Bhagwandas Goverdhandas Kedia vs. M/s Girdharilal Parshottamdas and Co. Case Summary (1966 SCC)

Share on whatsapp
Share on email
Share on facebook
Share on twitter
Bhagwandas-Goverdhandas-Kedia-vs-Ms-Girdharilal-Parshottamdas-and-Co-acceptance

Bhagwandas Goverdhandas Kedia vs. M/s Girdharilal Parshottamdas and Co case widened the scope of communication of offer and acceptance. This case decided the jurisdiction for bringing a suit when the agreement was made over a telephone. This case resolved the issue of the jurisdiction arises at a place of the offeror, i.e., a place where the acceptance is heard by the offeror with instantaneous communication, contrary to communication by post.

FACTS

  • On 22nd July 1959, Bhagwandas Goverdhandas Kedia Oil Mills (defendant-appellant) agreed to supply cottonseed cakes to M/s. Girdharilal Parshottamdas and Co. (plaintiff-respondent) of Ahmedabad over a telephone.
  • The respondents brought an action against the appellant in the City Civil Court of Ahmedabad as the appellant failed to supply seed cakes as per the agreement.
  • The appellant contended that the respondents’ offer to purchase was accepted at Khamgaon and the delivery and payment of the goods were also agreed to be made in Khamgaon and the City Civil Court of Ahmedabad had no jurisdiction to try the suit.
  • The City Civil Court of Ahmedabad held that it had jurisdiction as the acceptance of the offer was initiated in Ahmedabad and was intimidated to the offeree at Ahmedabad and that the contract was formed in Ahmedabad.
  • The appellants filed an application in the High Court of Gujarat, which was rejected. Then, the appellants with special leave appealed to Supreme Court.

ISSUES

  1. Whether the Ahmedabad Civil Court had jurisdiction over the matter?
  2. Whether the contract was formed at the place of acceptance, or where the acceptance was received?

CONTENTIONS

Appellant’s contention

  • Only the court under whose territorial jurisdiction the acceptance is spoken through telephone has jurisdiction to look into any suit regarding the contract.
  • For determining where the contract is made, Section 3 and Section 4 are applicable.

Defendant’s contention

  • If the making of an offer is cause for breach of contract, then the court in whose territorial jurisdiction such offer was made can look into the matter.
  • The court under whose territorial jurisdiction the acceptance was initiated has to look into the matter regarding the acceptance and formation of the contract.

RATIO DECIDENDI

  • The judges present to hear this case were Justice Shah, Justice Wanchoo, and Justice Hidayatullah. This case was in favor of respondents with a majority of 2:1.
  • Justice Shah and Justice Wanchoo were of the opinion that the majority of the European countries and the US had accepted the rule of consensus ad idem and the contract is made where the acceptance is spoken.
  • The Indian Contract Act 1872 doesn’t foresee the contracts formed through instantaneous modes of communication, such as a telephone. Therefore, Ahemdabad Civil Court had the jurisdiction to try the suit since the contract was formed where the acceptance was initiated under its territorial jurisdiction.
  • Justice Hidayatullah gave a dissenting opinion, saying that though Indian Contract Act is applicable in India, it was inspired by English Contract Law. In Entores case it was held that a contract is formed only when the communication of acceptance is done and is heard by the offeror. The contract has emerged where the acceptance is received and not where spoken through telephone. Therefore, the Ahmedabad civil city court doesn’t have jurisdiction to look into the matter.

DECISION

The Honorable Supreme Court held that the Trial Court was correct, and the decision was rightfully made under its jurisdiction where the communication of acceptance is heard by the offeror through the telephone. Therefore, the appeal made was dismissed.

CONCLUSION

This case widened the scope of communication of offer and acceptance. The court decided to question the place of origin of the cause of action in a suit where the breach was made. It clarified the rules regarding communication of offer, acceptance, and revocation when made over a telephone. It said the rule applied when acceptance is made through the post is not applicable when made through telephone. In cases of agreement over the telephone, the situation is like a conversation happening in front of each other. Therefore, acceptance of the offer is made at the offeror’s place when the communication is instantaneous, i.e., through telephone.

BEST BOOK FOR CONTRACT LAW: Contract Law by RK Bangia (Latest Edition)

Bhoomika CB

Bhoomika CB

Share on print
Print PDF
Share on whatsapp
WhatsApp
Share on email
Email
Share on facebook
Facebook
Share on twitter
Twitter
See Legal News, Judgements, Jobs Monthwise

Recent Posts

About Us

Law Planet is specially created for law enthusiasts. We provide courses for various law exams. We also write about law to make increase legal awareness amongst common citizens.

LAW Notes (Free)

  1. Administrative Law
  2. Advocates Act
  3. Arbitration, Conciliation & Alternative Dispute
  4. Banking Law
  5. Business Law
  6. Civil Procedure Code
  7. Competition Law
  8. Company Law
  9. Constitution
  10. Contract Law
  11. Copyright Law
  12. Criminal Procedure Code
  13. Cyber Law
  14. Drafting, Pleading & Conveyance
  15. Equity & Trusts
  16. Environmental Law
  17. Evidence Law
  18. Family Law
  19. Financial Markets
  20. Hindu Law
  21. Human Rights
  22. Interpretation of Statutes
  23. International Law
  24. Intellectual Property Law
  25. Indian Penal Code
  26. Insurance Law
  27. Jurisprudence
  28. Juvenile Law
  29. Law in Changing Society: Contemporary Issues
  30. Labor Law
  31. Law of Taxation
  32. Law of Tort
  33. Limitation Act
  34. Law on Education
  35. Land Laws
  36. Legal Aid
  37. Legal Writing
  38. Mergers and Acquisitions
  39. Media Law
  40. Muslim Law
  41. Motor Vehicles Act & Traffic Rules
  42. Property Law
  43. Penology and Victimology
  44. Patent Law
  45. Real Estate Law
  46. Specific Relief Act
  47. Sales of Goods Act

LAW VIDEOS (Free)

  1. Administrative Law
  2. Advocates Act
  3. Arbitration, Conciliation & Alternative Dispute
  4. Banking Law
  5. Business Law
  6. Civil Procedure Code
  7. Competition Law
  8. Company Law
  9. Constitution
  10. Contract Law
  11. Copyright Law
  12. Criminal Procedure Code
  13. Cyber Law
  14. Drafting, Pleading & Conveyance
  15. Equity & Trusts
  16. Environmental Law
  17. Evidence Law
  18. Family Law
  19. Financial Market Regulation
  20. Hindu Law
  21. Human Rights
  22. Interpretation of Statutes
  23. International Law
  24. Intellectual Property Law
  25. Indian Penal Code
  26. Insurance Law
  27. Jurisprudence
  28. Juvenile Law
  29. Law in Changing Society: Contemporary Issues
  30. Labour Law
  31. Law of Taxation
  32. Law of Tort
  33. Limitation Act
  34. Law on Education
  35. Land Laws
  36. Legal Aid
  37. Legal Writing
  38. Merger and Acquisitions
  39. Media Law
  40. Muslim Law
  41. Motor Vehicle Act & Traffic Rules
  42. Property Law
  43. Penology and Victimology
  44. Patent Law
  45. Real Estate Law
  46. Specific Relief Act
  47. Sales of Goods Act
SUBSCRIBE TO OUR BLOG!