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1953 (11) TMI 19 - SC - Indian Laws

Issues Involved:
1. Applicability of the doctrine of frustration under Section 56 of the Indian Contract Act.
2. Whether the doctrine of frustration applies to contracts for the sale of land in India.
3. Whether the requisition orders issued by the Government frustrated the contract of sale.

Issue-wise Detailed Analysis:

1. Applicability of the Doctrine of Frustration under Section 56 of the Indian Contract Act:

The learned Attorney-General argued that the doctrine of frustration, as recognized in English law, does not apply to India due to the statutory provision in Section 56 of the Indian Contract Act. Section 56 states, "A contract to do an act which after the contract is made, becomes impossible, or, by reason of some event which the promiser could not prevent, unlawful, becomes void when the act becomes impossible or unlawful." The court clarified that the term "impossible" in Section 56 does not mean physical or literal impossibility but includes impracticability and uselessness from the point of view of the object and purpose of the contract. The court emphasized that Section 56 embodies the doctrine of frustration, making it a rule of positive law in India. The court held that the Indian Contract Act is exhaustive on this subject and it is not permissible to import principles of English law beyond these statutory provisions.

2. Whether the Doctrine of Frustration Applies to Contracts for the Sale of Land in India:

The Attorney-General contended that the doctrine of frustration does not apply to contracts for the sale of land. The court noted that under English law, a concluded contract for the sale of land creates an equitable interest in the purchaser, which cannot be destroyed by frustration. However, under Indian law, as per Section 54 of the Transfer of Property Act, a contract for the sale of land does not create any interest in the property. Therefore, the obligations of the parties to a contract for the sale of land in India are the same as in other ordinary contracts. Consequently, the court held that the doctrine of frustration is applicable to contracts for the sale of land in India.

3. Whether the Requisition Orders Issued by the Government Frustrated the Contract of Sale:

The court examined whether the requisition orders issued by the Government, which requisitioned the lands covered by the development scheme, frustrated the contract of sale. The court emphasized that frustration occurs automatically and does not depend on the choice or election of either party. The court noted that the contract in question was part of a development scheme and not an ordinary contract for the sale of land. The parties did not specify a time limit for the completion of roads and drains, and the war conditions prevailing at the time of the contract were likely contemplated by the parties. The court found that the requisition orders, being temporary in nature, did not fundamentally affect the basis of the contract or make its performance impossible. The court concluded that the requisition orders did not frustrate the contract.

Alternative Argument on Illegality:

The respondent's counsel argued that the requisition orders made the performance of the contract illegal, rendering it void under Section 56 of the Indian Contract Act. The court dismissed this argument, stating that the requisition orders imposed a prohibition on the use of the land but did not make the performance of the contract impossible. The court also noted that this argument was not raised in the lower courts and should not be considered for the first time at this stage.

Conclusion:

The court held that the doctrine of frustration is applicable under Section 56 of the Indian Contract Act, including to contracts for the sale of land. The requisition orders did not frustrate the contract of sale, and the contract remained enforceable. The appeal was allowed, and the judgment and decree of the High Court were set aside, restoring the judgments of the lower courts in favor of the plaintiff. The plaintiff was entitled to costs in all courts.

 

 

 

 

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