CASE BRIEF

Case Name- Bhagwandas Goverdhandas Kedia vs. Girdharilal Parshottamdas & Co.
Equivalent citation- AIR 1966 SC 543
Court- Supreme Court of India
Judge- J.C. Shah, K.N. Wanchoo, M. Hidayatullah J.J.

ON
Date of decision- 30th August 1965
Relevant Act- Indian Contract, 1872 Section-3 and 4
Plaintiff- Bhagwandas Goverdhandas Kedia
Defendant- Girdharilal Parshottamdas & Co.
Brief Facts of the Case
The plaintiff M/s. Bhagwandas Goverdhandas Kedia filed a suit against the defendant in city civil courts of
Ahmadabad for Rs. 31,150/- ont he plea that the defendant failed to supply the cotton seed cake as an ordal
agreement was made between the parties over the telephone dated July 22, 1959. Dispute arose between the
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parties, as to the place where the contract was concluded. Plaintiff contended that as the offer was accepted at
Ahmedabad, the defendant was bound to supply the goods at Ahmedabad. The Defendant on the other hand
contended that offer was accepted at Khamgaon over the telephone and price was also to be paid at that offer
was accepted at Khamgaon over the telephone and price was also to be paid at Khamgaon. Trial court of
Ahmedabad ruled in favour of the plaintiff, and the revision filed by the defendants to decide the suit on merits
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was dismissed by the High Court in limine, thus the appeal was filed against the High Court’s order in Supreme
Court.
Issues of the Case
1. Whether inthe case of a contract by conversation on instaneous communications like telephone, the place
where the offer is accepted is the place where the contract is made?
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2. Whether the contract was concluded at Ahmedabad or Khamgaon?

Contentions of Bhagwandas Goverdhandas Kedia
The contract is concluded at the place where the offeror has made the offer which on acceptance results into
contract.
Contentions of Girdharilal Parshottamdas & Co.
 The place where the offer is accepted over the telephone is the place where the contract is concluded.
 Section 3 and 4 of the Indian contract act are applicable uniformly whatever is the mode of communication for
the acceptance of the offer.
Decision of the City civil Court of Ahmedabad
1. Though the defendant acceped the offer at Khamgaon and goods were also to be delivered at Khamgao, in
that case civil court of Ahmedabad not vested with the jurisdiction.

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2. In the case of communication from telephone, the place where the acceptacnce of offer was intimated to the
offeror, is the place where the contract was concluded.
Decision of the High Court
The revision filed by the defendants to decide the suit on merits was dismissed by the High Court in limine.
Ratio Decidendi
While dealing with the contentions of the parties, the majority judgement delivered by the bench of Hon’ble

ON
Justice Wanchoo and J.C. Shah while referring the case of Adams v. Lindsell (1818) 1B & Ald 681 observed
that “Contract is complete as soon as it is put in the course of transmission.”, but this rule does not apply on
instantaneous communication like telephone.
The communication by telephone stands on different footing then on communication by post. Section 4 is not
applicable in the case of communication through telephone. The Supreme Court relied on Entores Ltd.’s vs.
Miles Far East Corporation (1955) 2 Q.B.D. 327 in which it was held that “The Contract is complete when
Acceptance is received by the offer and the contract is made where the Acceptance is received.” Many
European and common law countries follow the same principle as laid down in Entores’s case.
Decision
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In this case, the Supreme Court followed the principle of Entores Case and upheld the civil court decision of
Ahmedabad court and held that contract was concluded at Ahmedabad. The Court dismissed the appeal of
the defendant.
Dessention Opinion
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The Hon’ble Hidyatullah observed in his dissenting opinion that language of Section 4 is adequate enough to
include the instantaneous communication like telephone and telex, as the law when it was drafted in 1872,
people were unaware about the communication like telephone and other form of instantaneous communication.
He relied on Adam’s Case, while holding that the communication can be interrupted and offeror has to repeat
the offer during the communication of offer, so as to avoid the repetition of offer, the general rule will be that
contract is concluded as soon as it is put in the course of transmission. He affirmed that the contract was
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concluded at Khamgaon.
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