India: Bombay HC Refuses to Provide 'Force Majeure' Exemption to Steel Importers Citing 'Essential Service'

Few of the importing companies in India had raised the force majeure clause with Hyundai Corp and GS Global in South Korea since the contract seems impossible to complete amid complete lockdown. However, the Bombay high court rejected the force majeure for all the importers who refused to accept the letter of credit issued by South Korean exporters since the distribution of steel is declared as 'essential commodities' category.

-- Also, there are no restrictions on its movement and all ports and port-related activities including the movement of vehicles and manpower, operations of container freight stations and warehouses and offices of custom houses agents have also been declared as essential services.

--In addition to it, Directorate General Of Shipping, Mumbai on 28th March'20, has notified the shipping lines not to impose any container detention charge on import shipments for the period from 25th March 2020 to 7th April 2020 (both days inclusive) over and above free time arrangement that is currently agreed and availed as part of any negotiated contractual terms and are also advised not impose any new or other charges.

-- It is the case of the petitioners that in view of the COVID-19 pandemic and the lockdown declared by the Central/State Government, its contracts with Respondent No. 1 were terminated as unenforceable on account of frustration, impossibility and impracticability. The petitioners have relied upon Section 56 of the Indian Contract Act, 1972.

-- Under the contracts, the Respondent which has its head office at South Korea was to supply certain steel products, the shipments of which were to be dispatched from South Korea to the Petitioners at Mumbai.

-- SteelMint learned from few of its market sources that, "the shipments to end consumers are all clearing and being accepted. However, a few traders are trying to evade the contractual obligations citing lockdown as market prices have drastically fallen."

~Sourced