Tanishka purchased two flats in Ansal VVIP Homes at Greater Noida, one at Block A and another at Block D. She also entered in contract with Sakshi to letout the flat at Block D. At the time of entering into contract, both Tanishka and Sakshi were unaware that Block D is completely destroyed due to earthquake. Afterwards knowing the facts Sakshi requested to transfer the contract in favour of flat at Block A. In the light of provisions of the Indian Contract Act, 1872, whether Tanishka is liable to handover the possession of flat at Block A in place of Block D?

Section 20 of the Indian Contract Act, 1872 provides, where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, there is a bilateral mistake. In such a case, the agreement is void. Bilateral mistakes may be as to the quality, existence, identity, title, price or quantity of the subject matter. In the instant case, Tanishka purchased two flats in Ansal VVIP Homes at Greater Noida in Block A and Block D. She also entered in contract with Sakshi to letout the flat at Block D. But at that time the Block D was completely damaged by earthquake unknown to both Tanishka and Sakshi. Sakshi demanded the possession of flat at Block A. Here, the matter discussed in above problem is concerned with bilateral mistake. As in case of bilateral mistake, contract is void, both Tanishka and Sakshi are not bound with this contract. Hence Sakshi cannot demand the possession of flat at Block A from Tanishka.