Case BriefsCOVID 19Tribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): Vanaja N. Sarna (Information Commissioner), observed that,

For a CPIO to be able to ascertain the impediment to life and liberty of a person, there ought to be some consideration between the information seeker and the person whose life and liberty is at stake.

Appellant in the present matter stated that a 9-member committee was set up in April 2020 to ensure the adequate availability of medical oxygen in the wake of the COVID-19 Pandemic.

With respect to the above, applicant sought certain information.

Due to non-provision of the information sought under Section 8(1)(a) and (d) of the RTI Act, second appeal was filed.

Analysis, Law and Decision

Commission observed that,

“…life and personal liberty are the most valuable possessions of an individual. The value for life, liberty and property are not merely a norm or a policy of the State but an essential prerequisite of any civilized society.”

Coram relied on the decision of this Commission in Venkatesh Nayak v. Department of Defence, 24-07-2019,

“Commission remarked at this instance that the instant RTI Application has been filed on the grounds that it concerns life and liberty of a person, however, it is not clear from the facts on record as to how life and liberty of a third party Lt. Col. Dharamvir Singh concerns the Appellant.


 Commission clarified that it is not the locus standi vis-a-vis the RTI Act that is being questioned but locus standi of the Appellant vis-à-vis the life and liberty of Lt. Col. Dharamvir Singh. In other words, Commission inquired if the affected person or his wife who allegedly filed the FIR reached out to the Appellant to pursue their case or if the Appellant is aware of what prevented the affected party or his wife from seeking this information.


 It may be noted that since every case involving the life and liberty of an individual will not invariably concern human rights violation, the considerations advanced by the Appellant to contest locus standi on the claim of human rights violation of the said officer is deemed as extraneous in the instant case.


 For a CPIO to be able to ascertain the impediment to life and liberty of a person, there ought to be some consideration between the information seeker and the person whose life and liberty is at stake.”

Further, in the matter of Sehar Singh v. PMO, while dealing with the query of “when is the question of life and liberty to be considered a matter of concern?” laid down the following parameters:

“-The RTI application be accompanied with substantive evidence that a threat to life exists (eg. Medical report).

-If, the claim of concern for life and liberty is not accepted in a particular case by the public authority, the reasons for not doing so, must be given in writing while disposing of the application.”


In the instant matter, in view of the above discussion, the Commission came to the conclusion that the Parliament has made a very special exception for cases involving “life or liberty of a person” so that it would be used only when an imminent threat to life or liberty is involved.

Coram added that appellant referring to the matter as being related to the public at large, and not ‘a person’ as specified in Section 7(1) proviso and in the interest of preventing the damage caused by pandemic is not sufficient to invoke this particular clause of 48 hours reply timelines, when apparently, the Appellant failed to substantiate as to how information sought in the instant RTI Application has a bearing on his life and liberty or of any other person.

Further, the Commission stated that the appellant also failed to quote any particular instance in which any individual related to him was affected due to non-disclosure of the information. Therefore, the life and liberty of whom the appellant was pleading for was non-existent.

Though, the Commission found the matter to be of greater public interest. 

In the opinion of Commission, the matter was unprecedented and hence the appellant’s plea that disclosure of information would have helped in holding discussions with the Government is far stretched.

Whether there were enough steps taken by the authority or not in ensuring supply of medical oxygen?

Commission answered that the above-stated question was outside its jurisdiction.

Now, since the matter of life and liberty was rejected, Coram found the CPIO’s response on time. Though the delay was due to the ill health of CPIO.

Concluding the matter, Commission could not find any relation nor as a matter of fact, any justification of concerns of life and liberty of any person and therefore, there was no question of applicability of the proviso of Section 7(1).

CPIO vide letter dated 11.06.2021 had provided a cursory reply claiming exemption u/s 8(1)(a) and (d) and had failed to amplify the same with reasons. The fact of the reply being timely is justified but the denial was not justified in his reply. Further, he also failed to record his reasons for rejecting the applicant’s request to consider the same under the clause of “life and liberty”. The CPIO is, therefore, cautioned to be careful in future and ensure that he follows the provisions of the RTI Act implicitly.

CPIO contended that “…the proposals considered by the empowered group contain commercial business, technological and strategical information pertaining to several government and private entities which qualifies as commercial confidence and/or intellectual property and the disclosure of the same would impair and irreparably harm the competitive position of such government and private entities constituting third parties. Thus, such information has been exempted from being disclosed u/s 8(1)(d) of the RTI Act.”

Further it was submitted that,  High level discussions of the empowered group frequently form part of the discussions within the highest decision-making body to avert and mitigate the impact of COVID-19 pandemic in the country and thus must be protected from disclosure given the larger intent to protect such information from being misused or being adversely used against the interest of the state.

Lastly, the Commission directed the CPIO to provide a suitable point-wise reply to appellant within 10 days. Coram added that any information if denied completely should be suitably justified with the application of the relevant clause.

In view of the above discussion, appeal was disposed of. [Saurav Das v. CPIO, DPIIT; CIC/DOIPP/A/2021/625997; decided on 29-07-2021]

Advocates before the Commission:

Appellant: Present over phone

Respondent: Karan Thapar, Deputy Secretary and CPIO, present over the phone

Op EdsOP. ED.


Every business owner would want to grow his/her company and make a profit. But there are many vulnerabilities to watch out for, like cartels. A cartel is a group of independent businesses that agree to engage in anti-competitive activities like fixing prices, allocating customers or markets, restricting production, or rigging bids. Cartels are harmful and illegal because they lead to higher prices, decreased product choice and less innovation. They can be big or small, with various degrees of formality and secrecy from a loose arrangement made over dinner to highly structured agreements with exclusive membership rules. In fact, you might be taking part in illegal behaviour and not even know it. Suppose Company X and Company Y are bidding for the same work. Company X agrees to drop its bid or raise its prices so the Company Y wins the contract. Or maybe a company and its competitor agree not to expand into each other’s markets, ensuring both sides remain profitable. Many business owners are not aware that these kinds of agreements are illegal under the Competition Act1 and can result in fines, jail time, or both.

Cartels in a specific type of oligopoly where entities that normally compete with one another reach agreements concerning fixing prices, setting mutually acceptable production targets, synchronising their marketing campaigns. Resultant in cooperating so as to one be more profitable compared to the competition scenario to no longer have to spend as much time and energy innovating which make it hard for new businesses to appear with the cartel making. These types of arrangements are made illegal in Section 3 of the Competition Act, 20022 under the head “anti-competitive agreements”. Economies of scale work in its favour and so examples include anything from infamous drug cartels to as strange as it may seem the Organisation of the Petroleum Exporting Countries (OPEC) in many countries such as the US cartels, violate so-called antitrust laws and are therefore illegal with notable exceptions such as OPEC which is protected by foreign trade laws despite congressional attempts to punish it all. The cons associated with cartels primarily revolve around potential legal consequences, yet in quite a few cases market participants decided to take their chances because in their opinion the pros outweigh them.

Now, these formal or informal arrangements for forming cartels should have an appreciable adverse effect then only it attracts the anti-competitive provision, the same has been enumerated in Section 19(3)3 read in conjunction with Section 3. The word “appreciable” has been defined in Law Lexicon as “capable of being estimated, weighed, judged of or recognised by the mind capable of being perceived or recognised by the senses, perceptible but not a synonym of substantial (Black’s Law Dictionary.)”. Therefore, agreements are considered illegal only if they result in unreasonable restrictions on competition. This is tested on the “rule of reason” analysis; an agreement has been defined only inclusively,4 and not exhaustively under Section 2(b) of the Act 4. According to the provisions of the Act, an agreement may be oral or in writing, and may or may not be enforceable by legal proceedings.5 Moreover, the basic requirement for establishing an arrangement is that the parties to it shall have communicated with one another in some way. In order to challenge the acts of any enterprise on the ground of causing appreciable adverse effect on competition it is sine qua non for the informant to establish that there existed an agreement between those enterprises. “Agreement” under Section 2(b) of the Competition Act, 2002 is modelled on the lines of Section 6(3) of the United Kingdom’s Restrictive Trade Practices Act, 1976 as follows:

  1. (b)“agreement” includes any arrangement or understanding or action in concert,—

(i) whether or not, such arrangement, understanding or action is formal or in writing; or

(ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;

Section 2(b), while defining “agreement”, takes within its sweep “any arrangement” or “understanding” or “action in concert”, even if it was arrived at informally and even if not intended to be enforceable.6 If any of these elements are found to be in existence, it can be said that there was an agreement. “Arrangement” is the scheme in which all participants first decide to operate and then operate it based on acceptance of mutual obligations towards each other.7 The term “understanding” implies some sort of behavioural communication between two or more parties resulting in the adoption of a particular course of conduct by them.8 This is no less than an understanding within the definition of “agreement”. “Concerted practices” are a form of coordination between undertakings by which, without having reached the stage of a formal agreement, practical cooperation can be traced.9 Enterprises might use it intentionally with the objective of using it as a tool to abuse the mechanism which is in its first place provided for mitigating losses and to rationalise significant supply of medical infrastructure and other essential commodities during the pandemic.

Legally speaking the antitrust authorities are concerned with the unprecedented situation which may tempt businesses towards efforts which may be anti-competitive and violate these abovementioned provision related to two most likely areas of potential infringement which is an abuse of dominant position and price gouging.

Having an understanding of cartelisation, undoubtedly corona has affected the economy and the supply chain itself. Due to the disruption or disproportionate supply chains and production processes of companies that are significantly interrupted by the COVID-19 outbreak, the World Health Organisation (WHO) has declared it as a “global pandemic” dated 11-3-2020. Companies are trying to find solutions in order to minimise the impacts of the pandemic on their businesses including cooperating with each other. Meanwhile, customers have been facing price hikes particularly on pharmaceuticals, medical equipment and food. In the whole process now, we have to examine how different guidelines have allowed the cartelisation and to what extent.

Exemption under guideline issued by various national and international authorities

After taking into consideration the situation and the impacts of COVID-19 on the economy, the European Union (the EU) has released a detailed guideline stating that the European Commission shall provide guidance and legal certainty to pharmaceutical companies who may need to coordinate to meet the high demand in the sector.10 Additionally, the Commission has also released a communication specifically for the airline sector, clarifying that it will not actively intervene against necessary and temporary measures taken to address a shortage of supply.11

According to the guidelines issued by the EU in the year, 2020 during the corona pandemic which allowed cartelisation and exempted cartelisation for the time being. It stated that the current confinement measures have led to a decrease in air freight capacity and price increases. The pharmaceutical industry relies mainly on small volume shipments by air. The member States should consider actions to ensure air cargo capacity for transport of medicines, APIs, intermediates, and raw materials in line with the Commission guidelines. Member States should encourage cargo and express airlines to exceptionally reserve capacity for the supply of essential goods, in particular medical and emergency supplies, and to apply reasonable shipping rates for such supplies.

Similarly, maritime cargo services need to run smoothly and without unnecessary delays to ensure the continuity of supply chains. In order to effectively facilitate transport, inland vessels travelling to manufacturing sites after or before pick up must also be allowed to cross borders without delays. Secondly, the Norwegian Competition Authority, Konkurransetilsynet has granted a temporary exemption from competition laws to the transport sector.12 The exception makes it possible, in particular, to maintain the transportation of passengers and goods in Norway in order to secure the population access to necessary goods and services. The exception does not go further than what is strictly necessary. Agreements and practices covered by the exception must to the largest extent possible further the efficient use of resources and the interests of consumers.13

Thirdly, the Icelandic Competition Authority has opened up an information centre dedicated specifically to responding to queries regarding the current pandemic.14 Fourthly, similar actions have been taken by the Finnish Competition and Consumer Authority in granting exemptions to collaboration aimed at securing the supply of essential goods and services. It stated that companies may need to work together to ensure adequate supply or the equal distribution of products to all consumers. The FCCA will not intervene in measures that are necessary to ensure the sufficient availability of products.15

Lastly, European Competition Network (ECN) issued a joint statement on the application of competition law during the corona crisis where it is stated that in the current circumstance after considering all the extraordinary situation, ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.16 Additionally, considering the current circumstances, such measures are unlikely to be problematical, since they would either not amount to a restriction of competition under Article 101 of TFEU17 and Article 53 of EEA18 or generate efficiencies that would most likely outweigh any such restriction.

Wherein, talking about the Indian stand on it, we have certain inbuilt safeguards which are provided by the antitrust legislation that if the acts undertaken by the enterprises do more harm than good. “Advisory to Businesses in Time of Covid-19” issued by the Competition Commission of India dated 19-4-2020, also specifies the same.19 When a price leader alters the price of his goods or services due to factors such as an increase in the cost of inputs, raw materials, or other related causes, most of the competitors will have no choice but to follow him, though the extent could vary. This cannot be said to be illegal because its behaviour is based on the sheer economic premise that any price increase taken by a small player ahead of the price leader would imply significant penalties in terms of loss of the customer.20

Also, there is a distinction between price cartelisation and a perfectly legitimate economic and business behaviour in responding to a situation in which a competitor is placed in a price leadership position. The doctrine of de minimis deals with the concept wherein agreements of enterprises with insignificant market shares have an insignificant effect on the market i.e. it is unlikely to cause an appreciable adverse effect on competition in the market, therefore capable of being used as a factor to militate against appreciable adverse effect on competition (AAEC).

Rule of severability applies, and nullity affects only the prohibited clauses in the agreement. A thing that is void is non est. The ECJ clarified the erga omnes nature of the nullity envisaged by Article 101(2), envisaging that the void agreement has no effect between the contracting parties, and thus cannot be set up against third parties.

In certain circumstances, it can be established that firms that are collaborating on some socially valuable activity may need to agree to do away with the competition to establish a cooperative relationship. Agreements are considered illegal only if they result in an unreasonable restriction on competition that is tested on the basis of “rule of reason” analysis. Where the agreement is formed to augment the supply of services against increasing demand in light of transporting essentials to those vulnerable affected by the pandemic, it qualifies the test of socially valuable activity. And this COVID-19 global pandemic has set such circumstances which make it the perfect example of creating a crisis cartel which the article will try to discuss in its next section in depth.

Crisis cartel

When facing an economic downturn, forming a crisis cartel could be a sound alternative to initiate cooperation with other operators to overcome shared challenges to survive in the economy. Crisis cartels are agreements or contracts entered into between two or more enterprises for a specific period which aimed at reducing overcapacity caused by exogenous factors. Over the years, several undertakings have attempted this, including by referring to the need in times of crisis to reduce overcapacity in a particular sector, or by referring to an imminent economic crisis that may force virtually all undertakings in the sector out of the market. These arrangements may end up being so-called “crisis cartels”, where a significant number of operators cooperate in order to find a common solution to their challenges in times of crisis and do it in a way that goes beyond what is lawful. Such agreements may, for example, have as their object to reduce overcapacity or agree on prices to prevent undertakings from going bankrupt or leaving the market.

In a judgment from 1984, the European Court of Justice held that an agreement of long duration between competitors concerning the supply of products constituted a violation of the prohibition of anti-competitive agreements. The Court held in this connection that competing producer undertakings were not allowed to enter into indefinite agreements on the reciprocal supply of unlimited quantities of products, although this could be allowed in certain circumstances if the object was to avoid emergencies in cases of force majeure. Hence, the judgment indicates that there may be a certain limited scope for action if the circumstances are so exceptional that it can be considered a real crisis.21

Additionally, Martijn Snoep, who is the Chairman of the board at Netherlands Authority for Consumers and Markets (ACM), has already declared that ACM will apply the competition rules in a more lenient manner during the corona crisis. Supermarkets, for instance, are allowed to inform each other about their stocks (exchange of sensitive competitive information, which is usually prohibited outside a crisis). Medicine wholesalers may also keep each other informed of the number of products that they sell. ACM has not yet been very explicit about the possibilities of forming crisis cartels, however, by looking at past precedent which is set for forming such crisis cartels can be beneficial in such troublesome times.22

In such exceptional circumstances the impact of a crisis on the incentive of firms to cartelise, firstly, will depend on the nature of the crisis, be it sectoral, national, or international. In each case, a crisis is taken here to refer to deterioration in economic performance indicators (such as demand) beyond that associated with a typical business cycle downturn. Second, in thinking through the impact of each type of crisis on the behaviour of cartel members it will be useful to identify how the crisis affects the business environment and, more importantly, the incentive to cartelise or to remain a cartel member. Fortunately, there is a well-established logic for thinking through such matters.

That even if a crisis-era policy towards cartels and cartel law enforcement has an established motive, or motives, that do not imply that the policy is necessarily “justified”. Evaluation of the relative merits of a specific policy proposal turns critically on the evaluation criteria and the alternative policy options considered. Concerning evaluation criteria, economists typically distinguish between so-called economic welfare criteria (consumer surplus and total welfare) and all other criteria, which are referred to as non-economic criteria.23

That given a non-economic objective and the willingness of policymakers to trade-off attaining this objective against the costs of doing so, then a crisis cartel is said to be justified if the associated contribution to the stated objective and the cost incurred as evaluated by the policymaker is the most beneficial option available.24

In case of Chinese Taipei, up to and including the east Asian financial crisis, the OECD Secretariat Paper for the 2006 Peer Review of Chinese Taipei’s competition law25 notes that  earlier the trend of policy was generally speaking towards restricting inter-firm rivalry. OECD in its review/report for the year 2008 stated that:

Policy attention to market competition has a long lineage, although the usual tendency was to suppress it. Rules against monopolisation and price-fixing can be found as far back as the code of the Tang dynasty. But central control has also been prominent. Cultural distrust of traders led readily to reliance on price controls and State regulation or ownership of resources and production. The private sector joined in anti-competitive restraints. Guilds were enforcing price-fixing agreements at the turn of the 20th century. As late as the mid-1980s, courts in Chinese Taipei were entertaining private competition suits in the form of complaints that competitors were cheating on cartel agreements. Meanwhile, the Government commonly intervened to protect the interests of enterprises.26

Even when a new fair trade law (FTL) was enacted in 1991, provisions exempting crisis cartels from prohibition on cartelisation were included.  Moreover, other exemptions that might plausibly be invoked in economic crisis were included such as “uniform specifications (to reduce costs, improve quality or increase efficiency), joint research and development, specialisation and rationalisation of operations, export cartels, import agreements, and agreements among SMEs to improve efficiency and strengthen competitiveness”.27

Competition during a severe crisis, such as coronavirus pandemic may show that only few companies survive in the market. It is often not favourable to competition in the medium to long term if straightaway there are hardly any parties remaining due to the competition during a crisis. The consumers may be faced with higher pricing or less freedom of choice, as well as a deduction in product or service availability or quality.  Therefore, temporary crisis cartel may prevent that unwanted scenario and can be helpful to the competition among companies and to the consumers in the medium to long term.

Similarly, in case of supermarkets28  by working together, it could provide a more consistent supply of food in the face of current demand increases for food supply. Sharing stock data and coordinating supply networks, distribution depots, delivery vans, which stores should remain open, and possibly personal exchanges are all part of this. For example, if one supermarket has a lot of fresh vegetables and the other does not, it would be good to coordinate the distribution of these items so that the customers may purchase them in both the stores. Moreover, medicine wholesalers also keep each other informed about the number of products that they sell.

In terms of cartel enforcement, Governments are responding to the following—

  1. Many law enforcement agencies have issued temporary guidelines defining when and where collaboration is permissible. Given that several industries have experienced supply constraints (for example, hand sanitiser), it is no surprise that many enforcement agencies’ efforts to date have been focused on tackling short-term capacity issues.

For example, companies may cooperate to “guarantee supply and equitable distribution of scarce products to all consumers”, according to a statement made by the European Competition Network. Temporary remedies are thought to be unlikely to impede competition in such instances, or if they do, they are likely to provide efficiency gains that will offset any potential harm.

  1. Other actions have been implemented in order to maintain crucial services. In Norway, a block exemption for airlines and other transportation businesses was established to ensure that citizens have access to goods and services they require. This exemption permits coordination agreements between all modes of transportation as long as cooperation ensures the preservation of “socially vital” infrastructure.
  2. Dealing with the problem of overcapacity, in the past, crisis cartels were not regarded any differently from ordinary cartels under EU competition law. Even in situations of long-term structural overcapacity—for example, as a result of a recession—the European Commission has maintained that the criteria for cartel exemptions under Article 101(3) TFEU are rarely met and that overcapacity should be resolved through market forces. This suggests that, in Europe, businesses with items that are seeing little or no demand as a result of the epidemic will be limited in their capacity to coordinate their actions under competition law. Outside of the EU, Brazil’s Administrative Council for Economic Defence (CADE) has approved the collaboration of food and beverage industry competitors in order to mitigate the pandemic’s impact and, in particular, to prevent small food stores from leaving the market. These measures, in particular, enable large food suppliers to collaborate on special terms, such as discounts for purchases that must be passed on to consumers (to encourage demand), and longer payment periods and loans for businesses. These measures, which follow OECD guidelines, do not allow for the coordination of commercial initiatives or the exchange of sensitive information but are a novelty in that they are aimed at dampening demand shocks to these businesses.

State aid

The rules on State aid form a crucial part of the relationship between State involvement in, or regulation of national markets and community competition law. The Treaty has specific provisions under Article 8729 to Article 8930 of Treaty on the Functioning of European Union to categories of vertical agreements and concerted practices for regulating State aid granted by the member States. The basic rationale behind these rules is that the level competitive playing field for undertakings throughout the community may be jeopardised by any grant of aid to undertakings by public authorities of member States.

As also provided by the commentaries on competition law31 which state that general justification for State aid is that it may contribute to the correction of market failures or market imperfections. State aid often produces important externalities (for example, employment aid, environmental aid, aid for research and development, or regional aid) which may sufficiently compensate the distortion of competition. These factors will have to be considered in the appreciation of the compatibility of aid with the common market.

Accordingly, the control of State aid is a particularly political and sensitive issue, with great potential for conflict between the aims of the community and the nationalistic concerns of member States. It follows that this is a task particularly suited to the Commission which should act in the general interests of the community and without nationalistic prejudice.

Article 87(2) specifically deals with mandatory exemptions by stating that three specific forms of aid shall be compatible with the common market.32 It is uncertain whether these types of aid are free from the duty of notification. The three forms of aid are first, the aid of a social character,33 secondly, granted to individual consumers and without discrimination as to the origin of the products; and lastly, aid to make good the damage caused by natural disasters or exceptional occurrences;34 and aid granted to certain areas of the Federal Republic of Germany in order to compensate for the economic disadvantages caused by the division of Germany.

The Commission has developed several sectoral policies in its application of the State aid rules, with certain sectors such as shipbuilding, steel, coal, the motor vehicle industry, the synthetic fibre industry, and transport being subject to specific rules.35 In other industries, the general State aid rules continue to apply and the position is less clear. However, the Commission introduced general guidelines on State aid for rescuing and restructuring firms and these have been revised recently.36

The basic principles remain the same, although the Commission’s approach is more restrictive in scope. Rescue aid must consist of financial assistance at normal commercial interest rates, be restricted to the amount necessary to keep a firm in business and to the time in which a feasible recovery plan can be devised, be justified on the grounds of serious social difficulties, and have no undue adverse effects on the industrial situation in the other member States.

Many national Governments including that of the Netherlands are complying with the demands made of State aid. The Commission has also announced that it will offer support and will accommodate measures taken by national Governments wherever possible, also by flexibly applying the State aid rules. The Commission’s measures that are relevant from a State aid perspective are set out in the temporary framework. The Commission introduced a similar temporary legal framework for State aid at the time of the economic crisis in 2008. Through the current measures, the Commission wishes to provide the member States with specific tools under Article 107(3)(b) of the Treaty on Functioning of the European Union37 to deal with serious economic disruptions.38 Those measures supplement rather than replace the current possibilities to provide State aid.

The EU has classified COVID-19 as an exceptional circumstance under the said article and has introduced a temporary framework, approving at least 30 State aid measures, which total to more than EUR 325 billion.39 The French President, Emmanuel Macron, has guaranteed that no French business will face bankruptcy, with unlimited State financial aid available. State aid measures are capable of achieving efficiency benefits by removing inefficient capacity from a market.40

Moreover, specifically concerning the situation of an outbreak of global pandemic COVID-19 in India, an article explains and deliberates by giving a sneak peek into the EU’s new block exemption regulation for liner shipping consortia and proceeds to trace the developments in competition law prevailing in Pakistan right from its inception which at present is nearly identical to EU’s Competition Law and concludes by favouring the State aid mechanism in India as far as the Indian competition regime is concerned with the help of a case study.41


Since the Government has not specifically come out with any exemptions with regard to certain sectors from the purview of antitrust laws, therefore it would be interesting to note how the antitrust watchdog would be handling any such collaboration between competitors such as healthcare providers for sharing technical knowhow, or supermarket dealers who might indulge in deciding prices of commodities in future, or food aggregators dealing with retailers in order to provide easy services, etc. These collaborations will be monitored closely in the light of antitrust regulations in the country which also have a close eye on the intentions of the enterprises while forming such cartels.

Although competition authorities continue to have zero tolerance for cartels and are on the lookout for price hikers taking advantage of the crisis, most of them recognise that the pandemic may necessitate collaboration between entities to ensure supply chain continuity and allow consumers to access critical products such as pharmaceuticals and food during the crisis.

As a result, certain competition authorities have adopted a more liberal approach to such collaboration. Even said, such an approach should not be viewed as a blank check by companies, who must still verify that they follow their jurisdiction’s competition law. In this regard, we recommend the entities to closely follow the statements and actions of the competent competition authorities in order not to face any inconveniences.

Also, it is critical to provide financial assistance to the affected industries and other struggling businesses through State aid in order to keep them afloat, the approach should be rational and balanced, based on an assessment of the businesses involved, the parties’ financial situations. Thus, a balance must be struck such that the regulatory exemptions are established to ensure long-term market competitiveness.

* Fourth-year law student, BA LLB (Hons.), National Academy of Legal Studies and Research (NALSAR) University of Law, Hyderabad. Author can be reached at

** Second-year law student, BA LLB (Hons.) at Dr B. R. Ambedkar National Law University, Sonepat.

1 Competition Act, 2002.

2 Section 3 of Competition Act, 2002.

3 Section 19(3), Competition Act, 2002.

4 Suresh Chandra Bose v. State of W.B., 1975 SCC OnLine Cal 131; Agreement, Black’s Law Dictionary (8th Edn. 2004).

4 Section 2(b), Competition Act, 2002.

5 Abir Roy, Competition Law in India: A Practical Guide 46 (Eastern Law House, 2nd Edn. 2016).

6 Builders  Assn. of India v. Cement Manufacturers’ Assn., 2012 SCC OnLine CCI 43.

7 Mileage Conference Group of the Tyre Manufacturers’ Conference Ltd.’s Agreement, In re, 1979 ECR 2435.

8 Director General (Supplies & Disposals) v. Puja Enterprises, 2013 SCC OnLine CCI 55.

9 Rajasthan Cylinders and Containers Ltd. v. Union of India, (2020) 16 SCC 615.

10Communication from the Commission Guidelines on the Optimal and Rational Supply of Medicines to Avoid Shortages during the COVID-19 Outbreak, Official Journal of the European Union, 2020/C 116 I/01.

11European Commission Guidelines: Facilitating AIR Cargo Operation during COVID-19 Outbreak, C(2020) 2010 final.

12Airlines given the Go-Ahead to Cooperate, Ministry of Trade, Industry and Fisheries, Press Release dated 18-3-2020.

13Transportation Sector is Granted Temporary Exception from the Competition Act, Konkurransetilsynet, Norwegian Competition Authority dated 19-3-2020.

14Application of Competition Rules and Competition Control during economic difficulties due to Covid-19, Icelandic Competition and Markets Authority, Samkeppniseftirlitið.

15The Finnish Competition and Consumer Authority (FCCA) will take into Account the Exceptional Circumstances Caused by the Coronavirus when Applying the Competition Act, Press Release dated 23-3-2020.

16 Antitrust: Joint Statement by the European Competition Network (ECN) on Application of Competition Law during the Corona Crisis, March 2020.

17 Treaty on the Functioning of the European Union, EU Law, Art. 101.

18 Agreement on the European Economic Area, EU Law, Art. 53.

19 Competition Commission of India, Advisory to Businesses in Time of Covid-19.

20Ministry of Corporate Affairs, High Level Committee on Competition Policy & Law 4.3.2 (Government of India, 2000).

21Compagnie Royale Asturienne des Mines SA v.  Commission of the European Communities, ECLI:EU:C:1984:130, C-29/83.

22 Murco Mijnlieff, ACM: Ensuring that Markets Work Well, also in 2021, rep. ACML.NL, Publication  date 14-1-2021.

23 OECD, Policy Roundtables, Crisis Cartels, 2011, pp. 22-23.

24 OECD, Policy Roundtables, Crisis Cartels, 2011, p. 25.

25 OECD Secretariat Paper for the 2006 Peer Review of Chinese Taipei’s Competition Law.

26 OECD, Annual Report, 2008, p. 130.

27 OECD, Annual Report, 2008, p. 134.

28 Covid-19: CMA Approach to Essential Business Cooperation, CMA Press Note dated 19-3-2020.

29 Treaty on the Functioning of European Union to categories of vertical agreements and concerted practices, European Commission Treaty, Art. 87, Regulation No. 2790/1999.

30 Treaty to categories of vertical agreements and concerted practices, European Commission Treaty, Art. 89, Regulation No. 2790/1999.

31 Bary J. Rodger & Angus MacCulloch, Competition Law and Policy in the European Community and United Kingdom, 2nd Edn., pp. 245-267.

32 Bendetti v. Munari, (Case 52/76), 1977 ECR 163.

33 EC Treaty, Art. 87(2)(a).

34 EC Treaty, Art. 87(2)(a).

35 Moritz Lorenz, An Introduction to EU Competition Law, Cambridge University Press, 2013.

36 Community Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, OJ C288/02, 1999.

37 Treaty on the Functioning of the European Union, EU Law, Art. 107.

38 Richard Whsih & David Bailey, Competition Law, Oxford, 7th Edn., p. 53.

39 Paula Riedel, Thomas Wilson, Shane Cranley, EU State Aid and Covid-19, Kluwer Competition Law Blog, 24-3-2020.

40 Policy Roundtables: Crisis Cartels, OECD, 2011.

41 Amit Kapur, Mansoor Ali Shoket and Manas Kumar Chaudhuri, Current Legal Appraisals in Competition Law in Various Jurisdiction, Competition Law & Policy, Manupatra, Journal of Oct. 09-Dec. 09.



These days the impacts of Covid-19 have reverberated around worldwide, putting enormous strain on public health providers and enterprises of all sorts. While adopting a method to control and regulate Covid-19 is critical, individuals and organisations must also be aware of their contractual rights and obligations during this period. To better understand the impact of Covid-19 on international commercial contracts, as well as the remedies and exceptions available to company owners under such contracts, it is essential to undertake a study of the various concepts involved under the realm of these contracts, which is the aim of the article.

An insight into the principle of force majeure and the doctrine of frustration in light of the ongoing Covid-19 pandemic

A significant question here is whether the Covid-19 pandemic has rendered contractual duties impossible to fulfil, or whether the incapacity of a participant to fulfil contractual commitments is attributable to past choices or acts taken in consideration of the situation at present. To determine this, two concepts are of utmost importance. They are:

i. The Principle of Force Majeure; and

ii. The Doctrine of Frustration.

The Principle of Force Majeure: It is always feasible that severe and inevitable circumstances outside the control of the transacting parties will make business transactions unattainable. “Force majeure” occurrences are characterised by their extreme nature and unpredictability. The phrase “force majeure” comes from civil law in France and implies “superior force”. The concept of force majeure, on the other hand, does not exist under common law or English Law. War or acts of terrorism, lockouts, riots, energy supply shortages, as well as other catastrophes usually referred to as “acts of God”1 that no one can be held responsible for are examples of situations that fall under the umbrella of “force majeure” (i.e. natural disasters). Force majeure provisions can be negotiated to incorporate a checklist of particular circumstances that will activate the provision, or they can be designed generally and leave it up to the stakeholders to establish or accept that a “force majeure” event has occurred. While each contract’s phrasing for force majeure clauses is different, they usually include the following characteristics:

  1. text exempting one or both sides from completing the contract if a force majeure event happens;
  2. a list of force majeure events that are normally negotiated by the participants;
  3. impacted party requirements (i.e. notice and mitigation obligations); and
  4. prescribed remedies.

A force majeure clause, irrespective of its particular details, normally only applies to unanticipated situations and beyond reasonable human forethought and expertise. Company owners must be aware that for the Covid-19 pandemic to activate the application of a force majeure clause, the affected party must demonstrate that the pandemic was:

  1. unexpected; and
  2. rendered the fulfilment of its contractual obligations impracticable.

The impacted party must demonstrate that fulfilment of its duties has been hampered or postponed as a direct result of the pandemic in order to establish this causal relationship. It is indeed crucial to remember that when attempting to depend on or exercise a force majeure clause, the impacted party is usually required to minimise the impacts of the force majeure occurrence. Commercial reasonableness is the criteria for mitigation under a force majeure situation.

The goal of force majeure provisions in commercial contracts is to release participants from liability in the case of an unanticipated and inevitable event. Rather, it is up to the contracting parties to determine what constitutes force majeure and what the implications will be if a force majeure event occurs. In principle, force majeure provisions absolve parties to a contract of their contractual responsibilities in the case of an occurrence beyond the parties’ control.

Before utilising a force majeure provision, a party seeking remedy must meet specific requirements. First and foremost, the impacted party must adhere to any contractual procedural obligations. These obligations involve notifying the other party that the force majeure occurrence is interfering with the fulfilment of its contractual obligations. This notice must be sent within the time range specified. The necessity of giving notice is normally a condition precedent that must be met by the party requesting relief under this provision.

As a result, in order for a force majeure provision to apply (should a force majeure incident happen), the emergence of such events must be beyond the stakeholders’ power, and the stakeholders must demonstrate that they have made reasonable efforts to reduce the impact of the force majeure event. If an incident or circumstance falls within the scope of a force majeure event and meets the clause’s criteria for applicability, the stakeholders will be excused from executing their respective responsibilities under the contract for the duration of the force majeure event.

Additionally, according to the language of the provision, the parties may be obliged to provide a written notice informing the other party of the occurrence of such event and invocation of the force majeure clause. Some contracts additionally state that if a force majeure incident lasts for an extended period of time, the parties may be able to terminate the contract.

Lastly, the party claiming the force majeure provision must show that the force majeure incident prohibited, hampered, or postponed the performance of its contractual obligations. As a consequence of the force majeure incident, the party must demonstrate that it was legally or practically impossible to execute its commitments. The party must additionally show that it was unable to fulfil its responsibilities due to circumstances or events beyond its control and they did everything in its power to mitigate the effects of such a situation. There can be additional remedies granted to the affected party, but these additional remedies can be determined by the courts and tribunals or by negotiations with the defaulting party. Further, if a party receives a force majeure notice from the other party, then adequate measures have to be followed by the receiving party as elucidated below.

A force majeure notice and the way to handle it

The first step is to locate the appropriate contract. The notice will have been served in accordance with the contract’s force majeure clause. The second step is to interpret the clause. Force majeure provisions can take many different shapes. Its design will be determined by the contract and the nature of the business.

Here, some preconditions apply, such as whether there are any restrictions on the exercise of the provision, such as whether the supplier must serve the notice within a certain time-frame or in a specific format. If this has not been observed, the precondition may be classified as a condition precedent that must be met in order to activate the clause, or as an intermediate term whose non-fulfilment does not prevent the supplier from invoking the clause, based on the architecture of the clause. The receiving party must be cautious not to waive such requirements or act in such a way that estoppel is created.

Lastly, it should be determined whether the stated force majeure occurrence and the other party’s non-performance are related. Examine whether performance can be excused under another legal doctrine, such as the frustration of contract or impossibility of performance if there is not a force majeure provision. Insist on receiving the following:

a) proof of the factors purportedly delaying performance, and

b) regular updates on its attempts to resume performance and/or lessen the impact of the delay. Consider drafting a written contract revision to reflect a commercially sensible outcome if necessary.

Additionally, a party seeking relief under the force majeure clause has the obligation to establish the burden of proof to demonstrate that the force majeure incident has impacted such party’s performance of the contract.

Furthermore, the force majeure certificate plays an essential role under force majeure conditions. Although the “force majeure certificate” is the primary evidence that the company has been engaged in Covid-19 harmful impact, it is insufficient to release the company from its contractual responsibilities. It has also been established that contractual performance has become objectively implementable as a consequence of the pandemic or the authorities’ restrictions. In other words, the debtor must show that the pandemic is an “objective, unforeseen, inescapable, and insurmountable occurrence” that directly affects contractual performance in its specific circumstances.

The Doctrine of Frustration: When it comes to negotiating the parameters of a commercial transaction, stakeholders sometimes get caught up in the big image and overlook what could be considered as boilerplate clauses. As a consequence, a contract may be quiet on how to behave in the event of unforeseen and extreme circumstances. The present practice of the courts is not to read in a force majeure clause into a contract, whether the transacting parties intentionally opted not to add one or just neglected to do so. A party who is unable to perform contractual duties owing to a force majeure event must claim that the contract has been frustrated due to certain conditions. A party proposing that the theory of frustration of contract should apply, unlike invoking a force majeure provision, is not asserting that fulfilment of its contractual duties is impossible. Instead, this is a higher-level assertion that the impacted party’s motivation for engaging in the contract has vanished.

According to case law,2 an entity asserting frustration of contract must show that:

  1. the impacted party can no longer achieve its intent for the transaction;
  2. all parties to the contract were aware of the impacted party’s primary purpose for entering into the contract; and
  3. the frustration was caused by a qualifying supervening event.

When an employee’s place of employment is harmed and the reason for the employee’s hiring is no longer valid, the frustration of contract is widely utilised in employee-employer contracts. Another instance is when a property is sold for a certain use and a municipality passes a zoning by-law limiting that purpose after the contract is signed. Furthermore, the impacted party must consider whether the Covid-19 epidemic counts as an intervening event that has fundamentally altered the contract from what was originally agreed to. Despite the fact that this path is complicated, demanding and pricey, it may be the only viable alternative in the event of a crisis. While the aforementioned fundamentals may provide helpful reference to how force majeure clauses or the doctrine of frustration may apply to contractual obligations impacted by the Covid-19 pandemic, company owners should pay close attention to the specific info of their contracts and seek legal advice if such claims are made.

After taking a look at the force majeure principle and the doctrine of frustration, it is essential to understand the relevance of the notion of “hardship” in a contractual equilibrium, to completely understand the nitty-gritty associated with international commercial contracts.

Interpretation of the term “hardship” and its legal consequences

First and foremost, it should be noted that the Principles relating to International Commercial Contracts 2004, which includes provisions on hardship are issued by the International Institute for the Unification of Private Law (UNIDROIT). “Where the performance of a contract becomes more burdensome for one of the stakeholders, that party is nevertheless required to perform its obligations subject to the following restrictions on hardship,” according to Article 6.2.1 of the aforementioned principles.

The “following provisions” mentioned in Article 6.2.1 are provided in Article 6.2.2, which states that “hardship exists when the onset of incidents fundamentally modifies the equilibrium of the contract, either because the cost of a party’s performance has increased or because the value of the performance a party receives has diminished, and

a. the events occur or become known to the disadvantaged party after the conclusion of the contract;

b. the events could not reasonably have been taken into account by the disadvantaged party at the time of the conclusion of the contract;

c. the events are beyond the control of the disadvantaged party; and

d. the risk of the events was not assumed by the disadvantaged party.”

The consequences of hardship are outlined in Article 6.2.3, which states:

i. In the event of hardship, the affected party has the right to request renegotiations. The request must be made as soon as possible and must state the grounds for the request.

ii. A request for renegotiation does not give the disadvantaged party the right to refuse to perform.

iii. If the parties are unable to reach an agreement within a reasonable time, either party may take the matter to court.

iv. If the court finds hardship, it may

a) terminate the contract at a predetermined date and on predetermined terms, or

b) adapt the contract to restore its equilibrium.

Furthermore, hardship refers to situations in which the agreed-upon performance is still technically attainable. Nevertheless, some underlying facts have significantly changed, making proper fulfilment of contractual obligations possible in principle but not economically viable.

Hardship is founded on the premise that the contract’s underlying circumstances alter in a manner that the parties did not anticipate at the time of the contract’s conclusion, and while the contractual obligations are still fulfillable in principle, it does not make economic sense. For instance, suppose the seller of a specific object loses it in the ocean. In theory, he should try to recover it from the ocean’s depths, which is theoretically possible but not economically feasible.

In the event of adversity, contract performance is not impossible, but it is hampered. Hardship is described as any legal, technical, political, or financial incident that occurs after the contract’s completion that was unforeseeable at the time the contract was formed, regardless of the best efforts.  In principle, hardship does not render performance impossible, but it does permit contract renegotiation. A hardship provision can compel the parties to negotiate new contractual conditions if ongoing performance has become unreasonably onerous owing to an occurrence beyond a party’s reasonable control. It is the goal of a hardship clause to give the parties more freedom while also balancing the risk.

As far as the legal consequences of the hardship clause are concerned, it should be noted that the hardship provisions recognise that parties must fulfil their contractual obligations even if events make fulfilment more difficult than could have been reasonably anticipated at the point of the contract’s conclusion. The legal consequence of hardship is that the participant whose underlying circumstances have changed significantly can still perform the contract and fulfil its contractual responsibilities, but the performance has lost its economic value.

Further, hardship is founded on the core concept of civil law and international law, namely, pacta sunt servanda, which indicates “agreements must be fulfilled”. Private contract provisions are law between the parties, and non-performance of certain clauses represents a breach of the pact, according to this theory. Nonetheless, there is one caveat to this genuine pacta sunt servanda idea. The restriction is known legally as clausula rebus sic stantibus, which is a legal doctrine that allows contract terms to become unenforceable due to a substantial shift in conditions. It is effectively the “escape clause” that provides an exception to pacta sunt servanda’s general norm. Even so, it is evident from a review of the UNIDROIT principle that a contract’s clauses can be subjected to the “escape clause of hardship” only when:

  1. events occur or become known to a party after the contract’s conclusion;
  2. the events could not reasonably have been taken into account at the time of the contract’s conclusion;
  3. the events are beyond the party’s control; and
  4. the risk of the events was not assumed by it.

This philosophy can be applied to any contract, including domestic and international business agreements. Since the concepts of pacta sunt servanda and clausula rebus sic stantibus are essential principle of international as well as domestic laws, it is essential to study them in-depth.

Understanding the doctrine of clausula rebus sic stantibus

The doctrine of clausula rebus sic stantibus (Latin: “things standing thus”) states that a participant may withdraw from or cancel a treaty if there has been a significant change of circumstances.3 Also, the Latin phrase “clausula rebus sic stantibus” (things thus standing) refers to a scenario in which a contract cannot be retracted or terminated as long as the contract’s circumstances have not changed significantly.

Clausula rebus sic stantibus is a provision in international agreements (international treaties or accords) that allows a treaty to be rendered unenforceable owing to radically altered circumstances. One of the first standards of customary international law is this doctrine. Article 62 of the Vienna Convention on the Law of Treaties codifies a form of this idea. Individual treaties frequently include it as a clause4. This has frequently been employed as a theory in international law, particularly treaty law, and has been the topic of debate and disagreement.

Additionally, clausula rebus sic stantibus is a notion that permits the withdrawal or termination of an agreement or treaty when the parameters of the contract or treaty alter fundamentally. It serves to get around the principle of pacta sunt servanda, which asserts that all States must uphold agreements made in good faith between them. Pacta sunt servanda is also legally provided for in Article 26 of the Vienna Convention which provides that treaties in force are binding upon parties and are to be performed in good faith.5

Article 62 of the Vienna Convention on the Law of Treaties (1969) discusses the fundamental change of conditions in which clausula rebus sic stantibus can be asserted, but it is subject to the following conditions:

  1. There must be a fundamental change in the circumstances that existed at the time the treaty was signed to the current circumstances. The parties could not have predicted such a radical shift.
  2. Those circumstances must have been a necessary condition for the parties’ assent to enter the treaty and agree to be bound by it.
  3. The modification has the impact of significantly and drastically altering the scope of a party’s duties under the treaty.
  4. If no boundary is established by the treaty.
  5. This theory cannot be utilised to avoid treaty obligations if the fundamental change occurs as a result of a breach by the party invoking the change. This breach could be a violation of a treaty obligation or a violation of any international commitment owed to any party under that treaty.

Parties withdrawing from treaties have frequently invoked this doctrine in international relations. This notion can be used by a State in the following situations:

a) At the time of the treaty’s conclusion, the State believes the treaty’s provisions are favourable but later discovers that they are not. There could be an internal scenario in a country where the treaty is judged to be destructive or detrimental. In such cases, the State may consider withdrawing, terminating, suspending activities, or declaring the pact null and void.

b) State sovereignty and strategy may demand that the community does not always adhere to the conditions of the treaty, prompting the community to withdraw from the agreement. This option is available if a State believes a treaty is harmful to its security or the security of its subjects.6

As a result, it has been observed that States frequently apply this theory for internal purposes such as the defence of their objectives. Through the condition of “substantial change in circumstances”, this concept fulfils the goal of protecting State interests while also avoiding misuse.

Lastly, a party desiring relief under clausula rebus sic stantibus must demonstrate that exceptional and unpredicted occurrences have made performing its obligations overly onerous, to the point where they have substantially and completely modified the balance of the exchange under the contract (quid pro quo), all of which has resulted in an unreasonable imbalance in the reciprocal responsibilities.7 Further, an understanding of the principle of pacta sunt servanda is essential in order to appreciate the interplay involved in the simultaneous application of the rebus sic stantibus and pacta sunt servanda with respect to international commercial contracts.

The principle of pacta sunt servanda

In the history of international law, the dispute over stability and change – or the boundaries of pacta sunt servanda – has played a crucial role. The issue of when a State may deviate from treaty obligations due to new conditions appears to be a perennial issue. It is compounded by treaties’ natural ability to “freeze” legislation at the time of acceptance, thus fixing it at a specific point in time.

Contracts bind the parties, according to a fundamental contract law premise. Only with the approval of the other party can a party default, postpone, or change its contractual duties. To emphasise the importance of this crucial feature of contracts, the Romans developed the phrase pacta sunt servanda. This principle is so important in contract law that it has been attributed to Ferdinand I, Holy Roman Emperor from 1556 to 1564, and his modus operandi: “Let justice be done, though the world perishes.” The strict application of this fundamental contract law principle, on the other hand, may in some situations result in severely unfair outcomes, antithetical to good faith, which is also a significant factor in continental judicial systems.

Scholars and case law have typically defined any exemption to this fundamental principle very narrowly, but only as a way of avoiding any excessive and unfair effects that are regarded to be in contradiction with justice. The different civil law systems envisage particular procedures to deal with these extraordinary situations, such as

  1. the force majeure regime; and
  2. the rebus sic stantibus doctrine (or variants of the same).

In light of the above, parties to commercial contracts are at risk of defaulting on their obligations as a consequence of the Covid-19 epidemic, either directly as a result of government actions (e.g. lockdowns, curfews) or indirectly as a consequence of the demand shock produced by the pandemic. Distressed obligors argue that this is either:

  1. a force majeure occurrence that releases them from contractual obligations; or
  2. an unforeseen and unusual change of circumstances that warrants revising or rebalancing the contract’s provisions under the rebus doctrine (or similar legal constructs).

Moreover, the case of Balfour v. Balfour8 showed that not all agreements can be made as contracts. As a result, in order for any agreement to have legal effect, the parties must agree to carry out specific legal responsibilities. This rationale is reflected in the principle of pacta sunt servanda, which states that the parties have a legal obligation to keep their promises and that the agreement is obligatory on them to that extent.

The pacta sunt servanda idea has always had its limitations. Even though it is intellectually grasped, the legal impact is nullified if the base or subject-matter is eliminated. Even Roman Law stipulates that no contract is enforceable or enforceable in all situations.9 If a side failed to fulfil its contractual responsibilities, the contract could be terminated unilaterally (e.g. in the case of leases, mandates or contracts of sale). To apply the theory to its full impact, such an exception must be acknowledged.

It should be noted that the theory of clausula rebus sic stantibus has historically been used to undermine the principle of pacta sunt servanda.10As per this idea, a contract is only enforceable if the conditions at the time of the contract’s conclusion remain unchanged. Nevertheless, the essential beliefs of modern theory defining pacta sunt servanda have shifted. According to certain authors, modern contract law cannot be based on classical contract law viewpoints because those positions have necessarily become obsolete because of advances, as is also stated in the theory of radical change, which essentially makes the same argument. Others believe that because contract law’s scope is not limited to the sale of things, its principles must be adjusted to fit the length and width of its dimensions. In other terms, given the economic, social and basic issues, the rigidity of the pacta sunt servanda premise cannot be sustained. Irrespective of one’s perspective on the binding nature of contracts, the examination of legal grounds for contractual duty exemption has become increasingly relevant in recent years.

Concluding remarks

Looking into the various concepts underlying international commercial contracts, it is clear that along with a harmonious functioning of these concepts, various conflicts are also prevalent between them. Furthermore, a glimpse into the Indian law makes it clear that it has yet to fully examine such concepts, especially the notion of hardship, even though this concept has matured to some level under English Law, American Law, and certain European Law. Nevertheless, because India is a UNIDROIT participant, this concept will undoubtedly have persuasive value in Indian courts, and Indian courts may be asked to investigate whether this doctrine can be applied even where Indian law is the applicable law.

Further, it is impossible to deny that the theory has been heavily condemned for its role in jeopardising contractual consistency. Although it is important to remember that the doctrine of hardship is still evolving, and its parameters, like those of any other jurisprudential term, are never fully defined, but rather as broad as the categories of human behaviour. The theory was created to compensate for the flaws in the actual contract. An unexpected turn of event, such as a fully abnormal rise or decrease in prices, a rapid depreciation of the currency, an unanticipated hurdle to execution, or the like, frequently confronts the parties to an executory contract while carrying it out. Nevertheless, if the current legal system acknowledges the doctrine of hardship and provides reasonable consideration for the insertion of hardship clauses in contract terms, this problem can be successfully addressed. If the doctrine is applied correctly, it will undoubtedly benefit parties willing to engage in long-term commercial agreements, both domestic and international.

Lastly, further development concerning the notion of international commercial contracts is essential not only for the better application of domestic laws but also for clarifying the existing principles of international law, especially the doctrine of clausula rebus sic stantibus and the principle of pacta sunt servanda.

*Managing Associate, L&L Partners, New Delhi. Author can be reached at

**2nd year student LLB (Hons.), National Law University, Bhopal. Author can be reached at

1“Force majeure”, Black’s Law Dictionary (8th Edn., West Publishing Co. 2015).

2Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310 .

3Blociszewski, ‘L’Annexion de la Bosnie et de l’Herzegovine’, (1910) 17 Rev. Gen. de Dr. Int. Pub. 441.

4Elihu Lauterpacht,International Law: Disputes, War and Neutrality (5th Edn., Cambridge 2004), 14-15.

5Carrasco Perera, Ángel: ‘Debtor’s Release by Covid-Hardship (Rebus Sic Stantibus) in Financial Debts? Spanish Trends’, (2020) 36 JIBLR.

6United Kingdom of Great Britain and Northern Ireland v. Iceland, (1973) ICJ Reports.

7Gómez Pomar, Fernando, Alti Sánchez-Agullera, Juan, Cláusula Rebus Sic Stantibus: Viabilidad y  Oportunidad de su Codificación en el Derecho Civil Español, InDret 1/2021 (2021).

8(1919) 2 KB 571 (CA).

9R. Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition, (1992) KLTP576.

10Treitel, The Law of Contract (12th Edn., Sweet & Maxwell Ltd. 2007) 924.

Case BriefsCOVID 19District Court

District Court: The Court of Devanshu Sajlan, MM, NI Act-05/(West)/Delhi, allowed a mutual application moved on behalf of the parties for the recording of evidence through video conferencing.

Noting the fact that the matter is a ‘5-year-old’ matter, both the counsels mutually submitted that they wish to proceed with the matter and conduct evidence through VC.

Trial Court stated that both the parties were mutually willing in recording the evidence through VC, hence mutual oral application moved on behalf of the parties was allowed and the matter was directed to be listed for the recording of evidence through VC in terms of the following directions:

(i) An audio-visual recording of the examination of the complainant shall be preserved. An encrypted master copy with hash value shall be retained as a part of the record.

(ii) The evidence shall be transcribed through the mode of ‘screen sharing option’ on Cisco Webex, so that both the parties and their counsels can follow/ read the transcription in real time.

(iii) Upon the conclusion of the transcription of the cross-examination of the complainant, the complainant shall be provided with a soft copy of the transcript (bearing the digital signature of the undersigned court) through the official email- id of the court, and the complainant shall be required to affix his signature on the transcript after taking a print-out of the same.

(iv) After affixing his signature on the printed copy of the transcript, the complainant shall be required to send a scanned copy of the same on the official email-id of the court. The signed transcript will form part of the record of the judicial proceedings.

(v) Due to the present situation of COVID-19 pandemic, both parties are in agreement that it is not advisable to depute a ‘coordinator’ at the place from where the complainant shall appear for the recording of his evidence.

(vi) However, in order to prevent unnecessary tutoring or prompting, learned counsel for the complainant has submitted that he shall ensure that the complainant appears for the recording of his evidence through VC from his home; and not from the office premises/ chamber of the learned counsel for the complainant.

(vii) The complainant shall not use mobile phone/ any communication device while his evidence is being recorded.

(viii) Further, the complainant shall ensure that he has a proper internet connection so that there are no disruptions while recording his evidence.

(ix) While all endeavours shall be made to record evidence through VC, the court is cognizant of the fact that internet connectivity issues can be taken as an excuse for not answering questions put by the learned counsel to the witness and to indulge in witness prompting. Accordingly, in a scenario where the VC is disrupted during the recording of evidence, recording of evidence through VC may be discontinued and the matter would be adjourned if it appears that the witness/ complainant is deliberately disconnecting his internet connection.

[Kanwal Nain Singh Mokha v. Rekha Khurana, CC No. 1924 of 2016, decided on 26-06-2021]

Read the Summary of Videoconferencing Rules notified on 1-06-2020 by the Delhi High Court

The Rules are divided into 5 Chapters with 2 Schedules.

First Chapter contains the definitions.

In Chapter 2, the General Principles have been laid down which are under the following heads mainly:

  • General Principles Governing Video Conferencing
  • Facilities recommended for Video Conferencing
  • Preparatory Arrangements

Chapter 3, consists of the Procedure for Video Conferencing, which is laid down under the following heads:

  • Application for Appearance, Evidence and Submission by Video Conferencing
  • Service of Summons
  • Examinations of Persons
  • Exhibiting or Showing Documents to witness or accused at a remote point.
  • Ensuring Seamless Video Conferencing
  • Judicial remand, the framing of charge, the examination of accused and Proceedings under Section 164 CrPC

Chapter 4 is all about the General Procedure for conducting Video Conferencing. Following heads cover the said procedure:

  • Costs of Video Conferencing
  • Conduct of Proceedings
  • Access to legal Aid Clinics/Camps/Lok Adalat’s/Jail Adalat’s
  • Allowing persons who are not parties to the case to view the proceedings

Chapter 5 is the Miscellaneous Chapter with the following heads:

  • Reference to Words and Expressions
  • Power to Relax
  • Residual Provisions

Schedule I has pointers regarding the attire of the Advocates, Police Officials, Presiding Judge, Judicial Officers and Court Staff; Protocol, Remote point, etc.

Schedule II is with respect to the “Request Form for Video Conferencing”.

Read the detailed Rules here: NotificationFile_ULDC4UVQWZ9

Hot Off The PressNews

Writing to Justice Dr. DY Chandrachud, after waiting for a response from the Chief Justice of Madhya Pradesh High Court for over two months, the Madhya Pradesh States Bar Council has has drawn Justice Chandrachud’s attention towards the serious concerns of a large number of advocates having day-to-day hearings before the High Court and has sought for introduction of an effective, efficient, user-friendly, and convenient virtual hearing platform for convening the virtual Court proceedings.

Currently, since the onset of the COVID-19 pandemic, the Madhya Pradesh High Court has been carrying out its virtual hearings on the “Jitsi platform”, which is neither user-friendly nor convenient for both, the lawyers as well as litigants.

“As in the case of physical Court, the justice must be accessible’ convenient; in the case of virtual Courts, the softwares and the applications that are being employed for convening virtual Courts must be completely user friendly, which meets all the desired expectations which make the virtual courts efficient, non-interruptive and hassle-free.”

The letter highlights that in the ongoing COVID-I9 proceedings, where 25-30 advocates are appearing, most of the time are not able to comprehend submissions of the counsels, nor the lawyers appearing on the screen are able to fathom the oral observations of the Court. From the last two dates, the hearings had to be suspended due to technical glitches.

“This is nothing less than deliberately trivialising the justice dispensation system, wherein the whole system is continuing on the same application/software despite facing day-to-day regular problems with it, that too on a matter concerning the life and livelihood of the larger number of citizens of the state who are facing the wrath of the COVID-19 pandemic.”

The letter, hence, urged, Justice Chandrachud, who is the chairperson of the E Committee Project, to Iook into the matter and push for the introduction of appropriate steps, which may resolve the problems faced by the Iawyers of the country.

Also Read

Know Thy Judge| Justice Dr. DY Chandrachud

Case BriefsCOVID 19High Courts

Bombay High Court: The Division Bench of Z.A. Haq and Amit Borkar, JJ., directed that reports for RT PCR test shall be made available to patients on Whatsapp.

Dr Mukesh Chandak, Intervener raised the difficulties that the patients were being subjected to during the upsurge of the COVID-19 pandemic in obtaining the reports of the RT-PCR Test.

Delay in receiving the reports by patients was being caused for the reason that till the time reports were being uploaded on the ICMR website the same was not being provided to the laboratories.

Hence, Court directed for the said reports to be uploaded and made available to the patients on Whatsapp, who tests positive shall be uploaded on the ICMR portal within 24 hours and reports of patients who test negative should be uploaded on ICMR portal within 7 days.

If the above-said directions will not be complied with by the laboratories, Court directed the authorities to take appropriate action against the laboratories concerned.

The said arrangement shall continue until further orders.

In view of the above, civil application was disposed of.[Court on its own motion v. Union of India, Suo Motu Public Interest Litigation 4 of 2020, decided on 15-04-2021]

Advocates before the Court:

S. P. Bhandarkar, Amicus Curiae
U. M. Aurangabadkar, ASGI for Union of India Shri Raheel Mirza, Advocate for Intervener
T. D. Mandlekar, Advocate for Intervener
M. Anilkumar, Advocate for Intervener


The M.P. Migrant Workers project is an initiative by Rakshita Agarwal (graduate of National Law University Odisha), Rohit Sharma (graduate of West Bengal National University of Juridical Sciences), and Lakshay Gupta (final year student, GGS Indraprastha University, New Delhi) carried out in association with Zenith Society for Socio-Legal Empowerment, Shivpuri, (M.P.). The project aims to throw light on the current employment status of migrant workers who had come back to Madhya Pradesh (home state) because of COVID-19. The summary version of the report, based on 1500 responses from 52 districts of M.P., draws our attention to the miserable condition of these workers and calls for immediate actions.

The sudden nation-wide lockdown announced in March 2020 resulted in India’s biggest migrant labour crisis. After much hue and cry, the migrant workers were somehow sent back to their villages but, surprisingly, their plight was quickly forgotten. No attempts were made to follow up on their livelihood and living conditions after their transportation. Recognising the importance (and dearth) of post-transport assistance to these workers, the M.P. Migrant Workers project was initiated. More than 60 people, coming from different fields of study, volunteered for the project and completed the humongous task in 1.5 months.

For the purpose of this project, the volunteers contacted migrant workers who had come back to Madhya Pradesh from Maharashtra. Based on a questionnaire developed by the co-ordinators specifically for this purpose, the migrant workers were asked about a number of things ranging from the support received during their travel to their current employment status. The key highlights of the summary findings are as under:

  1. Around 90% of the people have not yet received any kind of monetary help from the government despite being promised about the same.
  2. 5% of the migrant labourers continue to remain unemployed even after 4 months of their return to M.P. In fact, 585 out of 1291 people (around 45.3%) are not even aware of even a single employment scheme that has been introduced for them. Further, 67% of total respondents admitted that they do not have sufficient means to run their families and need urgent support.
  3. The earning patters of those who are employed also present a gloomy picture. At their original places of work in Maharashtra, majority of the respondents (almost 59% of 1450 people) earnt between Rs. 300-500 per day. In the post-lockdown scenario, this number has gone down by 10% and only 49% of the respondents earn between Rs. 300-500 per day in Madhya Pradesh. This significantly impacts the standard of living of these workers.
  4. Despite a number of directions being issued by the Honb’le Supreme Court such as maintaining records of returned workers, introducing employment schemes, establishing counselling centres etc., the results suggest that none of these directions have been followed by the state.
  5. However, the report also represents some pleasant pictures. Findings suggest that the government has performed fairly well in terms of transportation of these workers. Almost 58% of the respondents said that the tickets for their travel were funded entirely by the government. Majority also stated that bus facilities were provided to them from railway stations to their respective villages.
  6. Speaking of the future, 51.79% of people wish to settle in Madhya Pradesh permanently and want employment opportunities here. Up till now, around 310 people have already left M.P. in search of job opportunities. There are many others (around 45% of total respondents) who are considering the idea of moving to other states owing to extensive unemployment and dysfunctional government schemes in M.P.

The co-ordinators of this Project hope to bring real, ground level changes through their findings. To ensure the same, they are approaching bureaucrats and government officials in the state of Madhya Pradesh with possible plan of action to remedy the situation. The project is ongoing and the final version of the report shall be released in upcoming months.

M.P. Migrant Workers Project [Executive Summary]

The Covid-19 Pandemic has affected almost everyone, but some sections are worse hit than others. The migrant labourers of India are one such category.

It is common for the working class in India to temporarily move to other states in search of better job opportunities. With a sudden nation-wide lockdown being announced in March 2020, these migrant labourers were stranded in their host states of work, far away from their homes and families. After much hue and cry, steps were taken to safely transport these workers back to their home states. However, there has been no update on their employment status or standard of living since then and a huge data gap remains in this regard.

With the objective of filling this gap, the M.P. Migrant Workers Project was initiated by co-ordinators Rakshita Agarwal, Rohit Sharma, and Lakshay in association with Zenith Society for Socio-Legal Empowerment, Shivpuri, Madhya Pradesh. The main purpose of this study is to shed light on the current employment status of migrant labourers who have returned to Madhya Pradesh during the lockdown. It also aims to know the extent of State intervention and aid provided to these workers throughout the process – starting from their journey from host states to settlements in their villages. Besides making us aware of the ground realities, the findings of this report are important as they can guide immediate policy decisions relating to migrant labourers. A 360-degree analysis of the current approach will help us identify the strengths and weaknesses and further ensure that we are better equipped to deal with such situations in the future.

This executive summary accounts for 1500 respondents from 52 districts of Madhya Pradesh wherein the respondents answered a questionnaire which was devised by the coordinators in consultation with industry experts, civil societies, and governmental officials. A detailed report which includes multiple other factors shall be released in the upcoming months.

We could not have done this without the help of our volunteers. For the purposes of this Study, our dedicated volunteer team relied on first-hand data of migrant workers who travelled from the state of Maharashtra to Madhya Pradesh during the lockdown period.

Through this executive summary, we aim to draw everyone’s attention to the plight of these migrant workers and highlight the most pressing issues which require immediate attention. We further hope that the findings will prompt speedy relief action and encourage the development of a sustainable model for upcoming months to ensure that the employment conditions of these migrant workers are improved and they lead a life of dignity.


● Caste – Out of 1365 responses received, around one-third respondents (33%) belonged to Other Backward Classes (OBC)and General Category. 14.5% and 13.4% of the respondents identified themselves as Scheduled Castes (SCs) and Scheduled Tribes (STs) respectively.

●  Age – Around 60% of the respondents belonged to the working age-group of 21 to 30 years. Within that, the highest number (31%) fell in the range of 21-25 years.

●  Gender- 89% of the total respondents were males and 10.38% were females. 4 people (0.26%) preferred not to disclose their gender.

●  Number of dependents- Out of 1409 responses received, 50% of the respondents revealed that approximately 4 to 6 people depended solely on their income. Additionally, 176 people (12.5% of respondents) said that they were the only earning member in a family of 7 or more people.


●  What was promised – The Madhya Pradesh State Government had announced in the month of April 2020 that returning labourers shall receive Rs 1,000 directly in their bank accounts. Additionally, it was also assured that in case more money is required, the money shall be credited in the accounts.

●  Following up on this promise of monetary aid and assistance, our findings reveal that around 90% of the 1460 respondents did not receive any money from the government. Remaining 10%, however, said that they did receive some amount. Most of the people were still desperately waiting for the money.


●  As far as the employment status of these migrant workers is concerned, 56.5% said that they are currently unemployed. Almost 67% also asked for immediate administrative support to run their families.

●  While 43% said that they are undertaking some kind of work, the situation is worrisome. 135 of the 617 people (around 22%) who identified themselves as employed are engaged in agriculture-related work or farming in their own fields. In some cases, the entire family works on a single field giving rise resulting in cases of disguised unemployment.

●  It is also important to note that only 602 individuals answered questions about their current earnings (i.e. for the post-lockdown phase) as opposed to 1450 individuals before the pandemic which points towards unemployment on a large scale. In simple terms, most of the earlier employed people have not been able to find suitable job opportunities in Madhya Pradesh yet.

●  As far as the performance of various employment schemes of Madhya Pradesh is concerned, 585 (45.31%) out of 1291 people said that they were not aware of any such schemes. A total of 706 respondents said that they were aware of at least one of such schemes. The exact representation of the responses (scheme-wise) for this question is as under: 

Name of the Scheme Number of Respondents who knew about it
Naya Savera Yojana for labourers 100 people (7.75%)
Shram Siddhi Abhiyaan 112 people (8.68%)
MP Jeevan Shakti Yojana 133 people (10.30%)
MP Rojgar Setu Yojana 2020 247 people (19.13%)
Mukhya Mantri Jan Kalyan (Sambal) Yojana 254 people (19.68%)
MGNREGA 359 people (27.81%)
Pradhan Mantri Awas Yojana Grameen 494 people (38.27%)
Others 13 people (1.07%)


● The earning capacity of those who are employed has also been drastically affected. To give our readers a perspective, we have presented a contrast of their earnings during the pre- covid and post lockdown era.

●  The graph clearly illustrates that before Covid-19, more number of respondents fell in comparatively higher income groups (those who earnt 350 or more per day). Since their return to Madhya Pradesh, the number of respondents for high-income groups has been consistently declining. This negatively impacts their standard of living.

●  As far as the current situation is concerned, around 40% (majority) of respondents earn less than Rs.250 per day. This is a matter of grave concern as only 8% of them belonged to this income group before Covid.


●  To ensure that the returning migrant workers find sufficient employment opportunities in their home states, the Hon’ble Supreme Court of India vide its order dated 9th June 2020 had issued the following directions:

  1. Each State was required to maintain a record of all such migrant workers who were coming back. The details of migrant workers, nature of their skill, place of their earlier employment were required to be maintained in prescribed proforma formulated by the concerned State at the village level, block level and the district level so that necessary help could be extended by the State authorities and district authorities to these migrant labourers.
  2. Counselling centres were required to be set up by the concerned State at the block level and the district level to provide all information regarding Government schemes and other avenues of employment to these workers and where possible to expand the avenues of employment to these workers so that they may not sit idle and they may be utilised as a resource by the State.
  3. The States were also expected to provide the necessary information and facilitate the return of the workers who wanted to return to their employment. Necessary information could be provided by the State in this regard by creating the help desk with the help of railway authorities and road transport authorities.

●  Actual action in respect of the above-mentioned directions has been dismal. Only 14.07% (198) of 1407 respondents mentioned that their nature of skill (skilled or unskilled) was recorded. The majority of respondents (66.24%) said that only the basic details (such as Name, Age, Gender, Place of work, Village etc.) were asked. Recording the nature of skill was required as the same could have helped the state in locating suitable job opportunities for these workers and supporting their livelihood.

●  Moreover, only 8.18% of respondents mentioned that they had information of or accessibility to counselling centres or state aid camps.

●  Similarly, only 9.11% of people said that some kind of awareness or sensitization programs on re-employment was organised in their villages. The majority of respondents were not aware of even a single government employment scheme.


●  The study has highlighted certain areas where the State and government actually did a good job and made things for the migrant workers easier. The most significant work has been done in relation to the travel of these workers.

●  Online Registration – Out of 1481 people, 68% had registered themselves online with the government to facilitate their transport from the host state to home state. 39% of them received assistance from the state to complete the process.

●  Extensive assistance – The data further reveals that 52% of the respondents were in possession of smartphones while the other 48% had to rely on offline modes for registration. On a brighter side, out of 578 responses received for offline registration, 390 people (67.5%) said that they were duly assisted by government officials in the process.

●  Travel funded by the government- Interestingly, in a total of 1202 people, almost 58% said that the tickets for their travel were funded entirely by the government. 494 persons out of a total of 965 (51%) said that the government had also provided for travel facilities from Railway stations to their respective villages.

●  A substantial percentage (73.68%) of those who travelled through the train stated that they received food for free during the journey. More than 75% of them said that the food average and above (quality-wise) which shows that the state performed better on this front.


●  Around one-quarter of the respondents (364 people) had already left Madhya Pradesh when they were responding to this survey. Out of the 332 people who stated the reason behind such a decision, an overwhelming majority (92.77%) said that lack of employment opportunities in M.P. forced them to move out. The remaining people cited family and COVID related health concerns as the primary reason.

●  Additionally, many respondents (currently residing in Madhya Pradesh) said that they were considering moving to other places in near future owing to extensive unemployment and dysfunctional government schemes in their areas.

●  Against this backdrop, it must be mentioned that these people are not leaving their home state and villages happily. Findings suggest that out of 1450 respondents, 51.79% responded that Madhya Pradesh is their first preference for future employment and permanent settlement. Only 3% said that they were flexible to working anywhere. Despite their aspirations of living together with their families, around 45% of the people said that they wanted to move to other states considering the current employment scenario in Madhya Pradesh.


The journey of working on this Report and the overall experience has been overwhelming for each one of us. While speaking to these people we came across remarkable stories. Some of them, being extremely ghastly, shook us to the core. At the same time, there were others, the heart-warming ones, which restored our faith in mankind and humanity. These stories, which are beyond the scope of any study, gave us a glimpse into the lives of these people and their everyday struggle. We decided to share a few of them with our readers.

For the purpose of safety and confidentiality, we have changed the names of the relevant parties related to the story.

1. A Messiah and a Devil in disguise – Babloo is a married man who identifies himself as belonging to the Other Backward Classes category. He used to stay in Bhopal before shifting to Pune for employment, with his family – a wife and 2 small kids. His life was going well and he used to earn a reasonable amount while working in the waterproofing and painting industry in Pune. He got to know about the lockdown through the media and heard about the unemployment situation in his industry. While his family was in Pune, all their savings were utilised and they were only left with the bare minimum to survive. Even then, due to financial constraints, he had to wait till the government announced running of special Shramik trains for the migrant workers. Babloo registered his name multiple times so that he and his family could travel back home. However, despite registering, his family’s name didn’t appear in the train list. The fear of Covid and the apathy they faced after he lost his job forced him and his family to start walking from Pune towards MP. Pune is about 789 km from Bhopal. They started walking with very little food in the hope that they would get some vehicle which could drop them off at MP borders. However, within a few hours of beginning to walk their food was finished with their children crying on multiple occasions about how their legs were paining. Babloo informed us that their family was fortunate some “Messiah” provided their family with food for the way, and that’s the only reason they could survive their walk. Fortunately, Babloo found a traveller tempo for his wife and his children who, at a low cost, promised to get them home. He was a little relieved to know that now his family could reach home safely without much trauma of displacement or pain. He took another vehicle to return home. Once he got back, he realised that his family was still not home. When his wife arrived home, she had tears in her eyes as she told him how she was molested by the driver of the tempo and the co-passengers. Babloo narrates this story with a heavy voice which not only signifies institutionalized neglect but also social neglect towards his family from all possible angles.

2. Covid 19: The Aggravating social divide – In the village of Pachokhar which falls in Tehsil- Mangawan of District- Rewa, Madhya Pradesh lives Shyam, who is a migrant worker. Shyam is the sole breadwinner of his family, who when contacted, complained of the caste discrimination in his village. Shyam belongs to OBC category which is considered to be more privileged in India than the marginalised groups belonging to Scheduled Castes and Schedule Tribes. Pachokar village panchayat is highly dominated by members belonging to the Brahmin community. As a result, most of the schemes and subsidies which are announced by the government often don’t even reach the backward and scheduled castes while the Brahmin community in the village takes advantage of almost every scheme which is announced for the villages. Shyam informs that Devi, a Scheduled Caste woman, has a broken roof above her head for years which gets even more damaged in the rainy season, and the leakage fills their houses on a regular basis. Pachokhar village gets funds under the Pradhan Mantri Awas Yojna almost every year, with the family of a local Brahmin leader having four pucca houses. The Government of MP announces schemes for cow breeding which the backward castes are not even aware of, while the same scheme provides benefits to almost every upper caste household. Shyam who belongs to OBC category once reached out to the Panchayat Secretary to create documents for availing schemes and they demanded bribe for sending these documents to higher authorities. Shyam used to have a very busy day in a district of Maharashtra wherein, before lockdown, he used to drive someone’s car for OLA and Uber and was paid around 350-400 per day, depending on the number of daily rides. However once the lockdown was announced, it came down heavily on thousands of drivers like Shyam. He is now back in his village and trying to survive on the bare minimum of facilities. He misses his time in Maharashtra but has the small relief of being with his family currently. Shyam is scared of telling this story but he also has faith that maybe, someday, these instances of apathy will be highlighted. He is also very delighted to know that someone called him to know of his employability after months. Even when he doesn’t have the resources to make his future bright, he definitely had a bright smile that someone cared enough to listen to his story.

3. Rakesh: A ray of Hope – Rakesh is from a small village called Belkhedi, in the Sehpura Tehsil of Jabalpur. He was a supervisor in a reputed company, earning around 17,000 rupees a month for his livelihood. Soon, however, Covid struck, and he had to come back to his village owing to insufficient means of sustenance. Rakesh has a diploma and good command over maths and science. And when we contacted him, we were introduced to a heart-warming story. Speaking to us, he said that once he came back, he was moved by the situation of the school students in his village who mostly failed in Maths and English, leaving their basic education hanging by a thread. These children dropped out of school as early as after 8th and 10th standard. In an entirely selfless gesture, he didn’t ask us for employment help but said that he wants to settle down in the village and he plans to start coaching for these children, where he would teach them Maths and Science for free. Moved by Rakesh’s noble intentions, Zenith Volunteers crowdfunded and sent copies, pens, and pencils for him and his students. Rakesh now wants to bring about constructive change in society. Zenith is trying to get a device for his students to ensure classes in English so he can achieve his goals and help educate the future. In these unpredictable, almost apocalyptic times, Rakesh has been a ray of shining hope, reflective of all the good that human beings can do in the world. His story only serves to remind us at Zenith why we do this work and pushes us to keep moving even when the light at the end of the tunnel seems dim.

Report Prepared by: *Rakshita Agarwal (graduate of National Law University Odisha), **Rohit Sharma (graduate of West Bengal National University of Juridical Sciences), and ***Lakshay Gupta (final year student, GGS Indraprastha University, New Delhi).

Cabinet DecisionsCOVID 19Legislation Updates

The Union Cabinet has given its approval for extending the contribution both 12% employees’ share and 12% employers’ share under Employees Provident Fund, totaling 24% for another 3 months from June to August, 2020, as part of the package announced by the Government under Pradhan Mantri Garib Kalyan Yojana (PMGKY)/ Aatmanirbhar Bharat in the light of COVID-19, a Pandemic.

This approval is in addition to the existing scheme for the wage months of March to May, 2020 approved on 15.04.2020.  The total estimated expenditure is of Rs.4,860 crore.  Over 72 lakh employees in 3.67 lakh establishments will be benefitted.

Salient Features:

The salient features of the proposal are as under:

  1. For the wage months of June, July and August, 2020, the scheme will cover all the establishments having upto 100 employees and 90% of such employees earning less than Rs. 15,000 monthly wage.
  2. About 72.22 lakh workers working in 3.67 lakh establishments will be benefited and would likely to continue on their payrolls despite disruptions.
  3. Government will provide Budgetary Support of Rs.4800 crore for the year 2020-21 for this purpose.
  4. The beneficiaries entitled for 12% employers’ contribution for the months of June to August, 2020 under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) will be excluded to prevent overlapping benefit.
  5. Due to prolonged lockdown, it was felt that businesses continue to face financial crisis as they get back to work. Therefore, the  FM, as part of Aatmanirbhar Bharat, announced on 13.5.2020 that the EPF support for business and workers will be extended by another 3 months viz. for the wage months of June, July, and August, 2020.

     The steps taken by the Government from time to time to ameliorate the hardships faced by the low paid workers are well accepted by the stakeholders.

COVID 19Hot Off The PressNews

During the 44th session of the Human Rights Council, UN High Commissioner for Human Rights — Michelle Bachelet issued a statement where it was pointed that,

In Sri Lanka and India, members of the Muslim minority are being targeted by stigma and hate speech associating them with COVID-19.

Expressing her dismay by reports indicating that in many countries, members of minority communities and migrants face increasing stigmatisation – including, in some cases, by officials, she also added that,

 In Bulgaria, Roma people have been stigmatised as a public health threat, with some local authorities setting up checkpoints around Roma settlements to enforce lockdowns. In Pakistan, hate speech against religious minorities remains virulent. Stigmatization and threats against people presumed to be infected by COVID-19 have also been reported in Haiti, Iraq and many other countries.

In a debate, Council rightly highlighted the importance of principled and non-discriminatory policing in upholding human rights.

Discrimination kills. Depriving people of their social and economic rights, kills. And these deaths and harms damage all of society. COVID-19 is like a heat-seeking device that exposes, and is fuelled by, systemic failures to uphold human rights.

To read the full statement issued by UN High Commissioner for Human Rights, please follow the link below:


COVID -19 dropped itself like a bomb on industries, consumers and economies. The world is still putting itself together from this crisis. The business fraternity however, has never really anticipated any sort of complication or even for that matter, viewed their ‘force majeure’ clauses seriously. Now, that many contracts hinge on ‘force majeure’, a series of questions arise on its invocation. This article looks to condense available material on ‘force majeure’ and looks at the steps ahead.

Force Majeure and general clause:

The term ‘force majeure’ originates from the Code Napoléon of France, that translates to mean ‘superior force’ or ‘greater force’. Ordinarily, this means a drastic or a fundamental change to the substance of the contract that is brought about by an event that was neither anticipated by the parties nor under their control, resulting in non-performance of their contractual obligations. 

In India, since the concept of force majeure is not codified into law, it would be necessary to coin this as part of the contract. Scores of precedents have held that the contract overrides the law and therefore ‘force majeure’ clauses are now part of the standard clauses in any contract along with confidentiality and dispute clauses.

Several examples of force majeure clauses exist. One such instance is as under:

a. The event of ‘force majeure’ such as an act of God, fire, earthquake, flood, accident, an act of governmental authority, lockout or any event beyond the reasonable control of any of the parties that hinder the performance or render it impossible;

b. The duration of force majeure event – typically between 15-60 days;

c. The manner in which this clause needs to be invoked including notices etc.;

d. Suspension or termination of agreement in case the event continues beyond the stipulated period.

Most often, drafting a ‘force majeure’ clause lacks inclusion of details. For instance, majority of the ‘force majeure’ clauses, do not specifically mention ‘pandemic’ or even ‘epidemic’ for that matter, as an event.

Indian Contract Act & Force Majeure:

Although the term ‘force majeure’ finds no presence under the Contract Act, 1872 (“the Act”), its doctrine can be found embodied under Section 32[1] of the Act which renders a contract void when an event upon which performance of contract is contingent becomes impossible.

Essentially, COVID-19 will find a mention in contracts in the form of epidemic, pandemic, or even natural calamity. However, it is noteworthy that where the failure to perform an obligation is primarily due to lockdown implemented by the Government, the force majeure clause must also contain term ‘lockdown’, for it to be invoked. One can also argue that since the lockdown is a result of COVID- 19 and the pandemic, reliance can be placed on the term pandemic in a ‘force majeure’ clause.

The COVID-19 pandemic or the resultant lockdown, will not be treated as ‘force majeure’, if there are other methods of performing the terms of the contract. Having said that, performance of the contract may be suspended during the operation of ‘force majeure’ event and performance may be suitably extended. Parties have the option of renegotiating and modifying the contractual terms, termination is the last step if the force majeure event continues beyond the time prescribed under the contract.

Therefore, construing COVID-19 lockdown a ‘force majeure’ event will depend on the contractual obligations binding the parties and the manner of its performance. 

Several questions have been raised on the fact that some contracts do not stress on ‘pandemic’, ‘epidemic’, ‘disease’ etc. While some parties may rely on the general phrase ‘any other unforeseeable event, not under the control of either of the parties’, a reference may be drawn to some Government notifications and departmental circulars across board, which have declared COVID- 19 and the lockdown as a natural calamity/disaster.

The Ministry of Finance has for instance, by way of an office memorandum dated February 19, 2020[2] with respect to ‘Manual for Procurement of Goods, 2017’, clarified and declared the disruption in supply chains which is a result of COVID-19 from China or any other country, such a disruption will be covered as ‘force majeure’.

The Ministry of New & Renewable Energy with respect to solar project developers, vide office memorandum dated March 20, 2020[3] has declared that parties can invoke the force majeure clause to avoid financial penalties if they miss the contractual obligations on account of COVID-19.

The Karnataka RERA Authority, through its Circular dated April 06, 2020 extended the registration of all real estate projects by a period of three months, in cases where registration is expiring after March 15, 2020 and has also extended the timelines for compliance of the RERA Act by a period of three months.

The Ministry of Electronics and Information Technology[4] has decided to provide rental waiver to small housed in STPI premises (MSMEs, Start-ups) in the country from March 1, 2020 till June 30, 2020 i.e. for 4 months period as of now.

While these notifications, memorandums and circulars do not have a binding effect for all contracts, these will have some persuasive value to bring COVID- 19 and the lockdown under the ambit of force majeure, if there are specific terms in the clause.

Doctrine of Frustration under Indian Law

Where a contract does not feature a ‘force majeure’ clause, Section 56[5] of the Act in the context of doctrine of frustration will be examined. Section 56 creates 2 kinds of impossibilities: (1) Impossibility existing at the time of the making of the contract, and (2) A contract, which is possible and lawful when made, but becomes impossible and unlawful thereafter due to some supervening event. Para 2 of Section 56 above, will have a relevance given the pandemic and lockdown.

For such a clause to be invoked, the following are the requirements:

a. a valid and subsisting contract between the parties;

b. there must be some part of the contract yet to be performed; and

c. the contract becomes impossible of perform.

The consequences of the ‘force majeure’ event will have to be assessed to determine whether it renders the contract impossible, unlawful, or impractical to perform and thereby frustrate its performance. Where it is established that the conditions have materially affected the parties and their obligations and where there is no way to perform the contract during the existence of such conditions, the contract is annulled and both contracting parties are discharged of their subsequent obligations. Under these circumstances, neither party has the right to sue the other party for breach of such contract.

The Supreme Court had interpreted the concept of ‘force majeure’, in Satyabrata Ghose v. Mugneeram Bangur & Co.[6], under Section 56 of the Contract Act. The Supreme Court in this case held that the word “impossible” ‘has not been used here in the sense of physical or literal impossibility’[7]. The determination of whether a ‘force majeure’ event has actually occurred, does not centre around its impossibility alone – a mere ‘impracticality of performance’ (given the subject-matter of the contract), will also suffice. When an ‘untoward event’ or ‘unanticipated change of circumstance’ changes the very foundation of the contract between the parties, this event will be considered a ‘force majeure’ and the contract therefore impossible to perform.

While there have been many judgments on this issue and scores of articles on this topic, we look at one recent decision of the Supreme Court in  Energy Watch Dog v. CERC[8] to buttress the fact that “economic hardship” cannot be considered a ‘force majeure’ event. The judgment also has various other aspects, which are extracted as under:

“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[9], 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. 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.”

The term impossibility and frustration are often used interchangeably. In a situation where there is no force majeure clause, Section 56 and doctrine of frustration comes to rescue. Frustration is a common law doctrine. It is concerned with the change in circumstances that can wholly destroy the object or foundation of the contract or make performance fundamentally different from what the parties contemplated in the beginning. Hence under English Law, one needs to establish functions by the English Code and under Indian Law, impossibility or frustration has been statutorily covered under Section 56 of the Act. If a party can prove that an unforeseen event has destroyed the object of the contract, or fundamentally changed the nature of performance, then the contract would be said to be frustrated and it would automatically come to an end. 

Evidence of force majeure:

It should be noted that the Courts in India follow the contract strictly in terms of force majeure clauses. In a case where the contract must be rescinded on account of a force majeure event, the burden to prove is on the party claiming force majeure. Unless there is compelling evidence that a contract cannot be performed under any circumstance, the Courts do not favour parties resorting to frustration of contract and termination.

The following may form as evidence for invoking force majeure:

  1. National and State Government notice and guideline imposing restriction of trade,
  2. News articles related to COVID-19 outbreak, quarantines, restricted travel and mandatory shutdown of airports, trains stations and seaports,
  3. Cargo booking and freight agency agreement,
  4. Cancelled flight or train ticket or anything other documents relating to travel itinerary, and
  5. Cancelled visa or rejected visa application.

Judicial Precedents during Lockdown

Bombay High Court – Pledge of Shares: Rural Fairprice Wholesale Ltd.  v. IDBI[10], March 30, 2020

Rural Fairprice Wholesale Limited (RFWL) has raised INR 670 crores in debt via insurance of NCDs – secured by shares held by Future Corporation Resources Private Limited (FCRPL)  in future retail limited (pledged shares):

  • Due to COVID-19 pandemic and the subsequent fall in the stock market, the value of the pledged shares fell – debenture trustees accelerated payments and invoked the pledged shares;
  • RFWL approached the Court seeking restraint of sale of pledged shares – contented fall in value of the pledged shares caused by COVID-19 pandemic and fall in stock market;
  • Bombay High Court granted interim relief restraining action in furtherance of the sale notice issued by debenture trustee.

Delhi High Court – Classification of NPA: Anant Raj Ltd v. Yes Bank[11], April 6, 2020

  • Borrower approached the court seeking restraint against lender from downgrading its asset classifications from SM A – 2 to NPA, on the basis of RBI’s COVID-19 regulator package;
  • Defaulting instalment fell due January 01, 2020;
  • Delhi High Court held statement of development and regulatory policies issued by RBI on March 27, 2020 along with regulatory package intended to maintain status quo as on March 01, 2020;
  • Asset classifications can be altered – status code to be maintained;
  • Time granted for payment of January instalment.

Bombay High Court – Invocation of LC’s: STANDARD RETAIL PVT. LTD. V. G.S. GLOBAL CORP[12]. , APRIL 8, 2020

  • Steel importers approached Court seeking restraint of encashment of letters of credit provided to Korean based exporters – claimed lock down hand rendered performance of contract impossible;
  • Bombay High Court refused the injunction:
  1. letters of credit are independent contracts with the bank;
  2. distribution of steel was recognised by government advisories as an essential service no restriction on movement;
  3. the lockdown was for from limited period;
  • The force majeure clause was only to aid exporters and not importers.

Bombay High Court — Transcon Iconica Pvt Ltd.  v. ICICI Bank[13] , April 11, 2020

  • Writ petitions filed by Transcon Sky City and Trancscon Iconica which had availed financing facilities from ICICI Bank defaulted on payments due on January 15, 2020 and February 15, 2020;
  • Determination of whether the moratorium is excluded for NPA classification;
  • Bombay High Court held (i) the period from March 01, 2020 to May 31, 2020 during which there is a lockdown will stand excluded until the lockdown is lifted, (ii) the reprieve is predicated on the lock down and not RBI moratorium, (iii) the borrower was put to terms as a consequences for non-compliance.

Delhi High Court: Invocation of Bank Guarantees: Halliburton Offshore Services Inc. v. Vedanta Ltd.[14] , April 20, 2020:

On an application filed by Halliburton Offshore Services Inc., which sought to restrain Vedanta Ltd. from encashing 8 bank guarantees issued in its favour to secure performance of obligations under a contract to drill petroleum wells, the Delhi High Court granted interim relief observing that the petitioner is not engaged in, stricto sensu, in the production of petroleum, but is, rather, engaged in drilling of wells, which activity is substantially impeded by the imposition of the lockdown and thereby an ad interim injunction, restraining  invocation or encashment of the bank guarantees, till the expiry of exactly one week from May 3, 2020 was granted.

Delhi High Court: Ramanand  v. Dr. Girish Soni[15], May 21, 2020

Application made by the petitioner (tenant), seeking suspension of rent on account of ’force majeure’ due to COVID-19 lockdown, the Single Judge observed that:

  • There is no rent agreement or lease deed between the parties, Section 32 of the Contract Act has no applicability.
  • The subject premises is governed by the provisions of the Delhi Rent Control Act, 1958 hence, Section 56 of the Contract Act does not apply to tenancies.
  • The petitioners have not urged that the tenancy is void under Section 108 (B)(e) of the TPA.
  • Considering factors such as nature of the property, financial and social status of the parties, amount of rent, any contractual condition(s) (relating to non-payment or suspension of rent), protection under any executive order(s) by the MHA, the application of the petitioners was rejected while granting postponement or relaxation in the schedule of payment of rent. However, it was clarified by the court that doctrine of frustration of contract or impossibility of performance does not apply to lease agreements.

**Authors are Founder and Senior Associate respectively with Shivadass & Shivadass (Law Chambers). The contents and comments of this document do not necessarily reflect the views/position of  Shivadass and Shivadass (Law Chambers) but remain solely of the author(s). For any further queries or follow up, please contact

[1] Section 32, Contract Act, 1872  

[2] Noti. No. F.18/4/2020-PPD

[3] Noti. No. 283A8/2020-GRID SOLAR 

[4] Months’ Rental Waiver to the IT Companies Operating from (STPI) dt. 16-4-2020 

[5] Section 56, Contract Act, 1872  

[6] 1954 SCR 310

[7] See, para 9 of Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310

[8] (2017) 14 SCC 80

[9] [1961] 2 WLR 633 : 1961 (2) All ER 179 

[10].Rural Fairprice Wholesale Ltd.  v. IDBI, 2020 SCC OnLine Bom 518

[11] Anant Raj Limited v. Yes Bank Limited, 2020 SCC OnLine Del 543

[12] Commercial Arbitration Petitions Nos. 404 to 408 of 2020, judgment dated 08.04.2020

[13] 2020 SCC OnLine Bom 626

[14] 2020 SCCOnLine Del 542

[15] RC. REV447/2017, order dated 21-5-2020

Case BriefsHigh Courts

Bombay High Court: While deciding the instant custody matter, S.C. Gupte, J., held that as per the provisions of Section 6 of Hindu Minority and Guardianship Act, 1956, it is a mother who is the natural guardian of an illegitimate child (whether boy or girl) and a father’s claim only comes in second to mother’s.

As per the facts of the instant case, the dispute revolved around the custody of a minor son of the petitioner and the respondent, born out of wedlock. The petitioner (biological father) via his counsel Aditya Pratap, challenged the Order passed by the Family Court, Pune which had awarded the custody to the respondent (biological mother). The petitioner contended that the respondent has cut-off his access to the child and that she is mentally and emotionally unfit to take custody of the child. The petitioner further submitted that the respondent intends to take away the boy to New Zealand; hence she has applied for visa. The respondent via her counsel Abhishek Pungliya, contended that the petitioner had abandoned her during her pregnancy; refused to acknowledge their marriage which allegedly took place in 2009. The respondent also claimed that the petitioner inflicted physical and mental torture upon her so that the child may get miscarried. The respondent further submitted that since his birth and till date, it is the respondent alone who has brought up the child. It was pointed out that the child suffers from autism spectrum disorder; hence he has always been under exclusive care of the respondent whereas the petitioner never had any affection or association with the child. Regarding the respondent’s relocation to New Zealand, it was submitted that both the mother and the child are the citizens of New Zealand and since the country is free from the current Covid-19 pandemic, hence it is a safe haven for her son.

Perusing the contentions of the parties and the Order given by the Family Court, the Court observed that the petitioner could not sufficiently establish the mental instability of the respondent, as the materials presented by him does not establish the respondent’s unsoundness of mind, prima facie. Deliberating upon the validity of the Order passed by the Family Court, the Bench noted that the Family Court had correctly taken into account all the relevant circumstances and materials on record; its view is certainly a possible view, which a Court of law might well take.

The impugned Order has fairly and adequately addressed prima facie merits of the case as also the question of balance of convenience. Regarding the petitioner’s claims, the Court noted that he denied any matrimonial relationship between himself and the respondent, and thereby, legitimacy to the minor child. The child, who is a special child, has been taken care of and looked after by the respondent mother ever since his birth. It is therefore the mother who has an indefeasible legal right to his natural guardianship over the petitioner. [Dharmesh Vasantrai Shah v. Renuka Prakash Tiwari, 2020 SCC OnLine Bom 697 , decided on 09-06-2020]

Op EdsOP. ED.

When the existence of the novel Coronavirus started featuring in the news space following China’s confirmation of its spread in the month of January, 2020, it was considered a novel, elusive actuality. It did not qualify as sufficient cause for concern and alarm which could have potentially sparked much needed preparations. However, in the past three months, the number of confirmed cases and resultant deaths due to Covid-19 (the disease caused by Coronavirus) has risen exponentially across the globe leading the World Health Organisation (WHO) to officially declare the corona virus outbreak as a “pandemic” on 11-3-2020[1].

In such persisting circumstances, the Government of India, in its endeavour to contain the extraordinary outbreak of the Coronavirus and its staggering effects, declared a nationwide lockdown. In the face of the unprecedented situations which have arisen as a result of the complete lockdown, many facets of our system find themselves temporarily inoperative. The disruption of the supply chain is one such inevitable corollary. Given this context, it is likely that performances under many existing contracts will be interrupted, postponed or cancelled. Such state of affairs then throws open many questions viz: Can the present day situation posed by COVID-19 pandemic qualify as “Force Majeure”, whether or not parties to the contracts/agreements can plead for being excused from performing their part of the contract citing force majeure and how will the contracts/agreements wherein, there is no specific force majeure clause would be governed in situation of supervening impossibility etc. This article would attempt to cover answers to all the afore-mentioned questions in light of the existing statutory provisions and the law laid down by the various courts of law in form of case laws.

Meaning of Force Majeure

The concept of force majeure[2] owes its origin to Roman Law which recognised the principle of “clausula rebus sic stantibus” which provides that obligations under a contract are binding so long as the situation existing at the time the contract was entered into fundamentally remains the same. The term force majeure refers to an event or effect that can be neither anticipated nor controlled. To put it differently, any event or circumstance which is within the reasonable control of the contracting parties does not qualify as force majeure. Legally, it is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled[3]. From a contractual perspective, the concept gains significance in as much as it provides protection to contracting parties in cases of virtual and actual impossibility of performance of contract. Hence, where reference is made to force majeure, the intention is to save the performing party from consequences of anything over which he has no control[4].

Force Majeure and Contract Act, 1872

While the provisions contained in the Contract Act, 1872 neither define the term ‘force majeure’ nor do they typically spell out the specific circumstances and events which would qualify as ‘force majeure events’, nevertheless the references to the same may be gathered from certain specific provisions laid therein.

In cases where the contract entered into between the parties contains an express or implied force majeure clause, defining the type of events, such as war, terrorism, earthquakes, hurricanes, acts of government, plagues or epidemics etc., the dissolution of the contract would take place under the terms of the contract itself and such cases would be dealt with under Section 32 of the Contract Act, 1872[5]. A force majeure clause should be construed in each case with a close attention to the words which precede or follow it, and with due regard to the nature and general terms of the contract. The effect of the clause may vary with each instrument[6]. The relevant provision as contained in Section 32 of the Contract Act, 1872 is as follows:

32. Enforcement of Contracts contingent on an event happening.- Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.

However, when no relevant event is mentioned in a contract, the occurrence of which frustrates the very purpose of the contract, the provision contained in Section 56 of the Act comes into play. Section 56 of the  Contract Act, 1872 embodies the “doctrine of frustration”. Briefly, “frustration” is an English contract law doctrine that acts as a device which serves to dissolve a contract when, as a result of an unforeseen instance, the obligations covered by it are rendered impossible to fulfil or the principal purpose for entering into the contact on the part of either party is fundamentally altered[7]. Generally speaking, the doctrine of frustration as embodied in Section 56 is relied upon for termination of contract. Section 56 of the  Contract Act, 1872 reads as follows:

56. Agreement to do impossible act.- An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful. A contract to do an act which, after the contract made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

Compensation for loss through non-performance of act known to be impossible or unlawful. Where one person has promised to do something which he knew or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promise for any loss which such promisee sustains through the non-performance of the promise.

As is manifest from the perusal of the aforementioned provision, the first paragraph of Section 56 provides that an agreement to do an act impossible in itself is voidwhile the second paragraph of the same lays that a contract to do an act becomes void when such an act becomes: (a) impossible; or (b) unlawful by reason of some event which the promisor could not prevent. Under Section 56, the court can proceed to grant relief on the ground of subsequent impossibility when the very foundation of the contract becomes upset by the happening of an unforeseen event which was not anticipated by the parties at the time when the contract was entered into by them[8]. Such event or change must be so fundamental as to be regarded by law as striking at the root of contract as a whole[9]. Therefore, where performance is rendered invalid by intervention of law, or where the subject-matter assumed by the contracting parties to continue to exist is destroyed or a state of thing assumed to be the foundation of the contract fails, or does not happen, or where the performance is to be rendered personally by a person who dies or is disabled, the contract stands discharged[10]. Thus, in a nutshell, it can be said that where there is clear stipulation in the terms of the contract upon which the performance of the contract is dependant, such contracts would be governed by Section 32 of the Contract Act, 1872 and wherever, there is no such stipulation in the contract, such contracts would be governed by Section 56 of the  Contract Act, 1872 in cases a supervening impossibility arises. The said applicability of Section 32 vis-à-vis Section 56 of the Contract Act, 1872 has recently been delved into by the  Supreme Court of India as an ancillary issue in  National Agricultural Cooperative Marketing Federation of India v. Alimenta S.A.[11]

Whether situation posed by COVID-19 pandemic qualifies as Force Majeure event?

In response to the potential ramifications of the Covid-19 pandemic in the functioning of the economic and industrial machinery, notifications and advisories have been issued by the Government of India in an attempt to bring in some semblance of stability.

For instance, on 19-2-2020, the Ministry of Finance, Government of India issued a notification[12] clarifying that the disruption of supply chains due to the spread of coronavirus should be considered as a case of natural calamity and force majeure clause may be invoked, wherever considered appropriate, following due procedures. The aforementioned notification further stipulates that “coronavirus should be considered as a case of natural calamity and force majeure may be invoked, wherever considered appropriate, following the due procedure…a force majeure clause does not excuse a party’s non performance entirely, but only suspends it for the duration of the force majeure. The firm has to give notice of force majeure as soon as it occurs and it cannot be claimed ex-post facto…If the performance in whole or in part or any obligation under the contract is prevented or delayed by any reason of force majeure for a period exceeding ninety days, either party may at its option terminate the contract without any financial repercussion on either side”. However, the aforesaid Office Memorandum may not necessarily or implicitly serve as binding document for the contracting parties, being more in the form of an advisory or recommendation. 

In addition to the above, the question as to whether COVID-19 outbreak along with its consequential restrictions including the quarantines, travel restrictions or other related limitations on normal business imposed by government would qualify as force majeure, would depend on the language of the clause and the rules of legal interpretation of force majeure clauses[13]. Hence, the wordings used in different clauses of the contract assume salience in order to find out as to whether or not parties to the contracts/agreements can plead for being excused from performing their part of the contract citing force majeure given the situation posed by the COVID-19 pandemic. For the aforesaid purpose, further discussion in this article is broadly categorised into two headings — (i) Firstly, cases where force majeure clause is enshrined in the contract itself, and (ii) Secondly, cases where force majeure clause is not enshrined in the contract.

1. If Force Majeure Clause is enshrined in the Contract

Pertinently, if the force majeure clause in the contract refers to a pandemic or an epidemic, the same may be pleaded and urged by contracting parties where performance of the contract entered between them has become practically and commercially impracticable on account of COVID-19 outbreak. Where a contracting party seeks to claim relief under the force majeure clause, the occurrence of one of the events set out in the force majeure clause is needed to be proved and the burden of proof lies on the party which invokes the force majeure clause.

Now, in contracts where the force majeure clause explicitly covers pandemics and epidemics or situations arisen by responses to the pandemic or epidemic, the discharge of the aforementioned burden remains fairly uncomplicated. However, complications arise in a scenario where a force majeure clause simply uses the phrase ‘event beyond the reasonable control of parties’. Here, to facilitate swift and favourable discernment of disputes, it becomes vitally important for the party invoking the force majeure clause to maintain any and all documents related to the event in question which may prove to be consequential in the ascertaining process. In regard to this discussion, the said documents may include (i) any notification and/or guideline issued by the national and/or state governments imposing restrictions on trade, (ii) definite forms of information from reliable media sources related to COVID-19 outbreak, restrictions on public movement and/or mandatory shutdown of modes of travel (iii) documents revealing any cancellations disrupting travel itinerary, such as cancelled/rejected visa et al.

2. If Force Majeure Clause is not enshrined in the Contract

As has been discussed earlier, when an event which is not mentioned in the contract takes place which frustrates the very purpose thereof, the provision contained in Section 56 of the Contract Act, 1872 shall come into play. The  Supreme Court of India, while explaining the concept of frustration in contract law in Satyabrata Ghosh v. Mugneeram Bangur & Amp; Co.[14] has held that the word “impossible” has not been used with respect to physical or literal impossibility. Where an unexpected occurrence or change in circumstances decimates the very objective of the contract the same may be considered as “impossibility” to do as agreed.

A study of the landmark judgments rendered by the  Supreme Court of India over the course of time showcases a very high threshold to apply the concept of force majeure which requires the entire foundation of the contract to be shown to be obliterated. An existing contract shall cease to bind the contracting parties only when consideration of the terms of the contract, in light of the circumstances existing when it was entered into, shows that there was no agreement to be bound in a fundamentally different and unexpected situation. The performance of a contract is never discharged merely on the ground that the same may become onerous to one of the parties[15]. In order elucidate and highlight the threshold defined by the Indian courts for citing force majeure by contracting parties, certain celebrated judgments rendered by the Supreme Court are discussed below:

In Satyabhrata Ghose case (supra), it was held by the Supreme Court of India that the contract of sale for a chunk of land was not frustrated and performance thereunder could not be said to be rendered impossible under Section 56 of the Contract Act, 1872 merely because the said land had been requisitioned by the Government for military purposes during the Second World War. The Supreme Court even went ahead to observe that during the war, the parties could naturally anticipate restrictions of various kinds which would make performance under contracts more difficult than in times of peace and therefore, the requisitioning of the land which formed the subject matter of the contract of sale could not be said to affect the fundamental basis upon which the agreement rested or strike at the roots of the adventure.

Likewise, in Alopi Parshad & Sons Ltd. v. Union of India[16], the claim of the appellant for enhanced prices for supply of ghee for Army personnel during the second world war was rejected by the Supreme Court despite enormous scarcity and enhanced procurement expenses owing to conditions of war and it was categorically held by the court that the parties to an executory contract are often faced with a turn of events which they did not at all anticipate, such as, an abnormal rise or fall in prices, a sudden depreciation of currency etc. However, the same does not per se affect the bargain they have made.

In Naihati Jute Mills Ltd v. Hyaliram Jagannath[17] while observing that it is not hardship or inconvenience or material loss which brings about the principle of frustration into play, the Supreme Court held that rejection of an import licence to a jute supplier sourcing Pakistani jute could not be said to have rendered performance under the contract entered into between the parties as impossible.

More recently, in Energy Watchdog v. Central Electricity Regulatory Commission[18] the rise in price of coal consequent to change in Indonesian Law, which though admittedly rendered the contract commercially impossible, was not treated as a force majeure event by the Supreme Court as neither was the fundamental basis of the contract, which in this case was to generate and supply energy from coal, was shown to be dislodged nor was any frustrating event, except for a rise in the price of coal, pointed out. On the contrary, the Court observed that where alternative modes of performance of obligations under the contract were available, albeit at a higher price, the same could not be treated to have been frustrated.


There is no gainsaying that the behemoth of COVID-19 has inter alia virtually brought economic activity to a halt and has disturbed the chain of production, supply and distribution. However, it would be extremely difficult, if not impossible; to prove beyond reasonable doubt that disruptions qua unprecedented outbreak of COVID-19 pandemic have radically and irreversibly dislodged the very bargain contemplated in a contract, particularly in view of the temporariness of such disruptions or for that matter the full probability of resumption of the “pre-Corona” times. Mere inconveniences, difficulty, pause or delay in performance of obligations under a contract owing to COVID-19 pandemic and its consequential restrictions would not hold ground to treat the same as a force majeure event given the little judicial importance offered by the courts of law to such parameters while defining the high benchmark for force majeure to apply. However, given that the Courts would assess the application of concept of force majeure in light of the facts and circumstances of each case presented before them, by either resorting to principle of equity or by adopting a more technical approach, it would be imperative for the contracting parties be thorough with the terms and clauses incorporated in the contract as well as their contractual rights and obligations thereunder.

*Author is a graduate of University of Cambridge (United Kingdom) with a specialisation in Commercial Laws. Currently practicing law before the Lucknow Bench of Allahabad High Court.

**Co-Author is a gold medallist in law from Unity Post Graduate and Law College Lucknow (affiliated to Lucknow University, Lucknow). Currently practicing law before the Lucknow Bench of  Allahabad High Court.

The authors deeply acknowledge the guidance of Mr. Gaurav Mehrotra, Advocate

[1] See World Health Organisation Virtual Press Conference on Covid-19, 11th March 2020 available at

[2] The term force majeure has been borrowed from French, the literal translation whereof is “superior force” in English.

[3] Black’s Law Dictionary, 11th Edition, at page 788.

[4] Dhanrajamal Gobindram v. Shamji Kalidas & Co., (1961) 3 SCR 1020

[5] Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310

[6] Lebeeaupin v. Crispin, (1920) 2 K.B. 714 

[7] Taylor v. Caldwell , (1863) 3 B & S 826

[8] Naihati Jute Mills Ltd. v. Khyaliram, (1968) 1 SCR 821 

[9] Satyabhrata Ghose v. Mugneeram Bangur, 1954 SCR 310

[10] Raja Dhruv Dev Chand v. Harmohinder Singh, (1968) 3 SCR 339 

[11] 2020 SCC OnLine SC 381  

[12] Office Memorandum No.F. 18/4/2020-PPD titled ‘Force Majeure Clause’, issued by Department of    Expenditure, Procurement Policy Division, Ministry of Finance, Government of India

[13] Mulla & Pollock on Indian Contract Act, 1872 & Specific Relief Act, 1967, page 1181.

[14] 1954 SCR 310 (12) 

[15] Alopi Parshad & Sons Ltd. v. Union of India, 1960 (2) SCR 793

[16] 1960 (2) SCR 793

[17] (1968) 1 SCR 821

[18] (2017) 14 SCC 80

Case BriefsCOVID 19High Courts

Delhi High Court: C. Hari Shankar, J., addressed a petition with regard to quashing of FIR wherein petitioner was in custody for loitering around without wearing mask and assaulting a police constable, and held that,

charges against the petitioners are unquestionably serious.

Petitioner sought quashing of FIR for offences committed under Sections 188/269/186/353/332/506 read with Section 34 of penal Code, 1860.

Rahul (Petitioner 2) was seen loitering without wearing a mask in violation of Compliance Advisory issued by Centre in the wake of COVID-19 pandemic.

On the complainant intercepting Rahul and querying him in that regard, Rahul retorted that the complainant had no right to stop him from walking in the area without a mask.

Further when the complainant with the help of a constable tried to control Rahul, he caught hold of the collar of the shirt being worn by the complainant and tore the shirt. Rahul also assaulted the constable by kicking him.

Rahul’s brother Petitioner 1 also joined him and started assaulting the complainant. Later both of them were take into custody and FIR was lodged.

Quashing of criminal proceedings by eviscerating them from their very inception, is an extreme step, to be taken with due circumspection.

Progress of the criminal law, once legitimately set in motion, should not be halted by judicial diktat, save in exceptional circumstances and with due cause.

Bench stated that, charges against the petitioners are unquestionably serious.

Breach of the lockdown restrictions, imposed by the Government, which, if permitted unchecked, may result in loss of lives of millions, and cannot be tolerated.

Court also added that the acts of petitioners are inherently inimical to public interest and may have catastrophic consequences and in these cases Courts cannot permit themselves to be carried away by the physical nature of the act as committed, unmindful of the results that would ensue, were such acts to be tolerated. [Sunder Kumar v. State, WP (Crl) No. 787 of 2020, decided on 06-05-2020]

COVID 19Hot Off The PressNews

Chief Justice of the Bombay High Court and the Administrative Judges of the Bombay High Court have decided that the High Court of Bombay and Courts subordinate to it shall not avail Summer Vacation, if after 3rd May, 2020 and before 7th June, 2020, the normal Court working is restored by lifting the lock-down.

During the period of Summer vacation if normal Court working is restored

The working hours for the Subordinate Courts during the said period, if normal court working starts, shall be as in force prior to Covid-19 pandemic.

The modified working hours for the High Court, if any, from 08th June, 2020 onwards shall be notified separately.

Access the Circular here: CIRCULAR 

Bombay High Court

[Circular dt. 21-04-2020]

COVID 19Legislation UpdatesNotifications

Government of India has reviewed the extant Foreign Direct Investment(FDI) policy for curbing opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic and amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017. Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry has issued Press Note No. 3(2020 Series) in this regard.

The present position and revised position in the matters will be as under:

Present Position 

Para 3.1.1: A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

Revised Position 

Para 3.1.1:

3.1.1(a) A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

3.1.1(b) In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview of the para 3.1.1(a), such subsequent change in beneficial ownership will also require Government approval.

The above decision will take effect from the date of FEMA notification.

Ministry of Commerce & Industry

[Press Release dt. 18-04-2020]

[Source: PIB]

COVID 19Hot Off The PressNews

The Ministry of Tourism, Govt. of India has launched portal on 31st March 2020, with a view to identify, assist and facilitate foreign tourists who are stranded in various parts of India due to the lockdown situation necessitated by the COVID-19 global pandemic.

Such tourists would need to log on to the portal, provide some basic contact information and narrate the nature of issues being faced by them, if any.

In the first 5 days of its operation, 769 foreign tourists from all over the country registered on the portal.

Every State Government and Union Territory Administration has identified a Nodal Officer for assisting such foreign tourists.

The 5 Regional Offices of the Ministry of Tourism are constantly coordinating with the Nodal Officers regarding the Support Requests logged on the portal, for facilitating ground support to the foreigners, if so required. The Tourism Ministry Regional Offices are also coordinating with the Bureau of Immigration and FRROs regarding Visa issues being faced by stranded foreigners. Requests for movement within the country/ state and for transfer to home country of such tourists are also being coordinated with the Ministry of External Affairs, Ministry of Home Affairs and with the respective Embassy/ High Commission/ Consulate.

The utility and efficacy of the portal has led to stranded foreign tourists being contacted over e-mails, telephones and also in person depending on the nature of support required by them. They have been connected with the relevant foreign office of their home country in India and provided various information updates on flights out of India to their home countries. Wherever required, they have been provided medical assistance, food and accommodation.

A lady, who is an American citizen, was stranded in Supaul district of Bihar amidst the COVID19 lockdown, while her son was undergoing a surgery at Delhi. The portal facilitated the required inter-ministerial, inter-departmental and State-Centre coordination and secured her a special transit-permit to travel to Delhi. She has safely reached her destination and expressed her gratitude for the efforts put in by all the concerned agencies.

Two Costa Rican citizens, who had come to Chennai for a surgery (medical tourism), were stranded at Chennai after the surgery. Close coordination with the State Government, the Costa Rican Embassy and the hotel in which the tourists were staying helped in soothing the frayed and panicked nerves of the tourists. They are now safe and well.

An Australian tourist with his family was stranded in Ahmedabad. The tourist has epilepsy and ran out of medication prescribed by Australian doctors due to the lockdown. The portal led to the tourist being reached through the office of the District Collector. He was provided with sufficient medication and was also offered food and local transportation. Now, they are comfortable and safe.

The above are just a few of the many occasions in which the portal helped many foreigners in getting critical assistance at a crucial time. In the coming days, the portal will continue to serve its purpose and the Government are committed to the cause of ensuring the comfort and well being of our foreign guests during their stay in India.

That is the spirit of “Atithi Devo Bhava”, the mantra that drives Incredible India!

Ministry of Tourism

[Press Release dt. 06-04-2020]

[Source: PIB]

COVID 19Hot Off The PressNews

Chewing Smokeless Tobacco products (Gutkha, Paan masala with tobacco, Paan and other chewing tobacco products) and areca nut (supari) increases the production of saliva followed by a very strong urge to spit. Spitting in public places could enhance the spread of the COVID19 virus.

In view of the increasing danger of COVID-19 pandemic, it is an appeal to the general public to refrain from consuming the smokeless tobacco products and spitting in public places during the COVID epidemic.

Indian Council of Medical Research


Legislation UpdatesNotifications

In a move to extend the availability and reach of online services in the wake of the COVID-19 pandemic, EPFO has issued revised instructions to its field offices to facilitate PF members to rectify their date of birth in EPFO records, thus ensuring that their UAN is KYC compliant.

The date of birth recorded in ‘Aadhaar’ will now be accepted as valid proof of date of birth for the purpose of rectification, provided that the difference in the two dates is less than 3 years. The PF subscribers can submit the correction requests online.

This will enable EPFO to validate the date of birth of members online with UIDAI instantaneously, thus authenticating and reducing the processing time of change requests.

EPFO has instructed field offices to expedite disposal of online requests, enabling PF members in financial distress, to apply online for availing non refundable advance from their PF accumulations to tide over the COVID-19 pandemic.

Ministry of Labour and Employment

[Press Release dt. 05-04-2020]

[Source: PIB]

COVID 19Hot Off The PressNews

The Income Tax Appellate Tribunal (ITAT) has commenced today a series of Video Conferences involving regular interactive sessions to productively utilise the time available during the 21-day lockdown to tackle the COVID-19 pandemic. ITAT President, Justice P.P. Bhatt, in a communication to Vice Presidents and Members of the Tribunal, said such meetings can be utilized for exchanging views and formulating strategies as to how to improve the rate of disposal of cases as well as quality of judicial orders.

Reiterating that the lockdown announced by the Government of India be strictly complied with by practising social distancing and self-quarantine, Justice Bhatt said it has become practically difficult to work from offices and retain the same productivity levels as of normal working days. Nevertheless, it is important that we utilize this period to enhance our skills and capabilities, he added.

“In our daily routine of attending to judicial workload, sufficient time is not available to address issues of administrative, infrastructure, employees disciplining etc. Therefore, such interactions would help in achieving efficiency in our administrative working also,” said Mr. Justice Bhatt.

The topics of the seven interactive sessions on all working days till Monday, 13th April, include domain as well as non-domain subjects and will have different sessions at the National and Zonal levels, including amongst Members of bigger multiple Bench stations. Domain topics include Income Tax and allied laws, while non-domain subjects relate to better living viz., health, meditation, holistic wellness etc. Members of each station have been asked to have meetings amongst themselves on local issues relating to infrastructure and administrative problems.

Emerging issues scheduled to be deliberated upon include:

(i) General Anti Avoidance Rule (GAAR) – likely issues arising from application of GAAR in assessments.

(ii) The Direct Tax Vivad Se Vishwas Act, 2020 – expectations of and from ITAT.

(iii) Amendments in Finance Act, 2020.

(iv) Changing concept of Permanent Establishment and Business Connection and taxation of digital economy in the light of BEPS and legal amendments.

(v) Impact of ICDS in the assessments and issues arising thereof.

Fundamental issues to be discussed during the Interactions include:

(i) Business connection.

(ii) Deemed Incomes under Section 9, FTS and Royalties.

(iii) Permanent Establishment and Profit Attribution.

(iv) Case studies – the impact of some important judicial precedents – key takeaways.

(v) Reopening of assessment and revision of assessment.

Non-domain subjects lined up for the Interactions include:

(i) Art of Living – facing pandemic lockdown with positivity.

(ii) Work from Home (WFH) – an opportunity to maintain work-life balance.

(iii) Yoga tips.

Addressing the Inaugural Session today, Mr. Justice Bhatt said he has requested the Chief Justice of India, Mr. Justice Sharad Arvind Bobde to address one of the Interactive Sessions with the ITAT Vice Presidents and Members. Eminent jurists will also address various sessions and participate in the interactions, he added.

Ministry of Law and Justice

[Press Release dt. 03-04-2020]

[Source: PIB]

COVID 19Legislation UpdatesNotifications

With respect to COVID 19 pandemic, Department of Rural Development, GoI in close collaboration with State Governments has taken various initiatives. Mahatma Gandhi NREGS wages have been revised by Department of Rural Development, GoI with effect from 1st April, 2020. The average national increase is Rs 20.

Focus of Mahatma Gandhi NREGS may be on individual beneficiary-oriented works which directly benefit SC, ST and women headed households as well as small & marginal farmers and other poor households. However, close consultation and guidance of the State as well as district authorities would be necessary to ensure that lock down conditions are not violated and norms of social distancing are scrupulously followed.

Ministry of Rural Development is according top priority to liquidate the wage and material arrears. An amount of Rs. 4,431 crore has been released in this week to various States/UTs to liquidate these liabilities of current fiscal year and the remaining such liabilities along with 1st tranche for the year 2020-21 will be released before 15th April, 2020. An amount of Rs. 721 crore has been released to State Government of Andhra Pradesh.

Ministry of Rural Development

[Press Release dt. 31-03-2020]

[Source: PIB]