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TMI Blog1968 (4) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... . The contract was, however, entered into in the name of the first defendant and P.W. 2 acted as a broker in the transaction. The respondent paid another sum of ₹ 20,000/on December 23, 1955 after the goods arrived and were cleared on the representation that the delivery would be given in one month. Defendant No. 1 executed a letter, Ex. A-2 in this connection but thereafter owing to rise in prices the appellant committed a default. The suit was contested by the first defendant on the ground that the contract was illegal and therefore void. The case of the second defendant was that he had nothing to do with the contract entered into between the plaintiff and the first defendant and, in any case, the contract for sale of chicory was illegal and void ab initio as contravening the provisions of the licence granted to him for the import of chicory. The trial court held, upon examination of the evidence, that both defendants 1 and 2 undertook with the plaintiff to fulfil the terms of the contract.On the question of legality of the contract the trial court held that as the contravention of the terms of the licence by the sale of the imported goods would entail only an administrativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.Chicory. 4. Serial number and part of the I.T.C. Schedule 79. V/IV. 5. Quantity.-24 3/4 tons. 6. Approximate value c.i.f. (in words) rupees thirty two thousand and two only (in figures) ₹ 32,002. 7. Period of shipment : Valid up to 31st March 1956 from the date of issue. 8. Limiting factor for purposes of clearance through Customs. Quantity/value Both. This licence is granted under Government of India, late Ministry of Commerce Notification No. 23-ITC/43, dated the 1st July 1943, as continued in force by the Imports and Exports (Control) 1947 (XVIII of 1947) and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival. This licence is issued subject to the condition that the goods will be utilised only for consumption as raw material or accessories in the licence holder's factory and that no portion thereof will be sold to any party. (Signed) For Chief Controller of Imports. This licence was granted under Government of India, late Commerce Department Notification No. 23. ITC/43 dated July 1, 1943 made under Rule 84(3) of the Defence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns (Continuance) Ordinance, 1.946, and in force immediately before the commencement of this Act shall, so far as they are not inconsistent with ,the provisions of this Act, continue in force and be deemed to have been made under this Act. 5. If any person contravenes any order made or deemed to have been made under this Act, he shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the Sea Customs Act, 1878, as applied by sub-section (2) of section 3, be punishable with imprisonment for a term which may extend to one year, or with fine, or with both. On March 6, 1948 the Central Government issued a notification under sub-r. (3) of r. 84 of the Defence of India Rules which -reads as follows : No. 2-ITC/48-In exercise of the, powers conferred by sub-s. (1) and sub-s. (3) of s. 3 of the Imports and Exports (Control) Act, 1947 (XVIII of 1947) the Central Government is pleased to make the following order, namely, (a) Any officer issuing a licence under clauses VIII to XIV of the Notification of the Government of India in the late Department of Commerce No. 23-ITC/43 dated the 1st July 1943 may issue the same subject to one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On December 7, 1955, the Imports (Control) Order was promulgated by the Central Government in exercise of the powers conferred by ss. 3 and 4A of the Imports and Exports (Control) Act, 1947. Clause 3 of this Order prohibited import of goods except in accordance with a licence issued by specified authorities. Clause 5 authorised imposition of conditions under which goods could be imported. Clause 5 provides as follows : Conditions of Licence.(1) The licensing authority issuing a licence under this Order may issue the same subject to one or more of the conditions stated below : (i) that the goods covered by the licence shall not be disposed of, except in the manner prescribed by the licensing authority, or otherwise dealt with, without the written permission of the licensing authority or any person duly authorised by it; (ii) that the goods covered by the licence on importation shall not be sold or distributed at a price exceeding that which may be specified in any directions attached to the licence; (iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted. (2) A licence granted under this Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the appellant was that the contravention of the terms of the licence issued, under the notification dated March 6, 1948 was a contravention of the notification itself within the meaning of s. 5 of Act XVIII of 1947 and was punishable. We are unable to accept this argument as correct. It is clear that s. 5 before its amendment only penalised the contravention of any order made or deemed to have been made under the Act. It is true that a licence was granted by virtue of a statutory notification dated March 6, 1948 issued under the Defence of India Rules and later deemed to have been issued under Act XVIII of 1947. Notification No. 23-ITC/43, dated July 1, 1943 merely provides that no goods shall be imported except the goods covered by special licences issued by an authorised, OSup. C. I./68-6 ,officer. Notification No. 2-ITC/48, dated March 6, 1943 authorises the licensing officer to impose, one or more conditions prescribed by that order and the licensing officer has therefore power to impose conditions in the licence issued by him, but if the licensee contravenes the conditions imposed by the licence it is difficult to hold that it is not merely a contravention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent in pursuance of the contract as the condition of the licence would be violated. In our opinion, the argument of the appellant is well-founded and must be accepted as correct. It is manifest that the disposal of the imported chicory which arrived at Madras port on December 13, 1955 was governed by the provisions of the Imports (Control) Order, 1955 which came into force on December 7, 1955. Clause 5(4) of the 1955 Order expressly provides that the licensee shall comply with all the conditions imposed or deemed to be imposed under that clause. Therefore the sale of the imported goods would be a direct contravention of cl. 5(4) and under s. 5 of the Imports and Exports (Control) Act, 1947 any contravention of the Act or any order made or deemed to have been made under the Act is punishable with imprisonment up to one year or fine or both. In consequence, even though the contract was enforceable on November 26, 1955 when it was entered into, the performance of the contract became impossible or unlawful after December 7, 1955 and so the contract became void under s. 56 of the Indian Contract Act after the coming into force of the Imports (Control) Order, 1955. Section 56 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by either party. By the Control of Timber (No. 4) Order, 1939, further trading transactions under the contract became illegal, but in 1941 the appellants gave notice to terminate the contract, and also to exercise their option to purchase the timber-yard. The House of Lords held that the option to purchase was dependent on the trading agreement, that the 1939 Order had operated to frustrate the contract, and that, consequently, the option to purchase lapsed upon the frustration since it arose only if the contract was terminated by notice. At page 274 of the Report, Lord Wright made the following observations It is now I think well settled that where there is frustration a dissolution of a contract occurs automatically. It does not depend, as does rescission of a contract on the ground of repudiation or breach, on the choice or election of either party. I t depends on what actually has happened on its effect on the possibility of performing the contract. Where, as generally happens, and actually happened in the present case, one party claims that there has been frustration and the other party contests it, the court decides the issue and decides it ex post facto on the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Report, Viscount Simon said: The principle remains the same. Particular applications of it may greatly vary and theoretical lawyers may debate whether the rule should be regarded as arising fro m implied term or because the basis of the ,contract no longer exists. In any view, it is a question of construction as Lord Wright pointed out in Constantine's case and as has been repeatedly asserted by other masters of law. In English Law therefore the question of frustration of contract has been treated by courts as a question of construction depending upon the true intention of the parties. In contrast, the statutory provisions contained in S. 56 of the Indian Contract Act lay down a positive rule of law and English authorities cannot therefore be of direct assistance, though they have persuasive value in showing how English courts have approached and decided cases under similar circumstances. Counsel on behalf of the respondent, however, contended that the contract was not impossible of performance and the appellant cannot take recourse to the provisions of s. 56 of the Indian Contract Act. It was contended that under cl. 1 of the Import Trade Control Order No. 2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. They named three trawlers other than the respondents', and then claimed that they were no longer bound by the charter-party as its object had been frustrated. It was held by the Judicial Committee that the failure of the contract was the result of the appellants' own election, and that there was therefore no frustration of the contract. 'We think the principle of this case applies to the Indian law and the provisions of s. 56 of the Indian Contract Act cannot apply to a case of self-induced frustration . In other words, the doctrine of frustration of contract cannot apply where the event which is alleged to have frustrated the contract arises from the act or election of a party. But for the reasons already given, we hold that this principle cannot be applied to the present case for there was no choice or election left to the appellant to supply chicory other than under the terms of the contract. On the other hand, there was a positive prohibition imposed by the licence upon the appellant not to sell the imported chicory to any other party but he was permitted to utilise it only for consumption as raw material in his own factory. We, are accordingly of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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