In light of orders of a nation-wide lockdown, the Supreme Court of India vide circular dated 26.03.2020 stated that it shall continue to function and to hear matters involving extreme urgency, till further orders in this regard. The Apex Court directed the continuation of steps enlisted vide Circular dated 23.03.2020 which were to be followed by the Advocate-on-Record /Party in-person, and all others concerned. Furthermore, to obviate the inconvenience that may be faced due to unforeseen linkage issue of the ‘Vidyo’ video-conferencing, as detailed in para 4 of the Circular dated 23.03.2020, the Hon’ble Court directed the AOR/Party-in-person to mention their alternative Skype, Facetime or WhatsApp contact details, if any, alongwith other details in their mentioning application. In the wake of the situation prevalent, the Hon’ble Court on 15.04.2020 issued Standard Operating Procedures for Advocates and Party in person for video conferencing hearing, e-filing and mentioning and directed the Registry to take all steps necessary to conduct the aforesaid hearings through remote Video Conference links.


Vide circular dated 18.04.2020, the Supreme Court instructed that Short category matters, Death penalty and Family law matters, shall be taken up through videoconferencing only after the parties have furnished joint consent along with the particulars of the matter by 24.04.2020 on the email address The Hon’ble Court vide notice dated 20.04.2020 also clarified that the Short category matters will include all the case categories notified by the Hon’ble court vide order dated 12.01.2017.




Due to the increase in COVID-19 cases in India, the Indian Government announced a total lockdown of 21 days with effect from 25.03.2020. The Hon’ble Delhi High Court observed that due to the lock down, advocates and litigants have not been in a position to appear in the matters, including those where stay/bails/paroles have been granted. Considering the gravity of the situation and hardship which may be caused to the litigants, the Hon’ble Delhi High Court took suo-moto cognizance of the issue on 25.03.2020 and 15.05.2020 and passed certain directions extending interim orders. In continuation of the said orders the Hon’ble High Court passed an order dated 15.06.2020 and held that all the interim orders passed by the High court and subordinate courts to continue till 15.07.2020 with the same terms and conditions in view of prevalent situation in Delhi and limited functioning of court. The High Court clarified that all the matters pending before it and courts subordinate to it, wherein interim orders issued were subsisting as on 15.06.2020 and expired or about to expire thereafter, the same shall stand automatically extended till 15.07.2020 or until further orders, except where any orders to the contrary have been passed by the Hon’ble Supreme Court of India in any particular matter, during the intervening period. The said order ends the dilemma amongst the litigants and the legal fraternity. The Court further clarified that in case any hardship is caused due the extension of interim order, of an extreme nature to a party to such proceeding, they are at liberty to seek appropriate relief.




Madhu Sweta & Shivangi Khanna

Updated on 18/03/2020


The outbreak of COVID-19, the pathogen causing coronavirus has been widely reported and the suffering consequences still continue. Countries around the world have imposed mass travel bans, temporary lockdowns and extremely restricted human movement. The World Health Organisation has declared the outbreak as a pandemic. Domestic and transnational trade has come to an unprecedented standstill. It has led to a crippling effect on the domestic market and its network of supply chain. The lethal virus already has the legal industry in wrangles. Recently, even the Supreme Court of India had invoked its plenary powers under Article 142 of the Constitution to extend the ‘limitation period’ (by way of suspension) in all cases against the usual timeline as enumerated under the Limitation Act, 1963.


There has been adverse impact on the world economy. Such a negative impact has affected the domestic market chain at its core. The immediate results were supply-chain disruptions, ‘unintentional’ and imminent delay in performance and carrying out of the ‘contractual’ obligations. From construction contracts to manufacturing and supply agreements, the variety of contracts which are likely to be affected by the spread of COVID-19 is undoubtedly humongous. Additionally, this new impossibility brings out challenges against land acquisition, financing of big projects and delay in engineering and technological research and advancements. Counterparties, including suppliers and professional service lenders (e.g. Independent Consultants & Accountants) may seek to avoid immediate performance, by citing delay or non-performance borne out of an unexpected event. Parties may cite this pandemic as a ground for opting re-negotiation of price and terms of the contract.


At this unfortunate state of affairs, parties to commercial contracts and legal experts, nationally and internationally are continuously reviewing and assessing their contractual provisions for seeking suitable rights and obligations, specifically on the potential routes for discharging the commercial arrangement or contract, particularly force majeure. It squarely forms a defense against the grunt norm of pacta sunt servanda (latin for “agreements must be kept”).



Although the word ‘force majeure’ is absent in its skeletal form in Indian law, its doctrine can be traced from Section 56 of the Indian Contract Act, 1872 (‘the Act’). A force majeure provision in a commercial arrangement is an express provision of circumstances in which performance under the contract will be excused or suspended temporarily.[1] The expression force majeure is borne out from the “Code Napoleon” and has a wider meaning than “act of God”, though it may be unclear if this includes all “causes you cannot prevent”.[2]  Section 56 of the Act, allows for temporary discharge of obligations on grounds of impossibility in the instance of any untoward event or change in circumstance that is totally dehors the “very foundation”[3] upon which the parties entered their agreement. The sine qua non for invoking such a clause is (a) an existence of a valid contract between the parties; (b) the contract is yet to be performed (during the period of temporary struggle for which force majeure is sought for); (c) the contract after it is entered into becomes impossible to perform due to fact or law.


The underlying principle with respect to a Force majeure event is that, upon the occurrence of an event or circumstance that is not reasonably within the control of a party and is unavoidable, and which prevents or delays that party from performing some or all of its contractual obligations, that party will be relieved from its contractual obligations/ liability. As a result of invocation of Force majeure, the performance of the contract is not merely suspended but the affected party is expected to continue to perform its obligations to the extent not prevented by an event of force majeure. The party claiming force majeure is under an obligation to prove that it has taken all reasonable endeavors to avoid or mitigate the force majeure event and its effects. This being subjective standard, differs from case to case and therefore needs to be interpreted accordingly. In some contracts, if the period of force majeure is prolonged, parties may be permitted to terminate the contract depending on the practical difficulties being faced by them.


There have been occasions where the parties to the contract have pleaded different situations/ events to be included in ‘Force Majeure’. For instance, in 2016 when the Government of India, without any prior notice declared demonetisation of certain Indian Currency notes, this had a stressful effect on the various sectors including construction and the realty sector which majorly involved cash transactions. Consequently, the parties to contract raised dispute claiming cost/ termination of contract treating demonetization as a force majeure event. The Central Electricity Regulation Committee (CERC) recently held “demonetization” as a valid threshold to invoke the force majeure clause(‘FMC’)  that was entered upon by the party. However, the same goes well against the decision of the Hon’ble Supreme Court in Energy Watchdog v. CERC, where the scope of FMC was construed to be strictly narrow.[4] Therein, a new dimension to the interpretation of force majeure event and its widening scope was recognized in India.[5]



The global impact of the outbreak has caused an alarming case of extreme disruptions of commercial activities and day-to-day business transactions. It is imperative to record that, there has been a consequential lockdown and suspension orders by various governments vide specific ordinances and general government orders. Therefore, it is completely fair to state that the consequences of the pandemic have the effect of a rigid interference.


The scope and extend of a FMC in the event of such a pandemic has to be assessed on the “definition of force majeure” under the parties’ agreement, as well as on the jurisprudence pertaining to the terms ‘extraordinary events’ and ‘circumstances beyond the reasonable control and expectation of the parties’.  However, it is also essential that even if the FMC within the agreement is inclusive of the terms epidemics and pandemics, the party affected has to generally prove its interference with the performance of the contractual portion.


In the present scenario arising due to the COVID -19 pandemic, the Government of India has also taken steps to safeguard the interest of parties in commercial contracts. The Ministry of Finance, Government of India vide an office memorandum dated 19.02.2020 recently clarified with respect to ‘Manual for Procurement of Goods, 2017’, and declared that in the event of any disruption in the supply chains due to spread of corona virus, such situation will be covered in the FMC in the contract. It is further clarified that such a situation should be considered as a natural calamity and FMC may be invoked, wherever considered appropriate, following the due procedure.[6] The said Manual is issued by the Ministry of Finance for various Ministries/Departments which have been delegated powers to make their own arrangements for procurement of goods under the Delegation of Financial Power Rules, which have to be exercised in conformity with the ‘Procurement Guidelines’.


Recently on FMC, the Ministry of Finance vide notification dated 13.05.2020  clarified that parties to the contract can invoke FMC for all construction/works contracts, goods and services contracts and PPP contracts with Government Agencies and in such event, the date for completion of contractual obligations which had to be completed on or after 20.02.2020 shall stand extended for a period not less than three months and not more than six months without imposition of any cost or penalty on the contractor/concessionaire. The Concession period in PPP – contracts ending on or after 20.02.2020 shall also be extended by not less than three and not more than six months. The period of extension, i.e. from 3-6 months, may be decided from case to case based on the specific circumstances and the period for which performance was affected by the force majeure events. The invocation of FMC would be valid only in a situation where the parties to the contract were not in default of the contractual obligations as on 19.02.2020. It is categorically stated that invocation of FMC does not absolve all non-performances of a party to the contract, but only in respect of such non-performance which are attributable to a lockdown situation or  restrictions imposed under any Act or executive order of the Government/s on account of COVID-19 pandemic.[7]


Similar initiative was taken by the Ministry of New & Renewable Energy with respect to ‘solar project developers’. The Ministry vide an Office memorandum dated 20.03.2020, recently  declared that whoever miss contractual obligation deadlines on account of COVID -19, can invoke the  FMC to avoid any financial penalties.[8]


Such initiative by the Government of India is a big reprise in such tough times. At the same time, even in the presence of such evidenced events, the question of force majeure and its application to a particular contract would have to be looked individually all over again at the stage of litigation or arbitration. There must be ample proof to show that there were no alternative means or method for performing the party’s obligations under the contract.




In the light of this current pandemic, few safeguards to be resorted in commercial contracts are:-

  1. Re-assess and review the contract in which the FMC exists and analyze the relevant factors and incidents mentioned to initiate the ‘rule to excuse’.
  2. Ensure ‘all’ or ‘any’ notification procedure as prescribed in the conditions of the contract. Comply strictly with the conventional ‘notice’ formalities.
  3. Mutually (along with the other parties to the contract) analyze the impact of the outbreak of COVID-19 on the contract and its performance.
  4. Initiate a chance to perform the contract in a possible alternative way; a failure will safely rule out a future ‘defense’ with respect to an alternative method of performance.
  5. Collect evidences to accord non-performance of the obligation to the sole force majeure event, in the current scenario, the pandemic.
  6. Keep a strict record of the various notifications and orders by government and administrative bodies. The same may be evidenced during the litigation/arbitration stage.


All records with respect to unavoidable additional expenditure incurred must be maintained.


[1] Pollock and Mulla, Indian Contract and Specific Relief Acts; Dhanrajamal Gobindram v. Shamji Kalidas & Co., AIR 1961 SC 1285.

[2] Elzekiel Abraham Gubray Vs Ramjusroy Golabroy, AIR 1921 Cal 305:33 CLJ 151:63 IC 267 (DB).  

[3] Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310.

[4]  Energy Watchdog & Ors. v. Central Electricity Regulatory Commission & Ors., ((2017) 14 SCC 80).

[5] M/s. Krishna Wind Farms v. Solar Energy Corporation of India Ltd. Order in Petition No. 27/MP/2018.


[6] Office Memorandum No. F.18/4/2020-PPD, Ministry of Finance dated 19.02.2020.

[7] Office Memorandum No. F. 18/4/2020-PPD, Ministry of Finance dated 13.05.2020.

[8] No. 283/18/2020-GRID SOLAR, Ministry of New & Renewable Energy (MNRE).






Dispute resolution is the process of deciding a dispute or a conflict that has arisen between transacting parties. The decision can be arrived at either in an amicable manner or adversarial manner, either by the parties themselves or a neutral third party. The differences between the parties are addressed by dealing with their transaction-related interests.

Broadly, there are three methods of dispute resolution:

  1. Traditional Dispute Resolution
  2. Alternate Dispute Resolution
  • Hybrid Methods of Dispute Resolution

While the traditional dispute resolution method or litigation refers to the proceedings before an appropriate court of law according to the procedure established, the alternative methods are more flexible and party-centric and include negotiation, mediation, conciliation and arbitration. Hybrid-methods, as the name implies are a cross-over between two alternative methods of dispute resolution.

The need to evolve alternative mechanisms to reduce the burden of the Courts and provide speedy access to justice alongwith the revival and strengthening of traditional systems of dispute resolution prompted the introduction of ‘Section 89’ in the Code of Civil Procedure, 1908 and ultimately, the Arbitration and Conciliation Act, 1996. The former opened the passage of statutory reference to ADR, either by the Courts or the parties themselves.

Under the provisions of Section 89, CPC, reference for the resolution of disputes could be had to any one of the following:

  1. Arbitration or Conciliation- Proceedings under the provisions of the Arbitration and Conciliation Act, 1996.
  2. Lok Adalat- Reference to Lok Adalat under Section 20 (1) of the Legal Services Authorities Act 1987, all provisions of which shall then apply.
  • Judicial Settlement- Reference by Court to a suitable institution or person who/ which shall be deemed to be a Lok Adalat and all other provisions of the 1987 Act shall apply
  1. Mediation-Court/third person effects a compromise between the parties.

In order to provide a better understanding of ADR, the two most popular forms, Arbitration and mediation are being elaborated herein:

  1. Arbitration:

It is an adjudicatory process in the nature of adversarial proceedings wherein parties submit their disputes to a neutral third party (arbitrator) for a decision. The proceedings, similar to litigation are however, faster, cheaper, confidential and more flexible in procedure and application of rules of evidence. The parties have the independence to chalk out the same in the agreement to arbitration. The said agreement which must necessarily precede arbitration, should be a valid one as per the Indian Contract Act, 1872. The parties to an arbitration agreement must have the capacity to enter into a contract in terms of Sections 11 and 12 of the said Act.

Arbitral decisions are final and binding on the parties with very limited scope of objecting to them.

  1. Mediation:

It is a voluntary, disputant-centered, non-binding method of dispute resolution wherein a neutral and credible third party facilitates a settlement between the parties. It is a confidential and structured process where the mediator uses special communication, negotiation and social skills to assist the disputants in arriving at a mutually acceptable solution themselves. The parties thereto must be willing to iron out the creases in their relation by a little outside help as the focus in mediation is on the future. It is ideal where the emphasis of the parties is on building relationships, rather than ascertaining the party at fault for what has already transpired. The outcome of a successful mediation is a settlement agreement, and not a decision. The objective of mediation is not to evaluate guilt or innocence but to promote understanding, focus the parties on their interests, and encourage them to reach their own agreement.

For the ease of evaluation the following comparative table is provided:



Madhu Sweta



The Division bench[1] of the Delhi High Court (“HC”) in a batch of Petitions titled, “Ardee Infrastructure Pvt. Ltd. v. Ms. Anuradha Bhatia & Ardee Infrastructure Pvt. Ltd. v. Yashpal & Sons”[2] augments more ambiguity to the already existing controversy with regard to the applicability of the amended provisions viz. Section 34 and Section 36 of the Arbitration and Conciliation (Amendment) Act, 2015 (“The Amendment Act”).

The HC observed that all petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“The Act”) prior to the amendment i.e. 23.10.2015, would be considered under the unamended provisions of the 1996 Act and consequently, the contesting party would be entitled to automatic stay of enforcement of the award till the disposal of the said petitions.

The Bench keeping Section 26 of The Amendment Act as the axis of the dispute, not only discusses the applicability of the amended Section 34 and Section 36(2), 36(3) of The Amendment Act, but also hinges out the much awaited interpretation of Section 26 of The Amendment Act in regard to arbitral and court proceedings. It thus pivots a clear interpretation of the amended section, thereby adding to the spectrum of conflicting decisions.


An Arbitration notice was sent on 07.06.2011 by the Respondents. The statement of claim was filed in February 2013 and an interim award was made on 10.07.2014. The final award was made by the Arbitral tribunal on 13.10.2015. The batch petitions challenging the award under Section 34 was however filed on 04.01.2016.

On 31.05.2016, learned Single Judge of the HC passed an order directing the Appellants to deposit Rs. 2.70 crores without prejudice to the rights and contentions of the parties. It was further directed that failure to make such a deposit would result in dismissal of objections filed by the Appellant under Section 34 of The Act whereas successful deposit of the said amount would amount to issuance of notice to the Respondents regarding the objections filed by the Appellants under Section 34.

The Appellants contended that their petitions under Section 34 of The Act shall be governed by the unamended provisions and they shall thus have the right to an automatic stay on the award upon filing the said petitions. Whereas the Respondents argued that the amended provisions shall apply thereby denying an automatic stay to the Appellants and requiring them to deposit Rs.2.70 crores as ordered by the Court.


  1. The Act gives a vested right in the form of an automatic stay on the enforcement of an award to a party filing an objection under Section 34. However, The Amendment Act, by virtue of Section 36(2) and Section 36(3) takes away such right.
  2. Section 26 of The Amendment Act[3] does not express any intention of retrospective operation; and therefore the amended provisions of Sections 34 and 36 would have a prospective operation and would not be applicable to the present case. In such scenario, Section 6 of the General Clauses Act, 1897[4] would be applicable which states that the repeal of an enactment would not affect any right accrued or acquired under the previous enactment, unless a different intention appears in the repealing act.


  1. The legislature in the first half of Section 26 of The Amendment Act has deliberately used the phrase “to arbitral proceedings” instead of “in relation to arbitral proceedings” to limit its scope so that it cannot be expanded to include post arbitration proceedings (including court proceedings).
  2. Section 6 of the General Clauses Act ought not to be resorted because of the use of the restrictive phrase in Section 26 of The Amendment Act. Section 6 does not apply to the present case as the legislature deliberately kept “post-arbitral proceedings” outside the application of the first part of Section 26 of The Amendment Act.
  3. Hence, automatic stay can only be viewed as an interim relief and not a right and such relief is not completely taken away but made subject to an order of the Court upon application.


Whether there is/was any difference in the expressions “to the arbitral proceedings” and “in relation to arbitral proceedings” appearing in the two parts of Section 26 of The Amendment Act?


The HC observed that if a narrow view of the expression “to the arbitral proceedings” is to be taken, then Section 26 of the Amendment Act is silent on those categories of cases where the arbitral proceedings were commenced prior to 23.10.2015 and where the award was made prior to 23.10.2015, but where either a petition under Section 34 was under contemplation or was already pending on 23.10.2015.

If the applicability of the amendments to both parts of Section 26 is treated differently, it would lead to serious inconsistencies especially in the interplay between Section 9 and 17, where the court proceedings (in relation to arbitral proceedings which commenced before the amendment) would be under Section 9 of the new Amendment Act and the arbitral proceedings (which commenced before the Amendment) would have to be under the old regime (including Section 17).

The Court further classified all arbitral proceedings which commenced in accordance with Section 21, prior to 23.10.2015 into three categories:

  1. where the arbitral proceedings had commenced prior to 23.10.2015 and were pending before an arbitral tribunal on 23.10.2015;
  2. where the arbitral proceedings had commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 seeking the setting aside of the award was made after 23.10.2015;
  3. Where the arbitral proceedings had commenced prior to 23.10.2015 and not only the award was made prior to 23.10.2015, but the petition under Section 34 had also been instituted before court prior to 23.10.2015.

With respect to these categories the HC opined that if the first part of Section 26 would only deal with the first category of cases i.e. before arbitral tribunals and not to court proceedings, then nothing in Section 26 of the Amending Act shall pertain to the second or third category of cases.

Thus, if the expression ‘to arbitral proceedings’ used in the first limb of Section 26 is given the same expansive meaning as the expression ‘in relation to arbitration proceedings’ as appearing in the second limb of Section 26, then, the matter becomes very simple and does not result in any anomaly. It would certainly not be the intention of the legislature to have the arbitral tribunal and the courts apply different standard in relation to the same proceedings.

HC while relying on the observations of the Supreme Court in Thyssen Stahlunion Gmbh v. Steel Authority of India Limited[5] held with regard to automatic stay that all aspects of enforceability of an award entail an accrued right both; in the person in whose favour the award is made and against whom the award is pronounced and henceforward, an automatic stay on the award upon filing of petition under Section 34 of The Act was an accrued right in favour of the Appellants. Thus, all the arbitral proceedings (the entire gamut, including the court proceedings in relation to proceedings before the arbitral tribunal), which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, would be governed, subject to an agreement between the parties to the contrary, by the unamended provisions and, all those in terms of the second part of Section 26, which commenced on or after 23.10.2015 would be governed by the amended provisions.


Although this decision comes as a refreshing respite for some, it adds to the prevailing confusion infused by the contradictory decisions of various High Courts with regard to the application of the provisions of Section 26 & Section 36 of The Amendment Act, wherein it was opined that ‘arbitral proceedings’ do not include ‘court proceedings’ and thus, the amendments would apply to court proceedings but not to arbitral proceedings. These decisions are discussed as follows:

  1. The Division Bench of Kolkata High Court in Sri Tufan Chatterjee v. Sri Rangan Dhar[6], held that even the pending court proceedings relating to arbitration, which were pending as on date when the amendments were notified, must be governed by The Amendment Act and not the unamended one.
  2. The Madras High Court in the matter of New Tirupur Area Development Corporation Ltd. v. M/s Hindustan Construction Co. Ltd[7], decided against the use of provisions contained in The Amendment Act to court proceedings, for such arbitrations which commenced prior to amendments being notified.
  3. Bombay High Court, adding to the confusion, held in the matters of Rendezvous Sports World v. BCCI[8] that amendments brought to Section 36 of The Act are procedural in nature and further balances the rights of both parties and ordered the BCCI to file an application seeking stay against enforcement of arbitral awards under challenge. This decision is pending adjudication before the Supreme Court of India now.
  4. Although, The Delhi High Court had previously also taken a view contradictory to that of the Bombay High Court and in consonance with the current judgment in the case of Ministry of Defence, Government of India v. Cenrex SP. Z.O.O. & Ors[9], The Court while relying upon Section 6 of the General Clauses Act, came to a conclusion that an Act (or an Ordinance for that matter) cannot have retrospective operation unless so provided in the Act and any vested right in such Act/ provision cannot be deemed to be taken away by means of the amending or the repealing Act.
  5. Amidst the opposing views of different High Courts across the realm, if the ratio of the present case in hand is accepted and followed, then the mere intention and purpose behind the amendment of Section 36 of The Act is lost. Although the present decision may seem plausible enough, but the conflict between these wide-ranging observations and judgments across the nation has to be settled by the Supreme Court at the earliest, giving such polemic it’s logical and peaceful conclusion.

(The author would like to thank Kanika Tandon, Associate of the firm for the valuable assistance in researching for this article.)

[1] Comprising of Hon’ble Mr. Justice BD Ahmed and Hon’ble Mr. Justice Ashutosh Kumar[2] FAO(OS) no. 221/2016 and FAO(OS) No.222/2016, judgment delivered on 06.01.2017[3]Section 26, Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.[4] Section 6, Effect of repeal. Where this Act, or any 1 [Central Act] or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not?

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or

(e) Affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

[5] 1999 (9) SCC 334[6] AIR (2016) Cal 213[7] Application No. 7674 of 2015 in O.P. No. 931 of 2015[8] 2016 SCC Online Bom 255.[9] 2016 (1) Arb LR