Covid-19 Litigation

Covid-19 Litigation in India

The era of Covid-19 has had brought various new challenges and fictions in the world. The fast pace of the world saw a different pace altogether.

The businesses were in a deep struggle zone to survive and sustain in the new ecosystem. There was a failure in every front and this led to many breaches and contraventions in the business commitments.

The compelling situations during and post Covid-19 will erupt an era of massive Covid-19 litigation in India likewise it will be explode in other parts of the world.

A serious Pandemic Legal Intelligence have to be deployed by business houses to contain and avert the upcoming new set of litigations.

The major dispute which may be cropping up will be in these broader areas as below:

Force Majeure

This clause has been resorted by various businesses with a conscious call to avert, defer or deny the obligation which were bound to have been carried out under Contractual obligations.

The correctness of invocation of force majeure in line with various parameters will be the biggest litigation factor in India during Covid-19.

In a majority of cases, we came across that international commitments have been also countered with force majeure clause in a very pathetic manner. 

The Contractual obligations were neither understood in its real perspective nor was dealt in the manner it ought to have been timed before invoking force majeure and unfortunately this will result into amassing of litigations for business houses within short period of time.

It is the high time when companies should carry out an honest assessment under an expert guidance and simultaneously implement the smart corrective measures so that they can assess their liabilities much before and look for all the avenues to reconcile and amicably settle rather than landing up with unforeseen liabilities and costly litigations in future.

Employment Laws

With the onset of Covid-19, the business entities were in race to cut down their costings and to minimise their liabilities in every possible manner.

This led to laying off of employees without even bothering for reasonableness and empathy. This haphazard treatment will result into the second biggest factor in adding Covid-19 litigation in India.

The termination letters which were issued lacked the basic sine qua none for termination which is expected at any given point of time.

The business entities can still plug their loopholes well in time so that no lacunas remain at their end. 

Outstanding Debts

The Covid-19 also resulted into a suspension of the substantive provisions of IBC and this also encouraged many business entities to suddenly realise that wrath of insolvency is no more for 6 months starting from 25th March,2020 and with a cap of further extention to a maximum period of 1 year, as deemed fit by the central Government to do so.

A suo motu discipline which was imbibed due to the fear of IBC is also lost and defaults are on the rise. The lethal weapon  of IBC with MSME has vanished suddenly and they are also left with the remedy and mercy of other laws.

Further, the limit of default is also enhanced from Rs 1 lakh to Rs 1 Crore for opting IBC while there is a categorical exclusion of time period starting from 25th march,2020.

The Companies should try to address their default and try to make it good as far as possible or can renegotiate under MOU or MOM so that a legal peace can be bought in time.

The above mentioned will be the major factors in contributing Covid-19 litigation in India amongst many other like regulatory & tax compliances which will also be in an abundance due to Covid-19 era.

We at AMLEGALS encourage for implementation of Pandemic Legal Intelligence well in time so that legal peace remains a priority like always as strategy in law matters the most and we help companies to achieve them well in time.

To connect and speak with us, feel free to connect on info@amlegals.com or alternatively call on +91-8448548549 | 8347853565.