HALLIBURTON OFFSHORE SERVICES v VEDANTA LTD. & ANR.

O.M.P (I) (COMM) &I.A.	3697/2020
ORDER DATED	April 20, 2020
COURT	High Court of Delhi
PETITIONER	M/s Halliburton Offshore Services Inc.
RESPONDENT	Vedanta Limited and Another
CORAM	Hon’ble Mr. Justice C. Hari Shankar

INTRODUCTION-

‘M/s Halliburton Offshore Services Inc. vs Vedanta Limited and Another’ is a recent case displaying the complexities of bulky contracts and their interpretation according to the disputes that arose. 

In this case, the question is regarding the imposition of lockdown and the consequences thereof. The central idea about this is whether any of the delay which is majorly because of the lockdown is maintainable or not.

The respondents here wanted to terminate the contract and get their guarantees encashed due to the incomplete work on part of petitioners, this case analyzes whether this is the right way or not.

All the material points about this are discussed herein under.

FACTS OF THE CASE-

• 25.04.2018- The contract was executed between both parties.
• A tender for fast-track development of 3 blocks (Mangala, Bhagyam and Aishwarya hereinafter referred to as MBA) was accepted by petitioner (one of the world’s largest oil fields services).
• The tender was floated by Respondent 1.
• Total value of the project was USD 197 million.
• The contract being lengthy and bulky contained several clauses and terms one of them being dates stipulated for project commencement and completion; and consequences in case of any delay caused in that.
• The work was not completed within the given time.
• The company served several notices to the contractor; many discussions were held with the Project Management Committee.
• Company concluded to complete work by January 31^st, 2020 and finally they agreed to March 31^st, 2020.
• 18 March 2020- contractor invoked force majeure clause and asked for more time to complete the project.
• Company was not ready to accept this, so they proposed termination of contract on 31^st March 2020 and again on 7^th April 2020; they also mentioned the consequences including invocation of bank guarantees.
• 13^th April 2020- present petition was filed to seek relief:

• To restrain Resp. 1 from invoking/encashing/receiving from Resp. 2 under said Guarantees.
• To restrain Resp. 1 from taking any coercive action and to stay same till this petition.
• Resp. 1 be directed to act strictly as per the conditions of the contract.
• Ask Resp. 1 to pay an outstanding invoice amount of USD 6.6 million held unreasonably.
• Pass any order to secure a recoverable amount by arbitration and for unbilled amounts incurred by petitioner in state of variations.
• Pass interim/ex-parte order
• Pass any other order as the Hon’ble Court deems fit.
• 13^th April 2020- company (respondent) terminated the contract.

ISSUES RAISED-

1. Whether the present situation falls under Force Majeure clause.
2. Whether the petitioner can get the restraining order. 

CONTENTIONS OF THE PETITIONER-

1. That they had been granted extension for completion of project till 31^st March 2020 and a substantial portion of work was completed prior this date and because of the lockdown in industrial activities and restrictions on the movement of people due to COVID-19 the petitioner was unable to perform the contract.
2. As for the completion of the project, there was a requirement of workmen to travel overseas and that was impossible owing to lockdown.

CONTENTIONS OF THE RESPONDENT-

1. The petitioner had to complete the work of 3 wells by 16^th January 2019, 16^th March 2019, 16^th June 2019 respectively. Even after this, the respondent agreed to extend time till 31^st March 2020 to complete the project.
2. That the petitioner had raised the issue of force majeure for the first time on March 2020 and that too just for reaping benefits and hiding their own faults.
3. That the work which was assigned to the petitioner stood excepted from the lockdown as imposed by the Government.

JUDGEMENT-

The fact that the countrywide lockdown which was imposed from 24^th March 2020 is unprecedented and a pandemic of nature which affects the complete world and which none of us had experienced in our life and hopefully would never either. 

As the respondent mentioned that the kind of work which the petitioner was assigned was exempted from the lockdown or so. Now, even if petroleum stood as an essential commodity, the petitioner was not producing it in a strict sense, rather they were drilling wells, which if not completely but substantially was hindered and impeded due to lockdown.

The court being aware of all facts and circumstances, in view of pandemic and situation of lockdown, grants an ad interim injunction to restrain invocation or encashment of the said eight Guarantees, till the expiry of one week from 3^rd May 2020, till which date the lockdown shortly stands extended.

As to this injunction’s merits would be heard on next hearing consequent to pleadings and all formal requirements completion.

ANALYSIS-

1. Force Majeure– Those circumstances which are unforeseeable and which prevents a party from fulfilling their part of contract. It is a French term which literally means ‘greater force’ and is related to the Act of God. For such acts no party can be held liable. 

2. Ad interim injunction-the kind of legal remedy which aims to maintain status quo in the existing situation and allows the party to seek prompt relief and prevent any infringement. 

3. Encashing Guarantee- Bank guarantee is something which implies that a bank will cover an eventuality. In case that eventuality occurs, may be in default of payment, the party holding the guarantee can ask the guarantor to pay that amount which when done by bank is said to be encashed.

CONCLUSION-

This case is crucial from the view that it highlights the COVID situation and its vulnerabilities. This case itself is a precedent for it allows lockdown as an excuse for the delay of performance of contract on part of petitioner.

The Court in this case gave an interim order of injunction restraining the respondent to maintain status quo and to keep guarantees in the same situation till next hearing. 

This case highlights that certain situations are not under our control and the recourse for that should also be changed in such cases. This points out the development which our justice system or the country is doing as of now. We are not accustomed to static point of views in unexpectedly changed circumstances and are ready to welcome the status required as of now.

REFERENCES-

1. indiankanoon.org
2. images.assettype.com

This Article is written by Devanshi Goyal, student of Faculty of law, JNVU, Jodhpur; Intern at Legal Vidhiya.

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