Where a contract is frustrated by the failure of a condition essential to its performance, the parties are entitled to restitution of the benefits they have received under the contract.

M. A. ANSARI, J. : -The appellants are a purchaser and representatives of two purchasers of cotton seeds from the respondent. In 1943 Kamisetti Mallayya, Talapula Subbarayudu and Sunku Chinna Lakshmayya were trading in Tadpatri. Gulfarosh Mohideen, the respondent, had shops in Adoni and Raichur. In March, 1943, each of the merchants purchased 1000 bags of Javari Cotton. Seeds at Raichur, Kamisetti Mallayya bought at the rate of Rs. 8/6/0 per bag. Talapula Sub-barayudu bought 500 bags at Rs. 8/4/0 per bag and further 500 bags at Rs. 8/6/0 per bag. Sunku Chinna Lakshmayya purchased his 1000 bags at Rs. 8/4/0 per bag.

In the first week of April 1943, the three persons again bought munguri cotton seeds from Gulfarosh Mohideen Sheik Sab in Padagiri. Mallayya bought 1050 bags, Subbarayudu 500 bags and Lakshmayya the same number of bags at the rate of Rs. 8/1/3 per bag. The goods were not fully paid on the dates they were purchased, but the entire prices were admittedly paid up in June, 1944. These purchases were made with a view to export the goods from the places where they were purchased, which were situated in the "then Nizams State to what was then the British territory.

At the time of these purchases, however, it was necessary to obtain permits from the Nizams Government to export cotton seeds. One of the disputes between the parties to these appeals is whether the seller had agreed to be solely responsible for obtaining the permits and the purchases were conditional on his doing so. The case of the buyers is that the responsibility to get the permits was of the seller and on his assurance of getting the permits the sales were entered into. On the other hand, the case of the vendor is that he gave no such promise and that because he belonged to the Nizams State, he tried his best to help the purchasers.

Admittedly all the bags of the cotton seeds could not be exported due either to the failure of getting the permits or to the railway wagons being not available. Because of the failures, each of the three purchasers took delivery of 100 bags i.e., 300 bags at Raichur and sold them there. Again, each purchaser in November, 1943 took further delivery of 193 bags at Raichur and sold them. At about the same time the entire stock of cotton seeds purchased in Yadagiri were sold away at that very place. Some bags, however, were sent out.

In November, 1943, the vendor managed to get a permit and arranged export of 500 bags to Terraguntla in Cuddapah District. But he sent the railway receipt to the Central Bank of India at Tadpatri to be realised on payment by the purchasers of the value of the goods. They did not honour the hundi, whereupon the vendor sent his own man to Yerraguntla to take delivery and he sold in November, 1943, these bags to some people of Proddatur.

Kamisetti Mallayya in his Suit No. O. S. 8/47 for the refund of the price of the cotton seeds had asked for Rs. 1000/- on account of the defendant having sold these bags at a profit of Rs. 2/- per bag. The first judgment of the trial Court in the case, however, found Mallayya alone not entitled to the damages, as the despatch was for the benefit of all the purchasers.

It further held that the three purchasers had not fully paid the price due from them on the date the railway receipt was sent to the Bank; the vendor was therefore, justified in demanding payment and he was further entitled to resell the bags on the refusal to pay. Consistently with these conclusions, the claim for damages was disallowed. After the case was remanded by the High Court for fresh trial, the claim was given up and the dispute needs no further adjudication.

2. But to continue with the narration of facts, in June, 1944 or thereabouts, the purchasers exported 300 bags of cotton seeds from Raichur to Trichur. Their case has all along been that these 100 bags to each purchaser were from out of their stock in Raichur, whereas the vendors case at one time was they formed part of a different transactio