Sivaprakasam v. Alternative Energy Industries Pvt. Ltd.
2002-08-02
PRABHA SRIDEVAN
body2002
DigiLaw.ai
Judgment :- The appellant is the owner of a tractor and trailer. There was an understanding between the appellant and the respondent for transport of materials. The appellant agreed to the use of the tractor and trailer under certain conditions. The contract period was from 1.2.1984 to 31.1.1985. The security deposit of Rs.500 was paid by the respondent. It was also a condition that the tractor and trailer should be used for a minimum period of 250 days per year for which he would be paid on daily basis. It was also agreed that if there is any shortfall in the fixed number of 250 days per year, the respondent should pay a sum of Rs.100/- per day as a compensation for the unutilised days. The respondent used the vehicle only for 82 days and for 160 days it remain idle and therefore the appellant claimed Rs.16,800/-. The appellant relied on clause 8 of the agreement of Ex.A1 which reads as follows: "The Company shall utilise the services of period of 250 days in a year including monsoon, strike, bundh, and circumstances beyond the control of the company. In case it is not possible to employ the tractor for the above period, the company shall pay by way of compensation Rs.100/- per day for the period not employed upto 250 days". 2. In fact the main defence of the respondent was that it was not possible for the respondent to use the vehicle because the labourers were on strike; there was a bundh, there was rainfall and circumstances beyond the control of the respondent. 3. The Trial Court held that whatever may be the circumstances which prevented the respondent from using the vehicle for the contracted period of 250 days per year, the respondent was bound to pay to the appellant a sum of Rs.100/- per day for those days when the vehicle remain unutilised. 4. The Appellate Court reversed the findings on the ground that the contract was unconstitutional and irrational. Clause-8 of the agreement would not be correct in view of Section 56 of the Act. 5. The Counsel for the appellant raised the question as to whether the interpretation of clause 8 by the Appellate Court was proper. 6. The learned counsel submitted that it was not the defendant's case that the contract became impossible nor did he claim that the clause was unconstitutional and therefore unenforceable.
5. The Counsel for the appellant raised the question as to whether the interpretation of clause 8 by the Appellate Court was proper. 6. The learned counsel submitted that it was not the defendant's case that the contract became impossible nor did he claim that the clause was unconstitutional and therefore unenforceable. The respondent only pleaded that though raw materials were available for 250 days, it was not possible to transport the same by using the vehicle for the reasons mentioned above in para-2 and therefore the appellant was not entitled to the amount. Therefore, the learned counsel for the appellant submitted that the Appellate Court cannot plead a case not put forwarded by the party. 7. Reliance was placed on the following decisions: Indian Appeals ( Vol. L) J.C. 1922 P.9 where the Lordships had dealt with doctrine of frustration. " As to the doctrine of "frustration," the High Court of Bombay had not the advantage, at the time when the appeal was heard before them, of several discussions and decisions which have taken place in England since then in the House of Lords as well as in the Court of Appeal. The adventure of which the commercial purpose is suggested to have been frustrated, is, of course, the purchase and sale of these goods between the parties to this contract, and this adventure was not frustrated. All that happened was that the defendants failed to perform their contract". It was submitted that contract between the parties is for commercial purpose. The Court should see whether the contract was frustrated or whether any parties went on contract failed to perform. If it is a failure to perform, it cannot be construed as frustration. 8. In Firm Rampratap Mahadeo Prasad and others, Vs. Sasansa Sugar Works Lmited's (AIR 1964 P 250) decided by a Division Bench of Patna High Court, it was held that where the parties had agreed to supply of goods for a specific period knowing fully well that the mill was closed, the closure of the mill cannot be considered as a reason for failure to supply the goods under the contract and the doctrine of frustration cannot be made applicable to such a case. 9.
9. In Sri Mahalingaswami Devasthanam, Tiruvadamarudur by its hereditary trustee Sri Lasri Subramania Pandara Sannadhi, Adheenakarthar Tiruvadu Thurai Mutt vs. A.T. Sambanda Mudaliar (AIR 1962 Madras 122), the lessee took on lease a large block of lands belonging to a Devasthanam undertaking to pay annual rent "despite act of State or God". It was held that the Court has no power or jurisdiction to relieve the lessee from the obligations undertaken by him on what may be called equitable grounds. The lessee will, therefore not be entitled to any remission by reason of the advent of unexpected circumstances which in that case was the enactment of Madras Act XIV of 1952. 10. The service of the Court notice on the respondent was refused and therefore the service was treated as complete. No one appeared on behalf of the respondent either in person or through counsel. 11. Section 56 of the Contract Act reads as follows: "An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlawful. 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". 12. In this case the respondent pleaded that because of strike, bundh and rainfall, they could not utilise the vehicle. It was specifically agreed by the parties that these reasons cannot be accepted for not paying Rs.100/- for every unutilised day. It has been held that where performance of contract remains physically and legally possible though commercially unprofitable, there is no frustration. It has also been held that the absolute contract involving unconditional promise by the parties may result in hardship if enforced but the parties stand bound by the contract and the hardship that visits the promiser while fulfilling his duties under the contract does not absolve him of liability in the least degree. 13. The issue of a contract becoming impossible is considered in case of Sri Mahalingaswami Devasthanam, Tiruvadamarudur by its hereditary trustee Sri Lasri Subramania Pandara Sannadhi, Adheenakarthar Tiruvadu Thurai Mutt vs. A.T. Sambanda Mudaliar's (AIR 1962 Madras 122) where the learned Judge refers to the case of Samuel Fitz Co. v. Standard Cotton and Silk Weaving Co. ( AIR 1945 Mad 291 ).
v. Standard Cotton and Silk Weaving Co. ( AIR 1945 Mad 291 ). There the District Board of South Kanara let out the right to collect tolls at the gates of a bridge in favour of an individual. A contract to this effect was entered into between the District Board and the individual. Subsequent to the contract, the Government acting in the interest of the public prohibited, by an ordinance, traffic of food and grains over the bridge. Therefore, the income of the person who contracted with the District Board got diminished and the party pleaded impossibility. It was held that contract to clear tolls did not become impossible by reason of the Government passing ordinance to relieve the plaintiff's liability under the contract. The performance would become impossible if the bridge had been washed away by flood. 14. Therefore, this clearly throws light on how clause 8 of the contract should be construed. The appellant's claim cannot be rejected on what may be called equitable grounds. The respondent's company did not plead that the contract was unconstitutional nor did they plead that it had become void on account of impossibility. The contract is clear, the extract of clause 8 would show that the respondent bound himself under the contract to pay the sum of Rs.100/- per day for every day on which the tractor and trailer remain unutilised, even if the reasons for such non-utilisation were strike, bundh, monsoon or any other circumstances beyond the control. This was a contract agreed to by the parties and therefore they are bound to abide by its terms. 15. Lower Appellate Court fell in error by striking out this Clause and the consequences that flowed from this clause, for reasons which are not legally sustainable. Judgment of the Appellate Court is set aside. Judgment of the Trial Court is restored and the suit is decreed. Hence, the Second Appeal is allowed. No costs.