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TMI Blog2009 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... enforced through the legal process.- Assuming Mr. Jetly is right in his submission that Settlement Commission has no power to grant immunity from the payment of interest but in the facts and circumstances of the case, the Settlement Commission has no power to enforce the contract which is already frustrated or which does not exist in the eye of law - 2723 OF 2008 - - - Dated:- 3-12-2009 - V.C. Daga and J.P. Devadhar, JJ. S/Shri P.S. Jetly with R.B. Pardeshi, for the Petitioner. S/Shri L.S. Shetty with A.M. Sethna, i/b. L.S. Shetty Associates, for the Respondent. [Judgment per : V.C. Daga, J.]. 1. Heard the learned counsel for the Petitioner and learned counsel for the Respondent. Perused Petition. 2. Introduction: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and notices to Respondent No.2 calling upon it to pay entire export duty together with interest thereon at 15% per annum. Since there was no response to the repeated reminders to pay customs duty a show cause notice came to be issued demanding customs duty in the sum of Rs.1,48,79,898/- with interest thereon amounting to Rs.1,34,36,546/- which was ultimately confirmed against Respondent No.2. The Custom department pending consideration of the show cause notice encashed bank guarantee in the sum of Rs.74,50,000/-. Respondent No.2, during the pendency of the show cause notice made payments from time to time to the extent of Rs.1,48,79,898/-. In other words, the Respondent No.2 paid principle amount guaranteed under the bond, but, did not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jetly, learned counsel for the Petitioner urged that it is an admitted fact that Respondent No.2 could not fulfill its export obligation. That the Respondent No.2 imported goods availing exemption from payment of the CIF duty which was payable @ 10% under Custom Notification No.111/95 dated 5.6.1995, as a result whereof, the Customs duty amounting to Rs.1,48,79,898/- was saved by it, which otherwise was required to be paid while clearing goods imported by it. He. Thus, submits that Respondent No.2, having executed the bond in terms of notification, and having undertaken to pay duty with interest thereon @ 24% per annum from date of clearance of goods till the date of payment of duty, in the event of non fulfillment of export obligation, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the contract in the nature of bond having been frustrated, the bond stands determined automatically. It came to an end or ceased to exist and that injured party thereby stood absolved from future performance or obligation incurred under the contract, as such specific performance of it cannot be asked for. In other words submission is that, for want of existence of the contract or rather frustration thereof, the liability to pay interest cannot be allowed to be enforced by any authority much less the Settlement Commission as such no useful purpose would be served by setting aside the impugned order and remitting the matter back to the Settlement Commission for consideration afresh. The submission advanced by the Respondent No.2 is: as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order and remanding the same to the Settlement Commission for consideration afresh on it's own merits. Judicial notice of the super cyclone that had occurred in the state of Orissa on 29.9.1999 can always be taken by this court. The submission advanced by the Respondent No.2 that even if the settlement commission has no power to grant immunity from payment of interest even then the Settlement Commission has no power to enforce the contract which stood frustrated deserves to be accepted. The law of frustration of contract is well settled. Section 56 of the Indian Contract deals with the Doctrine of frustration of contract. It lays down that the contract becomes void upon the act being (i) unlawful or (ii) impossible, though there is no con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 QBD 258], performance of contract became impossible because a crop of potatoes to be grown on a particular field fails In the case of WJ Tatem Ltd. Vs. Gamboa [(1938) 3 All ER Rep.135], performance of contract became impossible because a ship under charterparty is seized by the enemy. In all these cases contracts were discharged. The contract may also be discharged because the subject matter had greatly deteriorated. A cargo of dates was sunk and affected by water and sewage. The dates were saleable for some other purposes; but their merchantable character had been destroyed. Though the cargo was sold, the cargo owners' liability to pay freight was discharged in the case of Asfar Co. V. Blundell [1896] 1QB 123] In the case of VL Na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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