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PETITIONER: RAJA DHRUV DEV CHAND

       Vs.

RESPONDENT: HARMOHINDER SINGH & ANR.

DATE OF JUDGMENT: 01/03/1968

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. MITTER, G.K.

CITATION:  1968 AIR 1024            1968 SCR  (3) 339  CITATOR INFO :  R          1971 SC1756  (8)

ACT: Contract Act, s. 56-Doctrine of frustration, if applies,  to leases of agricultural land.

HEADNOTE: The  appellant  obtained lease of a land  in  the  undivided Punjab  and  carried  on  agricultural  operations  in   it. Following  the  partition  of India  and  allotment  of  the territory  in which the lands were situate to  Pakistan  the appellant  migrated  to India.  The appellant  commenced  an action for a decree for refund of the rent on the plea  that the   consideration  for  the  lease  failed,  because   the covenants of the lease had become impossible of  performance as  a result of communal riots in that locality and the  in- ability  of non muslims to continue to reside in  that  are. The  claim  was  decreed but the  High  Court  reversed  the decree.  Dismissing the appeal this Court, HELD  :  Where  the  property leased  is  not  destroyed  or rendered  substantially  and permanently unfit,  the  lessee cannot avoid that lease even if be does not or is unable  to use the land for purposes for which it is let to him.  Under a  lease of land there is a transfer of right to enjoy  that land.   If  any  material part of  the  property  be  wholly destroyed  or tendered substantially and  permanently  unfit for  the purpose for which it was let out, because of  fire, tempest,  flood,  violence  of an army or a  mob,  or  other irresistible  force,  the lease may, at the  option  of  the lessee, be avoided.  This rule is incorporated in s.  108(e) of  the  Transfer of Property Act and applies to  leases  of land to which the Transfer of Property Act applies, and  the principle  thereof  applies to agricultural  leases  and  to leases in areas to which the Transfer of Property Act is not extended. [345 D-F] In  the present case the relation between the appellant  and the  respondents did not rest in contract.  It is true  that the  representative of the respondents-own-ars had  accepted the  tender of the appellant and had granted him a lease  on agreed  terms.  But the rights of the parties did not  after the  lease  was granted rest in contract.  By s.  4  of  the

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Transfer  of Property Act the chapters and sections  of  the Transfer of Property Act which relate to contracts at.--  to be  taken  as part of the Indian Contract Act,  1872.   That section  however  cannot  be  read  as  enacting  that   the provisions  of  the  Contract Act are to be  read  into  the Transfer  of  Property Act.  There is  a  clear  distinction between  a completed conveyance and an  executory  contract, and  events which discharge a contract do not  invalidate  a concluded transfer. [342 E-H] Granting  that the parties at the date of the lease did  not contemplate that there may be riots in the area rendering it unsafe for the appellant to carry on cultivation or that the crops  grown by him may be looted, there was no covenant  in the lease that in the event of the appellant being unable to remain  in  possession  and to cultivate  the  land  and  to collect  the crops, he will not be liable to pay  the  rent. Inability  of  the  appellant to cultivate the  land  or  to collect the crops because of widespread riots cannot in  the event  that  transpired clothe him with the right  to  claim refund of the rent paid. [343 C-E] 340 Paradine  v. Jane. (1647) Aleyn. 26, Denny Mott and  Dickson Ltd.  v.  James  B.  Fraser &  Co.  Ltd.  [1944]  A.C.  265, Satybrata  Ghose  v. Mugneeram Bangur & Co.  &  Anr.  [1954] S.C.R.  310, Abdul Hashem & Anr. v. Balahari Mondal  &  Ors. A.I.R.  1952  Cal.  380, Tarabai  Jivanlal  Parekh  v.  Lala Padamchand   A.I.R.  1950  Bom.  89),  Alanduraiappar   Koil Chithakkadit by its Trustee M. Ramananda Nainar & Ors. v. T. S.  A.  Hamid  and Anzr, A.I.R. 1963 Mad.  94,  Sri  Amuruvi Perumal Devasthanam v. K. R. Sabapathi Pillai & Anr.  A.I.R. 1962 Mad. 132 and Inder Pershad Singh v. Campbell, L.I.R.  7 Cal. 474, referred to. Parshotan  Das  Shankar Das v. Municipal  Committee,  Batala A.I.R. 1949 E.P. 301, overruled.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 407 of 1965. Appeal from the judgment and order dated September 23,  1959 of the Punjab High Court in R.F.A. No. 143 of 1952. Vikrani Chand Mahajan and Hardev Singh, for the appellant. B.   P.  Maheshwari, Sobhag Mal Jain and R.  K.  Maheshwari, for respondent No. 2. The Judgment of the Court was delivered by Shah,  J.  The appellant obtained from the Court  of  Wards, Dada Siba Estate, a lease of five squares of land in  Tahsil Okara,  District Montgomery in the undivided Punjab for  the Kharif season 1947 and Rabi season 1948.  Following upon the partition  of  India  in  July 1947  and  allotment  of  the territory  in which the lands were situate to Pakistan,  the appellant migrated to India. An  action commenced by the appellant against the  Court  of Wards  in  the  Court of the Subordinate  Judge,  Kangra  at Dharamsala  for a decree for refund of the rent paid by  him was  decreed.   But the High Court of  Punjab  reversed  the decree holding that the doctrine of frustration of  contract did  not apply to leases of immovable property and  that  in any  event  on  the  facts  proved  there  was  no  case  of frustration established by the appellant.  With  certificate granted  by the High Court, this appeal is preferred by  the appellant.  Raja Harmohinder Singh and Kanwar Rajinder Singh have now been substituted in place of the Court of Wards  as the respondents. The appellant claimed a decree for refund of the rent on the

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ground that the consideration for the lease failed, ’because the  covenants  of  the  lease  had  become  impossible   of performance as a result of communal riots in the District of Montgomery  and the inability of non-Muslims to continue  to reside   in  that  area.   The  High  Court   rejected   the contention. The following findings of the High Court are not  challenged before us: 341 After obtaining possession of lands from the Court of  Wards the appellant carried on agricultural operations for  Kharit cultivation and "partly enjoyed benefit therefrom by taking- fodder etc." that the right to the demised land continued to remain  vested  in the appellant even after he  migrated  to India, that the lands demised with neither destroyed nor had they   become   permanently  unfit  for   the   purpose   of agriculture,  and  that there was no  agreement  express  or implied-that the rent was payable only if the appellant  was able  personally to attend to or supervise the  agricultural operations. Under the English common law the earlier asess laid down the rule of "absolute contract" that when a duty was cast upon a person  who  bound himself by contract absolutely  to  do  a thing, he could not escape liability for damages for  breach by proof that as events turned out performance was futile or even  impossible  : see Paradin v. Jane(1).  This  rule  was later  mitigated by an exception that if further  fulfilment of  the  contract  is  brought to an  abrupt  stop  by  some irresistible and extraneous cause for which neither party is responsible, the contract shall terminate forthwith and  the parties be discharged : see Denny, Mott and Dickson Ltd.  v. James  B.  Fraser  & Co. Ltd. (2) .  The  rationale  of  the doctrine  of frustration under the English common  law  need not  be  considered, for in India by the provisions  of  the Indian  Contract Act have turned a limited  exception  under the English common law into a positive general rule in s. 56 of  the Indian Contract Act.  Section 56, insofar as  it  is material provides               "An  agreement  to  do an  act  impossible  in               itself is 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. Under s. 56, where an event which could not reasonably  have been  in the contemplation of the parties when the  contract was  made  renders performance impossible or  unlawful,  the contract is rendered void, and the parties are excused  from performance  of  their  respective  obligations.   Therefore where  performance  is  rendered  by  intervention  of   law invalid,  or  the subject matter assumed by the  parties  to continue  to exist is destroyed or a state of thing  assumed to  be  the foundation of the contract fails,  or  does  not happen,   or  where  the  performance  is  to  be   rendered personally and the person dies or is disabled, the  contract stands discharged. (1) (1647) Aleyn, 26. (2) [1944] A.C. 265. 342 It  has  ’been  held by this Court that the rule  in  s.  56 exhaustively  deals  with  the doctrine  of  frustration  of contracts, and it, cannot be extended by analogies  borrowed from  the  English  common  law.   In  Satyabrata  Ghose  v. Mugneeram  Bangur  &  Co.  and A  nr.  (1),  Mukherjea,  J.,

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observed at p. 3 19 :               "........  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 section 56 of the Indian Contract Act.   It               would  be incorrect to say that section 56  of               the  Contract  Act 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.  It must be held  also               that  to the extent that the  Indian  Contract               Act  deals  with a particular subject,  it  is               exhaustive  upon  the  same  and  it  is   not               permissible   to  import  the  principles   of               English    law    dehors    these    statutory               provisions." No  useful  purpose  will  be served  by  referring  to  the judgments  of  the  Supreme Court of the  United  States  of America  and the Court of Session in Scotland to  which  our attention was invited.  Section 56 of the Contract Act  lays down  a positive rule relating to frustration  of  contracts and  the  Courts  cannot travel outside the  terms  of  that section.   The view expressed by the East Punjab High  Court in  Parshotam  Das  Shankar  Das  v.  Municipal   Committee, Batala(2), that s. 56 of the Contract Act is not  exhaustive of  the  law relating to frustration of contracts  in  India must be deemed not to be good law to that extent. We are unable to agree with counsel for the appellant in the present case that the relation between the appellant and the respondents rested in a contract.  It is true that the Court of  Wards had accepted the tender of the appellant  and  had granted  him a lease on agreed terms of lands of  Dada  Siba Estate.   But  the rights of the parties did not  after  the lease was granted rest in contract.  By S. 4 of the Transfer of Property Act the chapters and sections of the Transfer of Property  Act which relate to contracts are to be  taken  as part of the Indian Contract Act, 1872.  That section however does  not  enact  and cannot be read as  enacting  that  the provisions  of  the  Contract Act are to be  read  into  the Transfer  of  Property Act.  There is  a  clear  distinction between  a completed conveyance and an  executory  contract, and  events which discharge a contract do not  invalidate  a concluded transfer. (1) [1954] S.C.R. 310. (2) A.I.R. 1949 B.P. 301. 343 By  its  express terms s. 56 of the Contract  Act  does  not apply to cases in which there is a completed transfer.   The second  paragraph  of  s. 56 which  is  the  only  paragraph material  to cases of this nature has a limited  application to covenants under a lease.  A covenant under a lease 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.  But on that account the transfer of property  resulting from the lease granted by the lessor  to the lessee is not declared void. By  the  agreement of lease the appellant undertook  to  pay rent  for the year 1947-48 and the Court of Wards agreed  to give on lease the land in its management.  It is not claimed that the agreement of lease was void or voidable.  Nor is it the  case of the appellant that the lease was determined  in

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any manner known to law.  The appellant obtained  possession of  the  land.   He  was unable  to  continue  in  effective possession  on account of circumstances beyond his  control. Granting  that the parties at the date of the lease did  not contemplate that there may be riots in the area rendering it unsafe  for the appellant to carry on cultivation,  or  that the crops grown by him may be looted, there was no  covenant in the lease that in the event of the appellant being unable to  remain  in possession and to cultivate the land  and  to collect  the crops, he will not be liable to pay  the  rent. Inability  of  the  appellant to cultivate the  land  or  to collect the crops because of widespread riots cannot in  the events  that transpired clothe him with the right  to  claim refund of the rent paid. Authorities in the Courts in India have generally taken  the view  that s. 56 of the Contract Act is not applicable  when the  rights  and obligations of the parties  arise  under  a transfer  of  property under a lease.  In Abdul  Hashem  and another v. Balahari Mondal and Others(-’), the Calcutta High Court held that in a case where during the continuance of  a tenancy, a notice was served on the tenant requiring him  to place  a part of the land under his tenancy at the  disposal of  the Land Acquisition Collector, and the  Collector  took possession of the premises let out to him, it was held  that even  though  the  occurrence was  unforeseen  and  was  not contemplated by the parties when the lease was created,  the occurrence  was not so fundamental as to be regarded in  law to  strike  at  the  root  and  destroy  the  basis  of  the relationship of landlord and tenant. In Tarabai Jivanlal Parekh v. Lala Padamehand(2) it was held that  monthly  tenants of residential  premises  from  whose occupation  the  premises were  requisitioned  continued  to remain  the  monthly tenants of the landlord as  before  and that  by reason of the requisition there was no eviction  by title paramount or a (1) A.I.R. 1952 Cal. 380. (2) A.I.R. 1950 Bom. 89. sup.  Cl/68-9 344 frustration  of adventure.  The Court in that case  observed that  the doctrine of frustration did not apply where  there is a lease whether the term is one for a fixed period or one which  can  be terminated by notice to quit, as  the  estate vested  in the lessee by a lease is not extinguished by  the order of requisition which is of a temporary nature. In  Alanduraiappar Koil Chithakkadu by its Trustee M.  Rama- nanda  Nainar and Ors. v. T. S. A. Hamid and  Another(1),  a lessee of a shandy tope agreeing to pay an annual rent for a period  of  five  years  was held  not  to  be  entitled  to remission  merely for the reason that the shandy was hit  by two  cyclones during the period of lease and that  for  some period  on account of the cyclone, "the shandy did not  form properly  or  regularly  and  the lessee  did  not  get  any income".  The Court held in that case that in the absence of any  provision for remission on account of losses,  no  such remission can be granted by the Courts. In  Sri  Amuruvi  Perumal Devasthanam v.  K.  R.  Sabapatlhi Pillai  and another(1) the plaintiff Devasthanam  granted  a lease of lands in open auction to the defendant on the terms and conditions set out in the auction notices and a deed  of lease  was executed by the Devasthanam and  the  defendants. The Government of Madras thereafter promulgated Ordinance IV of 1952 which restricted the quantum of rent payable by  the tenants  to  the  landlords.   The  defendants  remained  in possession till after the expiry of the period of the lease,

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but  neglected  to pay rent and failed to  comply  with  the terms of the lease.  It was held that the plaintiff was held entitled to recover the stipulated rent from the defendants. Our  attention  was, however, invited to  certain  cases  in which  counsel claimed that the doctrine of frustration  had been   applied  to  leases.   In  Inder  Pershad  Singh   v. Campbell(") the plaintiff agreed to cultivate indigo for the defendant  for a specified number of years in certain  lands with respect to a portion of which lands the plaintiff was a sub-tenant  only.  During the continuance of  the  contract, the  plaintiff  lost possession of those lands  through  his immediate landlord having failed to pay the rent, and having been  in consequence ejected therefrom by the owner.   In  a suit  by  the plaintiff to have so much of the  contract  as related to those lands cancelled, on the ground that it  had become  impossible of performance through no neglect on  his part,  it was held that the case fell within cl. 2 of s.  56 of  the  Contract  Act.   But between  the  parties  to  the litigation  there  was no relation of landlord  and  tenant. The  plaintiff was unable to raise indigo and supply to  the defendants  because the plaintiff’s landlord failed  to  pay the rent due, and the plaintiff was on that account  ejected from the land.  That case’ (1).T.R. 1963 Mad. 94. (2) A.T.R. 1962 Mad. 132. (3) I.L.R. 7 Cal. 474. 345 does  not,  in  our view, support the  contention  that  the doctrine of frustration applies to the case of a lease. The  case strongly relied upon by counsel for the  appellant was  Gurdarshan Singh and Anr. v. Bishen Singh(1).  In  that case  a lease was executed on January 8, 1947 in respect  of agricultural land situated in an area which on partition  of India  fell  within  West Pakistan.  The  Court  found  that possession of the demised land was not given to the  lessee, and  the landlord was on account of riots unable to  deliver possession.   Obviously  on  that  finding  the  tenant  was entitled  to claim refund of the rent paid.  But  the  Court proceeded to consider the question "whether the doctrine  of frustration  applies to a contract of lease of  agricultural lands"   and  recorded  an  answer  that  the  doctrine   of frustration applies to leases.  The Court observed at P. 13- "that the doctrine of frustration does apply to leases,  but even if it does not apply in terms to a contract of lease of agricultural  land  the broad principle  of  frustration  of contract  applies to leases".  We are unable to  agree  with that  observation,  and  the  observation  at  p.  11   that "According  to Indian law, sales of land as also leases  are contracts".   Under  a lease of law there is a  transfer  of right  to  enjoy  that land.  If any material  part  of  the property  be wholly destroyed or rendered substantially  and permanently unfit for the purpose for which it was let  out, because  of fire, tempest, flood, violence of an army  or  a mob,  or  other irresistible force, the lease  may,  at  the option of the lessee, be avoided.  This rule is incorporated in s. 108(e) of the Transfer of Property Act and applies  to leases  of  land,  to which the  Transfer  of  Property  Act applies,  and the principle thereof to  agricultural  leases and to leases in areas where , the Transfer of Property  Act is not extended.  Where the property leased is not destroyed or  substantially and permanently unfit, the  lessee  cannot avoid the lease because he does not or is unable to use  the land for purposes for which it is let to him. The appeal fails and is dismissed with costs. Y.P.                     Appeal dismissed.

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(1) I.L.R. [1962] Punjab 5. 346