Can you escape Contractual Obligation under Covid-19?

In the case of MEP Infrastructure Developers Ltd. v. South Delhi Municipal Corporation.


No notice for invoking Force Majeure required:
Further, the Hon'ble Court noted that as a result of the MORTH Circular and the Department of Expenditure Circular dated 19th February 2020, COVID-19 became a force majeure event, as a direct result of these circulars itself and as such, no further action, in the form of a notice, for invoking force majeure to these situations was required.

The Court observed that `the force majeure clause under the agreement immediately becomes applicable and the notice for the same would not be necessary.`

Consequently, the Hon'ble Court observed that the strict timelines for making payments under the contract stood suspended and that the same would not be feasible until the `restoration of the pre-force majeure conditions.` Recognition of partial frustration arising from COVID?

The observations by the Hon'ble Delhi High Court regarding COVID-19 and the suspension of strict timelines until restoration of pre-COVID normalcy by the Delhi High Court appears to be recognition of a Doctrine called `partial frustration` in contract law.


While this issue has not been directly considered by the Delhi High Court in the present case, its observations in relation to COVID and the lack of control of parties in relation to the national lockdown clearly demonstrates the possibility of the Court taking a view that COVID is not only a `Force Majeure` event, but is also a supervening event for the purpose of frustration of contract, as a result of which, partial frustration can be invoked.

Court ruled that COVID is Force Majeure
This decision of the Hon'ble Delhi High Court marks a departure from several of its previous judgments. Whereas in its previous judgments, the Delhi High Court had held that COVID cannot be ground for refusing to pay rent, school or college fees, condoning pre-COVID breach of contracts, etc; in all of which relief based on COVID was refused, in this judgment, the Delhi High Court has recognized COVID as a force majeure event and has granted relief against adherence to strict timelines as a result of COVID.

Further, the observations in this judgment indicate an inclination of the Court to consider COVID as a `supervening event causing partial frustration of contract`, thus, protecting parties from its performance obligations. Such relief and timely intervention of Courts is a breather for the entire industry as the Infrastructure sector forms the bedrock of the Indian Economy. However, the Court refused to give any relief on previous dues of Rs. 115 Crore, citing being not raised on time or objected/disputed during the hearing.