VI TNNLU NATIONAL MED_ARB COMPETITION 2024 NMAC TC 16

STATEMENT OF JURISDICTION

The CLAIMANT has approached this Arbitral Tribunal under Section 16 of the Arbitration
and Conciliation Act, 1996 read along with the Dispute Resolution Clause of the Joint
Development Agreement which reads as:

Dispute Resolution Clause:

9.1 In the case of any dispute or differences or claims arising out of or in connection with or
relating to the Agreement or in the interpretation of any provisions of this Agreement, or the
breach, termination or in validity thereof (each, a “Dispute”), the Parties shall attempt to first
resolve such Dispute or claim through mutual discussions.
9.2 If such Dispute is not resolved through such mutual discussions within 15 (fifteen) days
after any Party has served a written notice on the other Parties requesting the commencement
of discussions, any Party may refer such Dispute to arbitration under the Arbitration and
Conciliation Act, 1996 (as amended from time to time, the “Arbitration Act”) in force at the
date of this Agreement.
9.3 The arbitration shall be conducted by 1 (one) arbitrator, to be jointly nominated by the
Developer and the Owner. The seat and venue of the arbitration shall be Tiruchirapalli.
The language of this arbitration shall be English.
9.4 Any arbitral awards made in accordance with this Agreement shall be conclusive and
binding on the Parties.
9.5 The arbitrator shall render a written and reasoned award in writing.

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STATEMENT OF FACTS

CLAIMANT Mx. Krishna, a resident of Trichy owning a property of an extent of 2 acres in

Bayangammedu in Trichy was approached by the RESPONDENT, Karpanai Developers P.
Ltd. to undertake joint ventures for property development.

On 11 December 2019, after a series of negotiations, the parties signed a Joint Development
Agreement (JDA) to construct residential and commercial complex. The complex was named
as Mithila (hereinafter referred as ‘Project’). The property when developed would have 18
commercial offices and 24 apartments consisting of 8 floors.

Soon after the JDA, the RESPONDENT began work on clearing the site and making the
detailed plans for the Project to obtain sanction. On 2 March 2020, the Government of India
responded to the COVID-19 situation by imposing a lockdown for the entire country. The
firm of M/s Batta Bhaduri was approached to design the Project, however, the partner in
charge of the Project Mr. Imroz Inderjeet passed away in August 2020, and the work was
further carried out by another partner Mr. P. Bhaduri. The effect of the pandemic, the
restrictions on accessing the office, and the death of Mr. Inderjeet had caused a cascading
effect on the work. It was only during September 2020 that the CLAIMANT requested the
RESPONDENT for updates on the Project and the RESPONDENT effectively communicated
that the pandemic and the lockdown had affected the progress of the Project. The
RESPONDENT also promised for a timely filing of the application for sanction of plans.

In response to the queries of the CLAIMANT, the RESPONDENT actively took measures to
cure the delay and prepared a detailed plans by October 2020. On 9 January 2021,
RESPONDENT filed the application for sanction of the plans for the Project. However, soon
after the application was filed, on 21 January 2021, the Government of Tamil Nadu issued a
notification increasing the fees for the applications for plan, this revision applied
retrospectively increasing the financial burden on the RESPONDENT from the earlier cost of
Rs. 15 lakhs to Rs. 135 lakhs. In February 2021, the RESPONDENT along with other
builders challenged the revision by a writ petition in the Madras High Court.

Subsequently, on 17 October 2021, the Ministry of History and Culture, Central Government
passed a ban order on the sanctions given for the construction of the multi-storeyed buildings
exceeding four storeys or beyond 45 feet in height in the ‘areas of cultural significance’ until
the next plan Master Plan for the development of those respective cities are finalised. The
ban order listed these areas, which included the Bayangammedu in Trichy.

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Consequently, on 20 March 2022 the CLAIMANT unreasonably terminated the contract by

issuing a letter of termination to the RESPONDENT.

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ISSUES RAISED

1. WHETHER THERE IS A BREACH OF CONTRACT BY THE RESPONDENT

2. WHETHER THE GOVERNMENT ORDERS/NOTIFICATIONS AFFECTED THE
TIMELY COMPLETION OF THE PROJECT
3. WHETHER THE CLAIMANT IS ENTITLED TO COMPENSATION

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SUMMARY OF ARGUMENTS

1. WHETHER THERE IS A BREACH OF CONTRACT BY THE RESPONDENT?

The RESPONDENT respectfully contends that the claimants' termination of the Joint
Development Agreement (JDA) lacks justification, as it allegedly disregards the underlying
reasons for the project delay. The RESPONDENT submits that the delay, which is cited as a
breach of contract by the claimants, was not a result of any misconduct on their part. The
respondents have established this in three folds:

i. If time is the essence of contract

ii. Applicability of the force majeur clause
iii. Unreasonable termination of agreement

The RESPONDENT humbly submits that the

[2.] WHETHER THE GOVERNMENT ORDERS/NOTIFICATIONS AFFECTED

THE TIMELY COMPLETION OF THE PROJECT?
The RESPONDENT humbly submits that the Government orders and notifications, along
with legal proceedings, significantly impeded the Project's timely completion, surpassing
initial expectations. RESPONDENT strategically paused progress to address uncertainties
arising from external factors and pending court decisions, acknowledging contextual
challenges in adhering strictly to the JDA timeline and there has been no instances of
material breach.

2.[3.] WHETHER THE CLAIMANT IS ENTITLED TO COMPENSATION?

The counsel on behalf of the RESPONDENTS submits that the force majeure clause
(Clause 11.1) in the JDA protects the RESPONDENT from liability for delays caused by events
beyond their control, including the COVID-19 pandemic. Additionally, two government
notifications, one increasing fees and another imposing a construction ban, further hindered the
Project's progress, justifying the plea for rejection of any compensation claims by the claimant.

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[1.] WHETHER THERE IS A BREASCH OF CONTRACT BY THE RESPONDENT?

A. IF TIME IS THE ESSENCE OF CONTRACT

1. Paragraph 2 of the Section 55 of the Indian Contract Act, 1872 provides that if the
intention of the parties was that time should not be of the essence in the contract, failure by a
party to perform at or before the specified time does not make such a contract voidable at the
option of the promise.

Paragraph 3 of the Section 55 of the Indian Contract Act, 1872 provides that even where a
contract is voidable on account of the contractor's failure to perform his promise at the time
agreed (which is of the essence), the promisee cannot claim compensation for any loss
occasioned by the non-performance of the promise at the time agreed. Such a bar from
claiming compensation arises if the promisee accepts the performance of such promise at any

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time other than the time previously agreed. It provides for an exception to this rule: at the
time of acceptance of performance, the promisee gives notice to the contractor of its intent to
claim compensation for the loss.

2. As regards construction contracts, considering the inherent uncertainties in the completion

of construction projects, historically, time was not regarded as of the essence. Indian
contract law, largely derived from English law, has presumptions regarding the types of
contracts where time is presumed not to be the essence of the contract. 1 In line with
English law, in construction contracts in India, it is presumed that time is not of the
essence.

Where the parties have expressly provided that time is of the essence of the contract such a
provision will have to be read along with other conditions of the contract, and such other
conditions may, on construction of the contract, exclude the inference that the completion
of the work by a particular date was intended to be fundamental, for instance, if the
contract were to include clauses for extension of time in certain contingencies or for
payment of fine or penalty for every day or week the work undertaken remains unfinished
on the expiry of the time provided in the contract, such clause would be constructed as
rendering ineffective the express provision relating to the time being of the essence of the
contract.2

In this case, though the contract stipulates a time schedule for the development of the
Project, in substance it does not make time an essence of the contract. To substantiate, the
JDA provides for an automatic extension of one (1) month if the RESPONDENT fails to
obtain sanction for the plans within four (4) months from the date of the JDA 3. Essentially,
the intention of the parties can be deduced from the JDA and that the JDA has a
consideration towards reasonable delay that might be caused due to unprecedented
circumstances.

3. The Supreme Court in the case of Welspun Speciality Solution Limited v. ONGC 4, has
reiterated the principles basis which Courts are required to construe whether time is
the of essence of a contract. The Court held that a collective reading of the entire
contract and its surrounding circumstances is imperative to come to such a

2
Hind Construction Contractors v. State of Maharashtra, (1979) 2 SCC 70
3
Med-Arb Proposition Paragraph No. 06, cl. xi
4
(2022) 2 SCC 382

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conclusion. Merely having an explicit clause in the contract may not be sufficient to
make time the essence of it. The Court also held that the availability of extension
procedures to fulfil obligations under a contract, is a good indicator that time is not of
the essence.
4. From the reading of the entire contract, as well as the surrounding circumstances, it
can be culled out that time is not of the essence. Essentially, the CLAIMANT was not
active in approaching the RESPONDENT for updates on the Project. It was only
during September 2020, i.e., after nearly 10 months of execution of the JDA 5, that the
CLAIMANT bothered to approach the RESPONDENT for updates on the Project.
However, the RESPONDENT was quick in responding to the needs of the
CLAIMANT and prioritised the completion of the Project. Soon after the meeting in
September 2020, the RESPONDENT prepared the detailed plans by October 2020,
validated the same by December 2020, and filed the application for sanction of the
plans for the Project.6

The RESPONDENT understands that there was a delay in the completion of the Project,
however, the RESPONDENT claims the delay was due to reasonable causes. The series of
events that hindered the completion of the Project were beyond the actual control of the
parties.

B. APPLICABILITY OF THE FORCE MAJEURE CLAUSE

1. ‘Force Majeure’ means an “event or effect that can be neither anticipated nor
controlled….[and] includes both acts of nature (e.g., floods and hurricanes) and acts
of people (e.g., riots, strikes, and wars).”7 ‘Vis Major’ is defined as an
“overwhelming, unpreventable event caused exclusively by forces of nature, such as
an earthquake, flood, or tornado.”8

Force Majeure is wider than Vis Major since the former encompasses both natural and
artificial unforeseen events whereas the latter contemplates only natural unforeseen events. In
fact, Vis Major actually forms a sub-set of Force Majeure. Notwithstanding the differences
between the two, the effect of both the terms is to excuse non-performance of a party and
prevent a party from being liable for a breach of contract whilst also saving the non-
performing party from the consequences of something over which it has no control.
5
Med-Arb Proposition Paragraph No. 09
6
Med-Arb Proposition Paragraph No. 10
7
Black’s Law Dictionary (11th ed . 2019)
8
Black’s Law Dictionary (11th ed. 2019)

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It is the case of the RESPONDENT that there was no mens rea on part of the

2. In this case, COVID-19 impacted the commencement of the Project largely effecting
the timelines of the Project. A lockdown was imposed on 2 March 2020 for a period
of sixty-eight (68) days, and this substantially effected the trajectory of the Project. 9 If
the event that is alleged to have prevented performance under the contract, such as an
epidemic, in this case, COVD-19, is specifically mentioned in the force majeure
clause and the event occurs, then the affected parties may be relieved from
performance. Even if such event is not specifically mentioned in the force majeure
clause, many force majeure clauses contain a catch-all phrase that is addition to the
specifically mentioned events. A catch-all phrase would have similar language
to“including, but not limited to” or “any cause/event outside the reasonable control
of the parties”. Clause 11 of the JDA specifies the force majeure clause and reads as
follows – “Neither party will be liable to the other for any failure or delay or for the
consequences of any failure or delay in performance of this Agreement is it is due to
any event beyond the reasonable control or contemplation of a Party to this
Agreement….”.10 This clause specifically includes a catch-all phrase which relieves
the party from performance of the contract as a result of COVID-19 pandemic.

PANDEMIC AS ACT OF GOD

3. Although Indian Courts have not directly ruled on whether an epidemic/pandemic like
COVID-19 is an ‘Act of God’, an argument to that effect can derive support from the
decision of the Supreme Court in The Divisional Controller, KSRTC v. Mahadeva
Shetty11, which holds that the expression ‘Act of God’ signifies the operation of
natural forces free from human intervention with the caveat that every unexpected
natural event does not operate as an excuse from liability if there is a reasonable
possibility of anticipating their happening. Similar judgements have also been passed
by the Madras HC in P.K. Kalasami Nadar v. Ponnuswami Mudaliar12
4. The effect of COVID-19 within the ambit of force majeure clause had a direct impact
on the non-performance. The judgement of the Orissa High Court in Sri Ananda
Chandra Behera v. Chairman, Orissa State Electricity Board13 provides some

9
Med-Arb Proposition Paragraph No. 07
10
Med-Arb Annexure A Paragraph No. 11
11
(2003) 7 SCC 197; See also Province of Madras v. I.S and G Machado AIR 1955 Mad 519
12
AIR 1962 Mad 44
13
1998 85 CLT 79

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guidance on the causal link between the force majeure event and the resulting
situation by citing, with approval, the decision of the House of Lords in Greenock
Corporation v. Caledonian Rly Co.,14 where it was held that “….An accident maybe
an act of God if it has resulted directly from natural causes without human
intervention. It is true that in most cases human and natural agency co-operate to
produce the result, but the immediate and direct cause is alone to be looked at in
determining whether the act is that of God or man….”.
5. On 2 March 2020, a lockdown was imposed by the authorities as a result of which
there were consequential restrictions including the quarantines, travel restrictions and
other limitations imposed by the government. Consequent to these restrictions, M/s.
Bhatta Bhaduri, the architectural firm engaged by the RESPONDENT for the detailed
plans had been irregular in their work on account of the pandemic. Furthermore, the
partner in charge of the Project Mr. Imroz Inderjeet passed away in August 2020 15,
and the work was handled by the senior partner Mr. P. Bhaduri. The effect of the
pandemic, the restrictions on accessing the office, and the death of Mr. Inderjeet had
caused a cascading effect on the work. Thus, there was a direct causal link between
the pandemic and the non-performance of the contract.

CHANGE IN THE POLICIES CONCERNING THE PROJECT

6. Clause 11 of the JDA provides for force majeure clause and clause 11.1 of the JDA
defines various force majeure events. The clause includes the term “change in policies
concerning the project”. The RESPONDENT filed an application for sanction of the
plan on 9 January 2021, however, soon after filing the same, on 21 January 2021, the
Government of Tamil Nadu issued a notification increasing the fees for the
applications for plan sanctions by 700 to 900% for all districts in Tamil Nadu and the
revision applied retrospectively, translating to a hike in the cost of the Project from
Rs. 15 lakhs to Rs. 135 lakhs. 16 This exacerbated the costs towards the Project and the
RESPONDENT was severely affected by the financial implications of such an order.
As a result, the RESPONDENT challenged the revision by writ petition in the Madras
High Court in February 2021.17 According to clause 11.1 this event essentially
satisfies the condition of “change in policy concerning the Project”.

14
1917 AC 556
15
Med-Arb Proposition Paragraph No. 09
16
Med-Proposition Paragraph No. 12
17
Med-Proposition Paragraph No. 13

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7. Along similar lines, the RESPONDENT was in receipt of another notification on 17

October 202118, whereby the Ministry of History and Culture, Central Government
passed a ban order on the sanctions given for the construction of the multi-storeyed
buildings exceeding four storeys or beyond 45 feet in height in the ‘areas of cultural
significance’ until the next plan Master Plan for the development of those respective
cities are finalised. The ban order listed these areas, which included the
Bayangammedu in Trichy. This notification caused greater impediment to the
RESPONDENT in the performance of the contract.
C. UNREASONABLE TERMINATION OF AGREEMENT
1. The CLAIMANT was aware that the RESPONDENT was in a turmoil while handling
the situations surrounding the performance of contract, and these included the
pandemic which affected not only the activities of the RESPONDENT alone, but also
the activities of all stakeholders across the industries. Even while the RESPONDENT
was actively engaged in the performance of contract after the pandemic, the
RESPONDENT was in receipt of a notification from the Government of Tamil Nadu
regarding the hike in the fees towards sanction of plans. Soon after the lockdown
restrictions were eased, the RESPONDENT was quick in preparing the sanction plan
and applying for approval of the same. However, this notification from the State of
Tamil Nadu posed as an impediment to the fulfilment of contract as such hike in the
costs of the Project would essentially alter the financial plan of the Project. In order to
address these issues surrounding the order, and to resume the work on the Project, the
RESPONDENT approached the High Court of Madras in February 2021 through a
writ seeking relief. In April 2021, the High Court directed the authorities to consider
the applications pending as of the date of the notification, on the applicants paying
50% of the increased fees. This hike in the fees caused significant issues in the costing
that had been worked out for the Project, however, the RESPONDENT was actively
engaged in attempting to resolve the same. Subsequently, the RESPONDENT
communicated the Subsequently, the RESPONDENT communicated this to the
CLAIMANT, whereby, a series of exchanges took place between the parties
attempting to resolve the issue.
2. Furthermore, the RESPONDENT received another notification on 17 October 2021,
whereby the Ministry of History and Culture, Central Government passed a ban order
on the sanctions given for the construction of the multi-storeyed buildings exceeding
18
Med-Proposition Paragraph No. 15

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four storeys or beyond 45 feet in height in the ‘areas of cultural significance’ until the
next plan Master Plan for the development of those respective cities are finalised. The
ban order listed these areas, which included the Bayangammedu in Trichy. This
notification aggravated the situation of the RESPONDENT. The order read – “With a
view to preserve and beautify the many locations in our country where historical
buildings are found, the Government has decided to stop construction of multi-
storeyed buildings in Areas of Cultural Significance with immediate effect till the
Master Plan for the cities in which the Areas of Cultural Significance are located
have been finalised. No new sanction for such construction should be issued
hereinafter.” This order put a temporary restriction on the sanction of plans for the
Project, whereby, the RESPONDENT was left with fewer options to pursue. These
circumstances were beyond the control of the parties, however, even after these
events, the RESPONDENT made diligent efforts amid unprecedented circumstances
to ensure the completion of the Project. These efforts were expressly communicated
and relayed to the CLAIMANT during the meeting on 15.02.2021. 19 The sole reason
for the forced delays, and not breaches, in the Project was due to the fact that the land
is situated in an area of cultural significance and was covered by the Ban Order.
3. Despite these orders, had the RESPONDENT pursued the Project further, then it
would be termed unlawful according to these orders leading to regulatory actions
against the parties. In order to avoid these regulatory issues, the RESPONDENT
considered it fit to take legal recourse to challenge these orders and obtain favourable
orders to commence the construction of the Project.
4. During all these events, the CLAIMANT was made aware of the situation and the
consequences of pursuing the Project despite these regulatory restrictions. However,
the CLAIMANT went on to issue a legal notice to the RESPONDENT, alleging a
breach of contract and unreasonably terminated the contract on 20 March 2022.20
5. As a result, The RESPONDENT pleads that the CLAIMANT terminated the contract
unreasonably without considering the various issues that the RESPONDENT faced
before such termination and that the RESPONDENT made highest possible efforts to
remedy the delay caused by these unprecedented circumstances, but the CLAIMANT
failed to recognise these and hence, terminated the contract unreasonably.

19
Med-Arb Annexure D Paragraph No. 05
20
Annexure F, Paragraph No. 03

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Thus, the RESPONDENT pleads that there has not been a breach of contract due to delay in
performance since the delay was reasonable due to the aforementioned reasons.

II. WHETHER THE GOVERNMENT ORDERS/NOTIFICATIONS AFFECTED

THE TIMELY COMPLETION OF THE PROJECT?

The notifications and orders issued by the government significantly impacted the timely
completion of the Project, which would have otherwise seen the approval of the project plan
within the prescribed time as outlined in the Joint Development Agreement (JDA). The
unforeseen delays extended beyond the initial expectations as the RESPONDENT had to
navigate through government directives. Moreover, the initiation of legal proceedings,
including the filing of a writ petition, further contributed to the pause in Project’s progress.
This pause was a strategic measure undertaken to prevent additional scepticism and
uncertainties, considering that the ultimate outcome was contingent upon the decision of the
court. In light of these external factors and legal proceedings, it is imperative to acknowledge
the contextual challenges that have influenced the Project timeline, potentially impacting the
parties' ability to adhere strictly to the initially stipulated schedule outlined in the JDA.

A. Material Breach
1. In contract law, a "material" breach of contract is a breach (a failure to perform the
contract) that strikes so deeply at the heart of the contract that it renders the agreement
"irreparably broken" and defeats the purpose of making the contract in the first place.
The breach must go to the very root of the agreement between the parties. Only if
there is a material breach (sometimes referred to as a "total" breach), the other party
can simply end the agreement and go to court to try to collect damages caused by the
breach.21

In this case, the assertion that the contract has rendered the agreement "irreparably
broken" is effectively disproven when considering the circumstances surrounding the
delays in Project completion. The delays, which might otherwise be construed as
causing irreparable harm, are substantiated as reasonable and beyond the control of
the contracting parties. Firstly, the unprecedented and unforeseeable impact of the
COVID-19 pandemic resulted in a state-mandated lockdown, disrupting regular
operations and timelines. Secondly, the issuance of a notification by the Tamil Nadu

21

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Government necessitated a revision in plan sanction fees, introducing an additional

layer of complexity.

2. Lastly, a Ban Order from the Ministry of Culture, Government of India, further
impeded progress. These external factors collectively contribute to the justification of
the delays, establishing them as events beyond the parties' control. The purpose and
viability of the agreement are still intact, as the delays are clearly attributed to
extraordinary circumstances rather than any wilful or negligent actions on the part of
the contracting parties, thereby mitigating the claim of irreparable harm to the
contract.
3. In the case of T Amuthavalli v. Secretary to the Government and others 22, the Madras
High Court rendered a significant decision by acknowledging and considering the
impact of the COVID-19 pandemic on the period of delay. The court held that the
duration of the delay in the proceedings appeared to be reasonable, considering the
extraordinary circumstances imposed by the global health crisis. The unprecedented
challenges posed by the pandemic, such as lockdowns, disruptions in court operations,
and the overall strain on the judicial system, were deemed valid reasons contributing
to the extended time frame. By recognizing the exceptional nature of the
circumstances brought about by COVID-19, the Madras High Court demonstrated a
pragmatic approach in its decision, ensuring fairness and understanding in light of the
challenges posed by the pandemic on legal processes.
4. The alleged breach in this case has failed to address the fundamental aspects of the
issue at its core, and the termination of the Joint Development Agreement (JDA) is
deemed entirely wrongful based on the aforementioned reasons. Specifically, the
impact of three significant conditions—namely, the COVID-19 pandemic, the
issuance of notifications/orders by the Tamil Nadu authorities, and the imposition of a
ban order—have substantially hindered the progress of the contractual procedure. The
respondent was compelled to halt the proceedings due to these external factors beyond
their control. Notably, the claimant is cognizant of the fact that a writ petition filed in
the Madras High Court further contributed to delays, as the respondent’s pursued
relief through the writ and argued for a reduction in fees for plan sanction. In light of
these circumstances, the RESPONDENT pleads that the termination of the JDA is
unjust and unreasonable.

22
(2021) SCC OnLine Mad 2315

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Government Notifications/Orders:

5. In the face of the challenging circumstances presented by the COVID-19 pandemic,

the respondents exhibited a commendable commitment to their Project's success. By
October 2020, they managed to finalize a detailed plan, subsequently validated by
their engaged consultant on 23 December 2020, underscoring their dedication. In an
appreciable timeframe of just nine to ten working days, the respondents filed an
application for the sanction of Project plans on 9 January 2021, indicative of their
earnest intention to complete the Project. Unfortunately, their proactive approach was
thwarted by a notification issued by the Government of Tamil Nadu, drastically
increasing fees for plan sanction applications by 700% to 900% across all districts in
the state.
6. Despite this substantial setback, the respondents, demonstrating resilience and
commitment, swiftly challenged the notification through a writ petition in the Madras
High Court within ten to twelve days of its issuance. It is important for the claimants
to recognize the massive percentage increase imposed by the government and
acknowledge the respondents' unwavering determination to navigate these challenges.
Importantly, the legal process, including the filing of the writ petition and subsequent
interim orders from the High Court in April 2021, directed municipal authorities to
consider pending applications by paying 50% of the increased fees, inevitably caused
a delay of two months—a delay that cannot be attributed to any unreasonable actions
on the part of the respondents.
7. In an effort to prevent confusions and miscommunications, the respondents
consciously abstained from furnishing inaccurate information to the claimant.
Regrettably, the claimant misinterpreted this cautious approach as a lack of
transparency, perceived it as inaction. Such allegations were deeply hurtful for the
respondents, considering their unwavering dedication to the Project's completion. The
respondents' intention was to maintain clarity and accuracy in communication, but the
unintended consequences of the claimant's misunderstanding resulted in not only a
false perception of non-transparency but also inflicted mental agony on the
respondents. Despite their significant contributions and efforts toward the Project's
success, the respondents found themselves unfairly accused and emotionally affected
by the claimant's misinterpretation of their actions.

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8. The respondents in response to the allegations replied that the delay in the sanction
was clearly due to the revision in the fees which:
i. The notification announcing a staggering increase in the plan sanction fee,
ranging from 700% to 900% above the customary rates, has engendered
significant disruption and turmoil within the offices of the Trichy Municipal
Corporation. This abrupt and exorbitant rise in fees has had profound
implications, causing a substantial upheaval in the routine operations of the
municipal offices. The sudden financial burden imposed by such a drastic fee
hike has created an environment of uncertainty and complexity, leading to an
immense churn in the administrative processes. The increased fees have not
only strained the financial resources of applicants but have also resulted in a
considerable delay in the approval and processing of plans. The Trichy
Municipal Corporation, grappling with these unforeseen challenges, is
navigating through a period of heightened difficulty and disruption, attempting
to adapt to the unprecedented circumstances brought about by the substantial
increase in plan sanction fees.
ii. The meticulous planning undertaken over months to establish a comprehensive
and viable financial framework for the Project now faces upheaval due to the
unforeseen hike in fees. This sudden and substantial deviation from the
anticipated costs has created a ripple effect, impacting the financial projections
and overall feasibility of the project. RESPONDENT, in charge of overseeing
the Project, is actively engaged in efforts to resolve these newfound issues in
the costing structure. The unexpected financial burden resulting from the
escalated plan sanction fees requires a reassessment of the Project's financial
landscape and poses a considerable hurdle in adhering to the initially outlined
business plan. RESPONDENT is currently navigating through the complexities
arising from these unforeseen challenges, seeking solutions to ensure the
Project's financial viability and successful realization despite the unexpected
hurdles introduced by the increased plan sanction fees.

The onerous financial burden arising from unforeseen circumstances, such as the
substantial increase in plan sanction fees, was shouldered entirely by the respondents,
demonstrating their resilience in the face of adversity.

Ban Order

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9. The state of Tamil Nadu was already grappling with considerable confusion
surrounding the fees for plan sanction, a situation the respondents adeptly managed.
However, another order, issued subsequently, posed a more substantial disruption to
the Project. Recognizing the importance of preserving the nation's history and culture,
the Ministry of History and Culture, Central Government, issued an office
memorandum on 17 October 2021. This directive specified that, until the next Master
Plan for the development of respective cities is finalized, no new sanctions would be
granted for the construction of multi-storeyed buildings exceeding four storeys or
beyond 45 feet in height in Areas of Cultural Significance. The Bayangammedu area
in Trichy, included in the Areas of Cultural Significance, was affected by this Ban
Order, causing a complete standstill in all project-related activities.
10. The order clarified that a 'multi-storeyed' building is one exceeding 45 feet or
extending beyond four storeys, requiring lift services. In response to this significant
hurdle, the respondents, demonstrating flexibility and commitment, expresses their
willingness to fulfil contractual obligations through novation or alteration of the Joint
Development Agreement (JDA) to construct half of the project, adhering to the
permissible limits outlined in the Ban Order. Despite these unforeseen challenges, the
respondents remained proactive, actively exploring measures to commence the Project
within the constraints imposed by the regulatory environment.
11. The termination of the contract is asserted to be unreasonable based on two key
issues, namely the invocation of Force Majeure and the absence of any material
breach. Firstly, the application of Force Majeure is emphasized as a valid ground for
the purported termination. It is contended that unforeseen and uncontrollable
circumstances, such as government notifications and orders, fall under the purview of
Force Majeure events. These events, beyond the control of the respondent, have
significantly impeded the smooth progress of the Project. Secondly, the assertion is
made that no material breach has occurred on the part of the respondents. The
circumstances leading to the termination were allegedly beyond their control, and they
had actively sought to navigate challenges imposed by external factors, including
government directives. By highlighting these factors, the argument aims to establish
that the termination was unjust and unreasonable, given the context of Force Majeure
events and the absence of any substantial breach on the part of the respondents, hence
it is pleaded to revoke the termination.
III. WHETHER THE CLAIMANT IS ENTITLED TO COMPENSATION

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1. It is pertinent to note that clause 11.1 of the JDA dealing with force majeure clause
states that neither party will be liable to the other for any failure or delay if it is due to
an event beyond the reasonable control or contemplation of a party to this agreement
including, the acts of god. The respondent had no control over the drastic spread of
the pandemic and consequences that followed. In M/s Halliburton Offshore Services
Inc v. Vedanta Ltd & Anr23, the petitioner Halliburton was obliged under a contract to
develop three blocks in Rajasthan for Vedanta Ltd. Due to the lockdown, Halliburton
was not in a position to complete the work in the given time frame. Thus, the
company decided to invoke the force majeure clause, but Vedanta Ltd objected to this.
As a result, Vedanta threatened to terminate the contract, forcing Halliburton Offshore
Services Inc to move to the Delhi High Court. The Delhi High Court tended towards
granting an ad-interim injunction to the invocation of bank guarantees given by
Halliburton to Vedanta. The court held that the lockdown caused due to COVID-19
was prima facie a force majeure event.

Actions of the authority

2. The resolution of complex issues concerning a causal link becomes particularly

nuanced when the immediate and direct cause is not the Covid-19 pandemic itself but
rather the responsive actions of authorities. For instance, measures such as lockdowns,
curfews, and restrictions on the movement of people and goods were implemented in
response to the pandemic. This intricate web of cause and effect is exemplified by the
identification of containment zones with a high incidence of COVID-19, leading to
stringent movement restrictions. In this context, the architectural firm M/s Bhatta
Bhaduri, engaged by the respondent, faced irregularities in their work due to the
pandemic's impact. Being situated in a containment zone, their operations were
significantly disrupted until the area's de-notification in August 2020. This example
illustrates the intricate nature of causal links, where the actions taken by authorities in
response to the pandemic can have profound and indirect effects on various aspects of
project execution, in this case, the irregularities in the architectural firm's work.
3. Also, it would not come as a surprise, that the Bayangammedu area in Trichy which is
in the heart of the city should also have had fair share of restrictions imposed
considering the movement of majority of population of the city through this area. The

23
(2020) SCC OnLine Del 542

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imposition of lockdown severely impacted the working conditions of the employees

of both the RESPONDENT as well the architectural firm.
Government Notifications/Orders
4. Apart from the serious effects that the COVID-19 pandemic had induced delay in the
completion of the Project, the governments issued two notifications that potentially
hampered the entire working and the completion of the Project. Such actions of
authorities may, depending on the language of the force majeure clause, constitute a
separate and independent force majeure event that excuses performance of a contract.
The force majeure clause in the JDA clearly stipulates that neither party will be liable
to the other for any failure or delay or for the consequences of any failure or delay in
performance of this Agreement if it is due to any event beyond the reasonable control
or contemplation of a Party to this Agreement including, acts of God, war, acts of
terrorism, industrial disputes, protests, fire, flood, storm, tempest, explosion and
change in policies concerning the Project.
5. The first government notification from the government of Tamil Nadu dated 21
January 2021 issued a notification increasing the fees for the applications for plan
sanctions by 900% for Trichy District. For the purpose of the Project, the revision in
the rates meant a hike in cost from Rs. 15 Lakhs to Rs. 135 Lakhs. 24 As a matter of
fact, the respondent had just suffered from the harshest of times in the pandemic,
meaning that drop in the business also as one of the major consequences that were to
be dealt with. However, reiterating that none of these were under the control of the
respondent rightfully invoking the Force Majeure clause mentioned in Clause 11.1 in
the JDA. Also, one of the steps that the respondent has taken is by challenging the
revision of rates by a writ petition in the Madras High Court in Feb 2021, establishing
the prompt and in time action from the respondent leaving no room for inaction.
6. Lastly, In October 2021, vide Office Memorandum dated 17 October 2021
(hereinafter “Ban Order”), the Ministry of History and Culture, Central Government
passed an order, stating that no new sanctions shall be given for the construction of
multi-storeyed buildings exceeding four storeys or beyond 45 feet in height in Areas
of Cultural Significance until the next Master Plan for the development of those
respective cities are finalised. The Ban Order listed the Areas of Cultural Significance,
which included the Bayangammedu area in Trichy. 25 The Ban Order, makes the

24
Med-Arb Proposition, Paragraph No. 12
25
Med-Arb Proposition, Paragraph No. 15

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Project as it had been planned, unlawful. Hence the respondent pleads that the drastic
spread of COVID-19, imposition of restrictions in the COVID-19 affected areas,
lockdown, unexpected and sudden revision in fees for plan sanctions and lastly the
Ban Order all of which get covered under the clause 11.1 of the JDA and can be stated
as Force Majeure. Therefore, the respondent under the umbrella of the clause 11.1
pleads that any claim, compensation of the claimant should be rejected.

PRAYER

Wherefore in view of the above, the RESPONDENT respectfully prays the Tribunal to
find that:

1. The Respondents have not breached the contract.

2. The Respondents are not liable to pay compensation or any damages towards the
breach to the CLAIMANT.

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The RESPONDENT reserves the right to amend its request for relief as may be required.

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