MUGNEERAM BANGUR & CO. versus SARDAR GURBACHAN SINGH

Citation: [1965] 2 S.C.R. 630 · Decided: 16-12-1964 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Dismissed

Judgment (excerpt)

630 
MUGNEERAM BANGUR & CO. 
v. 
SARDAR GURBACHAN SINGH 
December 16, 1964 
A 
(K. N. WANCHOO AND J. R. MUDHOLKAR, JJ.] 
B 
Contract Act, s. 56-Contract to purchase plot-Subject to comp~-
twn of development work-Government requisitioning 
/and-Rendering 
completion temporarily unlawful-Whether contract disc.harged. 
In May 1941, the respondent had entered into a contract with the 
appellant company for the purchase of a plot of land in a Colony Scheme. 
He had paid the earnest money and had undertaken to 
complete the c 
transaction within one month from the date of completion of certain 
development work by the appellant. Thereafter, the land in question was 
requisitioned by the Government under the Defence of India Rules and the 
company was therefore unable to undertake the development work during 
the continuance of the war. 
On learning that the Government proposed to de-requisition the lands 
taken over by them, in May 1946, the respondent approached the com-
D 
pany to ascertain when it would complete development work after the 
de-requisitioning of the land, so that be might complete the transaction 
within one :nonth thereafter. The company claimed that the contract 
1tood cancelled since the respondent had failed to comply with the terms 
of a circular Jetter issued by it in December 1943, offering all purchasers 
an option between' accepting refund of the earnest money or completing 
the transaction immediatoly by accepting the land in an undeveloped state. 
The respondent denied having received the circular letter and filed a auit 
E 
in August 1946, which was decreed by the trial court and the decree was 
upheld by the High Court in appeal. 
In the Supreme Court it was contended on behalf of the company 
that the contract was discharged by reason of frustration because its .per-
formance was rendered unlawful as a result of the requisitioning orders 
made by the Government, and furthermore, that the suit for specific per-
formance was premature, because, under the contract the respondent did 
F 
not get the right to obtain a sale deed till after the development work wu 
complete. 
HELD : (i) It cannot be said 'ihat because of the requisitioning 
orders which had the effect. of making the entry by or on behalf of the 
company on the land illegal, during the subsistence of the period of re-
quisitioning, the contract stood discharged by frustration. (637 HJ 
If time is of the essence of the contract, or if the time for the perfor-
G 
mance is set out in the contract, the contract would stand discharged. 
even though its performance may have been rendered unlawful for an 
.. indeterminate time, provided unlawfulness attached to the performance at 
the time when the contract ought to have been performed. [637 A-CJ 
In the· present case, it could not~ be said that time was of the essence 
of the contract or that the contract had been discharged because it had 
not been performed in a reasonable time within the meaning of s. 46 of 
H 
the Contract Act. 
When the parties entered 
into 
the 
contract, 
they 
k.nc:;;1.v the prevailing circumstances and must have borne in mind the possi-
bility of difficulties in obtaining the necessary material or the possibility 
of the land being requisitioned by the Government. (637 E-HJ 
• 
• 
·..,.. 
'-.. 
•MUGNEERAM co. v. GURBACHAN · (Mudholkar, l.) 
631 
. . ': .. '• 
. ::. 
A 
,· Denny Mott & Dicks~n Ltd. ',;;l~',n~j B."F;:isser & Co. Ltd. [1944) 
A.C. 265 and Satyabrata Ghose and Ors. v. Mugneeram Bangur & Co. 
_&c A.nr. [1954] S.C.R. 310. referred to. , 
(ii) Tue contention that the suit was prematnre could not be accepted 
because the development work had been completed when the appeal was 
heard by the High Conrt. ln such a case the conrt would be justified in 
taking notice of subsequent events in moulding its relief accordingly. [638 
B .A-BJ 
_ 
c 
Civn.: APPELLATE JURISDICTION: Civil Appeal No. 180 of 
1962. 
. 
Appeal by special leave from the judgment and decree dated 
January 28, 1959, of the Calcutta High Court from original Decree 
No. 226 of 1952. 
B. Sen and S. N. Mukherjee, for the appellant .. 
Hem Chandra Dhar, S. S. Khanduja and Ganpat Rai, for the 
respondent. 
· 
The Judgment of the Court was delivered by 
D 
Mudholkar, J. This appeal, like Satyabraia Ghose v. Mugnee-
ram Bangur & Co. and another( 1 ) relates to the effect of requisi-
tioning orders made by the Government during the last war under 
. which they took possession of land belonging to t

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