M/S Haliburton Offshore Services Inc. vs. Vedanta Limited & Anr.

Held

The Court granted an ad-interim injunction restraining the Respondent from invoking or encashing eight bank guarantees. The Court found, prima facie, that the sudden and emergent imposition of the COVID-19 lockdown on March 22, 2020, had a significant impact on the Petitioner's ability to perform its contractual obligations. The Petitioner had been working on the project until shortly before the lockdown and could not have reasonably foreseen its consequences. Therefore, in the interests of justice, an ad-interim injunction was justified to protect the Petitioner's interests until the next date of hearing, after pleadings were completed and relevant materials, including governmental instructions, were placed on record. The Court explicitly stated that the injunction was purely ad interim and its continuance would be examined later. The Court did not decide the ultimate merits of the dispute regarding the contract termination or the validity of the bank guarantee invocation.

Facts

The Petitioner, M/s Halliburton Offshore Services Inc. (Contractor), entered into a contract dated April 25, 2018, with Respondent No. 1, Vedanta Limited (Company), for an oil and gas exploration project valued at USD 197 Million. The project involved drilling, completion, well services, and surface facility development. The contract had stipulated timelines, but delays occurred. On March 18, 2020, the Contractor invoked the Force Majeure clause. The Company, on March 31 and April 7, 2020, threatened to terminate the contract and invoke bank guarantees. The Petitioner filed a petition on April 13, 2020, seeking to restrain the invocation of bank guarantees and other reliefs. On the same day, the Company terminated the contract. An ad-interim order was passed on April 20, 2020, restraining the invocation of eight bank guarantees.

Key Issues

1. Whether the Petitioner is entitled to an ad-interim injunction restraining the Respondent from invoking bank guarantees, considering the imposition of the COVID-19 lockdown and its impact on the Petitioner's ability to perform its contractual obligations. Petitioner's arguments: The Petitioner contended that the sudden and emergent imposition of the lockdown on March 22, 2020, prevented them from performing their contractual obligations. They argued that they were working on the project until shortly before the lockdown and could not have anticipated its impact. The ad-interim injunction was necessary to protect their interests until the dispute could be resolved by an arbitral tribunal. Respondent's arguments: The Respondent argued that the Petitioner had invoked Force Majeure and that the Company was entitled to terminate the contract and invoke bank guarantees as per the contract's terms. The Respondent likely contended that the Petitioner's inability to perform was due to reasons other than the lockdown or that the lockdown did not entirely prevent performance.