SATYABRATA GHOSE V/S MUGNEERAM BANGUR & CO., AND ANOTHER

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Citation	1954 AIR 44 , 1954 SCR 310
Date of Judgement	16 November 1953
Court	Supreme Court Of India
Case No	Civil Appeal No.80 of 1952
Case Type	Civil Appeal
Petitioner	Satyabrata Ghose
Respondent	Mugneeram Bangur & Co.,and Another
Bench	Mukherjea, B.K.Bose, VivianBhagwati , Natwarlal H
Referred	Indian Contract Act,1872Section.56 – Agreement to do an act impossible in itself is void-Doctrine of Frustration

FACTS OF THE CASE

This case was about the sale of land and due to certain circumstances, the defendant contested his capability to perform the contract. Mugneeram Bangur and Co was the defendant in the case. His company owned a very vast area of land in Calcutta (Kolkata at present). In order to develop the land and make it fit for residential purposes, the company decided to divide the large tract of land into different small plots and sell them.
The company started working as per the plan and made certain agreements for the sale of plots with various purchasers.The company entered into agreements with the purchasers for the sale of the different plots and accepted a small amount of earnest money at the time of sale of land.
The company on the other hand took the responsibility of providing all the necessities for the residential purpose be it the construction of roads/ drainage system or any other essential needs for residing.The plots would be given after the construction of all essentials gets completed and payment of balance amount by the respective purchasers.
Satyabrata Ghose(assignee of Bejoy Krishna Roy), the plaintiff of the case, was also interested in purchasing the plot of land and therefore entered into an agreement with Mugneeram Bungar and the Company and paid the earnest money deposit of Rs.101 on 5 th August,1941.

Following in time ,as war conditions were frequent at those times, the government in 1943 decided to take over the land and make use of it for some military purpose. As a result of which Mugneeram Bangur and the Company in November 1943,decided to treat the contract canceled due to the impossibility of further construction and sale and they conveyed the same to the buyers.But the company gave the appellant the option of either taking the earnest money back or paying the balance money and the company would continue its work after the termination of war.
Satyabrata Goshe denied both the available options and decided to file a suit on 18^th January 1946 against Mugneeran Bangur and the company, saying that it was bound to the terms of the contract in January 1946.

ISSUES

1. Did the contract of sale of land become frustrated after the given circumstances under section 56 of the Indian Contracts act?

2. Does the English law of frustration apply in India?

DOCTRINE OF FRUSTRATION

It defines frustration of a contract refers to a way in which the parties can escape from the contractual obligations. When the parties are not at fault but due to certain circumstances the contract becomes incapable of being performed.

JUDICIAL HISTORY

The suit was filed by the plaintiff in the trial court and there the court pronounced its judgment in favor of the plaintiff.
The company then filed an appeal in the district court and the same was dismissed. Again a second appeal was filed in the high court where the court gave its judgment in favor of the company.
The plaintiff(appellant) after the high court decision filed an appeal in the supreme court under Article 133(4) of the Indian constitution.

RATIO DECIDENDI

The Supreme Court of India held that although the government requisitioned the land, impossibility can not apply in this case as:
The work did not start when the work was demanded by the Defence of India. The plea of the defendant is just as the situations would give rise to undecided detainment in the contract’s completion, and thus, the impossibility shall apply.
However, there was no mention of a specified time limit in the contract and the demand was only short-term. Thus, it concluded that there wasn’t any unspecific slowdown.
The provision of the Indian Contract Act Section 56 stated that whenever a person, while signing the contract, has appropriate close attention which the other party didn’t know about, then the party must compensate for the loss incurred by the other party.

RELATED CASE LAW

Smt.SUSHILA DEVI V/S HARI SINGH

In this case the supreme court said, section 56 lays down a positive law and does not leave the matter determined according to the intention of the parties.
Section 56(2) is dealt with when matter is not determined to the intention of parties.It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract.Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset.

JUDGEMENT

In the given case, the court held that performance of the contract by any of the parties has not become unfeasible, the court said that the land taken by the government was of temporary native the government did not take the land for a permanent purpose. It was only for a limited time period. Also, Mugneeram Bngur and the company did not initiate their work when the land was taken by the government. So therefore there is no case of interruption in work.
Secondly,there was no time limit implied in the contract for the completion of construction of the roads and drains. Therefore, the work was to be completed within a reasonable time, and also since, the war conditions prevalent were known to both the parties while entering into the contract, that reasonable time was to be modified.
Hence the contract had not become incapable of being performed under section 56 i.e. Agreement to do impossible acts(Doctrine of frustration). Therefore the court gave its judgment in favor of the plaintiff(Satyabrata Ghose).

CONCLUSION

It can be concluded stating that though theories of law of frustration of England are not applicable in India,the matter is always determined to the court which analysis the contract as presented by the parties and considers the circumstances around the contract.
Wherever time is of the Essence of the contract, then such delays in the performance of the contract would result in the frustrated contract but in the given case the work could be continued after the termination of the war, and hence the contract was not held void. And it did not fall in the criteria of being a frustrated contract.

REFERENCES

This Article is written by K.Dhanush of Vels Institute of Science Technology and Advanced studies,Intern at Legal Vidhiya.