Munmun Kaur
Published On: January 07, 2022 at 12:05 IST
Recently, the Supreme Court held that only those fire accidents can be termed to be an act of God if they are inevitable and caused due to external forces and not due to human intervention.
The Apex Court was adjudicating a dispute between excise department and McDowell company over the loss of excise revenue because of the fire in warehouse that led to destruction of liquor.
The Bench of Justices A M Khanwilkar, Dinesh Maheshwari and Krishna Murari stated, “When nothing of any external natural force had been in operation in violent or sudden manner, the event of the fire in question could be referable to anything but to an act of God in legal parlance”.
The Supreme Court through this Judgement set aside Allahabad High Court’s Order in the matter. The High Court accepted the contention raised by the Company that if the fire had taken place despite the company having taken all care, it was nothing but an act of God.
The Apex Court while deciding on the matter referred to the observations made in earlier judgments viz Divisional Controller, KSRTC v. Mahadeva Shetty and Ors.: (2003) 7 SCC 197, Vohra Sadikbhai Rajakbhai & Ors. v. State of Gujarat and Ors: (2016) 12 SCC 1 and Patel Roadways Limited v. Birla Yamaha Limited: (2000) 4 SCC 91 and observed that fire in the present case was not caused by anything related with the forces of nature like flood, lighting or earthquake. Therefore, the company cannot be given any benefits under the act of God clause.
The Bench was also of the view that the fire which started around 12:55pm on April 10, 2003, could be brought under control only by 5am on April 11 and when all the factors are cumulatively taken into account, it is difficult to consider the fire beyond the control of human agency.
Force Majeure clause or Act of God is an exception that releases the parties of their contractual obligations provided that the events take place beyond their control and leave them unable to perform their part of the contract.