The doctrine of frustration applies to leases, including agricultural land leases, and the loss should fall on the lessor.

G.D.Khosla, J.

1. The following two questions have been referred to this Full Bench:

(1) Whether the doctrine of frustration applies to a contract of lease of agricultural land?

(2) If the doctrine of frustration applies to such leases, on whom should the loss fall, i.e., on the lessor or the lessee?

2. The circumstances, which have given rise to this reference are briefly as follows: In the year 1947 Gurdarshan Singh minor acting through his guardian and mother, Balwant Kaur, executed a lease-deed in respect of some agricultural property in favour of Bishan Singh. The lease-deed was executed on 8-1-1947 and was in respect of property which is now part of Pakistan. The lease-deed made mention of the fact that possession of the land had been handed over to the lessee, though in point of fact the possession was with the lessors tenants and the crops of the tenants were at that time standing on the land. The terms of the lease were that it was to commence with effect from kharif 1947 and was to last for a period of five years ending with rabi 1952. The finding of the Court is that possession was not delivered to the lessee, and in the middle of 1947 partition of the country took place and both lessor and lessee were compelled to leave West Punjab, and so the contract of lease could not be given effect to.

3. The lessee had paid a slim of Rs. 4,500/-and he made an application under Section 10 of the Displaced Persons (Debts Adjustment) Act for the recovery of this amount on the ground that the contract of lease had become void and incapable of performance and so the benefit which had accrued to the lessor should be surrendered by him. This matter came up before a Division Bench consisting of my Lords, Dulat and Mahajan, JJ. In the course of arguments reliance was placed on a Division Bench decision of this Court in Court of Wards Dada Siba Estate V/s. Raja Dharam Dev Chand, First Appeals Nos. 143 and 144 of 1952: (AIR 1961 Punj 143), Dulat and Mahajan, JJ. thought that the decision in that case was not correct and so referred the questions set out above for the opinion of the Full Bench.

4. The lessors case is that the doctrine of frustration does not apply to leases. This was the opinion expressed by the Division Bench in F. A. Nos. 143 and 144 of 1952 : (AIR 1961 Punj 143) to which a reference has just been made. Reliance was also placed on a Supreme Court decision and a number of English cases. On the other hand, it was argued on behalf of the lessee that the doctrine of frustration prevalent in England does not hold good in India and, in any case, the broad principle of frustration applies to leases and so under Section 65 of the Contract Act Bishan Singh is entitled to recover the amount and the loss should fall on the lessor.

5. The doctrine of frustration is set out in Sec-lion 56 of the Contract Act of which the relevant portion runs as follows:

"56. An agreement to do an act impossible in itself is void. A contract to do an act which, after the con tract is made, becomes impossible, or, by reason of some event which the promisor could not pre vent, unlawful, becomes void when the act becomes impossible or unlawful.

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Section 65 may also be set out here:

"65. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."

6. I may observe at the very outset that the case before us could have been decided on the ground that possession of the land was not made over to the lessee. However, as the matter is before us in the form of a reference and the question is likely to arise in other cases of a similar type, we deemed it advisable to hear arguments on the entire case and give our decision on the questions referred to us.

7. The decision of Court of Wards case F. A. Nos. 143 and 144 of 1952: (AIR 1961 Punj 143) was based on cert