Q. Under a development scheme a considerable area of land was to be developed in the city by ‘D’. He entered into a contract with ‘P’ for the sale of a plot out of the said land after the war broke out. The sale deed was to be executed within one month after the scheme was completed. But before development began a considerable portion of the land was requisitioned and the entry of the owner on the land during the period of requisition was made illegal. ‘D’ offered to return the earnest money with cancellation of the contract or completion of the conveyance of the land in the condition it was, and that if neither of the alternatives was acceptable to ‘P’ the agreement would be treated as cancelled and the earnest money confiscated. ‘P’ brings a suit for the enforcement of the contract and ‘D’ pleads to be discharged by frustration. Decide. Civil Services (I.A.S.) Exam. 1975
Ans: Pleading of ‘D’ is not sustainable in the eyes of law—Supreme Court in Satyabrata Ghosh v. Mugnee Ram Bangur & Co., AIR 1954 SC 443.
Reasons: Facts of this problem have been taken from the famous case of Satyabrata Ghosh v. Mugnee Ram referred above. In this case the Supreme Court held that a contract between parties has not been frustrated. The doctrine of frustration comes into play not only when the performance is not physically possible but where it is not practically or legally possible. Where the object of the contract has failed i.e., the object could not be achieved.
In this case B.K. Mukherjee J. remarked—The word “impossible” here has not been used in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impractical and useless from the point of view of the object and purpose of the parties to the contract. If an untoward event or change of circumstances totally upsets the very foundation upon which the parties vested their bargain, it can be said that it is impossible for the promisor to do the act which he has promised to do.
In view of the decision given by Supreme Court in Satyabrata v. Mugnee Ram it can be said that in the given problem defence of ‘D’ that contact has been discharged by frustration is not sustainable in the eyes of law and ‘P’ will succeed in his suit.
Kishor Prasad
