Frustration of auction sale and invalid government contract entitled the purchaser to refund, restitution, and interest.

An auction purchaser was entitled to refund where authorities refused to permit removal of the coal, since the obstruction destroyed the commercial basis of the transaction and the contract was treated as frustrated. The transaction was also held void for non-compliance with the statutory form required for government contracts, creating an independent ground for restitution of the price paid. Because the money had been withheld despite demand and the purchaser had been kept out of its use, interest was also payable at 6 per cent from the date of suit until realization, together with costs.

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Issues: (i) Whether the auction sale contract had become frustrated and the purchaser was entitled to refund of the purchase price when the authorities refused to permit removal of the coal from the auction site; (ii) whether the contract was void for non-compliance with the statutory requirement governing government contracts; (iii) whether the purchaser was entitled to interest on the refunded amount.

Issue (i): Whether the auction sale contract had become frustrated and the purchaser was entitled to refund of the purchase price when the authorities refused to permit removal of the coal from the auction site.

Analysis: The purchaser bid on the reasonable basis that the coal could be transported to the destination for which it was purchased. The subsequent refusal to allow movement of the coal, coupled with the later conduct of the authorities proceeding on the footing that the sale would be cancelled and the price refunded, destroyed the commercial basis of the transaction. The refusal to provide transport facilities was treated as part of the obstruction to removal and not as an independent condition of sale communicated to the purchaser at the auction.

Conclusion: The contract stood frustrated and the purchaser was entitled to refund of the purchase money.

Issue (ii): Whether the contract was void for non-compliance with the statutory requirement governing government contracts.

Analysis: A government contract must comply with the statutory formality prescribed for such contracts. The transaction in question did not conform to that requirement, and the Court treated that defect as an independent ground invalidating the contract.

Conclusion: The contract was void and the purchaser was entitled to restitution of the amount paid.

Issue (iii): Whether the purchaser was entitled to interest on the refunded amount.

Analysis: Since the money had been withheld despite demand and the purchaser had been kept out of its use for a considerable period, there was no justification for refusing interest. The appropriate rate was taken from the date of suit until realization.

Conclusion: Interest was payable at 6 per cent from the date of suit until realization.

Final Conclusion: The appeal succeeded, the decree in favour of the purchaser was restored with interest and costs, and the denial of refund by the authorities was not sustained.

Ratio Decidendi: Where a government auction purchaser is prevented from taking delivery because the authorities refuse, without prior communication of such a condition, to permit removal of the goods, the contract may be treated as frustrated and, in any event, a government contract that fails to satisfy the statutory mode of execution is void, entitling the purchaser to restitution and appropriate interest.

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