introdUCTION
Kedarnath vs. Gorie Mohammad[1] is a very famous case related to consideration. In this case, the defendant promised the plaintiff that he would pay to build a town hall[2] in Howrah, to which he later refused, saying that there was no consideration. This is a case from the year 1886, and it was decided by a two-judge bench of the Calcutta High Court, i.e., Justice W.C. Petharam and Justice Beverley[3].
FACTS
Kedarnath Bhattacharji was the plaintiff in this case. He was the Municipal Commissioner of Howrah as well as one of the trustees of the Howrah Town Hall Fund. He wanted to build a town hall in Howrah, providing the necessary funds could be raised[4] for it. He tried to find out how many people could be interested in it and would be willing to pay. Some people agreed upon this. When this number reached a certain level, he contacted a contractor to construct the building. Thereafter, a contract was entered into by the commissioners, including the defendant and other subscribers like him, for the above cause. Subsequently, the building plans were presented and passed. However, along with the membership list for paying members, the plans increased too, and the original cost, which was intended to be Rs. 26,000, has swelled up to Rs. 40,000.[5]. Since the changes to the original plans for the building had been ratified by all the commissioners, including the plaintiff, the commissioners were also responsible for paying the contractors for this additional cost. The dispute arose when the respondent, named Gorie Mohammad, accepted to pay Rs 100 by writing his name in the membership register, I.e. subscription book. But he did not give this amount. Therefore, the plaintiff filed a suit for the recovery of this amount from the defendant.
ISSUES
- Is the case maintainable?
- Is the defendant bound to indemnify the required sum of money?
- Was there a valid contract between the two parties?
PERTINENT CASE LAWS
In Doraswami Iyer v. Arunachala Ayyar[6], a temple was undergoing repair work. There was some shortage of money for this work, so to fulfill that, the trustees of this temple invited membership from the people. As a result, some other people, including the respondent, voluntarily subscribed to give financial support and get their names written. The respondent had his name entered into the membership list to voluntarily give Rs 125 for the repair work. But he did not give the money. The plaintiff, Arunachala Iyer, who was one of the trustees, sued him to recover the money. The contention of the respondent, Doraswamy Iyer, was that the plaint of the plaintiff was not maintainable. The plaintiff contended that he had incurred the repair work only by relying on the promise of the defendant and that it was a consideration for the contract. Hence, the agreement made between the two was a valid contract and is therefore enforceable by law. In the present case, the court ruled that there is no evidence[7] to show that the respondent has made an offer to pay for the repair of the temple, which has been accepted by the plaintiff. At the time when this so-called contract was entered into, the work of repairing the temple was already going on, so it cannot be said that the plaintiff started the work at the instance of the respondent, or after his assurance. The court also observed that there was no valid settlement between the two parties. Therefore, the right to recover the money was not accepted.
In Radhakrishna Joshi v. Syndicate Bank[8], his two children were involved in a car accident after their father died. His mother stepped in and wrote to the youngest son, promising to pay the sum of Rs. 50 lakhs owed to him outside of the family assets if his older brother did not. A portion of the debt was paid by the brother. The mother supplemented the payment to some extent, but she still had to pay the balance, so she requested a decrease. The contract was negotiated as part of a family arrangement. Section 25 had no bearing on it because, in such circumstances, the purchase of family peace is a fair consideration. The boy was given a loan in the case that his father, who signed all of the important documents, would be held liable.[9]
LEGAL PRINCIPLES INVOLVED
“Section 2(d) of the Indian Contract Act, 1872 says that When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.”[10]
“Section 25 of the Indian Contract Act, 1872 says that Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.—An agreement made without consideration is void, unless— —An agreement made without consideration is void, unless— (1) it is expressed in writing and registered under the law for the time being in force for the registration of 1[documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless. (3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.”[11]
HELD
The Supreme Court while dealing with the concerned issues held that the members, knowing what the money was going to be used for, had voluntarily agreed to pay the contractor for this work and took the subscription. Hence, there is a valid contract between the parties according to section 2(d) of the Indian Contract Act[12] and the respondent is bound to pay the promised amount. Also, a person, after the commencement of the work, cannot back out of the promise that they have made.
CONCLUSION
The defendant, Gorie Mohammad, knew the purpose, for which he was paying while he opted for the subscription. He was very well aware of the fact that he was putting his money towards a charitable cause when he opted for the subscription, so that is enough consideration. The court ruled that, based on the subscriptions chosen by people like Gorie Mohammad, the commissioner was liable to pay the contactor for the work.[13] So for the commissioner, the faith of his subscribers was the consideration, and the consideration for Gorie Mohammad was that he willingly agreed to contribute his money for the purpose. Therefore, there is a valid contract with good consideration. The decision was given in favor of the plaintiff, i.e., Kedarnath Bhattacharji, and the defendant, Gorie Mohammad cannot opt-out of the subscriber’s list after making a promise. Hence, he was liable for the promise he had made.
Author(s) Name : Sakshi Swapnil (Agnel School of Law)
References:
[1] Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64
[2] Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64, [2]
[3] Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64
[4]Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64, [2]
[5] Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64, [2]
[6] Doraswami Iyer v. Arunachala Ayyar, 1935, AIR 1936 Mad 135, [1]
[7] Doraswami Iyer v. Arunachala Ayyar, 1935, AIR 1936 Mad 135 [3]
[8] Radhakrishna Joshi v. Syndicate Bank, 2006, IV (2006) BC 180, 2006 131 CompCas 54 Kar, ILR 2006 KAR 2365, 2006 (1) KarLJ 534, [2]
[9] Radhakrishna Joshi v. Syndicate Bank, 2006, IV (2006) BC 180, 2006 131 CompCas 54 Kar, ILR 2006 KAR 2365, 2006 (1) KarLJ 534, [10]
[10] Indian Contract Act, 1872, s 2(d)
[11] Indian Contract Act, 1872, s 25
[12] Indian Contract Act, 1872, s 2(d)
[13] Kedarnath Bhattacharji vs Gorie Mahomed, 1886, ILR 14 Cal 64, [6]
