LawPutra ®

Committed To Your Success

“Every Breach cannot be defended solely on the invocation of Covid-19 as a Force Majeure Condition.”:Delhi High Court

The Delhi High Court of India  on Friday held that the , clause does not contain any help  or aid to the Contractor, , to seek restraint against the encashment of the Bank Guarantees.The court has said this while responding in a plea seeking interim protection, by way of restraint against respondent/Vedanta Limited, injuncting the Vedanta from invoking or encashing bank guarantees.

          The matter was considered by a single judge bench consisting of Honourable Justice,Prathibha M Singh of Delhi High Court of India.The matter was heard via videoconferencing.While saying the judgement,the Honourable Justice Prathibha M Singh pointed 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 nonperformance due to the epidemic/pandemic.”

The Court further said that,“As observed in Energy Watchdog (supra) it is 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 nonperformance. There has to be a ‘real reason’ and a ‘real justification’ which the Court would consider to invoke a Force Majeure clause.”

      The court was pronouncing the judgement in an application filed by M/s Halliburton Offshore Services Inc. under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection, by way of restraint against respondent/Vedanta Limited, injuncting the said respondent from invoking or encashing eight bank guarantees, five of which are due to expire on 30th June 2020, and the remaining three on 24th November 2020, issued by the ICICI Bank, under the instruction of Petitioner/ M/s Halliburton Offshore Services Inc.

     After allowing the application,the bench said that,“Prima facie, in my view, special equities do exist, as would justify grant of the prayer, of the petitioner, to injunct the respondent from invoking the bank guarantees of the petitioner, forming subject matter of these proceedings, till the expiry of a period of one week from 3rd May, 2020, till which date the lockdown has been imposed.

The application also said that, ”the Contractor in the present case was cautioned repeatedly since September 2019 by the Company that it was in breach. There was hardly any work done in the months of November 2019, December 2019, January 2020, February 2020, and March 2020. There was clear non-performance and lack of alacrity in completing the work on the various fields forming part of the Project. The reasons for the same are not to be gone into in this petition.”

     While disposing the petition,the single bench said that, “the opinion rendered herein is prima facie in nature and shall not bind the arbitral proceedings in any manner whatsoever. The respective claims and counterclaims would be liable to be adjudicated by the duly constituted Arbitral Tribunal, on their own merits, in accordance with the law.”

by Ayisha Riswana