Mohamed Hussain vs. The Government Of Tamilnadu

Facts

The petitioner, Mohamed Hussain, was the successful bidder for Municipal Shop No.1 at Vadasery Christoper Bus Stand, Nagercoil, agreeing to pay a monthly license fee of Rs.40,000/- plus 18% GST for a three-year period. He paid a substantial advance and security deposit. Due to the COVID-19 pandemic, a total lockdown was imposed from March 24, 2020, to September 6, 2020, preventing the petitioner from accessing and operating the shop. Subsequently, restrictions were partially lifted. The petitioner sought a waiver of license fees for the total lockdown period and a revision for the subsequent period, citing financial hardship. The respondents contended that the contractual obligation to pay was absolute. The Government had previously issued an order waiving lease/rental amounts for April and May 2020.

Held

The Court held that the COVID-19 lockdown restrictions constituted a force majeure event, making the performance of the contract impossible. The respondents themselves had recognized this by issuing G.O(D)No.298, waiving fees for April and May 2020. The Court found no merit in the respondents' contention that the petitioner had not challenged this G.O, as it conferred a benefit. The Court reasoned that the rationale for waiving fees for April and May 2020 applied equally to the entire total lockdown period. Therefore, the petitioner was granted a complete waiver of license fees for the period of total lockdown from March 24, 2020, to September 6, 2020. For the period subsequent to September 6, 2020, when there was partial relaxation, the Court directed the petitioner to submit a fresh representation for revision of license fees, which the respondents were to consider expeditiously. The Court acknowledged that it might not be open to the Court to enter into finer details of revision for the subsequent period.

Key Issues

1. Whether the petitioner is entitled to a complete waiver of license fees for the period of total lockdown from March 24, 2020, to September 6, 2020, under the doctrine of frustration or force majeure, considering the COVID-19 pandemic restrictions prevented business operations? (Section 56, Indian Contract Act, 1872). 2. Whether the petitioner is entitled to a revision or partial waiver of license fees for the period subsequent to September 6, 2020, when lockdown restrictions were partially lifted but business operations were still significantly impacted? Petitioner's Arguments: The petitioner argued that the lockdown rendered the performance of the contract impossible, akin to frustration or force majeure, and therefore, he should be relieved of his payment obligations for the period he was prevented from operating the shop. He also contended that the existing Government Order waiving fees for April and May 2020 was insufficient given the prolonged impact of the pandemic. Respondents' Arguments: The respondents argued that the contractual obligation to pay the monthly license fee was absolute and not excused by supervening events. They relied on the tender notification stipulating that the licensee would not be excused from payment under any circumstance. They also pointed out that the petitioner had not challenged the Government Order waiving fees for April and May 2020.