Agreements to Do Impossible Acts under Indian Law

Agreements to Do Impossible Acts: A Juridical Analysis under Section 56 of the Indian Contract Act, 1872

Introduction

The principle that the law does not compel a person to do that which is impossible (lex non cogit ad impossibilia) is a fundamental tenet of justice and is enshrined within the Indian contractual framework. Agreements to perform acts that are inherently impossible, or become so after the contract's formation, are addressed primarily by Section 56 of the Indian Contract Act, 1872. This provision governs the voidability of such agreements and encapsulates the doctrine of frustration of contract as recognized in India. This article undertakes a comprehensive analysis of the legal principles surrounding agreements to do impossible acts, drawing upon statutory provisions and key judicial pronouncements from Indian courts.

The Statutory Framework: Section 56 of the Indian Contract Act, 1872

Section 56 of the Indian Contract Act, 1872, is the central legislative provision addressing the impossibility of performance. It reads:

“56. Agreement to do impossible act.— An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful.— A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.

Compensation for loss through non-performance of act known to be impossible or unlawful.— Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.”

The Madras High Court in Ramasamy Athappan v. Secretariat Of The Court, International Chamber Of Commerce (2008) observed that Section 56 contemplates three situations: (i) an agreement to do an act which is impossible in itself; (ii) an agreement to do an act which becomes impossible after the making of the contract; and (iii) an agreement to do an act which becomes unlawful later, on account of some event which the promisor could not prevent.

The Andhra Pradesh High Court in Central Bank Of India Staff Co-Operative Building Society Ltd., Vijayawada v. Dulipalla Ramachandra Koteswara Rao (2003) explained that the first paragraph of Section 56, dealing with acts impossible in themselves, represents the same law as in England. However, the second paragraph, concerning supervening impossibility or unlawfulness, turns limited English law exceptions into a general rule. The Act lays down positive rules of law, rather than treating these as mere matters of construction based on party intention, a point also emphasized by Mukherjea J. in Satyabrata Ghose v. Mugneeram Bangur & Co. And Another (1954) (as cited in Govindbhai Gordhanbhai Patel And Others v. Gulam Abbas Mulla Allibhai And Others, 1976 and PRAKASH KUMAR THAKER v. THE JHARKHAND STATE COOPERATIVE LAC MARKETING AND PROCUREMENT FEDERATION LIMITED, 2023).

Judicial Interpretation of "Impossibility"

The Supreme Court of India has clarified that the term "impossible" in Section 56 is not to be construed in a narrow sense of physical or literal impossibility. In the seminal case of Satyabrata Ghose v. Mugneeram Bangur & Co. And Another (1954), the Court held that "impossible" ought to be interpreted as impracticable and useless from the point of view of the object and purpose that the parties had in view when they entered into the contract. This interpretation was reiterated in Delhi Development Authority v. Kenneth Builders And Developers Private Limited And Others (2016) and Govindbhai Gordhanbhai Patel And Others v. Gulam Abbas Mulla Allibhai And Others (1976).

This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated (Satyabrata Ghose v. Mugneeram Bangur & Co. And Another, 1954). However, it is crucial to distinguish this from mere onerousness or commercial hardship. The Supreme Court in Energy Watchdog v. Central Electricity Regulatory Commission And Ors. Etc. (2017), referencing Satyabrata Ghose and Alopi Parshad & Sons Ltd. v. Union Of India (1960), emphasized that a contract is not frustrated merely because its performance has become more expensive or onerous. As stated in Alopi Parshad & Sons Ltd. v. Union Of India (1960), a contract cannot be circumvented due to unforeseen events that do not fundamentally alter the contract’s basis. The Madras High Court in Starshine Logistics v. Tamil Nadu Civil Supplies Corpn. (2022), citing the English case Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH, affirmed that a mere rise in price or expense would not discharge a contract for impossibility.

The Doctrine of Frustration (Subsequent Impossibility)

The second paragraph of Section 56 effectively codifies the doctrine of frustration in Indian law. This doctrine applies when a contract, initially possible to perform, becomes impossible or unlawful due to a subsequent event beyond the promisor's control (Rose Valley Real Estate And Construction Ltd. v. United Commercial Bank And Anr., 2007).

Conditions for Applicability

For the doctrine of frustration to apply, certain conditions must be met:

Illustrative Cases

The application of this doctrine can be seen in various judicial decisions:

  • In Smt Sushila Devi And Another v. Hari Singh And Others (1971), an agreement to lease agricultural land became impossible to perform due to communal disturbances and the partition of India, which placed the land in Pakistan. The Supreme Court held the agreement to lease (an executory contract) was frustrated under Section 56.
  • Conversely, in Satyabrata Ghose v. Mugneeram Bangur & Co. And Another (1954), government requisition orders for military use during wartime were deemed temporary and did not fundamentally disrupt the contract's purpose, especially as no specific time for performance was fixed. Thus, the contract was not frustrated.
  • The State Consumer Disputes Redressal Commissions, in cases like INDANA PALACE v. ARUN BHANDARI (2022) and Ramesh Chand Agarwal S/o Shri Satynaryan Agarwal v. Jai Mahal Place (2022), have applied Section 56 to situations where wedding venue bookings were cancelled due to "unavoidable reasons" (e.g., the intended marriage itself being called off by one party), deeming the performance of the contract (holding the event) impossible and the contract void. These decisions highlight the application of the principle in consumer contexts, though the weight of such precedents differs from superior court judgments.

Initial Impossibility

The first paragraph of Section 56 states: "An agreement to do an act impossible in itself is void." This refers to agreements that are void ab initio because the act undertaken is inherently impossible from the outset. The Madras High Court in Andritz Oy. v. Enmas Engineering Pvt. Ltd. (2007) distinguished agreements void ab initio (covered by various sections including the first part of Section 56) from those which become void later (covered by provisions like Section 35 and the second part of Section 56). An example would be an agreement to discover treasure by magic, which is impossible by its very nature.

Contemplation of Intervening Circumstances and Contractual Stipulations

A crucial aspect limiting the application of Section 56 is whether the parties themselves contemplated the intervening circumstance. If the contract contains express provisions addressing the contingency, those terms will generally govern. In THE NAIHATI JUTE MILLS LTD. v. HYALIRAM JAGANNATH (1967 INSC 236) and Naihati Jute Mills Ltd. v. Khyaliram Jagannath (1968 AIR SC 522), the Supreme Court emphasized that where the contract itself stipulated the procedure and repercussions for delays or failure in obtaining an import license, the doctrine of frustration could not be invoked to escape liability. The Court noted that the parties had, by their agreement, provided for the situation.

As observed in PRAKASH KUMAR THAKER v. THE JHARKHAND STATE COOPERATIVE LAC MARKETING AND PROCUREMENT FEDERATION LIMITED (2023), citing Satyabrata Ghose, if parties contemplate the possibility of an intervening circumstance which might affect performance, but expressly stipulate that the contract would stand despite such circumstance, there can be no case of frustration because the basis of the contract is to demand performance despite that event.

Consequences of Impossibility

When an agreement is void under Section 56 due to initial impossibility, or becomes void due to subsequent impossibility or unlawfulness, several consequences follow:

  • Contract becomes Void: The primary consequence is that the contract itself becomes void from the moment the act becomes impossible or unlawful (Section 56, Indian Contract Act, 1872).
  • Restitution: Section 65 of the Indian Contract Act, 1872, mandates that 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. This principle of restitution is applicable to contracts voided under Section 56 (as noted in Ramesh Chand Agarwal S/o Shri Satynaryan Agarwal v. Jai Mahal Place, 2022, which refers to Section 65).
  • Compensation for Known Impossibility: The third paragraph of Section 56 provides a specific rule for compensation. If a person promises to do something which they knew, or with reasonable diligence might have known, to be impossible or unlawful, and the promisee was unaware of this fact, the promisor must compensate the promisee for any loss sustained due to non-performance.

Conclusion

Section 56 of the Indian Contract Act, 1872, provides a comprehensive legal framework for addressing agreements to do impossible acts, encompassing both initial and supervening impossibility. The judiciary, through landmark pronouncements like Satyabrata Ghose v. Mugneeram Bangur & Co. And Another (1954), has interpreted "impossibility" broadly to include practical and commercial frustration, where the very object and purpose of the contract are defeated. However, this doctrine is not a panacea for escaping contractual obligations merely because performance has become more onerous or expensive. The courts maintain a careful balance, upholding the sanctity of contracts while providing relief when supervening, unforeseen, and uncontrollable events fundamentally alter the contractual obligations, rendering them impossible to perform. The express provisions within a contract addressing potential contingencies remain paramount, underscoring the importance of clear contractual drafting in allocating risks. The principles enshrined in Section 56 continue to be pivotal in ensuring fairness and equity in contractual relations under Indian law.