Bombay High Court has rejected an application for ad-interim relief in a case between “Standard Retail Pvt. Ltd. vs. M/s G. S. Global Corp and Ors”[i].
Brief Facts
The petitioner has requested to purchase certain steel products from the seller, the shipment has been dispatched from South Korea to reach petitioner at Mumbai. Later due to the rise in cases of coronavirus the Government of India has imposed a 21 day lockdown. Pertaining to the lockdown the petitioner has terminated the contract with the seller as unenforceable on account of frustration, relying upon the section 56 of the Indian Contracts Act, 1972 which specifically talks about “Agreement to do impossible act”. After a thorough analysis and listening to the arguments the court has come to an opinion that the petitioner was not entitled to ad-interim relief. Also the “Force Majeure” clause does not apply to the petitioner, as per the contract it is only applicable to the seller. And the contract terms were on Cost and Freight basis (CFR), and the seller has complied with his obligation of supplying the goods, it is now on part with the petitioner to comply with his part of the obligation towards the contract. The court further made a statement “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”[ii]. The court has also mentioned that distribution of steel was considered to be an essential service and there were no restriction imposed on them. The ports its respective authorities and other operations there were also decided to be essential services.
Key Features
1. Bombay High Court has rejected an application for ad-interim relief in the case between “Standard Retail Pvt. Ltd. vs. M/s G. S. Global Corp and Ors”[iii].
2. The petitioner has purchased certain steel products from the seller who is headquartered in South Korea.
3. The seller has shipped the steel products to the petitioner in Bombay.
4. Due to the Lockdown initiated by the Indian Government, the petitioner has terminated the contract relying on section 56 of Indian Contracts Act, 1972.
5. The Court has decided that the “Force Majeure” clause does not apply to the petitioner. As it was in accordance to the seller in the contract.
6. The court has also said that distribution of steel is an essential service, and port operations were not restricted during the lockdown.
7. The contact was based on Cost and Freight basis (CFR). The seller has successfully complied with their part of obligations according to the contract by shipping the products.
Conclusion
During the lockdown of the nation, there are only few services which were restricted, but all the essential services which the government believes to be essential to run the country are being processed, and one of them is distribution of steel and port operations.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
End Notes
[i] Bar & Bench, Lockdown cannot rescue steel importer from contractual obligations to make payment, distribution of steel an essential service: Bombay HC Bar and Bench – Indian Legal news, https://www.barandbench.com/news/litigation/lockdown-cannot-rescue-steel-importer-from-its-contractual-obligations-to-make-payment-bombay-hc (last visited Apr 12, 2020).
[ii] Bar & Bench, Lockdown cannot rescue steel importer from contractual obligations to make payment, distribution of steel an essential service: Bombay HC Bar and Bench – Indian Legal news, https://www.barandbench.com/news/litigation/lockdown-cannot-rescue-steel-importer-from-its-contractual-obligations-to-make-payment-bombay-hc (last visited Apr 12, 2020).
[iii] Bar & Bench, Lockdown cannot rescue steel importer from contractual obligations to make payment, distribution of steel an essential service: Bombay HC Bar and Bench – Indian Legal news, https://www.barandbench.com/news/litigation/lockdown-cannot-rescue-steel-importer-from-its-contractual-obligations-to-make-payment-bombay-hc (last visited Apr 12, 2020).
