Business Law

Group Assignment
Summary Report on
“LANDMARK JUDGEMENTS ON DISCHARGE OF
CONTRACT”

Submitted by:
Srl No Names Roll No
1 Prachi Garg 191237
2 Prajjawal Tyagi 191238
3 Prakhar Pareek 191239
4 Priyank Agarwal 191240
5 PriyashKaramchandani 191241
6 Raj Mahor 191242

Section: B
Batch: MBA – FT (2019-2021)
Institute of Management, Nirma University
Date of Submission: 6th March, 2020
TABLE OF CONTENTS
 Srl No. Title Page No

MugneeramBangur&Co. vs Gurbachan
1 Singh 3
M/s Fortune Infrastructure V. Trevor
2 D’Lima&Ors. 6
3 Chandra Shekhar Singh & Others vs
State Of U.P. & Others 8
4 Krell vs Henri 10

5 Sumpter Vs Hedges 12

6 Shiam Sunder Lal vs Durga And Anr. 14

MugneeramBangur& Co. vs Gurbachan Singh

(January 28, 1959)

Introduction:

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The present case is a landmark case, establishing the discharge of contract between two
parties by Performance.
The case was decided on 28th January, 1959 at High Court of Judicature at Calcutta by the
Honorable Mr. Justice P.N Mukherjee and the Honorable Mr. Justice P.K Sarkar.The
judgement of the court was delivered by Mudholkar. J.

In this case, the Appellant and the Respondentare:

Appellant Respondent
MugneeramBangur& Co. Sardar Gurbachan Singh

Parties involved:
1. MugneeramBangur& Co.
2. Sardar Gurbachan Singh.

Facts of the case:

In May 1941, the respondent Mr. Sardar Gurbachan Singh had entered into a contract with
the appellant MugneeramBangur& Co. for the purchase of a plot of land in a colony scheme
at that point of time. As a part of the deal, the respondent had paid the earnest money in to
confirm the contract made and also had undertaken to competition of certain development
work by the appellant.

The land which was the part of the contract was requisitioned by the government under the
defense of India rules and the appellant company therefore was unable to undertake the
development work during the continuance of the war situation.
So, in May 1946, the government proposed to derequisition of the lands taken over by them.
The respondent approached the appellant to raise the query of the development work so that
they both can complete the transaction after one month of it.
Here the appellant claimed that the contract stood cancelled since the respondent has failed to
comply with the circular letter issued by it in December 1943. In the circular, offering all
purchases of the plot of land with two options:
 Accepting the refund of the earnest deposit of money.

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  Completing the transaction immediately by accepting the land in an undeveloped
state.

The respondent in this case denied of receiving of any such circular notice and filed a suit in
the year 1946 which was upheld by the high court in appeal.

In Supreme court, it was contended on behalf of the company that the contract was
discharged by the reason that:

 Its performance was rendered unlawful as a result of the requisitioning ordered by the
government.
 The suit for specific performance was premature because under the contract the
respondent did not get right to obtain a sale deed as the development work was
unfinished.

Main argument:
The controversy as we have said above centersaround the question whether the contract in
suit came to an end by performance due to the intervening circumstances to which the
material facts have been stated above.
The argumentonbehalf of the appellant is that by the requisitions stated above, it has totally
become impossible start the development work. This comes under the discharge by
performance and is clearly coming to the point of conclusion that the respondent should
have acted on time and have applied for the refund at that point of time or should have
undertaken the development work on themselves so that the respondent could have got sale
deed and further the appellant would be free from the situation aroused due to the orders.

An additional argument raised by Mr. Gupta in the court was in support of appeal, that the
performance of the contract should also be applicable on the construction of roads and other
infrastructures. The only applicability in the transaction of real estate business is not
appropriate. But this argument also not been so strong to support the appellant.

The argument on behalf of the respondent is that he has not received any notice, mentioned
above in case facts. Due to this he could not take the decision at that point of time. Also, the
respondent has paid Rs. 202/- as the confirmation amount for the purchase of the plot of land.
Either this should be refunded or the development should be finished.

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Judgement:
On hearing on all the facts, appeals and argument about the case, the Calcutta High Court’s
Honorable Mr. Justice P.N Mukherjee and the Honorable Mr. Justice P.K Sarkar gave their
judgement and the judgement of the court was delivered by Mudholkar. J.
So, in the above views and on the groundof the law, the court decided that Mr. Sardar
Gurbachan Singh would get the refund amount given at the time of the contract and rejected
the appeal by the appellant company MugneeramBangur& Co. The judgment was based on
the principles laid down by the Supreme court.

Conclusion:
After the complete analysis and summarized interpretation of the case we can thoroughly find
that the judgement made was according to the principles laid down by the Supreme court
regarding the discharge by performance of contract.
In the above view, the courts were right in upholding respondent’s claim. appeal would fail
and the case is won by the Mr. Sardar Gurbachan Singh getting the refund of Rs. 202/- which
was deposited at the time of the confirmation of the contract signed.

Source referred:https://indiankanoon.org/doc/1483916/

-Priyank Agarwal (191240)

M/s Fortune Infrastructure V. Trevor D’Lima&Ors. (March

12, 2018)

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Parties involved:

1. NCDRC (National Consumer Dispute Redressal Commission)

2. M/s Fortune Infrastructure
3. Trevor D’Lima&Ors.

Facts of the case:

Trevor D’Lima&Ors. have gone to NCDRC against the M/s Fortune Infrastructure because
they were not delivering the possession of the flats to the (3 years was deemed as reasonable
time for the completion of contract) and alleged deficiency in service and unfair trade
practices on the company under the consumer protection act, 1986. After which the NCDRC
ordered the company to refund the amount of Rs.1,87,000 and pay Rs. 3,65,46000 to the
people. Against this decision of NCDRC the building company went to supreme court.

Main arguments:

The company claimed that the project of flats was transferred to a third party and therefore
they should be discharged from any liability for not giving the people flats and also they were
not happy with the amount of compensation that they were ordered to pay by NCDRC as the
real estate market was really slow. So, the main issue boils down to weather there was a
deficiency of service on the part of building company or they were discharged of the
liabilities arising from the contract and if the compensation levied by NCDRC on the
company was reasonable or not.

On the other hand, the people felt that they were cheated by the company and they deserved
the compensation under the deficiency of service clause as the transfer of the responsibility
was not mentioned at the time of getting into the contract and neither was the same
communicated to them prior to taking the decision.

Judgement:

The court in its judgment referred many cases like Johnson and Anr. V. Agnew to note that if
the seller wants to limit their liability for breach of contract, they will have to show that they

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have did their part of obligations in a prudent manner and the onus is on the seller to show
best attempts in discharging of the obligations. In this case the top court found that the
company did not give any valid reason on why they transferred their responsibility to the
third party and thus obligation was still there on the building company.

The court also made an important remark that a person can not be made to wait indefinitely
for the possession of the flats and they had the right to seek refund and compensation both.
Also, in this case the court was of the view that as there was no redevelopment of the
property took place there was deficiency of service on the part of company.

For the matter of amount of compensation, the supreme court again refer to a landmark
judgment of Ghaziabad Development Authority v. Balbir Singh , after which the court said
their was no fixed criteria to fix damages and whenever the builder has not performed the
contract without any valid justification the people were entitled to compensation as they were
deprived of the benefits which they would have gotten because of price escalation in property
prices if they would have gotten the flats on time.

In this case the court found the compensation was little high and surpassed the actual loss,
that’s why the court modified the amount and reduced it to Rs.2,50,000.

Conclusion:

Damages become Due on the Date of Breach of Contract and not from the date of judgment.
The suffered should be compensated to the position at which he would have been if the
contact was not breached and performed on time but the damages awarded to the suffered
should not be excessive but logically calculated depending on the facts and circumstances of
individual cases that’s why courts and tribunals needs to find the right balance while ensuring
the right amount for compensation.

-Prajjawal Tyagi (191238)

Chandra Shekhar Singh & Others vs State Of U.P. & Others

(2 August, 2017)

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Introduction:
The present case is a landmark case on discharge of a contract by breach of contract which
was decided on 2August, 2017 at High Court of judicature at Allahabad. The judge for the
same was Honorable Mrs. Vijay Lakshmi, J.

Parties involved:

1. The applicant – Chandra Shekhar Singh & Others

2. The opposite party – State of U.P. & Others

Facts of the case:

The case basically is about domestic violence and demand for dowry. Smt. Sudha Devi, the
deceased married the accused in the year 1999. She was an educated person and worked as an
assistant teacher at a primary school and her husband was unemployed. Continues cruelty
compelled her to shift to her parent’s home but mental harassment did not stopped their and
she committed suicide by hanging herself. Just before her death she wrote a letter to “Basic
Shiksha Adhikari” to not to give employment to her husband or any of his relatives.

Main arguments:

There were 3 main allegations put by the husband of the deceased and his relatives. First, the
applicantshave withdrawn a sum of ₹97000from the joint account of husband and his
deceased wife. Its counter argument was that since the husband was unemployed he could not
have contributed to that sum. Moreover since the father of the deceased is her legal heir he
has the right to withdraw the amount and hence no offence is done. Second, the ornaments
given to the deceased wife at the time of marriage were not returned to the opposite party. Its
counter argument was that these ornaments are a “Streedhan” and the wife had full right to
keep them with her and hence the O.P. has not entrusted them on the applicants. Third, there
was a “KisanVikas Patra” of amount ₹50000 which was purchased as a joint account of
husband and the deceased wife. This was not returned to the opposite party by the applicants.
This allegation has no substantial base as the applicants cannot take advantage of the “Kisan
Vikas Patra” which is issued on the joint name of husband and his deceased wife.

Judgment:

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As per the Apex court and various other high courts, in order to have an offence recorded
under section 506 of I.P.C. there should be an intention to cause harm established. Only
expression of words without any intention will not suffice, the threat should be a real one.
The learned magistrate in this case has not recorded a prima facie case regarding intention to
cause threat to the complainants. Judgments like ‘Mahadev Prasad Kaushik vs State of UP’
have the proceedings quashed by the Apex court. The statements made by the complainants
showed there are vague allegations and nothing substantial to show that they were threatened.
Under these circumstances no offence under section 506 of I.P.C. is against the applicants.
The entire proceedings of the criminal case under sections 506 and 406 I.P.C. were quashed.

Conclusion:

The section 406 I.P.C. says punishment against the breach of contract, the punishment for the
same is imprisonment and fine. The section 506 I.P.C. says punishment for criminal
intimidation. The punishment for the same is imprisonment which may extend to 2 years and
fine or both. The intentions of the alleged should be to cause serious harm to the
complainants should be there and mere words will not suffice anything. The threats should be
real one and it should cause a fear that the person is going to kill the complainant. In this case
these were not present and hence the proceedings were quashed.

-Prakhar Pareek (191239)

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 Krell vs Henry (1903)
Introduction:
This case is known as the coronation case as it happened during the coronation of King
Edward VII and Queen Alexandra in 1902. It is based on the principal of frustration of
purpose in contract law. In this case the plaintiff sued the defendant for the non-payment of
the flat rented by the defendant to watch the coronation of the King.

Parties involved:

1. Defendent – CS Henry
2. Plaintiff – Paul Krell

Facts of the case:

On June 20, 1902 Henry and Krell came into a contract to rent a flat on Pall Mall for 75
pounds but the contract did not contain any express reference regarding the procession or to
any other purpose for which the flat was taken. Henry gave Krell an amount of 25 pounds as
deposit for the flat but after it was found that the procession is not going to take place because
of the King’s illness, Henry refused to pay the remaining 50 pounds to Krell. Due to this
reason Krell brought a suit against Henry to recover the remaining 50 pounds and in turn
Henry countersued to recover his deposit of 25 pounds.

Main arguments:

The right that the plaintiff had on that day was the right of looking out of the window of the
roomwith the chance of seeing the procession from that window. The only sale to the
defendant was of such right as the plaintiff hadand that was all that the plaintiff was parting
with by the contract. There wasthe risk that the processionmight not take place due to some
reason but that risk passed to the defendant by the contract. On entering into the contract with
the defendant the plaintiff put it out of his power to let the room to anyone else. He passed the
right and the risk at the same time. No implied condition can be imported into the contract
that the object of it shall be attained. There can be no implied condition that the defendant
shall be placed in the actual position of seeing the procession. In the case Krell argues that the
thing or the existence of which is necessary for the fulfilment of the contract is limited to the
subject matter of the contract which is expressly mentioned in the contract. From the other
side the argument comes that it is not compulsory to expressly specify the thing in the

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contract and it is sufficient if that condition or thing appears as an extrinsic evidence and is
assumed by the parties to be the foundation of the contract.

Judgment:

In the final judgement the defendant was excused from performance because his purpose for
entering into the contract was frustrated. The purpose of Henry for entering into the contract
was to view the procession which was the foundation of the contract. Also the reason for
taking the flat was to view the procession comfortably which was ultimately the purpose of
the contract. Performance of the contract was not made impossible as the defendant could
remain in the flat even though the coronation procession did not take place. However
thedefendant would not receive any benefit from staying in the flattherefore he must be
excused from performing.Parol evidence is admissible to show that the subject of the
contractwhich was flats to view the coronation and was known by both of the partiesin order
to determine whether the object of the contract was frustrated by the non-occurence of the
coronation. Thereforethe court held that defendant was excused from performing under the
contract and plaintiff’s claim is dismissed.

Conclusion:

The doctrine of frustration of purpose originated in cases called coronation cases such as this
case. The doctrine of frustration of purpose states that when a party’s purpose is frustrated by
intervening events the duties of the parties will be discharged. A party’s purpose is frustrated
when events occur which destroy this purpose even though performance of the contract is not
impossible.

-Prachi Garg (191237)

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 Sumpter Vs Hedges
(18 March, 1898)
Parties involved:
1. Sumpter.
2. Hedges.

Facts of the case:

Sumpter v Hedges QB 673 is an English agreement law case, concerning generous execution
of an agreement and compensation for shameful enhancement. Mr. Sumpter was a builder.
He had an agreement to construct two houses and stables for Mr. Hedges for £560. He
accomplished work esteemed at £333 and said he needed to stop since he had no more cash.
Considerable instalments on the account have in actuality been made to the builder. Hedges
completed the structure, utilizing materials that Sumpter had abandoned. Sumpter sued for
the outstanding cash. Bruce J found that Mr Sumpter had abandoned the contract, and said he
could obtain money for the value of the materials but nothing for the work.

Main arguments:

The Court of Appeal found that Mr. Sumpter had deserted the structure work and
underscored that it left Mr. Hedges with no decision of whether to embrace the work. It held
that Mr. Hedges needed to pay for the structural materials that he utilized, yet didn't have to
repay Mr. Sumpter for the half-constructed structures.

Judgments:

AL Smith LJ gave the following judgments over the case:In this case, the plaintiff, a builder,
went into an agreement to build two houses and stables on the litigant's property for a lump
sum. At the point when the structures were still in an incomplete express, the offended party
educated the respondent that he had no cash and was not going on with the work any longer.
The scholarly judge has found as a reality that he surrendered the agreement.  Under such
circumstances, what is a building owner to do? He cannot keep the buildings on his land in an

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unfinished state forever. The law is that where there is an agreement to accomplish work for a
lump sum amount until the work is finished its cost can't be recouped. In this way, the
plaintiff couldn't recoup the first agreement. It is recommended anyway that the offended
party was qualified for recouping for the work he did on a quantum meruit. However, there
must be proof of a new agreement to pay for the work previously done.

Conclusion:

The plaintiff had contracted to raise certain structures for a single amount. At the point when
the work was just incompletely done, the plaintiff said that he was unable to go on with it,
and the judge has discovered that he deserted the agreement. The position, along these lines,
was that the litigant discovered his territory with incomplete structures upon it, and he
immediately finished the work. That is no proof from which the deduction can be drawn that
he went into a crisp agreement to pay for the work done by the plaintiff.

The case is truly concluded by the finding of the educated judge such that the plaintiff had
deserted the agreement. In the event that the offended party had simply broken his agreement
somehow or another so as not to give the respondent the option to regard him as having
surrendered the agreement, and the litigant had then continued to complete the work himself,
the plaintiff may or maybe have been qualified for use on a quantum meruit on the ground
that the respondent had taken the advantage of the work done. Yet, that isn't the present case.
There are cases in which, however, the plaintiff has deserted the presentation of an
agreement, it is feasible for him to raise the deduction of another agreement to pay for the
work done on a quantum meruit from the respondent's having taken the advantage of that
work, at the same time, so that might be done, the conditions must be, for example, to give an
alternative to the litigant to take or not to take the advantage of the work done. It is just where
the conditions are, for example, to give that choice that there is any proof on which to ground
the derivation of another agreement.

-Raj Mahor (191242)

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 Shiam Sunder Lal vs Durga And Anr. (1965)

Introduction:

This case is known as two appeals raise common contentions and they are disposed of by a
single order. They are against the order of the District Judge dated, the 21st April, 1962
confirming the judgment and decree of the trial Court dated, the 3rd May 1960, decreeing the
plaintiffs' suit for specific performance of the contract dated the 25th March 1955 and
directing the defendant to execute the deed of sale in favour of the plaintiff and to get it
registered within one month from the date of the decrees after taking from the plaintiffs the
balance of the purchase money and in default the deeds of sale would be executed by the
Court on behalf of the defendant after the plaintiffs have deposited the balance of the
purchase money within the time to be specified.

Parties involved:

1. Defendent – Durga And Anr.

2. Plaintiff – Shiam Sunder Lal

Facts of the case:

The plaint allegations were that the defendant was the owner and the Zamindar of the
plots in dispute lying within the Municipal Limits of the town of Meerut. That the chief
tenant was one Moti of all these plots who had sublet them to tenants, and on account of
subletting the defendant had filed a suit against Moti as well as the sub-tenants under
Section 171 of the U. P. Tenancy Act (Act XVII of 1939). That during the pendency of
the said suit the defendant had entered into a contract for sale to the effect that he would
execute the sale deed with respect to the plots in suit at a price to be worked out at the
rate of Rs. 650/- per Kacha Bigha within a period of one month after the decree for
ejectment of the tenants. That a sum of Rs. 1000/- was advanced as earnest money on
condition that the said amount shall be returned to the plaintiff together with interest at
the rate of 6% per annum in case the defendants were not able to secure the ejectment of
the tenants and it was further agreed that if the defendant after the ejectment of the
tenants was unwilling to execute the sale deed it would be open to the plaintiffs to obtain
the execution of the sale deed through Court. It was further alleged that the defendant's
suit for ejectment of the tenants was dismissed by the trial Court but on appeal to the
Commissioner a decree for ejectment of the tenants was granted on the 14th September
1955. 

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Main arguments:

The defendant's case was that the agreement was conditional upon a decree of ejectment
being obtained from the revenue Court and that there was no agreement between the parties
that the defendant would be obliged to execute the sale deed if he was able to secure the
decree for ejectment from an appellate Court. That he had to spend a sum of Rs. 2500/-in the
litigation to eject the tenants and therefore, he was not bound to execute the deed of sale.
Three issues were struck-

"(1) Whether the defendant had agreed to execute the sale deed only if the suit for ejectment
was decreed by the particular trial Court and not by the appellate Court ?

(2) Whether the defendant had made a breach of contract as alleged ?

(3) To what relief if any is the plaintiff entitled ?"

Judgment:

In the final judgement the defendant appellant his rights in the plots in suit have vested in the
Stale Government since the 16th July 1964 and he cannot, therefore, now be asked to convey
property which does not belong to him. No decree accordingly, for specific performance can
possibly now be made. Neither he can be directed to execute the sale deed and upon his
failure to do so nor would the Court be in a position to have the document executed under the
provisions of Order 21 Rule 34 of the C. P. C. Further more, under Section 56 of the Contract
Act the contract had now become impossible of performance for reasons over which the
promisor had no control viz. the passing of legislation by the Legislature and therefore the
appeal should be allowed and the decree for specific performance be set aside.

Conclusion:

The doctrine of frustrationthere is no alternative but to allow the appeals of the defendant-
appellants and to set aside the judgment and decree of both the Courts below and to dismiss
the suits.The appeal is accordingly allowed, but in the circumstances of the case there will be
no orders as to costs.

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-Priyash Karamchandani (191241)

REFERENCES
Prachi Garg (191237)

 http://www.kentlaw.edu/faculty/rwarner/classes/contracts/cases/krell/krell.htm
 https://www.lawteacher.net/cases/krell-v-henry.php
 https://en.wikipedia.org/wiki/Krell_v_Henry

Prajjawal Tyagi (191238)

 https://www.vakilno1.com/legal-news/sc-damages-become-due-on-the-date-of-
breach-of-contract.html

Prakhar Pareek (191239)

 https://indiankanoon.org/doc/187505746/

Priyank Agarwal (191240)

 https://indiankanoon.org/doc/1483916/
 http://www.the-laws.com/Encyclopedia/Browse/Case?CaseId=004691253000
 https://www.legalauthority.in/judgement/mugneeram-bangur-co-vs-sardar-gurbachan-
singh-36536

Raj Mahor (191242)

 https://en.wikipedia.org/wiki/Sumpter_v_Hedges

 https://www.lawteacher.net/cases/sumpter-v-hedges.php

Priyash Karamchandani (191241)

 https://indiankanoon.org/doc/1409674/

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 UNDERTAKING

To Whom It May Concern:

We Prachi Garg, Prajjawal Tyagi, Prakhar Pareek, Priyank Agarwal, Priyash Karamchandani
and Raj Mahor hereby declare that this assignment is our original work and is not copied
from anyone/anywhere. If found similar to other sources, we shall take complete
responsibility of the action, taken thereof by, Prof.Tejpal Sheth.

Group No. :
Section : B
Batch : MBA – FT (2019-2021)
Date : 6th March, 2020

Signature

Name Prachi Prajjawal Prakhar Priyank Priyash Raj

Garg Tyagi Pareek Agarwal Karamchandani Mahor
Roll No 191237 191238 191239 191240 191241 191242

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