Courts unlikely to interfere on force majeure basis, says Abhishek Singhvi

Declaration of force majeure by companies and individuals to seek rent waivers or delay other payment obligations amid the Covid-19 lockdown is unlikely to be readily accepted by Indian courts, former additional solicitor general and Congress spokesperson Abhishek Singhvi tells Mohit Bhalla. Edited excerpts: Whatever I am saying is based […]

Declaration of force majeure by companies and individuals to seek rent waivers or delay other payment obligations amid the Covid-19 lockdown is unlikely to be readily accepted by Indian courts, former additional solicitor general and Congress spokesperson Abhishek Singhvi tells Mohit Bhalla. Edited excerpts:

Whatever I am saying is based on 400-year-old English and 70-year-old Indian jurisprudence. It does not claim to be normative (what the law should be). Individual judges may take different positions. Ultimately what prevails are the facts and context of each case, as also contractual language which is supreme. Generally, the temporariness and non-permanence of Covid-19 suggests that courts cannot treat this as a frustrating event, permitting exit from tenancy or waiver of rent.

Qua tenants, the law requires the birth of a virtually new contract and the removal of the substratum of the original bargain for force majeure to apply. There is a direct Hong Kong decision in the context of SARS where, applying English law, a very similar claim by a tenant was dismissed in 2003. It is unlikely courts will readily interfere on force majeure basis.

As a general rule, there is nothing better than mediatory and conciliatory settlement. Never has this been truer than during Covid-19 times. Any litigation, if successful, will yield a final result, if at all, well after Covid-19. And therefore it is much better to act consensually now, as far as possible.

As far as raw material suppliers are concerned, my view is closer to the tenancy example above. Subject to individual clauses and contractual language, it would be difficult to suggest that a one month or more lockdown marks a complete break in identity from the original contract and creates a new bargain for the parties.

Source Article

Lois C. Ferrara

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