actual release. The interest of justice lies first in
preserving the liberty of the applicant and hence entitled to be released on
Bail owing to the COVID-19 and Force Majeure situation. |
|
2 |
HIGH COURT OF
JHARKHAND |
Damodar Valley Corporation
v. Gautam Ferro Alloys [MANU/JH/0174/2020] |
Whether order from a statutory body,
restarting performance under a contract falls under the ambit of Force
Majeure? |
Restrainments from Statutory bodies
fall under the ambit of Force Majeure. The same is beyond the reasonable
control of the Petitioner. Even though the respondents might have
suffered losses, Petitioner had no role in it. Hence, not liable to make
payments, in accordance with the obligations under the contract. |
|
3 |
HIGH COURT OF CHHATTISGARH |
Enchanting Diaries Hotels And Resorts Private Limited v. Chhattisgarh
Tourism Board [MANU/CG/0394/2020] |
Unilateral termination of the contract
awarded to the petitioner, forfeiting the performance security furnished in
connection with the same. Request for issuance of a written notice and
request categorize the issue under 'Force Majeure' |
Even though it is owing to Force
Majeure situations, agreed dispute settlement measures under the Contract
cannot be bypassed and overlooked. Matter referred to Arbitration as provided
under the original contract. Status Quo issued on the EMD/Security
Deposit till the deliverance of an arbitral award within one month’s time, as
directed by the Hon’ble Court. |
|
4 |
High Court of Patna |
Kaalendi Ventures LLP
v. The State Of Bihar [Civil Writ Jurisdiction Case No.5684 of 2020] |
The maximum demand charges and electricity
consumption charges have been raised for the month of April by the Respondent
despite prevailing Force Majeure situation and non-operation of the plant.
Request for invocation of Force Majeure Clause contained under Chapter VII of
the Electricity Supply Code turned down by the Respondents. |
Interim stay on the payment of due
amount. However, actual electricity
consumption charges, post lockdown period, to be paid within 10 days from the
date of passing of interim order. |
|
5 |
HIGH COURT OF DELHI |
Ramanand & Ors vs
Dr Girish Soni & Anr [MANU/DE/1072/2020] |
Request for suspension in full/part of
the rent to be paid by the petitioner owing to the COVID-19 situation and
request to consider the same as a Force Majeure Event. |
In the absence of a contract, Section
56 of the Indian Contract Act cannot be invoked. Also, Section 108(B) (e) of
the Transfer of Property Act cannot be invoked as the said property is not
destroyed in full. Mere non-usage does not amount to destruction.
In the absence of a contract or a contractual stipulation, the tenant may
generally seek suspension of rent courtesy of Force Majeure situation and
subsequent temporary non-use of premises, by invoking the equitable
jurisdiction of the Court. The Tenants' application for suspension
of rent is liable to be rejected inasmuch as while invoking the doctrine of
suspension of rent on the basis of a force majeure event, it is clear from
the submissions made that the Tenants do not intend to surrender the tenanted
premises. Hence, Tenants shall pay the use and
occupation charges as directed by the Court at an extended time frame.
Post-lockdown, strict adherence to the originally existing pattern of
payment, |
|
6 |
HIGH COURT OF DELHI |
Polytech Trade Foundation
vs Union Of India & Ors [W.P.(C) 3029/2020] |
Injunction/ restraint order against the
Respondents, under Section 151 of CPC. Respondents blocking the lifting of
material from ports citing non-payment of penal charges by the Petitioner in
their ports. Petitioner calls for exemption owing to COVID-19 situation and
requests for Force Majeure invocation. |
The Central Government had issued a
slew of directives in the form of Orders and letters from the Ministry of
Shipping, Ministry of Finance, and a Ministry of Home Affairs Order invoking
Section 53 of Major Port Trust Act 1963, allowing for no extra penalties in
the event of delays. However, it remains to see if these are binding in
nature. No grounds for grant of
injunction/restrain order in favour of the petitioner owing to the fact that
no irreparable loss is going to be caused to the petitioner if the court
finally comes to a conclusion that these letters were not in the form of
advisories/guidelines but were in fact binding directions, that is, the
petitioner can recover the ground rent/penal charges paid by them to
respondent. Hence, order of restraint on account of
the Force Majeure situation was not granted. Case listed to a later date. |
|
7 |
HIGH COURT OF
RAJASTHAN |
State Of Rajasthan vs
Galaxy Mining And Royalties [Spl. Appl. Writ No.
301/2020] |
Appeal by the State against learned
Single Judge’s interim stay on termination of contracts for non-performance
owing to Force Majeure situation. |
Opinion regarding treating COVID-19
as Force Majeure event: The prevailing COVID-19 Pandemic is an
extraordinarily compelling situation, which we have not faced for decades
together. Drastic measures were required to be taken and severe lockdowns
were imposed by the Central and the State Governments to save the lives of
the people. For all practical purposes, businesses
in the country were crippled. The lockdown has been lifted but with severe
restrictions and routine life of the people is limping back to normal at a
painfully slow pace. Fully functional operation of
businesses including the mining operations/royalty collection is not possible
even as on date because still some restrictions are in place. Thus, the collection of royalty amount
under the contracts in question shall be commenced within a period of three
days from the date of order. Outstanding dues prior to the lockdown to be
cleared off in three days time. Learned Single Judge’s interim order stands
modified. |
|
8 |
HIGH COURT OF DELHI |
Halliburton Offshore
Services Inc. vs Vedanta Limited & Anr. [MANU/DE/1130/2020] |
Request for restrain on invocation of
bank guarantees. |
Interim relief on the invocation of
bank guarantees granted. Observation on Force Majeure: The Delhi High Court observed that the
country wide lockdown was prima facie, in the nature of Force Majeure.
Therefore, it could be said that special equities do exist, as would justify
grant of the prayer, to injunct invocation of the bank guarantees. |
|
S. No. |
Court |
Name of the Case
[Citation] |
Facts/Issues/Claims |
Outcome |
|||
|
1 |
HIGH COURT OF DELHI |
Bharat Heavy
Electricals Limited v. Egyptian Electricity Transmission Company & Ors. [MANU/DE/1136/2020]
|
Plaintiff seeking permanent injunction to restrain defendant No.1 from
encashing the bank guarantees in question. Plaintiff claims that Egypt is undergoing a war like situation which
constitutes a force majeure situation and hence irreparable harm shall be
caused to the Plaintiff if the Hon’ble Court does not grant those reliefs
prayed for. |
Hon'ble High Court confirmed the interim order passed, subject to the
following terms: i) The plaintiff shall not object to appointment of a local
commissioner at its cost for recording of the evidence after framing of
issues. ii) The learned local commissioner so appointed by this court, after
framing of issues, will complete recording of evidence within nine months
thereafter. iii) No adjournment would be sought by the plaintiff before the
learned local commissioner for recording of evidence. |
|||
|
2 |
HIGH COURT OF DELHI |
Steel Authority Of
India Ltd, India v. Tata Projects Ltd, India and Anr. [OMP (COMM) 418/2020,
IA 3983/2020] |
Petitioner seeks exemption from depositing money / liquid cash on
account of financial stress / liquidity crunch posed by COVID-19 on account
of absence of domestic and international demand, which has constrained the
petitioner to increase its borrowing, with heavy interest. Petitioner further cites notifications issued by the Minister of
Finance, recognising COVID-19 as a Force Majeure event and clearing the air
on the invoking of Force Majeure Clause. The petitioner prays to the Hon'ble Court to exercise its discretion
by staying the impugned award and permitting the petitioner to secure the
respondent's interest by way of Bank Guarantees for the said amount awarded
in the impugned award by June 21, 2020. |
The court accordingly directed the petitioner to deposit 50% of the
awarded amount with the Registrar General of the Court and asked the
Petitioner to furnish a bank guarantee for the balance 50% in favour of the
Registrar General within three weeks from the date of the judgement. Furthermore, the Hon’ble Court held that on such deposit, there shall
be stay of the operation of the impugned award dated November 20, 2019. However, the respondents were instilled with the rights to file an
application for withdrawal of the deposited amount for the consideration of
the Court. |
|||
|
3 |
HIGH COURT OF DELHI |
91 Springboard
Business Hub Pvt. Ltd. v. Delhi Printing And Publishing Company Pvt. Ltd. [OMP(I)(COMM) 132/2020, IA 4425/2020 &
4426/2020] |
Petitioner seeks an order of restraint on the respondents from and in any manner interfering in the
ingress/ egress of the Petitioner, its agents, employees etc, from and to the
premises. The petitioner also seeks for removal of locks from the main entrance
on the premises, claimed to be unlawfully placed by the respondents after
termination of the lease deed and forfeiture of the security deposit. Petitioner further claimed that there was a stipulation of force-
majeure clause in the lease deed and that COVID-19 was an event of
force-majeure and because of which the obligations under the lease deed
should get suspended. |
Sole Arbitrator appointed by the Hon’ble Court to sort out the
indifferences. Locks to be broken open. The respondents, their agents, employees, servants shall not interfere
with the ingress / egress of the petitioner, its agents, employees from and
to the premises. Petitioner directed to pay to the respondents proportionate rent for
the month of May, 2020 effective from 18th and for the month of June, 2020
and the same to be paid to the respondents on or before June 22, 2020, in
view of COVID-19 and Force Majeure situation. |
|||
|
4 |
HIGH COURT OF DELHI |
MEP Infrastructure Developers Ltd. v.
South Delhi Municipal Corporation and Others [MANU/DE/1229/2020]
|
Petitioner found liable for non-payment of amounts prior to the
lockdown and hence Respondent claims that Force Majeure cannot be a valid
claim for non-payment. |
The Hon’ble Court held that the
question as to whether COVID-19 would justify non- performance or
breach of a contract has to be examined on the facts and circumstances of
each case. It further iterated that every breach or non-performance cannot be
justified or excused merely on the invocation of COVID-19 as a Force Majeure
condition. It ascertained that the Court would have to assess the conduct of the
parties prior to the outbreak, the deadlines that were imposed in the
contract, the steps that were to be taken, the various compliances that were
required to be made and only then assess as to whether, genuinely, a party
was prevented or is able to justify its non- performance due to the
epidemic/pandemic. Furthermore, it stated that it is the settled position in law that a
Force Majeure clause is to be interpreted narrowly and not broadly. Parties
ought to be compelled to adhere to contractual terms and conditions and
excusing non-performance would be only in exceptional situations. Furthermore, it was said that as observed in the landmark Energy
Watchdog case, it was not in the domain of Courts to absolve parties from
performing their part of the contract. It is also not the duty of Courts to provide a shelter for justifying
non-performance. There has to be a „real reasons and a real justification which the
Court would consider in order to invoke a Force Majeure clause. The said amounts in accordance with the interim order ought to be paid
as directed in the interim order. However, weekly payments of Rs.20 crores stand relaxed in view of the
force majeure clause. |
|||
|
5 |
HIGH COURT OF DELHI |
Rashmi Cement Ltd. vs World Metals
& Alloys (Fzc) & Anr. [MANU/DE/1269/2020]
|
Petitioner seeks direction to the respondent to release the cargo to
the petitioner without insisting on payment of demurrage. The petitioner's primary ground for seeking the same is that it stood
absolved of its contractual obligations to take delivery immediately on the
arrival of the vessel at the Haldia Port on account of the nation- wide
lockdown and also of its liability to pay contractual demurrage by reason of
the concessions granted by the Ministry of Shipping in its circulars,
announcing COVID-19 as a Force Majeure event. |
No prima facie case in the petitioner's favour on the applicability of
the Force-Majeure clause or its claim for exemption from paying demurrage. Learned Single Judge deliberately refrained from expressing any
conclusive opinion on the general conditions of applicability/
non-applicability of the Force-Majeure clause. Furthermore, the petitioner has failed to substantiate that it would
incur irreparable injury or loss if the interim relief it seeks by way of
this Section 9 petition is not granted by this Court. Thus, the petitioner
has failed to satisfy the parameters for grant of interim reliefs and hence
no relief granted. It was also directed that in the event that it were to be held in the
arbitration proceedings that no demurrage was in fact payable by the
petitioner or it turns out that the vessel owner is exempted from the
liability of paying demurrage, the amount paid by the petitioner to the respondent
by way of demurrage would be refunded with interest at a rate determined by
the learned Arbitrator. |
|||
|
6 |
HIGH COURT OF
ALLAHABAD |
Manikya Creation Pvt. Ltd vs Union Of
India And 5 Others [WRIT - C No. - 9940
of 2020] |
Petitioner seeks quashing of the demand raised by respondent no.6 to
towards rent and detention charges and claims it of being in violation of the orders/directions
issued by the Government of India, entailing COVID-19 as a Force Majeure
Event. |
Without entering into the merits of the claim of the petitioner for
waiver/remission (of the ground rent/detention charges), the Hon'ble High
Court ordered that the Respondent No.5 shall take an expeditious decision on
the reply submitted by the petitioner, protesting against the demand notice
charging ground rent and detention charges on storage of the cargo containers
beyond the free period of fourteen days, at the ICD Dadri. Respondent no. 5 directed to pass a reasoned and speaking order in
accordance with law within a period of two weeks from the date of receival of
order copy. |
|||
|
7 |
HIGH COURT OF
ALLAHABAD |
Chetan Overseas Delhi
Pvt. Ltd. v. Union Of India And 4 Others. [WRIT - C No. - 9702
of 2020] |
The petitioner seeks a writ of mandamus commanding the Respondent nos.
1 to 4 to take appropriate penal action against the respondent no. 5 for not
complying with the orders and advisories issued for waiving all charges
pertaining to ground rent, demurrage, container detention charges or any
other ancillary charges imposed during the lockdown period, due to the
existing Force Majeure situation and release the containers and/or its
contents to the owners/purchasers and also requests to direct the Respondent
no. 5 to issue the delivery order on payment of usual charges by the
petitioner allowing the detention free days and extending the benefits of
orders and advisories issued by respondent nos. 1 to 4 to waive all charges
pertaining to container detention charges or any other ancillary charges
imposed during the lockdown period and release the containers and/or its
contents to the petitioner. |
Without entering into the merits of the claim of the petitioner for
waiver/remission (of the ground rent/detention charges), the Hon'ble High
Court ordered that the Respondent No.5 shall take an expeditious decision on
the reply submitted by the petitioner, protesting against the demand notice
charging ground rent and detention charges on storage of the cargo containers
beyond the free period of fourteen days, at the ICD Dadri. Respondent no. 5 directed to pass a reasoned and speaking order in
accordance with law within a period of two weeks from the date of receival of
order copy. |
|||
|
8 |
HIGH COURT OF DELHI |
Shiva Industrial
Security Agency (Guj.) Ltd. vs
National Highways Authority Of India [W.P.(C) 3718/2020
& CM 13331/2020] |
Due to the COVID-19 Pandemic, the petitioner invoked the Force Majeure
Clause contained in the Agreement. The respondent is yet to make a decision on the same. Similarly,
certain other claims have also been raised by the petitioner, which are yet
to be decided by the respondent. The petitioner prays for release of the Performance Security submitted
with the respondent as the period of Agreement has already ended. |
Hon’ble Court directed the respondent to consider the representations
of the petitioner and decide on the same within a period of three weeks from
the date of order. Respondent directed to not take any coercive action on the Performance
Security deposited by the petitioner for a period of one week from the date
of decision taken on such representations made by the petitioner, including
those made pertaining to the invocation of the Force Majeure Clause in the
Agreement. |
|||
|
9 |
HIGH COURT OF DELHI |
Sahakar Global Ltd
and Anr. vs National Highway Authority Of India and Anr. [MANU/DE/1295/2020]
|
Petitioner had lodged its claim
for relief under the Force Majeure clause of the Contract, however, the
respondent no.1 is yet to take a decision thereon. Relief measures provided by the respondents, not in line with the
contractual terms. Respondent claims that Petitioners are also entitled to claim benefit
under the Office Memorandum recognizing COVID-19 as a Force Majeure event
since petitioners found in default prior to the COVID-19 impact too. |
claim of the petitioners shall be considered strictly in accordance
with the Contract executed between the petitioners and the respondent no.1
and the Contract provides for such consideration within a period. respondent no.1 shall decide on the claims of the petitioners within a
period of two weeks from today. The petitioners, if aggrieved of the decision taken by the respondent
no.1 on its claim under Clause 25 of the Contract, shall be free to agitate
the same in accordance with law and in appropriate proceedings. The petitioners shall, however, continue to deposit the admitted toll
collected at various toll plazas with the respondent no.1, after deducting
the retention amount as claimed by them during this period. |
|||
|
10 |
HIGH COURT OF DELHI |
Cinepolis India Pvt.
Ltd vs Sarita Multiplexes Pvt. Ltd [O.M.P(I)(COMM) 149/2020 and I.As.
4742-4743/2020] |
Petitioner pleads that during the currency of the pandemic and
continuance of the force majeure, the petitioner be exempted from its
requirement to pay lease rent to the respondent. Petitioner also prays for an ad interim order, restraining the
respondent from terminating the Lease Deed, and from acting in furtherance of
the termination notices dated 12 th May, 2020 and 6th June, 2020, and from
alienating the premises, in which the petitioner is in occupation, to any
third party, pending disposal of this petition, subject to his undertaking to
deposit the lease rent, till date and till the disposal of this petition,
with the Registrar General of this Court. |
The Hon’ble High Court held that serious and disputed issues have
arised in this case, regarding the applicability of the force majeure clause,
and the consequent liability or otherwise, of the petitioner to deposit lease
rent, as well as the applicability of the various decisions, on which the
respondent relies. It also held that in so far as the issue of non-performance, by the
respondent, of its obligations under the Lease Deed is concerned, that would
ideally form the subject matter of adjudication by the learned Arbitral
Tribunal, which is yet to be constituted in the matter. Thus, it was held that there shall be an ad interim stay on the
respondent from terminating the Lease Deed subject to the petitioner depositing,
within a period of two weeks, with the Registrar General of this Court, the
entire balance lease rent, required to be paid to the respondent, as well as
continuing to deposit, till the disposal of the OMP, the rent payable to the
respondent for the occupation of the aforesaid premises as fixed in the Lease
Deed. The Hon’ble Court also opined that the said decision would not
prejudice either party as were the respondent to succeed, the lease rent
could be released to the respondent. |
|||
|
11 |
HIGH COURT OF PUNJAB
AND HARYANA AT CHANDIGARH |
Vinod Kumar vs. Union of India and Ors.
[MANU/PH/0700/2020] |
Petitioner is aggrieved by circular dated 13.5.2020 issued by Real
Estate Regulatory Authority, Punjab (RERA) whereby it extended the period of validity
of registration of projects by six months in addition to the period that
would be normally granted for processing the application provided application
is made on payment of necessary late fee, owing to the fact that COVID-19
pandemic, presented a Force Majeure situation. Petitioner also claims that the circular was issued to give relief to
those projects whose registration was expiring on or before 15.3.2020. However, by virtue of impugned circular which is in the nature of a
notification even term of those projects whose registration has expired long
back has been extended by six months. Petitioner also claims that the power to issue circulars/notifications
of this nature vests in the State Government and not in the adjudicatory
bodies. |
The Hon’ble opined that it failed to understand the need for passing
an omnibus order giving protection to all the projects in the State of
Punjab, particularly when the Act has a specific provision for entertaining
an application on behalf of the promoter/builder for extension of time. The Court also iterated that there was no doubt that the 'Force
Majeure' clause can be invoked for this purpose. However, the applicant who would approach the RERA would have to
convince it that he has been forced by circumstances beyond his control to
continue with the project. The Hon’ble Court found it surprising that the circular may even give
protection to those promoters/builders whose registration may have expired
long back. The intent of the advisory issued by the Government of India was
certainly not to accommodate such defaulters. Thus, the Court went on to stay the operation of the impugned circular
dated 13.2.2020 and conclude that it found something palpably wrong with the
circular. |
|
S. No. |
Court |
Name of the Case
[Citation] |
Issues |
Outcome |
|||
|
1 |
HIGH COURT OF DELHI |
Prakash Asphaltings
And Toll Highways India Limited v. National Highways Authority Of India and
Anr. [W.P.(C) 3853/2020] |
Petitioner seeks for a series of writs, directed at setting aside
those office memorandums which in the view of the Petitioner imposes a
unilateral condition /formula for payment of force majeure compensation in
derogation of the contracts executed between tolling contractors (such as the
Petitioner) and Respondent No.1 and towards setting aside of the direction
issued by the Respondent to the Petitioner to replenish the cash performance
security pertaining to various projects. |
Respondent directed to decide on all such Force Majeure claims within
a period of three weeks from the date of order. Pending such a decision, no coercive action shall be taken by the
Respondent No.1 against the Petitioner for the recovery of any claimed amount
for the period in dispute. In the event that on the final decision certain amount is found due
against the petitioner, the same shall not be enforced for a period of one
week from the communication of such demand to the petitioner. Until the interim decision is taken by the Respondent no.1 On the
Force Majeure claims, petitioner directed to deposit only the collected toll
post the deduction of the retention amount, in toll plazas where there is
below 90% pre-lockdown traffic. In those toll plazas where there is greater than 90% of pre lockdown
traffic, the deposit amounts shall be strictly in accordance with the
Agreements. |
|||
|
2 |
HIGH COURT OF DELHI |
Khoobsurat Infra Pvt
Ltd. v. Idbi Trusteeship Services Ltd. [MANU/DE/1340/2020] |
Petitioner seeks for Order of Restrain on the Respondent No.1 from
acting on the Pledge Invocation Notice against the Petitioner, including from
invoking the pledge and / or selling the pledged shares in open market,
during the pendency of the present Petition and / or conclusion of
arbitration proceedings. Petitioner seek for some time for the market conditions to recover to
achieve optimal recovery for the debenture holders / petitioners, owing to
the fact that COVID-19, being a Force Majeure event, has resulted in the
stock markets not only operating at historically lower points but also are
extremely volatile. Petitioner also cites RBI and SEBI circulars granting relaxations for
defaults during the Force Majeure situation and hence calls for financial
institutions like the respondent No.1 and debenture holders owe a duty to act
fairly and in good faith. |
The Hon’ble Court held that when absolute discretion lies in law and
under the subject contracts with pawnee to sell the shares when it likes and
as it likes, surely, the Court cannot substitute that discretion with its own
discretion. Petitioner’s claims based on RBI and SEBI circulars are not appealing
and the judgements relied on by the petitioners were distinguishable based on
the facts. Since, the terms of the contract have not been disputed by Petitioner,
interpretation was not an issue. Thus, when the regulator has not issued any circulars, to meet the
eventuality of COVID-19, the Hon’ble Court cannot read into the contracts, to
locate a clause akin to force majeure, for postponing the obligations under
the contracts. |
|||
|
3 |
HIGH COURT OF DELHI |
K L Enterprises Llp
& Ors. vs Bajaj Finance Limited [MANU/DE/1353/2020]
|
Petition filed under Section 9 of the Arbitration and Conciliation Act
of 1996 seeking directions to restrain the Respondent and/or any person
claiming through and/or under it, from selling/transferring/alienating and/or
encumbering and/or creating any third party rights pertaining to the shares
of Petitioner Nos. 1 to 5, pledged in favour of the Respondent as security
for a loan taken by Petitioner No. 1. Petitioner claims COVID-19 and subsequent lockdown as a Force Majeure
situation and highlights the same as the reason for the drop in value of the
mandated security. Petitioner also cites that RBI had permitted lending institutions
(LIs) to grant a moratorium of three months on payment of current dues
falling between March 1 and May 31, 2020. |
There being no Force Majeure Clause in the Agreements between the
parties,the Petitioners cannot take a refuge under the same. Assuming that the Agreement contained such a Clause, again they are
not eligible for any relief as prima facie, it appears that the fall in the
Security Margin started on 26.12.2019 and continued till 04.03.2020, though
intermittently. Thus, the past breaches cannot be condoned off in relation to COVID-19
as a Force Majeure event. Petitioners shall furnish the Additional Securities, to the
satisfaction of the Respondent, within a period of two weeks from the date of
order. The Restraint Order passed today will remain in force against the
Respondent for a period of two weeks from today. In case, Petitioners furnish the Additional Security acceptable to the
Respondent, as directed above, the restraint order passed today will continue
till the Arbitral Tribunal passes any other and/or further order. In the event that the same has not been furnished, the restraint order
will stand vacated upon the end of the two-week period granted to the
petitioners. |
|||
|
4 |
HIGH COURT OF DELHI |
Usha Goel v. Tata
Power Delhi Distribution Ltd. and Anr. [W.P.(C) 4107/2020
& CM APPL. 14714/2020] |
Petitioner contends that because of the pandemic related lockdown, the
petitioner was prevented from using the premises, therefore, the fixed
charges cannot be levied. |
The petitioner's contention is untenable because the respondent
continues to discharge its responsibility of providing the essential
service/electricity to the city despite the lockdown. Also, the waiver has been sought merely on the non-usage of the
premises and has not been sought on the basis of COVID-19 as a Force Majeure
event. |
|||
|
5 |
HIGH COURT OF DELHI |
Khoobsurat Infra Pvt.
vs Idbi Trusteeship Services Ltd. [MANU/DE/1379/2020]
|
Appeal has been filed under Section 37 of the Arbitration &
Conciliation Act, read with Section 13 of the Commercial Courts Act, 2015
against the common judgment of the learned Single Judge, who had dismissed
the petitions seeking interim relief by the Petitioner. Petitioner claims that the learned Single judge had erred by not
considering the extraordinary situation prevailing due to the pandemic, which
constitutes a Force Majeure event and had failed to factor in the consequent
difficulties of liquidity that companies were facing and which hardship the
RBI had addressed by issuing moratorium for repayment of loans and also by
releasing Rs.50,000 Crores of liquidity for utilization by mutual funds and
issuance of guidelines by SEBI, precisely to protect the interest of
investors. After pointing out various other similar shortcomings, the respondent
emphasized that what was sought was just a further time of six weeks, which
would enable the appellants to make proper arrangements so that a more
profitable deal could be struck or in the alternative, the appellants could
make the assured payment of Rs.110 crores for which the Directors were
willing to give an undertaking to this Court. |
The Hon’ble Court held that the scope of interference by the court
while exercising its jurisdiction in an appeal under Section 37 of the
Arbitration and Conciliation Act was extremely limited. Thus, it was held that despite the fact that the country was facing an
extraordinary situation due to the Covid-19 pandemic and the economy has been
impacted by the Force Majeure situation, the economic stress faced by the
appellants cannot be a ground to discharge their legal liabilities founded on
the contractual obligations agreed to by them and as incorporated in the DTD
and the Share Pledge Agreements and the Corporate Guarantees. Various other claims such as
the requirement of the License granted to the appellant/Direct Media
for Direct to Home Broadcasting Services and the learned Judge’s non
adherence to the orders of the Bombay
High Court as upheld by the Supreme Court to grant such interim protection,
was also held invalid by the Hon’ble Court. Thus, it was held that the Hon’ble Court cannot be a ground to
restrain the respondent from exercising their rights as a pawnee as per their
discretion, guaranteed under Section 176 of the Indian Contract Act of 1872. |
|||
|
6 |
HIGH COURT OF DELHI |
Uni Construction v.
Ircon International Limited [O.M.P.(I)(COMM)
159/2020 & I.A. 4824/2020] |
Petitioner seeks for an order/direction restraining the Respondent
from invoking the bank guarantee and an order/direction restraining the
Respondent from blocking the due payments of the Petitioner and awarding the
balance contract to any other contractor. Petitioner claims that he had invoked
Clause 71 of the GCC, which was the Force Majeure clause. |
Despite COVID-19 being a Force Majeure event, Petitioner had unjustly,
and in stark violation of the terms of the contract with the respondent,
encashed the term deposit of ₹ 16,51,300/-, even before the work had been
completed, and hence, the petitioner cannot seek an injunction, against the
respondent, against encashment of the sole remaining term deposit receipt of
₹ 7 lakhs. Relief under Section 9 of the Arbitration and Conciliation Act can be
granted only if the considerations of a prima facie case, balance of
convenience, and irreparable loss, are cumulatively made out. |
|||
|
7 |
HIGH COURT OF DELHI |
Sh. Y.S Dwivedi v.
Directorate Of Estate & Anr. [MANU/DE/1375/2020]
|
Petitioner seeks the issuance of a writ of mandamus to the respondent
nos.1 and 2, allowing him to retain the house allotted to him by the
Government, on the prescribed license fee until the Covid-19 pandemic
situation normalizes. Petitioner claims COVID-19 to be a Force Majeure Situation and hence
seeks for the said relief. |
Prayer made on behalf of the Petitioner to allow him to retain the allotted house
on prescribed license fee till the situation of COVID-19 normalizes, cannot
be granted, as it is not known when the situation of the present pandemic will
end and no such prayer as made by the petitioner seeking retention of the
allotted accommodation in which he has no right to reside, can be granted
till eternity, despite the fact that COVID-19 is a Force Majeure event. However, the Hon’ble Court granted a stay of the proceedings of the
impugned order qua the petitioner till 31.07.2020, thus providing the
petitioner with a reasonable period of time to evict the premises. |
|||
|
8 |
HIGH COURT OF
KARNATAKA |
Rajesh Export Limited
vs Reserve Bank Of India and Anr. [MANU/KA/2568/2020] |
Petitioner, a public limited company seeks inter alia a Writ of
Mandamus against Prime Corporate Branch of Canara Bank to defer payments in
respect of Letters of Credit issued by the Bank at petitioner's request in
the light of Force Majeure situation prevailing due to the Covid-19. |
Respondent Number 2, Canara Bank has issued the L/Cs at Petitioner's
request. Petitioner has received the gold and L/Cs have been discounted. Therefore, Canara Bank is duty-bound to honour the L/Cs and make
payment. Further, Petitioner has not made out a case that it has a legal right
over the performance of a legal duty by the Canara Bank against whom the
mandamus is sought. Hence, Petitioner is not entitled to a Writ of Mandamus even though
COVID-19 might be construed as a Force Majeure event. |
|||
|
9 |
HIGH COURT OF KERALA
AT ERNAKULAM |
Golden Importers v.
Union Of India [MANU/KE/1888/2020]
|
Writ appeals against learned Single Judge’s order, seeking a writ of
mandamus or any other appropriate writ, direction or order, commanding
respondents 1 and 2 to ensure strict compliance with those Orders,
recognising COVID-19 as a Force Majeure event and hence providing certain
concessions and relief. Furthermore, Petitioner seeks a Writ of mandamus or any other
appropriate writ, order or direction, commanding the respondents to permit
the petitioner to clear the imports covered by Exhibit- P1 series Bills of
Lading by extending the benefit of Exhibit- P6 and to reimburse any amounts
already paid thereto, courtesy of the fact that COVID-19 is a Force Majeure
event. Other interim reliefs also sought, including grant of
injunction/restrain against the respondents under Section 151 of the CPC. |
Those letters issued by the concerned Ministries,are indeed
circulars/guidelines/advisories issued by respondent no. 1 and 2 and hence do
not bind respondent no. 3 to 6 who are not availing any concession from port
authorities and who have their containers located outside the Port Land. Moreover, the letters/guidelines/advisories entailing COVID-19 as a
Force Majeure event, also cannot intervene or interfere in a private contract
which respondent no. 3 to 6 have entered with the petitioner. Pertaining to the interim relief, the Court is bound to consider
whether, (1) there is prima facie case, (2) balance of convenience, and (3)
likelihood of irreparable hardship. The petitioner has clearly failed to make a case out of the same and
hence the Writ court has not committed any gross error in considering the
interim order of the Hon'ble High Court of Delhi in Polytech Trade Foundation
v. Union of India and Ors.and hence declining the interim reliefs sought for
by the appellants. |
|||
|
10 |
HIGH COURT OF MADHYA
PRADESH |
Aman Jaiswal vs State
Of M.P. [WP Nos.7373, 7389,
7472, 7473, 7474, 7490, 7520, 7567, 7576, 7577, 7578, 7738, 7764, 7767, 7771,
7804, 7805, 7808, 7810, 7811, 7812, 7815, 7867, 7918, 8016, 8084, 8131, 8137,
8139, 8153, 8159, 8160, 8259, 8260, 8363, 8365 and 8575 of 2020] |
Petitioners have challenged the auction process conducted by the
respondents for grant of licence for the retail liquor shops and further directions have been sought
against the respondents to revalue the same; restrain them to issue licences
to the petitioners; refund the money deposited by the petitioners and further
to set aside the offers made by the petitioners and acceptance thereof by the
respondents. Few of the petitioners have also challenged those relevant clauses of
the State Excise Policy 2020-21. Petitioners have preferred the challenge on various claims including
the claim that COVID-19, constituting a Force Majeure event, presented a need
for relaxation. |
The Hon’ble Court held that the petitioners had failed to show how the
said memoranda, issued by the Central Government would apply to statutory
contract under the Excise Act and its policy. The Court also held that under office memorandum dated 13.05.2020,
force majeure event is only for extension of contract period in view of the
restrictions due to lockdown. There was nothing to indicate that the parties can invoke force
majeure clause for completely absolving themselves from performance of the
contract. It was further held that Clause 48 of the Excise policy expressly
saves the compliance of the contract against the breach of the policy on
account of ‘act of God’ and also against ‘natural calamities’. Thus, the Hon’ble Court held
that it would not be out of place to hold that the Covid-19 pandemic falls
within the meaning and term of "natural calamity" and hence, being
a "force majeure" event expressly covered by Clause 48 of the
Policy, which in the present case was impliedly within the contemplation of
the parties and so its consequences. Thus, the Hon’ble Court said that it did not find any force in the
argument advanced on behalf of the petitioners that the force majeure event
was neither within the contemplation of the parties and nor expressly or
impliedly provided for in the Excise Policy. In advancement of the same, it was held by the Court that by virtue of Clause 48 of the Excise Policy
2020-21, the "force majeure" condition was expressly and impliedly
within the contemplation of the parties and therefore, Section 56 of the
Contract Act cannot be invoked, as in the present case, the petitioners have
agreed to their obligations by submitting an affidavit that they would be
bound by the terms and conditions of the Excise Policy 2020-21. It was opined by the Hon’ble Court after relying on a Series of
Supreme Court Judgements that it cannot be said that the contract between the
parties had become totally unworkable, impossible, frustrated and unlawful to
perform and hence petitioners cannot claim that they are excused from the
performance of the contract. Clause 48 of the Policy does not provide any benefit to the
petitioners if decision to close the liquor vends or re-auctioning the liquor
vends is taken on account of any liquor prohibition policy or any loss is
caused to the licensees on account of act of God or natural calamity. However, the Petitioners were given an option to invoke Clause 49 of
the Excise Policy to seek remission/waiver of Excise duty to the extent of
loss if the petitioners find that they
are at a loss in operating the allotted liquor shops. The Hon’ble Court held that following all the due processes and
procedures associated with the same, the Authority shall consider the claim
of the petitioners sympathetically and take decision in accordance with law. |
|||
|
11 |
HIGH COURT OF GUJARAT
AT AHMEDABAD |
The Campaign Ads,
Proprietorship Firm v. Rajkot Municipal Corporation [C/SCA/8331/2020] |
Petitioner seeks writ of mandamus or any other appropriate writ, order
or direction, directing the respondent Corporation not to charge the amount
of contractual pursuant to the contract entered into during the lockdown
starting from 24.3.2020 till the lockdown period is removed and further be
pleased to extend the contractual period equal to the lockdown period, owing
to the fact that COVID-19 is essentially a Force Majeure event. Petitioner relies upon the Office Memorandum issued by Government of
India, Ministry of Finance dated 19.2.2020 and similar circular issued by the
Eastern Central Railway. Petitioner submits that the petitioner be permitted to file an
appropriate application before the Corporation for the very purpose. |
The Hon'ble High Court held that If any such application is filed, the
Corporation shall look into the same and pass an appropriate order
considering the circulars relied upon by the petitioner in this petition. It was also clarified by the Hon'ble Court that the Court had not expressed any opinion on merits and
that the respondent Corporation shall take appropriate decisions in accordance
with law. |
|||
|
12 |
HIGH COURT OF GUJARAT
AT AHMEDABAD |
Mantra Admedia
Private Limited vs Rajkot Municipal Corporation [C/SCA/8509/2020] |
Petitioner seeks writ of mandamus or any other appropriate writ, order
or direction, directing the respondent Corporation not to charge the amount
of contractual pursuant to the contract entered into during the lockdown
starting from 24.3.2020 till the lockdown period is removed and further be
pleased to extend the contractual period equal to the lockdown period, owing
to the fact that COVID-19 is essentially a Force Majeure event. Petitioner relies upon the Office Memorandum issued by Government of
India, Ministry of Finance dated 19.2.2020 and similar circular issued by the
Eastern Central Railway. Petitioner submits that the petitioner be permitted to file an
appropriate application before the Corporation for the very purpose. |
The Hon'ble High Court held that If any such application is filed, the
Corporation shall look into the same and pass an appropriate order
considering the circulars relied upon by the petitioner in this petition. It was also clarified by the Hon'ble Court that the Court had not expressed any opinion on merits and
that the respondent Corporation shall take appropriate decisions in accordance
with law. |
|||
|
13 |
HIGH COURT OF GUJARAT
AT AHMEDABAD |
Minaal Publicity,
Proprietorship Firm v. Rajkot Municipal Corporation [C/SCA/8717/2020] |
Petitioner seeks writ of mandamus or any other appropriate writ, order
or direction, directing the respondent Corporation not to charge the amount
of contractual pursuant to the contract entered into during the lockdown
starting from 24.3.2020 till the lockdown period is removed and further be
pleased to extend the contractual period equal to the lockdown period, owing
to the fact that COVID-19 is essentially a Force Majeure event. Petitioner relies upon the Office Memorandum issued by Government of
India, Ministry of Finance dated 19.2.2020 and similar circular issued by the
Eastern Central Railway. Petitioner submits that the petitioner be permitted to file an
appropriate application before the Corporation for the very purpose. |
The Hon'ble High Court held that If any such application is filed, the
Corporation shall look into the same and pass an appropriate order
considering the circulars relied upon by the petitioner in this petition. It was also clarified by the Hon'ble Court that the Court had not expressed any opinion on merits and
that the respondent Corporation shall take appropriate decisions in accordance
with law. |
|||
|
14 |
HIGH COURT OF GUJARAT
AT AHMEDABAD |
Bhavya Yogeshbhai
Joshi v Rajkot Municipal Corporation [C/SCA/8755/2020] |
The petitioner has instituted this petition while invoking the
"Force Majeure" clause agreed between the petitioner and the
corporation, in the light of the nationwide lock- down which followed the
spread of pandemic COVID-19. According to the petitioner, the said situation prevented him
performing the contract of advertising entered into by him with the
corporation and therefore the corporation is obliged not to coercively
recover the agreed amount/s under the contract from him. |
The said petition under Article 226
of the Constitution of India would not be maintainable in absence of
the petitioner making a written representation to the Corporation seeking
advantage of the above-mentioned clause. However, on the representation and request made by the petitioner, the
Hon'ble Court directed that if the petitioner makes a representation on the
subject matter of the petition, the same may be decided by the Corporation in
accordance with law. |
|||
|
15 |
HIGH COURT OF GUJARAT
AT AHMEDABAD |
Global Publicity
Proprietorship Firm v. Rajkot Municipal Corporation [C/SCA/8951/2020] |
Petitioner seeks writ of mandamus or any other appropriate writ, order
or direction, directing the respondent Corporation not to charge the amount
of contractual pursuant to the contract entered into during the lockdown
starting from 24.3.2020 till the lockdown period is removed and further be
pleased to extend the contractual period equal to the lockdown period, owing
to the fact that COVID-19 is essentially a Force Majeure event. Petitioner relies upon the Office Memorandum issued by Government of
India, Ministry of Finance dated 19.2.2020 and similar circular issued by the
Eastern Central Railway. Petitioner submits that the petitioner be permitted to file an
appropriate application before the Corporation for the very purpose. |
The Hon'ble High Court held that If any such application is filed, the
Corporation shall look into the same and pass an appropriate order
considering the circulars relied upon by the petitioner in this petition. It was also clarified by the Hon'ble Court that the Court had not expressed any opinion on merits and
that the respondent Corporation shall take appropriate decisions in
accordance with law. |
|||
|
16 |
HIGH COURT OF DELHI |
Beoworld Private
Limited v. Bang & Olufsen Expansion [MANU/DE/1453/2020] |
Plaintiff claims that the grounds given in the Termination Notice
issued by the Respondent for bringing the MDA to an end i.e. that the
business was not being carried out or that the minimum stock level of its
products as provided in Clause 7.14 of the MDA was not available or that
there was a failure to fulfil the annual minimum purchase obligation as set
out in Clause 9.1 of the MDA, were not made out. Plaintiff also claims that COVID-19, being a Force Majeure event
resulted in lockdowns and even following lockdowns, there is little or no
foot fall in the malls and hence it was impossible to meet the minimum
purchase obligation. Plaintiff had also failed to
furnish an unconditional bank guarantee for an amount of Euro 1,137,430, as
directed by the interim order of the Hon’ble Court. Two applications filed before the Hon’ble Court by the plaintiff as
well as the defendant under Rule 1 and 2 of the CPC and for vacation of the
interim order, respectively. |
The Hon’ble Court held that there was next to no chance in the
plaintiff obtaining the relief of specific performance. Therefore, it held that the interim protection shall not continue any
further. Furthermore, it was held that if the plaintiff was right in
establishing as it contends that the termination was bad in law, it could
seek recompense by way of damages. Since the plaintiff claims that it has invested Euro 15 million in
developing the Indian market for the defendant's brand, if relief of that
kind is claimed and proved, it can be awarded by the Court of competent
jurisdiction. The interim relief order stands vacated as the Plaintiff had failed
twice in furnishing the bank guarantee which it had offered to give not once
but twice i.e. on 11.05.2020 and, thereafter, on 22.05.2020. - The fact that the relationship between the parties has frayed to an
extent that it can't be repaired was also considered despite the fact that
COVID-19 as a Force Majeure event might have significant impact only in the
near future. |
|
|
|
|
|
|
Conclusion
The above-presented compilation of cases, inspected with a
legal lens makes it evident that there is no particular trend practiced or
observed by the Hon’ble High Courts in passing orders and judgements pertaining
to cases involving “Force Majeure”. Assessing of issues based on the specific
facts of the case and relief based on the same are the only discernable trends.
This being said, almost all the global nations are keen on
resolving those existing issues. China has issued over 5,600 Force Majeure
certificates to various companies[2],
through its Council for the Promotion of International Trade thus entailing
COVID-19 as an Act of God. However, in the Chinese case, bringing COVID-19
under Force Majeure might be to shift the blame game away from itself, with the
world accusing China over COVID-19 and it being a potential weapon of mass
destruction. In the Indian context, Sections 32 and 56 of the Indian Contract
Act, 1872[3],
through cautious interpretation, puts it out that mutual invoking of the clause
is a possibility. In case of no such Force Majeure clause in the contract,
Doctrine of Frustration comes in. Termination or holding of contracts
where it is impossible to perform the contract due to an unforeseen event
becomes possible through this doctrine. The centre too
has responded by issuing an office memorandum through its Ministry of Finance,
asking the relevant Government Departments to invoke Force Majeure clause
wherever necessary[4]. However,
it is evident that invoking Force Majeure does not amount to non-performance as
the sole and first step and all possible alternatives like temporary hold on
the performance, renegotiation between parties regarding the terms of contract
are to be taken by the concerned parties. Further, invoking the clause has to
be done only in case of a supply chain disruption or any event that makes the
performance impossible and the event ought to be linked directly to COVID-19.
Thus, the issue is still afresh with COVID-19 continuing its onslaught all over the world, throwing up unprecedented challenges. It will be testing times indeed for the legal fraternity as we battle it out against our invisible enemy. While it is impossible to arrive at solutions to combat the same, certain actions like serving of timely notices and expressing the need to hold a contract and providing crucial evidence, linking the non-performance specifically to COVI9-19 can save the day and ease out the situation for both the parties.
[1] Fred
Schmalz and Kellogg Insight, The coronavirus outbreak is disrupting supply chains
around the world — here's how companies can adjust and prepare, BUSINESS INSIDER, (Mar. 26, 2020), https://www.businessinsider.com/covid-19-disrupting-global-supply-chains-how-companies-can-react-2020-3?IR=T
[2]China force majeure certificate issuance pass
5,600 amid virus outbreak - trade body, REUTERS, (Mar. 11, 2020) https://www.reuters.com/article/health-coronavirus-china-forcemajeure/china-force-majeure-certificate-issuance-pass-5600-amid-virus-outbreak-trade-body-idUSL4N2B43CK
[3]
The Indian Contract Act, 1872 (Act no. 09 of 1872 dated 25th April 1872).
[4]
Republic of India, Department of Expenditure, “Office Memorandum on Force
Majeure Clause (FMC)”, (Ministry of Finance, 2020), available at: https://doe.gov.in/sites/default/files/Force%20Majeure%20Clause%20-FMC.pdf
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