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Alanduraiappar Koil Chithakkadu by Its Trustee M. Ramanada Nainar and ors. Vs. T.S.A. Hamid and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberApp. No. 162 of 1959
Judge
Reported inAIR1963Mad94
ActsTransfer of Property Act, 1882 - Sections 105; Contract Act, 1872 - Sections 56
AppellantAlanduraiappar Koil Chithakkadu by Its Trustee M. Ramanada Nainar and ors.
RespondentT.S.A. Hamid and anr.
Appellant AdvocateT.K. Subramania Pillai, Adv.
Respondent AdvocateT.R. Ramachandran, Adv.
DispositionAppeal allowed
Cases ReferredSatyabrata Ghose v. Mugneeram Bangur and Co.
Excerpt:
.....- doctrine of frustration - section 56 of contract act, 1872 - petitioner did not pay rent as per lease on account of cyclone - lease was for period of five years - cyclone remain for very short period - doctrine of frustration will not apply. - - the right of collecting dues from the stall-keepers in the market as well as in the shops used, to be leased out. the defendant had to spend a good amount of money for effecting the necessary repairs. as a result of the cyclone, the business in the shandy became poor, and the defendant sustained heavy loss. they did not provide for remission in the event of loss or damage sustained by the defendants due to causes like cyclones. further, it was for the lessee to put up the temporary structures like the sheds and the lamps, for his facility..........and consequently is he entitled to any relief under section 56 of the indian contract act?' 4. the suit lease agreement is ex. a.1. after stipulating for the payment of rs. 12000 towards the lease amount for five years from 1-4-1952 payable at the rate of rs. 250 every week, it does not provide any clause for remission for loss due to unexpected causes. the property is described as the site known as the shandy tope. it does not refer to any structures existing there. it would therefore appear that the sheds, lamps etc., in the tope were put up by the lessee for his own facilities. this is also clear from the evidence of p. w. 1, the executive officer that 'the sheds put up by the defendants' fell down due to the cyclone and that it would have caused about rs. 800 to put up the sheds.....
Judgment:

Ramakrishnan, J.

1. This appeal is directed against the judgment and decree of the learned Subordinate Judge, Mayuram, in O. S. No. 18 of 1956. The suit was filedfor the recovery of Rs. 10,243-8-0 due as arrears of lease. The plaintiff is a temple, Sri Alanduraiappar Koil, Chuhakkadu, represented by its present trustees, plaintiffs 1 to 5. The 2nd defendant is the minor son of the first defendant. The temple owned a property called Shandy tope inside Mayuram municipality where fairs are held every Monday and where there are also some shops for carrying on daily sales. The right of collecting dues from the stall-keepers in the market as well as in the shops used, to be leased out. In an auction held on 24-2-1952, the first defendant took this on lease for a term of five years from 1-4-1952 at an annual rental of Rs. 12,000. However, the registration of the lease deed took place only on 12-9-1953. The first defendant became a defaulter, and on 1-1-1956, the arrears of rent stood at Rs. 10,203-8-0. The plaintiff sent a notice demanding these arrears on 4-1-1956. The first defendant sent at reply on 9-1-1956 requesting for remission, and then he prayed for time till 31-3-1956 for payment of arrears. Since the first defendant became a defaulter, the plaintiff decided to determine the lease. That was done by notice dated 17-2-1956. The arrears upto the date of the determination of the lease came to the suit amount.

The plea of the first defendant which was adopted by the 2nd defendant was this. The shandy tope originally fetched only a lease of Rs. 300 a year, and in 1946, the first defendant's brother took the lease at Rs. 4500 for five years from 1948 to 1952. The bid was pushed upto Rs. 12000 for the suit period on account of unhealthy competition. After the lease period commenced, there was an unexpected and unprecedented cyclone in November 1952 and it caused damage to the buildings in the tope. The trees fell down on the roofs, and the market became slushy and water logged. The defendant requested the plaintiff to attend to the repairs but he would not do so. The defendant had to spend a good amount of money for effecting the necessary repairs. As a result of the cyclone, the business in the shandy became poor, and the defendant sustained heavy loss. He wrote letters on 12-11-1953 and 24-11-1953 to the plaintiff referring to the loss, and requesting him to grant a proportionate reduction in the lease amount. But the executive officer of the plaintiff temple issued a notice on 30-11-1953 to the defendant demanding the arrears. According to the first defendant, on account of the cyclone, the fundamental basis for the contract became altered, and the contract became impossible of performance due to circumstances which the defendant could not prevent. The defendant also applied to the Deputy Commissioner of the Hindu Religious and Charitable endowments board for remission, but no relief was given. There was a second cyclone on 30-11-1955, which caused damage to the goods, and the sandy did not resume its normal business thereafter. In view of the above circumstances, the claim for the arrears was denied. There was also another plea by the defendant that on account of an earlier notice by the plaintiff on 2-12-1953 stating that the lease was cancelled, the lease became determined on 2-12-195? itself.

2. The trial court came to the conclusion that the plea last mentioned about the determination ofthe lease in 1953, was not sustainable, because even after that notice, the defendant continued to occupy the shandy on the same terms as under the original lease. This point is not now before us in this appeal. The lower court went at length into the claim of the defendant for remission on account of the cyclone. It came to the conclusion that the defendant did suffer loss on account of the two cyclones. It accepted the entries in the defendant's account books, which showed that the defendant had spent more than two thousand rupees in putting up the sheds and the mercury lamps immediately, after taking the shandy on lease, and that he had to spend more than five thousand rupees for putting up sheds immediately after the cyclone of 30-11-1952. The trial court considered this expenditure and also the loss which according to the accounts of the first defendant was sustained for a period of one year from the commencement of the lease, and came to the conclusion that Rs. 6000 should be granted to the first defendant by way of remission to the end of November, 1953. There was next the cyclone in 1955. It affected the supply of merchandise from outlying places to the shandy. The sale of tickets for the sale of such merchandise fell considerably in 1955-56. The trial court was inclined to grant one thousand to the defendant for the loss caused by the cyclone of 1955. The trial court considered that the defendant could claim these amounts because of the application of the principle of frustration under Section 56 of the Indian Contract Act; in the instant case, the promisor could not fulfil his promise on account of the two cyclones. Therefore a decree was passed reducing the suit claim by Rs. 7000 by way of remission. The plaintiffs have filed the appeal against the above decision.

3. The learned counsel for the appellants urged that the terms of the lease should be strictly interpreted; they did not provide for remission in the event of loss or damage sustained by the defendants due to causes like cyclones. Further, the circumstances of the case did not justify the application of the principle of frustration under Section 56 of the Indian Contract Act. The points for consideration in this appeal are:

'(1) Under the terms of the lease between the plaintiff and the first defendant, is the first defendant entitled to remission on account of the loss sustained by him?

(2) Could the first defendant not fulfil his promise under the lease, on account of reasons beyond his control, namely, the two cyclones, and consequently is he entitled to any relief under Section 56 of the Indian Contract Act?'

4. The suit lease agreement is Ex. A.1. After stipulating for the payment of Rs. 12000 towards the lease amount for five years from 1-4-1952 payable at the rate of Rs. 250 every week, it does not provide any clause for remission for loss due to unexpected causes. The property is described as the site known as the shandy tope. It does not refer to any structures existing there. It would therefore appear that the sheds, lamps etc., in the tope were put up by the lessee for his own facilities. This is also clear from the evidence of P. W. 1, the executive officer that 'the sheds put up by the defendants' fell down due to the cyclone and that it would have caused about Rs. 800 to put up the sheds originally. Thus it would appear that the terms of lease included only enjoyment of the shandy tope, and the payment of the stipulated amount of lease without any provision for remission. Further, it was for the lessee to put up the temporary structures like the sheds and the lamps, for his facility of using the tope by leasing out stalls to vendors.

5. The evidence in the case was directed to the effect of the two cyclones which occurred in the Tanjore Dt. during the suit lease period, one in November, 1952 and the other in 1955. Apparently, the first cyclone was more severe, and hit Mayuram itself, and caused damage to the sheds put up by the defendant in the shandy. There were damages to plantations on the neighbouring areas with the result that there was a sudden influx of a large quantity of produce into the shandy due to windfall and the falling down of fruitbearing trees. This additional business owing to this sudden influx lasted for two or three months after the cyclone. Thereafter for six months the shandy was not getting formed regularly. This can be gathered from the evidence of D. W. 1, who was the executive officer from February/March 1953 to 1955. This executive officer estimated the loss sustained at Rs. 4500, and he seems to have made a recommendation to the higher authorities for granting that amount, as remission to the defendant. But ultimately no remission was granted. Similar evidence was also given by D. W. 2 who was the trustee of the suit temple at that time, and who was the Vice Chairman. of the Mayuram Municipality during the suit period. This witness refers to a petition given by the defendant after the cyclone on 30-11-1952, stating that dried fish was not coming to the market as previously, but no action was taken on that petition. So far as the second cyclone is concerned it did not hit the shandy directly. According to D. W. 1 it was a mild one. There was no' damage to the sheds, but the shandy had short supply off fish, because the stores near the sea were washed away by the tidal waves. The defendant's witnesses have not been able to give any evidence about the damage under the second cyclone. Obviously, being people of Mayuram which was not affected by the cyclone, they could not give any information. Only D. W. 3, the first defendant produced his accounts to show that the business fell during the period. But he referred only to the loss of business in dried fish on account of the second cyclone. The trade in the shandy however includes vegetables and plantains. Apparently the second cyclone did not affect this kind of produce. It appears to us that under the terms of the lease, the defendant was not entitled to any remission on account of fall in the business due to causes beyond his control. The lease did not stipulate that the defendant should make any specified amount as profit. If that was the intention the parties could have fixed the lease amount on the basis of a percentage of the earnings. Here we have a lump sum amount payable irrespective of the earnings of the lessee from the tope. The executive officer of the temple recommended some amount as remission to the defendant as a matter of grace. But the authorities who had to grant theremission were not inclined to concede this request. However much one may sympathise with the firstdefendant for the losses sustained by him on account of the cyclone, the court cannot constitute itself into an authority for granting remission on an ex gratia basis to him. The court has to interpret the terms of the contract, and proceed togrant remission only if the terms provide for it.

In a decision in App. No. 1172 of 1953 to which one of us was a party, this court observed,

'in Sri Newas Prasad Singh v. Ram Raj Tewari, 22 Ind Cas 822 : AIR 1914 Cal 673 it was held that where the lease deed provided that the tenant should not claim reduction of rent either on account of celestial or terrestrial disturbances or on account of any village practice or usage, the tenant was liable to pay according to the contract and was notentitled to plead relief by way of custom in the village. Reference was then made to the decision reported in Ramakrishna v. Rangachariar, 32 Ind Cas 737 : AIR 1917 Mad 313, where it was held that in the absence of custom or contract to the contrary, the obligation to grant remission was purely moral and not legal, and cannot be enforced in a suit and that the tenant was not entitled to a remission on account of savi or failure of crops.'

In the present case, the defendant is himself toblame for the losses, because admittedly in thelease which his brother took for the previous fiveyears the amount of lease was only Rs. 4500, andon account of cut-throat competition, the defendantbid the lease upto a very high figure of Rs. 12000which evidently was something far more than whatthe business could afford. It was after havingcatered into such a foolish venture that he had toresort to the authorities repeatedly for remission.Unfortunately, however much one may sympathisewith the defendant for his predicament, the courtshave a duty to enforce the contract between theparties, and in the absence of any provision for remission on account of losses, no such remission canfee granted by the courts.

6. Taking up the question of frustration, we are of the opinion, that this is a case where the principle of frustration laid down under Section 56 of the Indian Contract Act has no application. Certain English cases were cited before us where the scope of the principle has been explained. Morgan v. Manser, 1947 2 All ER 666 refers to 'an event, or change of circumstance, which is so fundamental as to be regarded by the law as striking at the root of a contract as a whole and beyond what was contemplated by the parties, and such, that to hold the parties to the contract, would be to bind them to something to which they, would not have agreed, had they contemplated that event or those circumstances' as amounting to frustration. Again in Cricklewood Property and Investment Trust Ltd. v. Leighton's Investment Trust Ltd.; 1945 AC 221 frustration has been defined as 'the premature determination of an agreement between parties, lawfully entered into and in course of operation at the time of its premature determination, owing to 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.'

Cheshire in his Law of Contracts, 5th Edn. at page 464 refers to the observations of Goddard, J. in Tatem Ltd. v. Camboa, 1938 3 All ER 135

'If the foundation of the contract goes, either by the destruction of the subject-matter or by reason of such long interruption or delay that the performance is really in effect that of a different contract, and the parties have not provided what in that event is to happen, performance of the contract is to be regarded as frustrated'.

7. In India, this principle is embodied in Section 56 of the Indian Contract Act stating that 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. In the decision of the Supreme Court in Satyabrata Ghose v. Mugneeram Bangur and Co., : AIR1954SC44 , the scope of Section 56 has been considered. After referring to English cases on the subject of frustration, which could have only a persuasive value and may be helpful in showing how the courts in England have, decided cases under similar circumstances, their Lordships observed that the doctrine of frustration is really an aspect of 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. Having stated this proposition, they considered the application of the principle to the case before them. In that case the defendant company launched a scheme for development of land, and undertook to construct the roads and drains necessary, on that land. They also agreed to sell a plot of the land to the plaintiff. A considerable portion of the area comprised in the scheme, was requisitioned for military purposes in 1941. This prevented the various construction from proceeding, and the defendant-company who could not undertake the road construction for an indefinite period, wrote to the plaintiff, seeking to have the agreement treated as cancelled. Their Lordships at p. 326, of the report (SCR): (at p. 49 of AIR), took up the question for consideration as to whether or not the disturbing element which is alleged to have happened in the case, had substantially prevented the performance of the contract as a whole. They came to the conclusion that it could not be said that the requisition by the military vitally affected the contract or made its performance impossible.

8. In the present case, it is difficult to conceive how the cyclone which lasted for a short duration in 1952, and another milder cyclone in 1955 rendered the performance of the contract impossible, or substantially prevented the performance of the contract. The defendant admits the sudden influx of produce to the shandy, caused by the windfall of this after the 1952 cyclone, and then the slackening of the supplies for a period of six months when the shandy was not being formed regularly. Thereafter, the shandy admittedly continued to function. These disturbances in the business of the shandy would have been over, by the middle of 1953. Though the suit lease commenced on 1-4-1952, the lease deed was executed and registered only on 12-9-1953. By that time, the cyclone had come and gone, and its after-effects also had subsided. Nothing prevented the defendant at that stage, from insisting upon a recital in the contract to provide for the effects of the cyclone. The omission to mention this in the document of the lease, would show that the parties did not intend to provide for a clause about remission of lease amount, on account of the cyclone. In such circumstances it will not be open to the parties to adduce oral evidence that the lease did include a clause for remission, as it will amount to varying the terms of a written contract by parole evidence. However, the defendant has not based his claim for remission on the ground that the contract provided for remission. He seems to have based his claim on the doctrine of frustration. The trial court has referred to the decision of the Supreme Court abovementioned under Section 56 of the Contract Act, and came to the conclusion that in the circumstances of the case, the promisor could not fulfil his promise on account of the two cyclones. It is not clear how the promisor was prevented from fulfilling his promise on account of the cyclone. The interruption in the business for a short period, no doubt, might have led to a fall in the business from what was anticipated, but the lease had five years to run, and the business would have resumed its normalcy in the following season; the business might have even boomed, and the increase in business might have offset the loss. Of course, no evidence has been given about this. The fact, however, is that the lease had five years to run, and both temporary fall of the income in one year and temporary boosting of the income in another year, should be considered to be implied in the calculation of the parties when they entered into the agreement. The long duration of the contract was expected to iron out these variations and provide for a fair average profit during the period as a whole. Therefore, it was quite improper for the trial court to fasten only on the loss during the cyclone, and ignore the profits that might have been earned in the other periods for holding that this is a case where the doctrine of frustration would apply. The trial court in extending its sympathy to the defendant has not considered the fact that the defendant was largely responsible for his present predicament, through having bid at a highly excessive figure at the auction, for no other purpose than to get the better of a rival competing lessee. The court cannot relieve a party of the consequences of such a foolish action. It would have been open to the temple authorities to give some relief on ex gratia basis, if they were so advised, but that is not for the court to grant. We are of the opinion that this is not a case where the doctrine of frustration would apply.

9. The appeal is, therefore, allowed, and the decree of the lower court set aside. The parties will get a decree for the amount as prayed for, in the suit with costs. The appellant will get the costs of the appeal.

10. Cross-objections were filed by the defendant-respondent against the amount decreed. This was not pressed at the hearing of this appeal. The memo of cross-objection is dismissed without costs.

11. The lower court in its decree disallowed to the plaintiff, the court-fee paid for the relief for possession, in view of the fact that plaintiff had been given possession of the property by efflux of time. The suit was however filed also for possession on the basis of the termination of the lease, for the default of the defendant. There is, therefore, no reason why the plaintiff was disallowed, the court-fee paid on this portion of the relief as part of the costs. This point is also urged, in the appeal. The appellant will be entitled to court-fee paid for the relief of possession as part of his costs in the lower court.


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