IMPORTANT POINT
When contract could be implemented even in part, it cannot be said to have been frustrated.

JUDGMENT

V. GOPALA GOWDA, J.

Leave granted.

2. This Civil Appeal is directed against the judgment and order dated 14.6.2012 passed in Original Side Appeal No.9 of 2005 by the High Court of Himachal Pradesh at Shimla, whereby it has dismissed the appeal of the appellants herein by concurring with the judgment and decree dated 3.10.2005 passed in Civil Suit No. 31 of 1997 by the learned Single Judge in decreeing the suit for payment of money at [pic]39,20,000/- with 6% interest per annum from the date of institution of the suit till the date of payment of decretal amount to the respondents giving its reasons in the impugned judgment though it did not entirely agree with the reasonings provided by the learned single Judge. Correctness of the same with regard to the interest from the institution of the suit till the date of payment is questioned by the appellants, urging various facts and legal contentions.

3. For the sake of brevity and convenience in this judgment, the parties are referred to as per the rank assigned to them in the original suit proceedings.

4. The plaintiffs (the respondents herein) and the defendants (the appellants herein) executed an agreement to sell 164 bighas, 7 biswas of land in question on 2.8.1995. As pre-condition for sale, permission from the competent authority under Section 118 of the Himachal Pradesh Tenancy & Land Reforms Act (hereinafter referred to as “the Land Reforms Act”) was necessary. The onus to obtain the relevant permission was cast on the plaintiffs in the agreement to sell. The plaintiffs managed to obtain permission only for 145 bighas of land. As the stipulated time for obtaining permission for the entire area expired, the plaintiffs sought extension of time from the defendants. This extension was denied which eventually led to filing of the suit in question. In the suit, the plaintiffs pleaded frustration of contract and sought refund of the money already paid with interest. The learned single Judge decreed the suit, finding that there was frustration of contract.

5. Aggrieved by the same, the defendants filed an appeal before the Division Bench of the High Court. The Division Bench held that :-

(i) the contract in question was not “frustrated” as understood in Indian law in terms of Section 56 of the Contract Act, 1872; (ii) the plaintiffs were at fault for their failure to obtain the necessary permission for the entire area as the obligation to obtain the permission rested with them. The plaintiffs had committed breach of the agreement, however, the defendants had not committed any breach and (iii) permission having been obtained for at least 145 bighas of land, sale could have been completed with regard to this substantial portion of the suit property. Aggrieved by the same, the defendants have filed this appeal.

6. This Court vide order dated 3.12.2012 passed the following order in the matter:-

“ We have heard learned counsel for the petitioners and perused the record. In our view, the impugned judgment as also the judgment of the learned Single Judge does not suffer from any legal infirmity insofar as the decree for payment of the principal amount is concerned.

Issue notice only on the question of payment of interest by the petitioners on the amount which they had received from the respondent in furtherance of the main as well as the additional agreement, returnable on 06.02.2013. Dasti, in addition, is permitted.

Issue notice on the petitioners’ prayer for interim relief, returnable on 06.02.2013. Dasti, in addition, is permitted.

In the meanwhile, operation of the impugned judgment as also the judgment of the learned Single Judge shall remain stayed insofar as they relate to award of interest to the respondent.

The petitioners shall pay the principal amount to the respondent within a period of six weeks from today.

It shall be the petitioners' duty to serve the respondent before the next date of hearing failing which the interim order passed today shall stand automatically vacated.”

After