SATYABRATA GROSE versus MUGNEERAM BANGUR & CO., AND ANOTHER.

Citation: [1954] 1 S.C.R. 310 · Decided: 16-11-1953 · Supreme Court of India · Bench: BIJAN KUMAR MUKHERJEA · Disposal: Appeal(s) allowed

Judgment (excerpt)

310 
SUPRkME COURT REPORTS 
[1954] 
1953 
appeal is allowed and we award to the Commissioner 
-:--:-
of Income-tax the costs of this appeal and those of 
Comm?SBioner of th 
d' 
· th H' h C 
t 
Income-tax, 
e procee mgs m 
e 
1g 
our _ 
Bo1nbay CUy 
v. 
]loyal Western 
India Turf 
Club Ltd. 
195J 
November 16. 
Appeal allowed. 
Agent for the appellant: G. H. Bajadhyaksha. 
Agent for the respondent: Bajinder Narain. 
SATYABRATA GROSE 
v. 
MUGNEERAM BANGUR & CO., AND ANOTHER. 
MuKHERJEA, V1vrAN BosE and BHAGWATI JJ.] 
Indian Contract Act (IX of 1872), s. 56-Aareement to sell lct·nd 
-Doctrine of frnstratio,.-Applicetbility-Doctrine whether a.ppvic-
able ir1i India-'-Scope of s. 56-"Inipossible," nwaning of-Agree. 
inent for sale of land-B11yer's rights-English and Indian law. 
The doctrine of frustration is really an aspect or part of the 
law of discharge of contract by reason of supervening impossibility 
or illegality of the act agreed to be done and hence comes within 
the purview of s. 56 of the Indian Contract Act. 
'rhe view that 
s. 56 applies only to cases of physical impossibility and that where 
this section is not applicable recourse can be had to the principles 
of English law on the subject of frustration is not correct. English 
cases can have only a persuasive value, and are only helpful in 
showing how English courts decided cases under similar circum· 
stances. 
· 
Section 56 of the Indian Contract Act lays down a rule 
of positive law and does not leave the matter to be determined 
according to the intention of the parties. 
According to the Indian Contract Act, a promise n1ay be ex-
press or implied. 
In_ cases, therefore, where the court gathers as 
a matter of construction that the contract itself contained im-
pliedly or expressly a term, according to which it would stand 
discharged on the happening of certain circumstances, the dissolu-
tion of the contract would take place under the terms of the 
contract itself and such cases would be outside the purview of 
s. 56 altogether. Although in English law these cases are treated 
as cases of frustration, in India they would be dealt with under 
s. 32 of the Indian Contract Act which deals with contingent 
contracts or similar other provisions contained in the Act. In the 
large majority of cases however the doctrine of frustration is 
applied nol on the sround that the parties themselves'ogreed to ap 
.; 
j 
" 1 
s.c.:R. 
SUPREME COUR'l' REPORi'S 
311 
implied term which operated to release them from the performance 
1953 
of the contract. The relief is given by the court on the ground of 
--
subsequent impossibility when it finds that the whole purpose or Satyabrata Ghost 
basis of a contract was frustrated by the intrusion or occurrence 
v. 
of an unexpected event or change of circumstances which was be-
Mugneeram 
yond what was contemplated by the parties at the time when they Bangur and Oo., 
entered into the agreement. Here there is no question of finding 
and Another. 
out an implied term agreed to by the parties embodying a provi-
sion for discharge, because the parties did not think about the 
matter at all nor could possibly have any intention regarding it. 
When such an event or change of circumstance occurs which is so 
fundamental as to be regarded by law as striking at the root of the 
contract as a whole, it is the court which can pronounce the con-
tract to be frustrated and at an end. 
The court undoubtedly has 
to examine the contract and the circumstances under which it was 
made. 
The belief, know ledge and intention of the parties are 
evidence, but evidence only on which the court has to form its own 
conclusion whether the changed circumstances destroyed altogether 
the basis of the adventure and its underlying object. This may be 
called a rule of construction by English Judges but it is certainly 
not a principle of giving effect to the intention of the parties which 
underlies all rules of construction. This is really a rule of positive 
law and as such comes within the purview of s. 56 of the Indian 
Contract Act. 
. 
The reason underlying the rule of English law that the 
doctrine of frustration does not apply to contracts for the sale of 
land, is that under the English law, as soon as the agreement to 
sell is complete the buyer becomes the owner of the land in equity. 
As a mere agreement to sell does not confer any rights of owner-
ship on the buyer under the Indian law, the doctrine of frustra-
tion is as applicable 

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