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Parshotam Das Shankar Das Vs. Municipal Committee - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana
Decided On
Reported inAIR1949P& H301
AppellantParshotam Das Shankar Das
RespondentMunicipal Committee
Cases ReferredFibrosa Spolka Akoyjna v. Fairbairn Lawson Combe Barbour Ltd.
Excerpt:
.....his money. he further maintained that the plaintiff had succeeded in proving by evidence that the municipal committee had failed in fulfilling the above said terms and since this amounted to a breach of the contract, the plaintiff was entitled to the refund of the amount in suit. in my judgment, therefore, it was not a case in which refund of the amount paid by the plaintiff to the defendant committee could be decreed on the ground that the defendant had failed to perform his part of the contract and the courts below were wrong in treating it as merely a suit of that kind. as regards the first objection, i concede that the term 'frustration' is not used anywhere in the plaint but since my opinion is that the facts set out therein are sufficient to make out a case of frustration, and if..........municipal committee conducted an auction sale of what was described as the contract of the tonga stands situate within the municipal limits, but which really consisted of the lease of the said tonga stands for a period of one year from 1st april 1944 to 31st march 1945. the sale was knocked in favour of parshotam das for rs. 5000/- and he paid the entire amount to the municipal committee before the 1st of april. it, however, appears that parshotam das was unable to take advantage of the lease and dispute between him and the municipal committee started at the very inception. after some correspondence between the parties, parshotam das eventually instituted a suit for the refund of rs. 5000/- on 19th january 1945. he alleged, (1) that the municipal committee did not fulfil its part.....
Judgment:

Teja Singh, J.

1. This is a second appeal from a judgment and decree of the District Judge, Gurdaspur, whereby he accepted an appeal from the decree of Subordinate Judge Second Class, Batala, and dismissed the plaintiff's suit for recovery of Rs. 5000/- against the Municipal Committee, Batala. The facts briefly stated are as follows: On 24th March 1944, the defendant Municipal Committee conducted an auction sale of what was described as the contract of the tonga stands situate within the municipal limits, but which really consisted of the lease of the said tonga stands for a period of one year from 1st April 1944 to 31st March 1945. The sale was knocked in favour of Parshotam Das for Rs. 5000/- and he paid the entire amount to the Municipal Committee before the 1st of April. It, however, appears that Parshotam Das was unable to take advantage of the lease and dispute between him and the Municipal Committee started at the very inception. After some correspondence between the parties, Parshotam Das eventually instituted a suit for the refund of Rs. 5000/- on 19th January 1945. He alleged, (1) that the Municipal Committee did not fulfil its part of the contract, (2) that the tongas for which the stands leased out to him were meant did not use them and accordingly he was not able to recover any fees from them, (3) that the tongas were all along using private stands and the Municipal Committee took no steps to have those stands closed, (4) that the tonga drivers did not care for the Municipal Committee and contended inter alia that the auction of the lease of the stands by the Committee was illegal, and (5) that the Committee neither could compel the tonga drivers to use its tonga stands and to pay any fees nor did it do so in fact. On these allegations, the plaintiff maintained that he was entitled to sue the Municipal Committee for damages, which, he assessed at the rate of Rs. 885/- per month but he merely contented himself by claiming the refund of the amount that he had paid to it. It may be mentioned at this stage that though no evidence has been adduced by either side to prove this fact, it is admitted by both the counsel that according either to the rules framed by the Municipal Committee or practice every tonga driver who had to use the municipal tonga stand was to pay to the contractor, or to use the correct term, to the lessee of the tonga stand, one anna per rupee of his earning. The Municipal Committee admitted the grant of the lease of the tonga stands to the plaintiff and the payment of the amount of Rs. 5000/- by him. It also admitted that the plaintiff was entitled to recover one anna per rupee from the tonga drivers who had to use the tonga stands leased out to him but it denied that it had been guilty of breach of any of the terms of the contract or that the plaintiff was entitled to claim refund from it. The following three issues were framed by the trial Sub-Judge:

1. Whether the defendant Committee had not fixed up any tonga stands and the possession of the same was not delivered to the plaintiff and what is its effect?

2. Whether it was agreed between the plaintiff and defendant committee that the tongas plying for hire will not stand at any other place except the fixed tonga stands; if so, what is its effect?

3. Whether the defendant committee had no right to levy the fee from tongawalas for the use of the tonga stands and for that reason the sale in question is null and void?

The first and the third issues were found against the plaintiff but the second issue was found in his favour and in the result the suit was decreed. On appeal the District Judge upheld the finding of the trail Sub-Judge on the 1st issue. As regards the other issues, his judgment is not by any means clear. He observed that according to the plaint the breach on the part of the Municipal Committee consisted of its failure (1) to appoint any particular stands and (2) to close the private stands. The first part, he held not established but as regards the second, his opinion was that the evidence on the point was not final though it leans more in favour of the assumption that the Committee did take steps against the tonga drivers, but that either the police or tha Magistrate refused to proceed according to law, purely on humanitarian grounds. Further on, he made the following observations:

I do not, however, consider that such evidence was material to the present case for it could never have been a condition of the contract that the committee would compel tonga drivers to use the municipal stands. At the time when the lease was auctioned on 24th March 1944, the tonga drivers were behaving normally and of this circumstance the plaintiff must have been aware, if be was prepared to take the lease. All that the Committee did was to lease its property for a year to return for Rs. 5,000/- and for its own part to make the Municipal tonga stands available to the plaintiff.... It might be found that he has incurred a loss of Sve thousand rupees, but it might also be found that he has realized a part of the fees due to him, in which case the amount of damages would be below Rs. 5000/-. It is for this reason that the present suit cannot be treated as one for damages and as the Committee has not failed to fulfil any essential condition of the contract, it is idle to argue that the contract is at an end, and that the plaintiff is entitled to a refund to his money.

2. The main argument of the appellant's counsel before us was that the District Judge has ignored most of the oral and documentary evidence that the plaintiff had produced in support of his case and he also made an effort to show that the findings of the District Judge, where-ever they were clear, were erroneous. He maintained that according to the terms of contract between the parties, it was the duty of the Municipal Committee (1) to specify tonga stands where the tongawals were to keep their vehicles, (2) to compel all tongawalas who plied their vehicles for hire within the municipal limits not to use any other stand except those specified by the Municipal Committee, and (3) to compel the tonga drivers to pay a fee of one anna per rupee to the plaintiff for using the municipal stands. He further maintained that the plaintiff had succeeded in proving by evidence that the Municipal Committee had failed in fulfilling the above said terms and since this amounted to a breach of the contract, the plaintiff was entitled to the refund of the amount in suit. I have no hesitation in coming to the conclusion that these contentions were wholly devoid of force and had they constituted the only grounds on which the plainttff's claim was based, I would have had no hesitation in agreeing with the lower appellate Court in non-suiting the plaintiff. My reasons for coming to this conclusion are that there was no evidence on the record to support the plaintiff's contention that the committee had taken upon itself the duty either to appoint any particular tonga stands or to close other stands. I am, further, of opinion that the statement of Mukand Lal, Sanitary Inspector and Mohammad Latif, Cart Inspector, when read in the light of the reports made by them from time to time and Resolution No. 1 passed by the Committee in its meeting of 6fch April 1944 (Ex. P-5) leave no doubt that the Committee took every possible action to compel the tongawals to use the municipal tonga stands and if in spite of all this tonga drivers did not use the municipal stands

and in the result the plaintiff was not able to, realise' a single pie by way of fees, the reason for this was that the Committee was practically helpless in the matter. I say practically helpless, because it was open to the Municipal Committee to have the tonga drivers, who made their vehicles stand at unauthorised places, prosecuted and there is ample evidence to show that it was not found wanting in this, but it could not take the tongawals physically to its stands and make them pay the requisite charges to the plaintiff. It is true that no case against any one of the tonga drivers was actually put in Court, but the main responsibility for this lay on the shoulders of certain local police officials and executive authorities, who took up the attitude that unless the Committee redressed some of the grievances of the tonga drivers they could not be called upon to take up the cases against them. I am, however, inclined to think that even if every tongawala had been successfully prosecuted and punished, since they were determined not to use the municipal stands, those stands would have remained unused all the same and the plaintiff would still have not been able to receive a single pie by way of fees. In my judgment, therefore, it was not a case in which refund of the amount paid by the plaintiff to the defendant committee could be decreed on the ground that the defendant had failed to perform his part of the contract and the Courts below were wrong in treating it as merely a suit of that kind. To start with, the appellant's counsel also made the same mistake, but when his attention was drawn to the allegations contained in para 3 of plaint, he took up the position that the refund should be allowed because the contract had been frustrated.

3. The learned Counsel for the respondent-committee urged that the plea of frustration should not be allowed at this stage, because (1), it had not been raised specifically in the plaint, and (2), that it has never been argued in the Courts below. As regards the first objection, I concede that the term 'frustration' is not used anywhere in the plaint but since my opinion is that the facts set out therein are sufficient to make out a case of frustration, and if is a well-recognized rule that the pleading of the Mufassil Courts should not be construed strictly, I do not think it correct to rule out the plea merely on this ground. As regards the second objection all that I wish to say is that if the facts on record are sufficient to make out a plea, it would be wrong to ignore it simply because it did not strike counsel in the Courts below. It was then urged by the respondent's learned Counsel that doctrine of frustration goes much beyond Section 56, Contract Act, and in view of the fact that that section is exhaustive, no relief can be granted by Courts in India on the basis of that doctrine. As I shall show hereafter, 'frustration' has a very wide meaning and Section 56, deals with some aspects of it. The first part of the section deals with an agreement to do an act impossible in itself and lays down that such an agreement is void. This is exactly the rule of common law. The second paragraph lays down that a contract to do an act of which 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. The words of the third paragraph are that 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 promisee sustains through (the non-performance of the promise. Now it is not denied that all the conditions of a contract need not be expressed in words and there are conditions which may be implied from the nature of the transaction. The section does not, deal with cases in which an event, the parties took it 'for granted will never happen does happen and makes the performance of the contract impossible. If it be held that Section 56 is exhaustive, no relief could be granted to any of the parties on the happening of such an event, but this would be against the very principles underlying Section 56. In Hurnandrai Fulchand v. Pragdas Budhsen A.I.R. 1923 P.C. 54, the observations made by Lord Sumner would go to show that he had no doubt in his mind that the doctrine of frustration was applicable to India. In Firm of Hussainbhoy Karimji v. Haridas and Ors. A.I.R. 1928 Sind 21, the question for consideration involved the interpretation of Section 56. While dealing with this point, Tyabji, A.C.J. who delivered the judgment of the Bench made the following observations:

Considered in this light, the law in India does not, it seems to me, stand on a basis very different from that of England, and the significance of the decision of the Privy Council in Hurnandrai Fulchand v. Pragdas Budhsen A.I.R. 1923 P.C. 54, becomes clear. Lord Sumner in that case referred to the discussions and decisions in England on the doctrine of 'frustration' in such terms as to show that they were applicable to India, as well as the principle of Taylor v. Caldwell (1863) 11 W.R. 726 and of the Coronation cases Krell v. Henry (1903) 19 T.L.R. 711 etc.

Pollock in his well-known book on Contracts (Edition 1946) while dealing with the doctrine, of frustration makes the following remarks:

The Indian Contract Act attempted to generalize the doctrine as long ago as 1872. (Then he reproduces paragraph 2 of Section 56). This is unsatisfactory both in excess and in defect. It purports to lay down a positive rule of law regardless of the parties' intention, and therefore is too wide; yet it fails in terms to include the case of lateral performance being possible but useless, and in that respect 13 too narrow. It does not appear, however that there has in practice been any material divergence from English doctrine.

In Cricklewood Property Ltd. v. Leighton's Investment Trust Lid. 1945 A.C. 221 Viscount Simon L.C., defined frustration as 'the occurrence of an intervening event or change of circumstances so fundamental as to be regarded by the law both as striking at the root of the agreement, and as entirely beyond what was contemplated by the parties when they entered into the agreement.' There can be no doubt that if an event which could not be foreseen by the parties supervenes, frustration would apply. The question whether it would also apply in a case where the supervening events may have been foreseen by the parties but no express provision was made with respect to them, Pollock answers the question in the affirmative. The following passage appears at p. 228 of his Book:

If the inability to perform the contract is due to the fault of one of the parties, he cannot successfully plead frustration. It is also true that if the parties expressly contract with reference to the occurrence of the supervening events, frustration is inapplicable. But there is another type of case outside these rules. The parties when they made the contract, may have foreseen the supervening events as probable, but may have made no express provision with respect to them. Here if the events occur, frustration can be pleaded.' The learned author relied upon Tatem Ltd. v. Gamboa 1939 1 K.B. 132 in support of his view.

4. Let us now examine whether the doctrine of frustration as enunciated above applies to the present case. It is not denied that the tonga stands which were leased out to the plaintiff were meant to be used by all tonga drivers plying their vehicles within the municipal limits. It was also contemplated by the parties that the plaintiff would collect the specified fee from the tonga drivers who use the stands and I have not the slightest hesitation in coming to the conclusion that it was on this assumption that the Municipal Committee leased the tonga stands to the plaintiff and the latter paid the sum of Rs. 5000.

5. The evidence produced by both sides proves beyond doubt that no tonga driver used any of the stands for a single day and consequently the plaintiff did not, and could not, realise anything. The respondent's counsel submitted that the Committee could not be held responsible for the state of affairs that ensued. This may be so, but no blame attached to the plaintiff either and the fact remains that because of no fault on his part the very conditions, on the strength of which he entered into contract and paid the lease money to the Municipal Committee, did not come into existence and the contract

wag thus frustrated. The case in this respect is similar to the famous English cases which are known as Coronation cases. In Krell v. Henry (1903) 2 K.R. 740 the defendant agreed to hire from the plaintiff a flat in Pall Mall for June 26 and 27, on which days it had been announced that the coronation processions would take place and pass along Pall Mall. The contract which was made on 20th June contained no express reference to the coronation processions, or to any other purpose for which the flat was taken. A deposit was paid at the time of the contract. As (foe processions did not take place on the days originally fixed, the defendant declined to pay the balance of the agreed rent.

6. It was held that from necessary inferences drawn from surrounding circumstances, recognised by both contracting parties, the taking place of the processions on the days originally fixed along the proclaimed route was regarded by both contracting parties as the foundation of the contract and the words imposing on the defendant the obligation to accept and pay for the use of the flat for the days named, though general and unconditional were not used with reference to the possibility of the particular contingency which afterwards happened, and consequently the contract was frustrated. The general rule applicable to cases of this kind was enunciated in Bush v. Whitehaven Town and Harbour Trustees (1888) 62 J. P. 392 in the following words:

Where a contract is made with reference to certain anticipated circumstances, and when it becomes wholly inapplicable or impossible of application to any such circumstances, without any default on the part of plaintiff, it ceases to have any application. It cannot be applied to other circumstances which could not have been in the contemplation of the parties when the contract was made.'

Since in the present case the plaintiff obtained the lease and the committee granted the same to him on the assumption that the tonga-stands, to which the lease related, would be used by the tonga-drivers of the town and the plaintiff would recover fees from them, but for reasons which both sides could not help neither the tonga drivers used the stands nor the plaintiff was able to recover any thing from them, the doctrine of frustration applied with full force.

7. The last question that falls for determination is whether the contract having frustrated the plaintiff is entitled to claim the refund of the amount that he has paid. The learned Counsel for the respondent urged that no such relief could be given under Section 65, Contract Act. It appears to me that Section 65, in terms applies to cases that fall within the ambit of Section 66, but the principle of it should apply to all cases of frustration. This view is supported by the observations made by Pollock and Mulla in their well-known Commentary on Indian Contract Act (Edition 1944) on p. 356 of the book. Previously the law in England was that the parties to a frustrated contract are released from any further fulfilment of the obligations created by it and any payment that had been made in pursuance of the contract prior to the moment of frustration was not recoverable. This was commonly known as the rule in Chandler v. Webster (1904) 90 L.T. 217, and was based on the principles that let the loss lie where it has fallen.

8. But recently the House of Lords has taken a different view in Fibrosa Spolka Akoyjna v. Fairbairn Lawson Combe Barbour Ltd. 1942-2 ALL E.R. 122. In that case A contracted to deliver certain machinery to B. Part of the money was advanced by B for the purpose. By reason of the outbreak of European war the contract was frustrated and it was held that B was entitled to recover 1000 paid in advance as money paid upon a consideration which had wholly failed and that the foundation of his right to do so was quasi contract and not contract. It may also be mentioned here that since it was recognised that the principle laid down in Fibrosa case 1942 2 ALL E.R. 122 might not apply to all sorts of cases, shortly after that case the law reformed and Frustrated Contract Act, 1943 was passed which extended consider, ably the principles of the case. The present case however, appears to me to be analogous to the Fibrosa case 1942 2 ALL E.R. 122 and following that authority I hold, that the plaintiff was entitled to the refund of) the lease money.

9. In the result, I would allow the appeal set aside the decision of the District Judge and decree the plaintiff's case. In view of the difficult nature of the question involved, I would leave the parties to bear their own costs throughout.

Mahaian, J.

10. I agree.


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