Case: Boothalinga Agencies Vs. V. T. C. Poriaswami Nadar

and reasonable in the new situation.""The day is gone," the learned Judge went on to say "when we can excuse an unforeseen injustice by saying to the sufferer it is your own folly, you ought not to have passed that form of words. You ought to have put in a clause to protect yourself. We no longer credit a party with the foresight of a Prophet or his lawyer with the draftsmanship of a Chalmers. We realise that they have their limitations and make allowances accordingly. It is better thus. The old maxim reminds us that he who clings to the letter clings to the dry and barren shell and misses the truth and substance of the matter. We have of late paid heed to this warning, and we must pay like heed now." The decision of the Court of Appeal was reversed by the House of Lords, 1952 AC 166 at p. 184 and Viscount Simon expressed disapproval of the view taken by Denning, L. J. At page 184 of the Report, Viscount Simon said:"The principle remains the same. Particular applications of it may greatly vary and theoretical lawyers may debate whether the rule should be regarded as arising from implied term or because the basis of the contract no longer exists. In any view, it is a question of construction as Lord Wright pointed out in Constantines case and as has been repeatedly asserted by other masters of law."13. In English Law therefore the question of frustration of contract has been treated by courts as a question of construction depending upon the true intention of the parties. In contrast, the statutory provisions contained in S. 56 of the Indian Contract Act lay down a positive rule of law and English authorities cannot therefore be of direct assistance, though they have persuasive value in showing how English courts have approached and decided cases under similar circumstances.14. Counsel on behalf of the respondent, however, contended that the contract was not impossible of performance and the appellant cannot take recourse to the provisions of Section 56 of the Indian Contract Act. It was contended that under Clause 1 of the Import Trade Control Order No. 2-ITC/48 dated March 8, 1948 it was open to the appellant to apply for a written permission of the licensing authority to sell the chicory. It is not shown by the appellant that he applied for such permission and the licensing authority had refused such permission. It was therefore maintained on behalf of the respondent that the contract was not impossible of performance. We do not think there is any substance in this argument. It is true that the licensing authority could have given written permission or disposal of the chicory under Clause 1 of Order 2-ITC/48 dated March 8, 1948 but the condition imposed in Ex. B-9 in the present case is a special condition imposed under Clause (v) of Paragraph (a) of Order No. 2-ITC/ 48 dated March 6, 1948 and there was no option given under this clause for the licensing authority to modify the condition of licence that"the goods will be utilised only for consumption as raw material or accessories in the licence holders factory and that no portion thereof will be sold to any party".It was further argued on behalf of the respondent that, in any event, the appellant could have purchased chicory from the open market and supplied it to the respondent in terms of the contract. There is no substance in this argument also. Under the contract the quality of chicory to be sold was chicory of specific description-"Egberts Chicory, packed in 495 wooden cases, each case containing 2 tins of 58 lb nett".The delivery of the chicory was to be given by S. S. Alwaki" in December, 1955. It is manifest that the contract, Ex. A-1 was for sale of certain specific goods as described therein and it was not open to the appellant to supply chicory of any other description. Reference was made on behalf of the respondent to the decision in Maritime National Fish Ltd. v. Ocean Trawlers, Ltd., 1935 AC 524. In that case, the respondents chartered to the appellants a steam trawler fitted with an otter trawl. Both parties knew at the time of the contract that it was illegal to use an otter trawl without a licence from the Canadian Government. Some months later the appellants applied for licences for five trawlers which they were operating, including the respondents trawler. They were informed that only three licences would be granted, and were requested to state for which of the three trawlers they desired to have licences. They named three trawless other than the respondents, and then claimed that they were no longer bound by the charter-party as its object had been frustrated. It was held by the Judicial Committee that the failure of the contract was the result of the appellants own election, and that there was therefore no frustration of the contractWe think the principle of this case applies to the Indian law and the provisions of Section 56 of the Indian Contract Act cannot apply to g case of "self induced frustration ." In other words, the doctrine of frustration of contract cannot apply where the event which is alleged to have frustrated the contract arises from the act or election of a party. But for the reasons already given, we hold that this principle cannot be applied to the present case for there was no choice or election left to the appellant to supply chicory other than under the terms of the contract. On the other hand, there was a positive prohibition imposed by the licence upon the appellant not to sell the imported chicory to any other party but he was permitted to utilise it only for consumption as raw material in his own factory.We are accordingly of the opinion that Counsel for the respondent has been unable to make good his argument on this aspect of the case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]1. Notification No. 23-ITC/43, dated the 1st July, 1943, issued by the late Department of Commerce, as amended.Notification No. 2-ITC/48, dated 6th March, 1948, issued by the late Ministry of Commerce.8. On the basis of these provisions was contended by Mr. Gokhale on behalf of the appellant that the contract which is the subject-matter of the suit was unlawful and the respondent cannot claim damages for breach of such a contract. It was not disputed by Mr. Gokhale that the contract between the parties was entered into on November 26, 1955 before the coming into force of the Imports (Control) Order. It was nevertheless argued that a breach of the conditions of the licence was punishable under Section 5 of Act XVIII of 1947 as it stood at the relevant time and therefore the contract was illegal and no claim for the breach thereof was maintainable. The contention of the appellant was that the contravention of the terms of the licence issued under the notification dated March 6,1948 was a contravention of the notification itself within the meaning of Section 5 of Act XVIII of 1947 and was punishable. We are unable to accept this argument as correct. It is clear that Section 5 before its amendment only penalised the contravention of any order made or deemed to have been made under the Act. It is true that a licence was granted by virtue of a statutory notification dated March 6, 1948 issued under the Defence of India Rules and later deemed to have been issued under Act XVIII of 1947. Notification No. 23N-ITC/43 dated July 1, 1943 merely provides that no goods shall be imported except the goods covered by special licences issued by an authorised officer. Notification No. 2. ITC/48 dated March 6, 1948 authorises the licensing officer to impose one or more conditions prescribed by that order and the licensing officer has therefore power to impose conditions in the licence issued by him, but if the licensee contravenes the conditions imposed by the licence it is difficult to hold that it is not merely a contravention of the conditions of a licence but there is contravention of the terms of the notification and so the provisions of Section 5 of Act XVIII of 1947 are attracted. Reference was made on behalf of the appellant to the amendment made to S. 5 of Act XVIII of 1947 by the Amending Act 4 of 1960. By the Amending Act Section 5 of Act XVIII of 1947 was amended so as to include contravention of a condition of a licence granted under any order as an offence under Section 5 of the Act.It is not, however, permissible, in the circumstances of the present case, to construe the language of Section 5 of the parent Act with the aid of the Amending Act (Act 4 of 1960). It is not possible for us to accept the contention of Mr. Gokhale that the Amending Act of 1960 is something in the nature of a Parliamentary exposition of the meaning of Section 5 as it stood in the parent Act. It follows therefore that on the material date a breach of the condition of a licence was not tantamount to a breach of the statutory order within the meaning of Section 5 of Act XVIII of 1947.The view that we have expressed is borne out by the decision of this Court in East India Commercial Co. Ltd. Calcutta v. Collector of Customs, Calcutta, (1963) 3 SCR 338   = (AIR 1962 SC 1893  ) in which it was held by the majority judgment that an infringement of the condition of a licence was not equivalent to an infringement of the two orders dated July 1, 1943 and March 6, 1948 i. e., Nos. 23 ITC/43 and 2-ITC/48 made under the Imports and Exports (Control) Act, 1947 and therefore the provisions of Section 167 (8) of the Sea Customs Act were not attracted. We accordingly reject the argument of Mr. Gokhale on this aspect of the case.The doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. It should be noticed that Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties.In English Law therefore the question of frustration of contract has been treated by courts as a question of construction depending upon the true intention of the parties. In contrast, the statutory provisions contained in S. 56 of the Indian Contract Act lay down a positive rule of law and English authorities cannot therefore be of direct assistance, though they have persuasive value in showing how English courts have approached and decided cases under similar circumstances.