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By Nazaqat Lal, Advocate & Solicitor, Bombay High Court | Nov 30, 2020

The law of limitation governing the territory of India is contained in the Limitation Act, 1963 (“the Act”). The preamble of the said Act states that it is “An Act to consolidate and amend the law for the limitation of suits and other proceedings for purposes connected in addition to that.” (emphasis supplied) Being a consolidating act, as distinguished from an act that merely defines and amends certain parts of the law relating to that subject, the Act is largely exhaustive on the subject of limitation. However, the Act does recognize special laws that may provide a period of limitation different from the period stipulated under the Act.

The Act has factored in certain situations wherein the limitation period may need to be extended (Section 4), relaxed (Sections 5, 6 and 7) or completely done away with, as stipulated in Section 10. But it is pertinent to note that force majeure events do not expressly fall within any of the provisions providing for extension or relaxation of the strict rule of limitation.

The expression ‘force Majeure’ is of French origin. Under the French Civil Code, force majeure is a defence to a claim for damages for breach of contract. It needs to be shown that the event: made performance impossible, was unforeseeable, was unavoidable in occurrence and effects. [1] Force majeure clauses are incorporated in contracts as a way for parties to take a break in their performance obligations or terminate the contract in extreme circumstances under English Law.

Typically, a natural disaster, war or “act of God” would legitimately suspend or excuse the performance of the contract. This English law doctrine has been recognized in Sections 32 and 56 of the Indian Contract Act, 1872. However, applying the force majeure doctrine is not a blanket one. The party(s) to the contract would have to show inter-alia, the steps taken on their part, to mitigate the consequences, whether the time is of the essence of their contract, etc. before the court extends the time for performance of the contract or excuses non-performance thereof completely.

For litigation, the doctrine of force majeure would have to be considered slightly differently than in contract law. Whether a plea of force majeure would extend or relax the time otherwise permitted to a party to initiate proceedings by suit, appeal or application.

One can attempt to bring a situation of force majeure, particularly the situation of Covid-19, within the scope of Section 4, which provides for expiry of limitation when the courts are closed, or Section 5, which provides for an extension of the period of limitation in the case of appeal or application if “sufficient cause” is shown. However, it is pertinent to note that Section 5 applies to appeals and applications only and not suits. Therefore, the only benefit a potential plaintiff (who is not covered by any of the other relaxations or Section 10 of the Act) would get is under Section 4.

Section 4 would be applicable in a case where the expiry of the period of limitation falls on a holiday and, therefore, permits a plaintiff/applicant to file on the immediate next working day. If the limitation period expired during the lockdown imposed to curb the spread of covid-19, and suits, appeals, and applications were under section 4. They would have to be kept completely ready for filing and filed as soon as the court registry opens. In my view, this would neither be a fair nor pragmatic approach to take. Given that movement was severely restricted, public offices closed or functioned with minimum staff. Several other logistical factors involved utilizing the lockdown period as effectively as one would want to or need to prepare and file pleadings was not possible.

The potential plaintiff/applicant should not gain any additional or undue advantage due to the force majeure event. A potential defendant/respondent should also not be deprived of a right they would ordinarily have had. A solution will have to be found that factors the unprecedented force majeure event and the foundational principles of the law of limitation.

Keeping in line with the principles of the Act, the best solution to my mind would be to exclude the period of the force majeure event from the computation of limitation, i.e. freeze such period of force majeure, and the remainder or outstanding period of limitation would start running again once the effect of such force majeure event has ceased and normal functioning of courts has been restored. Specific to the case of Covid-19, (a) the period of lockdown, (b) the immediately preceding week(s) during which only very urgent matters were being taken up, and the Bombay High Court was working for lesser hours than normal as well as (c) any time after the lockdown is lifted, but courts do not resume work in full swing should be excluded from the computation of limitation.

In exercise of its powers under Articles 141 and 142 of the Constitution of India, the Hon’ble Supreme Court vide Order dated 23rd March 2020 [2] directed retrospective suspension of the law of limitation from 15th March 2020 onwards till further orders. Supreme Court has effectively frozen or suspended the running period of limitation from when the courts ceased to take up matters in the ordinary course. It will probably order the resumption of the law of limitation from the date courts begin to function at full strength and take up matters in the ordinary course.

The issue of limitation was bound to come up once courts resumed working and bypassing such Orders. The Supreme Court has obviated the need for such issues to be decided by each court separately and brought uniformity. While this was possible in litigation, it may not be so in the realm of contracts. In determining the effect of a force majeure event, particularly Covid-19, on contractual obligations, each contract will have to be considered on its own terms. At best, courts may be able to lay down some guidelines or principles applicable to a class of contracts.

[1] The NEC4 Engineering and Construction Contract: A Commentary by Brian Eggleston @ Pg. 124

[2] Suo Motu Writ Petition (Civil) No. 3/2020