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Sannidhi Gundayya Vs. Illoori Subbayya and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1926)51MLJ663
AppellantSannidhi Gundayya
Respondentilloori Subbayya and anr.
Excerpt:
.....endeavours to secure the waggons but failed. the argument that the parties should have provided for the failure of performance in the contract itself and since that was not so done, the defaulting party should suffer cannot apply in a case like the present where the parties knew that owing to the restrictions introduced by government rules, shortage of waggons may occur and per formance for that reason may be rendered impossible. (1917) 2 k b 679. in our opinion the reasonable view of the contract in this case is that the seller agreed to supply the promised number of bags of rice if after using his best endeavours he was able to secure the necessary number of waggons......cannot be obtained aluminium cannot be shipped, and i cannot see why the law should imply an absolute obligation to do that which the law forbids. a shipment contrary to the prohibition would be illegal, and an absolute obligation to ship could not be enforced. i cannot agree that, in order to give to the contract its business efficacy, it is a necessary implication that the sellers undertook an absolute obligation to ship whether a licence was or was not obtained.5. in in re, anglo-russian merchant traders, ltd. and john ban and co. (london), ltd. (1917) 2 k b 679 scrutton, l.j. also used language to the same effect:it is sufficient in order to give business efficacy to the contract to hold that no higher obligation can be implied than that the sellers would use reasonable.....
Judgment:

1. This is an appeal under Section 15 of the Letters Patent against the judgment of Odgers, J., in S.A. No. 121 of 1924.

2. The facts of the case are simple and the findings are not disputed. The plaintiffs sued the defendant-appellant for damages for breach of contract to deliver certain bags of rice. The defendant had no license for importing rice but it is admitted that the parties knew that the defendant's friend 'Ayyalu' had a license and that he would enable the defendant by his good offices to perform the contract with the plaintiffs. It is not disputed that the contract contemplated delivery by railway waggons. As a war measure the Government had imposed 'waggon restrictions' 'priority certificates' all over the Presidency, and this interfered with the free and easy transport of rice. The existence of these restrictions was well-known to,all the parties. Owing to the shortage of waggons on account of the enforcement of the rules the defendant was not able to perform his contract. He therefore pleaded impossibility of performance as a defence to the suit. Odgers, ]., held in second appeal that, since the parties knew of the existence of these restrictions, it was not open to the defendant to import into the contract an implied condition that the contract was not to be performed if he was not able to secure the sufficient number of waggons for delivery.

3. The defendant-appellant relies on Section 56 of the Indian Contract Act. According to the 2nd para of this section 'A contract to do an act which, after the contract is made, becomes impossible,...becomes void, when the act becomes impossible....' 'By the Common Law of England a man who promises without qualification is bound by the terms of his promise. If the parties do not mean their agreement to be unconditional, it is for them to qualify it by such condition as they think fit (Pollock and Mulla, page 318). The rigour of this absolute rule has been gradually and very considerably relaxed by the recognition of 'the doctrine of the implied term ' by which, on the ground of impossibility, parties have been excused from performing their contracts by relying on conditions which may be implied from the nature of the contract and the surrounding circumstances. It does not appear as observed by Sir Frederick Pollock that the law embodied in Section 56 is materially divergent from the English doctrine.

4. In In re, Angld-Russian Merchant Traders, Ltd. and John Halt and Co. (London), Ltd. (1917) 2 K B 679 , by a contract made in London, 50 tons of aluminium had to be supplied to Vladivostok during a specified time. At the date of the contract, there was to the knowledge of both parties a prohibition against the export of aluminium from England except on licence granted by the British Government. The sellers were unable to obtain a permit and the aluminium was not exported. The Court of Appeal held that the contract was discharged by the impossibility of performance. With reference to the argument that the seller's obligation under the contract was absolute, Viscount Reading, C.J. observed thus:

There was at the time of making the contract and at all material times a prohibition against the export of aluminium except under a licence. If a licence cannot be obtained aluminium cannot be shipped, and I cannot see why the law should imply an absolute obligation to do that which the law forbids. A shipment contrary to the prohibition would be illegal, and an absolute obligation to ship could not be enforced. I cannot agree that, in order to give to the contract its business efficacy, it is a necessary implication that the sellers undertook an absolute obligation to ship whether a licence was or was not obtained.

5. In In re, Anglo-Russian Merchant Traders, Ltd. and John Ban and Co. (London), Ltd. (1917) 2 K B 679 Scrutton, L.J. also used language to the same effect:

It is sufficient in order to give business efficacy to the contract to hold that no higher obligation can be implied than that the sellers would use reasonable diligence to get a licence.

6. The learned Judges refused to read the contract as imposing an obligation which would imply that the parties had undertaken to carry out an arrangement against law. They therefore held that the reasonable view of the contract in that case was that the sellers sold subject to their being able to ship under a licence and that they impliedly undertook to use their best endeavours to obtain a licence.

7. In our opinion the present case falls within the principle of the above ruling. It has been found that the defendant used his best endeavours to secure the waggons but failed. If we regard the obligation to deliver the bags of rice as absolute in spite of the waggon restrictions and priority rules enforced by Government, it would imply that the seller had undertaken to perform a contract contrary to the rules enforced by the Government and hence illegal. The argument that the parties should have provided for the failure of performance in the contract itself and since that was not so done, the defaulting party should suffer cannot apply in a case like the present where the parties knew that owing to the restrictions introduced by Government rules, shortage of waggons may occur and per formance for that reason may be rendered impossible. As pointed out by Viscount Reading, C.J. in In re, Anglo-Russian Merchant Traders, Ltd. and John Bait and Co. (London),Ltd. (1917) 2 K B 679, so, in this case, we cannot see 'why the law should imply an absolute obligation to do that which the law forbids'. The learned vakil for the appellant was not able to distinguish the present case from the case in In re, Anglo-Russian Merchant Traders, Ltd and John Ban and Co. (London),Ltd. (1917) 2 K B 679. In our opinion the reasonable view of the contract in this case is that the seller agreed to supply the promised number of bags of rice if after using his best endeavours he was able to secure the necessary number of waggons. The obligation to perform the contract was not therefore absolute, but impliedly conditional. In this view we set aside the decision of the learned Judge and restore the decree of the Trial Court. The appellant will get the costs in the District Court and in the High Court.


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