CASE:

Three contracts were entered into by the plaintiff (P) with the Railway (R) for supply of food-grains.
Deliveries were to be made at any station of ER [1] in Bihar. [2] These three identical contracts were to
be performed within a stipulated time period. P failed to supply within time. R, by notice extended the
time, but P still did not supply in time. On the refusal of acceptance by R, after an extended time, P sold
the goods at auction. P realized far less value (AP) for it and claimed for the difference of price. [3]Later
P modified his claim and asked for the difference price w.r.t market price (MP)

ISSUES:

· Whether the contracts between P and the Div.Superintendent, was valid?

· Whether these contracts can be regarded as mercantile contracts?

· Whether time was the essence of the contracts? If so, were they waived?

· Was there any breach of contract as alleged by P?

· Whether the contracts have been frustrated by reason of the order of the Sadar Sub-Divisional
Magistrate

· Can the acceptance by R constitute ratification so as to override the mandatory provisions of

Arguments:

Plaintiff 1:

1. Breach of Contract: ​The supply was essential and the contracts did not authorize R to refuse
delivery of the goods if affected after the expiration of the stipulated date. The refusal by R was
wrongful and in breach of the contracts.

2. Time was not important: ​We argue that plaintiff should get compensation for his loss as time
was not of the essence to the contract. Thus, Late delivery does not make the contract void. There was
no fixed date, only a period of one month was provided. Time was not of the essence of the contract,
When R extended time he gave Plaintiff only 2 days to make the delivery which was not ​“Reasonable​”
for P to make the delivery. So, Time is not of the essence in these contracts and even if it was, it was
waived when R extended time.

Points from site: No fixed date, only a period of one month was provided. Time was not of the essence
of the contract, and even if it was it had been waived.
The supply was essential and the contracts did not authorise R to refuse delivery of the goods if
effected after the expiration of the stipulated date. The refusal by R was wrongful and in breach of the
contracts.

Defense 1:

1. Contract Validity: ​We would like to raise the question “Whether the contracts between P and the Div.
Superintendent, were valid?” DS had no authority by the Gov.-Gen. to execute such contracts on his
behalf. Even if DS had been duly authorized, it was not enough to entitle P to recover damages on the
strength of these contracts. So we would claim the contract was void. Ab initio.

2. Recession of Contract: ​Furthermore, R was not in breach of contract. The contract was in recession
due to P’s failure to comply with the terms of the contract. So, R had legal right to refuse delivery of the
goods.

3. Counter Time:​ As for plaintiff’s argument that time not of the essence, By extending the time limit on
mutual consent [7], time was made of the essence of the contract. The contract being mercantile one
Time was anyway the essence. Where time is not originally of the essence or where it has been waived,
time may be made of the essence, where there is unreasonable delay, by a notice from the party who is
not in default.

Plaintiff 2:

1. Counter Validity: ​Even if DS was not authorized by GOV. Gen. He was an agent of the
government. He had implied authority as he was the executive officer who arranged food and grains for
the railway. Thus, it is clear that he had authority though not in writing but implied from his role and
work.

2. Supply hurdle:​ We would further like to draw attention to the fact that P would have
supplied, within a reasonable time, but for the impediments, deliberately put by the railway officials. R
having undertaken to supply wagons [5] delayed it. The word ‘dispatch’ and the payment to be made on
presentation of the railway receipt showed that the food grains had to be loaded into wagons. R had no
sufficient space in their godown.

[Probably Time kn invalid eita niye aro kisu bola jay]

From the site : P would have supplied, within a reasonable time, but for the impediments, deliberately
put by the railway officials. R having undertaken to supply the wagons[5] delayed it. The word
‘despatch’ and the payment to be made on presentation of the railway receipt showed that the food
grains had to be loaded into wagons. R had no sufficient space in their godown.

The control orders did not apply to contracts made before, and even if they did apply the contracts in
question are not hit by them.
Defense 2:

1. Counter Supply​: The very terms of the contracts repel this contention. The goods were stipulated to
be delivered at any station [14] and R could not possibly have kept wagons at every station in
anticipation of the arrival of the goods. Paucity of wagons [15] did not create any obligation on R to
supply wagons as provision for wagons by R was not a condition precedent to the performance of the
contracts. Furthermore, contract does not imply that the goods must be loaded into the wagons. It is a
question of contract or of usage of the railway concerned. The word dispatch does not necessarily imply
movement of the wagons. P could get railway receipt immediately after the delivery of the goods
irrespective of whether it was loaded into wagons or not. There was no obligation on R to supply
wagons.

2. Doctrine of Frustration:​ There was frustration of the contracts because of the order.[8] S.56 of ICA[9]
applicable. Imposition of control over the prices of food grains under the Defense of India in certain
states Rules: The rule made it illegal and thus impossible for the railway to perform the contracts, as the
contractual rate of price was higher than the control rates.

3.Authority:​ Subject to the provisions of this Act, with respect to the Federal Railway Authority, all
contracts made in the exercise of the executive authority of the Federation or of a province shall be
expressed to be made by the Governor General or by the Governor of the province, as the case may be,
and all such contracts and all assurance of property made in the exercise of that authority shall be
executed on behalf of the Governor General or Governor by such persons and in such manner as he may
direct or authorize.

Plaintiff 3:

. 1. Counter Frustration:​ At the time of performance of the contract the rates were not illegal
under Indian law. After the contract was completed the law was passed. According to the laws under the
doctrine of frustration “R is exempt from any future obligations” but he must pay for the dues that were
incurred before the law was passed. Contracts gave P very wide discretion to deliver the goods at any
station. P had option to deliver goods at stations other than those lying within the jurisdiction. If the law,
subsequently enacted, does not affect the contracts and the contracts could be legally performed
despite the change in law, S.56 of ICA is not attracted, and there is, strictly speaking no frustration of the
contracts. Unless the subsequent change in law rendered the entire contract illegal, the question of
frustration does not arise at all. In short, the control orders did not apply to contracts made before the
law was passed.

2. Counter Authority:​ Defence of Section 175(3)[6] was not available to R because this point was
not raised. Also this section did not govern contracts made on behalf of the railway administration and
in any case S175(3) rendered the contracts not void but voidable and were therefore capable of
ratification. R ratified the contracts by accepting the goods tendered by P and paid for them.(Basically
ordhek order niye etar ratification kore felse)