Section 56 of the Indian Contract Act deals with the frustration of a contract and states that any act which was to be performed after the contract became unlawful or impossible to perform and which the promisor cannot prevent will become void.
The Supreme Court in its landmark judgment Satyabrata Ghose vs Mugneeram Bangur & Co held that to determine whether a force majeure event has occurred, it’s not necessary that the performance of an act should literally become impossible; a mere impracticality of performance will also be covered. “If the contract has an express or implied ‘force majeure’ clause, then the situation will be analyzed on the basis of that, and not through the application of principles under Section 56,” it said.
Further, in Industrial Finance Corporation of India Ltd vs The Cannanore Spinning & Weaving Mills Ltd. and Ors., the Court stated: “It may be noticed here that the Statute itself has recognized the doctrine of frustration and encompassed within its ambit an exhaustive arena of force majeure under which non-performance stands excused by reason of an impediment beyond its control which could neither be foreseen at the time of entering into the contract nor can the effect of the supervening event could be avoided or overcome.”
It may be prudent to file a letter petition with Electricity Supply Companies (DISCOMS) for waiver of minimum contract demand bills due to forced closure of industrial units during government-mandated lockdown due to COVID19. The frustration of the contract under section 56 as the agreement has become impossible to perform should be appropriately invoked.
