JUDGEMENT
Bhargava, J -
(1.)THIS is a second appeal by the defendant against the judgment and decree of the learned District Judge, Jaipur District Jaipur reversing that of the Civil Judge, Sambhar.
(2.)THE plaintiff-respondent filed a suit for recovery of Rs. 756/- plus Rs. 144/-as interest against the appellant Firm Meghraj Nathmal alleging that it had contracted to supply two wagons of salt on 16th November, 1942 vide Ex. P. 1 to it at Sambhar which had been alloted to it by the Salt Department, Government of India, the price of which had been paid vide Treasury Receipts Nos. 14522 and 14523 on 27th October, 1942. THE Salt Department was to deliver the salt wagons to the defendant on some future date. THE plaintiff paid Rs. 378/- per wagon as profit to the defendant firm at the time of making the contract and agreed to pay the price of salt at the time of delivery of wagons to the defendant. It was stipulated in Ex. P. 1 that the defendant would inform the plaintiff about the receipt of wagons as and when they received notice of clearance from the Salt Department. THE gunny bags were to be supplied by the plaintiff. THE plaintiff was to be responsible for any profits or losses or any increase or decrease in the rate of duty on salt. THE defendant firm receiving intimation from the Salt Department informed the plaintiff vide notices Ex. A-4 and Ex. A-5 dated 22nd May, 1943 and 5th May, 1943 respectively and called upon the plaintiff to take delivery of the railway receipts for the wagons in question on payment of the price thereof. THE plaintiff, however, declined to accept the railway receipts and gave reply on 9th May, 1943 (Ex. 12) saying that the contract between the parties had become void on the doctrine of frustration because of certain notifications issued by the General Manager, Rajputana Salt Sources Division Sambhar issued in pursuance of the Salt Emergency Distribution Order dated 24th October, 1942. THEreafter the plaintiff instituted the present suit claiming refund of Rs. 726/- which had been paid to the defendant along with interest thereon.
The defendant contested the suit and stated that it was always prepared to give delivery of the railway receipts to the plaintiff and therefore, the contract had not become frustrated or incapable of performance. The defendant accepted that it was prepared to pay the sum of Rs. 100/- which it had received as profit on the two wagons in question.
The trial court gave a decree to the plaintiff for the sum of Rs. 100/- which the defendant had accepted to pay but dismissed the claim for the refund of Rs. 756/-and interest holding that the contract in the suit had not become impossible of performance and the plaintiff himself was at fault in not having taken the delivery of the wagons inspite of their having been offered to them.
The learned District Judge in appeal reversed the decision of the trial court and decreed the plaintiff's suit for the principal sum of Rs. 756/- having come to the finding that by virtue of the notifications Exs. 5 and 6 which were issued by the General Manager, Rajputana Salt Sources, Sambhar, it had become impossible for the defendant to sail the wagons of salt in question to the plaintiff and by the said notifications the defendant was bound to sell the same to a Government nominee.
At first this appeal was heard by a learned Judge of this Court and was allowed on the ground that it was directly governed by the decision of this Court in Firm Meghraj Nathmal vs. Dwarka Das (D. B. Civil Second Appeal No. 410/52) decided on 28th January, 1959 wherein it was held that there was nothing in the notifications Exs. 5 and 6 on the basis of which it could be held that the performance of the contract in question had become impossible. Thereafter, the plaintiff submitted a review application on the ground that some material documentary evidence had not been taken into consideration when the appeal was heard ex parte. The learned Judge who decided the appeal granted the review application and ordered that the appeal should be reheard, and this is how the appeal has come before me.
On behalf of the appellant it has been contended that: 1. The contract between the parties was not of supply of the two wagons of salt but the defendant had merely assigned to the plaintiff the benefits which it had received on the allotment of the said wagons from the Salt Department. (2) The contract had not become incapable of performance. In this connection it was contended that the appeal was fully governed by the decision in D. B. C. S. A. No. 410 of 1952 and be documentary evidence pointed out on behalf of the plaintiff during the review application did not in any way alter that position. (3) that the plaintiff had no right to file the present suit as it had itself sold the two wagons in question to another party by taking profit from it even before the defendant received intimation of clearance from the Salt Department.
As for the first contention, it may be pointed out that it was clearly alleged in the plaint that the! defendant had agreed to supply two wagons of salt to the plaintiff under the contract Ex. P. 1 and this allegation was not denied by the defendant. In fact the common ground between the parties was that the defendant firm accord-ding to the custom of the trade was to receive these wagons in due course but before it did receive, it entered into a contract with the plaintiff on 16th November, 1942 (Ex. P1) for the sale of these wagons to it and in lieu thereof received a profit of Rs. 378/-per wagon. It is for the first time in this Court that the above contention has been raised. No issue was framed on this point and it view of the reply given by the defendant in paragraph 2 of the written statement, there is no room for the defendant to raise this contention now. The contention is not merely a question of law, but is of fact depending upon the construction of the document, custom of the trade and the intention of the parties to be gathered from surrounding circumstances when the contract was entered into. The defendant, therefore, cannot be permitted to raise new point in second appeal which requires an enquiry into questions of fact.
The next and the main question is whether the contract had become impossible of performance on account of the notifications Ex. 5 and 6 issued by the General Manager, Rajputana, Salt Sources Division, Sambhar. Before discussing this question, it is necessary to mention as to how these notifications came to be issued. On 24th October, 1942, the Government of India in exercise of the powers conferred by sub-rule (2) of rule 81 of the Defence of India Rules enforced the Salt (Emergency Distribution) Order, 1942 (hereinafter called the Order ). In cl. (3) it was provided that : - "notwithstanding anything contained in any rule of procedure or in any contract entered into by or on behalf of the Central Government, the Collector or any Salt Revenue Officer authorised by him in this behalf may, in issuing salt from a Government manufactory. (a) Give priority to such extent as he thinks fit to the indents of any person or body of persons or society nominated by a District Officer or by the Administration of an Indian State, or of a Municipal or other local authority, or of a registered cooperative society ; (b) Direct any other indentor to send the whole or any portion of the salt issued to him to such destination or destinations as may be specified in the direction. Clause 3 (b) was further amended vide Notification of the Finance Department published in the Government of India Gazette dated 30th January, 1943. The General Manager of the Rajputana Salt Sources Division Sambhar on 25th January, 1943, (Ex. 6) issued a notice as under - "it is hereby notified for general information of traders that from the 1st February, 1943 or as soon as possible thereafter, it is intended to direct ordinary indentors not only to send the salt issued to them to specified districts but to sell it at the fixed profit of Rs. 50/- per wagon to the nominated dealers of those districts. If any trader fails to comply with the direction given to him or desires to have his money back, his indents will be cancelled and the revenue refunded. Traders are given this information in advance and warned that they should not enter into any further commitments about their indents coming up for clearance in future. " Again on 30th January, 1943, the General Manager issued a notice which is rcpro-duced below - "in continuation of this office notice No. 7 Sales/43/1477 dated the 25th January, 1943, traders are hereby informed that with effect from the 1st February, 1943, all salt cleared against ordinary indents will be sent only to the nominees of the district magistrates and Indian States and no salt will be supplied to dealers other than the nominees, The indentors should despatch salt issued to them to the nominated dealers of specified districts on a fixed profit of Rs. 50/- per wagon in addition to the price of 543/15/- per wagon of Sambhar crystal salt, Rs. 542/2/- per wagon of Reshta salt, Rs. 476/9/-per wagon of Pachbadra salt and Rs. 459/13 per wagon of Didwana salt, excluding cost of bags. The indentors will, as hitherto, have the option of the selecting any of the 4 or 5 given districts to which salt is to be despatched but the name of the nominee to whom the indentor will be bound to despatch the salt, will be intimated by the Superintendent Weighments Circle Sambhar, Superintendent, Pachbadra and the Superintendent Didwana, as the case may be, at the time of delivery of the Railway receipts to the indentors concerned. All the out-of-turn quotas will be issued first and then the remaining wagons will despatched to those places where salt is most urgently needed. " These notices are said to have been issued by the General Manager by virtue of the powers delegated to him by the Collector vide Ex. P. W. 7/1 dated 23rd January, 1943. .
It is contended on behalf of the appellant that - (1) there is nothing in the notices Exs. 5 and 6 to show that they were issued in exercise of the powers conferred by clause (3) of the order. (2) there was no delegation of powers by the Collector to the General Manager, by virtue of Ex. PW 7/1. (3) the Collector had no authority to issue instructions to the General Manager on 23rd January, 1943 when clause 3 (b) of the order had not even been amended. (4) the General Manager could not have issued notices (Exs. 5 and 6) before the Order was amended, and the notices Exs. 5 and 6 are not in accordance with the instructions given by the collector vide Ex. PW 7/1. (5) the Collector and the General Manager both exceeded the powers conferred upon them by the Order in fixing the amount of profit to Rs. 50/- per wagon.
Notices Exs. 5 & 6 which are relied upon by the plaintiff in this case came up for consideration in D. B. C. S. A. No. 410 of 1952 and it was observed that - "neither was there any evidence on record to show that these orders were passed under the Salt Order, 1942 nor does the said Order contain any provision authorising the passing of such orders. " It was further observed that; "it is not mentioned either in Ex. Al or in Ex. A2 (Exs. 5 and 6 in the present case) that the General Manager, Rajputana Salt Sources Division, Sambhar Lake had been authorised by the Collector to pass an order under the Salt Order, 1942. These two orders of the General Manager did not even purport to have been passed under the Salt Order, 1942. No evidence was produced to prove that the Collector had delegated any authority to the General Manager to pass an order under the Salt Order, 1942. Both the courts below erred in presuming that Ex. Al and Ex. A2 must have been issued under the Salt Order 1942 and that the necessary authority to do so must have been delegated to the General Manager by the Collector. Further "no power was conferred under the Salt Order 1942 either to direct the indentor to sell the salt issued to him only to a nominated person or to limit his profit to any specific sum. "
Sitting singly, I would respectfully be bound by the above decision unless the appellant can satisfy that the present case cannot be governed by the said decision. On behalf of respondent it is pointed out that in the case before the Division Bench, Ex. PW7/1 was not produced by either party which could show that the Collector had delegated its authority to the General Manager to issue notices Exs. 5 and 6. It it also pointed out that the amendment of the Order dated 30th January, 1943 was also not brought to the notice of the Division Bench and that is why the Hon'ble Judges came to the conclusion that the General Manager had no authority to issue the notices and further he had no power to direct the indentor to sell the salt only to a nominated person. It is pointed out that by the amendment dated 30th January, 1943 the following sub-clause (b) of clause 3 of the Order was substituted : "direct any indentor to send the whole or any portion of the salt issued to him to such destination or destinations or to such person or body of persons nominated by a district officer, or by the administration of an Indian State, as may be specified in the direction. " Which gave authority to the Collector or any Salt Revenue Officer authorised by him to direct the indentor to sell the salt issued to him only to a nominated person. In my view the contention of the respondent is not without force and the decision of the Division Bench in the above mentioned case for the foregoing reasons is distinguishable. It is clear from the judgment of that case that neither the delegation of power by the Collector to the General Manager nor the amendment dated 30th January, 1943 of the Order were brought to the notice of the Bench. This appeal therefore, will have to be decided on its own merits.
The Collector, Central Excises and Salt North Western India, Delhi sent the following communication to the General Manager Sambhar : From the 1st January, 1943, or as soon as possible thereafter it is intended to direct ordinary indentors not only to send the salt issued to them to specified districts but to sell them at the fixed profit of Rs. 50/- per wagon to the nominated dealers of those districts. 2. The necessary amendment to the Salt (Emergency Distribution) Order, 1942, is under examination by the Government of India and a copy will be endorsed to you officially as soon as it is issued. I write to give you advance information so that you can adjust your directions to traders accordingly and also warn the traders not to enter into any further commitments about their indents up for clearance. As soon as you receive a copy of the amendment to the order you should issue a brief notice to the traders stating that from such a date, which I leave you to fix in the light of local circumstances, indentors will be required to sell their wagons to one of the nominated dealers of the district or State which will be specified with the profit limited to Rs. 50/-per wagon. If any trader is unable to comply with these directions or desires to have his money back, his indents will be cancelled and the revenue refunded. 3. After the old indents have been cleared, fresh indents are to be accepted from the registered traders only on condition that the salt is sent to the nominated firms of the specified districts or States only with the profit limited to one anna per maund. '' The General Manager as would appear from the above was authorised by the Collector to issue a brief notice to the traders that from a specified date the indentors would be required to sell their wagons to one of the nominated dealers of the district or State which will be specified, with the profit limited to Rs. 50/- per wagon. It is obvious that under clause 3 (b) of the Order no power was given to the Collector or the officer authorised by him to fix the amount of profit and the Collector therefore, exceeded the powers which were given to him under the order. The General Manager was required to issue the above notice after he received a copy of the amendment of the order which was in the contemplation of the Government. Until the order was amended neither the Collector nor the officer authorised by him had any power to direct the indentor to send the salt issued to him to person, body or persons nominated by a district officer or by the administration of an Indian State. Before the amendment, they could only direct the indentor to send the whole or any portion of salt issued to him to such destination or destinations as specified in the direction. The Collector had informed the General Manager in anticipation of the amendment which was soon going to be passed. The General Manager in pursuance of this communication dated 23rd January, 1943, issued two notices Exs. 5 and 6. Notice Ex. 6 dated 25th January, 1943, is a sort of warning to the traders in view of the intended amendment of the order. But notice Ex. 5 was issued by the General Manager on the same day when clause 3 (b) of the order was amended, and by virtue of the authority given to him by the Collector. Vide his communication dated 23rd January, 1943, he was competent to issue this notice so far as it was consistent with clause 3 (b) of the Order. The whole notice cannot be said to be bad simply on the ground that it directed the indentors to charge a fixed profit of Rs. 50/- per wagon. The direction with regard to the charging of profit is severable from the other direction and even if it be held to be in excess of the powers given under the order the remaining directions cannot be said to be bad. Though there is nothing on the face of Ex. PW 7/1 or the notices Exs. 5 and 6 to show that they were issued in exercise of the powers conferred upon the Collector by the Order yet Clause 3 of the order clearly gives those powers and the orders issued by the Collector or the officer duly authorised by him in that behalf shall be deemed to have acted in exercise of the powers vested in him by clause 3 of the Order. It is urged that clause 3 (b) contemplates a direction to the individual indentor and not a general direction as was given in Exs. 5 and 6 but in my view that does not make any difference. There was nothing wrong if instead of issuing direction to the individual indentor a general direction to all the indentors was issued by the notices Exs. 5 and 6. I, therefore, do not see any force in the objections raised regarding the validity of Exs. 5 and 6 and hold that the General Manager had been duly authorised by the Collector to issue those notices and the direction contained in them so far as it was consistent with clause 3 (b) of the Order was valid. 13. The next question is as to how did the notice Ex. 5 dated 30th January, 1943 affect the contract between the parties. From Ex. 1 it is clear that the defendant was to deliver two wagons of salt to the plaintiff as and when it received it from the Salt Department. Until the notice Ex. 5 was issued the plaintiff after receiving the wagons could send it at any place it liked and also to sell it on its own terms to a person of his choice. It is true that the parties entered into this contract after the order had come into force and it must have been contemplated at that time by the plaintiff that it may be required to send those wagons to a destination as may be specified by the Collector or the officer authorised by him. But this direction still left it open to the plaintiff to sell those wagons in a person of its own choice in that district and on its own terms but after the Order was amended on 30th January, 1943, and the General Manager issued notice Ex. 5, no such choice was left to the purchaser. The wagons sold under the direction were to be sent to a person or body of persons nominated by a district officer or by the Administration of an Indian State. There is sufficient evidence on record which shows that the indentor on receiving notice of clearance from the Salt Department was required to inform the purchaser so that he may supply the. gunny bags and have the destination changed according to his wishes. It is also clear from evidence that the railway receipts in the present case were prepared by the Salt Department and the name of the consignee was already mentioned by it. Neither the indentor nor the subsequent purchaser could have the place of destination or the name of the consignee changed. The question, therefore, is whether in these circumstances it can be said that there was a frustration of contract and it became impossible of performance within the meaning of sec. 56 of the Indian Contract Act. The primary question for consideration is whether having regard to the terms of the contract and the surrounding circumstances it would be reasonable and just to hold the parties any longer with the terms of the contract. In my opinion it is not a case as contended by the appellant where the performance of the contract only became more difficult but is a case where the very basis on which the parties entered into the contract, was upset. It was laid down by the Supreme Court in Satyabrate Ghose Vs. Mugneeram Bangur & Co. (1) that "the word 'impossible' has not been used in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and unless from the point of view of the object and purpose which the parties had in view ; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do," It was also laid down by their Lordships that: "if and when there is frustration the dissolution of the contract occurs automatically. It does not depend, as does rescission of a contract on the ground of repudiation or breach, or on the choice or election of either party. It depends on the effect of what has actually happened on the possibility of performing the contract. What happens generally in such cases is that one party claims that the contract has been frustrated while the other party denies it. The issue has not to be decided by the Court ex post facto on the actual circumstances of the case. " The object and purpose of the contract so far as the plaintiff was concerned, was to sell the goods to a person of his own choice after it had taken delivery from the defendant. But this object of the contract was completely overthrown by the direction issued by the General Manager vide Ex. 5. This event that the indentor would be required to send the wagons of salt to a person nominated by the district officer or by the Administration of an Indian State could not have been in the contemplation of the parties when they entered into this contract. Having regard to the above circumstances therefore it does not appear to be just and reasonable to bind the parties to the contract after the direction contained in Ex. 5 which, as already held, was quite valid. In Shree Kishen and another Vs. Gambhirmal (2) where at the time the defendant made a contract with the plaintiff to supply him certain goods at a place outside the State there was no prohibition against sending the goods outside the State but subsequently prohibition was imposed on the sending of that goods to that place and the railway booking was closed and it remained so for an year and a half the event which came into existence after the contract made the contract impossible, it was held "that the event which came into existence after the contract made the contract impossible and exempted the defendant from performing the contract under sec. 56. Contract Act. The fact that the defendant could have sent the goods to a different place cannot affect the defendant and impose any liability on him. "
(3.)THIS being so the defendants objection that it was ready to hand over the railway receipt to the plaintiff and the latter refused to accept it, has no meaning because the contract automatically was frustrated on the direction issued by the General Manager on 30th January, 1943 and the receiving of the railway receipt only could not have been of any practical utility to the plaintiff. I, therefore, hold that the contract between the parties had become impossible of performance and the plaintiff became entitled to claim refund of what it had paid to the defendant under the contract.
It is urged by the learned counsel for the appellant that as the plaintiff itself sold these wagons to another person at a profit, it is not entitled to claim refund from the defendant also. But in my opinion each contract in this chain must be considered solely by itself and the fact that the plaintiff had sold the goods to another person at some profit does not affect the right of the plaintiff to claim refund from the defendant of what it had paid to it. (See S. R. Muthuswami Ayyar and Sons, Firm Vs. V. V. C. Ramalinga Mudaliar (3) where it was held that: "where plaintiff was one of the vendors in the chain of purchasers and was also the last purchaser from defendant of certain goods which were the product of certain mills which cancelled their contract with their first purchaser, and where each purchaser had made an advance, the fact that the plaintiff made default in giving delivery to his vendee at some anterior link in the chain of purchasers does not disentitle him from claiming the return. "
In view of my findings this appeal shall stand dismissed but in view of the circumstances of this case, parties will bear their own costs of this appeal.
Leave to appeal to a larger bench is refused.