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Satyabrata Ghose v Mugneeram Bangur And Co and Smt. Sushila devi v Hari Singh Case Reasoning

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
Facts: 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.

Issue:
  • 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?

As per the law:
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 frustrated.
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 nature…
  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
Facts: 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 communal troubles.

Issue:
  1. Was it self induced frustration?
  2. 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 previous case.
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 perform.

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.

End-Notes:
  1. AIR 1954 SCR 310
  2. 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.
  3. In itself
  4. in THE INDIAN CONTRACT ACT, 1872 - BARE ACT (2020).
  5. Avatar Singh, in CONTRACT AND SPECIFIC RELIEF (2020).
  6. 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.
  7. Id. at 405
  8. AIR 1971 SC 1956

    Award Winning Article Is Written By: Mr.Pragyanshu Gautam - A First Year BA.LLB Student At Hidayatullah National Law University
    Awarded certificate of Excellence
    Authentication No: FB105946122921-28-0221

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