An Act of God, No Doubt, But Which One?

An admirable judgment from the Madras High Court relieved a trader from paying license fee during the lockdown and focuses on the “impossibility” of performance of the contract and sees it under the scanner of Article 14

- Prof Upendra Baxi

Justice GR Swaminathan of the Madras High Court has written a beautiful judgment of which dear Justices Krishna Iyer and PN Bhagwati would have been proud of. Both would have appreciated his masterly interpretation of contract law in Covid-19 times and admired the ways in which judicial interpretation can be friend justice. They would have applauded his art as well as his craft. But I espy also wider implications of the discourse in the constitutionalising of the law of contract and the quiet reconstruction of the social contract that is the Constitution of India.

This is probably the first decision to adjudicate a contractual liability in Covid19 times. The facts are, indeed, simple, though the arguments based on contract law are complex.

Nagercoil Municipal Corporation constructed a number of shops within the premises of the Vadaseri Christopher Bus Stand and licenses were brought for public tender cum auction sale on October 16, 2019. The petitioner successfully bid for Shop No 12A (Phase I) and was awarded a license for three years, commencing from November 1, 2019 on payment of Rs 1,15,000 towards monthly fee. The petitioner also paid Rs 13,80,000 towards refundable deposit and Rs 10 lakh towards security deposit. In other words, the Corporation had collected a year’s license fee from the petitioner in advance.

However, a complete Covid-induced lockdown was in force from March 24, 2020 to September 6, 2020, enforced under the National Disaster Management Authority Act, 2005. Exercising its powers under Section 6(2) of the Act, an order (on March 24, 2020) directed “all the authorities to take effective measures to prevent the spread of the pandemic in the country”.