The High Court of Bombay on 08.04.2020 rejected to grant interim relief to the Petitioner in the present matter based upon the “Force Majeure” clause. The Petitioners in the abovementioned matter are numerous steel importers who had filed a petition seeking directions to restrain the Respondent bank i.e. Wells Fargo, from encashing the letters of credit in view of the nationwide lockdown owing to the outbreak of Covid-19 pandemic.

The Petition was filed under section 9 of the Arbitration and Conciliation Act, 1996. The Respondents in the present case with whom the various Petitioners had entered into a contract were Hyundai Corp and GS Global.

In the present case, the Hon’ble High Court stated that since letters of credit are an independent transaction, the bank will not be concerned with the disputes amongst the Petitioner and Respondent. Furthermore, since the Respondents, i.e. Hyundai Corp and GS Global had already performed their part of the contract by shipping the goods from Korea; hence the Petitioner upon non-performance of its own obligations cannot hold the Respondents accountable for damages.

Additionally, the distribution of steel including the movement of vehicles and manpower, operations of Container Freight Station and warehouses and offices of Custom Houses Agents have been declared as essential services which means that there are no restrictions on its movement. Thus, the Petitioner could not take lockdown as an excuse to step back from performing the contract and thus not making the payments to the Respondents.

Referring to the case of Energy Watchdog V/s CERC (2017) 14 SCC 80 and Satyabrata Ghose V/s Mugneeram Bangure & Co. (1954) SCR 310, Justice A.A Sayed rejected the Petitioner’s plea and denied granting them any ad-interim reliefs.

Order:order1

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