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TMI Blog2020 (5) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... justify its nonperformance due to the epidemic/pandemic - It is the settled position in law that a Force Majeure clause is to be interpreted narrowly and not broadly. Parties ought to be compelled to adhere to contractual terms and conditions and excusing non-performance would be only in exceptional situations. In response to the Force Majeure argument of the Contractor, the Company s stand is that activity related to petroleum projects were exempted as per the letter of DGH Hydrocarbon dated 26th March, 2020. The Contractor s stand is that only petroleum production is exempted and not other construction/ project completion activity. However, there is nothing on record to show as to what steps the Contractor took toward mitigation, which was necessary as per the Force Majeure clause. The past non-performance of the Contractor cannot be condoned due to the COVID-19 lockdown in March 2020 in India. The Contractor was in breach since September 2019. Opportunities were given to the Contractor to cure the same repeatedly. Despite the same, the Contractor could not complete the Project. The outbreak of a pandemic cannot be used as an excuse for nonperformance of a contract for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 20th April, 2020 (as modified on 24th April 2020), stands vacated in the above terms. The present petition and all pending applications are disposed of. X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was a joint platform. Projected competition dates were thereafter proposed by the Contractor for completion of the Project. The Company, repeatedly insisted that work on all three fields ought to stand concluded by 31st January 2020. Finally, however, as per the agreement between parties, the deadline for conclusion of the entire work was agreed as 31st March 2020. 6. However, on 18th March 2020, the Contractor invoked the Force Majeure clause and sought further time to complete the Project. This was however not acceptable to the Company, which on 31st March 2020 and again on 7th April 2020 invoked Clause 11 proposing termination of the contract and threatened consequential action including invocation of the Bank Guarantees. At that stage, the present petition was filed on 13th April 2020. The reliefs sought in the petition are: "a) restrain the Respondent No.1 from invoking and/ or encashing and /or receiving any payment from Respondent No. 2 under said Bank Guarantee as described in para 3.4 above in favour of Respondent No. 1 including all coercive actions and consequential follow up action taken pursuant to the same till the present Petition and / or disputes arising un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, of the petitioner, that it was actually working on the project till the imposition of lockdown on 22nd March, 2020, or at least shortly prior thereto, and in view of the sudden and emergent imposition of lockdown, the interests of justice would justify an ad interim injunction, restraining invocation or encashment of the aforesaid eight bank guarantees, till the expiry of exactly one week from 3rd May, 2020, till which date the lockdown stands presently extended. As to whether this interim injunction merits continuance, thereafter, or not, would be examined on the next date of hearing, consequent to pleadings being completed and all requisite material, including all relevant Governmental instructions, being placed on record. The injunction presently being granted, it is reiterated, is purely ad interim in nature, and is being granted only in view of the completely unpredictable nature of the lockdown, and its sudden imposition on 22nd March, 2020, of which the petitioner could not legitimately be treated as having been aware in advance. I am also persuaded, in this regard, by the fact that the government itself has, after imposition of the lockdown, being issuing instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd only 3-5% of the Project work remains outstanding. Thus, there are no justified reasons for invoking the Bank Guarantees. He further relies upon the letter dated 6th May, 2020 to argue that a final proposal was given by the Company clearly seeking timelines for execution. This itself showed that the contract was still alive between the parties and the Contractor wanted to resolve the matter. It is further submitted that Force Majeure squarely applies in view of the outbreak of COVID-19 globally. It is well within the knowledge of the Company that the kind of equipment that is to be installed requires personnel to travel from various foreign countries which is not possible due to lockdown. Thus, the Contractor is entitled to an injunction. 10. Reference is made to the contract dated 25th April, 2018 to submit that as per clause 2.1 the contract was to remain in effect for two years from the effective date. The terminologies i.e. the effective date and commencement date would show that it is when the last, out of the three fields, is commenced that the two years' period is kicked off. The commencement date is 17th January, 2018 concluding only on 16th January, 2020. As per clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of the Director General (Hydro Carbons) gave any exemption to the Project of the Contractor. According to him the said letter merely permitted the continuance of oil and gas production, which are public utilities, to continue their work. However, the MBA Fields which are yet to be commissioned would not get any exemption under the said letter. 15. It is also submitted that as per the `callout order' issued under clause 2.2 substantial portion of the work is completed and only a small portion of the work is left to be completed. The various progress reports according to him showed that the work was continuously being conducted. As per clause 6 of the contract, milestones were specified in Exhibit-J, which clearly provided that maximum 10% of the call out value can only be charged towards liquidated damages. 16. It is further submitted that there are three types of Bank Guarantees i.e. (i) Bank Guarantee to secure advance payment (ii) Bank Guarantee for performance and for (iii) Bank Guarantees to secure liquidated damages. Until and unless the amount of liquidated damages is adjudicated, the question of encashing the guarantee to the liquidated damages does not arise. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2020 which showed that the threat of invoking the Bank Guarantees became a reality when the Bank Guarantees were invoked and the contract was terminated. The Contractor has been permitted to work beyond 31st March, 2020. Since outbreak took place during which period event occurred, which prevented the progress of the Project, the interest of the Contractor ought to be protected. Reliance is placed on the following judgments: i. Leighton India Contractors P Ltd v. DLF Ltd. & Ors, [OMP (I) COMM 109/2020, decided on 13th May, 2020]; ii. Energy Watchdog v. Central Electricity Regulatory Commission (2017) 14 SCC 80; iii. National Agricultural Co-operative Marketing Federation Of India v. Alimenta2020 SCCOnline SC 381 ; and iv. Nalini Singh Associates v. Prime Time - IP Media Services Ltd. 2008(106) DRJ 734. 21. Finally, it is submitted that the contract was valid, a substantial portion of the work was completed and the Contractor is to be paid a large sum for works which have already been conducted. Under these circumstances, the Section 9 petition deserves to be allowed and the interim order already granted ought to be confirmed. Submissions of Mr. Harish Salve, Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91% of construction for 'Aishwarya', 'Bhagyam' and 'Mangala' fields respectively has been achieved and a substantial amount of work to the tune of 26% is still outstanding. The Contractor was put to the notice that the Project should achieve completion by 31st January, 2020. According to Mr. Salve, giving of the notice to submit a `cure plan' in effect meant, that the Contractor was in serious breach of the contract. As per the reply dated 5th December, 2019 the Contractor on its own agreed to complete the work on the various fields by the following deadlines: a) Aishwarya - 31st January 2020 b) Bhagyam - 29th February 2020 c) Mangala - 31st March 2020 25. Ld. Sr. Counsel emphasized that this suggested cure plan was not acceptable to the Company which again called upon the Contractor vide repeated letters dated 9th December, 2019 and 16th January, 2020 that the 'cure plan' is not agreeable. Letter dated 16th January, 2020 was issued invoking Clause 11.3 of the contract and clearly informing the Contractor that if the work on the entire Project does not achieve completion by 31st January, 2020, the Company would be compelled to use alternative sources to complete the Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Chartered v. Heavy Engineering Corporation Ltd & Ors., 2019 SCC Online SC 1638, UP State Sugar Corporation v. Sumac International Ltd., (1997)1 SCC 568, Svenska Handelsbanken v. Indian Charge Chrome, (1994) 1 SCC 502, Larsen and Toubro v. Experion Developers Pvt. Ltd., [OMP (I)(COMM) 234/2019, decided on 3rd December, 2019], Vinitec Electronics (P) Ltd. v. HCL Infosystems Ltd., (2008) 1 SCC 544, Gujarat Maritime Board v. Larsen and Toubro Infrastructure Development Projects Ltd., (2016) 10 SCC 46, U.P Coop. Federation Ltd. v. Singh Consultants & Engineers (P) Ltd (1998) 1 SCC 174 Dwarikesh Sugar Industries Ltd v. Prem Heavy Engineering Works (P) Ltd., (1997) 6 SCC 450, Ansal Engineering Projects Ltd. v. Tehri Hydro Development Corporation Ltd., (1996)5 SCC 450, BSES Ltd. v. Fenner India Ltd., (2006) 2 SCC 728 and Consortium of Deepak Cable India Ltd. and Abir Infrastructure Private Limited v. Teestavalley Power Transmission Limited, (FAO (OS) 397/2014, decided on 15th September, 2014). He submits that egregious fraud is required to be established not in the encashment of the Bank Guarantee but in the underlying contract itself. The contract is not challenged in this case and neit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S) No. 186/2009, decided on 12th May, 2009] where it was held that the question of Force Majeure would have to be decided in terms of the arbitration clause. It was held that the contractual conditions are not part of the letter of credit. 32. Mr. Salve further submitted that once the breach took place, the fact that further time is given to the Contractor to complete the Project, does not mean that the right of liquidated damages is waived or that the Bank Guarantees cannot be invoked for non-performance. Reliance is placed on Ansal Engineering Projects Limited (supra) to argue that the adjudication of liquidated damages is not required to be made to justify the invocation of the Bank Guarantees. He submits that variation orders can be placed even after the breach had taken place as the company is entitled to seek performance of the contract. Whenever there is a breach, there are two options given to the other party i.e. • repudiation leading to arbitration and claim for damages or • extension for completing the contract along with a claim for damages. In the latter circumstance, the claim for damages is one which would be proved before the Arbitral Tribunal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The last `call out order' was admittedly issued on 17th January, 2018 and thus, it is not in dispute between the parties that the `commencement date' is 17th January, 2018. 37. One of the warranties given by the Contractor was that it would achieve the milestones as per the milestone dates contained in the contract. It also warranted that it had the capability, expertise manpower and the required technical and financial resources to undertake the Project. Under clause 6 the Contractor guaranteed that it would achieve each milestone by the milestone date. Failure to achieve the milestones entailed payment of liquidated damages in terms of clause 6.2. 38. As per clause 6, if there is delay in achieving any milestone as stipulated in Exhibit-J of the contract, for each day of delay, the Contractor had to pay liquidated damages merely on a demand by the Company. If there was any failure to pay the liquidated damages the Company could withdraw the said amounts from the various bonds/Bank Guarantees. Under clause 9, the Contractor was obliged to furnish `advance payment bonds', `performance bonds', `financial bonds' and `Parent Company guarantee' for the various agreed amounts as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expired, the Contractor, vide its e-mail dated 10th September 2019, gave a monthly progress report with revised milestones. As per the said report, insofar as 'Mangala' was concerned, the completion was to be achieved with the first injection on 15th September, 2019. It was claimed that the contract closeout date would be 30th November, 2018 (sic 30th November 2019). Similarly, vide emails dated 10th September, 2019, the Contractor gave monthly progress reports for 'Bhagyam' and 'Aishwarya' with revised milestones. For 'Bhagyam', the completion was to be achieved with the first injection by the forecast date of 20th September, 2019 and the forecast contract close out date was 25th November, 2019. For 'Aishwarya', the completion was to be achieved with the first injection for AEOR by the forecast date of 25th October, 2019 and the forecast contract close out date was 30th November, 2019. 43. A perusal of the various monthly progress reports would show that the completion date which was initially in January 2019, March 2019 and June 2019 was thereafter moved to November, 2019. When the Company vide its letter dated 25th November, 2019 realised that the deadlines of November, 2019 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re submitted by the Contractor giving completion dates of 31st March, 2020 and 30th April, 2020 by which time, however, disputes were already brewing between the parties. In none of these Reports, reliance was placed on the Variation order no.3. The letter dated 18th March, 2020 by which the Contractor invoked the Force Majeure clause was clearly as a last resort, in response to which the Company notified the Contractor that it was in complete breach as it had failed to complete the Project by 31st March, 2020. The Company then reserved its right to complete the Project on its own using alternative sources. The subsequent letters dated 1st April, 2020 and 7th April, 2020 exchanged between the parties clearly show that while the Contractor relies upon Force Majeure as the justification for the non-completion of the Project, the Company's stand was that the timelines were not adhered to and that the Contractor was in breach even prior to the occurrence of the Force Majeure event. 47. In view of the letter dated 31st March, 2020 issued by the Company threatening to terminate and to use alternative sources, the Contractor filed the present Section 9 petition. A perusal of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Project Monitoring Committee (PMC) meetings the Project was not managed and has gone completely beyond schedule. iv) The negotiations which took place were without prejudice to the rights of the Company that the linking of the delay and non-performance to non-payment of invoice was completely untenable. v) The timelines proposed by the Contractor was not at all agreeable to the Company. vi) Finally, vide the e-mail dated 20th February, 2020 the Contractor was called upon to complete all its obligations by 31st March, 2020, that the Contractor did not admit or agree to this deadline proposed by the Company, that the Contractor was in default of its obligations and has wrongly attributed the same to a Force Majeure event. In view of the same, the contract stood terminated and the Contractor was called upon to take all steps required to give effect to the termination as per the contractual terms. 49. The Bank Guarantees were also invoked on 13th April, 2020. In reply to the termination notice, on 15th April, 2020, the Contractor claimed as under: a) That the termination was illegal and was malicious, that there were various delays by the Company including in closure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the months of September-October, 2019 and no work whatsoever since November, 2019. The graphs further show that even as per the 6th January, 2020 report, there was little or no work carried out in all three fields during the months of November- December, 2019. Projections were given to complete the same in January- February, 2020 substantially and thereafter to be concluded by March, 2020 which was not adhered to. A perusal of the Monthly reports submitted on 11th March, 2020 just before the invocation of the Force Majeure clause, shows a bleaker picture i.e., that even the miniscule work carried out in November- December, 2019 was absent in January-February, 2020. Vide the said report the Contractor projected that it would complete a substantial portion of the work in March, 2020 and in April, 2020. This report was submitted with an e-mail of 11th March, 2020 and just seven days later, the Contractor invoked the Force Majeure clause. The progress graphs for the other two fields are similar in nature. Thus, the work at the fields had stopped long before the outbreak of COVID-19 or the lockdown. 54. As the saying goes `a picture speaks a thousand words'. As per the monthly progres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would operate as part of a contract as a contingency under section 32 of the Indian Contract Act 1872 (`ICA'). b) Independent of the contract sometimes, the doctrine of frustration could be invoked by a party as per Section 56, ICA. c) The impossibility of performance under Section 56, ICA would include impracticability or uselessness keeping in mind the object of the contract. d) If an untoward event or change of circumstance totally upsets the very foundation upon which the parties entered their agreement it can be said that the promisor finds it impossible to do the act which he had promised to do. e) Express terms of a contract cannot be ignored on a vague plea of equity. f) Risks associated with a contract would have to be borne by the parties. g) Performance is not discharged simply if it becomes onerous between the parties. h) Alteration of circumstances does not lead to frustration of a contract. i) Courts cannot generally absolve performance of a contract either because it has become onerous or due to an unforeseen turn of events. Doctrine of frustration has to be applied narrowly. j) A mere rise in cost or expense does not lead to frustration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combination of events or circumstances that is beyond the reasonable control of a Party has a material and adverse effect on the performance by that Party of its obligations under or pursuant to this Agreement and that demonstrably could not have been foreseen by the Partiers provided, however that such materia and adverse effect could not have been prevented overcome or remedied by the affected Party through the exercise of diligence and reasonable care but provided further that the exercise of diligence and reasonable care will not include the obtaining or maintaining of Insurance beyond the requirements of this Agreement. Force Majeure includes the following events and circumstances but only to the extent that each satisfies the above requirements. (i) any act of war (whether declared or undeclared) invasion armed conflict or act of foreign enemy, blockade, embargo, revolution, riot, insurrection, civil commotion act of terrorism or sabotage; (ii) strikes go- slows or works to rule that are widespread or nationwide of a political nature unless affecting only or caused by the affected Party or, in the case of Contractor, any of its Subcontractors; and (iii) significant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach occurred prior to the said outbreak? 62. The question as to whether COVID-19 would justify non-performance or breach of a contract has to be examined on the facts and circumstances of each case. Every breach or non-performance cannot be justified or excused merely on the invocation of COVID-19 as a Force Majeure condition. The Court would have to assess the conduct of the parties prior to the outbreak, the deadlines that were imposed in the contract, the steps that were to be taken, the various compliances that were required to be made and only then assess as to whether, genuinely, a party was prevented or is able to justify its nonperformance due to the epidemic/pandemic. 63. It is the settled position in law that a Force Majeure clause is to be interpreted narrowly and not broadly. Parties ought to be compelled to adhere to contractual terms and conditions and excusing non-performance would be only in exceptional situations. As observed in Energy Watchdog (supra) it is not in the domain of Courts to absolve parties from performing their part of the contract. It is also not the duty of Courts to provide a shelter for justifying nonperformance. There has to be a 'real re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s hardly any work done in the months of November 2019, December 2019, January 2020, February 2020 and March 2020. There was clear non-performance and lack of alacrity in completing the work on the various fields forming part of the Project. The reasons for the same are not to be gone into in this petition. 69. The past non-performance of the Contractor cannot be condoned due to the COVID-19 lockdown in March 2020 in India. The Contractor was in breach since September 2019. Opportunities were given to the Contractor to cure the same repeatedly. Despite the same, the Contractor could not complete the Project. The outbreak of a pandemic cannot be used as an excuse for nonperformance of a contract for which the deadlines were much before the outbreak itself. 70. As held in Global Steel (supra) the question as to whether the Force Majeure clause itself would apply or justify non-performance in these facts would have to be finally determined finally in the arbitral proceedings. The observations of the Ld. Division Bench are as under: "9. It is not in dispute that the LC is an independent contractual document. The disputes between the contracting parties are to be settled by arbitrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation order as per the contract is set out in clause 10 of the contract. The clause relating to variation i.e., clause 10 contemplates the issuance of a variation order request for the services to be rendered by the Contractor. Such a variation order request would require the Contractor to submit a proposal. The acceptance of a variation order request would not entitle adjustment to the milestone dates, unless the same is an approved variation in terms of the contract. Under clause 10 the Contractor would not be entitled to any adjustment in the milestone dates if steps are not taken to minimise the delay. The procedure for a variation to come into effect is specified in clause 10.2 which requires the following chronology to be adhered to: a) Company makes a request for variation under clause 10.1 (a) or 10.1 (b). Contractor shall submit a variation order request along with its proposal for adjustment to the milestone dates and compensation payable i.e., the Exhibit J and C within 14 days. After within 14 days such a proposal is not received the same shall constitute a waiver of any entitlement to a change in the milestone dates or the compensation payable. b) Upon receivin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension of such a contract till 30th June, 2020 an agreement in writing would not have been executed. In fact, the e-mails filed along with the counter signed variation order no.3, after judgment was reserved, seem to suggest that the said Variation order was merely a discussion point and nothing more. As per clause 2.1(b) the Company had the `option' to extend the Term of the contract on the same terms and conditions. However, though such an option appears to have been contemplated between the parties, there was no final decision to extend, as per the correspondence. Such an extension contemplated revised Milestone Dates etc., which were never agreed upon. Thus, this Court holds that there is no novation in the present case. 74. There are three sets of Bank Guarantees - Advance guarantees, Financial guarantees and Performance Guarantees. The details of the same are as under: Field Name BG Type Amount in USD Issuing Bank BG Ref No. Expiry Date Aishwarya ABG 2,728,728.59 ICICI 0021BG00012818 30 June'20 Bhagyam ABG 7,754,095.74 ICICI 0021BG00012918 30 June'20 Mangala ABG 3,695,607.42 ICICI 0021BG00013018 30 June'20 Aishwarya FBG 4,086,363.00 ICIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Bond shall be without limitation to any other right or remedy of the Company in relation to the relevant Contractor breach. Further, in addition to the other circumstances specified in this Agreement, Company has the right to drawdown and, at Company's discretion, apply the proceeds for recovering any Liquidated Damages or any payments due to the Company under this Agreement, all or part of the value of the Financial Bond. Such recourse against the Financial Bond shall be without limitation to any other right or remedy of the Company in relation to the relevant Contractor breach." Thus, as far as the Advance Bank Guarantees are concerned, a perusal of Clause 9.2(f) shows that upon termination, the Company would be entitled to draw upon the advance payment bond in the amount of the unrecovered portion of the advance payment. The `unrecovered portion' is not yet determined. The invocation letters simply state that the amounts of the advance Bank Guarantees are unrecovered. A perusal of the petition shows that as per paragraph 3.23, it is the case of the contractor that approximately 6.6 million dollars has already been invoiced and is yet to be paid by the company. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee shall not be determined, discharged or affected by the liquidation, winding up, dissolution or insolvency of the contractor and shall remain valid, binding and operative against the bank. The bank also agrees that the company at its option shall be entitled to enforce this bank guarantee against the bank as principal debtor, in the first instance, without proceeding against the contractor and notwithstanding any security of other guarantee that company may have in relation to the contractor's liability." 78. The law relating to Bank Guarantees is extremely clear and has been repeatedly settled by the Supreme Court including in Standard Chartered v. Heavy Engineering Corporation Ltd &Ors. (supra). Relevant extracts from the judgment are: "… 23. The settled position in law that emerges from the precedents of this Court is that the bank guarantee is an independent contract between bank and the beneficiary and the bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. The dispute between the beneficiary and the party at whose instance the bank has given the guarantee is immaterial and is of no consequence.There are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ad-interim in nature, was prior to pleadings between the parties and does not deserve to be continued in favour of the Contractor, for the reasons stated above. 82. Thus, insofar as the invocation of three sets of Bank Guarantees are concerned, no case is made out for passing of any interim order staying the invocation or encashment thereof. 83. However, reconciliation of accounts would be required to determine as to what would be the component of the Advance Bank Guarantees recoverable by the Company. There are no pleadings as to what exactly is the amount recoverable. Accordingly, insofar as the Advance Bank Guarantees are concerned, this Court is of the opinion that the amount recoverable by the Company ought to be ascertained. Accordingly, it is directed that the amount of only the Advance Bank Guarantees which have been invoked, upon being encashed, shall be placed in a separate `Joint Account' which shall be jointly held by the Contractor and the Company. The parties are directed to reconcile the accounts, including payment of any invoices already raised and upon reconciliation as to the unrecovered portion of the advance amount which the Company is entitled to retain, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be further extended to the extent required for Contractor to complete any Services being carried out during the expiry of the Term. 2.2 Call out Order (a) Contractor shall commence the Services on the Commencement Date as notified by the Company to the Contractor pursuant to the respective Call Out Order ("Commencement Date") issued for Mangala, Bhagyam and Aishwariya. (b) Until Company issues a Call Out Order, Contractor shall not become entitled to any payment under this Agreement. (c) At any time prior to the issuance of a Call Out Order, the Company may terminate this Agreement for convenience and, in the event of such termination will have no liability whatsoever to Contractor whether direct or indirect, in contract, tort or otherwise in relation to or arising out of or in connection with any transactions contemplated under or in connection with this Agreement of otherwise. In this regard, Contractor acknowledges that Company's issuance of a Call Out Order will be subject to the satisfaction of certain conditions, including an extension of the term of the PSC, JOA and the receipt of certain third party approvals. 2.3 Novation of Certain Agreements (a) Withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J - Milestones, Milestone Dates and Liquidated Damages or agreed by the Parties in writing (as applicable). (b) The Parties acknowledge that the liquidated damages set forth in Exhibit J- Milestones, Milestone Dates and Liquidated Damages reflect a genuine preestimate of the losses that Company may suffer or incur as a result of Contractor's failure to achieve a Milestone by the relevant Milestone Date or otherwise for the matters addressed therein and are not in the nature of a penalty. (c) If Contractor fails to pay any liquidated damages when due and owing under Section 6.2(a), Company will be entitled to withdraw the amount owing (together with any applicable GST on such amount) from the Performance Bond, Financial Bond or deduct such amounts from any and all amounts otherwise owing to Contractor under this Agreement." CLAUSE 9 Relevant extracts of Clause 9 are hereinbelow: "9. ADVANCE PAYMENT BOND, PERFORMANCE BOND, FINANCIAL BOND AND PARENT COMPANY GUARANTEE 9.1 Obligation to Provide Contractor shall provide to Company: (a) within 14 Days following the Call Out Order, an advance payment bond in an amount equal to [o]1 and in the form set out in Exhibit N- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin 14 Days following receipt of Notice from Company, and upon delivery of the replacement Advance Payment Bond or Performance Bond or Financial Bind Company shall return the previous Advance Payment Bond Performance Bond or Financial Bond to Contactor. (d) Within 20 Business Days following any increase in the Required Performance Bond Amount or Financial Bond, Contractor shall cause the amount of the Performance Bond or Financial Bond to be increased to the Required Performance Bond Amount or Financial Bond. (e) Within 20 Business Days following any draw on the Performance Bond or the Financial Bond by Company in accordance with this Agreement, Contractor shall cause the amount of the Performance Bond or Financial Bond to be restored to the then-effective Required Performance Bond Amount or the required Financial Bond amount. (f) If Company terminates this Agreement pursuant to Section 11.4 prior to Company's recovery of Advance Payment, Company will be entitled to draw upon the Advance Payment Bond in the amount of the unrecovered portion of the Advance Payment and to retain the amounts so drawn. (g) In addition to the other circumstances specified in this Agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same prescribed information of its own initiative in the circumstances and for the reasons set out in Section 10.1(d) in either case, a "Variation Order Request". A Variation Order Request shall be headed or clearly include the words "Variation Order Request". (c) Except as provided in Section 5.8(g), the Contractor shall not make any addition, deletion, alteration and/or modification to the Services unless instructed to do so by a Variation and/or in accordance with an Approved Variation. (d) Subject to the terms of this Article 10, Contractor shall be entitled to a Variation in the following circumstances: (i) a delay caused to the Contractor's performance of the Services by Force Majeure (in which case, any Variation will, if granted, only be in respect of any adjustment to the Milestones and/or the Milestone Dates and/or the Required Commercial Operation Dates and will not result in any change to the compensation payable pursuant to Section 8 and Exhibit C - Compensation) except as provided under section 15.4 (c); (ii) a delay caused to Contractor's performance of the Services as a result of an Optional Suspension by the Company; or (iii) a delay caused to Contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following circumstances: (i) delay caused to Contractor's performance by a restriction on access to the Block that may be imposed by a Government Authority provided Contractor is not under default for any of the obligation in the Contract. The time to be considered in Variation shall be equivalent to the period during which such restriction is in force. (ii) delay caused to Contractor's performance due to local strike/unrest which results in cease of operation for a consecutive 7 days provided Contractor is not under default for any of the obligation under the Contract. The time to be considered in Variation shall be equivalent to the period during which such local strike/unrest is in force The Contractor shall immediately inform the Company, in writing, about commencement and discontinuance of any of the above condition and shall furnish the Company such information in respect of such condition as the Company may reasonably require. 10.2 Variation Procedure (a) Contractor shall either: (A) within fourteen (14) Days of receipt of the Company's request for a Variation pursuant to Section 10.1(a) or a Variation Order Request pursuant to Section 10.1(b); or (B) if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with Section 20.2, shall become an "Approved Variation" and from the date of agreement under Section 10.2(c) or from the date of resolution under Section 20.2 (as the case may be) this Agreement shall be deemed to be amended in accordance with, and shall be construed in light of, such Approved Variation. (f) A Variation and/or a Variation Order Request is effective only if made in accordance with this Article10. Contractor shall not be or become entitled to additional payment for any addition, deletion, alteration or modification to the Services or to any adjustment of the Milestone Dates and/or the compensation payable pursuant to Article 8 and Exhibit C - Compensation unless reflected in an Approved Variation in accordance with this Article 10 or as determined in accordance with Section 20.2." CLAUSE 11 Relevant extracts from clause 11 are herein below: "11. EARLY TERMINATION AND EVENTS OF DEFAULT 11.1 Early Termination Option (a) Company will have the right to terminate this Agreement or any portion of the Services at any time upon delivery of Notice to Contractor. (b) If Company terminates this Agreement or any portion of the Services pursuant to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contractor is in breach of any of its representations, warranties or obligations under Section 21.2; (b) if: (i) Contractor (A) is in breach or default of any of its obligations under this Agreement (B) is in breach or default of any of its representations and warranties in Section 19.1 (in each case, other than Section 21.2); (C) violates any Applicable Laws; or (E) violates any of its obligations under this Agreement relating to HSSEQ matters; and (ii) Contractor fails to commence to cure such breach and submit cure plan acceptable to Company (which is not withheld unreasonably) within 10 Days following receipt of Notice from Company identifying such breach and demanding cure of the same; (c) if Contractor fails to pay any amount owing to Company under this Agreement 30 days following the due date therefor; (d) If any person comprising Contractor or any person providing a Parent Company Comfort Letter becomes bankrupt or insolvent, goes into liquidation, has a receiving or administration order made against it, compounds with its creditors, or carries on business under a receiver, trustee or manager for the benefit of its creditors, or if any act is done or event oc ..... 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