 On our sessions, we have shared knowledge from different speakers who can make things simplified and which one can understand with simplicity and the nuances within the subject are chiseled in such a manner that anybody can understand. And one of our resource persons, Mr. Mohan Katarkhi, who is a senior advocate in Supreme Court of India, has shared different issues with us and we all know that doctrine of frustration was one of the issues which we were thinking about, discussing about during the COVID. But the significance of doctrine of frustration has never been mellowed down or to say therein that it has lost the significance that will continue to hold in the fields, especially in the contract to reflect what are the aspects, what will be the doctrine of frustration, what fences are available or what cannot be there. These are the aspects in today's session that we will be delving upon, which I'm quite sure after the session everybody will be able to understand these aspects with much, much better clarity than what one normally has. What do you say and thank you for accepting our invite. Thank you very much. At the outset, I thank you all for inviting me to speak on the topic, which is of great interest to the students of law, particularly the practitioners on the civil side. Usually, when a lecture is arranged, we have proposition to speak, but this time, as you rightly chose, you chose a topic which by itself a proposition. My role I consider today is more to explain analytically the doctrine of frustration, which is one of the ground for discharge of contract validly entered into by the parties. As you all know, there are several methods to discharge the contracts. We discharge the contract by performance. We discharge the contract by if the other side commits a breach. We discharge the contract by or in open ground or fresh agreement or an agreement to vary the terms of the contract. Doctrine of frustration becomes important. Theoretically, the doctrine has its basis in preventing or protecting the party from absolute liability. Whenever there was a breach of contract, the plaintiff claimed damages, the courts thought the defendant owes an absolute liability and must pay the damage if the terms of contract say so. It was like pound of flesh. There was no way a defendant could avoid payment of compensation if he has not been able to perform the contract which say do something or don't do something. The courts in order to mitigate invented the doctrine of frustration long back in England, that's how the English common law grew up. And they said that if the defendant is unable to perform the contract for the reasons that it is impossible to perform the contract, then he can be relieved of the obligations. This doctrine received further support when the Indian Contract Act was drafted in 1872, almost 151 years back. The doctrine of frustration was specifically imported into Section 56 of the Act. The legislators, when they codified the law of contract under the Indian Contract Act, that is the codification of the common law with the modification that are necessary for the Indian conditions, they incorporated the doctrine of frustration in Section 56 which largely resembles. The doctrine which prevailed in England. Although the word frustration is not used in Section 56, but it has been interpreted as almost the same as it is in English common law. The doctrine of frustration on a first glance to anyone looks very simple. Well, if there is a difficulty, if it is impossible to perform the contract, if the promissor is not able to do what he's supposed to do or not to do for the reasons beyond his control, which are not foreseen at the time of entering into a contract, then he should be relieved from the liabilities which may befall on him in case or if the allegation of breach of contract arises. But there are other issues which get mixed up usually when you deal with the doctrine of frustration. We have a wagering contract which is a conditional contract where the parties are agreed to do or forbear from doing something if an event were to happen. Such a contract is a wagering contract and wide unless it falls in the exception. Then you have conditional contract where parties agree to do or not to do depending upon certain event and if that doesn't happen, then the parties are relieved from. But there are contracts here which are not conditional contracts, which are usual contracts which doesn't contain any clause with regard to the contingencies or happening of certain unknown events, how to deal with that. And that issue is dealt by Section 56 that is doctrine of frustration. Let us first read quickly what is Section 56, how the legislators have crafted it. It says there are three parts in Section 56. The first part is an agreement to do an act impossible in itself is wide. If the act is important that a party cannot at all perform, if a two parties enter into an agreement to do something impossible in a common parlance and that agreement is wide. There are empty number of circumstances where one can undertake to do something which is impossible, which no man would have undertaken to do. The second part is contract to do an 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 promissor could not prevent unlawful becomes wide when the act becomes impossible or unlawful. This second part of Section 56 deals with the situation where the promissor is not able to perform his obligation or an obligation which is radically different or if he performs such an obligation it will attract the charge of illegality. In such a situation the contract is wide under second part of Section 56. Then the third part deals with compensation for loss through non-performance of act known to be impossible or unlawful. This is cite a digression from the propositions in first and second part. Here the law tries to compensate a party if the promissor while entering into a contract knew that it cannot be performed but despite due diligence he enters into contract then the contract may be wide but he is liable to pay the compensation. There has been debate if the contract is wide why should he pay the compensation under the third part but the legislators thought if a person knowingly enters into a contract then it should be made to pay for it. That's how the third part of Section 56 has been conceived by the legislators. Now let us have a quick journey into what is the growth of law in the doctrine of frustration. The origin of the doctrine of frustration we can trace back to the principle of absolute liability as I already said forming the basis of contracts in England. It is usually believed that the courts that the parties to contract must fulfill their obligations in any situation and are absolutely liable for the same. This theory of absolute liability was let down by the court as far as back in 16th century in paradigm versus Jane which is reported in 82 English reports 897. In this case what happened is a person was sued for arrears of rent. He argued that he was evicted and kept out of possession of the land which was beyond his control. This is why he could not receive the profits from the land from which he anticipated that he would get and the profit and pay the rent however he was still held liable for not paying the rent due to the theory of strict liability. Once he has taken agreed to pay the rent the court says in those days the material whether you are kept out of the land whether you were able to cultivate the land and earn profit. But if you are undertaken to pay the rent you must pay. This is how a strict liability theory was introduced way back in the 16th century in paradigm versus Jane. Later the court felt this strict liability is an unjust doctrine. It is going to create a hindrance in the commercial activities therefore it is necessary to give a protection to the defendant from the strict liability. Therefore in the case of Atkinson versus Ritchie where back in 1809 the court rectified and said the theory of absolute liability the concept of doctrine of frustration was introduced. The court for the first time recognized this doctrine in this case of Atkinson versus Ritchie. The facts in this case where it was held that loading of a British ship on a foreign port at St. Petersburg in Russia is impossible due to the outbreak of war between the two countries and hence the contract is frustrated. There was a contract to pick up the load from St. Petersburg port. But before the ship could go there there was already a war between the two countries and many ships were returned. Therefore the British ship was unable to go and pick up the commodities and the court said the contract to pick up the commodities has become impossible to be performed. The frustrating event is the declaration of war and due to this frustrating event the contract is impossible to be performed and therefore the parties are discharged. This is how the court departed from the strict liability theory and came to the rescue of defendant in the Atkinson case. Then further in the case of Taylor versus Caldwell in 1863 the facts were like this. The defendants were discharged from the lab it is mentioned in the contract as it stood frustrated according to court because it was impossible and incapable of being performed due to external factors arising from fire which destroyed the hall and the garden where a concert was supposed to be held. So this is how the court said if a party had undertaken to perform the contract but it was not able to be performed due to the factors which are external then he should be relieved from the liability to perform. That's how the court came to the rescue and saved the defendant. There are couple of cases on this basis how the defendant was relieved from the liability to perform the contract on the ground of frustration of the contract. Frustration as I said arises from impossibility to do an act. Either the frustration arises because the subject matter of the contract has disappeared or the party who is supposed to perform the contract is no more alive if it is a personal contract or the law has impeded the performance of the contract and therefore it is not possible to perform the contract. We have the case recently in India that is called National Agriculture Cooperative versus Elemental. In this case the contract was signed between the National Agriculture Federation and Elemental of South Africa according to which certain amount of quantity was to be delivered to Elemental by the corporation. Agriculture Cooperative Federation over due to the cyclone it was only able to deliver a part of the decided quantity of the commodity. The parties extended the contract and added the clause that the remaining quantity could be delivered next year. But due to the hike in the price of commodities because of the failure of crops in the years the government refused to export the quantity and hence the contract could not be performed as a result of which the other party took the recourse of arbitration for the default of the contract. The arbitral award was passed in fear of the element which was challenged in the Supreme Court. However the Supreme Court took a view that contract was solely dependent on the policy of the export laid down by the government and hence is within the scope of section 32 of the Indian contract act that is a conditional contract. This made the contract between the two parties null and wide. If you go to section 56 the second part which says if the impossibility of performance arises because the performance would lead to or will expose the party to unlawfulness then the party is relieved from the performance. So on that ground the Supreme Court was able to come to the rescue of the defendant and protect him against the liability arising from breach of contract. Later there was a case that is Narayan versus government of Tamil Nadu where the defendant invoked pandemic. We are all familiar that during the pandemic lot of people went into difficulties because the contract could not be performed. The performance of the contract was impeded by lockdown and or there was financial difficulties. So series of contracts were broken or breached but the question arose whether pandemic would be a ground for invoking the doctrine of frustration and taking a shelter under that. The Madras cycle said that the pandemic does not amount to frustration of contract but it can be an act of God force measure and that's how the court were able to come to the rescue in the case of Narayan versus government of Tamil Nadu. And you're not going to much into that because much of the cases which are being decided are decided on the facts of the case. Nothing much turns on the law although every question in involving doctrine of frustration is called mixed question of law and fact but mostly the case turn on the facts. Now let us see what are the questions which really arise in the interpretation of section 56 of the act. The first question which I consider arises for consideration is the difference between section 56 and section 32 of the Indian contract act. Section 32 deals with conditional contracts. If a condition is imposed in a contract and the condition is a certain event that the defendant will perform on the happening of a certain event and that event is impossible of being performed then he gets a relief under section 32. If the contract does not cover by is not covered by section 32 that is not a conditional contract then it falls under section 56 that is where the parties can invoke doctrine of frustration. Doctrine of frustration is considered to imply term of the contract that's how section 32 and section 56 are being dealt with. If the contract is a conditional contract then the court will deal with the subject matter as per the terms of the contract under section 32. If it is not a conditional contract but certain events happen as frustrating event happen as per winning event happens which hinders the performance of the contract in that case the question is considered under section 56 of the act. Next is if the performance of contractual obligation has become impossible due to the occurrence of frustrating event or performance may attract unlawfulness whether it is a wide contract. Yes section 56 very clearly says is a wide contract therefore the parties are completely discharged from the obligations to perform if it is impossible to perform or if it is a contract whose performance will attract charge of unlawfulness. The next is whether the termination of contract based on frustration can be avoided by including an express term in the contract. There are cases where the parties expressly provide in the contract a term to overcome the frustration of contract being invoked at the later stage. If contract is absolute and makes a provision to deal with the anticipated changes or change circumstances supermaning event or contingency then it cannot be declared as wide on the ground of frustration or impossibility of performance except in limited cases. This is the general view of the court that if there is an express term incorporated in the contract. In anticipation that this might happen in case that happens then it has to be discharged in a particular manner or certain amount of compensation to be paid if there is a fixed amount of compensation to be paid then that case will be dealt under section 32 in the manner it is provided therein. Therefore, doctrine of frustration can also be frustrated by to some extent by incorporating a special clause or a specific clause in the contract itself. Then the next question is what is the difference between the discharge under the conditional contract under section 32 and discharge based on section 56. This is already explained if the contract itself stipulates that the performance contract is subject to frustration or force measure then the issue is dealt by section 32. If it does not mention contract then it is dealt by section 56 where the court imply and imply that doctrine of frustration is a part of the contract. Then last is whether section 56 will not apply to initial impossibility which was within the knowledge of the performer. Yes, it will not imply impossible of being performed, court will not accept the plea that a contract cannot be performed if the defendant were to know the impossibility of performance at the time of entering into contract. Therefore, the law will not come to the residue but next question whether the section 56 applies where the impossibility of performance of contract is due to the subsequent event or due to the performance which on performance becomes unlawful. Yes, in this case if the impossibility of performance is due to the frustrating event or due to the legal intervention that is the law will come to the rescue of the defendant and will protect him. This is how the things are being dealt with under section 56 of the contract act. So these are the general principles on which the doctrine of frustration is being conceived in India. As I have said the whole question is stems from the strict liability theory. It was considered at one time that whoever enters into a contract is bound by it, it is like a pound of flesh and the consequences will follow. Later the courts came to the rescue to some extent to protect a party from the difficulties in the performance of contract and the ground that if the impossibility of performance arises due to the event which is a super winning event or due to the death of a party or due to the legal impediment then court will come to the rescue. This doctrine originally had its basis in the theory of implied contract. The courts said that whether the contract provides or not we imply a doctrine of frustration. Later the courts took a view that the courts have the power ultimately to enforce or not to enforce a contract and it is just and equitable not to enforce a contract if it finds that the party was in a position where it could not perform the contract. There is also a theory later came of that is radical change in the obligation which usually is used in the commercial contract because in the commercial contract the parties may intend certain things for a certain purpose. The subject matter of the contract may be alive it may be there but still if the purpose has changed if the object has changed in that case the parties can seek relief in the court with regard to the and get itself relieved from the performance of the contract. So this is how the law has developed and the law is yet to develop a lot in this area. The nature of the commercial contracts are changing fast with the introduction of the e-commerce and artificial intelligence. We are moving into the next generation and there could be serious issues with regard to the frustration of the contract in the changing circumstances in the technological scenario in the future. Therefore the doctrine of frustration, doctrine of impossibility of performance requires to be more refined to be more made applicable to the situations to meet the ends of justice. With this I would like to close my lecture. I won't take much of your time. I know that as a Friday evening is a time for lawyers to take a break. So thank you very much and hope the short lecture was useful to the listeners and if there are any questions I am ready to answer to the extent I can understand. So just check it out on the YouTube except that people have praised it and on the chat also we don't have any questions. It was a short topic but this one thank you for sharing your knowledge. Thank you.