BOOTHALINGA AGENCIES versus V. T. C. PORIASWAMI NADAR

Citation: [1969] 1 S.C.R. 65 · Decided: 22-04-1968 · Supreme Court of India · Bench: J.C. SHAH, V. RAMASWAMI, G.K. MITTER · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
BOOTHALINGA AGENCIES 
v. 
V. T. C. PORIASWAMI NADAR 
April 22, 1968 
B 
[J. C. SHAH, V. RAMASWAMI AND G. K. MITTER. JJ.] 
c 
D 
E 
F 
G 
H 
Indian Cont1·act Act (9 of 1872) s. 56--Contract entered in con-
travention of licence terms-Doctrine of frusitration .. "self induced frustra-
tion"-!! applies t<>-lmports and Exports (Control) Act (18 of 1947) 
s. 5-Contract entered in contravention of licence terms before amend-
1nent in 1960-Whether statutory order breached-Sale if contravening 
cl. 5(4) of 1955 order. 
The appellant entered into a contract to sen certain goods to the 
respondent which he was importing under ·actual users' licence. Under 
the terms of the licence the sale of the, goods was prohibited and was to 
be 
utilised for consumption by •he importer. The goods arrived. and 
were cleared by the appellant. The respondent filecl a suit, which was 
contested by the appellant on the· ground that the contract was illegal, 
and, therefore, void. 
The trial court decreed the suit holding thait the 
contravention of the terms of licence entailed only an administrative 
penalty, the sale could not be held to be prohibited by law and the 
contract was a legal contract The High Court upheld the decree. In 
appeal, this Court : 
HELD : The appeal must be allowed. 
(i) The licence was granted by virtue of a statutory notification issued 
under the Defence of India Rules. The 
n.otificaition 
authorises 
the 
licensing officer to impose one or more conditions prescribed by that order 
and the 1icensing officer has therefore power to impose conditions in the 
licence issued by him, but if the licensee contravenes the condi1tions im-
posed by the licence it is merely a contravention of the conditions of a 
licence and not a contravention of the provisions of s. 5 of the JmpoI11s 
and Exports (Control) Act, Section 5 of Act was amended by the Amend· 
ing Act 4 of 1960 much after the present controversy, so as ito include 
contravention of a condition of a liccn.ce. granted under any order as an 
offence under s. 5 of the Act. Therefore on the material date a breach 
of the condi1tion of a licence was not tantamount to a breach of 
the 
statutory orde' within the meaning of s. 5 of the Act 18 of 1947. 
[73H; 74A-Dl 
East India Con1ni.::rcial Co. Ltd., Calcutta, v. The Collector of Cus-
tonJ.<, Calcutra, [1963] 3 S.C.R. 338. followed. 
(ii) The goods which arrived at the Indian Port on 13th December 
1955 were governed by the provisions of lm9orts (Control) Order, 1955 
which came into force on 7th De.ccmber 1955. 
Clause 5(4) of the 1955 
order expressly provided that the licensee shall comply wiith all the condi-
tions imposed or deemed to be imposed under that 
clause~ Therefore 
the <;ale of the 
imported goods would be a 
direct contravention of 
cl. 5 ( 4) and under s. 5 of the Act an.y coT11travention of the Act or any 
order made or deemed to have. been made under the Act was punish-
able with imprisonment or :fine or both. In consequence, even though 
the contract \Vas enforceable when it was entered, the performance of the 
contract became' impossible or unlawful when the 1955 Order came into 
force. and so the contract became void under s. 5'6 of the Indian Contract 
Act. [75B-D] 
·.:~ 
• 
• 
66 
SUPREME COURT REPORTS 
[1969] I S.C.R. 
The doctrine of fru~~ration of contract is really an aspect or part 
of the law of discharge of contract b)r reason of supervening impossibility 
or illegality of the act · agr°ced to be done and hence comes within the 
purview of s. 56 of the 'Jndian Contract Act1 It should be noticed that 
s. 56 lays down a rule of positive law and does not ]eave the matter to 
be determined ·according to the intention of ithe parties. 
In Engli!ijl l:l\v 
the question of a frustration of contract bas been treated by courts as n 
question of cons!ruCtiOn depending upcn the true intention of tho parl ics. 
In Contrast, the statut6ry 
provisions coi;itained in s. 5,6 of the Indian 
\_,0ntrar-t Act laY down a positive rule of la\v and English authoritici; 
cannot therefore be of direct nssistance, though they h;ive persuasive value 
in sho\\fug how English courts have approached and decided cases ur\der 
simifar circumstances. [750; 77H; 78A-BJ 
Denny. Mott and Dickson Ltd. v. James B. Fraser & Co,, Ltd., [l944] 
A.C. 265~ British· Movietonews Ltd. v. London 
and 
District 
Cinemas 
Ltd., [1951] 1 K.B. 190; House of Lords, 
[19521 
A.C. 166 at 185, 
referred to. 
(iii) The licens.ing authod!y c

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