Agreements Archives - Page 2 of 7

Force Majeure

On February 19, 2020, the Ministry of Finance ruled that “disruption of supply chains due to spread of Coronavirus will be covered” under the force majeure clause of government contracts. On May 13 it went further. For contractors not already in default, dates for obligations falling due from February 20 “shall stand extended for a period not less than three months and not more than six months,” without “any cost or penalty on the contractor/concessionaire.”

The same day, the Ministry of Housing and Urban Affairs asked the states to “treat the pandemic COVID-19 as ‘force majeure'” under the real estate law and to “automatically extend registration of all real estate projects registered under RERA by 6 months.”

Impossible

Section 56 of the Indian Contract Act releases the parties when performance becomes impossible. In Satyabrata Ghose v. Mugneeram Bangur of 1954, the Supreme Court explained the word. “This much is clear that the word ‘impossible’ has not been used here in the sense of physical or literal impossibility.”

Performance can also become impossible, the Court said, when it is “impracticable and useless from the point of view of the object and purpose which the parties had in view.”

Reasonable Compensation

Many Indian contracts name a sum that one side must pay if it breaks the contract. Under Section 74 of the Contract Act, a court does not simply award that sum. In Fateh Chand v. Balkishan Dass, decided in 1963, the Supreme Court said the court “will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated.”

The figure in the contract is a ceiling, not a price.

The Moratorium

On March 27, 2020, the Reserve Bank of India permitted lenders “to grant a moratorium of three months on payment of all instalments” falling due between March 1 and May 31. In May it extended the moratorium “by another three months, i.e., from 1 June 2020 to 31 August 2020,” as Business Standard reported.

The Works Contract

Indian contracts for public works often expect prices and dates to move. In a contract of the Delhi Development Authority, quoted by the Delhi High Court in 1998, clause 10CC provides that if the prices of materials “and/or wages of labour required for execution of the work increase the contractor shall be compensated for such increase.” The clause applies to longer contracts.

In the General Conditions of Contract that IIT Hyderabad uses for its works, clause 5 covers delays from force majeure, bad weather, strikes or “any other cause like above, which, in the reasoned opinion of the Engineer-in-Charge is beyond the Contractor’s control.” In such cases the authority “shall, if justified, give a fair and reasonable extension of time.”

Half a Berth

On Indian Railways, a passenger may hold an RAC ticket, Reservation Against Cancellation. “At the time of booking, RAC passengers are assigned a side lower berth, which is shared with another RAC traveller,” Zee Business explains.

Compensatory Tariff

In 2011 and 2012 Indonesia barred the export of its coal below a benchmark price. Adani Power, with a plant at Mundra in Gujarat, and Coastal Gujarat Power, a subsidiary of Tata Power, then “filed petitions before the CERC seeking compensatory tariff,” a higher price than their power purchase agreements set. On April 11, 2017, the Supreme Court ruled on the matter in Energy Watchdog v. CERC.

The matter did not end there. In 2018 the Gujarat government formed a high-power committee, which recommended changes to the tariffs. “The Gujarat government has approached the Supreme Court seeking to amend the PPAs,” the trade journal Power Line reported in October 2018.

Review, Negotiate and Bring Down

On July 1, 2019, the new government of Andhra Pradesh issued an order to “review, negotiate and bring down the high wind and solar energy purchase prices” in agreements already signed. It set up a High Level Negotiation Committee. The Union power minister, R.K. Singh, asked the state to honor the agreements.

The High Court stayed the order on July 26, 2019. In September “the court struck down a government order, which had appointed a three-member expert committee to renegotiate the deals.”

The Second Offer

In March 2018 the government invited bids for 76 percent of Air India. In May it announced: “No bids received for Air India.” In January 2020 it tried again, this time for the whole airline. Later that year it eased the terms. As the Free Press Journal put it, the government “gives flexibility to investors to decide on the amount of Air India debt.”

In October 2021 the Tata group made the winning bid, 18,000 crore rupees.

Review and Modification

India and Pakistan signed the Indus Waters Treaty in 1960. On January 25, 2023, India sent Pakistan a notice seeking to modify it. In August 2024 “India has served another notice to Pakistan seeking a review and modification of the Indus Water Treaty,” Deccan Herald reported.

On April 23, 2025, after the attack at Pahalgam, India announced that the treaty “will be held in abeyance with immediate effect.”