Bombay High Court refuses ‘Force Majeure’ Exemption to Steel Importers; says Steel declared as ‘Essential Service’ during Lockdown

Must Read

Kerala High Court Rejects Writ Petition for Rejection of Loan Application

Case: Anvardeen. K v. Union of India. Coram: Justice P.V. Asha On 24th November 2020, The Kerala High Court involving a...

Supreme Court: Maritime Board Must Not Wallow in Inaction and Be Arbitrary in Its Contractual Duties

A Division Bench of the Supreme Court held that a State instrumentality such as the Maritime Board is expected...

Supreme Court: Right to Property Is a Constitutional Right, the Essence of Rule of Law Protects It

A Division Bench of the Supreme Court has held that permitting the State to assert indefinite right upon one’s...

Madras High Court Directs Tahsildar To Issue Origin Certificates To Two Sisters in Two Writ Petitions

Two Writ Petitions by two siblings was filed under Article 226 of the Indian Constitution. The petitions owed to...

Delhi High Court Directs Centre and Delhi Govt To Consider a PIL Seeking Paid Menstrual Leave as Representation

The Delhi High Court had provided direction to consider a petition as representation. The Central and Delhi governments were...

Follow us

The Bombay High Court refused to grant ‘Force Majeure’ exemption to a set of steel importers, who had sought to restrain the encashment of their Letter of Credits by Korea-based exporters.

The companies had approached the High Court under Section 9 of the Arbitration and Conciliation Act, stating that the lockdown had rendered the performance of the contract impossible. Petitioner companies – Standard Retail Pvt Ltd, Integral Industries Pvt Ltd, Vinayaga Marine Petro Ltd and Hariyana International Pvt Ltd – invoked the Force Majeure clause in their contract with Hyundai Corp and GS Global seeking directions restraining the respondent bank Wells Fargo from encashing letters of credit.

Petitioners contended that contracts with Hyundai Corp and GS Global stood terminated as unenforceable on account of “frustration, impossibility and impracticability”. They relied upon Section 56 of the Indian Contract Act, 1972 and the Supreme Court’s judgment in Energy Watchdog Vs CERC (2017) and Satyabrata Ghose Vs Mugneeram Bangure & Co. (1954).

Court’s Observation

Firstly, the Court noted that the Letters of Credit are an independent transaction with the Bank and the Bank is not concerned with underlying disputes between the buyers and sellers. Notably, Justice A A Sayed also observed that the lockdown guidelines indicated that the distribution of steel has been declared as an essential service.

“The Notifications/Advisories relied upon by the learned Senior Counsel for the Respondent No. 1 does suggest that the distribution of steel has been declared as an essential service. There are no restrictions on its movement and all ports and port-related activities including the movement of vehicles and manpower, operations of Container Freight Station and warehouses and offices of Custom Houses Agents have also been declared as essential services. The Notification of the Director-General of Shipping, Mumbai, states that there would be no container detention charges on import and export shipments during the lockdown period”. 

Furthermore, Court said, “In any event, the lockdown would be for a limited period and the lockdown cannot come to the rescue of the Petitioners to resile from its contractual obligations with the Respondent No. 1 of making payments.” Justice AA Sayed observed that the Force Majeure clause in the present contracts applies only to exporters and cannot come to the aid of the Petitioners.

The bench further said,

“Moreover, the contract terms are on Cost and Freight basis (CFR) and the Respondent No. 1 has complied with its obligations and performed its part of the contracts and the goods have been already shipped from South Korea. The fact that the Petitioners would not be able to perform its obligations so far as its purchasers are concerned and/or it would suffer damages, is not a factor which can be considered and held against the Respondent No. 1.”

Thus ad-interim reliefs were rejected. Senior Advocate Vineet Naik instructed by Tuli Tuli & Co. appeared for GS Global, Ameya Gokhale along with Veena Sivaramakrishnan and Vaibhav Singh instructed by Shardul Amarchand Mangaldas & Co. for Hyundai Corp. Whereas Advocate SB Deshmukh along with Uttam Rane appeared for the petitioners.


Libertatem.in is now on Telegram. Follow us for regular legal updates and judgements from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe for our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Supreme Court : High Courts Have Sole Authority Under Article 226 To Decide Validity of Tax Provision, Even if Matter Is Sub-Judice Before Income...

A Full Bench of the Supreme Court held that the validity of a provision is a serious matter which could only be decided by...

Kerala High Court Rejects Writ Petition for Rejection of Loan Application

Case: Anvardeen. K v. Union of India. Coram: Justice P.V. Asha On 24th November 2020, The Kerala High Court involving a single bench judge of the...

Supreme Court: Maritime Board Must Not Wallow in Inaction and Be Arbitrary in Its Contractual Duties

A Division Bench of the Supreme Court held that a State instrumentality such as the Maritime Board is expected to act without any arbitrariness...

Supreme Court: Right to Property Is a Constitutional Right, the Essence of Rule of Law Protects It

A Division Bench of the Supreme Court has held that permitting the State to assert indefinite right upon one’s property, without any legal sanction...

Madras High Court Directs Tahsildar To Issue Origin Certificates To Two Sisters in Two Writ Petitions

Two Writ Petitions by two siblings was filed under Article 226 of the Indian Constitution. The petitions owed to the fact that they were...

Delhi High Court Directs Centre and Delhi Govt To Consider a PIL Seeking Paid Menstrual Leave as Representation

The Delhi High Court had provided direction to consider a petition as representation. The Central and Delhi governments were directed to consider the same....

Madras High Court Reiterates That ‘Ignorance of Law’ Is Not an Excuse and Dismisses Petition by a Constable

A Constable committed bigamy and deserted his service for more than 21 days. After dismissal from his service, he moved to Tamil Nadu Administrative...

Transfer of Winding-up Proceedings Allowed Under S. 434, Restrictions Under 2016 Rules To Not Apply: Allahabad High Court

This appeal relates to the question of transfer of winding-up proceeding from the High Court (Company Court) to the NCLT.  Facts M/s. Girdhar Trading Company, 2nd...

Constitutional Court of South Africa Declares Provisions of Domestic Workers’ Injury Compensation Legislation To Be Unconstitutional

The Constitutional Court of South Africa in Sylvia Mahlangu v Minister of Labour , declared parts of the Compensation for Occupational Injuries and Diseases...

Bail Granted Under Section 167(2) CrPC Can Be Cancelled Under Section 439(2) CrPC: Supreme Court

The Supreme Court held that the right of default bail of the Accused can be cancelled under Section 439(2) of the Criminal Procedure Code. Facts...

More Articles Like This

- Advertisement -