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.