Satyabrata Ghose v/s Mugneeram Bangur
BENCH: Justice MUKHERJEA, B.K.BOSE, VIVIAN BHAGWATI,
NATWARLAL H.
Satyabrata Ghose …... APPELLANT
Vs.
Mugneeram Bangur …... RESPONDENT
FACTS OF THE CASE:
The Respondent's company owned a large tract of land in Calcutta. It started a
scheme for the development of the land for residential purposes and divided land
into different plots. The company entered into agreements with purchasers for the
sale of the different plots and accepted a small amount of earnest money at the time
of sale of land. The company undertook the job of constructing roads and drains,
necessary for the residential purposes. The plots would be given after the
construction and payment of balance amount by the buyers. Bejoy Krishna Roy
entered into the agreement with the company and paid the earnest money deposit
of Rs. 101 on 5th August, 1941. On 30th November 1941, the appellant was made
the nominee of the above land. It so happened that subsequently the land was
requisitioned by the Collector, 24 - Parganas under Defense of India rules for
military purposes. As a consequence, in November 1943, the company decided to
treat the agreement cancelled but gave the appellant the option of either taking the
earnest money back or paying the balance money and the company would continue
its work after the termination of war. The appellant refused both the options. He
filed a suit on 18th January 1946 and claimed that the company was bound to the
terms of agreement.
ISSUES OF THE CASE:
1. Did the plaintiff have a locus standi for instituting the suit?
2. Did the contract become frustrated under the Section 56 of ICA?
3. Does English law of frustration apply in India?
HOLDING:
The Supreme Court stated that English principles of Frustration of Contract on
basis of which the judgement of the High Court was passed is not applicable in the
statutory provisions of Indian Contract Act. It also said that the performance of the
contract has not become impossible. The Court pointed out, the company had not
commenced its work when the land was requisitioned, therefore, there was no
interruption of work. Secondly, there was no time limit implied in the contract for
the completion of construction of the roads and drains. It was laid by the trial court
as well as the lower appellate court that the appellant was a real assignee of Bejoy
Krishna Roy on the issue of latter's rights on filing the suit. Appeal allowed. In this
case of Satyabrat Ghose v. Mugneeram Bangur , though the land gets
requisitioned by the government, impossibility does not apply because:
They did not start their work when the land got requisitioned. Therefore, there was
no interruption in the work. As the defendant pleads there would be an indefinite
delay in performance of the contract so the impossibility should be applied. But
there was no time limit described in the contract and the requisition was only
temporary. So there was no indefinite delay. Third provision of Section 56 [2] says
when a person while signing the contract has reasonable diligence which the other
party didn't know must compensate for the loss faced by the other party.
