Bombay HC refuses exemption from 'Force Majeure' for steel importers; says Steel declared as 'Necessary Service' during lockdown

Team SoOLEGAL 11 Apr 2020 3:47pm

Bombay HC refuses exemption from 'Force Majeure' for steel importers; says Steel declared as 'Necessary Service' during lockdown

On Wednesday, the Bombay High Court refused to grant 'Force Majeure' exemption to a group of steel importers who had sought to limit Korea-based exporters' encashment of their Letter of Credit.

According to Section 9 of the Arbitration and Conciliation Act 1996, the companies had approached the High Court alleging that the lockout had made contract success 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 to obtain guidance to prohibit the defendant bank Wells Fargo from encashing credit letters.

Contention made by the petitioner was that the contracts with both the companies i.e. Hyundai Corp and GS Global stood terminated as were unenforceable on the account of "frustration, impossibility and impracticability". The petitioners relied on the Supreme Court’s judgment in the cases of Energy Watchdog vs CERC (2017) and Satyabrata Ghose vs Mugneeram Bangure & Co. (1954) and the Section-56 of the Indian Contract Act 1972.

Justice A A Sayed noted that the instructions for the lockdown suggested that steel distribution has been deemed an important service.

The Court stated, “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".

Justice Sayed further stated that the ‘Force Majeure’ clause with respect to the on-going contracts will only beenforceable upon the exporters and petitioners cannot claim the same,henceforth denying interim reliefs.

Tagged: Bombay HC   Force Majeure   steel importers   Lockdown   Justice Sayed  
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