Rahul Ranjan

Advocate
Compilation of Orders passed by High Courts during Lockdown on
account of Force Majeure & COVID-19 Pandemic

Sr. Case & Citation Relevant Facts & Proposition Relevant Extracts/ Court’s
No. (in brief) order
1. Rural Fairprice The instant suit has been The Court noted the plea of
Wholesale preferred by the Rural Fairprice plaintiff that at the time of
Limited & Anr. vs. Wholesale Limited (“RFWL”) and execution of the Debenture
IDBI Trusteeship its one of holding company, Trustee Deed, the market price
Services Limited namely, Future Corporate of per share was INR 350 and
& Ors. Resource Private Limited because of collapse of stock
(“FCRPL”), one of the promoter of market due to threat of COVID-
Commercial Suit Future Retail Limited, seeking 19 pandemic, the price of per
(L) No. 307 of urgent injunction against the share fell down INR 100.
2020. [Bombay IDBI Trusteeship Services
High Court] Limited (“IDBITSL”) from selling
shares pledged by FCRPL amid a The Court after considering
Order dated: share market collapse due to the current prevailing crises
30.03.2020 threat of spread of COVID-19 across the globe had granted
across the nation. ad-interim protection to the
plaintiff in the following words
Facts of the Case: “Considering the present
situation of market and COVID-
FCRPL had pledged its equity 19, I am of the opinion that
share in FRL , to secure the loan plaintiffs are required ad-
granted to RFWL by USB AG, interim protection till next date”.
London (“Lender”) and the
pledged was created in favour of
IDBITSL. The value of the FRL’s
share (a listed company) has
been drastically fell down due to
recent collapse of stock market,
result from COVID-19 pandemic
against the value of shares at
the time of execution of the
Debenture Trust Deed dated
12.01.2018 and 10.04.2019.
Therefore, IDBITSL, in capacity
of debenture trustee, served the
event of default notice on
17.03.2010 followed by notice of
sale dated 18.03.2020.

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The Plaintiff sought an ad-
interim injunction against IDBI
from proceeding with selling of
shares so pledged during the
period of crisis arose on the
account of widespread threat
due to COVID-19. The Plaintiff
informed the Court that the
since loan of INR 610 crores to
FRL was secured with market
value of share of INR 350 per
shares but the same fell down
below INR 100 per share during
the crisis, therefore, inability to
meet the minimum contractual
security cover was solely
attributable to the prevailing
unprecedented outbreak of
COVID-19 pandemic.

The Plaintiff further sought that

invocation of the sale of the
pledged share with trustee was
unfair, commercially
unreasonable and untenable in
eye of law and equity.

2. Indiabulls Facts of the Case: The High Court has issued

Housing Finance notice in a plea moved by
Limited vs. The Petitioner by this petition Indiabulls Housing Finance
Securities seeks a restraint on respondent Limited challenging the
Exchange Board No.2, ICRA Limited from downgrading of its credit rating
of India & Ors. proceeding to downgrade the by ICRA and restrained the
credit rating of the petitioner in ICRA from uploading any
Writ Petition furtherance of its decision with regard to the
(Civil) Urgent No. communication dated credit rating of the Petitioner
07 of 2020 23.03.2020, 30.03.2020 and on its website or giving effect to
01.04.2020 directly or indirectly it till the next date of hearing.
in view of circular issued by the
Order dated Securities and Exchange Board
03.04.2020. of India (SEBI) dated
30.03.2020.

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The Petitioner urged that in view
of the lockdown and several
advisories issued by the
Government and occurrence
emergent situation due to which
necessary requisite details as
sought for by respondent No.2 in
their emails could not be
provided.

The Petitioner further sought

reliefs in terms of the advisory
dated 30.03.2020 issued by
SEBI whereby, certain
relaxation from compliance were
issued, due to COVID-19
pandemic and the moratorium
permitted by RBI.
3. Anant Raj Facts of the Case: The High Court in the light of
Limited vs. YES advisory issued on 27.03.2020
Bank Limited The instant urgent writ petition in the wake of COVID-19
was preferred by the Anant Raj pandemic and its applicability
Writ Petition Limited seeking an appropriate to the Petitioner, ordered to
(Civil) Urgent- directions to YES Bank not to maintain status quo to the loan
05/2020 [Delhi classify the account of petitioner which were on default as on
High Court] as Non-Performing Asset in the 01.03.2020 till 31.05.2020 in
aid and cover of Statement of the following words “Reading of
Order dated Development Regulatory Policy the Statement on Development
06.04.2020 along with Regulatory package and Regulatory Policies issued
dated 27.03.2020 announced by th
by RBI on 27 March, 2020
the Reserve Bank of India to
along with Regulatory Package
cope with the adverse scenario
issued on March 27, 2020
and ease the financial burden
prima facie shows that the
caused by the disruption of the
intention of the RBI is to
current pandemic by relaxing
maintain status quo as on
and rescheduling repayment
01.03.2020 with regard to the
schedule and improving the
all the instalments payment for
functioning of market in the
which had to be made post
current crisis along with
01.03.2020 till 31.05.2020”.
pausing the classification of
accounts as pursuant to the The Court also noted that since
economic fallout. the instalment that was due on
01.01.2020 was not paid
within 30 days, the account of
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The Petitioner approached the
High Court with the plea that
they had serviced their loan due
up to December 32, 2019 but
could not January 1, 2020
instalment for repayment could
not be paid because of adverse
economic impact brought about
by the widespread COVID-19.
On contra, the Bank submitted,
the account of Petitioner was
classifies as NPA on
31.03.20202 as per IRAC
guidelines issued by Reserve
Bank of India for the overdue of
instalment for the period of 90
days.
the petitioner was classified as
SMA-1 and thereafter since it
was not paid within 60 days,
the account was classified as
SMA-2 as RBI in ts advisory
has stipulated that the account
which has been classified as
SMA-2 cannot further be
classified as a non-performing
asset in case the instalment is
not paid during the
moratorium period i.e. between
01.03.2020 and 31.05.2020
and status quo qua the
classification as SMA-2 shall
have to be maintained.
Therefore, the Court while
granting interim reliefs,
ordered that “Prima facie, I am
of the view that the
classification of the account of
the petitioner as an NPA on
31.03.2020could not have been
done by the respondent.
Accordingly, status quo ante is
restored qua the classification
of the account of petitioner and
the account classification as it
stood on 01.03.2020 shall
stand restored”.

However, the Court directed

the petitioner to pay the
instalment which fell due as on
01.01.2020 along with interest
accrued thereon till the date of
the payment irrespective of the
lockdown position on or before
25.04.2020.
4. Ideal Tolls & Facts of the Case: The High Court has restrained
Infrastructure the ICICI Home Finance Ltd. to
Private Limited This instant suit has been filed proceed with the sale of
by the plaintiffs, a subsidiary

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Vs. ICICI Home MEP Infrastructure Developers
Finance Co. Ltd. Limited (“MEPIDL”), whose
Mumbai & Anr. share has been pledged in
favour of defendant no.1 seeking
Commercial Suit a temporary injunction
No. LD-VC 7-8 of restraining the defendants from
2020 alienating, selling or
[Bombay High transferring the pledged shares
Court] and also to withdraw orders for
sale of the pledged shares
pursuant to the loan sanction
Order dated letter 14.01.2019.
07.04.2020
The Plaintiff also prayed for a
permanent injunction
restraining the defendants from
giving effect to certain e-mails
including that of 31.03.2020
whereby Defendant No. 1
notified the plaintiffs that they
would be invoking the security
and liquidating the suit shares.
sale the pledged shares of
MEPIDL, offered as collateral in
connection with term loans
extended to its subsidiary i.e.,
Plaintiff subject to the
compliance of a payment
schedule ordered by it i.e., stay
has been granted along with a
direction to facilitate payment
of the amount which was due
in January 2020, in three
instalments.
The Court has granted the
interim relief in the following
manners “In the meanwhile
none of the pledged shares,
excluding those that have
already been sold at the close of
trading today, shall be sold by
the defendants”

The Contention of the Petitioner The Court further added that

based on fact that there was “Till a default is committed, the
sharp decline in price of the per plaintiffs suit loan account shall
share of the MEPIDL from INR not be declared a Non-
40 to INR 11.55 per share in the Performing Asset”
beginning of the April 2020 and
such sharp decline was caused
by the effect of the lockdown
announced throughout the
country, as a result of which
road traffic came to a standstill
and the only source of income of
the plaintiffs-company and
MEPDIL also was badly affected.

The Petitioners further in the

instant suit claimed the benefits
of the RBI’s relief package dated
27.03.2020, whereby, RBI has
permitted to allow a moratorium
of three months on payment of

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instalments in respect of all
term loans outstanding as on
01.03.2020 and the repayment
schedule of subsequent due
dates was permitted to be
shifted by three month, so that
the declaration of defaulted loan
account as on 01.03.2020 could
be avoided for time being in
interest of justice.
5. Standard Retails Facts of the Case: The Court held that the
Private Limited vs imposition of lockdown for
G.S. Global Corp The Petitioners companies had limited period cannot rescue
& Ors. approached High Court under the steel importer from the
section 9 of the Arbitration and contractual obligation to make
WITH Conciliation Act, 1996, invoked payment and declared that the
the Force Majeure clause in distribution of steel an
Vinayaga Marine their respective contract seeking essential services during the
Petro Limited & interim reliefs by way of period of lockdown.
Anr. vs. G.S. directions to retrained Bank
Global Corp & from negotiating/encashing the The Court noted that Letter of
Ors. Letter of Credit in respect of Credit were an independent
import made into the country. transaction with the Bank and
WITH Bank was not concerned with
The petitioner companies the underlying disputes
Integral contended that the contract with between the buyer and sellers.
Industries Private Overseas Buyers located in
Limited & Anr. vs. South Korea, stood terminated The Court while rejecting the
G.S. Global Corp as unenforceable on account of plea of ad-interim reliefs held
& Ors. “frustration, impossibility and that “The contract terms are on
impracticability” in light of Cost and Freight basis (CFR)
WITH widespread threat of COVID-19 and the Respondent No. 1 has
pandemic and lockdown complied with its obligations
Prabhat Steels declared by the Government of and performed its part of the
Traders Pvt. Ltd. India. contracts and the goods have
vs. Hyundai been already shipped from
Corporation and The Petitioners relied upon the South Korea. The fact that the
Ors. section 56 of the Indian Contract Petitioners would not be able to
Act, 1872 and orders passed by perform its obligations so far as
WITH Hon’ble Supreme Court in its own purchasers are
Energy Watchdog vs. CERC concerned and/or it would
Haryana reported at (2017) 4 SCC 80 suffer damages, is not a factor
International Pvt. and Satyabrat Ghose vs. which can be considered and
Ltd. vs. Hyundai Mugneeram Bangure & Co.

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Corporation and reported at 1954 SCR 310 to held against the Respondent
Ors. justify their stance and reasons No. 1”.
for invocation of the “Force
Commercial Majeure” Clause. Therefore, “In any event, the
Arbitration lockdown would be for a limited
Petition (L) No. period and the lockdown cannot
404-408 of 2020 come to the rescue of the
Petitioners so as to resile from
[Bombay High its contractual obligations with
Court] the Respondent No. 1 of making
payments”.
Order dated
08.04.2020

6. Transcon Skycity Facts of the Case:
Pvt. Ltd. Vs. ICICI
Bank & Anr. The petitioners had availed the
financial assistance from the
Writ Petition LD- ICICI Bank, which were to be
VC No. 28 of 2020 repaid in instalments and as per
repayment schedule the same
Listed long with were fell due on 15.01.2020 and
15.02.2020 but they failed to
Transcon Iconica pay and default occurs. Due to
Pvt. Ltd. vs. ICICI non-payment of the said
Bank & Anr. instalment, the account of the
Petitioner were schedule to be
Writ Petition LD- classified as NPA on account
VC No. 30 of 2020 being overdue for period of 90
days.
[Bombay High
Court]
The Petitioners in the instant
Order dated petition claimed the benefits of
11.04.2020 the RBI’s relief package, with
respect to NPA declaration of
loan account already in default
as on 01.03.2020, the date from
which the moratorium advised
by the RBI as part of COVID-19
relief package is applicable to
the defaulters and sought that
moratorium period must be
excluded for the computation of
The Court went on to held that
the period of lockdown on
account of COVID -19
pandemic should be excluded
from the 90-days period for
NPA declaration/calculation
The Court noted that directive
from the RBI on the face of it
applied to amounts due after
the date of the lockdown. The
RBI document itself would
prima facie indicate that this
moratorium operates with
effect from, 01.03.2020 and, as
goes on up to 31.03.2020.
The court provided the interim
relief to the Petitioner in the
following words “the period of
the moratorium during which
there is a lockdown will not be
reckoned by ICICI Bank for the
purposes of computation of the
90-day NPA declaration period.
As currently advised, therefore,
the period of 1st March 2020
until 31st May 2020 during
which there is a lockdown will
stand excluded from the 90-day

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any balance days of the NPA NPA- declaration computation
declaration, otherwise, the until — and this is the condition
moratorium provided by the RBI — the lockdown is lifted….”.
would be nullified.

7. Shakuntala Facts of the Case: The Court restrained the

Educational & Punjab and Sind Bank from
Welfare Society The Petitioner, being a declaring the accounts of
vs. Punjab and charitable trust, in the instant Shakuntala Educational &
Sind Bank petition seeking directions to Welfare Society as NPA.
Punjab and Sind Bank to not
Writ Petition declare its pending loan account The Court opined that a prima
(Civil) No. 2959 of with bank as NPA. The Petitioner facie case had been made out
2020 also seeking directions to the for restraining the Bank from
[Delhi High Court] bank for availing the benefit of declaring the Petitioner’s
grant of additional period accounts as NPA, when the
moratorium of 3 months to it in countrywide lockdown was still
term of circular dated continuing
Order dated 27.03.2020 issued by RBI in the
13.04.2020 wake of COVID-19 and The Court held that the Bank
nationwide lockdown. would not have declared the
Petitioner’s accounts as NPA
The Petitioner expressed its and passed the order in
inability to the pay the following words “Any
instalment on the account of classification of the petitioner’s
directive issued by State accounts as NPA would
Government prohibiting the certainly amount to altering the
Petitioner from collection of fee position as existing on
from the students. 01.03.2020 and, therefore,
grave and irreparable loss will
be caused to the petitioner, in
case, its accounts are declared
as NPA, only on account of its
failure to pay the instalments,
which were admittedly payable
on or before 31.03.2020”.
8. Indiabulls Facts of the Case: The High Court has directed for
Housing Finance maintenance of status quo
Limited vs. The instant Writ Petition with respect to the repayment
Securities and preferred by the Petitioner in to be made by Indiabulls
Exchange Board provocation of the circular Housing Finance to its Non-
of India issued by the Reserve Bank of Convertible Debenture holders.
India dated 27.03.2020,
whereby, the RBI liberalised the

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Writ Petition debt recoveries process for the
(Civil) No. 2963 of period of 3 months on account of The Court noted that the
2020. COVID-19 pandemic and it emergent and peculiar
rendered impossible for the circumstances, prevailed,
Petitioner to effect recoveries of consequent to the COVID-19
Order dated debts owed to it by various pandemic, applicable to the
15.04.2020 institutions. Petitioner for appropriate
reliefs as prayed in the writ
Therefore, the Petitioner sought petition.
parity between its liability to pay
and the rights to recover dues, The Court has granted the ad-
by way of postponing its liability interim reliefs to the Petitioner
to pay its Non-Convertible in the following words “11.
Debenture Holders by invoking Given the peculiar facts of this
SEBI's power under Section case and the present lockdown,
11(B) of the SEBI Act, 1992 i.e., till the next date of hearing,
prayed for an ad there shall be an ad interim
interim direction to restrain any order, in terms of prayer (a) in
coercive action against it with CM Appl. No. 10281/2020, till
respect to the repayment to be the next date of hearing”.
made by it to its Non-Convertible
Debenture Holders.

Note: The operation of the

instant order of ad-interim
reliefs has been stayed by
the order dated 29.04.2020
passed Division Bench of
Delhi High Court in LPA No.
143 of 2020.
9. JR Toll Road Facts of the Case: The High Court has restrained
Private Limited YES Bank from declaring a
vs. YES Bank The Petitioner was constituted loan account as a 'Non
Limited as Special Purpose Vehicle Performing Asset' for non
(“SPV”) by the National Highway payment of instalment due to
Writ Petition Authority of India (“NHAI”) for unprecedented circumstances
(Civil) No. 2970 of the development National brought about by COVID19
2020 Highway- 11 and Reliance pandemic.
Infrastructure Limited (“RIL”)
Delhi High Court was selected for the
implementation of Project. The Court followed the order
passed in M/s. Anant Raj
Order dated The SPV was granted a loan of Limited against the bank, by
17.04.2020 INR 389 crores by the way of WP(C) Urgent 5/2020

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Respondent Bank through
execution of loan agreement,
whereby as per agreement
petitioner was required to
inform the bank of any loss or
damage, suffered owing to any
force-majeure circumstances,
such as earthquake, flood,
typhoon etc. against which the
petitioner may not have insured
its property.
The case of the Petitioner that
owning to the imposition of the
nationwide lock-down on
account of COVID-19 pandemic,
which also resulted in closure of
National Highway, the Petitioner
is unable to generate revenue
from toll collection and
operational activities of the
petitioner came to a standstill.
Hence, the Petitioner invoked
the force majeure events and
requested to deferred the
obligation to pay instalment per
the moratorium announced by
the Reserve Bank of India by its
Circular dated 27.03.2020.
10. Ashwani Mehra Facts of the Case:
vs. Indian Oil
Corporation The instant writ petition was
Limited & Ors. preferred by Mr. Ashwini Mehra,
Resolution Professional of Punj
Lloyd Limited under Article 226
of Constitution of India, seeking
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and noted that entitled to the
restoration as status quo ante,
as status of its account existed
on 01.03.2020 in terms of
guidelines issued by the
Reserve Bank of India on
account of COVID-19
pandemic to ease the financial
stress.
The Court has granted the
interim relief in the following
manner “see no reason to give,
either of the parties before me,
a treatment different from that
which is to be found in the
order, dated
th
6 April, 2020 of a learned
Single Judge of this Court in
M/s. Anant Raj Limited
(supra). For the reasons which
are already exhaustively set
out in the said order, present
petitioner would also be entitled
to the restoration as status quo
ante, as status of its account
st
existed on 1 March, 2020.
This relief would additionally
be justified in view of the
paragraph 17 of the statement
by the Governor, RBI, as
released this morning, which
stands extracted, in extenso, in
paragraph 17 (supra)”.
The High Court has restrained
Indian Oil Corporation Ltd
from invoking and encashing
bank guarantees furnished by
Punj Lloyd Limited in
connection with a contract for
 Rahul Ranjan
Advocate
Writ Petition issuance of appropriate Writ, works at Haldia Refinery, in
(Civil) No. 2971 of quashing and setting aside of State of West Bengal.
2020 the actions of IOCL, who sought
to invoke certain bank
Order dated guarantee, relating the project The Court had granted the ad-
17.04.2020 situated at Haldia ie.., the interim relief from invoking
petitioner sought an injunction bank guarantee in the
against the IOCL, restraining it following words “In WP (C)
from encashing bank 2966/2020, which is also
guarantees, till the expiry of one between the present petitioner
week from lifting of lockdown, and respondent, an identical
which was imposed on nation on controversy arises, qua three
account of widespread COVID- other bank guarantees. I have
19 pandemic. disposed of that writ petition by
staying the encashment of the
said bank guarantees till the
rd
expiry of one week from 3
May, 2020. I was inclined to do
so in the present case as well”.

Note: The relevant portion of

order passed in the WP(C) No.
2966/2020 on 17.04.2020 is
being extracted hereinbelow:

“12….. Accordingly, this writ

petition is disposed of by
granting limited relief, to the
petitioner, to the extent that, till
the expiry of period of one week
from the lifting of the lockdown,
imposed by the Central
Government, consequent to n-
COVID-2019 pandemic, the
IOCL shall remain injuncted
from encashing/ invoking the
aforesaid three bank
guarantees…. till the expiry of
one week from the lifting of the
lockdown imposed by the
Central Government, which is
presently in force till 3rd May,
2020”.

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11. Halliburton Facts of the Case: The High Court held that the
Offshore Services ‘Lockdown’ on account of
Pvt. Ltd. vs. The Petitioner had approached COVID-19 pandemic prima
Vedanta Limited High Court under section 9 of facie appeared is in the nature
& Anr. the Arbitration and Conciliation of Force Majeure and has
Act, 1996, invoked the Force restrained Vedanta Ltd from
OMP (I) (COMM) No. Majeure clause in the amid of invoking eight bank
88 of 2020 COVID-19 pandemic and guarantees extended by
seeking directions to restrain Halliburton Offshore Services
[Delhi High Court] Vedanta from encashing eight in connection with a
bank guarantees issued by ICICI development contract of
Order Dated Bank in its favour to secure the Petroleum wells in State of
21.04.2020 performance of obligations Rajasthan.
under a contract to drill
petroleum well in the State of
Rajasthan and substantial The Court noted that the
portion of work had already been countrywide lockdown, which
completed. came into place on 24.03.2020
was, prima facie in the nature
The Petitioner contended that of force majeure and Prima
contractual obligations have facie, the court viewed that,
been substantially performed, special equities do exist, as
and the delay in the execution of would justify grant of the
the remaining portion was due prayer, of the petitioner, to
to the lockdown imposed in the injunct the respondent from
wake of COVID-19 pandemic, invoking the bank guarantees
which restricted the free of the petitioner, forming
movement of personnel and subject matter of these
normal continuance of activities proceedings, till the expiry of a
due to threat of COVID-19 period of one week from
pandemic. 03.05.2020, till which date the
lockdown has been imposed.

The Court has granted the

interim in following manner
“For the present, I am
convinced, prima facie, that, in
view of the submission, of the
petitioner, that it was actually
working on the project till the
imposition of lockdown on 22nd
March, 2020, or at least shortly
prior thereto, and in view of the
sudden and emergent

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12. Indrajit Power Facts of the Case:
Private Limited vs
Union of India & The instant writ petition has
Ors. been filed praying for issuance of
a writ of Certiorari for quashing
Writ petition the email dated 04.04.2020
(Civil) No. 2757 of whereby the Union of India has
2020 passed a decision to appropriate
[Delhi High Court] the Bank Guarantee dated
13.04.2015.
Order dated
28.04.2020 The Petitioner also prayed for a
writ of Mandamus for direction
to the Union of India to refrain
from appropriating the Bank
Guarantee dated 13.04.2015
along with direction to
Allahabad Bank to renew the
Bank Guarantee dated
13.04.2015 which is due to
expire on 12.04.2020.
The contention of the Petitioner
based on the fact that the
invocation of Bank Guarantee is
barred in view of the prevailing
situation of spread of Covid-19,
which has been declared as
pandemic by World Health
Organization on 11.03.2020 and
the same is covered under Force
Majeure at clause 23.1 (ii) of the
agreement dated 16.03.2015.
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imposition of lockdown, the
interests of justice would justify
an ad interim injunction,
restraining invocation or
encashment of the aforesaid
eight bank guarantees, till the
expiry of exactly one week from
3rd May, 2020, till which date
the lockdown stands presently
extended”.
The Court analysed the law
related to invocation of Bank
Guarantee in detail and
concluded that merely because
invocation will cause financial
distress, is not a ground of
stay, however, exception of
irrevocable injury should be
invoked and refused to refrain
Union of India from invoking
bank guarantee and rejected
the concern of COVID-19
raised by the Petitioner.
The Court dismissed the plea of
petitioner in the following
words “…this Court in Umaxe
Projects Pvt. Ltd. Vs. Air Force
Naval Housing Board & Anr.:
2019 SCC Online Del 9126,
while relying upon another
judgment of this Court in
Classic KSM Bashir JV Vs.
Rites Ltd. & Ors.: 2018 SCC
Online Del 8888 wherein law
related to invocation of Bank
Guarantee has been analyzed
in detail and concluded that
merely because invocation will
cause financial distress is not a
ground of stay, however,
exception of irrevocable injury
should be invoked”.
 Rahul Ranjan
Advocate
The Petitioner further seeking
parity with the order dated
06.04.2020 passed by this Court
in W.P. (C) Urgent No.5/2020
being Anant Raj Limited vs. Yes
bank and order dated
03.04.2020 in W.P. (C) Urgent
No. 7/2020 being India Bulls
Housing Finance Ltd. vs.
Securities Exchange Board of
India & Ors. whereby, the
encashment and appropriation
of Bank Guarantee may be
stayed during the period of
lockdown.

Office:
Chambers of Anusha Nagarajan
A-35, First Floor,
Defence Colony, New Delhi-110024
Contact:- 91 9931122313