Alopi Prasad and Sons

v. Union of India
AIR 1960 SC 588
(SECTION 56, FRUSTRATION, QUANTUM MERIUT, SECTION 62)
Parties Involved

PETITIONER:
M/s. ALOPI PARSHAD & SONS, LTD.

RESPONDENT:
THE UNION OF INDIA

BENCH:

• SHAH, J.C.
• DAS, S.K.
• WANCHOO, K.N.
FACTS:

Plaintiffs were appointed by UoI to provide for the army personnel ghee in return for consideration as stipulated under
contract. World War II then started and after three years, government considering increased demand for ghee varied the
original agreement by mutual consent under which the original price consideration was substituted by decreased price.
After one year, plaintiffs demanded sale consideration of goods be enhanced in view of increasingly onerous discharge of
their obligations followed by assurance by government that it “might be entertained”. Plaintiffs continued the supply, but
the ‘assurance’ was never acted on.
ISSUES:

1) Whether original contract needed to be enforced w.r.t. price as stipulated therein or in

view of mutual variation by parties, consideration as paid by government as according to
substituted price was valid and subsisting?
2) Whether the contract had become impossible to perform considering increasingly onerous
discharge of obligations by the plaintiffs never contemplated by them while entering it?
3) Whether the obligation of government to pay the sale price must be determined by
contract or considering non-contemplated circumstantial change leading to onerous
discharge of sale by plaintiffs, claim for quantum merit be entertained?
RATIO DECIDENDI:

A party is not absolved from liability to perform his/her part of the contract merely because
performing the contract has become onerous, i.e., difficult, and needs a lot of effort to
perform the contract.
Judgement:

1)In the matter of M/s Alopi Prashad & Sons Ltd vs UOI, 1960 the court held that when an agreement is varied
mutually (S.62) then commitments under the original/genuine contract thereof becomes void for both parties.
2) In Alopi Prasad vs UOI case, the effects of mutual variation in the original contract regarding the price of goods
discharged were that it now enclosed the government to pay the agreed decreased price and not the price which
was laid down earlier in the original contract.
3) Though plaintiffs incurred losses, they received the consideration as mentioned in the varied agreement; hence,
no action for additional payment is held valid.
4) Besides that, the argument of the plaintiffs regarding the assurances by the government, latter was estoppel to
go back on it, could not hold valid for vague assurances do not alter the contract and neither can be invoked to
have any action regarding promissory estoppel for it was never intended to be lawfully binding.
5) S.56 (Impossibility to perform): If a consideration of the terms of the contract, regarding the situations in which
it was clarified that parties never agreed to be bound in a distinct scenario now unexpectedly aroused, the contract
operates not because it is just and reasonable to fulfill the terms but because on its genuine construction; it does
not hold applicable in that situation.
6) There is nothing in the Indian Law which justifies that variation in circumstances ‘wholly outside the contemplation of the
parties’ from the time of drafting the contract will justify a Court to acquit a party from express terms thereof.
7) A contract is not irritating just because of varying situations. Hence, instead of ‘intention of the parties, as rational men’,
focusing on ‘correct interpretation of the contract.’
Sections Involved in this Case

• Section 56 of the Indian Contract Act, 1872

• Section 62 of the Indian Contract Act, 1872

Sections Reference

Brief:

Section56

states that an agreement to do an act impossible in itself is void, and a contract to do an

act afterwards becoming impossible or unlawful becomes void when the act becomes
impossible or unlawful. Compensation for loss through non-performance of an act known
to be impossible or unlawful must be made by the promisor to the promisee. The doctrine
of frustration under section 56 paves the way for a just consequence if the performance
of obligations under a contract is hindered by unexpected supervening events, leading to
contractual uncertainties.
Section 62

When an agreement is altered mutually then obligations as under original contract

w.r.t. thereof are no longer required to be performed by the parties.
 Thank you

Ritesh Mukherjee
LLB(1st year)
Lloyd Law College