Court caseAIR 1968 SC 522

The mills agreed to buy raw jute to be imported from East Pakistan, and undertook to supply the seller with an import licence within a fixed time. Government policy on import licences then changed: a mill could get a licence only if it had consumed a stated quantity of Indian jute. The mills had not, could not get a licence, and did not take the goods. When the seller claimed damages, the mills pleaded that the contract had been frustrated by the change in policy.

The Supreme Court (Shelat J) held that there was no frustration. The contract did not become impossible; the mills had undertaken to procure the licence and took the risk of the Government's policy, which was known to be liable to change. A party cannot plead frustration when the event relied on is one that he had, expressly or by implication, undertaken to guard against, nor where the difficulty is of his own making. Nor does the doctrine apply merely because performance has become onerous or less profitable; courts have no general power to absolve a party from performance on that ground. The mills were liable in damages.