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TMI Blog2018 (8) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... are altered. The Courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events. There is no merit in the petition - petition dismissed. - O.M.P. 444/2015 - - - Dated:- 7-8-2018 - MR. NAVIN CHAWLA J. Petitioner Through: Mr. J.M. Sharma, Sr. Adv. with Mr. Neil Hildreth, Mr. Rahul Jain, Mr. Ajit Sharma, Advs. Respondent Through: Mr. Rajesh Kumar, Mr. G.K. Singh, Advs. NAVIN CHAWLA, J. (Oral) 1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award dated 28th April, 2015 passed by the majority of the members of the Arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requisite amount as required under different clauses of the bid document and therefore, a contract came into existence between the parties. 5. By a circular dated 21st May, 2014, RBI liberalized the policy with respect to import of gold by permitting import of gold by Star Trading Houses/Premier Trading Houses which were registered as nominated agencies by the Director General of Foreign Trade (DGFT) under 20:80 Scheme. The petitioner claiming that due to such liberalization in the policy, the gold prices and consequently, the profit margins of the petitioner had considerably decreased, claimed Force Majeure by invoking clause 7 of the tender as also under Section 56 of the Indian Contract Act, 1872. 6. The respondent, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for as long as these circumstances prevail, provided that, in the event of these circumstances continuing for more than three months, either party shall have the right to refuse to fulfil its contractual obligations without title to indemnification of any losses it may thereby sustain. The party unable to carry out its contractual obligations shall immediately advise the other party of the commencement and the termination of the circumstances preventing the performance of the contract. A certificate issued by the respective Chamber of Commerce shall be sufficient proof of the existence and duration of such circumstances. 9. A reading of the above clause would show that the circumstances envisaged therein as cause of Force Majeure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-performance of the promise. 12. Though, it is correct that as laid down by the Supreme Court in Satyabrata Ghose vs. Mugneeram Bangur Co. and Anr. AIR 1954 SC 44, the word impossible has not been used in the Section in the sense of physical or literal impossibility, at the same time it has been held by the Supreme Court in Alopi Parshad Sons Ltd. vs. UOI, (1960) 2 SCR 793, a wholly abnormal rise or fall in prices, which is an unexpected obstacle to execution, does not in itself get rid of the bargain parties have made. It is only when a consideration of the terms of the contract, in the light of the circumstances existing when it was made, showed that they never agreed to be bound in a fundamentally different s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point - not because the court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation. When it is said that in such circumstances the court reaches a conclusion which is just and reasonable (Lord Wright in Constantine case or one which justice demands (Lord Sumner in Hirji Mulji v. Cheong Yue Steamship Co. Ltd.), this result is arrived at by putting a just construction upon the contract in accordance with an implication from the presumed common intention of the parties - speech of Lord Simon in British Movietonews Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontemplated turn of events, but will do therein what is just and reasonable. 13. Similarly, in Naihati Jute Mills Ltd. vs. Khyaliram Jagannath, 1968(1) SCR 821 , it was held that a contract is not frustrated merely because the circumstances in which it was made are altered. The Courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events. 14. In Energy Watchdog vs. Central Electricity Regulatory Commission Ors., 2017 SCC Online SC 378, the Supreme Court again reiterated that a more onerous method of performance by itself would not amount to a frustrating event. Where the fundamental basis of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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