Summary of Bhagwandas Govardhana’s Kedia V. Girdharilal Purshottam Das & Co. Case

The case of Bhagwandas Govardhana’s Kedia v Girdharilal Purshottam Das & Co. revolves around a dispute that emerged from a telephone agreement in 1959. This landmark case focused on two primary legal questions: which court has jurisdiction to try the case under the Indian Contract Act, 1872, and at what point a contract is considered to be complete, influencing the liability of the parties involved.

Facts:

Bhagwandas Govardhana’s Kedia Oil Mills agreed to supply cotton seed cakes to M/s Girdharlal Purshottama’s and Co. of Ahmedabad over the phone on July 22, 1959. The defendant accepted this offer over the phone in Khamgaon. However, the defendant failed to supply the seed cakes as agreed, prompting the plaintiff to file a lawsuit in Ahmedabad seeking compensation for monetary losses.

Issues:

The case raised significant questions about the jurisdiction of the courts under the Indian Contract Act, 1872, and the moment at which a contract is deemed complete, affecting the liabilities of the parties involved. A key point of contention was determining where the contract was formed – in Khamgaon, where the acceptance occurred, or in Ahmedabad, where the acceptance was communicated.

Judgment:

The Supreme Court ruled against the appellant, emphasizing that in cases of instantaneous communication like telephone calls, the jurisdiction lies where the acceptance of the offer is communicated and heard. The court concluded that it is the acceptance that initiates the contract, setting a precedent that a contract is formed when the offeror becomes aware of the offer’s acceptance by the recipient.

Dissenting Opinion:

Justice Hidayatullah provided a dissenting judgment, arguing that a contract is established when the acceptance of the offer is clearly heard and understood. He highlighted the difficulty in proving the exact location of the contract’s formation under the terms of the Contract Act, suggesting that the agreement was officially made in Khamgaon, where the acceptance was verbally expressed.

This case is a critical reference for understanding the legal principles governing contract formation via telephonic communication and the jurisdiction of courts in such matters. It highlights the importance of the communication of acceptance in determining the formation and jurisdiction of contracts, setting a foundational precedent in Indian contract law.