Panakkatan Sankaran vs The District Board of Malabar and Another

Curgenven, J.—The two suits out of which these appeals arise were brought by the District Board of Malabar to recover the balance due

from toll-gate contractors in regard to the rentals of three toll-gates upon the road between Tellicherry and Mercara, Coorg. The claims have been

decreed. In A.S. No. 317 of 1928 (O.S. No. 27 of 1926) the appellant (2nd defendant) is the contractor''s surety, and two toll-gates leased to a

single contractor are involved, Eranjoli, two miles from Tellicherry, and Merumpuzha, 12 miles from Tellicherry. In A.S. No. 391 of 1928 the

appellant is the contractor himself, and the claim relates to Irutti toll-gate, about 26 miles from Tellicherry.

The right to collect tolls at the toll-gates is put up to auction annually. The suits relate to the sale for the period 1st April, 1924 to 31st March,

1925. The Eranjoli and Merumpuzha gates were knocked down to the 1st defendant in O.S. No. 27 for Rs. 7,020 and Rs. 7,000 respectively.

The Irutti gate was knocked down to the 1st defendant in O.S. No. 2 for Rs. 11,100. These sums were payable in certain kists. It so happened

that the monsoon of the year 1924 was of exceptional severity, leading to serious floods. The road on which these toll-gates lie crosses two rivers

by means of bridges--one, the Irutti bridge, a quarter of a mile west of the Irutti toll-gate, the other, the Kuttupuzha bridge, six miles to the east of

it. On the 12th July both these bridges were carried away by floods. Pending reconstruction, temporary bridges were erected at Irutti by 31st

October, but at Kuttupuzha not until the 10th December. At the latter place, however, a ferry capable of carrying carts was installed from 12th

October. Thus from 31st October both rivers became again passable, and the through cart traffic between Coorg and the Coast, from which the

toll-gates largely derive their receipts, was able to resume after an interval of about 3 1/2 months. By the time these breaches occurred, the

contractor of the Eranjoli and Merumpuzha gates had paid a sum of Re 7,010 out of a total due of Rs. 14,020, and the contractor of the Irutti gate

a sum of Rs. 4,490 out of a total of Rs. 11,100. They defaulted in the payment of the balances, although they continued throughout the rest of the

year to collect tolls, and applied to the Board for remission on the ground of loss of receipts owing to the collapse of the bridges. The Board

considered that no remission was needed in the case of the Eranjoli gate, but remitted sums of Rs. 2,915 and Rs. 4,625 respectively out of the

amounts due upon the Merumpuzha and Irutti gates. The present suits are for the sums remaining due.

The defence common to both suits is that the contracts came to an end because they were incapable of fulfilment. An unforeseen accident

precluded, for a substantial part of the year, the collection of tolls, and at some time during the 3 1/2 months during which the suspension of traffic

continued, it must be taken that the contract was avoided, u/s 56 of the Contract Act.

For illustrations of this principle reference has been made to a class of English cases of which a few examples may be mentioned here. A ship

was chartered from 1st March, 1917 for 10 months, and before the commencement of the period it was requisitioned by the Government and was

not released until February, 1919. It was held in Hirji Mulji v. Cheong Yue Steamship Company, Ltd. (1926) A.C. 497 that there had been in

1927 a frustration of the charterparty which forthwith brought to an end the whole contract. Another case of this kind is the Bank Line case, Bank

Line, Limited v. Arthur Capel & Co. (1919) A.C. 435. Then there are what are known as the Coronation cases, of which an example is afforded

by Krell v. Henry (1903) 2 K.B. 740. The defendant hired a flat upon the route for the two days upon which the Coronation processions were to

take place, agreeing to pay a sum of �75. The contract contained no express reference to the Coronation. Owing to the King''s illness the

ceremony was postponed, and the defendant refused to pay the balance of the rent agreed upon. It was held that there was an implied term in the

contract that the processions should take place, and that by the non-happening of these events the contract was frustrated. Another case

embodying the same principle is Metropolitan Water Board v. Dick, Kerr & Co (1918) A.C. 119.

Now the principle upon which these cases were decided is that the occurrence which rendered the contract incapable of execution was of a

kind not within the contemplation of the parties when the contract was signed, and for which they would have made provision if its possibility could

have been foreseen. Lord Sumner in Bank Line, Limited v. Arthur Capel & Co. (1919) A.C. 435 cites Lord Watson in Dahl v. Nelson, Donkin &

Co. (1880-81) 6 A.C. 38 as authoritatively explaining the legal theory as follows:

There may be many possibilities within the contemplation of the contract of charterparty which were not actually present to the minds of the parties

at the time of making it, and, when one or other of these possibilities becomes a fact, the meaning of the contract must be taken to be, not what the

parties did intend (for they had neither thought nor intention regarding it), but that which the parties, as fair and reasonable men, would presumably

have agreed upon if, having such possibility in view, they had made express provision as to their several rights and liabilities in the event of its

occurrence.

The same learned Judge in Hirji Mulji v. Cheong Yue Steamship Company, Ltd. (1926) A.C. 497 says:

The doctrine of frustration rests upon a term or a condition implied in the contract. In contemplation of law the parties, if they had anticipated and

had taken into consideration the events which ultimately frustrated the object of their adventure, would have made provision for it, and, again in

contemplation of law, the legal operation of those events upon the contract is the very thing for which that term would have provided. Hence, in

implying that term to give a foundation for a legal conclusion, the law is only doing what the parties really (though sub-consciously) meant to do

themselves.

The question thus is whether the destruction of the bridges by floods was an event which the parties could not have foreseen or made provision

for. Clause 6 of the sale notice provided that, ""The sales will be subject to all risks. Claims for compensation will not be entertained."" Was this a

risk which cannot reasonably be brought within the operation of this clause? It cannot be said, in general terms, that the risk of an interruption to

the traffic by weather conditions--by the formation of breaches, landslips, etc., could not have been foreseen and provided for. Such accidents are

common enough on ghaut roads during the monsoon, and are perhaps the most likely cause of a suspension of traffic, certainly at that time of the

year. There is a clause No. 15 in the conditions of lease which even makes the toll-contractor responsible for reporting when any bridge within half

a mile of his toll-gate is in danger, and for taking emergency steps to protect it when it is threatened at times of flood. The duty is doubtless laid

upon him in part at least because it is to his interest that the bridge should not be damaged. A temporary suspension of traffic owing to the

breakdown of a bridge must therefore, we think, clearly fall among the risks contemplated by the parties. But it is said that the floods of 1924 and

the damage they caused were unprecedented, and could not have been within the contemplation of the parties; in other words, that interruption of

the through route by weather conditions for more than a certain time was of the nature of an unforeseen contingency. We think that if it is to be held

that the destruction of a bridge was in the nature of an ordinary risk, there was nothing exceptional or unreasonable in the length of the actual

period--about 3 1/2 months--during which the through traffic was interrupted. We are unable to read into the contract any implied condition,

suitable to the circumstances of this case, which we are satisfied the parties would have framed had the possible need for it occurred to them.

But the defence set up must fail, we think, on another ground. The contract did not in fact cease to be executable, and the contractors continued

to'' discharge their functions up to the end of the year. Even during the period when the bridges were down, the evidence shows that a certain

amount of traffic was paying toll at Merumpuzha, and a good deal more at Eranjoli, which commands the Wynaad route from Coorg. Even at

Irutti, which lies between the two bridges, the learned District Judge''s remark that there was local cart traffic between Irutti and Kuttupuzha has

not been contradicted. There is ground to suppose that during the heavy monsoon period, when the breaches occurred, cart traffic is light, and that

the heavy traffic, yielding the bulk of the toll income, occurs between the months of December and May. In all probability, therefore, the

contractors never had any intention of pleading that their contracts were frustrated until after they had availed themselves of the right to collect tolls

for the remainder of the year, and upon this footing had obtained remissions from the District Board. Those remissions were made ex gratia, and

we think that there is no defence to the legal claim to the balance of the contract amounts.

The appellant in O.S. No. 317 puts forward as surety a further defence, based upon Clause 6 of the conditions of lease. That clause provides

that if payment of kist falls into arrear ""the toll will be liable to be re-sold . . . or conducted under amani"". It is said that this course would have

diminished the contractor''s liability, and that therefore the District Board ought to have resorted to it. But in the first place, since the contractor

would have been liable for any deficit on re-sale, there is no proof that his liability would have been lessened. And, secondly, the alternative of re-

sale or contract upon amani is one entirely within the option of the Board, and neither contractor nor surety can ask that, as a condition of the

discharge of his obligations, such a course should be adopted. The case does not fall within Section 139 of the Contract Act, nor are the cases

cited, Phillips v. Poxall (1845) 7 Q.B. 666 and Wulff v. Jay (1845) 7 Q.B. 756, pertinent to it.

We dismiss the appeals with costs.