Govt must bring in Covid-specific law to provide relief to lockdown-affected sectors: Harish Salve

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The government must bring in a Covid specific law to provide relief to all sectors affected by the lockdown and the pandemic, senior advocate Harish Salve said on Friday, warning that otherwise the already overwhelmed judicial system would be further stretched. Salve was speaking on “Force Majeure – Impact on Contracts and Commerce” at a…

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The government must bring in a Covid specific law to provide relief to all sectors affected by the lockdown and the pandemic, senior advocate Harish Salve said on Friday, warning that otherwise the already overwhelmed judicial system would be further stretched.

Salve was speaking on “Force Majeure – Impact on Contracts and Commerce” at a webinar conducted by the Bennett School of Law. The senior advocate said that the lockdown and pandemic have affected every single country round the world governed by rule of law.

“Unless the government brings in a Covid specific law that addresses sectoral problems, the already overburdened courts which now conduct less business than before will be flooded with very complex litigation and no lawyer would be able to say what would be the end result of such litigation,” he said.

Otherwise, people will be unnecessarily penalised for being remiss in their statutory duties, Salve said. The lockdown has affected all – businesses, service providers and each one of us, he said.

It has affected performance of contracts, and also statutory duties to third parties, employers’ benefits for workers and duties towards safety of employees.

It has also disrupted tax returns, statutory reporting obligations and industrial payments, he said, running through a sample of what the government would have to address.

Salve said that an impossibility cannot be a force majeure, it can only be a contractual allocation of risks as per the terms of a contract. Force majeure doesn’t automatically bring a contract to an end, he said. Much depends on language of contract, events and whether one is indeed an affected party.

He said that government interventions such as a lockdown can be a force majeure even without a pandemic.

In this context, he referred to at least three cases currently pending in the top court. One involving the LG polymer leak case in which he attributed the leak to the small number of passes issued to the company to maintain the plant during the lockdown.

The next case, he referred to, was the fare refund case involving ailing airlines in the top court. He said that no airline the world over is giving full refund. Rather they are giving credits to passengers.

The third case he referred to was whether interest could be charged on the RBI loan moratorium to borrowers. The RBI has since said that interest on the interest component cannot be waived as it would affect the financial stability of the banking system.

The banking regulator said that it was only a loan deferral of sorts and not a loan waiver. The courts have sought further clarity on the issue from the government by the next hearing scheduled for June 17, 2020.

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