A claimant cannot assert frustration of contract based on force majeure conditions if those conditions were previously contemplated and stipulated in the contract.

JUDGMENT

Sathish Ninan, J.

The suit for damages was decreed by the Trial Court. The defendants are in appeal.

2. The plaintiff is a company engaged in the business of manufacture and sale of newsprint. The first defendant is a company registered in Switzerland, engaged in the business of exporting coal. The second defendant is the Indian agent of the first defendant.

3. For the manufacturing process of the plaintiff, they require coal. On 12.04.2007, the plaintiff floated a tender for supply of coal. The first defendant was the successful tenderer. As per Ext.A1, purchase order dated 06.06.2007, was placed for the supply of 45,000 MT of coal. The defendant failed to supply. The plaintiff was constrained to purchase coal from alternate sources. The consequent loss suffered is sought to be realised.

4. The defendants contended that the contract was frustrated due to force majeure. The inability to perform was due to heavy floods and strike at the sites of the coal mines. It was also contended that the defendant was not put on notice with regard to the proposal to procure coal from alternate sources and that the defendant is not liable for damages.

5. The trial court negatived the plea of force majeure and frustration. Decree was granted for the damages suffered consequent to the alternate purchase made at a higher rate.

6. We have heard Sri.Madhu Radhakrishnan on behalf of the appellants and Sri.P.U.Shailajan on behalf of the respondent.

7. The points that arises for determination in this appeal are: -

(i) Is the defendant's plea of frustration of Ext.A1 contract sustainable ?

(ii) As the plaintiff established damages and if so what is the quantum ?

8. As per Ext.A1 purchase order dated 06.06.2007, the defendant was to supply 45,000 MT of coal. Clause-8 of Ext.A1 provided that the coal shall be shipped within 21-28 days from the date of issue of workable Letter of credit. That, after amendments to the letter of credit, it translated into a full workable letter of credit was acknowledged by the defendant as per Ext.B4 letter dated 30.07.2007. Till October 2007 the defendants failed to supply the coal. The supply was to be from Indonesia. According to the defendants, there occurred unprecedented rains and floods at the mines, disabling procurement of coal. Since the situation did not change over months, the defendants attempted to procure coal from another supplier situated at another part of Indonesia. However, due to strike in the mines at the alternate supplier's site, the defendant was unable to procure coal from there also. The contract between the parties provides for flood and strike as force majeure conditions. Thus there has been frustration of the contract. Hence the defendants are not liable for any damages, is the contention.

9. Clause 15 of Ext.A1 reads thus: -

“15.0 FORCE MAJEURE CLAUSE:—

Delivery date will be extended to the supplier without being subject to liquidated damages in the event of causes of force majeure within the contractual periods.

Only the following will be considered cause of force majeure:-

Acts of God (Earth quake, flood, storm etc.) acts of States, direct and indirect consequences of wars (declared and undeclared) hostilities, National emergencies, Civil commotion, and strikes (only those exceeding duration of 10 continuous days) or any other reasons beyond the control of the supplier and if accepted by the purchaser. The supplier shall immediately inform the purchaser by registered and detailed letter supported by documentary proof at the beginning and end of such impediments. It is understood that delivery date will be extended only for the duration of the above mentioned impediments.”

As could be seen therefrom, flood, and strikes exceeding ten continuous days, are agreed to be treated as force majeure conditions.

10. Initially what needs to be considered is whether the claim of flood and strike have been established by the defendants. Ext.B5 is the communication dated 31.07.2007 from the defendant intimating