 And I can say that frustration of a contract under the Indian Contract Act 1872 is a topic not only good for the students, lawyers, judicial officers as well as in the business. And especially this has taken I can say not only on the YouTube upsourced after the testing time of COVID-19, but at least I can say that once you have a good speaker and you have a tie up with the legal, legal allies, then at that point of time there cannot be frustration but only rejoice when the speaker can take things forward in the right perspective. And like Mr. Arvind Subramaniam, a renowned name in the Madras High Coach, said that what would be the timeline for the introduction? I said that we don't take much time because the speakers are already known banner here. But since we have a college partner with us, Mr. Adilakshmi Lagomoti, who has not only taken topics which are commonly being dealt with, but also central acts, state acts, and not only in English, but in the language down, therefore taking all these things, I request Mr. Adilakshmi to give an introduction because she was the connecting point for helping us to connect Mr. Subramaniam. He has taken topics on different aspects. You're saying that in Hindi, they say it is only aghaaz and ajham to chowka. So well begun would be half done only. What do you, ma'am? Thank you so much, my brother Vikas. This day is a special day. Legal Eagles Allied is the knowledge partner with Beyond Law CLC and Beyond Law CLC is doing very good and the topics they are taking recently, it's very, very innovative and very useful for people from all walks of life, not only in the legal perspective on the soft skills and the recent titles, it's awesome. And today we have Arvind Subramaniam, sir, he's not a chief of the whole block. He belongs to the family of lawyers wherein they have been trained by the doyen of the Kedras bar, Govind Swaminathan, sir. I have been there along with my senior as a very young lawyer, I have met Govind Swaminathan, sir. He doesn't know me much, only as a junior of VK Muthasamy, sir. Even just a small glimpse of sir, I know he has been trained under him. So that speaks volumes and sir is a regular speaker on the Legal Eagles Allied platform and many other platforms and his selection of topics are usually different, not the usual one. Frustration of contract as because rightly told, the COVID-19 situation has created this kind of topics to be taken, it is useful for everyone, for everyone because contract is the basic thing when the human relationships starts, when you have an issue in the court halls, it starts from something frustrated and something that is frustrated. There is a contract, there is an agreement that gets distorted. So this is a topic of importance and a topic of the day and Arvind Subramaniam, sir, is well known for his humor as well. I hope sir takes the session in his usual train and I wish him all luck coming on the Pan India platform for the first time along with Legal Eagles Allied and Beyond Law CLC. So I welcome all the participants who have joined in this Sunday to hear to this session over to you, sir. I welcome every one of the participant and the special faculty today on behalf of Beyond Law CLC, Vikas and my own self and Legal Eagles Allied, welcome. Thank you madam. Thank you so much. Thank you for the lovely introduction and thank you all of you who have assembled here for this session and is it my audio is okay? Now, coming to the law of frustration, that is section 56 of the Contract Act. First of all, I would like to give a brief history about the law of the concept of frustration, which originated from the Roman laws. Actually, it was the Roman laws which introduced this concept of frustration when they were selling slaves to the other countries. You know, there were so many slaves, the slavery was there in those days and the concept originated in Rome. What happened was when they were selling slaves and if the slaves died before delivering it to their bosses, what happens to the contract? So the contract gets frustrated because the subject of the contract is no longer there. So that is how the subject of frustration originally started. Similarly, it started permeating into the other countries also and the law of contract, as you all know, developed only from the mercantile system. If you see the law of contract, it is actually the law that follows the merchants. It was there was no concept of law of contract. The law followed the merchants, then the customs and usages of the merchants were codified and then they became a law, it's called the law of contract. And every bit of principle that was followed by the merchants, their usages and customs were made into laws and frustration was one of the principles that was followed by the merchants because most of the merchants were traveling by sea and due to the storms and other the vagaries of the nature, the merchandise would have got lost and hence the contract would have been frustrated. So that was how the origins of the law of contract or and the frustration in the law of contract was developed. Now coming to the English scenario, in 1863, one of the first cases in Taylor versus Cardwell, which is also being quoted by the Supreme Court even in the latest case, which I'm also going to refer to during my lecture. In that case, Taylor versus Cardwell, a concert hall was rented out for the performance of a opera or a concert. What happened was before the concert could take place, the entire hall was burned down. So as a result of which the contract could not be performed and they said the contract became impossible for performance. And the other word for it is frustration. So because the very subjects used to exist. Then later on in 19, this was in 1863, Taylor versus Cardwell. And subsequently in Paradine versus Jane, which was in 1904, the King's bench. The common rule of the contract was that they have to perform their obligations irrespective of the uncertainties. It was called absolute contracts. So what happened was, suppose I'd entered into a contract and during the course of the contract, certain events had taken place, which made me impossible to perform. Even then, unless it was envisaged in the contract itself, the parties were bound to perform the obligations under the contract. This was held in Paradine versus Jane, that unless certain conditions or certain uncertainties were visualized in the contract itself, the parties are bound to perform the contract. But however, now coming a little forward in 1905, in Krell versus Henry, the Krell had rented out, had given his flat for rent to Henry to watch a procession of Edward VIII. And from that balcony of that apartment, you could see the procession very clearly. So he had paid an advance to be owner, Mr. Krell. And then on unfortunately, the procession could not take place as a result of which Henry refused to pay the balance rent to Krell. The matter was taken up by the British courts and it was said that Henry was justified in not paying the rent because the procession for which he had hired that particular apartment was cancelled due to unforeseen reasons. And so it was said that there was a frustration of the contract and Henry was not bound to pay Krell the balance rent. So this is how the law of frustration developed. Now, coming to the Indian scenario, this is the background. Coming to the Indian scenario, we have section 56 of the contract act, which very clearly says that a contract has to be performed and if a condition or if a circumstance arises, which is beyond the scope of the parties or the parties did not envisage those conditions or those situations, then the contract stands frustrated. So this is the very basic concept for the law for the contract of frustration. But one more thing which we need to also, which I will be addressing is this section clearly does not apply to a case in which although the consideration is lost, the performance of the promise, if it's still possible of performance, then you cannot plead the case of frustration, even if the concentration is lost. So now we now come to the genesis of the law of frustration. And we have section 56, which I'm going to now quote, an agreement to do an impossible act. An agreement to do an impossible act in itself is void. That is the first portion. An agreement to do an impossible is a contract in which where the contract is made impossible by loss of the subject matter, then the contract becomes impossible of performance. Where one person has promised to do something which he knew or with reasonable diligence might have known and which the promise did not know to be impossible and unlawful, such a promissor must make compensation to such a promise to the promisey for any laws which the promisey is sustained during the course of the contract. So there are three portions to this section and the last portion deals with compensation. Most of the parties would like to place themselves under section 56 of the contract act, only for the purposes of getting compensation under the contract. Now a few illustrations would also highlight what is a frustrated contract. Suppose A agrees to B to discover a treasure by magic, then the agreement is void. And because right from inception you know that no treasure can be obtained by magic. So this is one of the examples of frustration. Then another illustration is A contracts with B to marry and before the time fixed A goes mad or becomes insane, then the contract is frustrated. So these are the few illustrations, simple illustrations which is easy to understand to show how a contract gets frustrated. Now there is another illustration. Suppose A carries cargo to B which is in a foreign port and A's government therefore, thereafter declares a war on B's country, then the contract gets frustrated. So these are the simple examples of the doctrine of frustration. Now coming to the actual doctrine, the doctrine of frustration actually is a doctrine of a special case of discharge of contract by impossibility. Mr. Armin, you have muted yourself. Sorry, is it okay now? Yeah. The contract act does not define frustration but the Black's dictionary which is a law dictionary defines frustration in relation to contracts as the doctrine that if a party's principal purpose is substantially frustrated by unanticipated changed circumstances, that party's duties are discharged and the contract is considered terminated. This is the definition for frustration. The expression also, the frustration of frustration is an elliptical expression. The fuller and more accurate expression is frustration of adventure or of the commercial or practical purposes of the contract. This is actually the clear definition of frustration vis-a-vis the contracts. This doctrine is a device to reconcile the rule of absolute contracts with a special exception which is demanded in certain circumstances in the name of justice. For example, all contracts are absolute contracts. The parties will have to perform the contracts but there are certain exceptions where in the interest of justice, certain exceptions and certain situations make the contract frustrated and impossible to perform, thereby discharging the obligations of the parties under the contract. The contract of frustration comes within the purview of section 56 of the contract act. As it discharges the contract by reason of supervening impossibility or illegality of the act, agreed to be done. For example, I will also give another section in the contract act where people will also try to come within the purview of frustration. That is section 32. Section 32 and section 56, there is a very thin line of demarcation. Section 32 deals with contingent contracts where if a condition is imposed within the contract itself, then on the non-failing or non-performance of that condition or the impossibility of that condition being performed, the contract becomes void. The difference between the two is in a contingent contract, you visualize the conditions based on which the contract becomes void. Whereas in 56, you do not visualize those conditions which makes the contract become void. So, this is the basic difference between section 32 and section 56. Section 32 only applies when contracts are discharged and the parties absolved of their obligations as per the terms which are already contained in the relevant contract. Whereas in 56 applies when contracts are discharged and parties due to outside forces and factors. So, now let us take section 32 because we have to make a comparative study between 32 and 56 to understand the distinction between the two. Enforcement of contracts contingent on the event of happening. A contingent contracts do not or a contingent contracts to do or not to do anything if any uncertain future event happens cannot be enforced by law unless and until that event has happened. Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced unless an event happens. Now, let us take a small illustration of contingent contracts. A makes a contract with B to buy B's horse if A survives C. So, this is a contingent contract. This contract cannot be enforced unless and until C dies in A's lifetime. So, this is a contingent contract which is already envisaged in the contract itself. If such a contract if such a condition is not envisaged in the contract then becomes frustration of a contract. This is the basic difference between the two. Similarly, A contracts to pay B a sum of money when B marries C. C dies without being married to B the contract becomes void. So, this is one of the examples or illustrations of a contingent contract. Now, let us go to the other factors governing the frustration of contracts. Now, going to the test of frustration under section 56. What are the conditions which are necessary or which are essential to justify that there is a frustration of contract? There are three basic conditions. One, there must be a subsisting contract. Two, some part of the contract is still to be performed that is we are in the midway of a contract or in the due process of performing the contract. Three, the contract during that time has become impossible after the contract has been after during the performance of the contract. So, these are the three main conditions for the test of frustration. One, there should be a subsisting contract. Two, the contract must be underway that means it is in the process of being performed. Three, three, three is that it becomes impossible to perform during the process. So, these are the three conditions for testing the frustration of a contract. Now, the next thing is the physical impossibility and this is not a prerequisite actually this is not a prerequisite but they have also taken those the physical impossibility also suppose a person dies during the subsistence of a contract what happens then? So, that factor is also being taken and that some say it can be taken in certain circumstances and many say that it cannot be the reason for discharging the parties under the contract. Now, a radical change in the fundamental assumption on the basis of which a contract was entered into is required to make the performance impracticable, illegal or impossible without the default of either of the parties. The determination of the degree of change in the obligation must be done by looking into the construction of the contract in the light of facts existing at the time of its formation. So, the conditions the terms of the contract depend on the conditions prevailing while formulating the contract. So, this is a very important issue then while perform the contract whether when there are radical changes which are beyond the control of the parties then you have to find out whether these conditions are really such that the parties cannot proceed further with the contract then you can say the contract becomes frustrated. Notwithstanding the ex-fasi subjectivity the test of frustration is an objective test because it is well settled that the supervening frustrating event immediately puts an end to an agreement independently of the violation of the parties. So, the parties have no role to play when such a situation prevails. So, this is one of the basis on which the test on which you test the whether the contract is frustrated or not. The second is the construction of the contract, the effect of the changed circumstances on the parties, parties contractual obligations next to the intention of the parties and the demands of justice. So, now this pattern of frustration how it started during the Roman law now how it has been developed over a period of time is what we are now seeing. So, the tests have also the test for frustration has also that has kept changing. Now, the Supreme Court as an energy watchdog brought a new factor to the above mentioned list through a multifactorial approach which was enunciated in the celebrated English case of C. Engel as under. Now, I am going to read and extract from that citation of C. Engel which was reported in 2013 Lloyd's report by the Court of Appeal. The application of the doctrine of frustration requires a multifactorial approach. Based on that, the Supreme Court decided the energy watchdog case. The application of the doctrine of frustration requires a multifactorial approach amongst the factors which have to be considered are the terms of the contract itself, point number one. Two, the context, the matrix or the context. Three, the parties knowledge of the subject. Four, expectations, assumptions and contemplations in particular as to the risk that is involved while forming the contract and that any rate so far as these can be ascribed mutually and objectively and then the nature of the superwinning event and the parties reasonable and objectivity are certainable calculations as to the possibilities of future performance in the new circumstances. So, one is the intention of the parties. Two is the terms of the contract. Three is what are the events which can happen during the performance of this contract if the parties are able to visualize those uncertainties or those superwinning events which will have to be taken and imbibed in the contract itself then the contract cannot be frustrated. Suppose with all their foreseeing the circumstances and their own assumptions and presumptions, the superwinning events go beyond those expectations and those assumptions then the contract is frustrated. This is what was laid down by the Court of Appeal in England in Sea Angels case and that concept was adopted by our Indian Kauai courts in Energy Watchdog case reported in 2017 which I will also be going through in the course of this lecture. Now, these are the, now this new concept is called the multi-factorial concept which will have to be taken into account while deciding the question of frustration. Now, differentiating between 32 and 56, coming back to 32 and 56, the Supreme Court as in Satya Brathak, Satya Brathak is 1954 Supreme Court was this Mungi Ram Bangur which was a landmark judgment of Vijay Kumar Mukherjee, one of the greatest judges of India has ever produced, though he was there only for five years in the Supreme Court. Some of his judgments are landmark judgments which are still being followed by our Supreme Court as of today. Now, in that case, he makes a very clear distinction between 32 and 56. Both 32 and 56 apply to cases of frustration of contracts. It is, it is, that's a basic concept and it is important to understand the difference between 32 and 56 where because parties normally tend to go to 56 even though it is false under 32 because that is the only way they can get compensation from the other side. 32 does not envisage compensation. 56 envisages compensation and that is the most of them, it's since the demarcation is very thin and you need a lot of interpretation to find out whether it is 32 or 56. Most of them try to fall under 56 because they can get a compensation under the as per section 56 so that the parties suffering a loss at least can be satisfied by the payment of compensation. Technically, both 32 and 56 the contract can be discharged on the impossibility of certain events in the future. Now, section 32 deals with a contingent contract which will dissolve under its own force if the condition is not satisfied because a condition is envisaged and if it is not satisfied it gets dissolved. Whereas 56 is attracted when a contract becomes impossible to perform because of an outside force like you see COVID or maybe a storm or a flood because those days most of the merchandise or the trading took place in the high seas. So the concept of storm and cyclone and flood were common and those actually were incorporated in the contract itself. So when those events occur, it becomes frustrated. Therefore, it can be said that it is sometimes a matter of doubt whether a contract falls under 32 or section 56. In Satya Bratha case, there is a Supreme Court in 1954 Supreme Court which is a landmark judgment. The Supreme Court said in cases therefore where the court gathers as a matter of construction that the contract itself contained impliedly or expressly a term according to which it would stand discharged on the happening of certain circumstances. The dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of section 56 altogether. Although in English law, these cases are treated as cases of frustration. In India, they would be dealt with under section 32 of the contract act, which deals with contingent contracts or similar other provisions contained in the act. So the distinction between Indian and English law is all the cases of this nature would fall under frustration. While an Indian contract act, they distinguish between contingent contracts and contracts of frustration. They make a distinction where if the contract itself provides for certain conditions, the non-fulfillment of which discharges the parties. Whereas in frustration, you don't see that event at all. You only go by what you can perceive and what you can perform under the contract and circumstances under which they fall outside the purview of that contract, you come under frustration. So this is the basic distinction between 32 and 56. Sometimes what happens is the courts have considered such cases under 56 instead of section 32. Sometimes the courts have held, even though there are certain conditions which are imbibed in the contract, certain supermeaning circumstances make it a frustrated contract. For example, while acquiring a permission to sell a property, the Supreme Court scrutinized the case under 56. In one of the cases, a person was buying a property and under that contract, he had to get certain permissions. Now he says, I'm not able to get the permissions, so the contract is frustrated. The Supreme Court says, no, no, it's not like that. Have you made an application to the concerned authorities? Have they refused permission? Only on the refusal of the permission by the authorities, can you say the contract is frustrated? Before it's premature to say that even without going to the authorities and getting the permission or without even approaching the authorities, you cannot say that the contract is frustrated. So this is one of the interpretations of the Supreme Court. But however, there is another interpretation which says, suppose there is a law under which you are supposed to get a permission and that law is struck down by the government or by the parliament. Now what happens in those situations? In those situations, the law, the contract becomes frustrated because of the change of law or the very law under which you are supposed to get permission is struck down by the parliament. Similarly, in land acquisition acts also, now you see the new land acquisition acts. Sometimes you get a particular provision in section of the land acquisition act which says, in case certain conditions are not fulfilled, then the land acquisition lapses. That is, within five years of the award, they have not taken possession or they have not paid compensation. What happens in those cases? Now the new act 2013 acts says, in such cases, the acquisition lapses. So many of the people whose lands have been acquired by the government due to the new act which has come into force have been able to get back their lands in view of the changed circumstances. The changed circumstances meaning that the acquisition itself lapses. So these are some of the contingent conditions or some of the conditions which actually help the petitioners at the same time. It has also helped the government also. But the new amendment, the new judgment, the five bench in indoor development authorities act have taken a view now under the land acquisition act that if one of the two conditions prevail, then the acquisition does not lapse and the person is eligible only for a compensation. Suppose the land is acquired under the old 1894 act but the possession is still with the party. However, the government has deposited the compensation in the court in the previous enactment before this decision came into force. The acquisition lapses. But after the decision in 2020 March, if one of the two conditions are there, suppose he has deposited the money even in the treasury or in the court, the acquisition does not lapse. That is the latest decision of the Supreme Court or the five bench five judges bench of the Supreme Court in indoor development authority act. So now you cannot plead it has lapsed if it is shown that the money of the compensation which was awarded under the award has been deposited in the court. So now that is how we interpret the land acquisition vis-a-vis the contract also. The contract also has a similar condition that if such and such a condition is not there, then the contracts get frustrated. This is one of the important distinctions between section 32 and section 56 of the contract act. So impossibility of performance is squarely covered under 56. Impossibility of performance when the conditions in the contract becomes impossible to perform falls under 32. So both in both situations the contract is the parties are discharged. Now what are the factors? Now let us say what are the factors accounting to the frustration of contract? What are the factors? What are the factors you normally take when you say a contract is frustrated? The first factor is sorry the first factor is when the subject matter of the contract is physically destroyed. So let us take a case where a ship is carrying cargo. Now what happens is when the cargo is destroyed due to floods or due to cyclone or due to these various situations in the sea, the contracts get frustrated because the subject of the contract being the goods gets destroyed. Two, suppose the ship itself is sunk. What happens? Forget the cargo, the ship itself is sunk, the contract gets frustrated. Now let us take a few cases to find out what is the meaning of subject matter of the contract is physically destroyed. The destruction of a specific subject matter essential for the performance of the contract will render the contract frustrated. Similar cases Caldwell was a tailor which we said when the opera house where the concert was supposed to be performed was burned down, the contract is frustrated. That is one of the simplest examples I can give you on the frustration of contract. Now let us take some of the other instances also where the goods in a factory gets destroyed by fire and it is impossible to perform then the contract is frustrated. In Applebee versus Myers, 1867 law reporter 651 is one of the instances where the doctrine of frustration was highlighted. Similarly, when a cinema hall, the wall of a cinema hall was collapsed by heavy rain and the contract should be frustrated because the pictures cannot be screened in those situations. In VL Narsu versus PSV IR, AR 1953 Madras, one of the earliest decisions of our high court. If the subject matter is not completely destroyed but immensely destroyed even then the contract may be discharged. Suppose in a case where the entire subject is not destroyed but a substantial portion of the subject is destroyed then you can also plead frustration of the contract and the parties can be discharged because a major portion of the subject matter has been destroyed. It was held in a case that even the cargo of dates which was sold in the market for other purposes yet it lost its mercantile character when it sank and was affected by water and sewerage. For example, if you are selling dates and suppose the dates are perishable items let us take these examples of perishable items. If the dates which are perishable items and consumables which are eating cannot be eaten then the contract is frustrated and discharged even though the subject matter is available. The dates are available but due to the water and other it gets contaminated because of factors then the contract can be discharged even though the subject is not physically destroyed. This was held by the Bombay High Court in 2010, 254 ELT page 647. I am just giving you certain citations only to understand the subject better. These citations are only to help the understand the subject better where the cargo owner's liability to pay the freight was discharged because the cargo itself was discharged. It was an incidental to the subject matter. The subject was cargo. Cargo was destroyed so the incidental liability of the cargo owner to pay the freight charges was also discharged. So this was one of the landmark cases of the division bench of the Bombay High Court in Union of India was a customs and central excise steel commission 2010 reported in 2010 in ELT excise law reports like excise law times sorry. So this is some of the examples where the subject is destroyed. Next is even if the subject is there it cannot be performed because of the perishable nature of the subject matter. These are the subtle differences in the doctrine of frustration. Now coming to the next factor is the legal changes in these are resulting in subsequent illegality. Suppose the law is struck down or the law under which you entered into a contract gets struck down by the parliament or by the Supreme Court or by the courts then what happens in such cases? For example if it is presumed that the parties intend to perform the contract with reference to the law in force. So you have to enter into a contract based on the law in force. So you can't enter into a contract which is illegal or unlawful. So this is the second ground on which the contracts gets frustrated. Suppose there is a change of law or the legal position affecting the contract and prohibiting the performance of the contract it is well recognized ground for frustration under section 56. I am going to refer to again the energy watchdog case which I will take the viewers in a little more depth where they say whether a subsequent change in the tariff will discharge the parties to the contract. The Supreme Court said no because you already know there will be some you have to anticipate these changes. You cannot you cannot just say that just because the tariff has gone up you have to the contract gets discharged. You are supposed to anticipate the changes in the tariff because of the surrounding circumstances because when you are renting into a contract for supply of power definitely there will be some changes in the tariff because it is regulated by the government and government will try to get revenue only through these tariff changes. So hence you have to be aware of this and you cannot be discharged because there is a slight change in the tariff. Suppose if there is a major change in the tariff then you can probably plead frustration but not in minor changes which you should have anticipated while entering into the contract. That is the multifactorial approach that is what the Supreme Court says in the energy dog case. Now to discharge the contract the law of the change in the law must be the change in the law must be such so as to strike the very basis of the contract itself and not merely to suspend the performance under the suspended performance. Now let us take a situation we are all under COVID. Now COVID is a force major where in a force major situation the contract is only suspended it is not discharged. What happens is you are not able to perform because of the certain supermeaning conditions but a COVID is not something which destroys the subject matter of the contract itself. It only postpones the performance the performance can be postponed whereas in a frustration the subject itself is destroyed. So this is a very subtle difference when you invoke the force major clause that is why the Supreme Court has also said during the period of COVID the law of limitation will be kept in abeyance or it will be suspended. So it does not say you are you are you are discharged from the contract it does not say that it says during this period the performance is suspended not the contract itself. So that is why you have to understand these subtleties. So that is a force major clause which I will also be touching upon during the course of this lecture in a very short way not I will not be going to elaborate into that and one of the first major force major decisions was from our High Court in 1925 which I will also be touching upon during the course of this. So now let us come into this is we see Rosen Mian versus Tahira Begum 2007 Supreme Court where it says in certain circumstances the performance is suspended but the contract is not discharged. It says a change in law may be brought by the Supreme Court's order which prohibited to supply crushed stones from its own stone crusher the change in the legal position made it impossible to supply crushed stones. So in that situation when the law prohibited supply of crushed stones the contract becomes discharged or the parties are unable to perform because of the change of law brought by the Supreme Court. Similarly in New Delhi municipal council versus Manohar stone crushing which I know referred because the High Court struck down the law the company could not supply crushed stones as envisaged under the contract. So hence the contract was discharged. Similarly the government's import control order of 1955 what happened was put a positive condition not to sell the imported goods and therefore it was impossible for appellant to supply chicory of a specific type to the respondents because of the import the order of the government. Further any prohibition order of the government which makes the performance illegal will also frustrate the contract. So these are some of the judgments which will throw light on the frustration of contract due to change of law. So these are some of the now next the next thing and the next case law will be now let us these are all legislations struck down by the Supreme Court which makes the performance impossible. Now what happens if the there's an amendment in the law itself or the legislation enacted by the government which fundamentally changes the legal situation making the performance illegal. For example in Rajkumar Gupta versus State of Rajasthan AR 1995 10 HP versus HP 107 where the change of the law itself made the performance illegal. But now let us take another situation. What is the liability of a guarantor after the nationalization of banks? The Supreme Court had a similar situation where it had to decide that what is the liability of a guarantor after the bank nationalization act came into force. That was in it was resided by the Supreme Court in industrial finance corporation of India versus the Kananur spinning and weaving mills limited air 2002 Supreme Court 1841. It held that the contract of guarantee has no correlation with that of the nationalization act. Neither is dependent there on it is an independent contract and in all fairness it has to be honored and the obligations under the contract has to be fulfilled. So when you say that because of the bank nationalization act I am not able to fulfill or able to perform the guarantee given by me to the bank the Supreme Court said no it is an independent contract and it has nothing to do with the bank nationalization at all. You have to honor the obligations. Similarly declaration of war. Suppose there are two parties I mean two different parties of different countries entering into a contract and during the performance of the contract a war is declared by one of the country against the other which is making it making it impossible to perform then the contract is frustrated. A contract which necessarily involves an intercourse with or an advantage to an alien enemy who was not an enemy when the contract was entered into will stand frustrated as soon as the war breaks out. This was in 1915 Bombay in Nizam, Isaac, Bekor versus Sultanil, Shiasthri and company AR1915 Bombay 76 was during the world war one that was in 1914 and in 1915 when there were trade commitments between two countries that was between India and Germany and Germany entered the war the contracts were frustrated. So this is some of the conditions which makes the contract frustrated. Now going to the third is the loss of the object. So in a similar case the Privy Council had the occasion to deal with the situation. For example, let us take a situation where if the contract did not specify the source of the goods then the seller cannot take the defense that since the goods were to come from Germany and enemy country the contract stands frustrated. Suppose I have to supply sugar and my contention is I have to get the sugar from Germany and since the war was broken out between Germany and others I cannot supply sugar. The Privy Council in Trinsche Overseas Trading Company was a Uganda sugar factory AR 1945, Privy Council 1944. 1945-144 said you cannot take that plea here because sugar is available from other countries also. So just because Germany has declared war on England or some other allied countries you cannot take the plea that I am not able to supply sugar because it has to come from Germany. You have to try out the other countries also who are supplying sugar and try to make good the loss or try to fulfill your contractual obligations under the contract. So this was one of the landmark judgments of the Privy Council in 1945 in the above side thing. Similarly, a temporary restriction imposed by war according to the terms of the contract may not result in frustrating the contract. That was again held by our Madras cycle in VL Narasu was a PSV IR AR 1953 Madras 300 and similarly as in the case of a lease agreement of 99 years may not be frustrated by the restriction imposed during the war because these are all temporary phenomenons. They are not permanent phenomenons. They are temporary phenomenons where only the performance is suspended. That was again in Kshar Chand was his Governor General in Council 1949 ILR Nagpur page 718. So these are just to highlight the different situations envisaging the frustration of contract and how the codes have interpreted whether the contract is really frustrated or not is one of the highlights of all these decisions. No next we go to the next factor which causes loss of object. This is the third factor which we have to we will be now be seeing regarding frustration. Now loss of object what is that? As already explained the term impossible has not been used in section 56 of the ad in the sense of physical or literal impossibility. The performance of a contract may be possible to carry out physically but if it has become redundant having regard to the object and purpose of the parties by an untoward event or change of circumstances then it must be held that the contract is frustrated. In Rosan Mian versus Thaira Begum 2007 Supreme Court 2883 this was one of the the landmark and the landmark judgment in Krell versus Henry where the very object based on which the contract was entered into becomes redundant or it is vanishes. Then the purpose of performing the contract itself becomes a waste. In those circumstances even if the performance is possible if the object based on which the purpose for which the contract was entered into destroyed or redundant then any performance becomes I mean redundant. So the contract stands discharged that is one of the interpretations of the Supreme Court in Rosan Mian's case. Similarly the Krell versus Henry I have already explained to you when the procession did not take place the contract should discharged. A contract under which the object of the purchaser was to sell the goods according to his own terms to a person of his choice stood frustrated by a direction issued by the general manager which authorized the district officer to nominate the person persons to whom the plaintiff had to sell the goods. In this case this was in a Rajasthan case firm Meghraj Nathmal versus firm Motilal Suresh reported in Rajasthan law weekly 1963 page 621 where in the contract if I choose the goods I have to supply or the persons I have to supply becomes frustrated when the government brings a different order saying no no no you can't supply to that person but you can you have to supply only to this person then I can plead frustration of the contract. This is one of the instances of loss of object. The other interpretation is the court will not accept the plea of impossibility even if the supermeaning event the object of the contract is not rendered redundant and the contract can still be performed substantially in accordance with the original intention of the parties though not literally in accordance of the language. So in other instances if it is capable of performance in spite of the super even a supermeaning event being available present then the contract does not get frustrated. This is one of the exceptions to the rule exceptions. Now the fourth factor what is the fourth factor death delay or incapacity to perform the delay and latches also result in frustration of the contract though it is often difficult to decide whether a contract has been frustrated by an event or change in circumstances which causes an unexpected delay in its performance. The delay has to be so great the end of such character that it makes the performance impossible. Such a delay must be abnormal and it and its effects on the or the expected duration so that it could not be reasonably contemplated at the time of contracting. Now this is a situation where both the parties in these agree that the contract is frustrated. Now in some in most of the cases one of the party pleads frustration and says the other party has to do it. Now the other party can contest saying that no no no he could have still performed the contract in spite of these events. That is one scenario loss of object change of law and physical impossible. Now we have come to a situation where we plead delay. Now let us say I have to supply certain things within a point now let us say I have to supply oxygens in the covid situation I have to supply oxygens. Now that is a very important factor where time is the criteria. Now here I am talking about time. Suppose I have to supply these oxygen cylinders within one week because that is a life saving equipment. Now if I am not able to perform that because of so many factors which both the parties are aware of which they did not contemplate in the contract then the contract can also be at the consent with the consent of both the parties stand discharged because of frustration or if I say that I am going to supply 15 cylinders and I am not able to supply 15 cylinders because of the factory being shut down or there is a riot in the factory what happens to the contract because time is the essence for life saving equipments and life saving drugs. If I am unable to provide that then both the parties can agree that this contract is frustrated they can enter into a fresh contract not that they cannot enter into any contract they can enter into a fresh contract saying that this contract is frustrated we are not able to do that maybe we will enter into a fresh contract for any other supply of oxygen or any equipments or medicines whatever it is. So there is an abnormal delay because of certain conditions which is supermeaning the contract itself. Now similarly the other aspect is suppose the fulfillment of the obligations when the delay is over will not accomplish the object of the contract then both the parties can say that the contract is frustrated for example we will say that I am supplying oxygen under the contract and I am not able to supply and the necessity for supply of oxygen itself becomes redundant because they are able to outsource the oxygen through some other channels for example if I have to supply oxygen to the hospital and suppose I am not able to supply the oxygen to the hospitals within that time in the meantime the hospital has already got the oxygen cylinders from another source the object of this contract becomes frustrated because there is nothing left I had to supply this I could not supply this because of various circumstances beyond my control which other parties also aware of and in the meantime the oxygen has also been obtained by the other party through some other channel then the very purpose of this contract or the object of this contract becomes redundant. So this is one of the reasons where the parties both the parties can say the object of the contract is redundant so we don't want to go ahead with the contract that's the one of the reasons which happens in these situations. Next is if the delay was within the commercial risks undertaken by the parties and it does not frustrate the commercial purpose of the contract there can be no frustration in a case delay in supply of cargo did not frustrate the charter party because such a delay was already contemplated in the terms of the contract that is in Reardon Smith line limited versus Ministry of Agricultural Fisheries and Food reported in 1961 to All England reporter 577 this is most of the English laws are the precursor to the laws laid down by our country because most of the laws have already gained or they have already practical implication of those laws have already been visualized by the English courts because they are a trading nation they were trading all over the world so that is why the contract act was developed by them on the basis the law follows the merchant whatever is the custom whatever is the usage of the merchant was codified into a contract that's a contract law similarly for when a contract specifically lays down a time limit then a super winning event causing delay of an indifferent period may make the performance impossible. Suppose I say I'm performing the contract within two months then the COVID comes so the entire performance is suspended now in the performance is suspended whether the object of the contract itself becomes redundant or can it still be performed after the COVID is lifted or the curfew under the COVID is lifted that is a super winning event which we never visualized I'm talking about more emphasis on COVID because we see a lot of practical difficulties faced by the individuals as well as the commercial people during this period so I'm more harping on that concept. In Kotelfa Construction Private Limited was a state railway authority of New South Wales it was held 1982-149 CLR 337 where they said even though it is the performance is suspended the contract has not become impossible to perform kindly see the distinction I'm only saying presently the performance cannot be done but whether the entire contract becomes impossible no so you have to perform the contract even during this the contract never it's not frustrated only the performance is frustrated so you can wait and then perform the contract so this is one of the landmark judgments of the Australian High Courts in Kotelfa Construction Private Limited versus state railway authority of New South Wales and this was also being followed by some of the Indian courts and in construction cases in a construction case where you have to put up a factory or something because of the COVID the migrant workers cannot work the construction is suspended or the performance of the construction is suspended but not the construction itself it can be performed after the the COVID is or the the ban is lifted or whatever is the the ban is lifted now next is finally death or incapacity of a party whose personal performance was required as per the contract is a valid groan of frustration of the contract in Balwinder Singh was a state of Punjab 2017 185 PLR 356 is one of the leading examples where when a person dies the contract also dies so that is the importance for example a performer if a person has to give a performance in a concert and the person dies the concert also dies because only based on the person the sponsors have announced and are staging the concert so if the person dies the contract also dies it cannot be enforced in these are the personal where for example a singer or an instrumental player is not able to is giving a concert and he dies then the entire contract dies so this is what also happened in an English case the contract was declared frustrated because of the illness of the pianist who was unable to perform the contract in Robinson versus Davison 1871 London London reporter 6269 it's very clear the the person also who has a role to play in that contract he himself is the subject matter of the contract the contract gets frustrated when the person is unable to perform the the concerned act or the concerned thing so these are some of the instances which I've taken the viewers through the frustration of contract now what is the current scenario in India let us take a view of the current scenario in India where the frustration of a contract in the present situation COVID situation how is it interpreted how do you see that now this is very important in the present scenario the government of India has issued a lockdown and that lockdown continues in bits and pieces is still there in in various states they have not fully lifted the lockdown they're still there with certain restrictions and some of the state governments have also imposed section 144 which is a curfew in order to follow social distancing and further several notifications have been issued under the disaster management act which is very which is the act and the epidemics act on social distancing and curfews so these specific acts will also have to be taken into account while interpreting the section 56 of the contract act it would be pertinent to note that the outbreak of pandemic was completely unforeseen and they said an event coupled with governmental actions has prevented further action of by the parties to the contract COVID-19 was an unexpected intervening event which was beyond the control of either parties to a contract which is similar to the act of God which is very important even even uh sorry event which affects the rights of the parties to a contract because of this they can treat frustration depending on the delay that is in this instant case the factor to be considered is a delay because of the performance or the person who has to perform has died because of COVID those are the factors which you will have to take into consideration to plead frustration of the contract the honorable supreme court has also taken several drastic measures including partial closing of courts with hearings to be conducted by video conferencing on emergent matters even today the concept of video conferencing is very much involved in all the courts it is not only most 90 I mean 100 percent of the courts are now following uh video conferencing so this is one of the very major uh intervening event which has frustrated several contracts now the in in such circumstances whether this intervening event that is COVID-19 and the resultant shutdown will be regarded as a force major event for all the agreements and hence permitting the parties to claim impossibility of performance is a matter to be decided on a case to case basis you cannot plead that the entire event has become uh frustrated that is a case to case basis you have to consider all these factors and find out whether the contract is frustrated or not when the postponement of supply is permitted depends on the contractual classes and the intention of parties certainly the performance during the lockdown period becomes impossible and the parties can info force major and excuse themselves if a contract was in the nature of a construction contract the performance during this period would become impossible but the performance can be postponed or to a later day and hence what remains is whether the contractor would be entitled for compensation in terms of time and money that's what I said certain times the performance is suspended because of these intervening factors but they can be performed after these intervening factors are have have have been I mean have uh resided or they have disappeared from suppose there is um the the covid itself is eradicated over a period of time or within the next one year hopefully then the performance can still be done see because the parties themselves know that it is not possible to perform they can have a mutual understanding and say that we can delay these performance during this period so it depends on the nature of the intervening event now this again has to be analyzed in terms of the contract and if the postponement is affecting the performance so deeply then compensation in terms of time can be granted of course one has to bear in mind the principles of mitigation of damages also and the parties seeking to take umbrage under the force major to give appropriate notice to the other party clearly demonstrating how covid 19 has impacted the performance and its obligations under the contract so if you take a plea that I'm not able to perform the contract because of covid 19 then the other party should be put on notice and said that these are the things I should have done these are the things I'm not able to do because of covid so hence the performance may be either postponed or it can be frustrated and the new contract can be entered into it depends on the mutual agreement between the parties at that point of time so generally most force major contracts an inclusive definition is also given which says that a force major the following are included one war hostilities then foreign enemies terrorism civil riots commotion disorder strike lockouts uh other than uh by lockouts per person and also change of law based on the contractors uh based on the contract similarly you also have uh munitions of war explosives materials ionizing radiation or contamination by radioactivity except as may be attributable to the contractors use of munitions explosions radiation and radioactivity then you have natural catastrophes such as earthquake hurricane typhoon or volcanic activity now in most of the contracts they have also included covid 19 as of today and it was SARS previously I'm going to also give you an example of how SARS was uh helped in I mean was one of the reasons as an intervening factor which uh probably uh made the the performance of the contract impossible so that was one of the SARS was one of the predecessors to the covid 19 so now pandemic or epidemic as of in most of the contracts which were entered prior to the covid 19 did not have a class of this pandemic and uh or any of in its definitions under force major in fact even FIDIC classes do not contain pandemic or epidemic in such circumstances whether covid 19 could fit in within the definition is a question that may arise as I pointed out most of the force major condition classes comes with a inclusive definition so if since the covid 19 definition is not included in many of the contracts whether that can be taken as a as a as a defense for frustration of the contracts now this several judgments of the supreme court of India which has laid down the word include would enlarge the scope of the definition just because it is not included the supreme court in several decisions have said you have to give an enlarge scope of the term definition include you cannot merely restrict yourself to the terms in the contract itself because you did not know about this epidemic at any point of time nobody had heard of covid 19 so how could you include that in the definition so now they have said that references made to several judgments which I am going to uh site in municipal corporation of greater Bombay versus Indian oil corporation 1991 supplement to sec 1918 similarly 1991 supreme court 686 equivalent then esa corporation versus highland coffee works reported in 1991 3 sec 617 then forest range officer versus p Muhammad Ali reported in 1993 3 sec 627 also facts and oils versus commissioner administration reported in 2010 4 sec 728 similarly doipax systems versus union of India reported in 1988 2 sec 299 then associated income mechanical private limited versus wb small industries development corporation reported in 2007 3 sec and lastly Mamta surgical cotton industries versus commissioner activation reported in 2014 4 sec have all highlighted that the word include should not be in a very restrictive interpretation it should have a liberal interpretation because of these are certain events which you do not envisage or you do not even know that they exist so you have to give a liberal interpretation to the words force major to include certain things which are not envisaged therefore if pandemics are epidemic is not specifically found the place in the definition class it can be reasonably construed the pandemic of the grave nature like covid would fall within the force major class that is what the supreme court has held and supreme court has also given orders periodically restricting I mean the period of limitation is being excluded excluding the period of limitation even as of today if the court has to take anything on file if it is if there is a limitation time that is excluded by the order of the supreme court on 15 421 where they have extended the period of limitation of filing cases or proceedings whatever it is indefinitely so this is in short or in brief what the supreme court has viewed the current covid how it is viewing the current covid but however even assuming that these proceedings there is no limitation the performance of every nature is not being suspended for example the banks can go ahead with the recovery of their monies the winding up of the companies are taking place and the debts have to be recovered and there is even though there is no limitation period the banks are enforcing the debts and they are filing cases for recovery of these debts there is no suspension of these recovery proceedings either by the bank or by the statutory authorities so that is one of the reasons you have to keep in mind if you are saying covid and you're going to take a plea of force major the courts will say no you have to perform the contract and even if you have difficulties in performing the contract you cannot say the contract is frustrated so many of the borrowers have taken this plea against the banks saying that the contract is frustrated because of this and that the court said no you cannot take the plea because things are functioning may not be functioning in the same normal way but they are functioning and you have to perform the contracts and you have to pay the monies maybe the banks may be a little lenient in recovery but there is no question of waiver the question of waiver will never come similarly with the landlord and tenants also the question of waiver by the landlords will not take place because during the period of covid maybe they may be they are prepared to waive or reduce the rents as far as the tenants are concerned because tenants will say sir we have not occupied the premises we are not able to come to the office so you have to waive the rents or you have to reduce the rents so in those cases the courts have indulged and said during that period where he has not used the office premises or where he has not occupied the premises either you can waive the rent because there is no provision for waiver under any of the tenancy acts nor can you the question is only mutual whether it is up to the landlord to waive the rent or reduce the rent that is the only thing he can do he cannot say I will not charge any rent at all so that those are the some of the legislations that the suspension has been there for a certain period but that period once it is goes what happens is I mean I saw one of the viewers that NPA period was suspended during the moratorium but subsequently it was revived because once the moratorium period is over what happens is it is only a moratorium where the payment of interest or the principal is suspended but the contract is again renewed with new terms and conditions where you have to pay the interest and you have to pay the principal amount so moratorium period is only a suspension of performance where you say you don't perform these things during this period but once the moratorium period is over then you have to pay everything you cannot that waiver will not come to you so this is one of the things which I want to highlight in this lecture now I am going to read a few citations relating to COVID-19 passed by the several high courts the Bombay High Court order passed in rural fair price wholesale limited and another versus ITBA trusteeship and services on 3rd April 2020 when the COVID was there in this case the Bombay High Court recognized the market situation pursuant to the COVID-19 and observed that the share market had collapsed due to COVID-19 therefore it was a fit case to restrain the bank from acting upon the sale notices and a direction to withdraw any pending sale orders for the pledged shares so this was a typical situation where the court intervened and said the person has to be given some respite breathing space so you don't presume to make the payment or don't presume with coercive steps to the entire thing will have to be revived after the COVID is over the Bombay High Court's order similar order was passed in standard retail private limited versus global corporate others on 8th April 2020 in a departure from its 3rd April order which I read earlier the Bombay High Court refused to grant entry measures to the petitioners observing that the commodity in question was an essential item and lockdown is only for a limited period consequently the petitioner cannot back out from its contractual obligation of making payments to the respondents that was another order by the Bombay High Court in a in the same situation which was five days later so each bench views the position in a different way so you cannot lay down a hard and fast tool that this is the only thing which can happen this cannot happen because each has its own parameters each case has its own factual differences so you cannot plead frustration in every situation the Bombay High Court further said there are no restrictions on its movement and all ports and port related activities including the movement of vehicles and manpower operations of the container freight station and warehouse services are inactive the notification of the director general of shipping Mumbai states that there would be no container retention charges on import and export shipments during the lockdown period so there is a circular given by them saying that there will not be any detention charges so they are giving some leave to the parties also in any event the lockdown would be for a limited period and the lockdown cannot come to the rescue of the petitioners so as to resile from its contractual obligations with the respondent number one of making payments so the suspension is only for the period during which the lockdown was enforced after which they have to make the payment similarly in Delhi High Court passed an order in Haliburton offshore services versus Vedanta limited on 20th April 2020 where the case pertained to restraining the invocation of bank guarantees while granting interim relief on the invocation of bank guarantees the Delhi High Court observed that the countrywide lockdown was prima facie in the nature of a force major therefore it would be that the special equities do exist and hence they granted a stay of the invocation of the bank guarantees the honorable court further held the question as to whether COVID-19 would justify non-performance or breach of contract has to be examined on the facts and circumstances of each case every breach or non-performance cannot be justified or excused merely on the invocation of COVID-19 as a force major condition the court would have to assess the conduct of the parties prior to the outbreak the deadlines that were imposed in the contract the steps that were taken to be taken the various compliances that were required to be made and only then assess as to whether genuinely a party was prevented or is able to justify its non-performance due to the epidemic it is a subtle position of law that a force major clause is to be interpreted narrowly and not broadly parties ought to be compelled to adhere to the contractual terms and conditions and the excusing non-performance would only be an exception to the rule it cannot be the rule as observed in energy watchdog it is not in the domain of courts to absolve parties from performing their part of the contract it is also not the duty of courts to provide a shelter for justifying non-performance there has been a real reason and a real justification which the court would consider in order to invoke a force major clause so it is a subjective thing which the courts will have to look into while invoking the force major clause because non-performance is only an exception to the rule and not the rule itself similarly the high court in Inderjit power private limited versus union of India and others reported on 28 April 2020 held the petitioner sought introduction of a bank guarantee inter alia on account of the lockdown in the country due to spread of covid-19 pandemic which would drive the petitioner towards being declared an NPA the court while observing the petitioner's conduct despite the extension of 12 months they were unable to fulfill the obligations under the contract and refused to grant relief to the petitioner the court observed that the petitioner's position under the contract was unaffected by the imposition of the lockdown so the conduct of the parties plays a very major role in assessing whether they are liable for the discretionary remedy injunction is a discretionary remedy it cannot be taken as a rule so each and every case will have to be assessed on its own merits Mr. Sethi further relate the orders passed during the lockdown this was this is a continuation of the case due to covid-19 regarding payment of installments to banks and declaration of NPA in WP number so on so so on so being Anantraj limited versus yes bank order dated so on so so on so he quoted another decision where they had given a stake however now the court says yes we do appreciate these laws but in your case if you take your case the fact remains that the petitioner is in non-compliance of milestones since april june 2018 despite extension of 12 months its position remained the same thus the orders passed mentioning the other orders passed during covid lockdown will not apply to your case for the simple reason that lockdown came into force in with effect from 24 3 2020 however the petitioner despite the extension of 12 months could not fulfill its obligations hence we do not want to interfere with the action taken by the bank and hence they said this repetition is dismissed the honorable supreme court also in state of Uttar Pradesh in in in human conditions at quarantine centers and for providing better treatment to corona positive persons held as follows while appreciating the effect the efforts of the judges of the high court in looking to the mat in depth while passing orders we are of the opinion that the high court should normally consider the possibility of implementation of the directions given by it and such directions which are incapable of being implemented should be avoided the doctrine of impossibility in our view would be equally applicable to court orders as well even the court orders cannot be frustrated the court should only pass orders which it can follow it should not pass orders which nobody can follow so the doctrine of frustration also applies to the court's orders as well that's what the supreme court held in the instant case now we are going to some of the landmark cases i'm just going to rush through the landmark cases the energy dog was a central electricity regulatory that is 2017 for scc page 80 where they relied on the decision of taylor versus caldwell it is all england reporter page 24 and they said it was very rigid and then they quoted the other case laws also that is sattibrata goes versus uh mugniram bangur and company 1954 acr 310 and they relied on the judgment of justice bijoy kumar mukherjee on section 56 and which i've already said before and they said that if however the frustration is to take place dehorsey contract it will be governed by section 56 and they said and they relied on the other decisions as well which i'm going to only for your academic purposes that is in alopee prasad and sun's limited versus union of india 1962 scr 793 where they said uh how the section 56 was interpreted then in nighati jute mills limited versus hayali ram jagannar 1968 one scr 821 where this court went into the english law of frustration in some detail and then cited the celebrated judgment of sattibrata goes versus mugniram the other important judgment is the uh syakorlu and company limited versus nobly tor gmbs 1961 to all england reporter 1979 where this is a case where despite the closure of the sue s canal and despite the fact that the customary route for shipping the goods was the sue s canal it was held that the contract of sale of ground nuts in that case was not frustrated even though it would have to be performed by an alternate mode of performance which was much more expensively namely that the ship should go around the cape of good hope which is three times the distance from hamburg to port sudan the freighter for such journey was also doubled despite this the house of lords held that even though the contract had become more onerous to perform it was not fundamentally altered and where performance is otherwise possible it is clear that a mere raise in freight praise would not allow one of the parties to say that the contract was frustrated so this was one of the landmark judgments which said that even though there were certain uh hindrances or certain uh during the in the contract it can still be performed by seeking other modes of alternate routes so this was one of the uh then similarly of course i've talked to you about the seagull sea angels case lords reporter 2013 one lords reporter 569 the modern approach to frustration is well put and the same is read as under which is followed under by the supreme court in energy watch dogs case so i'm not going to uh go into depths because it's already reported judgment where they say the power tariff revision of power tariff is not a ground for frustration of the contract now i'm going to come to the latest case law which is in uh supreme court in uh southeast asia marine versus oil india limited the supreme court held which is reported in ar 2020 page 2323 so that is the latest law on the subject where they have held that in india the contract act had already recognized the harsh consequences of such frustration to some extent and had provided for a limited mechanism to ameliorate the same under section 65 of the contract act which provides us under obligations of persons who has received an advantage under a void agreement or a contract that becomes void when an agreement is discovered to be void or in a contract becomes void any person who has received an advantage under such an agreement or contract is bound to restore it or to make compensation for it to the person from whom he received so section 65 is brought into account for the payment of compensation which is the third limb of section 56 of the contract act the aforesaid clause provides the basis of restitution for failure of basis we are cognizant that the aforesaid provision addresses limited circumstances where an agreement is void i've been issued or the contract becomes substantially void coming back to the case the contract has explicitly recognized force major events in clause 44.3 in the following manner for the purposes of this clause force major means an act of God war revolt riots strikes bond fire sabotage or restriction of good systems and acts and regulations of the government of India and other classes but not due to employment problem of the contractor beyond the reasonable control of the parties so these are the specific restrictions in the classes itself in the contract now having regard to the law discussed herein we do not subscribe either the reason provided by the arbitral tribunal or the high court although the arbitral tribunal correctly held that a contract needs to be interpreted taking into consideration all the classes of the contract it failed to apply the same standard while interpreting clause 23 of the contract we also do not completely subscribe to the reasoning of the high court holding that clause 23 was inserted in furtherance to the doctrine of frustration rather under the Indian contract law the effect of the doctrine of frustration is that it discharges all the parties from future obligations in order to mitigate the harsh consequences of frustration and to uphold the sanctity of the contract the parties with their commercial wisdom chose to mitigate the risk under clause 23 of the contract and said that the doctrine of frustration will apply from the above now the concluding I am going to conclude with the following that what are the synopsis or I will say the conclusion is of under section 53 is the words of the contract should be looked into that is the first point the definition of force major is important now it becomes not only an inclusive it because the inclusion itself is to be interpreted liberally as per the definitions of the super import to it must proceed from a cause not brought about by a defaulting parties default the second point three the hindrance cost must be such that it was impossible to perform that is it is not possible at any point of time the event and the non-performance where due to circumstances beyond the parties control the cost must be inevitable and unforeseeable you cannot foresee a clause and say it is impossible to perform the clause or the circumstances under which when you drew the contract cannot envisage such a eventuality then only it becomes frustration then four there were no reasonable steps that could have been taken to avoid or mitigate the event or its consequences suppose there is a possibility to mitigate then you cannot say it is frustration five it must have been brought to the notice of the other party that is very very important you cannot you cannot invoke the clause without notice to the other party the parties will have to be put on notice then six the party seeking to rely on the clause may also need to show it that it was not aware at the time of entering into the contract and that the circumstances giving rise to the event of force major was likely to occur because if they knew that it was likely to occur then you cannot plead frustration so these are the factors in a nutshell that you will have to look into to invoke the doctrine of frustration so this is how the law of contract evolved from the roman law then from the english law and now the indian law so this with these i would like to conclude this particular lecture on section 56 of the indian contract act thank you because thank you for giving me this opportunity pleasure was on us and like i said adi rashman ma'am had told that you'll take things in the right perspective and that's why it's one of the rare stations where we don't have any question on the youtube facebook as well as on this platform except for the thank you part because i think i've covered most of the things which probably the viewers anticipated or they wanted they had in their probably doubts in their mind they probably would have asked because i want to cover everything up till today because that's the scenario as of today so i think that's probably thank you so much for that thank you thank you you will connect to the other sessions thank you everyone stay safe stay blessed adi rashman ma'am has come adi rashman and it was also a revision for a lot of people thank you thank you thank you because oh no i'm saying you've taken one session out there and here so a lot of people got the revision of that part because they had watched out there also play the notes also because i think there is a request from one of the us we will share it on the groups over to you thank you thank you so much today sachsen was good i have heard the session from sir before but today he did much more better homework and we have come forward for the beyond last year especially thank you and the appreciation is there on the chat and again mukhut was there he's got to take a session on Tuesday and he was there on the participant list listening to you i thought i would pull in mukhut for the vote of thanks but i think he's not there right now we'll be taking on this thing sale yeah he's on Tuesday he's going to take a session on sale transfer of property it's really good that north and south is getting connected it's all good work of the beyond last year and the able leadership of vikas and his team thank you all thank you arvind sir it was a very good excellent session you get the flag of the abhira site code very high today thank you all and there's no questions from my side thank you so much over to vikas thank you thank you we all enjoyed the session and it was quite insightful there's a lovely session thank you sir bhabhi is asking share the link she can connect on the i'm sharing the whatsapp number not only bhabhi anybody can connect on that particular part to join the beyond logo though we have already shared thank you thank you vikas