CASE COMMENTARY

Bhagwandas Goverdhandas Kedia vs. Girdharilal

Parshottamdas & Co. & Ors

CITATION 1966 AIR 543

COURT Supreme Court of India

JUDGES/CORAM Justice J.C. Shah

DATE OF JUDGEMENT 30.08.1965

TABLE OF CONTENTS

• Facts
• Issue
• Contentions
• Ratio Decidendi
• Decision
• Analysis

NAME - SAT PARKASH

CLASS & SECTION - LLB( 5th Sem), G

EXAMINATION ROLL NO - 19310806692

CLASS ROLL NO - 216514

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 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?

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 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.

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 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.

Analysis

The court chose the subject of the spot of the starting point of the reason for
activity in a suit for a break of the agreement made over phone. Here, the court
likewise explained the guidelines
regarding the correspondence, acknowledgment, and denial of proposition and
acknowledgment concerning an agreement made through phone or through any
instantaneous communication. The decision further explained that the standard of
correspondence and acknowledgment of offer
pertinent to contracts made through the post would not be material to contracts made
via phone.
In a very laymen’s language, this case deals with “where have you heard and how
have you heard the fact.” This case deals with sections 2, 3, and 4 of the Indian
Contract Act 1872, which deals with the interpretation of basic terms used in
contract law, Communication, acceptance, and
revocation of proposal and Communication when complete. The most astonishing
thing in the case is that the plaintiff and respondent were not fighting for the
primary purpose, i.e., cottonseed cake. Instead, they were fighting for the courts
in which the case should be heard. In this case, justice Hidayatullah gave
dissenting judgment as he disagrees with the majority. He also proposes four
different types of conditions in which the acceptance could be heard. However, at
last, the court follows the precedent judgment Entores Ltd v Miles Far East
Corporation [1955], from which they agreed that the case should be heard at
Ahemdabad.

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