A) ABSTRACT / HEADNOTE
The Supreme Court of India in Satyabrata Ghose v. Mugneeram Bangur & Co. and Another, AIR 1954 SC 44, addressed a critical issue concerning the applicability and scope of the doctrine of frustration under Section 56 of the Indian Contract Act, 1872. The case revolved around an agreement to sell a plot of land that formed part of a development scheme initiated by the defendant company. The development faced interruption due to land requisition by the Government during World War II. The company, citing supervening impossibility, attempted to terminate the contract. However, the Court held that Section 56 is exhaustive on frustration and unlike English law, the Indian statute does not confine impossibility to physical or literal impossibility alone. The Court emphasized that frustration in India arises only if the fundamental basis of the contract is destroyed, which was not the case here. The requisition was temporary, and the parties had not fixed any time limit for performance. Hence, the contract was still enforceable. This decision is pivotal in asserting the primacy of statutory interpretation over imported common law doctrines in Indian jurisprudence.

Keywords: Section 56 Indian Contract Act, Frustration of Contract, Impossibility, Land Sale, Government Requisition, Doctrine of Frustration, Temporary Impossibility, Specific Performance.

B) CASE DETAILS

i) Judgment Cause Title: Satyabrata Ghose v. Mugneeram Bangur & Co., and Another

ii) Case Number: Civil Appeal No. 80 of 1952

iii) Judgment Date: 16 November 1953

iv) Court: Supreme Court of India

v) Quorum: Mukherjea J., Vivian Bose J., Bhagwati J.

vi) Author: Justice B.K. Mukherjea

vii) Citation: AIR 1954 SC 44; 1954 SCR 310

viii) Legal Provisions Involved:

• Section 56 of the Indian Contract Act, 1872

• Section 32 of the Indian Contract Act, 1872

• Section 54 of the Transfer of Property Act, 1882

• Section 42 of the Specific Relief Act, 1877 (repealed)

• Defence of India Rules, 1939 (repealed)

ix) Judgments Overruled by the Case (if any): None

x) Case is Related to which Law Subjects:

• Contract Law

• Property Law

• Civil Procedure

• Public and Administrative Law

C) INTRODUCTION AND BACKGROUND OF JUDGMENT
This landmark decision from the Supreme Court clarified the position on the doctrine of frustration under Indian law. The context of the dispute emerged from World War II era governmental land requisitions, which impacted several contracts for land development. The defendants sought to cancel the contract by invoking frustration, arguing the government’s wartime requisition made performance impossible. However, the Supreme Court took this opportunity to distinctly mark the boundaries between English and Indian jurisprudence, holding that Section 56 of the Indian Contract Act is a complete code in itself governing frustration. The Court also reiterated that frustration is not based on the intention of the parties but is a doctrine of positive law which strikes at the foundation of a contract. This clarification holds paramount importance in distinguishing Indian contract law’s statutory approach from the common law model.

D) FACTS OF THE CASE
The defendant company launched a real estate development project named Lake Colony Scheme No. 1 near Dhakuria Lakes, Calcutta, and entered into several contracts for sale of individual plots. One such contract, dated 5 August 1940, was with Bejoy Krishna Roy, who paid Rs. 101 as earnest money. The conveyance was agreed to be executed after construction of necessary roads and drains. Subsequently, Roy nominated the plaintiff, Satyabrata Ghose, as the purchaser.

In November and December 1941, the Government requisitioned large portions of the land for military purposes under the Defence of India Rules. The defendant company, citing impossibility due to requisition, unilaterally attempted to cancel the agreement and offered to return the earnest money. Alternatively, it offered to proceed with conveyance immediately, without completing infrastructure works. Ghose refused and filed a suit seeking a declaration that the contract subsisted and that he was entitled to performance.

The Trial Court and the First Appellate Court upheld the plaintiff’s position. However, the Calcutta High Court reversed these decisions on the ground that the contract had become impossible due to the requisition and thus stood frustrated under Section 56.

E) LEGAL ISSUES RAISED
i. Whether the requisition of land by the Government constituted a supervening event frustrating the contract under Section 56 of the Indian Contract Act.
ii. Whether the doctrine of frustration under English law applied to contracts for sale of land in India.
iii. Whether the requisition order rendered the contract illegal and thus void under Section 56.
iv. Whether the absence of a specific time period in the contract negated the plea of frustration.

F) PETITIONER / APPELLANT’S ARGUMENTS
i. The counsels for Petitioner / Appellant submitted that Section 56 is a comprehensive provision in Indian law and there is no room to apply English common law independently. They argued that under Indian law, impossibility includes both physical and commercial impossibility, but the event must strike at the root of the contract.

The petitioner contended that the war-time requisition was temporary and did not destroy the basis of the contract. No time limit was specified for performance; therefore, the delay caused by requisition could not amount to impossibility. The appellant relied on Ganga Saran v. Ram Charan, AIR 1952 SC 9, where the Supreme Court emphasized that Indian courts must rely on Sections 32 and 56 alone to determine frustration[1].

Moreover, they differentiated between commercial inconvenience and legal impossibility, citing Joseph Constantine Steamship Co. v. Imperial Smelting Corporation Ltd., [1942] A.C. 154, which held that inconvenience or delay does not necessarily frustrate a contract[2].

G) RESPONDENT’S ARGUMENTS
i. The counsels for Respondent submitted that the contract’s core purpose was defeated due to the requisition orders, which were beyond the control of the parties and of uncertain duration. Thus, performance became impossible or illegal.

The respondent relied on the principle of implied conditions under English law and cited Taylor v. Caldwell, (1863) 3 B & S 826, and Robinson v. Davison, (1871) L.R. 6 Ex. 269, where unexpected events beyond parties’ control excused non-performance[3]. It was further contended that the war made road construction and related works indefinite, amounting to frustration of the commercial object of the contract.

Additionally, the respondent argued that due to Section 79 of the Defence of India Rules, any use of requisitioned land would amount to a punishable offence, making the contract illegal.

H) RELATED LEGAL PROVISIONS
i. Section 56, Indian Contract Act – provides that a contract becomes void if its performance becomes impossible or unlawful due to supervening events.
ii. Section 32, Indian Contract Act – relates to contingent contracts dependent on the occurrence or non-occurrence of future events.
iii. Section 54, Transfer of Property Act – clarifies that a contract to sell land does not itself create any interest in the property.
iv. Section 42, Specific Relief Act, 1877 (now repealed) – governs declaratory reliefs.
v. Defence of India Rules – gave the government powers to requisition property during wartime.

I) JUDGEMENT

a. RATIO DECIDENDI
The Court held that Section 56 of the Indian Contract Act codifies the law of frustration and excludes the application of English common law principles except where they align with Indian statutory provisions. The Court reasoned that the requisition did not render the contract impossible as it was temporary and no time frame was fixed for performance.

Performance may become difficult or delayed, but such delay does not constitute frustration unless it strikes at the very foundation of the contract. The requisition orders did not have the effect of destroying the purpose of the contract. As such, the agreement remained valid and enforceable.

b. OBITER DICTA
The Court elaborated that contracts are not discharged merely due to commercial hardship or delays unless the performance becomes entirely unfeasible. Courts must interpret “impossibility” under Section 56 pragmatically. Further, Indian law treats frustration as a rule of law, not as an implied term of the contract as under English law.

c. GUIDELINES 

• Frustration must result from an event fundamentally altering the contract’s basis.

• Temporary or foreseeable hindrances do not qualify as frustration.

• Section 56 operates independently; English law may guide but not override Indian statutes.

• In India, frustration is not inferred from implied intention but from statutory prescription.

J) CONCLUSION & COMMENTS
The Supreme Court’s verdict in Satyabrata Ghose is seminal in separating Indian contract law from its colonial influences. By holding Section 56 as exhaustive, the Court reinforced the Indian legal system’s autonomy and rejected doctrinal imports not codified in Indian law. The ruling clarified that frustration in India demands a radical change in the contract’s circumstances, not mere delay or inconvenience. This judgment serves as a touchstone for future disputes where supervening impossibility is pleaded, especially in infrastructure and government-intervention-related contracts.

K) REFERENCES

a. Important Cases Referred
[1] Ganga Saran v. Ram Charan, AIR 1952 SC 9
[2] Joseph Constantine Steamship Co. v. Imperial Smelting Corp., [1942] A.C. 154
[3] Taylor v. Caldwell, (1863) 3 B & S 826
[4] Robinson v. Davison, (1871) L.R. 6 Ex. 269
[5] Denny, Mott & Dickson Ltd. v. James B. Fraser & Co. Ltd., [1944] A.C. 265
[6] British Movietonews Ltd. v. London and District Cinemas Ltd., [1952] A.C. 166
[7] Hirji Mulji v. Cheong Yue Steamship Co. Ltd., [1926] A.C. 497

b. Important Statutes Referred

• Indian Contract Act, 1872 – Sections 32, 56

• Transfer of Property Act, 1882 – Section 54

• Specific Relief Act, 1877 – Section 42 (repealed)

• Defence of India Rules, 1939