Appeal No 1860 of 1968
Appeal by Special Leave from the Judgment and decree dated the 29th January 1968 of the Bombay High Court in Appeal No 472 60
RP Bhatt BR Agarwala and Janendra Lal for the appel lants
Sachin Chaudhary Prakash Mehta Ravinder Narain and KL John of Ms 1
B Dadachanji  Co for the respond ents
The Judgment of the Court was delivered by JASWANT SINGH J
This appeal by special leave which is directed against the judgment and decree dated January 29 1968 of the High Court of Judicature at Bombay involves a question of the applicability or otherwise of the doctrine of frustration embodied in section 56 of the Contract Act which to use the words of Viscount Maugham in Joseph Con stantine Steamship Line Limited vs Imperial Smelting Corpo ration Ltd 1 is only a special case of the discharge of contract by an impossibility of performance arising after the contract was made or to use the language of Mukherjea J in Satyabrata Ghose vs Mugneeram Bangut  Co  Anr2 is really an aspect or part of the law off discharge of contract by reason of supervening impossibility or illegali ty of the act agreed to be done and hence becomes within the purview of section 56 of the  The facts giving rise to this appeal lie in a short compass and may be briefly stated The respondents who are the owners of four plots of agricultural land admeasuring 7 acres and 13 gunthas and a bungalow standing thereon situate in village Majwade near Pokhran Talao Road Thana having bought the same from Homi D Dubash under a sale deed dated September 9 1953 agreed to sell the same to the appellants in lieu of Rs 25000 vide agreement dated May 16 1957 relevant clauses whereof provided as follows  5
If the purchasers shall insist on any requisitions or objections as to the title evidence of title conveyance posses sion receipt of rent or any other matters on the abstract of or this agreement or connected with the sale which the Vendors shall be unable or on any ground unwilling to remove or comply with the Vendors shall be at liberty notwithstanding any negotiation or litigation in respect of such requisition or objection to give to the Purchasers or their Solicitors notice in writing of their intention to re scind the contract for sale unless such requisition or objection be withdrawn and if such notice be given and the requisition or objection be not withdrawn within ten days after the day on which the notice was sent the contract shall without further notice be rescinded
The Vendors shall thereupon return to the purchasers the deposit but without any interestcosts of investigating the title or other compensation or payment whatever
1  168
2  513 6
if the title be not approved by the Purchaser s attorneys or if the purchase is not completed within the said period of two months owing to any default on the Vendors  part it shall be at the option of the Pur chaser to rescind this agreement and in that event the Purchaser shall be entitled to receive back the earnest money from the Ven dors together with out of pocket costs incurred in the preparation of this agree ment and investigation of title advertise ment Bataid correspondence etc
But in ease of the Vendors wilful default the Ven dors shall also pay to the Purchasers interest at 6 per annum on the amount of earnest money from the date hereof fill the date of return of the earnest money and all costs of the Purchasers
If the sale is not completed within time provided for completion owing to the fault of the Purchaser the Vendors shall be entitled to put an end to this contract and to for feit the earnest money
 Pursuant to the aforesaid agreement the respondents  attorneys delivered the documents of title to the appellants attorneys on May 17 1957 for investigation of title and in the third week of May 1957 the respondents gave possession of the aforesaid property to the appellants in part perform ance of the said agreement
On August 22 1957 the re spondents and the appellants made a joint application to the District Deputy Collector Thana Prant under section 63 of the Bombay Tenancy and Agricultural Lands Act 1948 hereinafter referred to as the Act  seeking permission to sell and purchase the aforesaid agricultural land
Section 63 of the Act reads 63
1 Save as provided in this Act a no sale including sales in execution of a decree of a Civil Court or for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue gift exchange or lease of any land or interest therein or b no mortgage of any land or interest therein in which the possession of the mort gaged property is delivered to the mortga gee shall be valid in favour of a person who is not an agriculturist or who being an agricul turist will after such sale gift exchange lease or mortgage hold land exceeding two thirds of the ceiling area determined under the Maharashtra Agricultural Lands Ceiling on Holdings Act 1961 or who is not an agri cultural labourer Provided that the Collector or an officer authorised by the State Government in this behalf may grant permission for such sale gift exchange lease or mortgage on such conditions as may be prescribed    It may be mentioned that the conditions alluded to in the proviso to the above quoted section 63 have been pre scribed by Rule 36 514 of the Bombay Tenancy and Agriculutral Lands Rules 1956 hereinafter referred to as the Rules  the relevant por tion whereof is to the following effect 36
Conditions on which permission for sale etc of land under section 63 may be granted 1 The Collector or other officer authorised under the proviso to sub section 1  of section 63 shall not grant permission for sale gift exchange lease or mortgage of any land in favour of a person who is not either an agriculturist or agricultural labourer or who being an agriculturist cultivates per sonally laud not less than the ceiling area whether as owner or tenant or partly as owner and partly as tenant unless any of the follow ing conditions are satisfied  f the land is required for cultivating it personally by a person who not being an agriculturist intends to take to the profes sion of agriculture and to whom the Collector after having regard to the order of priority mention in clause c of sub section 2 of section 32 P has given a certificate that such person intends to take to the profession of agriculture and is capable of cultivating land personally   By means of communication No TNC48 dated December 8 1958 the Prant Officer Thana informed the respondents that their request to sell the aforesaid lands to appellant No 1 could not be granted as the intending purchaser had not obtained the certificate from the Collector to the effect that he intends to take to the profession of agri culture and is capable of cultivating land personally
 On January 21 1959 the respondents  attorneys wrote to the appellants informing them that no effect could be given to the aforesaid agreement of sale dated May 17 1957 as the permission under the Act to sell the suit property had been refused by the Prant Officer by his letter dated December 8 1958 supra for appellant No 1 s failure to obtain the certificate to the effect that he intended to take to the profession of agriculture and was capable of cultivating land personally
The respondents  attorneys also called upon the appellants by means of the said communication to return the tite deeds adding that on the return of the title deeds the earnest money paid by them at the time of execu tion of the aforesaid agreement would be returned to them
On March 4 1959 the appellants  advocate wrote to the respondents  attorneys requesting them to authorise the appellants to approach the higher authorities for securing the necessary permission
On March 14 1959 the respond ents  attorneys wrote to the appellants  attorneys evasively replying that no useful purpose would be served by approach ing the higher authorities having regard to the provisions of the Act
On the respondents  refusal to cooperate with the appellants in the matter of obtaining permission or sanction under the Act appellant No 1 made an application to the Collector Thana District Thana on April 8 1959 bringing the above mentioned facts to his notice and re questing him to grant him a certificate of an agriculturist and the necessary permission to purchase the aforesaid plots of land
Acceding to the request of appellant No 1 the Additional Collector
Thana 515 by his order dated June 6 1959 granted to the former the requisite certificate under Rule 36 of the Rules as also the permission to purchase the aforesaid plots of land from the respondents as required under section 631 of the Act read with Rule 36 of the Rules
The said order ran as follows  No CBTNC 1800 Collector s Office Thana Thana 6th June 1959
Read Application of the applicant Shri GG Patel dated the 8th April 1959
Read Papers ending with Mamlatdar Thana s No TNC
400 dated the 11th May 1959
ORDER A certificate is hereby granted to Shri Govindbhai Gordhanbhai Patel residing at House No 404 Majiwade Taluka Thana on his appli cation dated 8th April 1959 under subclause C  of clause 1 of Rule 36 that he intends to take to the profession of Agriculture
After having gone through the merits of the priority list mentioned in clause C of section 2 of section 32 P through the Mamlatdar Thana permission is hereby granted to Shri Govindb hai Gordhanbhai Patel to purchase the land mentioned below from Shri Ibrahim Ismail Jetpurwala etc
under section 631 read with Rule 36 under the Bombay Tenancy and Agricul tural Lands Amendment Act 1955 on the conditions as mentioned under  Village section No H No Area Majiwade 415 Part 6 514 289 2 Part 0 36 12 280 1 Part 0 7 280 4 0 5 7 13 34 Conditions  Permission to purchase the land mentioned above is granted subject to the condition that if the applicant Shri GG Patel ceases to cultivate the land personally or transfers his interest in the said land by sale gift exchange lease or mortgage without the previous sanction of the Collector the permission given under sub section  1  of section 63 shall be deemed to have been cancelled
Sd For Addition al Collector Tha na 516 On June 25 1959 the appellants  attorneys addressed a communication to the respondents  attorneys forwarding therewith a copy of the aforesaid order No CBTEC1800 dated June 61959 made by the Additional Collector Thana granting permission to appellant No 1 for the purchase of the aforesaid plots of land and requesting the respondents to let them know as to when their clients would desire to complete the sale and further asking them whether they had got the property transferred to their names in the records of the Collector of Thana whereupon the respondents  advo cate by his letter dated June 30 1959 addressed to the appellants  attorneys replied saying that his clients could not take notice of the aforesaid permission
Thereafter the respondents served a notice on the appellants on August 25 1959 calling upon them to return the title deeds and to restore possession of the aforesaid property
Thereupon the appellants  advocate wrote to the respondents attorneys on November 24 1959 pointing out to them that appellant No 1 having obtained the requisite sanction from the Collector the respondents were bound to complete the sale and to execute the conveyance in favour of appellant No 1 and that the aforesaid agreement could not be put an end to in the manner in which the respondents were attempting to do
Not heeding the aforesaid communication of the appellants dated November 24 1959 the respondents filed a civil suit being suit No 36 of 1959 on November 17 1959 in the Court of the Civil Judge Senior Division Thana for declaration that the aforesaid agreement dated May 16 1957 was void in law and of no legal effect and for possession of the aforesaid property as also for compensation at the rate of Rs 150 per mensem for wrongful retention of the property from June 1957 till delivery of possession thereof
In spite of the stout resistance put up by the appellants the trial Court decreed the suit in favour of the respondents subject to their paying to the appellants or depositing in Court the earnest money of Rs 5000 and the compensation amount of Rs 88225 holding inter alia that the aforesaid agree ment dated May 16 1957 which was void ab initio being violative of section 63 of the Act was discovered by the respondents to be void in June 1957 when they found that the permission under section 63 of the Act was necessary
Aggrieved by the judgment and decree of the trial Court the appellants took the matter in appeal to the High Court of Bombay but their appeal remained unsuccessful
The High Court held that the aforesaid agreement to sell was not void ab initio as section 63 of the Act itself envisaged sale etc
in favour of a nonagriculturist with the permission of the Collector or an officer authorised by the State Govern ment in that behalf subject to the conditions which may be prescribed and Rule 36 of he Rules prescribed only a certif icate by the relevant authority to the effect that the intending purchaser intended to adopt the profession of an agriculturist
The High Court however opined that the aforesaid agreement became incapable of being performed on December 8 1959 when the Prant Officer declined permission to the respondents to sell the property to the appellants
Rejecting the contention advanced on behalf of the appel lants the effect that the aforesaid letter dated January 21 1959 written by the respondents to the appellants did not terminate or rescind the agreement the High Court further held that the said letter amounted to cancellation of the agreement
517 Appearing in support of the appeal Mr Bhatt counsel for the appellants has vehemently urged that the aforesaid order passed by the Prant Officer refusing permission to the respondents to sell the lands did not make the contract impossible of performance that the said order was merely administrative in character and did not bar the making of the second application by the appellants under section 63 of the Act that the said agreement was subsisting on June 25 1959 when the appellants obtained the requisite permission and the certificate from the Additional Collector Thana and that section 56 of the was not attracted in the present case as the contract had not become impossible of performance
Mr Sachin Chaudhary counsel for the respondents has on the other hand contended that the agreement became impossible of performance and as such void on December 8 1958 when the Prant Officer refused to permit the respond ents to sell the suit property to the appellants and that the Prant Officer who had co ordinate jurisdiction with the Collector under section 63 of the Act having refused to grant permission to the respondents to sell the suit proper ty by his order dated December 8 1958 which was of quasi judicial character and had not been set aside either in appeal or revision it was not open to the Collector to grant the permission to the appellants
Two questions arise for determination in this case 1 whether the order of the Prant Officer dated December 8 1958 rendered the aforesaid agreement dated May 16 1957 impossible of performance and as such void under section 56 of the and 2 whether in view of the aforesaid order of refusal by the Prant Officer Thana dated December 8 1958 the Additional Collector Thana was not competent to grant the sanction and the certificate under section 63 of the Act and Rule 36 of the Rules
The answer to the first question depends on the construction of the expression impossible of performance  occurring in section 56 of the which lays down 56
An agreement to do an act impossi ble in itself is void A contract to do an act which after the contract is made becomes impossible or by reason of some event which the promisor could not prevent unlawful becomes void when the act becomes impossible or unlawful
Where one person has promised to do something which he knew or with reasonable diligence might have known and which the promisee did not know to be impossible or unlawful such promisor must make compensation to such promisee for any loss which such promise sustains through the non performance of the promise
 The meaning of the aforesaid expression impossible of performance  as used in the above quoted section would be clear from the following observation made by Lord Loreburn in Tampfin Steamship 518 Co Ltd vs
Anglo Mexican Petroleum Products Co Ltd1 403 which is generally considered to contain a classic and terse exposition of the law relating to frustration The parties shall be excused if sub stantially the whole contract becomes impossi ble of performance or in other words imprac ticable by some cause for which neither was responsible
 We find ourselves in complete accord with this view which also finds support from the decisions of this Court in Satyabrata Ghose vs Mugneerarn Bangur and Co and Anr
supra and Smt
Sushila Devi and Anr
vs Hari Singh and Ors2 where it was held that the performance of a contract becomes impossible if it becomes impracticable from the point of view of the object and the purpose which the par ties had in view and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain it can very well be said that the promisor found it impossible to do the act which he promised to do
It would be advantageous at this stage to refer to the following observations made by Mukherjee J Satyabrata Ghose vs Mugneerarn Bangur and Co and Anr supra which is a leading authority on the subject of frustration The first paragraph of the section lays down the law in the same way as in England
It speaks of something which is impossible inherently or by its very nature and no one can obviously be directed to perform such an act
The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done
The wording of this paragraph is quite general and though the illustrations attached to it are not at all happy they cannot derogate from the general words used in the enactment
This much is clear that the word impossible has not been used here in the sense of physical or literal impossibility
The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain R can very well be said that the promisor found it impossible to do the act which he promised to do
Although various theories have been propounded by the Judges and jurists in Eng land regarding the judicial basis of the doctrine of frustration yet the essential idea upon which the doctrine is based is that of impossibility of performance of the con tract in fact impossibility and frustration are often used as interchangeable expres sions
The changed circumstances it is said make the performance of the contract impossible and the parties are absolved from the further 1 2 519 performance of it as they did not promise
perform an impossibility
 In the instant case there is no term or condition in the agreement in question which stipulates that the agree ment would be treated as having become impracticable on the refusel of the Prant Officer to grant the permission under section 63 of the Act
The parties are  therefore gov erned purely by section 56 of the Contract Act according to which a contract becomes void only if something supervenes after its execution which renders it impracticable
On the contention advanced on behalf of the respondents the ques tion that arises is whether the above quoted order of the Prant Officer Thana Prant dated December 8 1958 rendered the contract impracticable
The answer to this question is obviously in the negative
The said order it will be noted was not of such a catastrophic character as can be said to have struck at the very root of the whole object and purpose for which the parties had entered into the bargain in question or to have rendered the contract impracticable or impossible of performance
A careful perusal of the order would show that it was neither conclusive nor was it passed on the merits of the aforesaid application
The permission was refused by the Prant Officer only on the technical ground that the appellants had not obtained the requisite certificate as contemplated by rule 36f of the Rules
It did not in any way prohibit the appellants from making a fresh application to the Collector Thana Prant who in view of the Phraseology of section 63 of the Act read with clause f of rule 35 of the Rules appears to be the only authority competent to grant the requisite certificate
The said order also did not put any fetter on the appellants to apply to the Collector or the Additional Collector for grant of the requisite permission for sale and purchase of the land after obtaining the aforesaid certificate
We are therefore clearly of the opinion that no untoward event or change of circumstances supervened to make the agreement factually or legally impossible of performance so as to attract section 56 of the Contract Act
The answer to the second question turns on the answer to two subsidiary questions i whether in according or declining to accord permission under the proviso to section 63 1 of the Act the Collector or the officer authorised by the State Government in that behalf acts in an adminis trative capacity or a judicial or a quasi judicial capaci ty and ii whether the aforesaid order dated December 8 1958 passed by the Prant Officer Thana was one on merits or otherwise
Turning to the question i it has to be ob served that there is nothing in section 63 of the Act to indicate that in exercising his jurisdiction under the proviso to sub section 1 of the section the Collector or the authorised officer has to act judicially or in conformi ty with the recognised judicial norms
There is also nothing in the aforesaid Section of the Act requiring the Collector or the authorised officer to determine any ques tion affecting the right of any party
The function which the Collector or the authorised officer discharges under the aforesaid proviso is therefore an administrative one and not judicial or quasi judicial
It will be apposite to advert to a few decisions 17 1546 SCI76 520 bearing on the matter
In AK Bhaskar vs Advocate General1 a full Bench of the Kerala High Court held that the decision of the Advocate General granting or refusing to grant the sanction under section 92 of the Civil Proce dure Code was neither judicial nor quasijudicial notwith standing the fact that he has to form an opinion and come to conclusion one way or the other
To the similar effect are the decisions of Allahabad and Rajasthan High Courts in Shantanand vs Advocate General2 and Shrimali Lal vs Advo cate General3
In Abdul Kasim vs Md Dawood4 it was held that in granting or withholding sanction to file a suit under section 552 of the Muslim Wakfs Act 1954 the Wakf Board does not act in a judicial or quasijudicial capacity but only in an administrative capacity
In The State of Madras vs
CP Sarathy and Anr5
It was held by this Court that the act of the Government in making a reference under section 10 of the Industrial Disputes Act was merely an administrative act and the fact that the Government before making a reference under section 101 of the Act had to satisfy itself on the facts and circumstances brought to its notice that an industrial dispute existed did not make the act judicial or quasi judicial
In regard to question ii it may be stated that al though the Prant Officer may have been exercising concurrent jurisdiction with the Collector Thana Prant he did not pass any orders on the merits of the previous application made by the respondents and endorsed by the appellants seeking permission to sell and purchase the suit property
The order as already stated was passed by him on the ground that the intending purchaser had not obtained the certificate required under rule 36f of the Rules
It is well recognised that the dismissal of a proceeding by an authority not on merits but merely on account of a formal defect will not attract the applicability of the general principles of Res judicata and will not debar the authority exercising concurrent jurisdiction from entertaining the subsequent proceedings for same relief and passing proper orders on merits
See Putali Meheti vs Tulja6 where the rejection of a previous suit for the plaintiff s omission to produce a certificate of the Collector under section 6 of the Pensions Act was held not to bar a second suit on the same cause of action and Pethaperumal vs Murugandi7 where rejection of the first suit for recovery of money for plaintiff s failure 1 AIR 1962 Ker
2 A IR 1955 All
372 3 AIR 1955 Raj 166
4 A IR 1961 Mad 244
5 AIR 1953 SC 53 6 ILR
3 Born
7 521 to produce succession certificate was held not to bar a second proceeding for the same relief
We are therefore of the opinion that the previous order passed by the Prant Officer being merely an administrative order and not having been passed on the merits of the case it did not in the absence of a statutory prohibition impair the power of the Collector to pass the impugned order on the merits of the matter under proviso to section 63 1 of the Act on the grant of the requisite certificate under rule 36f of the Rules
For the foregoing reasons we allow the appeal set aside the judgments and decrees passed by the Courts below and dismiss the respondents  suit but in the circumstances of the ease without any order as to costs
MP Appeal allowed


Summary:
The respondents agreed to sell their agricultural land to the appellants
The title deeds and possession of the land were given to the appellants and both parties jointly applied to the District Deputy Collector Thana Prant under section 63 of the Bombay Tenancy and Agricultural Lands Act 1948 seeking permission for the sale
The permission was refused on the ground that the intending purchaser had failed to obtain a certificate from the Collector under Rule 36f of the Bombay Tenancy and Agricultural Lands Rules 1956 that he intended to take to the profession of agricul ture and was capable of cultivating land personally
The appellants thereafter obtained the requisite sanction from the Additional Collector Thana in spite of the respond ents  non cooperation
A suit by the respondents for de claring the agreement void in law was decreed by the Trial Court
In appeal the High Court opined that the Prant Officer s refusal to permit the sate had rendered the agree ment impossible of performance
Allowing the appeal the Court
HELD 1 The parties are governed by section 56 of the Contract Act according to which a contract becomes void only if something supervenes after its execution which renders it impracticable or impossible of performance
The order of the Prant Officer was not of such a catastrophic character
519A C Satyabrata Ghose vs Mugneeram Bangur  Co  Anr   Smt
Sushila Devi  Anr
vs Hari Singh  Ors
and Tamplin Steamship Co Lid vs Anglo Mexican Petroleum products Co Ltd  403 applied
Joseph Constantine Steamship Line Ltd vs Imperial Smelting Corporation Ltd at 168 referred to
2 The function which the Collector or the authorised officer discharges under the proviso to section 631 of the Bombay Tenancy and Agricultural Lands Act is an administra tive one and not judicial or quasi judicial
519G H The State of Madras vs CP Sarathy  Anr
AIR 1953 SC 53 AK Bhaskar vs Advocate General AIR 1962 Kerala 90 Shantanand vs Advocate General AIR 1955 All 372 Shrimali Lal vs Advocate General AIR 1955 Raj 166 and Abdul Kasim vs Md Dawood AIR 1961 Mad
similarity marked
3 The dismissal of a proceeding by an authority not on merits but merely on account of a formal defect will not attract the applicability of the general principles of res judicata and will not debar the authority exercising concur rent jurisdiction from entertaining the subsequent proceed ings for the same relief and passing proper orders on merits
520 F H Putali Mehati vs Tulia ILR and Pethaparu mal vs Murugandi  applied