Precision Electronics Ltd. (Party signed a contract with Suraj Telecommunications Ltd. (Party 2) for supply of military grade sensors with following main clauses

1. Contract would be effective for 12 months starting from 1^st January,2020
2. Party 1 will manufacture 1000 sensors with prescribed specification every month and will keep it ready for delivery on 1^st of the following month. Thereafter, Party 2, technical advisor, will carry out inspection of 10 sensors as sample and then approve for delivery. Within 2 days of inspection approval, Party 2 will arrange to take delivery of consignment.
3. Both the parties agreed on the clause that in case Party 1 fails to supply sensors to Party 2, then it will be at the sole discretion of Party 2 whether to waive non- performance and continue the contract or terminate the contract with INR 25.00 lakhs, as liquidated damages.
4. Party 1 successfully, delivered the agreed quantity on 1^st Feb and 1^st March, 2020.
5. However, on 1^st April, 2020, Party 1 conveyed its inability to supply any sensors sighting following reasons

1. Indian Government declared National Lockdown effective from mid-night 24-25 March and hence factory was closed. After, Indian Govt lifted lockdown in phase manner, factory operations could not be started as its area was under RED Zone till 30^th June, 2020.
2. National lockdown in view of Pandemic was a Force Majeure event and therefore, Party 2 cannot terminate the contract for non-performance and can neither claim liquidated damages.
3. Factory workers have gone to native place.

6. Party 2 argued and claimed that as COVID -19 Pandemic was fast spreading in other parts of world since November, 2019 and it was a matter of time that then, it could spread in India also, why Party 1, could not envisage such business risk and work in factory in 3 shifts to keep quantity of sensors ready for next 2 months at least.
7. Party 2 also argued that Military Grade Sensors are essential commodities and factory with permission from relevant authorities could have still functioned?

You are required to critically evaluate legal issues in the dispute which have arisen between 2 parties and explore remedies for respective parties, under the Indian Contract Act and Alternate Dispute Settlement Mechanism.

(Make your own justifiable assumptions)