Tapping into the "extremely urgent" hearings during the COVID-19 lockdown

Tapping into the "extremely urgent" hearings during the COVID-19 lockdown

Pursuant to the Central government’s announcement for a nation-wide lockdown on account of the growing COVID-19 pandemic, several courts have issued notifications for suspension of work therein, barring hearings in matters of extreme urgency through video conferencing.

Though the Supreme Court has suo motu issued guidelines for functioning of courts through video conferencing during the COVID-19 pandemic, the question remains – what matters may be catergorised as “extremely urgent”?

This gains further relevance in light of recent orders of courts in imposing costs on parties seeking to list "non-urgent" matters such as regular contempt proceedings.

How urgent is ‘extremely urgent’ and what is a hardship of an ‘extreme nature’?

Several High Courts have extended interim orders, previously passed by courts. The Delhi High Court had taken suo mots cognizance in this regard, ordering that, “interim orders issued were subsisting as on 16.03.2020 and expired or will expire thereafter, the same shall stand automatically extended till 15.05.2020 or until further orders”, with the liberty to approach the Court in the event any hardship of an extreme nature caused to a party due to such extension.

Soon thereafter, the Bombay High Court extended all interim orders to remain in force till April 30, subject to liberty to parties to move for vacation of interim orders only in extremely urgent cases. Such extension is applicable to all courts/tribunals/authorities subordinate, over which the High Court has superintendence.

However, the question still remains as to what other matters may be characterised as ‘matters of extreme urgency’ or involving hardship of an ‘extreme nature’ to the applicant.

A snapshot of the matters taken up by the Supreme Court/High Courts of Delhi and Bombay make it apparent that matters concerning the ongoing pandemic have been treated as ‘matters of extreme urgency’:

  1. Matters concerning personal protective equipment for doctors and medical personnel in the wake of COVID19, deployment of security for professionals, and free testing by government or approved private laboratories, for COVID-19.

  2. Matters concerning welfare of migrant workers in India and provisions for mid-day meals on closure of schools.

  3. Petitions filed in relation to issues concerning Indian nationals stranded in Kazakhstan, repatriation of students stranded in the UK, and extending assistance to all Indian nationals abroad due to the COVID-19 situation.

  4. Matters requiring steps to be taken for prevention of contagious spread of COVID-19 in prisons across India.

  5. Petitions filed in the interests of protection of victims of the recent riots in Delhi – for providing them with basic amenities, accommodation, and maintenance of sanitation, cleanliness and hygiene therein.

Other cases which have been considered include issues pertaining to organ donation by a minor in advanced stages of organ failure (Anshita Bansal v. Secretary, Ministry of Health and Family Welfare and Ors, High Court of Delhi) and bail applications.

Though the Rajasthan High Court was of the view that bail applications would not amount to ‘matters of extreme urgency’, such order was subsequently stayed by the Supreme Court.

The Bombay High Court was of the view that unless an extremely urgent situation for entertaining a bail application is pointed out, the mere fact that the accused is undergoing either pre-trial or post-trial detention would not be entertained by the Court (Sopan Ramesh Lanjekar v. The State of Maharashtra).

The Delhi High Court has extended the liberty to undertrial prisoners to apply for interim bail, and explicitly provided that such petitions “shall also be taken into consideration by the appropriate courts and the said petitions shall be decided in accordance with law” (Shobha Gupta and Ors. v. Union of India).

Notably, most of the requests for bail before the Delhi High Court have been triggered under the ongoing pandemic situation – seeking social distancing or for better facilities in prisons.

Can there be ‘“commercial interests” of extreme urgency’?

High Court of Delhi

Although the Delhi High Court has primarily restricted itself to matters related the ongoing pandemic and lockdown, it has also adjudicated upon certain matters of ‘commercial interest’:

  1. In Anant Raj Limited v. Yes Bank Limited, the Delhi High Court adjudicated on a dispute on the classification of the petitioner’s term loan as a non-performing asset. The dispute arose pursuant to the moratorium permitted by Reserve Bank of India, vide its notification dated March 27, on loan servicing, working capital facilities etc. for three months.

  2. In another order, the Delhi High Court directed SIDBI to not raise any demand on Indiabulls Commercial Credit Ltd till the time RBI clarified if non-banking financial companies would be covered under the ambit of its notification issued on March 27. This order was passed pursuant to a writ filed by Indiabulls in connection with a loan extended to it by SIDBI.

  3. In India Bulls Housing Finance Ltd. v. Securities and Exchange Board of India and Anr, the petitioner sought a restraint on ICRA Limited from proceeding to downgrade its credit rating, in view of the relaxations in credit rating, as provided by the Securities and Exchange Board of India in its circular dated March 30. The said circular has been issued in view of the developments arising due to COVID-19 pandemic.

  4. In Brij Mohan Aggarwal v. Rajnish Gupta and Anr, the Delhi High Court heard an interim application filed by the judgment-debtor who had been directed to vacate the suit property on a date, which fell within the period of the ongoing lockdown. On due consideration of the prevailing conditions of lockdown wherein it would not be feasible for the judgment-debtor/applicants to vacate the suit property and shift to another accommodation, the Court extended the date for vacation of the suit property.

High Court of Bombay

Amidst the matters concerning the COVID-19 pandemic, the Bombay High Court ordered for release of an arrested offshore supply vessel in a commercial admiralty suit, pursuant to the amicable settlement between the parties.

In another matter, the Bombay High Court issued interim orders restraining IDBI Bank from selling the shares of Future Retail Ltd., which had been pledged as security for the debentures issued by the plaintiff. The Court considered the market situation on account of COVID-19, and issued a temporary injunction on the sale of the pledged shares (Rural Fairprice Wholesale Limited & Anr. v. IDBI Trusteeship Services Limited & Ors).

The Bombay High Court faced a similar issue in a subsequent case, wherein it granted a stay on the sale of pledged shares subject to the compliance of a payment schedule ordered by the court in connection with the underlying term loan (Ideal Toll & Infrastructure Pvt. Ltd., Mumbai and Anr.v. ICICI Home Finance Co. Ltd., Mumbai & Anr; Mrs. Anuya Jayant Mhaiskar v. ICICI Home Finance Co. Ltd., Mumbai & Anr).

The Court recently heard a writ petition concerning the computation of the 90-day period by ICICI Bank, for declaration of non-performing assets, in light of the moratorium granted by the RBI (Transcon Skycity Pvt Ltd & Ors v. ICICI Bank & Ors).

While hearing an application for interim relief under the Arbitration and Conciliation Act 1996, the Bombay High Court refused to apply the force majeure exemption to steel importers from performing their financial obligations, considering they are ‘essential service providers’ during the lockdown.

Supreme Court of India

Though the Bombay High Court disallowed contempt proceedings (Chandrakant Mulchand Shah v. Jiraj Developer LLP & Ors), the Supreme Court has heard applications for extension of time for making payment towards penalties levied by SEBI and to the Court, pursuant to contempt proceedings initiated against the applicant (SEBI v. Pravin Kumar Tayal & Ors).

Among other matters which have been recently heard, the Supreme Court had also listed writ petitions challenging the functioning of the Serious Fraud Investigation Office (Vivek Harivyasi v. SFIO), special leave petitions in respect of grants-in-aid availed by a multiplex (M/s. HDIL Entertainment Private Limited (Carnival Films Entertainment Private Ltd.) v. The State of UP & Anr.), and stay orders on warrants of attachment issued pursuant to non-release of undisputed dues of employee’s salary (M/s. Uptron Powertronics Ltd & Ors. v. Om Prakash Punyani & Ors.).

Concluding remarks

Though the cases currently taken up by the High Courts and the Supreme Court are broadly connected with the ongoing pandemic, it may be presumed that there may be other instances that entail serious adverse effects on commercial interests of an entity (such as the cases discussed above) as a result of the lockdown.

Such serious commercial adverse effects could also arise in cases where the survival of an entity is itself in jeopardy such that the entity may not be able survive through the lockdown. There could also be cases where the factors causing such jeopardy arise due to the lockdown, resulting in the need to address such issues during the lockdown itself.

Further, there may also be cases where performance of the obligations of a party or compliance with applicable laws or orders of judicial/administrative bodies, are rendered unfeasible or impractical, due to the ongoing pandemic and lockdown.

Prior to passing any order, courts also would give due regard to the measures introduced for smooth and effective functioning of businesses, such as:

  1. Extension of interim orders by several High Courts.

  2. Extension of limitation period by the Supreme Court of India (w.e.f. 15 March 2020 till further orders), which has also been followed other courts and tribunals including the National Company Law Tribunal and National Company Law Appellate Tribunal. Therefore, the time-lines prescribed under the Insolvency and Bankruptcy Code 2016 (IBC) also stand extended. Further, the threshold of default under the IBC has been increased from one lakh rupees to one crore rupees, due to emerging financial distress faced by most companies on account of COVID-19.

  3. Relaxations provided in the regulatory framework, such as Statement on Developmental and Regulatory Policies, and COVID -19 Regulatory Package issued by RBI on 27 March 2020. These measures were announced by the RBI to mitigate the burden of debt servicing caused by disruptions on account of COVID-19 and to ensure the continuity of viable businesses.

  4. Circulars issued by SEBI, for relaxation from compliance with the existing requirements.

  5. Relief measures announced by the Finance Minister on 24 March 2020 – regarding compliances with taxation, IBC, banking etc.

The authors are Delhi-based lawyers at Nishith Desai Associates.

Related Stories

No stories found.
Bar and Bench - Indian Legal news