Engineering professionals' body CEAI on Wednesday sought government intervention to declare COVID-19 as force majeure event for all infrastructure consultancy contracts as consulting firms are not able to meet contractual performance in ongoing projects.

'Force Majeure' clause is a contractual provision that addresses circumstances in which contractual performance becomes impossible or impractical due to events that could not be foreseen, and are not within party's control.

"The Consulting Engineers Association of India (CEAI), in a letter to the Union Minister of Finance Ms Nirmala Sithraman has urged the government to declare COVID -19 as a Force Majeure event for all infrastructure consultancy contracts under implementation as both Parties, neither the Client nor the consulting companies are able to meet contractual performance in ongoing projects," CEAI said in a statement.

The total lockdown, though was inevitable, has major implications on companies, particularly the consulting companies, which have a small capital base, said KK Kapila, former president CEAI and Chairman of Infrastructure Committee.

"In present lockdown conditions, it will be difficult for these consulting companies to meet contractual performance for Consultancy Contracts under implementation or under service including preparation of Feasibility Report and Detailed Project Report (DPR), Detailed Engineering, Project Management by an Authority Engineer," Kapila said.

The running contracts expiring during the lockdown period should be given an automatic extension of time and there should be a waiver for submission or extension of bank guarantees as provided for in the contracts, during this lock down period, he said.

CEAI also demanded that the government release 90 percent payments of the already submitted invoice amount by the consulting firms, as per valid payment clause in the contract, prior to scrutiny of invoice by the department staff.

The balance payment may be released after the due process. This will enable consultants to pay to their staff and to the support organizations that work for them as well as to large number of informal persons whose services are availed from time to time, it said.

Consulting Engineers Association of India (CEAI) also urged the government to provide clear directives to the insurance companies to cover "home office inputs" under the definition of workplace to ensure availability of professional indemnity insurance coverage to the staff of consulting organisation's who operate from home.

First Published:May 6, 2020 2:26 PM IST