Mansimran Kaur

Chennai, May 26, 2022:  Referring to  Section 54  of the Indian Contract Act, 1872 which states that the performance of the reciprocal promise cannot be claimed till the other promise has been performed, the Madras High Court has held that the pandemic situation can be taken as “force majeure” event.

In this matter before the Bench of Justice G.R. Swaminathan, the writ petitioner was engaged in the business of promotion of advertisements. The respondent-Corporation invited tenders for award of licenses to display advertisements on the buses run by them. The writ petitioner qualified as the successful bidder. The license period was to be valid for 11 months from February 26, 2021 to January 25, 2022. The contract between the parties contemplated renewal for two subsequent spells of 11 months. However, due to pandemic situation, the operation of the buses was affected and the petitioner could not enjoy the perks of the licence fully.  Yet, they were called upon to pay the monthly license fee. In pursuance of the same, the petitioner submitted the representation to the respondent seeking full waiver of the licence fee during the lockdown period.  On receiving no response, the petitioner instituted the writ petition. 

After directions were passed by the Court, the respondent directed the petititoner to remit a sum of Rs.69, 87,960 on or before July 22, 2021. It was further made clear by the respondent that non- adherence to the aforesaid conditions would result in cancellation of the tender. Assailing the same, the petitioner filed writ petitions. In view of the same, the respondent passed the order accepting the  request of waiver of the licence fee for the full lock down period and called upon the petitioner to pay a sum of Rs.2,49,68,376 . Since the demand was not fulfilled by the petitioner, the impugned communication dated January 5, 2022 was issued wherein the agreement was terminated. Thus, the petitioner prayed before this Court to quash all the adverse communications and direct the respondent to issue license for the second spell also. 

The Court after hearing the rival contentions of the parties stated that though there was an arbitration clause in the tender agreements, however the same cannot not imply that the writ petition can be completely thrown out on the said ground. It was also observed that the existence of the arbitral remedy cannot be cited as a reason for non-suiting the petitioner. Additionally, the Court observed that the Corporation is a State instrumentality and therefore, its actions ought to be just, fair and reasonable. Even the commercial activities of the respondent are not exempt from the aforesaid mandate, added the Bench.

Further reliance was placed to a judgment of Apex Court in the case of SBI V. Radhey Shyam Pandey. The Bench said, “…even if the agreement between the parties did not contain an explicit “force majeure” clause, it can be taken as implied term.

The Bench also stated that in the instant case the writ petitioner was obliged to pay a certain amount as licence fee to display the advertisement boards on the buses run by the respondent Corporation. This obligation could have been enforced in totality only if the petitioner had been able to display the advertisement board on all the 1530 buses. However, the Corporation could not run all the buses mentioned in the three agreements as per the usual timings and therefore it couldnot expect the petitioner alone to pay the licence fee in full, the Court noted. 

The Court was also of the view that the actions of the respondent in the present case were in violation of Article 14, as the other Corporations did give relaxations to other individuals placed on similar footings. Thus, the impugned communications were quashed and accordingly the writ petitions were allowed. 

0 CommentsClose Comments

Leave a comment