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1977 Supreme(Del) 125
High Court Of Delhi
JAGATJIT DISTILLING AND ALLIED - Appellant
Versus
BHARAT NLDHL LIMITED` - Respondent
REGULAR FIRST APPEAL 167D of 1965
Decided On : 10/05/1977
B.R.Tuli, K.K.JAIN, K.L.Mehta, P.Dayal, S.P.Manga
A party cannot rely on self-induced frustration, that is, on frustration due to his own conduct or to the conduct of those for whom he is responsible.
Headnote:
PLEDGE - BAILMENT - FRUSTRATION - CONTRACT ACT, SECTION 56 - SALE OF GOODS ACT, SECTION 172 - A bank pledged goods with a company as security for a loan. The bank sold the goods without the knowledge or consent of the pledger. The pledger sued the bank for damages. The bank pleaded frustration of contract. The court held that the bank was liable to the pledger for the value of the goods. The court also held that the bank was not entitled to rely on the doctrine of frustration as the frustrating event was caused by the bank's own breach of contract.
Fact of the Case:
The plaintiff, a distilling company, pledged goods with the defendant bank as security for a loan. The bank sold the goods without the knowledge or consent of the plaintiff. The plaintiff sued the bank for damages.
Finding of the Court:
The court held that the bank was liable to the plaintiff for the value of the goods. The court also held that the bank was not entitled to rely on the doctrine of frustration as the frustrating event was caused by the bank's own breach of contract.
Issues: 1. Whether the bank was liable to the plaintiff for the value of the goods. 2. Whether the bank was entitled to rely on the doctrine of frustration.
Ratio Decidendi: 1. The bank was liable to the plaintiff for the value of the goods because the bank had breached the contract of pledge by selling the goods without the knowledge or consent of the plaintiff. 2. The bank was not entitled to rely on the doctrine of frustration because the frustrating event was caused by the bank's own breach of contract.
Final Decision: The court allowed the appeal and passed a decree for Rs. 2,59,166/12. 00 in favour of the plaintiff-appellant Jagatjit Distilling and Allied Industries Ltd. against the defendant-respondent Bharat Nidhi with interest at the rate of 6 per cent from the date of the suit till payment. The appellant shall be entitled to costs throughout.
( 1 ) JAGATJIT Distilling and Allied Industries Ltd. (hereinafter called the distillers ) is a joint stock company incorporated under the Indian Companies Act 1913. They have their registered office at Hamira in Kapurthala, Punjab. In 1945 the distillers placed an order for a complete Drum Screw Plant from two manufactures of England, namely. Moon Brothers Limited and Siemens-Sachuckert (Great Britain) Ltd. The Machine Tool Controller, Government of India required the distillers to furnish a guarantee. The distillers approached Bharat Bank Limited, Darya Ganj, Delhi (the bank ). On June 18, 1945, the bank agreed to furnish guarantee to the Machine Tool Controller for Rs. 2,08,800 plus ten per cent for the purpose of the plant which the distillers had odered.
( 2 ) THE distillers entered into an agreement with the bank. As a margin towards the guarantee of Rs. 2,08,800 the distillers gave a fixed deposit receipt of Rs. 57,429 which was in the fixed deposit account with the bank. By mutual agreement the Bank guarantee was extended to June 23, 1947. The guarantee amount was treated by the bank as a cash-credit account of the distillers in its books.
( 3 ) THE Drum and Screw Cap Plant arrived in Karachi in April and June 1947. The bank paid the following two amounts to Francis Klein of Calcutta through whom the goods were purchased from the foreign manufacturers:
1. Rs. 1,13,809/5. 00.
2. Rs. 1,01,024/6. 00.
TOTAL Rs. 2,14,833/11. 00.
( 4 ) IN return the plant was pledged by the distillers with the bank as security for the advance made in the cash credit account.
( 5 ) THE bank s head office was in Darya Ganj at Delhi. It had its branches in Karachi and Lahore. From England the goods arrived at Karachi port. The bank took delivery of the goods. A part of the plant was stored by the bank in its godown at Karachi. Another part was stored by the bank with a company of clearing and forwarding agents known as the Eastern Express Company Limited, Karachi (Express Company) under its lien.
( 6 ) IN March 1950 the bank sold and delivered the said plant-to one Akhtar Ali Khan of Pakistan Development Corporation, Karachi. The Express Company also delivered that part of the plant to Akhtar Ali which was stored with them. The bank represented that the sale was for a sum of Rs. 65,000. The distillers objected to the sale. They took the stand that the sale was "engineered and manipulated by the bank staff in Pakistan. for their gain" and that it was not a genuine offer. "the distillers said that it was a "fraudulent transaction and was not binding on us". In April and May 1950 letters were exchanged between the distillers and the bank : See P 14 dated May 8, 1950, P23 dated April 11, 1950 P24 dated May 5, 1950, P25 dated May II, 1950 and D7 dated, April 17, 1950. At a result of protest of the distillers the bank cancelled the sale to Akhtar Ali Khan and took back the plant from him. For the cancellation of sale the bank had to pay damages in the sum. of Rs. 30,000 to Akhtar Ali in May 1950. On cancellation of the sale Akhtar All returned the plant. There were in all 29 cases. This time all these were stored with the Express Company.
( 7 ) NOW the bank called upon the distillers to take delivery of the plant after adjusting the loan account. On June 16, 1950 the bank wrote to the distillers:
( 8 ) ON July 13, 1950 the bank wrote another letter to the distillers:-
"we requested you to adjust your account with Darya Ganj Branch, Delhi, and take back the delivery of the Drum Plant lying in Karachi by sending your authorised representative there. We have not heard from you anything in reply.
AS our Branch at Karachi is already closed, we can t continue to hold the Drum Plant for long. We request you to give the matter your immediate attention. "
( 9 ) ON August 8, 1951 the distillers cleared the loan account of the bank. They remitted the balance sum "in full and final settlement of the account" and wrote to the bank:
"kindly arr
