Bhagwandas Goverdhandas Kedia vs. M/s Girdharilal Parshottamdas and Co case is one of the very few cases which introduced a new angle of discovery in the study of Law of Contracts. This case, which explains in detail about the essentials of a valid contract, broadens the extent of communication of an offer and acceptance. The Offer for a contract and the Acceptance for the same are regarded to be one of the most crucial aspects which constitute a valid contract. This Supreme Court judgement delivered in this case is regarded to be a turning point in the formation of a contract, since it emphasised the jurisdiction for the filing of a civil suit when the offer and agreement took place through a telephonic conversation. Various unanswered questions regarding to the Jurisdiction of the Ahmedabad Civil Court and the Place of formation of a contract were answered. The concept of completion of a contract was also examined by the court.


To understand the various aspects of this case, it is imperative for us to first analyse the real meaning of a valid contract. A contract, in the eyes of Chris Turner, can be described as the legal obligation which is created by law as the result of a promise or a set of promises, for the breach of which suitable remedy is provided by law. In simple terms, a contract is a legally binding agreement. The term legally binding means that the particular contract is lawfully bound to be fulfilled and if not fulfilled, it can be enforced by legal action in the court.


All Indian contracts are governed by the Indian Contract Act of 1872. It mentions various essentials and guidelines to by followed for a valid contact to be constituted. There are six essentials which the Indian Contract Act, 1872 mentions. They are as follows:

  • Offer and Acceptance
  • Intention to create legal obligation
  • Free consent of parties
  • Competent Parties
  • Consideration
  • Lawful Object

A void agreement is said to be that agreement which is not enforceable by Law. Section 2(g) of the Indian Contract Law 1872 defines a void agreement, which is an invalid agreement that cannot be legally binding. If the agreement is declared to be voidable in nature, neither of the parties are entitled to the benefits which were assumed at the time of execution of the agreement.


It was on the 22nd of July, 1959, Bhagwandas Kedia Oil Mills had agreed to supply cotton seed cakes to Girdharilal Parshottamdas and Co., who belonged to Ahmedabad. This entire agreement was formed over a telephonic call. The offer and Acceptance were also conveyed over the telephone. When the cotton seed cakes were failed to be delivered in time, it resulted in a breach of contract. A civil suit was brought against Bhagwandas Kedia Oil Mills. In the case, Bhagwandas Kedia was the Defendant- Appellant and Girdharilal Parshottamdas was the Plaintiff- Respondent. The latter filed an action in the Civil Court of the city of Ahmedabad owing to the failure of fulfilment of the contract made and demanded a compensation of Rs. 31,150. In the civil court, an argument was made by the defendant that since the offer to purchase the cotton seed cakes and the payment for the same was agreed in Khamgaon, Maharashtra, the Ahmedabad Civil Court lacked the jurisdiction to hear the case. The court reverted back to this statement stating the fact that since the initiation of the offer and the contract was formed in Ahmedabad, the Civil Court of Ahmedabad had full jurisdiction to hear this case. This is later on challenged in the High Court of Gujarat and was eventually rejected. Thus, the defendants appealed to the Hon’ble Supreme Court with special leave.


After the Supreme Court allowed this case to be heard, a three bench judge was allotted for the trail of this case. The bench consisted of Justice Shah, Justice Hidayatullah and Justice Wanchoo. After hearing the case, they came to a decision to favour the respondents ie, Girdharilal Parshottamdas and Co. The case concluded with a majority of 2:1. Justices Wanchoo and Shah supported the cause by declaring that a valid contract is formed in the place where the acceptance is spoken. They had also accepted the Rule of Consensus Ad Idem. While Justices Wanchoo and Shah gave a supporting opinion, Justice Hidayatullah dissented to this. He emphasised that the Indian Contract Law is applicable within the territory of India and it mentions that a contract is said to be formed only when the acceptance is received and nullifies agreements made via telephonic conversations. He also stated that the Ahmedabad Civil Court did not have any jurisdiction to hear this particular case since the acceptance for the agreement was received in Khamgaon.

Since there prevailed a majority of 2:1 in the judge’s panel, the Hon’ble Supreme Court of India came to a final conclusion that the defendants were indeed liable for the breach of the contract, which was declared to be a valid contract. It also upheld the decision of the Ahmedabad Civil Court regarding the jurisdiction of the case. The Supreme court passed the landmark judgement that the place where the acceptance is spoken, is the place where the contract is formed and the courts in that place have full jurisdiction to handle any suit brought in for the breach of that contract. The appeal challenging the jurisdiction of the Ahmedabad Civil Court was successfully dismissed,


This judgement passed in this case broadened the idea of communication of offer and acceptance of a valid contract. It was a right call by the Supreme Court to raise questions on the place of origin of the cause of action in a suit where the breach was madeIt is only because of this, Sections 2, 3 and 4 of the Indian Contract Act are viewed with more legality. This judgement clarified the guidelines of the communication of offer, acceptance, and revocation through a telephonic conversation. This judgement paved way for more valid contracts to be formed on the basis of a telephonic conversations which are declared to be legally enforceable by the Law.


Ref- Lawplanet

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