TMI Blog1967 (10) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... usand bales of Saidpur N.C. Cuttings. The contract was in the standard form prescribed by the India Jute Mills Association. It provided that shipment or rail despatch from agencies was to be made during August and/or September and/or October and/or November, 1958. As the import of Pakistan jute required an import licence the contract provided: 'Buyers to provide the sellers with the letters of authority and sellers to open letters %A credit. If buyers fail to provide the sellers with import licence within Novem- ber 1958 then the period of shipment would be upto December, 1958 and the price mentioned in the contract would be increased by 50 nP. If buyers fail to provide licence by December 1958 then the contract would, be ,settled at the market price prevailing on January 2, 1959 for goods of January and February 1959 shipment. One of the printed terms provided:- 'Buyers shall not however be held responsible for delay in delivering letters of authority or opening letters of credit where such delay is directly or indirectly caused by sod by I or due to act of God, war mobilisation demobilization 'breaking off trade relations between Governments, requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of them to obtain the licence; (b) that owing to the intervening causes, in the present case a change in the policy of-the Government, which the parties could not foresee when they entered into the contract, the contract became impossible of performance and that therefore under S. 56 of the Contract Act the contract ought to have been treated' as void and (c) that the arbitrators had no jurisdiction as the arbitration clause in the said contract perished along with the contract. The respondents, on the other hand, denied that the performance of the contract became impossible, and asserted that in any event the appellants had taken upon themselves the absolute obligation to procure the licence and lastly that even if the contract was discharged by frustration, the arbitration clause would still survive as there would be disputes and differences between the parties as to whether (i) there was frustration and (ii) even if so, the consequences thereof they pleaded that the contract could not be construed to mean that an unilateral allegation by one of the parties hat there was frustration would put an end to the contract. It would be for the Arbitrators to decide whether the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has subsequently become impossible. Courts in England have however evolved from time to time various theories to soften the harshness of the aforesaid rule and for that purpose have tried to formulate the true basis of the doctrine of discharge of contract when its performance is made impossible by intervening causes over which the parties to it had no control. One of such theories is what has been called the theory of implied term as illustrated in F.A. Tomplin Steamship Co. Ltd. v. Anglo--Mexican Petroleum Products Co. Ltd. [1916] 2 A.C. 397. where Lord Lorebum stated: A court can and ought to examine the contract and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties must have made their bargain on the footing that a particular thing or a state of things would continue to exist. And if they must have done so, then a term to that effect would be implied; though it be not expressed in the contract . He further observed: It is in my opinion the true principle, for no court has an absolving power, but it can infer from the nature of the contract and the surrounding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solute in its term, nevertheless, if it is not absolute in intent, it will not be held absolute in effect. The day is done 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 lawyers with the draftsmanship of a Chalmers. This theory would mean that the Court has inherent jurisdiction to go behind the express words of 'the contract and attribute to the Court the absolving power, a power consistently held not to be inherent in it. The House of Lords in the appeal from that decision [reported in 1952 A.C. 166] discarded the theory. In more recent times the theory of a change in the obligation has come to be more and more generally accepted. Lord Radcliffe, the author of this theory, in Davis Contractors v. Fareham U.D.C.(2) formulated it in the following words:- Frustration ocours whenever the law reoognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Although in English law such cases would be treated as cases of frustration, in India they would be dealt with under sec. 32. In a majority of cases, however, the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from performance of the contract. The Court can grant relief on the ground of subsequent impossibility when it finds that the whole purpose or the basis of the contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which, was not contemplated by the parties at the date of the contract. There would in such a case be no question of finding out an implied term ;%greed to by the parties embodying a provision for discharge because the parties did not think about the matter at all nor could possibly have any intention regarding it. When such an event or change of circumstances which is so fundamental as to be regarded by law as striking at the root of the contract as a whole occur$ it is the court which can pronounce the contract to be frustrated and at an end. This is really a positive rule enacted in sec. 56 which governs such situations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants were not able to furnish the licence by December 1958 they would pay damages at the market rate prevailing on January 2, 1959 for January- February shipment goods. These clauses clearly indicate that the appellants were conscious of the difficulty of getting the licence in time and had therefore provided In the contract for excusing delay from November to December 1958 and for the appellants' liability to pay damages if they failed to procure it even in December 1958. The contract, no doubt, contained the printed term that the buyers would not be responsible for delay in delivering the licence but such delay as therein provided was to be excused only if it occurred by such reasons as an act of God, war, mobilization etc., and other force majeure. It is nobody's case that the performance became impossible by reason of such force majeure. As already stated when the appellants applied for the licence, the authorities refused to certify their application because they held at that time stock for more than 2 months. It is therefore manifest that their application was refused because of a personal disqualification and not by reason of any force majeure. Since this was the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parshad Sons v. Union of India [1960] 2 S.C.R. 2,0.6 793 at p. 808. affairs would continue at the date of performance. The reason is that where there is an express term the court cannot find on construction of the contract an implied term inconsistent with such express term. In our view, the provision in the contract that whereas the delay to provide a licence in November 1958 was to be excused but that the contract was to be settled at the market rate prevailing on January 2, 1959 if the appellants failed to deliver the licence in December 1958 clearly meant that the appellants had taken upon themselves absolutely the burden of furnishing the licence latest by the end of December 1958 and had stipulated that in default they would pay damages on the basis of price prevailing on January 2, 1959. That being the position the defence of impossibility of performance or of the contract being void for that reason or that the court should spell out an implied term in the contract would not be available to them. In the view that we take that the said contract cannot be said to be or to have been void and that in any event the stipulation as to obtaining the import licence was absol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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