Both the cases come under the ambit of Section 56 which includes the doctrine
of frustration theory in implied terms and through just and reasonable solutions
by the judges. Also no intentions of the parties in supervening events and when
the foundation of the contract was per se frustrated.
Satyabrata Ghose v Mugneeram Bangur & Co
: The defendant company owned a tract of land in Calcutta. It
started a scheme for the development of tract of land into a housing colony.
The plaintiff was granted a plot on the payment of earnest money as the company
entered into different agreements with difference purchasers. The company
undertook a job of constructing the roads and drains and making the land
suitable for building and residential purposes. As soon as they were completed,
the buyers were to be called upon to complete the process of transfer by payment
of the balance of the purchase money.
Bejoy krishna roy was entered into the agreement with the company to get a plot
on the payment of earnest money, of Rs. 101 on 5th August, 1941. On 30th
November, 1941, the plaintiff was made a nominee of the granted land. But:
before the construction was to be done by the Company and final process of
payment, a considerable portion of the land was requisitioned by the State
during the Second World War for military purposes.
As per the law:
- Did the contract become frustrated on the ground of a supervening event?
- Did the plaintiff have a right to claim for their earnest money back on
filing the suits?
- Did the legal theories of England applicable in India?
This case comes under the ambit of Section 56 of Indian
Contract Act, 1872.
Application of law: Impossible to perform the contract and Doctrine of
frustration. S.56: An agreement to an impossible act is per se void. Two
impossibility: contract to do any act which afterward becomes impossible or
unlawful due to some event and the contract through non-performance of an act
which is known (reasonable diligence) to be impossible or unlawful.
Interpretation of the facts and Law:
As the taking place of the decided process
was the foundation of the contract and the real object of the both parties recognised as a view of the construction process. Thus, here the doctrine of
frustration has two roles, first where the performance is physically cut off and
second, where the object was failed.
The Supreme Court held that: The word
‘impossible’ has not been used in the terms of the physical or literal
impossibility. It may be impractical and useless from the viewpoint of the
object and purpose which the parties had. And if an unknown change of
circumstances totally upsets the very foundation upon which the parties rested
their will, then it can be well said that the promisor finds it impossible to do
the promised act.
Justice B.K. Mukherjea J of the Supreme Court held that the contract was not
The learned judge said:
Undoubtedly the commencement of the work was delayed but was the delay going to
be so great and of such a character that it would totally upset the basis of the
bargain and the commercial object which the parties had in view? The requisition
orders, it must be remembered, were, by their very nature, of a temporary
As this was government,
administration or legislative intervention not affected the fundamental basis
upon which the agreement rested so the effect of an administrative intervention
has to be seen in the terms of the contract, and if it shows that the parties
have taken an absolute obligation regardless of administrative changes, they
cannot claim to be discharged.
This theory was not applicable in India. As there is the statutory provision in
the Indian Contract, the difference in the way of formulating legal theories
is actually not concerned and further the English law was not imported to the ICA.
In deciding the case in India, the only doctrine that has to be followed is of
supervening impossibility or void in the eyes of the law as laid down in Section
56 of the Contract Act. The Supreme Court established the word impossible
in the practical and not in literal sense. Also, the section 56
lays down a rule of positive law and does not leave the matter to be determined
according to the intention of the parties.
Smt. Sushila devi v Hari Singh
The appellants were legal representatives of the owner of the village.
The previous owner called the tender of a property on a lease for a period of
three years in January, 1947. It was accepted by the respondents and they
deposited the earnest money and security for the payment of the rent. The terms
of the tender was that the lease should be registered by the lessee and he would
be personally liable for taking the possessions of the land. As the India and
Pakistan partition was done the village became a part of Pakistan. Now it was
not possible for the lessee to go to a village in Pakistan due to the serious
- Was it self induced frustration?
- Did the plaintiff have a locus standi on filing the suit?
As per the law: It was an agreement on the lease and as per the law this case
also comes under the scope of Section 56 of Indian Contract Act, 1872 as in the
Application of law: Similar to previous case.
Interpretation of the facts and law:
The Supreme Court held that: there is no concluded contract since no deed was written or registered
. There was frustration with the contract as the parties
could not go to Pakistan to give or take possession of a property.
As the frustration arises without any blame or fault of the either party, so it
is not self induced frustration.
Conclusion of both the cases:
Reasoning behind both the cases are similar that
is due to the prevailing circumstances (government intervention and serious
communal troubles during the partition) the contract had become impossible to
In the case of Satyabrata Ghose v Mugneeram Bangur & Co
, the English
Law was not applicable to Indian Law but the Indian Judges analysed the facts as
presented by the parties and law according to the situations around them which
is compatible in India. In the case of Smt. Sushila devi v Hari Singh as there
was no fault of either party in the course of partition. So, the contract was
frustrated but not the self-induced frustrated.
- AIR 1954 SCR 310
- It is any act which is to be performed after the contract becomes void
in the eyes of law or impossible to perform and further parties cannot claim
damages for non-performance of the event.
- In itself
- in THE INDIAN CONTRACT ACT, 1872 - BARE ACT (2020).
- Avatar Singh, in CONTRACT AND SPECIFIC RELIEF (2020).
- It is human made-laws which specifies actions of an event at a certain
‘time and place’. Also, establishment of the specific right for an
individual or group.
- Id. at 405
- AIR 1971 SC 1956
Award Winning Article Is Written By: Mr.Pragyanshu Gautam - A First Year BA.LLB Student At Hidayatullah National Law University
Authentication No: FB105946122921-28-0221