The Bombay High Court ruled that as the lockdown was for a temporary period, the petitioners could not take advantage of the situation to flout their contractual obligations. The interim order in the present case (Standard Retail Pvt. Ltd vs M/s G. S. Global Corp & Ors) was passed by a single Judge Bench of Justice AA Sayed.
The petition which was filed under section 9 of the Arbitration and Conciliation Act had sought to restrain the bank from encashing the Letters of Credit with respect to the import.
Relying on Section 56 of the Indian Contract Act, the petitioner had submitted that as due to the present lockdown amidst the Covid-19 pandemic the contract had become impossible, same stood terminated.
The court stated that as the defendants had performed their part of the obligation by shipping the goods from South Korea and as the contract terms were on Cost and Freight basis (CFR) the petitioner could not escape his liability.
The fact that the Petitioners would not be able to perform its obligations so far as its own purchasers are concerned and/or it would suffer damages, was not a factor which could be considered and held against the sellers, the Court stated
Further it was held by the court that the Force Majeure clause in the present case could only be invoked by the seller.
Adding to the above, the court stated that the distribution of steel was declared as an essential service and there were no restrictions on its movement including the movement of vehicles and manpower, operations of Container Freight Station and warehouses and offices of Custom Houses Agents.
The court lastly added, “In any event, the lockdown would be for a limited period and the lockdown cannot come to the rescue of the Petitioners so as to resile from its contractual obligations with the Respondent No. 1 (sellers) of making payments.”
The advocates for the present case were as follows:
Petitioners were represented by Advovates S B Deshmukh with Uttam Rane.
Senior Advocate Vineet Naik with Advocates Mohit Arora, Rajat Taimni and Saket Satapathy, from Tuli and Co. appeared for seller M/s G S Global Corp & Ors.
Shardul Amarchand Mangaldas Advocates Ameya Gokhale with Veena Sivaramakrishnan, Vaibhav Singh appeared for seller M/s Hyundai Corporation & Ors.
Bank was represnted by Advocates Akshay Kolse-Patil, Avinav Mukharjee, briefed by Kochhar & Co.
