Two orders of the high court of Bombay providing relief to corporate houses hit by the Covid-19 pandemic and nationwide lockdown could provide a cue as to how jurisprudence may evolve in the post pandemic world, legal observers said.
The court on Saturday granted exclusion of the lockdown days from the moratorium period to arrive at the timeline banks use to declare a loan account a non performing asset.
ICICI Bank had taken two defaulting real estate companies Transcon Ironica and Transcon Skycity to court.
“...the period of the moratorium during which there is a lockdown will not be reckoned by ICICI Bank for the purposes of computation of the 90-day NPA declaration period,” the order of justice Gautam Patel read.
Earlier this month, the same high court had restrained IDBI Trusteeship from selling pledged shares of Future Retail. IDBI Trusteeship held the shares as collateral against debentures issued by a Future Group company. When Future Retail shares tanked, IDBI wanted immediate redemption of debentures or to sell shares as an alternative. The court, however, restrained it from selling shares taking into consideration the global selloff in equities, including in India, in the wake of the virus outbreak.
“These are unprecedented orders. But it is an unprecedented situation. I think a new order of jurisprudence will evolve. More likely than not judges will take a lenient view of the situation,”said N.G. Khaitan, senior partner of Khaitain & Co.
He was speaking at a webinar organised by Bharat Chamber of Commerce where members wanted to understand the impact of the coronavirus outbreak on contractual obligations and other legal aspects relating to statutory payments, bank dues, payment of wages and salaries.
Khaitan, who is also senior vice-president of the chamber, apprised the members that at least two countries have passed specific regulations to provide relief to corporate houses and individuals from the economic fallout of the pandemic.
Singapore promulgated the Temporary Measures Act, 2020 earlier this month providing widespread relief, including suspension of rent, protection from eviction from premises for failing to pay rent, suspension of performance of contract, suspension of ongoing legal and arbitral proceeding, including insolvency for a period of 6-12 months.
Germany, on other hand, has acted on the principle of “stop the clock”. Apart from spending 20 per cent of GDP on financial packages, it has stopped termination of lease, rent and contract and given rights to consumers and business to refuse performance of contract.
In contrast, the efforts in India so far are piecemeal. “We need to stop the clock in India too. It will not cost the exchequer much but provide relief to business and industry which is in ICU,” Khaitan said, who recently wrote to the law minister seeking extension of limitation period for filing claims before an arbitral tribunal.