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2020 Supreme(Del) 643

IN THE HIGH COURT OF DELHI AT NEW DELHI
Najmi Waziri, J.
Mep Infrastructure Developers Ltd - Appellant
Versus
South Delhi Municipal Corporation And Ors - Respondent
Writ Petition (Civil) No. 2241 of 2020
Decided On : 12-06-2020

Advocates Appeared:
Abhishek Manu Singhvi, Advocate, Mukul Rohtagi, Advocate, Salman Khurshid, Advocate, Rajiv Nayyar, Advocate, Rajiv S Dwivedi, Advocate, Sanjay Jain, Advocate, Garima Prashad, Advocate

Headnote:(A) Writ Jurisdiction - Judicial review and enforcement of contractual obligations - The High Court ruled on the contract between an infrastructure developer and the municipal corporation regarding toll collection, noting the invocation of force majeure due to COVID-19 Pandemic and its implications for compliance with payment orders under clauses of the agreement. The subsequent conduct of the petitioner and the delays caused by the pandemic were considered critical in deciding contractual viability. (Paras 5, 28, 30)

(B) Force Majeure - Different interpretations of force majeure between parties; the importance of timely notices and compliance with contract terms, particularly in light of the documented impact of a national emergency. (Paras 4, 12, 20)

(C) Modification of Orders - Describing the adjustments made to existing orders in light of new circumstances post-the pandemic's onset and the failure of strict compliance regarding deadlines previously set. (Paras 31)

Facts of the case:
The petitioner, an infrastructure developer, faced financial penalties under a toll collection agreement with the municipal corporation. The COVID-19 pandemic triggered claims of force majeure against stipulated payment obligations. There were issues regarding payment defaults and encashment of bank guarantees as remedies for those defaults.

Findings of Court:
The court recognized the force majeure invoked due to COVID-19 and adjusted the obligations accordingly, stating that the prior orders would be modified to consider the implications of the pandemic on performance obligations.

Issues: Whether non-payment due to COVID-19 constituted a breach of contract and if the invocation of force majeure was credible.

Ratio Decidendi: The court concluded the enforcement of terms needed reaffirmation in light of contract provisions on force majeure. It determined that the municipal corporation’s termination notice was premature, given the government's declaration of a pandemic and resultant difficulties affecting the contractor's ability to comply fully with financial obligations.

Result: The application for modification was allowed, adjustments made, and both parties were directed to adhere to the terms considering altered circumstances.

Table of Content
1. modification of order based on subsequent events. (Para 1 , 2 , 3)
2. status of payments and breaches outlined as per agreements. (Para 4 , 5 , 6)
3. termination and compliance of contract terms reviewed. (Para 10 , 11 , 12)
4. arguments regarding force majeure and contractual obligations. (Para 13 , 14 , 15)
5. judicial interpretation of force majeure clauses applied. (Para 20 , 21 , 22)
6. conclusion regarding the validity of termination and modifications. (Para 28 , 29 , 30)
7. modification of interim order and further directions issued. (Para 32)

JUDGMENT

Najmi Waziri, J. - Cm 11092/2020

    CM 11093/2020 (By pet. for modification of order dated 02.03.2020)

    CM 11094/2020 (By pet. to place additional facts on record)

    CM 11095/2020 (By pet. for extension of the effective day of termination)

    CM 11096/2020 (By pet. for hearing of WPC 2241/2020 & 570/2020 together)

    CM 11397/2020 (by resp. seeking dismissal of the writ petition)

    CM 11398/2020 (by pet. to place additional facts on record)

    1. The petitioner seeks modification of the order dated 02.03.2020 on account of the events that occurred thereafter, while the respondent''s application seeks dismissal of the writ petition itself. The latter on the ground of breach of the aforesaid order and that the case involves complex and disputed questions of facts, which would not be suitable to be adjudicated in writ proceedings.

2. Reference to orders dated 02.03.2020, 20.04.2020, 27.04.2020 and 21.05.2020 is essential. They are reproduced hereinunder:

    Order dated 02.03.2020

    1. Issue notice. Learned counsel for respondent accepts notice.

    2. This Writ Petition is filed seeking to impugn the speaking order passed dated 31.1.2020 and Demand Notice dated 14.2.2020 issued pursuant to a hearing given as directed by this court in its order dated 26.11.2019.

    3. Learned senior counsel for the petitioner has raised various submissions to plead as to why the impugned order has been wrongly passed. He further submits that the connected matter being W.P.(C)570/2020 is coming up on 6.3.2020.

    4. Learned senior counsel appearing for the respondent has pointed out that there has not been proper compliance of the order of this court dated 26.11.2019 inasmuch as the petitioners have defaulted in making payment of (a) Rs.20 crores per week as stated by this court; (b) have not given fresh Post Dated Cheques as was directed by this court.

    5. Counter-Affidavit be filed within one week. Rejoinder thereto, be filed within one week thereafter. In the meantime petitioner will deposit all arrears, as directed by this court in its order dated 26.11.2019, which as per the respondent is Rs. 115.04 crores in three equal monthly instalments without prejudice to their rights and contentions. First instalment will be payable within 15 days from today. He will also continue to pay Rs.20 crore per week as stated in the earlier order dated 26.11.2019. They will also ensure compliance of the order of this court dated 26.11.2019 regarding issue of fresh Post Dated Cheques.

    6. Subject to compliance of these directions, no coercive steps may be taken against the petitioner, till the next date of hearing.

    Order dated 20.04.2020

    CM APPL.10326/2020

    2. This hearing has been held by way of a video-conference. The main writ petition was listed on 31st March 2020, by which time the lockdown due to COVID-19 had taken effect.

    3. The present application has been moved inter alia, with the prayer that the national lock-down period ought to be taken into consideration while giving effect to the termination of the Toll Tax Collection Agreement dated 28th September, 2017 {hereinafter, "Agreement") and further that the NIT dated 6th April 2020 be quashed.

    4: Mr. Nayyar, Id. Senior Counsel refers to the letter dated 4 April, 2020 which postpones the effective date of termination of the Agreement and prays that the fresh notice inviting t








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