TIL Legal Speak: Episode 2: Catch Up With Sushila Ram Varma

All kinds of businesses, industries and sectors across the world have been adversely affected due this Covid-19 Pandemic and the Lockdown situation.

But the role of a lawyer in a society continues to have significance, even during this crisis period, to ensure that the aggrieved party has continued access to justice delivery system.

Thus, The Indian Lawyer & Allied Services in collaboration with Adv. Maitrayee Sanyal, brings before you the Episode 2 of TIL Legal Speak, which discusses about the legal system in the current framework.

To see the Video, please visit the link below:

Video Credits:

Speaker- Adv. Sushila Ram Varma

Moderator- Adv. Maitrayee Sanyal

Category: Legal

INDIA — JAPAN SPECIAL STRATEGIC AND GLOBAL PARTNERSHIP

#India and #Japan have a strong #bilateral relationship in the areas of defence and security, infrastructure and construction, railways, automobiles and locomotives, steel and iron-ore, forest and disaster management, etc. India and Japan have so far executed a number of agreements for strengthening the strategic and global #partnership between the two countries. The significant #agreements executed by both the countries since 2018 are given below:

AGREEMENTDETAILS  
1. Memorandum of Cooperation (MoC) in the field of technologyTo collaborate with India in the field of next generation technologies such as artificial intelligence, internet of things (IoT) and 5G technologies, etc.  
2. MoC in the field of healthcare and wellnessTo collaborate in the field of primary healthcare, prevention of non-communicable diseases, maternal and child health services, sanitation, hygiene, nutrition and elderly care.  
3. Memorandum of Understanding (MoU) in the field of food securityTo further the cooperation between the two countries, in the areas of food and water security.  
4. MoC in the area of food processingJapan plans to be involved with private companies in the field of agriculture, fisheries and food processing sectors, in order to improve farming productivity and decrease harvest and post-harvest losses.  
5. MoU between Council of Scientific and Industrial Research (CSIR), India and Hiroshima University, Japan for promoting research partnership  Both countries plan to promote research partnership in areas of electronics, sensors, robotics, intelligent transportation, etc.  
6. MoU between CSIR and Research Centre for Advanced Science and Technology (RCAST), the University of Tokyo, Japan for promoting research partnership  Both countries have committed to explore the opportunities for research partnership in the areas of sustainable and renewable forms of energy, electronics, robotics, IoT etc
7. MoC in the field of environment cooperation  Both countries have committed to explore the possibilities for collaboration in the areas of environmental protection and improvement.  
8. MoU between Indian Institute of Technology Hyderabad (IIT-H), India and Hiroshima University, Japan and other institutes, in the field of academicsIndia and Japan have planned to promote joint research and exchange of students and faculties between the institutions
9. MoU between Sports Authority of India (SAI), India and University of Tsukuba, Japan, in the field of academics and sports  Both countries have planned to strengthen cooperation in the field of sports development, through joint programmes.
10. Joint Venture (JV) Agreement between State Bank of India (SBI) and Hitachi Payment Services Pvt LtdThis JV, namely, SBI Payment Services Pvt. Ltd, is a state-of-the-art digital payments platform for India and other countries.  

Japan has so far invested an amount of approximately USD 33,080.56 Million during the period of April 2000 to December 2019 in India. The said investments have been made pertaining to water and sanitation projects, improvement of water quality of River Ganga, roads and highways connectivity improvement projects, biodiversity conservation and forest management projects, etc in the North-Eastern parts of India. Japan has further planned to collaborate with India in the field of unmanned ground vehicles, robotics and outer-space activities, cyber security-based projects, etc. Japan has also committed to make India, a manufacturing destination for companies across the globe.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

GOVERNMENT RELIEF MEASURES FOR MICRO-SMALL-MEDIUM ENTERPRISES

The Government of India has recently announced certain #relief measures for supporting the micro, small and medium enterprises (#MSMEs), financial institutions and other businesses, during the #Covid19 crisis.

The Covid-19 Pandemic has adversely affected trade and commerce across the globe. The Government of India had declared a lockdown around 22-03-2020 to contain the spread of Coronavirus. As a result, number of businesses, especially MSMEs, were forced to shut down their operations. This has resulted in loss of income and revenue generation.

Thus, with a view to support the MSMEs, the Government of India recently introduced the following relief measures from 12-05-2020 to 14-05-2020:

Currently, MSMEs have been facing problems of revenue generation due to the Covid-19 crisis. But it is strongly believed that the aforesaid Government measures would help to boost entrepreneurship and revive the economic growth of the country.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer & Allied Services

THE BEGINNING OF VIRTUAL COURTS : CASE ANALYSIS OF SWAPNIL TRIPATHI v. SUPREME COURT OF INDIA 2018

The unprecedented crisis caused by the #Coronavirus #Lockdown has compelled the Justice Delivery System to take recourse to video-conferencing to deal with the crucial legal matters. The likelihood of video-conferencing is expected to stay with Judges noticing its time-saving potential and ability to fast-track cases. However, adapting to this new technology, having virtual courts is not going to be without glitches. Introduction of any new system always has teething problems and so will this but that does not stop us from trying it.

Right now proceedings can only be viewed by the lawyers and their clients and are not available for public viewing. Many legal experts postulate that while technology is here to stay, it should not erode the rule of law. In the end, the #credibility of the court and its authority depends upon the conduct of open hearings.

The question which arises is how can courts retain public confidence in a post-pandemic world where digital pathways will have to be resorted to? One option is live streaming, which the Supreme Court itself had upheld in 2018. Justice D.Y. Chandrachud, had authorized it in the matter of Swapnil Tripathi v. Supreme Court of India, [(2018) 10 SCC 628] saying “sunlight is the best disinfectant”.

BRIEF FACTS OF THE CASE

In 2017, various individuals and groups filed #petition(s) before the Supreme Court of India under Article 32 of the Constitution. The Petition was seeking a declaration that “Supreme Court case proceedings of constitutional importance having an impact on the public at large or a large number of people should be live streamed in a manner that is easily accessible for public viewing”. In addition, the Petition also sought guidelines from the Court to enable the future determination of cases that would qualify for live streaming.

The Petitioners relied on the Supreme Court case namely Naresh Shridhar Mirjkar v. State of Maharashtra [(1966) 3 S.C.R 744] (‘Mirjkar’) wherein it was held that Article 19 of the Constitution included the right of journalists to publish reports of court proceedings. In that case the Court had emphasized “the efficacy of open trials for upholding the legitimacy, effectiveness of the Courts and for enhancement of public confidence and support”.

LEGAL ISSUES:

  1. Whether there should be live dissemination of proceedings before this Court with the aid of information and communications technology (ICT).
  2. Whether live streaming of court proceedings should be introduced in India, and if so, under what conditions.

DECISION:

The Judgment was delivered by a three-judge Bench of the Supreme Court of India. Justice Khanwilkar delivered the majority Judgment on behalf of himself and Chief Justice Deepak Mishra. Justice D.Y. Chanrachud delivered a separate concurring Judgment.

The Bench ruled that proceedings of cases having constitutional and national importance before the #SupremeCourt should be broadcast to the public.

The Judgment is a significant decision on the concepts of Open Justice, access to public information and transparency in the judicial process. Though the Judgment only directs that certain proceedings in the Supreme Court be live-streamed for the time being, it has opened the doors for live-streaming to be extended to all proceedings in the Supreme Court, High Courts and proceedings in lower courts.

HELD

The Court held that the ability to view live broadcasts of the Supreme Court proceedings flowed from the right of access to justice in the Constitution. The Court said that this right should not be absolute. It provided a set of Model Guidelines which should govern the courts’ discretion on when such broadcast should be used.

ANALYSIS AND OBSERVATIONS ON THE DECISION

The Court requested the Attorney General for India, Mr K.K. Venugopal (AG) to collate the suggestions given by him as well as the Petitioners and submit a comprehensive note for evolving a framework, in the event the relief claimed in the Writ Petition(s) to be granted.

While generally agreeing with the Comprehensive Guidelines for live-streaming of Court proceedings in the Supreme Court suggested by the AG, the Court recorded the following observations:

  1. The Court while considering the Petition observed that there is an express stipulation in Article 145(4) of the Constitution that such pronouncements shall be made in open court. It further held that “no such express provision is found in the Constitution regarding open court hearing before the Supreme Court, but it can be traced to provisions such as Section 327 of the Code of Criminal Procedure, 1973 (CrPC) and Section 153-B of the Code of Civil Procedure, 1908 (CPC).”
  2. The Court acknowledged that there was “unanimity between all protagonists that live streaming of Supreme Court proceedings at least in respect of cases of Constitutional and national importance, having an impact on the public at large or on a large number of people in India, may be a good beginning”.
  3. The Court discussed the importance of the rights involved in such a case, and the need to balance such rights that is access to justice while taking into account the privacy of the litigating parties and the dignity of the courts. It referred to the Mirajkar case (supra) which had held that the right to freedom of expression under Article 19 of the Constitution should be interpreted to allow journalists to carry on their occupation by attending Court proceedings.
  4. The Court noted that the right of access to justice as set out in Article 21 of the Constitution, which protects the right to life and liberty, would be meaningful only when the public gets access to the proceedings. In addition, the Court commented that the State has an obligation to spread awareness about the law to enable individuals to understand the law. The Court also remarked, that it was now well settled that Article 19(1)(a) of the Constitution confers the right to know and receive information. So the public is entitled to witness Court proceedings.
  5. The Court also referred to the Indian case of Olga Tellis v. Bombay Municipal Corporation [(1985) 3 SCC 545] which had reiterated the value of a hearing by emphasizing the principle that “justice must also be seen to be done”. It also referred to the cases of Life Insurance Corporation of India v. Manubhai [1992 (3) S.C.R. 595] and Mohd. Shahabuddin v. State of Bihar [(2010) 4 SCC 653]. These cases highlighted the importance of open courtrooms in assisting the dissemination of information.
  6. The Court concluded that live streaming should be accepted “so as to uphold the constitutional rights of public and the litigants”. It also added that it had sought to balance the interests of administration of justice, including open justice, dignity and privacy of the participants to the proceedings.

The Court also pointed out the multiple reasons why live-streaming would be beneficial to the judicial system. It stated the following:

  1. The technology of live-streaming injects radical immediacy into courtroom proceedings. Each hearing is made public within seconds of its occurrence.
  2. Introduction of live-streaming will effectuate the public’s right to know about court proceedings. It will enable those affected by the decisions of the Court to observe the manner in which judicial decision are made.
  3. Live-streaming of courtroom proceedings will reduce the public’s reliance on second-hand narratives to obtain information about important judgments of the Court and the course of judicial hearings.
  4. Viewing court proceedings will also serve an educational purpose. Law students will be able to observe and learn from the interactions between the Bar and Bench.
  5. Live-streaming will enhance the rule of law and promote better understanding of legal governance as part of the functioning of democracy;
  6. Live-streaming will remove physical barriers to viewing court proceedings by enabling the public to view proceedings from outside courtroom premises. This will also reduce the congestion which is currently plaguing courtrooms.
  7. Live-streaming is a significant instrument of enhancing the accountability of judicial institutions and of all those who participate in the judicial process.

The Court concluded by reiterating that the Supreme Court Rules, 2013 will have to be suitably amended to provide for the regulatory framework. The Judgment also undertook an analysis of the situation in comparative jurisdictions and identified some common trends. Which included the following points such as requirement of a minimal delay in live broadcast, that the Court retains copyright of the broadcast, that the presiding judge retains discretion to regulate the broadcast, etc. The Court also discussed the importance of beginning with a pilot project, and the potential for exclusion from broadcast of certain cases.

Dr D.Y. Chandrachud, J. delivered a separate concurring opinion wherein he formulated Model Guidelines for the broadcasting of the proceedings and other judicial events of the Supreme Court of India.

CONCLUSION

To summarize the said Judgment, the Court conveyed that the live-streaming must not compromise the integrity of the Justice System. The majesty and decorum of the Courts must not be compromised. We can consider the various steps taken by the Judiciary after this Judgment and especially, during the Coronavirus Lockdown with regard to fair functioning of the judicial mechanism. One thing is sure, that the Judiciary is looking at a virtually efficient judicial system in India.

The Judiciary cannot afford more delays. As crucial hearings are awaited decision in cases such as the Citizenship (Amendment) Act, and the use of Money Bill amongst others. Neither can the court afford to delay decisions on important public matters which involve scams and other criminal cases.

Lakshmi Vishwakarma

Associate

The Indian Lawyer & Allied Services

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer & Allied Services

TIL Legal Speak: Episode 1: Force Majeure and Frustration of Contract

In the wake of this #Covid19 crisis, it has become extremely important for individuals, professionals and #businesses to understand the concept of #forcemajeure and #frustrationofcontract. You can check the following link for expert opinion on the same:

Video Credits:

Speaker- Adv. Sushila Ram Varma

Moderator- Adv. Harini Daliparthy

Written and Edited By: Team, The Indian Lawyer & Allied Services

Category: Legal

TIL Legal Fundamentals: Episode 7: Law of Injunctions

In the aftermath of #Coronavirus, there will be several contracts that will be breached. This #Episode deals with #injunctions as a preventive relief available to an #aggrieved party, to restrain the defaulting party from doing an act or omission.

The Indian Lawyer & Allied Services is a multi-city commercial and business boutique Law Firm that provides advice in different aspects of #ContractLaw and has expertise in corporate and commercial #laws.

Thus, it is our endeavor to bring before you the Seventh Episode of our #YouTube Series called ‘TIL Legal Fundamentals’ and enable contracting parties to understand the law of injunctions in India.

To see the Video on Law of Injunctions, please visit the link below:

VIDEO CREDITS:

Starring- Adv. Daliparthy Harini

Written and Edited By: Team, The Indian Lawyer & Allied Services

Category: Legal

GOVERNMENT CLARIFICATION ABOUT RESIDENTIAL STATUS OF NON-RESIDENT INDIANS DURING COVID-19 CRISIS

The Government of India has recently issued a clarification vide #Circular dated 08-05-2020, about the residential status of a non-resident Indian (#NRI) staying in India during the #Covid19 crisis.

The #IncomeTax Act 1961 as amended thereof (the Act) contains provisions to determine the status of a person residing in India, i.e. whether he is an Indian #resident or an NRI. Section 6 of the Act provides that an individual can be said to be a resident of India, if he has stayed in India, for 182 days or more in a particular year, or if he has stayed in India for at least 365 days in all the preceding 4 years and for a period of 60 days in each such year (#ResidentialPeriod). Thus, an individual who has stayed in India, for a period less than the Residential Period, would be considered as an NRI.

But in the wake of Covid-19 crisis, the Government of India had declared a nation-wide #Lockdown, around 22-03-2020. As a result, the Government imposed restrictions on domestic and international travel. Thus, in view of the Lockdown and travel restrictions, people, who had come on a visit to India, have had to stay back for a prolonged period. As a result, they were at risk of losing their NRI status, as Section 6 states that an individual who stays in India for a period more than the Residential Period, shall lose his NRI status.

Thus, the Central Board of Direct Taxes (#CBDT) issued the Circular dated 08-05-2020 to clarify the residential status of the following categories of individuals, who had to stay back in India due to the Lockdown and travel restrictions:

1- If the individual had come to India on a visit before 22-03-2020, but has not been able to leave India, on or before 31-03-2020:

In such a case, the period of his stay in India from 22-03-2020 to 31-03-2020, would not be taken into account for computing the number of days of his stay in India. This would ensure that he does not lose his NRI status, as Section 6 states that an individual who stays in India for a period more than the Residential Period, shall lose his NRI status; or

2- If the individual had come to India on a visit before 22-03-2020, but has been quarantined in India on account of Covid-19, on or after 01-03-2020:

i) In such a case, if he has departed on an evacuation flight on or before 31-03-2020, then his period of stay from the beginning of his #quarantine to his date of departure, would not be taken into account for computing the number of days of his stay in India. This would ensure that he does not lose his NRI status; or

ii) If he has been unable to leave India on or before 31-03-2020, then the period of his stay from the beginning of his quarantine to 31-03-2020, would not be taken into account for computing the number of days of his stay in India. This is to make sure that he does not lose his NRI status; or

3- If the individual had come to India on a visit before 22-03-2020, but has departed on an evacuation flight on or before 31-03-2020:

In such a case, the period of his stay in India from 22-03-2020 to his date of departure, would not be taken into account for computing the number of days of his stay in India. This is to ensure that he does not lose his NRI status.

Further, in view of the extended Lockdown situation and travel restrictions, the Government has planned to issue a revised circular to exclude the period of stay of such individuals till the time international flights resume their operations, so that they do not lose their NRI status.

The aforesaid Government measures show the Government’s endeavor to curtail the spread of Novel Coronavirus and to ensure the safety of people residing in India. It has also ensured that Indians who have an NRI status do not lose their status due to overstay in India due to the Lockdown or quarantine that is applicable to the country.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

SUPREME COURT SEEKS GOVERNMENT REPLY ON THE VALIDITY OF ITS ORDER DATED 29.03.2020

Introduction

The nationwide #lockdown imposed to curb the outbreak of Corona virus is an action regulated by the Disaster Management Act, 2005 (the ‘Act’). The World Health Organization (#WHO) has declared the present situation as pandemic on 12.03.2020.

The provision of the Act, 2005, was invoked on 24.03.2020, after which the Prime Minister, Narendra Modi, announced the nation-wide lockdown, from 25.03 2020 and this has been extended till 17.05.2020.

Measures of the Government

In India, a review of the current situation demands immediate measures by the Government to control the spread of this Pandemic. In respect of which earlier an Order dated 24.03.2020, was passed by the National Disaster Management Authority in exercise of its power under Section 6(2) (i) of the Act, [Order no. 1-29/2020-PP (pt. II)]. Thereby, all the States and Union Territories (UTs) declared invocation of Section 2 of the Epidemic Diseases Act, 1897, which makes advisories issued by the Ministry of Health Welfare/State/UTs legally enforceable.It also issued guidelines to Ministers/Departments of Government of India, State/Union Territory Governments and Authorities for strict implementation to prevent the spread of COVID-19 in the country.

Thereafter, the Government issued Order dated 29.03.2020, under Section 10(2)(l) of the Act, to deal with the situation and for effective implementation of the lockdown measures, and to mitigate the economic hardship of the migrant workers. Wherein, the Government also directed that“All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown;”

Government Order under Disaster Management Act, 2005

It is significant to understand the object and purpose of the Act, 2005 which is to manage #disasters, including preparation of mitigation strategies, capacity-building and more. Directing employers to not reduce or pay full wages/salaries to their employee’s is not within the powers of the Government under Section 10(2) (l) of the Act. The Act is applicable to provide for the effective management of disasters and for matters connected therewith or incidental thereto. Section 10(2)(l) of the Act, is reproduced here for reference;

10. Powers and functions of National Executive Committee.—(2) Without prejudice to the generality of the provisions contained in sub-section (1), the National Executive Committee may—

(l) lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster;

It appears that the Government wants to reduce the suffering of workers due to the lockdown. Though the intention maybe appreciable all decisions of the Government to balance the situation rather than target one part of the society. The Government while passing the Order missed the hardship which can be faced by the employers/establishments due to enforcing of such directives. The industry which was already plagued by a global crisis in the last few months is further burden by the current lockdown. The Government should have kept this in mind before passing Order dated 29.03.2020. Every decision has two sides of the coin. Every debit entry has a corresponding credit entry. But the Government did not consider side of the employer while issuing the aforesaid advisories.

Impact of Government Order dated 29.03.2020

The scope of the Act is regulation over disaster management and empowers committees to frame plans to control disasters. A bare reading of the provisions of the Act would show that powers have not been vested with either the State or the Central Government to direct private employers to pay wages during a disaster when the #employees are not working.

As a result,a writ petition was filed before the Hon’ble Supreme Court of India on 21.04.2020 namely Ludhiana Hand Tools Association v Union of India and Others. The validity of Government Order dated 29.03.2020 under Section 10(2)(l) of the Act, was challenged under Article 32 of the Constitution of India,before the Hon’ble Supreme Court of India by various other private firms, association and establishments, separately. The Petitions are seeking an appropriate writ for setting aside or quashing of Government Order dated 29.3.2020 issued by Ministry of Home Affairs, Government of India, under Section l0(2)(l) of the Act, only to the limited extent wherein the private establishments are directed to pay full #salaries to all workers/employees, contract or casual workers during the period of COVID-19 lockdown.

The following legal issues were raised in the various Petitions before the #SupremeCourt;

  1. Whether Disaster Management Act, 2005 empowers Central Government to issue directions to private establishment for payment of full wages/salary during a disaster under Section 10(2)(l) of the Act.
  2. Whether under the Act, the Government of India can direct private establishments to pay full wages, when Industrial Disputes Act, 1948, provides for payment of 50% wages under similar circumstances.
  3. Whether the Impugned Government Order violates Article 14 and l9 of the Constitution of India.
  4. Whether Government of India issued the Government Order dated 29.03.2020 in undue haste and without considering the financial ability of private establishments to bear the burden of full wages during the period of lockdown.

A three-judge Bench, led by Justice N.V. Ramana, passed an Order dated 27.03.2020 in one of the matter namely FicusPax Private Limited v. Union of India and Others, wherein it allowed Solicitor-General, Mr Tushar Mehta, appearing for the Government, to file his response to a batch of petitions filed by several companies challenging the constitutional validity of the Government Order dated 29.03.2020, which mandates that industry, shops and commercial establishments, without exception, pay their workers without any deduction during COVID-19.

Conclusion

To conclude, it is imperative to say that the language of the Act and in particular Section 10(2) (l) of the Act has nothing to do with payment of salaries/wages, much less mandating private establishments to pay salaries against no work.Whether private establishments can be compelled to pay full salaries when no work is done, is a question to be decided. Further such an Order curtails the employers’ fundamental right to trade or business under Article l9(1)(g).

It should not be overlooked that the nationwide lockdown is for an undefined period. This situation presents several challenges for both the employers and employees. It is irrational to treat all private establishments alike irrespective of the profit and loss incurred by them or their revenues and turnover. A private establishment suffering loss with huge debts to repay cannot be equated with an establishment earning profits. There is no rational for treating them alike.The Order must be examined afresh as it is impossible to comply with.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

FORCE MAJEURE: ITS RELEVANCE AND APPLICABILITY TO CONTRACTS

What is force majeure?

The #Pandemic, #Covid-19, has seen to a rise in #forcemajeure cases. What is force majeure is a question that pops up often in several minds. Typically, force majeure would mean an unforeseen and unstoppable event that prevents parties from performing their obligations under a #contract. It is sometimes also known as an act of God.

It can also be explained as an event that could not have been anticipated or controlled and effects the contractual performance by the parties making it #impossible or impracticable to continue with the contract. The event is temporary in nature. However, the affected parties must ensure that they have taken all measures under the contract to mitigate the damage.

Is force majeure clause mandatory in a contract?

A force majeure clause is not mandatory in a contract. Generally, a force majeure clause incorporates all presumed events that the parties have identified. It is a possibility that a force majeure clause may not contain all presumed events as events like the Pandemic are new to the world. However, the use of epidemic would probably suffice in such a clause for invocation of force majeure during Covid-19.

It can only be invoked if there is a provision in the contract that has listed out the particular force majeure event. Therefore, many contracts contain a force majeure clause that limits damages or excuses performance when an “act of God” or circumstances beyond the parties’ control, prevent either party from fulfilling its obligations.

However, courts typically construe force majeure clauses narrowly and literally and it will only excuse performance, if the contract expressly includes the particular event. In order for COVID-19 to be considered as a force majeure event, it should explicitly contain a specific reference to a “pandemic,” “3epidemic,” “virus,” “disease,” “#quarantine,” “#lockdown”, “travel restriction,” or “state of emergency”, “national emergency”.

In many force majeure clauses, many of these words would not have been included, as the Pandemic is unique in its nature. However, that is not to say that all the above words should be there in the clause. Even the use of one of the words would suffice for invocation of force majeure. It is now a given that post-Pandemic, all force majeure clauses will have to be well-worded and should include all situations that are unforeseen, unstoppable and beyond the control of the parties.

What happens if there is no force majeure clause in the contract?

The Supreme Court of India has held that force majeure clauses have to be narrowly construed; many instances of invocation of force majeure may not fall within the force majeure clause. However, that is not to say that in the event of impossibility to perform one’s contractual obligations due to an unforeseen and unstoppable event that is beyond the control of the parties, there is no remedy.

In such cases, parties can plead frustration of contract under Section 56 of the Indian Contract Act 1872 and seek discharge. The Section provides that where a party to a contract finds it impossible to perform its obligations due to some event which is unforeseen and unstoppable and prevents it from performing its obligations, then such a contract will be deemed to be frustrated. In an important Judgment of the Supreme Court Satyabrata Ghose vs Mugneeram Bangur & Co., and Another 1954 SCR 310,the Apex Court held that the word ‘impossible’ does not have to be taken only in its literal sense and can mean impracticability of performance from the point of view of the parties. Essentially, frustration would be deemed to have occurred when it makes the performance impossible as it strikes the very root of the matter.

In M/S. Alopi Parshad & Sons, Ltd vs The Union of India AIR 1960 SC 588, the Petitioner sought to invoke force majeure as the price of ghee that had to be supplied had gone up substantially. The Court, however, declined to give relief to the Petitioner as it held that commercial impossibility or hardship was no ground for discharge from contractual obligations.

In another important case of The Naihati Jute Mills Ltd vs Hyaliram Jagannath AIR 1968 SC 522, the Supreme Court once again referred to ‘frustration’ and relied upon the English law of frustration. It further held that a party can be absolved from performance of its part of contract, if it is impossible to perform.

In the most recent Supreme Court Judgment of Energy Watchdog vs Central Electricity Regulatory Commission (2017) 14 SCC 80,the invocation of force majeure was again taken up. In the said case, the Petitioners held that they were invoking the force majeure clause, as there was a change in the laws of Indonesia, which made the price of coal go up. Thus, making it impossible for the Petitioner to fulfill its obligations under the contract. The Supreme Court was of the view that merely because the price of a basic raw material had gone up, the contract could not be deemed to be frustrated. It observed as follows:

37. It has also been held that applying the doctrine of frustration must always be within narrow limits. In an instructive English judgment namely, Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH, 1961 (2) All ER 179, despite the closure of the Suez Canal, and despite the fact that the customary route for shipping the goods was only through the Suez Canal, it was held that the contract of sale of groundnuts in that case was not frustrated, even though it would have to be performed by an alternative mode of performance which was much more expensive, namely, that the ship would now have to go around the Cape of Good Hope, which is three times the distance from Hamburg to Port Sudan. The freight for such journey was also double. Despite this, the House of Lords held that even though the contract had become more onerous to perform, it was not fundamentally altered. Where performance is otherwise possible, it is clear that a mere rise in freight price would not allow one of the parties to say that the contract was discharged by impossibility of performance.

38. This view of the law has been echoed in ‘Chitty on Contracts’, 31st edition. In paragraph 14-151 a rise in cost or expense has been stated not to frustrate a contract. Similarly, in ‘Treitel on Frustration and Force Majeure’, 3rd edition, the learned author has opined, at paragraph 12-034, that the cases provide many illustrations of the principle that a force majeure clause will not normally be construed to apply where the contract provides for an alternative mode of performance. It is clear that a more onerous method of performance by itself would not amount to a frustrating event. The same learned author also states that a mere rise in price rendering the contract more expensive to perform does not constitute frustration.

What events are not force majeure?

Generally, the parties to a contract may give an inclusive list of force majeure events such as act of God (earthquake, tsunami, floods, tide, storm, hurricane, tornado, cyclone), war, insurrection, riot, civil commotion, strike, explosion, fire, break down of machinery, epidemic, government regulations,radioactive contamination etc. However, there is no uniform set of events that constitute force majeure.

Instead, force majeure remains a flexible concept that permits the parties to add presumed/expected events that correspond to their unique course of dealings.

However, events that have been self-induced by the parties to cause breach of contract will not fall within the definition of force majeure.

Similarly, events that show commercial adversities or impossibilities that adversely affect parties or cause a commercial loss will not be accepted as a force majeure condition or a condition for discharge from contract.

Is notice mandatory for invocation of force majeure?

The parties that are taking the plea of force majeure must do so by giving a notice of the force majeure event at the earliest, to the other party, during the pendency of the event. Failing which it will not be deemed to be invocation of the force majeure clause.

What is the result of invocation of force majeure?

The force majeure event may either suspend or terminate the contract. It may also allow the aggrieved party to excuse the performing party’s performance, till the time such as the event continues. However, such an excuse would not be deemed to be a waiver of its rights under the contract. It would also allow the parties to re-negotiate the contract, if they so wish to.

How should a force majeure clause be drafted?

1- The parties while drafting a force majeure clause should bear in mind that the suspension of work or termination of the contract should be within a particular time frame.

2- The clause that is drafted should have an all inclusive list of events or circumstances that could impede a party from performing one or more of its contractual obligations.

3- The clause should clearly set out that the event must be unforeseen, unpredictable and beyond the reasonable control of either party and that such an event would make performance of obligation impossible. 

4- The clause should also set out that the party invoking the clause is relieved from its duty to perform its obligations and from liability for damages for the breach of contract.

5- Another important point that should be added in such a clause is that any party who knew that performance was impossible yet who has availed of any monetary benefit from the signing of the contract, should refund the said monetary benefit.

6- The clause should also include a provision regarding invocation by written notice at the earliest possible time, upon the occurrence of the event.

7- And lastly, the parties may have a clause that allows for extension of time for performance in case of a force majeure event or renegotiating the contract.

Sushila Ram Varma

Chief Legal Consultant

The Indian Lawyer & Allied Services

WILL THE INDO-JAPANESE ALLIANCE ATTAIN THE NEXT LEVEL

#Japan enjoys tremendous goodwill and esteem globally for their efficiency and skill sets. However, in #India there is a special affinity towards Japan for several reasons.

Japanese #companies that had set up businesses in India have done extremely well.

The Prime Ministers of both countries have created the Indo-Japan Strategic and Global Partnership to ensure economic growth for both countries. They have announced “Japan and India Vision 2025 Special Strategic and Global #Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World”, a Joint Statement that would serve as a guide post for the “new era in Japan-India relations.”

India has established the “Japan Plus” Office in the Ministry of Commerce and Industry as early as October 2014, as a “one-stop” location for resolving problems faced by Japanese companies.

India has been the largest recipient of Japanese Official Development Assistance (ODA) #Loans in the past decades. Delhi Metro is one of the most successful examples of Japanese cooperation through the utilization of ODA. Japan has pledged to cooperate on supporting strategic connectivity linking South Asia to Southeast Asia, through the synergy between ”Act East” policy and ”Partnership for Quality #Infrastructure.”

In terms of human resource development in the manufacturing sector in India, Japan has announced its cooperation of training 30,000 Indian people over next 10 years in the Japan-India Institute for Manufacturing (JIM), providing Japanese style manufacturing skills and practices, in an effort to enhance India’s manufacturing industry base and contribute to “Make in India” and “Skill India” Initiatives. JIM and the Japanese Endowed Courses (JEC) in engineering colleges will be designated by Japanese companies in India, and this is a good example of cooperation between the public and private sectors. In summer 2017, the first four JIMs started in the States of Gujarat, Karnataka, Rajasthan and Tamil Nadu, and the first JEC was established in the State of Andhra Pradesh. Since then, four more JIMs and one JEC have started. Those institutes are also expected to give more Indian students the ambition to study the Japanese language.

During the period of April 2000 to December 2019, Japan has #invested an amount of approximately USD 33,080.56 Million in India. 

Companies in India

There are around 1,441 Japanese companies registered in India. These companies have around 5,102 business establishments spread across various states like Karnataka, Tamil Nadu, West Bengal, Delhi, Mumbai and Gujarat.  List of these Japanese companies in India is attached.

Sectors

India and Japan have been collaborating with each other in the following #sectors:

1. Steel and Iron-Ore Industry

2. Infrastructure

3. Construction

4. Forest and Disaster Management

5. Automobile, Trains and Locomotives

Some of the important Indo-Japanese ongoing projects are as follows:

1. Clean India Project (Swachh Bharat Abhiyaan) –

This Project aims to maintain overall cleanliness of the streets, roads, and public properties in India.

The Japan International Cooperation Agency (JICA), a Japanese Governmental Agency in India, has funded a total of 25 water and sanitation projects in India, thereby disbursing loans of approximately USD 7 Billion, as on 30-01-2020.

2. Ganga Rejuvenation Project –

JICA has extended loans of approximately USD 105 Million for improvement of water quality of River Ganga at Varanasi in 2015.

3. Development of North-Eastern parts of India –

India and Japan have collaborated for road and highway connectivity improvement projects, biodiversity conservation and forest management projects, etc in the North-Eastern parts of India.

Future plans

1- Japan plans to collaborate with India in the field of artificial intelligence, internet of things and 5G technologies.

2- India and Japan have planned to collaborate in the agriculture and food processing sectors, in order to improve farming productivity and decrease harvest and post-harvest losses.

3- India and Japan have also planned to strengthen bilateral cooperation in the defence equipment and technology sector. There have been interactions between both the countries with regard to cooperative research in the field of Unmanned Ground Vehicle (UGV), Robotics and US-2 amphibian aircrafts, etc.

4- Both countries have planned to strengthen cooperation in exploring outer-space activities, such as the Joint Lunar Polar Exploration Mission.

5- Both countries have committed to explore the possibilities for collaboration in the areas of sustainable and renewable forms of energy, food and water security, environmental protection, cyber security based projects, etc.

6- Further, Japan has committed to contribute to the Make-in-India and Skill India Projects of India, for the purpose of making India, a manufacturing destination for companies across the globe.

Sushila Ram Varma

Chief Legal Consultant

The Indian Lawyer & Allied Services

And

Team, The Indian Lawyer & Allied Services