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7.23. The learned Arbitrator failed to appreciate the law laid down by the Supreme Court in Continental Construction Company Limited v. State of Madhya Pradesh, 1998 (3) SCC 82 wherein the Supreme Court expressly while dealing with similar facts and circumstances held that the arbitrator is a Tribunal selected by the parties to decide the dispute according to law and so is bound to follow the settled law and that a contractor having contracted cannot go back to the agreement simply because it does not suit him to abide by it. The Court further held that the contract is not frustrated merely because the circumstance in which the contract was based was altered. The Supreme Court further held that the Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates on some vague plea of equity. It was further observed that the parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, such as abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution of the contract. However, no general liberty is reserved for the Courts to absolve a party from liability to perform his part of the contract merely because on account of uncontemplated turn of events, the performance of the contract may become onerous.

10.5. The essential ingredients for application of second part of Section 56 are as under:

(a)    A valid and subsisting contract.
(b)    There must be some part of the contract yet to be performed.
(c)    The contract, after it is entered, becomes impossible to be
       performed.

10.6. The doctrine of frustration applies to contracts. However, a lease is something more than a mere contract or agreement in so far as it results in the creation of an estate in favour of the lessee. It creates an interest in a property in favour of the lessee. It brings into existence the respective covenants of the lessor and the lessee; including the consideration, and it constitutes an agreement enforceable at law i.e. contracts which have to be performed, until lease comes to an end. There is nothing to be done after the lessee is put in possession and therefore, condition (b) would not be fulfilled. Section 56 of the Contract Act does not apply to cases in which there is a completed transfer. There is a clear distinction between a completed conveyance and an executory contract, and the events which discharge a contract do not invalidate a concluded transfer. The relevant judgments are as under:-

10.9.1. In Raja Dhruv Dev Chand v. Raja Harmohinder Singh (supra), the Supreme Court held as under:

"10. ...By S. 4 of the Transfer of Property Act the chapters and sections of the Transfer of Property Act which relate to contracts are to be taken as part of the Indian Contract Act, 1872. That section however does not enact and cannot be read as enacting that the provisions of the Contract Act are to be read into the Transfer of Property Act. There is a clear distinction between a completed conveyance and an executory contract, and events which discharge a contract do not invalidate a concluded transfer.

21......It is not a case where any essential term of contract was kept back or kept undisclosed. The Government had placed all their cards on the table. If the Licensees offered their bids with their eyes open in the above circumstances they cannot blame anyone else for the loss, if any, sustained by them, nor are they entitled to say that license fee should be reduced proportionate to the actual supplies made.

23. Maybe these are cases where the Licensees took a calculated risk. Maybe they were not wise in offering their bids. But in law there is no basis upon which they can be relieved of the obligations undertaken by them under the contract. It is well known that in such contracts -- which may be called executory contracts -- there is always an element of risk. Many an unexpected development may occur which may either cause loss to the contractor or result in large profit. Take the very case of arrack contractors. In one year, there may be abundance of supplies accompanied by good crops induced by favourable weather conditions; the contractor will make substantial profits during the year. In another year, the conditions may be unfavourable and supplies scarce. He may incur loss. Such contracts do not imply a warranty -- or a guarantee -- of profit to the contractor. It is a business for him -- profit and loss being normal incidents of a business. There is no room for invoking the doctrine of unjust enrichment in such a situation. The said doctrine has never been invoked in such business transactions. The remedy provided by Article 226, or for that matter, suits, cannot be resorted to wriggle out of the contractual obligations entered into by the Licensees.