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Article

08 Jul 2020

COVID-19, Lockdown and Courts - Story So Far

COVID-19, Lockdown and Courts - Story So Far

July 08,2020
 
Shubhabrata Chakraborti (Partner, Juris Corp)    Ashish Mukhi (Principal Associate)     Madhurima Sarangi (Associate)

Introduction

Coronavirus (“Covid-19”) has rapidly become a global crisis and impacting life of people, businesses and markets and has led to nationwide lockdown in many countries. On 24th March 2020 the Government of India had directed a nationwide lockdown for 21 days till 14th April 2020 which was later extended till 31st May 2020. The reason for nationwide lockdown was to ‘flatten the curve’ for the Covid-19 pandemic. The lockdown or limited restrictions still continue depending on the prevailing situation in each city. The Covid-19 pandemic and the nationwide lockdown impacted all sectors and educational institutions, industrial establishments, transportation services and hospitality services were suspended due to lockdown. During this time when the Governments and the civil society are finding ways and dealing with pandemic, the judiciary has also come up with different mechanisms to ensure its support to the litigants, lawyers and most importantly, the justice delivery system.

With the judicial work continuing to be restricted, this article looks at the response of the judiciary to the current situation both on the judicial as well as the administrative side.

 

Initial response by Indian judiciary

Apart from the Indian Government, judiciary also stepped up in providing reliefs to litigants during the period of lockdown. The Hon’ble Supreme Court of India (“Apex Court”) took Suo Motu cognizance of the challenges faced by the litigants in filing petitions/applications/suits/appeals etc. within the limitation period prescribed under the general or special laws, passed directions for extension of limitation period, w.e.f. 15th March 2020 till further orders, for making such filings before any courts/tribunals including the Apex Court.  This was a much-needed relief to litigants and obviated uncertainty as regards failure of parties to approach the court.

Courts have passed orders in matters which are a direct result of the lockdown. These relate to law of arbitration, extension of limitation period, stay on auction of properties by banks during lockdown, stay of demolition of properties during lockdown, payment of wages, force majeure, invocation of bank guarantee, etc. We have also witnessed some important judgments being pronounced, which were kept reserved, by the Courts. There has been a clear effort by Courts to keep business as usual as far as possible and workable.

Embracing of Technology by Courts and Tribunals

Various High Courts, subordinate courts and tribunals have, initially (i.e. even before the lockdown was declared) had issued advisories to lawyers as regards maintaining social distancing and minimizing presence before court/tribunal and functioning of courts be restricted to urgent matters. The Apex Court taking Suo Motu cognizance, passed directions for adoption of measures required to ensure functioning of the judicial system through use of video-conferencing technologies. Post this direction all courts and tribunals put in place mechanisms for hearings through video conferencing and online filing of cases. 

A Key Development leading to initial batch of litigations

The Reserve Bank of India (the “RBI”) vide its notification dated 27th March 2020 (“Covid-19 Notification”) directed that all commercial banks, co-operative banks, non-banking financial institutions and all India financial institutions are permitted to grant a moratorium of three months for payment of installments, by borrowers, falling due between 1st March 2020 till 31st May 2020. The said period was further extended by the RBI for 3 months i.e. up to 31st August 2020. 

The above development resulted in a number of cases being filed before the Delhi High Court and Bombay High Court with borrowers approaching the Courts seeking stay on declaration of their loan accounts as non-performing assets (“NPA”) during the aforesaid moratorium period. In such cases, it has been held directed that the period of 1st March 2020 until 31st May 2020 during which there is a lockdown will stand excluded from the 90-day NPA declaration computation.

The Covid-19 Notification of RBI has been challenged before the Hon’ble Supreme Court on ground of imposition of interest during the moratorium period as wrong, unjustifiable and taken away the benefit of moratorium. The said challenge to RBI’s Covid-19 Notification is under adjudication and not yet decided.

 

Some other important orders

Force Majeure

The Hon’ble Delhi High Court in catena of orders observed that outbreak of Covid-19 is a Force Majeure event, however at the same time it held that every breach or non-performance cannot be justified or excused merely on invocation of Covid-19 as a Force Majeure condition. The Hon’ble Bombay High court has taken a similar view and stated that in spite of the Covid-19 pandemic, the protection of Force Majeure would be governed by the provisions of the relevant contract and on a case to case basis.

Payment of Wages

In a batch of writ petitions filed by various companies, as an interim measure the Apex Court has directed the workers and employers, to negotiate and settle the differences and disputes relating to payment of wages amid lockdown due to Covid-19.

Stay of auction/demolition/eviction/dispossession

Some High Courts have either extended the interim orders or decree for eviction/ dispossession/ demolition which has been passed subsequent to the original order or passed interim orders for stay of auction of mortgaged properties by banks during the lockdown period.

Conclusion

The Indian Judicial system quickly and efficiently shifted from its old school approach to a new technological approach with virtual courts and e-filings to ensure that the justice delivery system is not stagnant. Some of the courts in the country had already adopted e-filing as an addition to physical filing of cases. However, the pandemic has expedited the adoption of technological measures for filing and hearing of cases. The decision of embracing technology not only reduced the footfall in court premises, which eventually saved a large number of people getting affected by the Covid-19 but also balanced out loss of judicial time as far as possible.

In the meantime, while hearing cases, virtually, during lockdown, the Courts have not only recognized the grave and extreme urgency to deal with the issues at hand which arose due to the Covid-19 pandemic and nationwide lockdown but also balanced the situation with providing ad interim/interim protection to the defaulting companies, who prima facie appear to have made out a case of protection on account of the pandemic. For e.g. in various writ petitions filed against private banks and financial institutions, Courts have not, at the very outset, decided the primary issues of maintainability and attempted to preserve the parties in status quo ensuring that minimum prejudice is caused to both sides in this unprecedented and exceptional situation. At the same time, courts have also been mindful of not overextending the ‘force majeure’ defence (e.g. the Halliburton Order, above) to parties which are only seeking advantage of the current situation to safeguard their previous breaches.

Cases which Courts heard in recent times which are a direct result of the lockdown, reflected the Courts being conscious of the difficulties faced by litigants and have passed orders which balance the interest of parties as far as possible and legally justifiable.