Abstract –

2020, an year that struck the whole human life across the globe into cages with a fear of life and death. It took just a virus to shatter the economy of the world into pieces and to shut the business for an unknown and unpredictable amount of time.

Covid- 19, a never heard and never thought virus which turned into a pandemic leaving everyone in the unsatisfied doubts of ‘how, when, where’.

The very basic of these doubts comprise of:-

• How can this be cured?
• What are the rights available to us?
• Is all this happening legally valid?
• What is & will be scenario of the economy?

To figure out the solutions of the questions like this we have to go to the root of the issue. We are in a new state with an old and solid constitution which has shown us the way to combat such situations.

Through this paper we have tried to focus and touch the very basic questions related to this pandemic with a legal eye.

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INTRODUCTION

In this research paper we briefly take a look into the legal perspective of COVID-19 outbreak in India and how the state, the legislature and the economy are fighting the battle amid this outbreak. There has been some medical negligence, some questions being asked about the validity of the extended period of lockdown and how the economy has taken a sharp hit from the corona virus outbreak and the lockdown. So, basically, we divided our paper into 3 main parts:

1. Medical aspects of the pandemic
2. Lockdown and its operation
3. Impact on the economy

1. MEDICAL ASPECT

Basically, in an effort to address the spread of corona virus, India has invoked two major laws i.e.

1. Disaster Management Act, 2005 &
2. Epidemics Diseases Act, 1897.

            Most Indian states have invoked the EDA, 1897 to use methods such as compulsory isolation and screening even though the act is quite short and outdated as it does not reflect the realities of disease in the modern world and does not provide enough frameworks for effective response to outbreaks. The EDA, 1897 was first implemented as a response to the Bombay scourge that claimed the lives of thousands in the country. It is a 2-page, 4-section document that doesn’t define the term ‘deadly epidemic’. The basic purpose of carrying out this action by the government at that time was to ensure compliance with international sanitary conventions, protect trade, and remove any fears abroad about the possible spread of the disease.^[1]

In 2009, the Maharashtra government implemented the act in Pune to combat the swine flu outbreak. In 2015, it was invoked to deal with dengue and malaria in Chandigarh. But many health and legal professionals call it outdated and unable to serve the purpose. For example, under section 2-A, the law deals with inspecting ships or vessels but fails to address the increase in land movement and international travel, especially by airplane, migration, increased urbanization, high density of people in the cities, etc. Also, the law comes from a time when there was no concept of fundamental rights as at that time we did not even have a parliament. Also, it does not talk of any specific scientific steps the government must take to contain or prevent the spread of the disease.

On the other hand, the DMA, 2005 gives government greater freedom to make decisions and spend money from the disaster relief fund by notifying the pandemic as a disaster. The law places authoritative officials at national, state and district level. It then describes the role of the central and state governments under various departments. The Supreme Court issued a ruling on March 31, that section 54 of the DMA, 2005 could be used to punish those who spread false information. Section 54 says that sharing any updates or forwarding messages whether on WhatsApp or on any other social Media platforms, which are “false”, is a criminal offence. In order to speed up the effective disaster management, sections 51-60 of the act outline the offences and penalties, both against officials and the public.

MEDICAL NEGLIGENCE DURING COVID-19

The law doesn’t aim to punish all medical practices of a doctor that have caused injury to a patient but only deals with negligent acts. Medical negligence arises as a result of an action or inaction by a medical practitioner, which no reasonably competent and careful practitioner would have committed.

• Under Consumer Protection Act: in 1995, the supreme court decision in Indian Medical Association v. VP Shantha^[2] brought the medical profession within the ambit of the ‘service’ as defined under section 2(1)(o) of the Consumer Protection Act, 1986. The consumer has the option of going to consumer organizations\forums to seek immediate redressal of his grievances or file a criminal complaint. But CPA will not help if the service rendered by the doctor is free of charge.
• Liability under tort law: this applies when medical professionals provide free services. The onus is on the patient to show that the doctor was negligent and that the injury was the result of the doctor’s negligence.
• Liability under criminal law: a doctor can be given punishment under section 304A of the Indian Penal Code (IPC) for causing death by rash or negligent acts. In the decision of the Supreme Court in Suresh Gupta v. Govt. Of NCT of Delhi^[3], the standard of negligence required to be proved against the doctor should be so high that it can be described as “gross negligence” or “recklessness”, not merely lack of necessary care. For a civil negligence to become criminal, it should be of such a nature that it could be termed as gross negligence.

            Sections 87, 88, 89 and 92 of IPC provides immunity from criminal prosecutions to doctors who act in good faith and for the patient’s benefit. But the defense must prove that the doctor has acted in good faith and for the benefit of the patient. While it is important to punish guilty doctors, it is also important to protect the doctors who act in good faith from harassment, especially in the current scenario of COVID-19. Once, the Supreme Court noted in a case that the doctor’s job is to protect life and the courts should assist in this cause as far as possible.^[4]

SOME MAJOR CASE LAWS AMID COVID-19

The Supreme Court in Jerryl Banait V. Union of India^[5] has passed a number of interim directions for the government to guarantee the protection of doctors and health care workers fighting the COVID-19 pandemic on the front lines. The government told the court that it is taking all possible and necessary measures to ensure that the doctors and the health care professionals are protected. The court also noted that the report of attacks on the medical professionals and COVID-19 patients escaping medical facilities is “reinforcing a feeling of insecurity in the doctors and the medical staff. It is the duty of the administration and the police to ensure that adequate facility is provide to these professionals. The court also directed the ministry of health and family welfare to ensure the availability of personal protective equipment’s (PPE), including medical gloves, masks, face shields, respirators, shoe covers, etc.

Also, in an important order^[6], the Supreme Court has ordered that the COVID-19 tests must be performed free of charge in both public and private laboratories and directs that they must be carried out in NABL-  accredited labs or any agencies approved by WHO or ICMR. However, it was later made clear that free testing would only be available to the economically vulnerable sections of the population and those covered under the Ayushman Bharat scheme. Therefore, it modified its previous order of April 8. The private laboratories can charge Rs. 4,500 for testing those who do not fall under these categories.

Most recently the Supreme Court refused to pass any kind of directions to change the guidelines on COVID-19 treatment as the Court is of the view that it is not an expert in this issue^[7]. So, it is up to the doctors to decide the kind of treatment that can be prescribed for COVID-19. But it has given directions to the health ministry to obtain “informed consent from all COVID-19 patients for treatment with hydroxychloroquine and azithromycin so that they about the side effects too.

LEGALITY OF LOCKDOWN

LOCKDOWN (MEANING & DEFINITION)

A Lockdown may be considered as an emergency protocol that prevents people or information from leaving the site and can only be issued by a person authorized with a legal power or authority. It can be used to prevent, protect & avoid any situation(s) of unusual scenarios, danger or threat to ensure the safety and security of people. Lockdowns are planned and executed to reduce risk.

There are various historical events which throw light upon of the lockdowns that had been initiated for the public good & welfare including:

• A three-day lockdown of an American civilian airspace initiated in wake of the September 11 attacks (2001).
• In December 2005, the NSW police forces began blocking the Sutherland shire and other marine areas to contain a race riot.
• During the 2015 Brussels lockdown, the city was shut down for some days while security forces searched for suspects involved in the November 2015 Paris attacks.^[8]
• With the most recent worldwide lockdown being in place during the global corona virus pandemic, numerous governments are responding to the disease with the closure of international borders and public spaces (2019-20).

DIFFERENCE B/W LOCKDOWN & CURFEW

A curfew is a short term measure to control or to totally restrict any kind of movement in order to maintain and check law & order, safety & security from problems such as riots, terrorist activities etc.

Essential services are also disrupted in a curfew.

The term lockdown, on the other hand is a long term measure that requires the complete closure of all private and public utilities to prevent mass transit. However essential services continue in a lockdown and in addition, a lockdown is not just limited to law & order. A lockdown is therefore less restrictive than a curfew.

CONSTITUTIONAL VALIDITY OF LOCKDOWN

A lockdown is constitutionally valid under the said headings and prevailing cases: –

• As per the article 21 of Constitution of India “any person shouldn’t be deprived of life and liberty except according to the procedure established by law”.^[9] Health is the supreme for life & liberty therefore its disruption gives the law the power to establish mechanisms to control the disturbing phase.
• The supreme court in, State of Punjab v. M.S. Chawla, has interpreted article 21 in a broader manner stating that “right to health is integral to the right of life. The government has a constitutional obligation to provide health facilities.” Thus the State is entitled to promote any measures to protect & preserve the lives of its people.^[10]
• Two fundamental rights which are primarily affected by the lockdown are the right to move freely throughout the territory of India and the right to practice any profession freely as guaranteed under the article 19(1) (d) & (g) respectively, but these rights also clearly state that “reasonable restrictions can be imposed on these rights in the interests of general public provided it is done by a duly enacted law.”
• The guidelines issued under the DISASTER MANAGEMENT ACT, 2005 will qualify as a reasonable restriction under article 19(5) & (6).
• Section 2 of the epidemic diseases act, 1897 it provides state with the powers to take all necessary measures to contain an epidemic, while section 2A empowers the Centre to take measures for the inspection and detention of ships.^[11]
• The prime minister, being the ex officio chairperson of the national disaster -management authority (NDMA) under section 3(2) (a) of the 2005 act, has the power under section 6(2) (1) to take measures for the prevention and mitigation of disaster^[12].
• The guidelines for the lockdown & social distancing have specifically been mentioned under section 10(2) (1) of the act.

SUGGESTIONS

Therefore, as far as the legal tenability of the lockdown is concerned, the Centre’s actions are sound in law.^[13]But moreover, specific and concrete amendments must be devised so as to ensure complete establishment of law & order. Above that laws must also be devised to ensure the continuation of the work of the employees, students etc. to ensure no loss both at economic and professional levels.

Adding more to it, there should be specific polices allowing the fluent continuation of the supply chain ensuring perfect trade practices via technology & network.

At the end the health is the most supreme, thus any practices that ensure life and liberty must be enacted without the scope of any interrogations.

IMPACT ON THE ECONOMY

Today India is facing an unprecedented economic crisis as a result of the COVID-19 outbreak. The reserves in India are dry and the exports refuse to pick up the required pace due to closed borders. The country has been largely closed since March 25 and all businesses are facing uncertainty. Due to the downside of the procurement, working under most contracts is problematic.

Due to the outbreak of COVID-19, The Department of Labor and Employment issued a notice on March 20, 2020, urging all employers to refuse to suspend or reduce their salaries (including regular and contract workers). The notice further states that whether or not the workplace is in place, employees will be considered to be working. The governments of some countries have also issued similar recommendations. Given this, it will difficult for employers to eliminate and reduce employees or reduce their wages. And in the case of an unfair labor claim, the courts will decide whether it will be enjoyed by the workers under the Economic Disputes Act, 1947, the Workmen’s Compensation Act, 1923.  It is also worth noting that if an employee is suspected of being in possession of COVID-19, the employer may refuse to hire or shorten the date of joining that employee, in particular, to protect other employees from contacting the disease.

Depending on the mergers and acquisitions, the Material Adverse Change clause is expected to return to play. In the case of a company or business acquisition, it is a clause that aims to give the customer the right to travel and be available, in the event of damage to the company. MAC articles are a prominent feature of public and private adoption documents. In the context of a mortgage transaction, this is a clause which seeks to allow the borrower to call default if there is a negative change within the borrower’s position or circumstances (for example, an outsized negative variation shown in successive financial statements of the borrower). MAC clauses are a regular part of institutional agreements.

Although often debated, MAC clauses are seldom used to stop a borrower. The type and content of MAC clauses varies depending on the type of the transaction and, consequently, the practice in any relevant jurisdiction.

M&A submissions and financing agreements are also likely to be affected because the question now arises as to whether COVID-19 can cause material adverse change (MAC). A health emergency that resulted in various restrictions on people and the delivery of products & services that directly impacts the performance of business agreements. In this case, enforcing the majeure clause with the MAC clause may help the parties to the agreement.

MATERIAL ADVERSE CHANGE CLAUSE 

Transactions such as mergers and acquisitions remain unclear until they are closed. Generally, in an M&A transaction, the time between the signing of the agreement and the closing of the transaction is very important. This is where the MAC clause applies. The MAC clause provides the parties with a contractual right to terminate the contract in any event affect the performance of the item. However, agreeing upon the importance of the event for both parties is not an easy task as on one hand, the seller in an acquisition transaction would like to reduce and bring down the size of the material, and on the other hand, the client would like to extend it as much as possible to ease the transaction. It is for this reason that often the terms of the transaction go back to explaining what are the objects used in the transaction.

In addition, the courts in India do not provide any formal guidelines for determining the size of the events and have them set out to say that any event has limited scope or has made it impossible for any reasonable party to enter into such contracts can said to be heading towards a material adverse change. In addition, Indian laws also stipulate that anything which in the eyes of contracted person does not occur or prevents them from fulfilling their obligation for reasons not regulated by the parties to the contract can be regarded as a material change. Regulation 23(1) (c) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, determines that entities may withdraw from pre-agreement obligations if it is not possible to satisfy the terms for reasons beyond the control of the parties.

Also, Section 56 of the Indian Contract Act, 1872, which incorporates the concept of contract breach states that any act by reason of a specific event if it occurs after the contract has been canceled and such event is one of the things the promisor couldn’t prevent, such a contract would be null and void. In the future, while dealing with cases involving declining events, Indian courts may take references to US court decisions based on the importance of the severity and long-term impact of an event before giving relief by submitting a MAC clause.

COVID-19: THE CASE OF THE MAC CLAUSE

With the outbreak of the COVID-19 disease pandemic, the parties to the agreement may switch to re-forming or avoiding the performance of its contractual obligations by submitting the MAC clause. The entity that attacked the MAC clause would have the final burden of proving that the pandemic had a positive impact on the purchase. Cite as an example, interruptions within the supply chain due to COVID-19 may also be sought to avoid the operation of guaranteed business agreements or may also delay performance.

At present, the importance of the stability and impact of COVID-19 over time remains to be determined. Therefore, it is too early to conclude whether MAC claims vis-à-vis COVID-19 are to be entertained by the courts or not.

However, if any party in future files a claim against MAC due to the impact of COVID-19, it is important for the party to note it and double-check it before invoking the clause that, whether or not other means of contracting work are available. If this is the case, then the parties should deliberately discuss such alternatives. The Party should try to find a balance between what was agreed under the contract and whether it is right to terminate the contract under the under the cover of MAC clause.

Further, it is necessary for the party invoking the MAC clause to follow the due process of law and give proper notice to the opposite party before taking further action. If the opposite party argues, the court will decide the significance of the impact of COVID-19 on transactions based on the facts of the matter.

SUGGESTIONS AS TO FUTURE CONTRACTS

Those taking the initiative to enter into any business agreements including M&A agreements should consider including warranties regarding the adverse effect of COVID-19. While performing a proper exercise, either party should take steps to prepare the opposite party to reduce the side effects of COVID-19. In addition, certain disclosures must be obtained regarding COVID-19 from another party and COVID-19 may also be included in the description of adverse material changes within the transactional agreements in accordance with the risks that may arise during the due diligence process.

COVID-19: DECLARED A FORCE MAJEURE

The corollary of MAC clauses can be compared to the force majeure phrases. However, vis major clauses provide specific terms\events where contractual performance is prohibited and MAC clauses are vague and do not specify provocative events. In addition, MAC clauses will allocate risk between parties that will arise whenever an unforeseen accident\event occurs.

The spread of COVID-19 adversely affects the ability of organizations to perform their contractual obligations and, therefore, leads to seeking assistance under the force majeure clause. However, the question here arises whether the pandemic will create compulsory force. In India, the Ministry of Finance on February 19, 2020, has issued a memorandum which clearly states that COVID-19 can be treated as a natural disaster and hence a force majeure. The same can be called for following the correct procedure.
Force majeure means events which are beyond one’s control and hence extra ordinary. It is widely believed that the unavoidable danger involves an act of god, natural disaster, war, labor unrest, epidemics and strikes, etc. It is an exception which can be claimed by the performing party to a contract.

In the case of Energy Watchdog v. Central Electricity Regulatory Commission & Ors^[14], the Supreme Court of India reiterated the law of force majeure and set forth the following guidelines while invoking the inevitable accident clause:

1. The very basis of such clauses is that events are beyond the reasonable control of the parties and in those cases, the parties will not be liable for non-performance of the obligations under the contract.
2. While analyzing the unavoidable risk clause, it is also necessary to consider if best efforts are being made to reduce the pressure of the force majeure event.
3. Another condition is that the identical is unforeseeable by the parties.
4. The event has rendered it impossible or illegal.

Therefore, covid-19 may also qualify as a force majeure event as it completes all the above conditions.

In addition, the absence of a force majeure clause or MAC clause in any agreement, doesn’t limit the party’s right to seek remedy. In such a case, either party may turn to section 56 of the Indian Contract Act, 1872, which is the law of frustration of contract under the Indian regime.

CONCLUSION

Since the COVID-19 pandemic has already been called force majeure; the parties are likely to resort to the same just in the event of any impossibility to work under the contract. In absence of force majeure clause during a contract, the parties may turn to the MAC clause or to the frustration of contract under section 56 of the Indian Contract Act. However, even after the announcement of the outbreak by the globe Health Organization and being declared as a force majeure by the Indian government, it is too early to determine the long-term impact of COVID-19. Therefore, whether the impact of COVID-19 will trigger MAC clause is difficult to determine at this point.

The invoking of the force majeure or MAC clause depends upon the facts and circumstances of each case. The party invoking the force majeure or MAC clause should carefully review the wordings of the clause beforehand. And it is also worth considering those things under the contracts that can be used to avoid any conflict between the parties. In addition, it is necessary for the parties to evaluate the viability of their business and take steps to reduce the impact of COVID-19 on the work and ability to perform obligations under the contract.

[1]https://www.barandbench.com/columns/can-the-indian-legal-framework-deal-with-the-covid-19-pandemic-a-review-of-the-epidemics-diseases-act.

[2]1995 SCC (6) 651.

[3] Suresh Gupta v. Government of NCT, Delhi, (2004) 6 S.C.C.422 https://int.search.tb.ask.com/search/GGmain.jhtml?searchfor=Suresh+Gupta+v.+Government+of+NCT%2C+Delhi%2C+(2004)+6+S.C.C.+422&enableSearch=true&rdrct=no&st=sb&tpr=omni&p2=%5ECPC%5Echr999%5ES17547%5E&ptb=5B5B8D5C-C052-4D36-861D-23295A34E0C5&n=78397239&si=.

[4] Paramananda Katara v. union of India.

[5]https://www.livemint.com/news/india/supreme-court-order-centre-to-provide-ppe-and-protection-to-doctors-and-medical-staff-11586359744118.html citation not provided till date.

[6]  In SHASHANK SINGH DEO V. UNION OF INDIA AND ORS.

Writ petition of 2020 (D.NO.10816/2020https://medicaldialogues.in/news/health/medico-legal/supreme-court-relief-to-private-labs-allows-them-to-charge-for-covid-19-tests-but-with-riders-64837.

[7] https://www.barandbench.com/news/litigation/plea-sc-against-ministry-of-health-for-treating-covid-patients-with-controversial-toxic-drugs-hcq-azithromycin.

[8] https://en.wikipedia.org/wiki/lockdown.

[9] https://www.lawnn.com/article-21-indian-constitition-right-life-indian-constitution/.

[10] https://www.livelaw.in/coloumns/the-law-and-lockdown/.

[11] https://ijme.in/articles/the-fundamental-right-to-healthcare/.

[12]https://dokumen.tips/documents/district-disaster-management-plan-and-responsibility-of-stakeholders-developement.html.

[13] https://www.livelaw.in/coloumns/the-law-and-lockdown/.

[14](2017) 14 SCC 80.

Authored By:

VATSALYA VAJPAYEE & SRISHTI YADAV

Students of Law, Amity Law School, Noida, Amity University Uttar Pradesh

Disclaimer: This article has been published in Legal Desire International Journal on Law, ISSN 2347-3525 , Issue 22, Vol 7