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Rule of Common Law.---In the Common Law the rule as to money payments (which, however, is rendered practically obsolete by the methods of modern business) is that, if no place is named, the debtor is bound to find the creditor, provided he is within the jurisdiction but if the obligation is to deliver heavy or bulky goods he must procure the creditor to appoint a place to receive them. "And so note a diversity between money and things ponderous, or of great weight". The present section seems to lay down a reasonable rule for all cases without distinction; but more than one judge has expressed the opinion that it does not preclude the application of the Common Law rule that the debtor must seek his creditor out. Perhaps however this is only where the promiser fails to apply for the appointment of a reasonable place. The words "no place is fixed" do not exclude any inference the Court may draw as to the intention of the parties from the nature and circumstances of the contract, especially where the obligation is to pay money. This is essentially a question of fact, but cases in which an inference as to the intention of the parties has been drawn illustrate the section.

Place of delivery.---Where by an agreement for the sale of goods it was stipulated that the goods were "to be delivered at any place in Bengal in March and April, 1891," and it was added, "the place of delivery to be mentioned hereafter." The Privy Council held that the buyer had the right to fix the place, subject only to the express contract that it must be in Bengal and to the implied one that it must be reasonable. The use of the words "place of delivery to be mentioned hereafter" did not take away that right, nor did they leave the question of the place of delivery to be settled by a subsequent agreement. If the latter had been meant, the expression used would have been "agreed on" instead of "mentioned." It was also held that such a contract does not fall within S. 94 of the Act [now S. 36 (1) of the Sale of Goods Act, 1930], but rather resembles what is contemplated in the present section.

Negotiable instruments.---The section does not apply to negotiable instruments; the various High Courts speak with one voice on this point. Where no place is specified for payment, what rule is to apply? The High Court of Calcutta has held that the relevant rule is the common law rule that a debtor must follow his creditor, but this is fallacious as this is not the common law rule where negotiable instruments are concerned. Full Bench decisions of the High Courts of Madhay Bharat and Hyderabad, and bench decisions of the High Courts of Bombay, Madras and Punjab, and single Judge decisions in Nagpur agree that the Court where the promisee resides has no jurisdiction; jurisdiction lies in the place where the maker executed the note or now resides in the case of promissory note, or in the case of bill of exchange the place where the drawee resides.

Place of performance in pakki adat contract.---In the case of pakki adat agency the place of payment is the place where the constituent resides, unless he has chosen to fix another place by express direction.

Jurisdiction---Negotiable Instrument---Court at the Place of residence of payee has no jurisdiction. Where no place of payment was specified in the negotiable instrument and the payee brought a suit in the Court at his own place of residence on the ground that the debtor must seek the creditor, and not the place where the instrument was executed.

Held; The principle of debtor seeking the creditor could not be applied to such a case and that suction 49 of the Contract Act too cannot be invoked in cases relating to negotiable instruments.

Place of payment of debt. It is the duty of the debtor to find out the creditor, and where the parties have not stipulated the place of the discharge of the debt it will be presumed that the amount will be paid at the place of the creditor.

Payment to creditor---Debtor must make payment where creditor is found. If the contract does not stipulate to the contrary, then it is the duty of the debtor to find out the creditor and to make payment at the place where he resides.

50. Performance in manner or at time prescribed or sanctioned by promisee.---The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.

Manner and time of performance.---This rule is elementary. It may be doubted whether illustration (c) does not rather belong to S. 63, but no practical difficulty can arise. The facts of illustration (d) must not be confused with those which have given rise to troublesome questions in. cases of contracts of correspondence (Ss. 4 and 5 above). Here a complete contract is assumed to exist. It is hardly needful to add that where the request is to send not legal currency, but a cheque or other negotiable instrument, this does not imply any variation of the rule that payment by a negotiable instrument is conditional on its being honoured on presentation within due time.

Payment to an agent, who to the debtor's knowledge had no authority to receive the payment, does not discharge the debtor.

Simultaneous performance.---This section expresses the settled rule of the Common Law. To understand the principle rightly,: we must remember that in a contract by mutual promises the promises on either side are the consideration, and the only consideration, for one another. But the terms. of a promise may express or imply conditions of many kinds ; and the other party's performance of the reciprocal promise, or at least readiness and willingness to perform it, may be a condition. It is obviously immaterial whether it is called a condition or not, if in substance it has that effect. To say "I will' pay when you deliver the goods" is more courteous than to say "If you do not deliver the goods in a reasonable time you will not be paid"; but "when" implies "if', and the result is the same. And if it appears on the whole from the terms or the nature of the contract that performance on both sides was to be simultaneous, the law will attach such a condition to each promise, with the operation laid down in the present section.

Performance of one party's promise may have to be completed or tendered before he can sue on the other's reciprocal promise. In that case it is said to be a condition precedent to the right of action on the reciprocal promise.

Where the performances are intended to be simultaneous, as supposed in this section (goods to be delivered in exchange for cash or bills, and the like), they are said to be concurrent conditions, and the promises to be dependent. Observe that concurrent conditions are only a modified form of conditions precedent.

Promises which can be enforced without showing performance of the plaintiff's own promise, or readiness or willingness to perform it, are said to be independent.

It is doubtful whether these terms are of much or any real use. The real question, apart from all technical expressions, is what in each instance is the substance of the contract. But the terms cannot be said to be wholly obsolete, and acquaintance with them is necessary for the understanding of the decisions.

In order to apply the rule of this section we must know whether the promises are or at not "to be simultaneously performed." This is a question of construction, depending on the intention of the parties collected from the agreement as a whole.

There is a distinct question from that of "condition precedent", namely whether failure to perform some parts of a contract deprives the party in fault of any right to remuneration for that which he has performed, and entitles the other to put an end to the contract, or is only a partial breach which leaves the contract as a whole still capable of performance. In dealing with cases of this kind it may be very difficult to ascertain the true intention of the parties. We have to see whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for, or whether it merely partially affects it and may be compensated in damages. Illustration (b) suggests, though it does not actually raise or decide, a point which has given much trouble, and is not settled either by any of the general provisions of the Act, or by any disposition of the chapter on the Sale of Goods. If A fails to deliver the first installment of the goods, or delivers a short quantity, may B put an end to the contract? The Sale of Goods Act, 1893, S. 31, followed by S. 38 of the Indian Sale of Goods Act, 1930 has purposely left the point open as "in each case depending on the terms of the contract and the circumstances of the case."

It seems difficult at this day (except as to the unsettled question last mentioned, which is confined to the sale of goods by installments) to add anything in principle to the modern rule; and Indian decisions are, as might be expected, merely illustrative.

A contract for the sale of shares in a company to be transferred into the name of the purchaser upon payment of the price by him on or before a certain day falls within this section, so that transfer of the shares and payment of the purchase-money should be concurrent acts.

Readiness and willingness.---In the case of a contract for the sale of shares in a company it is not necessary, in order to prove that a vendor was ready and willing to perform his part of the agreement, that he should be the beneficial owner of the shares, or that he should tender to the purchaser the final documents of title to the shares. It is enough that he should be able and willing to constitute the purchaser the legal owner of the shares agreed to be sold. Thus, where the vendor tendered to the purchaser share allotment and receipt papers, and together with each a transfer paper and an application paper, both signed in blank by the original allottee, it was held that the vendor was ready and willing to perform his promise. But where neither the transfer nor the form of application for transfer was offered to the purchaser, nor had the vendor any such documents signed by the original allottee in his possession, it was held that the vendor could not be said to be ready and willing to perform his promise, as the allottee had it in his power to decline to complete the contract until he had executed the transfer and the application papers. Further, it is not necessary to prove readiness and willingness that the vendor should have made an actual tender to the purchaser of the transfer deed. Not is it necessary that the vendor should have the shares in his possession continuously from the date of the contract down to the time of performance. If a party bound to do an act upon request is ready to do it when it is required he will fully perform this part of the contract, although he might happen not to have been ready had he been called upon at some anterior period. But where the purchaser before the day fixed for delivery gives notice to the vendor that he will not accept the shares, or where he has absconded or is so financially embarrassed that he could not have paid for them if they had been delivered, the vendor is exonerated from giving proof of his readiness and willingness to deliver the shares. Similarly as to goods, it is still more elementary proposition that a vendor may be ready and willing to deliver without having the goods in his actual custody or possession; it is enough if he has such control of them that he can cause them to be delivered. And where the vendor of goods repudiates the contract on being called upon for delivery it is enough for the purchaser to prove that he was ready and willing to carry out his part of the bargain, and had made preparations with the object of having the money ready in hand to pay for the goods on delivery. This section does not require him to show that he made an actual tender of the money. But a mere demand for delivery of goods without payment or tender is not evidence of the buyer being ready and willing to pay on delivery.

Where goods are sold for "cash on delivery," and the vendor delivers a portion of the goods, and the purchaser offers to pay the price thereof if certain cross-claims set up by him are adjusted, it cannot be said that he is not ready and willing to perform his promise, so as to entitle the vendor to refuse delivery of the remaining goods.

Averment of performance.---According to the Common Law rules of the leading, where a contract consists of reciprocal promises to be simultaneously performed, neither party to the contract can maintain an action without averring a performance, or an offer to perform, on his own part.

Contract to deliver goods by installments and payment of price for them.---Price of first installment not paid---Breach of contract---Non-delivery of further installments justified. Where according to a contract goods were to be delivered, by one party in installments and they were to be paid for by the other party as per delivery. The latter did not pay for the first installment whereupon the delivery of further installments was not made and the contract was rescinded. It was held that the party who did not pay the price on the delivery of goods was guilty of the breach of contract, so that the seller was justified in rescinding the contract on the ground that there was a likelihood of the non-payment of price if any subsequent delivery is made.

Willingness to perform the contract by purchaser---What is---Intention to purchase and capacity to purchase important. Willingness to perform one's contract in respect of purchase of property implies the capacity of the purchaser to pay the requisite sale consideration within a reasonable time. In the second place even if a purchaser had the capacity to pay the requisite sale consideration, the question still remains whether he had the intention to purchase the property.

The capacity to pay the balance of sale consideration cannot be considered apart from the time when the sale consideration was payable.

52. Order of performance of reciprocal promises.---Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and, where the order is not expressly fixed by the contract, they shall be performed in that order which that nature of the transaction requires.

Impossibility created by act of party.---This is in substance the rule not only of the Common Law, but of all civilised law. No man can complain of another's failure to do something which he has himself made impossible. The principle is not confined it) acts of direct or forcible prevention, which are neither frequent nor probable, but extends to default or neglect in doing or providing anything which a party ought under the contract to do or provide, and without which the other party cannot perform his part. A man agrees to sell standing wood; the seller is to cut and cord it, and the buyer to take it away and pay for it. The seller cords only a very small part of the wood, and neglects to cord the rest; the buyer may determine the contract and recover back any money he has paid on account.

If the prevention by default goes only to one particular term or condition of the contract, the party so prevented from fulfilling that term or condition is entitled to treat it as fulfilled, and insist on payment or other reciprocal performance accordingly; or if there was an agreed penalty in the contract for non-fulfillment, or an option to rescind the contract, the other party cannot take advantage of it.

A railway contractor ordered a steam excavating machine, to be capable of digging a certain quantity of material in a working day, and it was agreed that he was to be bound to accept it only if it performed this on a fair trial at the place where it was to be used. After a partial trial the contractor said the machine had failed, and refused to accept or pay for it. The maker contended that the contractor had himself failed to provide the conditions for a fair trial. This view of the facts was adopted by the Court, and both the Court below and the House of Lords held, as a consequence in law, that the buyer, having by his own fault prevented the application of the test agreed upon, must accept and pay for the machine as if the test had been satisfied. As to the original duty of the buyer to secure the conditions for a fair trial, Lord Blackburn laid down this general rule:--

"Where in a written contract it appears that both parties have agreed that something shall be done which cannot effectually be clone unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances.

Breach of contract---Damages, assessment of---Defendants, held, were liable to pay to plaintiff the salary for the entire unexpired period which was to be calculated as per terms of contract per month minus average earning of plaintiff---Suit of plaintiff was decreed accordingly.

54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.---When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promiser of the promise last mentioned fails to perform it, such promiser cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract.

Defualt of promiser in first performance.---This section completes the declaration of the principles explained under S. 51. In practice the difficulty is to know whether the promises in the case in hand are or are not "such that one of them cannot be performed," etc. One way in which the test is expressed in English authorities is that, if a plaintiff has himself broken some duty under the contract, and his default is such that it goes to the whole of the consideration for the promise sued upon, it is a bar to his suit, but if it amounts only to a partial failure of that consideration, it is a matter for compensation by a cross-claim for damages.

Where a contract between a shipowner and a charterer was contained in the following words, "Hooper S. to arrive after completion of two country voyages for London on notice in May or June," and the shipowner gave notice after the vessel had completed one voyage only, and the charterer refused to ship the goods, it was held, in a suit by the shipowner for damages for breach of the contract, that the defendant was under the circumstances justified in refusing to perform his promise. Garth C.J. put the decision on the ground that the clause "after completion of two country voyages" was used to indicate to the charterer the time when the ship would be ready, and that it was as essential a part of the contract as any other more direct stipulation as to time. Markby J. based his judgment on the fact that this clause constituted a material part of the description of the vessel, and that the ship offered not having completed two country voyages, but only one such voyage, did not answer the description in the contract. From either point of view the above clause formed a condition precedent to the performance Of the contract by the ship owner, and the case would thus seem to fall under this section, though there is no reference to it in the judgments.

Cooperative Societies Rules, 1927, R. 32---Power of settlement of disputes to Registrar or his nominee---When dispute is determined solely either by Registrar or his nominee they render a decision which is not to be mixed up and has to be contracted to a majority or unanimous award made by the Committee of three arbitrators presided over either by Registrar or his nominee---Registrar or his nominee do not undertake any arbitration proceedings,--Decision of dispute by Registrar or his nominee is not a contractual arbitration or an arbitration by agreement but is in discharge of an obligation imposed by statute.

Reciprocal promises---Effect of default as to---Contract consisting of reciprocal promises such that one of them not to be (competently), performed till performance of other---Held: In case of promisor of promise (last mentioned)" failing to perform it, such promisor not to competently claim performance of reciprocal promises---Compensation also to be made by such person to other party to contract for any loss sustained by such party.

Reciprocal promises---Effect of default as to---Contract consisting of reciprocal promises such that one of them not to be (competently) performed till performance of other---Held: In case of promise (last mentioned) failing to perform it, such promisor not to competently claim performance of reciprocal promises---Compensation also to be made by such person to other party to contract for any loss sustained by such party.

Sale of goods---Breach of contract---Goods being not received as per contract, information sought from foreign company, supplied---Foreign company acknowledging receipt of such letter informing through telegram of arrangements being in progress for shipping of goods and respondents assured with regard to responsibility of Foreign company in such regard---Shippers hence, held, being still in process of making arrangements for shipment of goods, respondent having been directly dealing with shippers being conscious of their obligations and entitlement under C.I.F. Contract, without recourse to sellers findings making appellant liable on such evidence, held, not sustainable.

55. Effect of failure to perform at fixed time, in contract in which time is essential.---When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

Effect of such failure when time is not essential.---If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

Effect of acceptance of performance at time other than that agreed upon.---If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.

Time when of essence of contract.---The Privy Council has observed that this section does not lay down any principle, as regards contracts to sell land in India, different from those which obtain trader the law of England. Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. Specific performance of a contract of that nature will be granted, although there has been a failure to keep the dates assigned by it, if justice can be done between the parties, and if nothing in (a) the express stipulations of the parties, (b) the nature of the property, or (c) the surrounding circumstances make it inequitable to grant the relief. An intention to make time of the essence of the contract must be expressed in unmistakable language; it may be inferred from what passed between the parties before, but not after, the contract is made. The period fixed for completion in the Privy Council case above referred to was two months. Requisitions on title were made by the purchaser and were not complied with by the vendor, who subsequently claimed to be entitled to put an end to the contract, because the purchaser hall failed to complete within the stipulated time. The purchaser having brought a suit for specific performance against the vendor, their Lordships held, applying the principles above stated that there was no intention that time should be of the essence of the contract, and the purchaser was entitled to specific performance. All option to repurchase (being an exceptional provision for the seller's benefit) must be exercised strictly within the time limited.

There is no place, however, in mercantile contracts for the presumption that time is not of the essence of the contract; indeed the Supreme Court of the United States has laid it down broadly that "in the contracts of merchants time is of the essence." This is especially so as to shipping contracts. As to the sale of goods, "unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of a contract of sale. Whether ally other stipulation as to time is of the essence of the contract or not depends on the terms of the contract". Generally it is to be observed that in modern business documents men of business are taken to mean exactly what they say. Merchants are not in the habit of placing upon their contracts stipulations to which they do not attach some value and importance. Parties to mercantile contracts, therefore, cannot rely upon the present section to save them from the consequences of the unpunctuality. Thus where the defendant agreed to deliver his elephant to the plaintiff for khedda operation (to capture wild elephants) on 1st October, 1910, and the defendant subsequently obtained an extension of the time till the 6th October, but did not deliver the elephant till the 11th October, it was held that the very circumstances that the defendant asked for extension of the time showed that time was intended to be of the essence of the contract, and that the plaintiff was therefore justified in refusing to accept the elephant on the 11th October and was entitled to damages for breach of the contract. Where a contract for the sale of goods provides for delivery to be taken by the buyer within a specified period, and reserves liberty to the seller, if delivery is not taken within the fixed period, to sell the goods on the buyer's account and at his risk, the mere fact that the contract contains a clause that after the expiry of that period the goods shall remain at the buyer's risk will not take the case out of the general rule that in mercantile contracts time is of the essence of the contract. Again, on a sale of goods notoriously subject to rapid fluctuations of market price, the time of delivery is of the essence. It has been held on this same ground, that the value is likely to fluctuate, that in an agreement to exhibit a cinema picture time is of the essence.

Contract---Specific performance of---Time essence of contract---Party guilty of preventing completion of contract within time---Held, cannot plead that lime vas essence of contract.

Contract for sale of immovable property---Time, in such transaction, not ordinarily considered as being essence of contract---Intention of parties, in such behalf, can be gathered from terms of contract and facts and circumstances of case---Mere mention of time in contract for its performance,--Held, does not necessarily mean that time was of essence.

Failure to perform contract at fixed time---Effect of---Held: Time consumed on account of defendant's contest in litigation not to be utilized by him to his advantage to contend for being relieved of obligation to sell because of prices of immovable properties having risen in meantime springly.

Contract for extraction and removal of timber---Question arising whether time was essence of the contract thereby disentitling promiser to extension of time---Held: (i) In circumstances of case it could legitimately be inferred that parties to contract never intended time to be of the essence of contract and as such termination thereof was not justified in law---(ii) There being circumstances justifying demand for extension of time, order of confiscation of timber and termination of contract was in nature of penalty and could not be given effect to.

Fraud Agreement entered into by fraud is voidable contract at the option of party whose consent was obtained by fraud---Party so defrauded can insist performance of contract---Contract is not void, but voidable---Option of avoiding such contract is subject to an exception---Person seeking to avoid contract on basis of fraudulent representation has to be prompt in seeking redress---Such person if allows a long time to elapse, he disentitles himself from obtaining any relief on basis of fraudulent misrepresentation.

Petitioner entering into contract with (respondent) Department for removing timber and paying full consideration therefor---Time not essence of contract and parties not intending to strictly enforce agreement clause regarding time---Circumstances justifying request of petitioner for grant of further time to complete operation---Fact that petitioner had to hold up work due to show season set in area, and Forest Officers supporting case of petitioner, not disputed---Termination of contract by respondent (Department), held, not justified, in circumstances.

Time not being essence of contract---Proof of---Failure to mention specifically in agreement that time was of essence of contract, non-taking of such plea by vendor and absence of notice on part of vendor that time having expired, agreement would be ineffective, held, would prove that time was not of essence of contract---Evidence of parties also indicating that time was not of essence of contract---Vendor's admission ill evidence that time was not of essence of contract, period mentioned in agreement would have no significance---Real intention of parties would have to be deduced from surrounding circumstances of case.

Specific performance of contract of sale of immovable property---Principle that time is generally not essence of the contract is not absolute rule but one which is rebuttable---Whether time is essence of a contract is a controversy of fact determinable from attendant circumstances of each case and depending on the intention of the parties gatherable from the agreement itself and subsequent conduct of parties.

Civil Procedure Code (V of 1908), S. 100---Specific performance of contract of sale of immovable property---Second appeal---Question that time was not essence of the contract could not be allowed to be raised in second appeal especially when such question was neither set up in the pleadings nor canvassed by appellant before Lower Appellate Court and not only that the said ground was not even specifically taken in memorandum of second appeal as well---Such question being a controversy of fact, said pica has to be specifically set up in the pleadings and converted into issue so as to be appropriately and effectually adjudicated upon by giving parties a chance to support their respective stance by production of evidence etc.

Transfer of immovable property---Time, whether of essence of contract---In contracts relating to transfer of immovable property, time, held, was not of essence of contract.

Performance of contract---Time consumed on account of vendor's contest in litigation---Utilization of---Time spent on account of vendor's litigation held, could not be utilized by him to his own advantage to contend for being relieved of obligation to sell because of prices having in meantime risen springly---In agreement vendor had also undertaken to obtain clearance certificates from Income-tax Department and Property Tax Department before executing sale-deed on specified date which he failed to obtain.

Contract---Failure to perform----Time---Essence of contract---Question of---Held: Question of time being essence of contract to be one of fact.

Immovable property---Transfer of---Contract regarding---Held: In contracts relating to transfer of immovable property time to be no essence of contract.

Transfer of property Act (IV of 1882), S. 53-A---Specific Relief Act (I of 1877), Ss. 4 & 12---Contract for sale of plot---Suit for specific performance of contract---Time not being essence of contract, promisee could accept performance of promise at any time other than that agreed upon---Such acceptance of performance of promise by promisee would amount to novation of contract---Appellant entering into an agreement of sale of plot with respondent in open auction---Respondent purchasing the plot in question and paying 25 % of auction price and sale later approved by competent authority---Acceptance of payment of balance price by appellant after the lapse of agreed time amounted to novation of contract and the same was binding--,Appellant further charging respondent difference of amount found out on recalculation, plot demarcated and possession handed over to respondent---Such acts showing that not only the contract had been novated but it had been acted upon by parties---Respondent having performed his part of contract and having obtained possession of plot, held, was protected even under S. 53-A, Transfer of Property Act, 1882 and could not be dispossessed of the plot.

Performance of contract---Time consumed on account of vendor's contest in litigation---Utilization of---Time spent on account of vendor's litigation, held, could not be utilized by him to his own advantage to contend for being relieved of obligation to sell because of prices having in meantime risen sparingly---In agreement vendor had also undertaken to obtain clearance certificate from Income-tax Department and Property Tax Department before executing sale-deed on specified date which he failed to obtain.

Contract for sale of immovable property---Time for completion---Held: It is well established that in contracts relating to transfer of immovable property time is not of essence of the contract.

Contract---Time when essence of---Held: Principle that time is generally not essence of contract being not absolute rule, controversy of fact regarding its being of essence of contract or not to be determinable from attendant circumstances of each case and depending on intention of parties gatherable from agreement itself and subsequent conduct of parties---Held further: Such plea to be (required to be) specifically set up in pleadings and converted into issue so as to be appropriately and effectually adjudicated upon by giving parties chance to support their respective Stance by production of evidence.

Breach of contract at time fixed for performance---Time essence of contract---How damages are calculated. When two traders enter into a contract of sale of goods and fix a date for performance, then performance must take place on that date assuming time to be of the essence of contract. If delivery under that contract is of a commodity considerable in quantity then delivery has to commence on that day and continue according to the usage of that trade if the terms of the contract themselves do not provide for it. But the date of delivery must be adhered to. Where breach has occurred damages may be claimed on basis of difference between market rate prevalent on date of breach and that agreed upon in contract.

Ordinarily., in a contract for sale of goods, time is of the essence of the contract, and date of breach of contract is the date when the contract ought to have been fulfilled and not the date of refusal of liability or repudiation of the contract. In the absence, therefore of any evidence that the time was varied or extended, the date of breach should be that by which time the contract ought to have been completed by full delivery. Damages have to be calculated on the basis of the difference between the contracted rate and the best market rate available on the date of breach of the contract.

Mercantile transaction---Date of performance stated in contract---Date of breach is the date so stated. In mercantile contracts, time is the essence of the contract. Therefore the date of the breach would be the date on which the contract had to be performed.

Martial Law Regulation fixing lower prices than contracted---Breach of contract before enforcement of MLR---Offer to purchase goods at lower prices fixed does not cure breach. Where the MLR No. 42 fixed price of goods contracted to be sold at a rate lower than that contracted, but the breach of contract had occurred before the MLR was promulgated. The defendant however offered to purchase at the price fixed by MLR. Held: The breach had occurred prior to the promulgation of MLR therefore the new offer could not cure it.

Sale of land---Time for completing sale deed extended---Notice sent by seller to complete sale---Time becomes essence of contract---Contract not performed---Breach of contract---Damages. In cases of sales of land, time is not ordinarily of the essence of the contract, but that either party may make the date fixed for completion of the sale as of essence of the contract by serving notice on the other party. If a reasonable notice is given to make time the essence of the contract, this notice, would bind both the seller and the purchaser, that is, both the person who gives the notice and the person to whom the notice is given, and in case of non-compliance with it, the purchaser will be. liable to pay damages for breach of contract.

Sale of land subject to several conditions---Time cannot be deemed to be of essence of contract. Where the time specified in the agreement for sale was subject to more than one condition, it cannot be said that the parties thereto intended to time mentioned therein to be of the essence of the contract. Thus where the seller of land had undertaken to establish his good title pending time (six months) allowed for payment of balance of price and registration of sale-deed, and had agreed further to hand over documents of title to buyer, which undertaking seller had failed to fulfill. Held: that time was not of the essence of the contract.

Sale of land---Notice for executing sale deed given by seller without complying with preconditions for sale---Notice does not make time essence of contract. Where the buyer called upon the seller to hand over title deeds to buyer and to execute and register the sale deed before expiry of six months. The seller, without complying with the demand of title deeds, asked the buyer, after lapse of six months, to pay balance of consideration money and get the sale deed registered within 14 days and declared further that agreement would stand rescinded on buyer's default. Held : The seller was not entitled to fixed a time limit for performance of buyer's obligation and to treat the agreement as rescinded after the expiry of the time so fixed.

Sale of !and---Date fixed for completing sale---Plaintiff taking upon himself to obtain permission for transfer---Permission not obtained by stipulated date---No damages for non-completion of sale can be claimed by plaintiff. Held: The plaintiff took upon himself the responsibility of obtaining the permission and when it was found that the plaintiff did not take any step until after the expiry of the stipulated date when he filed a Naraji Petition before the Collector where express stipulation was that kabala was to be executed on a particular date, it was clear that the plaintiff was not diligent in the matter of getting the certificate and he had to suffer for such laches for which nobody else can be held responsible.

Time---When essence of the contract---Intention of parties and other facts must be considered. Where there is an express provision that time is of the essence of the contract and at the same time provisions for extension of time in certain contingencies, and for the payment of a fine or penalty for every day or week the work undertaken under the contract remains unfinished on the expiry of the time provided in the contract, such provision is inconsistent with time being of the essence of contract and would be calculated to render ineffective on express provision in the contract to that effect. In such a case it cannot be said that it was intended that time should be of the essence of the contract. Where therefore, notwithstanding the provisions in the contract that the time was of the essence of the contract, there were other clauses which indicated that the intention of the parties was not to strictly enforce the clause regarding time, e.g. the clauses, regarding suspension of work and the payment of penalty for the non-performance of contract in time, it was held that those clauses clearly indicated that the parties never intended that the time was of the essence of the contract.

Time, whether essence of the contract---Test for.---Three requisites are to be considered in finding whether time is the essence of the contract (1) express stipulations between the parties, (2) nature of the property and (3) the surrounding circumstances.

Sale of land---No indication that time is essence of the contract---Time cannot be made essence of contract by subsequent notice. If time is not originally made the essence of a contract for sale of land, one of the parties is not entitled afterwards, by notice to make it of the essence, unless there has been some default or unreasonable delay by the other party. Where the contract provided a period of two months for the performance of an agreement of sale of land and extended that period to 18 months if the vendee was not able to procure the sale price, and the vendor on his part, was able to obtain the Income-tax clearance and the Custodian's certificates only after these 18 months had elapsed, and, further, the vendor by a notice to the vendee fixed a period of only 10 days for completing execution of the conveyance; Held, that the vendor at this stage was not entitled unilaterally to fix the time of ten days for the performance of the contract.

Per Kaikaus, J. (contra.) A party to a contract has the right, although time is not of the essence of the contract or no time for performance is fixed in the agreement, to give notice of performance within a reasonable time. He can fix the time and it is for the Courts to find as a fact in each particular case whether the time fixed was reasonable.

By such a notice the party does not add to the terms of the contracts.

Special privilege of repurchase granted to vendor---He can take advantage of privilege only by conforming to conditions of sale-deed. Where the sale deed contains a simple agreement for reconveyance the right to repurchase given to the plaintiff cannot but be special privilege or a concession given to him and if the plaintiff wants to take advantage of that special privilege and concession he must strictly conform to the terms of the agreement. Where he does not do so, he cannot take advantage of the special privilege given to him.

Sale of immovable property---When time is of the essence of the agreement to sell---Principle discussed. Neither the language of a contract nor any particular circumstances of a case has been mentioned in the section as specifically indicative of the importance of time. If the parties stated in a contract that time was of the essence of it but there were sure indications of the contrary intention, then in spite of the language their intention would prevail. The point in an inquiry as to the importance of time for the performance of a contract is the discovery of the intention and not complete reliance on any particular aspect of the transaction. The English principle in equity that, 'generally time is not of the essence of a contract to sell real estate,' is based on a rational appreciation of the usual intention of the parties in such transactions. That basis is that the price of a real estate does not ordinarily fluctuate, nor does a real estate deteriorate within a few day's time. If, therefore, a date named by the parties in such a contract is not observed, one can ordinarily presume that the parties intended its performance within a reasonable time. This, however, does not mean that there is a direct relationship between a contract to sell real estate and the importance of time. This is explained by the English view that time can be of the essence of the contract if the real estate which is agreed to be sold constitutes business premises or is to be used for trade purpose. It follows, therefore, that the importance of time in a contract for sale is primarily not determinable by the subject-matter of the transaction but by the intention of the parties which may be gathered from the entire circumstances of the case. The circumstances which can indicate the intention of the parties are their words; their conduct; the purpose of the deal, the satisfaction, if any, of closely connected needs of the parties as well as the character of the subject-matter of the sale.

Sale of immovable property---How much time may be allowed for performance of---When deposit may be forfeited. Held; by about the 15th of October, 1952, the respondent had received sufficient information to know that the requisite sanction had been given. No reply to this letter of 15th of October, was sent by the respondent and when the appellants by their registered letter dated 23rd January 1953, extended the time till 10-3-1953, and further by their letter dated 26-3-1953 gave him time to pay within 48 hours and waited until the 22nd of June 1953 before forfeiting the deposit, we are clearly of the view that they had given reasonable notice to the respondent and had allowed sufficient time for payment of the balance, and the respondent having failed to do so, the appellants were within their right to put an end to the contract, which they did by their letter dated 22-6-1953.

Immovable property---Contract involving transaction of---Failure to perform at fixed time---Effect of---Held: True intention of parties to be gathered from terms of contract and facts and circumstances of the case and mere mention of time in contract involving transaction of immovable property for its performance not to make such time essence of contract.

Sale of immovable property---Whether time is essence of contract---Question may be decided on facts of each case. There is an initial presumption that time is not the essence of the contract of sale of immovable property. The presumption is rebuttable and would not apply if to apply it would be inequitable and unjust having regard to (i) the express stipulation between the parties, (ii) the nature and character of the property or (iii) the surrounding circumstances. The presumption that time is not of the essence of the contract is much stronger and will be readily inferred by the Court in the case of sales or leases of lands or of residential premises simpliciter than in the the case of transfer of commercial premises, as. for example, of a shop with vacant possession.

Contract of sale of immovable property---When time would be of the essence of the contract. In contracts other than commercial contracts if time is to be of the essence of the contract it is eminently necessary that such a stipulation should expressly be contained in the language of the contract. In this particular case the only reference to the time factor is the one sentence appearing in Exh. 3, namely:

"The balance of Rs. 18,000 is to be paid within six months." It was held that time was not of the essence of the contract entered into between the appellant and the respondent and that the respondent was only waiting for the appellant to acquire a full, valid, legal and marketable title to this property before he paid the balance of the purchase price to him.

Contract of sale---Time essence of contract---Sale not affected at proper time---Promisee may rescind contract---Whether notice of rescission must be given to promisor. Where the time is of the essence of the contract of sale but the promisor does not affect the sale at the stipulated time, the promisee may rescind the contract. Where he is entitled to rescind the contract, it is in the interest of both the parties that the choice should be made clearly and quickly so that no ambiguity in the conduct of the promisee or delay after the law has given the option to him, may prejudice the promisor nor such ambiguity and delay may cause estoppel to be created against the promisee himself. If there is neither prejudice to the promisor, nor estoppel or the bar of the ordinary law of limitation stands in the way of the promisee, then the promisee can make his choice whenever he likes and in any manner he likes. It may be, for instance by filing a suit or by taking a defence or in suitable cases, even by the amendment of pleadings. Prejudice is usually caused and estoppel is created either (1) when there is delay or failure in discontinuing the receipt of benefits or in restoring the benefits received by the promisee, or (ii) when the promisor is misled by the conduct of the promisee into taking steps to further perform the contract.

Contract of sale of immovable property---Reasonable time for completion is presumed. In a contract of sale of immovable property even though time is specified for the completion of the sale of presumption is that the parties realy intended that this should be done within a reasonable time unless, a contrary intention appears from the circumstances of the case or from an express stipulation.

Contract for sale of land---When specific performance may be granted---When time is essence of the contract. Under S. 55, specific performance of a contract of sale of land will be granted although there has been a failure to keep the dates assigned by it, if justice can be done between the parties and if nothing in, (a) the express stipulation of the parties (b) the surrounding circumstances; make it inequitable to grant relief. An intention to make time the essence of the contract must be expressed in unmistakable language; it may be inferred from what passed between the parties before, but not after, the contract is made. Equity will not assist where there has been undue delay on the part of the one party to the contract, and the other has given him reasonable notice that he must complete his part of the contract within a definite time.

Contract for reconveyance---If time is essence of contract. In the case of a sale it has been held that time is not generally the essence of the contract, but, in the case of a contract for reconveyance, it has been held that the time is of the essence of the contract.

Land, sale of---Time not essence of contract---Sale of running factory---Time is essence of contract. Ordinarily in a contract for the sale of land time fixed for the completion of the transaction is not considered to be of the essence of the contract. The presumption in such cases is that although a specific time is mentioned within which the performance of the contract is contemplated to be completed, the parties really and in substance did only intend that it should take place within a reasonable time. This presumption, however is rebuttable.

Time is essential if that can be gathered from the intention of the parties, This intention can be gathered either from the nature of the property or purpose or object of the agreement or from the terms of the agreement.

Time is the essence of the contract where the agreement in question related to the sale of a running factory and the plaintiff was anxious to complete the transaction within the shortest possible time as he was anxious to procure land in the vicinity of the town to establish a Max Factor Factory, about which at that time negotiations were going on between him and the representative of Max Factor, a foreign company.

Sale of plot of land on condition that if tile vendor did not build on it by a certain time the vendor would resume it---Time not essence of contract---No penalty can be imposed for not building within the stipulated time. one of the conditions of the sale of land by Improvement Trust was;

"In case the said intended vendee shall commit any breach or make any default in the performance of all or any of the convenants on his part here-in-before contained, it shall be lawful for the Trust or any officer in its employ or acting on its behalf to enter into and upon and gain possession of the said land and of all such buildings erections, and materials as may then he found upon the said land for the absolute use of the Trust and thereupon this agreement so far as it relates to the engagement of the Trust shall be void and the said security deposited as aforesaid shall be forfeited to the Trust and may be retained by it and shall belong to it absolutely, but without prejudice to all other legal rights and remedies of the Trust against the said intended vendee."

Held: In contracts to sell land there is no presumption that time is of the essence of the contract.

The clauses in contract taken together, do not express in unmistakable language an intention to make time the essence of the contract. In such situation every party's general right to have: the contract performed within a reasonable time remain unaffected and in cases of unnecessary delay the other party may give the party at fault notice fixing a reasonable time after the expiration of which he will treat the contract as at an end.

Held further; according to the principles applicable to sale of land the respondent was duly bound to provide further reasonable opportunity to the petitioner to commence and complete construction on the said plot of land. It took no such action and did not fix any reasonable time for the above mentioned purpose. In our opinion both under the agreement and under the law the respondent is not entitled to impose any penalty on the petitioner in pursuance of the said agreement. This could only be done by an agreement between the parties. If the respondent wants to terminate the agreement, it must proceed within the four corners of the terms agreed upon between the parties. In the agreement itself there is no stipulation or condition under which the respondent can impose any penalty.

Time essence of contract---When is---Contract including condition that buyer would send instructions to seller for despatch of goods on certain date---Time not essence of contract. There was a condition in the contract that the buyer would send instructions to the seller for the despatch of goods by a certain date.

Held; That that does not make time to essence of the contract and that if the seller did not repudiate the contract on or about that date, the buyer was entitled to demand delivery within a reasonable time.

Section 55 of the Contract Act also provides that when a party to a contract promises to do a certain thing at or before a specified time, and fails to do it at or before that time the contract becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract." The question whether time is or is not of the essence of the contract has to be determined on the facts of each case.

Time essence of contract---Seller not satisfying purchaser about his title to property in time---If the can be extended by seller---Breach of contract by seller. The seller was bound, to produce the income-tax clearance certificate and Custodian's certificate within the stipulated period and as these certificates were essential for the completion of the contract, the defendant, by not obtaining them in time committed breach of the contract and must suffer all the consequences arising from such breach by extending the time for performance of the contract but it is of no avail as the plaintiffs refused to extend it.

Time essence of contract---When is---Sale of land---Time not essence of contract. The question whether time is of the essence of the contract depends upon the intention of the parties, the surrounding circumstances and the nature of the property. The mere fact that certain time is specified for the payment of the amounts in consideration of which the property is transferred will not show that time is of the essence of the contract. So far as the contracts relating to land are concerned, it is well settled that time fixed for the completion of the transaction is not considered to do of the essence of the contract. The presumption in such contracts though specified time is mentioned within which completion is to take place; is that the parties really and in substance only intended that it should take place within a reasonable time. This presumption, however, is rebutable.

56. Agreement to do impossible act.--- An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful.---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.

Compensation for loss through non-performance of act known to be impossible or unlawful.---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 promiser must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.

The second paragraph has the effect of turning limited exceptions into a general rule. By the Common Law a man who promises without qualification is bound by the terms of his promise if he is bound at all. If the parties do not mean their agreement to be unconditional, it is for them to qualify it by such conditions as they think fit. But a condition need not always be expressed in words; there are conditions which may be implied from the nature of the transaction and in certain cases where an event making performance impossible; is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made; performance or further performance of the promise as the case may be, is execused. On this principle a promise is discharged if, without the promisor’s fault, (1) performance is rendered impossible by law; (2) a specific subject-matter assumed by the parties to exist or continue in existence is accidentally destroyed or fails to be produced, or an event or state of things assumed as the foundation of the contract does not happen or fails to exist, although performance of the contract according to its terms may be literally possible; (3) the promise was to perform something in person, and the promisor dies or is disabled by sickness or misadventure.

In the last-named class of cases a disabled promisor must give the best practicable notice to the promisee, and the promisee has the reciprocal right of rescinding the contract if it is a continuing contract and the disability makes it as a whole impossible of performance, though some part might afterwards be performed; this, on the ground not of breach of contract, which there has not been, but that the consideration has failed. In such a case the promisor cannot show that he was ready and willing to perform his promise. These rules have no bearing on cases where the parties have contemplated and provided for the contingency. In such cases the Court has only to construe the terms of their agreement.

Having regard to the unqualified language of the Act, which lays down a positive rule of law and does not leave the matter to be determined according to the intention of the parties, it seems useless to enter at more length on the distinction observed in English law. The illustrations do not, indeed, appear to go beyond English authority, but this cannot detract from the generality of the enacting words. There is no reason to suppose that a broad simplification of the English rules was not intended, nor does it appear that any inconvenience has ensued or is to be expected.

Stoppage of work by strike.---A strike of the workmen employed in executing work under a contract does not of itself make performance impossible for the purpose of this section.

Frustration of Adventure-War conditions.---Subsequent authority, however, has made it clearer than ever that the literal possibility or otherwise of executing the agreement according to its terms is not an adequate test; it has to be considered whether performance according to the true governing intention of the parties remains possible. But a temporary interruption (such as requisition of a ship for transport of troops) does not necessarily determine the contract. There is no general rule (as suggested by some dicta) that it does not apply to a sale of unascertained goods.

Frustration by Total or Partial Prohibition.---In a state of war many contracts are affected by performance or further performance becoming wholly or in part unlawful. This may be under the general rules against intercourse with the enemy, or may be the result of express executive orders issued under powers of emergency legislation. In principle the question is the same that we have noted above, whether the new state of things is such as the parties provided for or contemplated, and whether further performance, so far as the prohibition is not total, or when it is removed, would really be performance of the same contract. Compulsory suspension of an engineering contract on a large scale, in order to direct the labour to producing munitions of war, has been held to discharge the contractors. So, too a contract to deliver goods may be frustrated by emergency regulations restricting transport. Where after a contract has been made a notification regulating retail prices is passed and the notification does not make the performance of the contract impossible or unlawful, the parties are not discharged from the contract.

"Becomes impossible."---The Indian decisions merely illustrate what amounts to supervening impossibility or illegality within the meaning of the second paragraph.

Similarly, where the parties to a suit agreed that the plaintiff and his younger brother were to execute a sale deed within a week conveying the property in dispute in the suit to the defendant for a certain sum, and, in default, the suit was to be dismissed, it was held that the younger brother’s refusal to join in executing the deed did not make the performance of the agreement by the plaintiff impossible within the meaning of this section. An agreement to sell a specified quantity of dhotis to be manufactured at a particular mill "to be taken delivery of as and when the same may be received from the mills," cannot be read as meaning, "if and when," especially when a time is named for the completion of delivery; and the failure of the mills to produce the goods is no excuse. The doctrine of frustration does not extend to the case of a third person on whose work the defendant relief preferring to work for some one else during the material time.

It is to be noted that the agreement was not a mere agreement to lease, but the case was erroneously considered to be of that nature.

In Indian cases the doctrine seems never to have been applied to a lease, but the decisions have not considered Section 108 of the Transfer of Property Act. It appears, however, that the doctrine does not apply to a mere agreement to lease, where no interest in the property leased passes, In A.I.R. 1954, S.C. 44, 49, it was decided that the doctrine of frustration applies to a Contract to sell land, as in India unlike England a mere contract to sell land does not create any estate in the buyer.

The parties, both of Amritsar, had entered into a contract to refer all disputes to two European merchants at Karachi. Thereafter came partition, which left Amritsar in India, and Karachi in Pakistan. It was found as a fact that the effect of partition was to make it dangerous for Hindus to travel into Pakistan, nor could they do so without permits from the Pakistan authorities. It was held that the agreement to refer to arbitration was frustrated, on the ground that it was necessary for the parties robe present in Karachi. But in a subsequent case, a Full Bench of the same Court decided that if it was not necessary for the parties to be present in Karachi during the arbitration proceedings, there was no frustration of the agreement to refer to, arbitration^.

Without the promisor's default.---It is clear that a party, who is himself responsible for the frustrating event, cannot maintain that the agreement is discharged under S. 56.

It has not been clearly decided in what circumstances a party will be considered responsible, but in a Madras bench decision, the remark of Lord Wright that it has never been suggested that mere negligence suffices is approved, and the view advanced that cases of self induced frustration ,will really be covered by S. 39, frustration rendering a contract void, unless there has been conduct antecedent to frustration amounting to a repudiation of the contract.

Commercial impossibility.---The impossibility referred to in the second clause of this section does not include what is called commercial impossibility. A contract, therefore, to supply freight cannot be said to become impossible within the meaning of that clause merely because the freight could not be procured except at an exorbitant price. So a contractor for bridge tolls has no legal claim for compensation against the District Board if a considerable part but not the whole of the traffic is prohibited by a Government ordinance, or if floods make it impossible to use the bridge for a substantial part of the contract period. A contracted to buy tapestry from B and stated that he intended to resell it in Australia. Imports to Australia were thereafter prohibited. A repudiated the contract. In a suit by B against A for damages, it was contended that the contract was frustrated, but it was held not to be the foundation of the contract that A should be in a position to sell the goods in Australia.

"Becomes unlawful".---Where a truck owner agreed to carry bales of cotton, but both the owner's trucks were requisitioned by the military authorities and user thereafter would have been punishable, the contract was held to have been frustrated from the lime of the notice of requisition.

Certain later statutory enactments further define the effect of the present section. The Specific Relief Act, 1877, S. 13, provides (out of abundant caution, see commentary thereon in its place) that, notwithstanding anything contained in S. 56 of the Contract Act, a contract is not wholly impossible of performance because a portion of its subject-matter, existing at its date, has ceased to exist at the time of the performance. The Transfer of Property Act, 1882, S. 108, provides as to property let on lease, that if by fire, tempest, or flood, or violence of an army or of a mob or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently until for the purposes for which it was let, the lease shall, at the option of the lessee, be void.

Refund.---Where a contract, after it is made, becomes impossible, the party who has received any advantage under it is bound to restore it to the other party under S. 65 below. A buys freight from B for 2,500 bales of cotton on a ship belonging to B to be carried from Bombay to Genoa. The freight is paid in advance and the goods are put on board the ship. While the ship is still lying in the harbour, the export of cotton to Genoa is prohibited by orders Of the Government, and the voyage is abandoned. A is entitled under S. 65 to recover from B the freight paid in advance. This right is not affected even if B is a common carrier. Similarly, where a contract becomes unlawful owing to the out-break of war, either party is entitled under S. 65 to recover from the other any deposit made by him as a security for the due performance of the contract.

Dealings with Enemies.---Since 1914 the question has often arisen whether a contract lawfully made before the war comes within this section on the ground that performance or complete performance would involve dealing with enemies and therefore would be unlawful under S. 23.

In practice we have to ascertain whether the further execution of a given contract has become unlawful as involving dealing with enemies, or otherwise, or in a judicial sense impossible; and this is not always easy. Declaration of war is regularly accompanied by a Royal Proclamation against trading with the enemy. After a declaration of war a contract may stand dissolved.

Goods were shipped to Bombay under a c.i.f. contract from a German port and on board a German ship before the declaration of war: the vendor, a Glasgow firm, drew a bill of exchange upon the purchase on 9th November, 1914, which was accepted in Bombay. The bill became payable on 121h January, 1915, and the vendor sued for the amount. He was held not entitled to recover, as the bill of lading had ceased to be an operative legal document before it was tendered and the consideration for the acceptance of the bill of exchange had, therefore, failed.

Where, on the other hand, a German seller's draft on the buyer at 30 days' sight was drawn, purchased by British subjects in London, and presented and accepted at Bombay before the war, the buyer was held bound to pay. The case was complicated by the defendants' contention that the acceptance was qualified by the condition that the plaintiffs, when tendering the documents to the defendants, should put them in a position to get delivery of the goods, and that this could not be lawfully performed. Now in point of fact the ship carrying the goods reached Bombay just before the outbreak of war, left Bombay to avoid capture and took shelter in the neutral port of Marmagoa, where she was lying at the date of suit brought, and under a proclamation of December, 1914, British consignees were free to take delivery of goods from enemy ships in neutral ports. Thus both branches of the defence failed; actual payment of the bill, from one British subject to another, at the due date and after declaration of war, was of course in no way unlawful.

A contract was made in August, 1914, after the outbreak of war, between merchants at Ambur and importers of German dyes whereby the latter (defendants) agreed to sell and deliver to the former (plaintiffs) certain casks of dye already shipped from Germany. As the defendants could not lawfully take up and pay for the goods, they could not lawfully agree to sell and deliver them to the plaintiffs. The case has another aspect, perhaps of more interest. The German S.S. Barenfels carrying the dyes in question was captured in October, 1914, and taken into Alexandria for condemnation and subsequently condemned as prize of war in September, 1915. In the meantime the defendants got the goods released on payment of double the invoice value, agreeing to treat it as their sale price in case of their eventual condemnation. It was held that the condemnation by the Prize Court related back to the date of seizure and divested the ownership of the goods as from that date. The goods, therefore, came to the defendants as purchasers from the Crown and they were not bound to deliver them to the plaintiffs.

We have a rather peculiar state of fact. The contract was between two Calcutta firms for sale of steel bars "c.i.f., i.e., free Hoogly," by shipments in June, July, August, 1914. Goods were shipped under this contract from Antwerp per S.S. Steinturm, a German ship which was at sea when war was declared; she carried a general cargo for Madras, Calcutta and Chittagong. The ship was captured by a British cruiser and taken to Colombo for adjudication. The Prize Court condemned the vessel but released the cargo, and the goods were brought to Calcutta, the place where the goods were to be delivered under the original contract by the Steinturm, under an order of the Prize Court made by arrangement with the Government of Ceylon, which provided for delivery to consignees on payment of further freight and expenses. The purchasers were held not entitled to delivery of the goods from the vendors. The voyage from Colombo to Calcutta was in no sense a continuation of the original voyage in fulfillment of the contract of affreightment which was dissolved by the outbreak of the war; the voyage was broken up by capture so as to cause a complete defeasance of the undertaking, "The original bills of lading would be of no avail whatever, unless the consignee complied with the conditions imposed by the Prize Court.

Frustration of contract on account of imposition of ban by District Magistrate under S. 144, Cr.P.C.---Order of District Magistrate not void unless set aside at instance of aggrieved person in appropriate legal proceedings---Frustration of contract is immediate and automatic as same guillotines contract without action of either party---Letter of buyer after imposition of ban by District Magistrate suggesting alternate modes of supply, held at best were in nature of fresh proposals as mode of delivery was sought to be charged contrary to stipulation contained in contract---Finding of High Court that alternate mode of delivery of goods could nut have been in contemplation of parties or intended by them as natural or reasonable mode of delivery, held, unexcetional in circumstances.

Frustration of contract on account of statutory acquisition of subject-matter of contract by local authority---Plea that appellants being no longer owner of land, decree for specific performance could not be passed against him, held, not tenable in circumstances.

Goods imported under special import licence---Advance sale in 'bona fide' belief as to right of sale---On landing goods directed by Government to be sold to other person---Contract of sale is frustrated---No compensation for loss payable. When the defendants entered into the contract to supply them two chassis they had bona fide belief that considering that they had got the special licences under the Export Incentive Scheme they would be able to deliver the chassis to the two plaintiffs without restraint by the Controller-General as indeed they had been able to do in the past. Conditions, however, changed due to the imposition of Martial Law and the provisions of the Distribution Order were enforced when these chassis were imported with the result that the defendants were compelled to deliver the contracted articles to persons to whom permits had been issued. Held: A contravention by the defendant of the order of Controller-General or that of the Director of Civil Supplies would have involved a criminal prosecution and forfeiture of the vehicle. Therefore, section 56 was clearly attracted in the case, with the result that the delivery of the two chassis to the two plaintiffs became impossible by reason of the event which the defendants could not prevent thereby rendering the contract void. Therefore no compensation was payable by the defendant for any loss that the plaintiff may have incurred in this case.

Illegal order of Government making contract impossible of performance---Contract does not become illegal. The unlawfulness contemplated by section 56 of the Contract Act is one which is the result of a valid law, or of a valid order made in exercise of lawful authority. Where the order which hindered the performance of the contract was illegal, the defendants could not place reliance on the District Magistrate's order to support their plea of frustration of the contracts in suit.

Prohibition of export without registration existing before contract---Goods contracted to be purchased for export---Absence of Registration No. for export not sufficient reason for avoidance of contract. Where the defendant was aware of the existence of the circular requiring Registration and in spite of it he entered into a contract, the plea that the bar came into force on and from 11th February before which their was no bar disqualifying the defendant to export for want of registration number he could not lift the goods, cannot be accepted. Further more, from the Exhibits filed in this case it is clear that the plaintiff was asking the defendant to lift the goods but the defendant was taking time after time. So the plea that the contract could not be fulfilled for the absence of the Registration Number cannot be allowed to defeat the contract; nor did the contract become void in the aforesaid circumstances.

Contract with Government for export of commodity---Delay in issue of export licence resulting in adverse market conditions in importing states---Contract not frustrated. Where a company entered into a contract with the Government for export of mutter dal but Government delayed the issue of export permit. In the meantime new crop came on the market in the countries to which the mutter dal was to be exported. The company claimed frustration of the contract by the Government. Held: These facts do not attract the doctrine of frustration. The breach of contract, if any, by the Government was waived. Extension was taken by the appellants to perform the contract. The evidence led by the appellants shows only that after extension was obtained they found that it was not possible to export these goods. This evidence is not enough to establish that the contract became void on account of frustration.

Agreement of sale---Price for sale becoming illegal after execution of contract---Contract becomes void. Where the payment of price at the contracted rate was forbidden by law after the agreement was executed and before it was performed. Such a case is clearly provided for under section 56 which renders the contract void.

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 other words the section contemplates two kinds of impossibility namely physical impossibility and non-self-induced legal impossibility. The doctrine of frustration is founded on the theory of an implied term but in this case there being a clear provision it is not necessary for reading such an implied term into the contract. In the present case it cannot be denied that in view of the Martial Law Regulations the prices fixed under it at which the parties had agreed to supply the goods had become illegal and unlawful. Any one contravening its provisions would be guilty of a penal offence. Thus the contract for this reason was frustrated and in law it was not possible to perform it on the terms agreed upon between the parties. Since the contract had become impossible to perform no responsibility for non-performance of the contract could be placed on the respondents.

Acquisition by Government of land subject of agreement of sale---Agreement of sale is not frustrated---Price fixed by Government may be paid to vendee.---Where there is an agreement of sale of land and subsequently before the completion of the sale, the Government compulsorily acquires the land, the contract of sale is not thereby frustrated. The vendor can enforce it. The vendee is in that case entitled to receive the compensation which the Government undertakes to pay to the owners of land.

Executory contract---No vested rights created by contract---Doctrine of frustration applies to contract on its becoming unenforceable.---Where a contract of sale becomes unenforceable and void because of an amendment of law, and in the circumstances of the case the plaintiff’s contract of lease, though lawful at the time when it was made, has been rendered impossible of performance by the operation of section 75-A of the Act over which the parties to the contract have no control. The said contract cannot be performed or specifically enforced except in violation of the absolute prohibition contained in section 75-A; the performance of that contract has, therefore, been rendered unlawful by the said section. Thus, the doctrine of frustration coming within the purview of the second paragraph of section 56 of the Contract Act comes into play in this case with the result that the plaintiff's contract of lease has become void and unenforceable.

Frustration---When doctrine is applicable. The question whether frustration of the contract occurs or not depends on the nature of the contract and on the events which have occurred. Therefore in each case the question for consideration will arise, "what was the common intention and a common purpose for entering into a contract anti whether that purpose and intention has been frustrated by supervening circumstances," and it is not permissible for a Court of law to imply a term which is not consistent with the express term of the contract merely on the ground that parties being reasonable men must be deemed to have provided for a particular event.

Contract for supply of goods-Price of goods changed by Government order-Goods supplied after the Government order---If difference in price can be recovered by purchaser. On 16th September 1943, P Firm entered into a contract with the D company for the purchase of one wagon of mazin starch at the rate of Rs. 77 per Cwt. F.O.R. Jagadhri. The maximum price then fixed by the Government of India was Rs. 78 per Cwt. The goods were loaded on railway wagons at Jagadhari on 27th December, 1943 by D Company. In the railway receipt the D Company was the consignee. On 3rd January, 1944 the railway receipt was endorsed over to P firm who paid the balance of the price of the goods on that date. In the mean time on 16th December 1943, a new order was passed by the Government of India making Rs. 48 per Cwt. the maximum price. This order was applicable to all contracts in which delivery was to be given on or after 1st January 1944. P firm filed a suit to recover the difference between the contract price of Rs. 77 per Cwt. and the maximum price of Rs. 48 per Cwt. as fixed by the Government order, and relied upon Ss. 56, 65 and 72, Contract Act, in support of their claim.

Held; (i) That the subsequent order of the Government fixing Rs. 48 per Cwt. as the price affected the contract;

(ii) That the contract as it stood could not be performed without infringing the law and hence under S. 56 it became void on 16th December, 1943 i.e., the date on which the second Government order was promulgated.

(iii) That S. 65 did not apply to the case as the seller had received the benefit after the contract ceased to be a contract by becoming void. The section applies only when the benefit is received before the contract becomes void; and

(iv) That P firm could not recover the amount under S. 72 because it could not be said that the difference between the contract price and the price fixed by the second Government order represented a payment made by the P firm under a mistake.

Frustration---When doctrine is applicable. The question whether frustration of the contract occurs or not depends on the nature of the contract and on the events which have occurred. It therefore appears to us that in each case the question for consideration will arise, "what was the common intention and common purpose for entering into a contract and whether that purpose and intention has been frustrated by supervening circumstances," and it is not permissible for a Court of law to imply a term which is not consistent with the express terms of the contract merely on the ground that parties being reasonable men must be deemed to have provided for a particular event.

Frustration, doctrine of---What is---If doctrine applies to demise of land.---"Frustration may be defined as premature determination of an agreement between parties, lawfully entered into and in course of operation at the time of its premature determination owing to that 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. If, therefore, the intervening circumstances is one which the law would not regard as so fundamental as to destroy the basis of the agreement, there is no frustration. Equally, if the terms of the agreement show that the parties contemplated the possibility of such intervening circumstances arising, frustration does not occur. Neither, of course, does it arise where one of the parties has deliberately brought about the supervening event by his own choice."

Thus it is clear that in order to invoke the doctrine of frustration the first and the most important condition is to show that such an interference, by some authority or circumstances beyond the control of the parties, has taken place as to have made it impossible to continue with the contract by destroying the very basis of the contract itself or striking at its root.

Whether the doctrine of frustration can also be applied to the case of a demise of land or not, I cannot imagine that such a temporary interference with a contract, as a temporary sealing or seizure by the police during the pendency of a criminal prosecution must inevitably be, can never be taken to amount to frustration of the tenancy itself.

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