Kedarnath Bhattacharji v. Gorie Mahommed Citation- (1887) ILR 14 Cal 64
Date of Judgement- 26 November 1886
Bench – W C Petheram, Beverley
FACTS OF THE CASE:
A Town Hall was planned to be constructed in Howrah. The plaintiff was a Municipal Commissioner of Howrah and one of the trustees of the Howrah Town Hall Fund. It was decided to build a Town Hall in Howrah, provided the necessary funds could be got together for the purpose.
Later on, when the subscription list increased, the plans also increased. Earlier the original cost of construction was intended to be Rs. 26,000, but later it increased to Rs. 40,000. As the subscriptions list increased, the Commissioners and other members, including the plaintiff who was also Vice-Chairman of the Municipality, entered into a contract with a contractor to build the Town Hall.
The defendant agreed to subscribe in his name in the book for Rs. 100 for the construction of Town Hall at Howrah. After collecting all the subscriptions, funds and interested parties came up for the construction of the Town Hall. Then the plaintiff agreed with the most suitable contractor and supplied the necessary information of the plans.
However, later he refused to pay the amount. Then the Plaintiff decided to commence an action to claim the unpaid subscription amount from the defendant.
1) Whether the lawsuit initiated by Plaintiff and all other interested, is maintainable in the court of law?
2) Is Defendant is liable to pay the unpaid amount?
The plaintiff contended before the Hon’ble Court that, if somebody voluntarily puts his name for a subscription for a charitable object, it cannot be recovered, as there is no involvement of consideration. However, in this particular case, persons subscribing knew the purpose for which the money was applied and was also aware that on the account of their subscription, the plaintiff entered into the contract. The court considered it as perfectly valid with good consideration.
The defendant contended in the court that the plaintiff has no right to sue him. The Small Cause Court later referred to the High Court.
DECISION OF HIGH COURT
The High court was of the opinion a trustee or a Municipal Commissioner under the provisions of the Code of Civil Procedure, 1908 is entitled to bring an action on behalf of himself and others who are interested in him.
The Court held that if the defendant did not benefit directly from the promise he made for a charitable purpose, he is liable to pay the subscription amount. Also, there was no consideration involved. In the particular case, the persons were asked to subscribe, the purpose for which the money was to be used and there was an obligation on the part to pay money to the contactor which was engaged.
When the subscriber himself puts his name on the subscription list – he undertakes to give money for that particular purpose. This is a valid contract. Thus he was held responsible for his promise. A promise once made cannot be taken back after work has been commencement. The rule of law states that “Any act done at the will of the promisor’s wish is taken as the fulfilment of consideration of a contract.”
The Judges were of the opinion which can be enforced by the proper party to the contract for good consideration and the plaintiff can enforce it and the defendant is liable to pay the promised amount for the construction of Town Hall.
LEGAL PRINCIPLE OF LAW INVOLVED
‘Consideration’ means “something in return”, i.e. quid pro quo that is an essential element to find out the true intention of the parties to create a legal relationship. Consideration is an essential component of a valid contract.
Consideration is the price of the contract. An agreement without consideration is void and is not enforceable by law except under certain circumstances. An agreement without consideration is a bare promise and cannot be held to binding on the parties.
What is a Consideration?
Section 2(d) of the Indian Contract Act defines “when at the desire of the promisor, 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.”
For example, Ram promise to pay ` 1,00,000 to Mohan if B will sell his iPhone to him. It means that for the purchase of the iPhone he is ready to give Rs.100000 in return. So under this transaction, Ram will get the iPhone and Mohan gets Rs.100000 in return for his iPhone.
Requirements of valid consideration:
1)Consideration must be given at the desire of the promisor
The Indian Contract Act states that the consideration should be at the desire of the promisor. If the consideration is made at the will of a third person or is not as per the promisor then it cannot be said to be a good consideration. If there is a voluntary act done at the desire of the third party it is not a consideration in the eyes of law.
For example, Lokesh’s house was on fire. Arpit rushed to help Lokesh and later demanded `50,000’ from Lokesh. Is Arpit justified in claiming `50,000’? The answer is No. He is not justified as there is no involvement of consideration. It is a voluntary act of Arpit.
2) Consideration must be given ‘by the promisee or any other person
Under the Indian Contract Act,1872 as long as there is a consideration it is immaterial who has furnished it. Judges in Chinnaya vs Rammyya held that consideration can move at the desire of a third party but only in the condition where the party is the beneficiary of the binding and valid contract.
3) Consideration may be passed, present or future
Past consideration is a promise for a voluntary act done in the past to help the party who is making a promise to pay or to do something subsequently after the act. It means consideration is promised to be paid later on for an act done without any promise. A promise is said to be given for past consideration when the intention of the promisor for making the promise is merely a past benefit he received that gave rise to an obligation to give compensation. Earlier past consideration was not a valid consideration but now it is a good and valid consideration.
B)Present or Executed consideration
When the promisor receives consideration simultaneously with his promise, the consideration is called Present Consideration.
C)Future or Executory Consideration
When a promise is to be executed on a future date it is known as executory consideration or future consideration. Under this, the promisor makes an offer for a future date and the promisee promises to accept and execute the contract after that date this is a future consideration. Both parties move the consideration to a future date and the liability becomes outstanding on both parties on a future date.
4)There should be some act, abstinence or promise by the promise
If the promisee does something or abstains from doing something for the promisor on his desire, then it will be a good and valid consideration.
Section 25 of the Indian Contract Act, 1872 states that “an agreement made without consideration is void”. The presence of consideration is essential for a contract to be valid.
In the landmark case of Aloka Bose v. Paramatma Devi the court said that the promised party is not obliged to act since he does not give any promise on his side, but if he carries out the desired actions by the promisor, he can fulfil the promisor.
The decision of Kedarnath Bhattacharji v. Gorie Mohammad suggests that, that such revocation is impossible. The accused, in the case, was held responsible as the contract for the construction of the Twin Hall was concluded.
Lord DENNING in the case of Errington v. Errington and Woods, held that the promise of the father was a unilateral contract. A promise of the house in exchange for his act of paying the dues.” It can be revoked by him once the couple started doing it. On the other hand, he will also stop obliging him if they left the payments incomplete and unfulfilled.