People’s Bank of India, Respondent
The case deals with the acceptance of the subsequent condition. The term “condition” is used broadly in contract law, and it is used commonly associated with “terms,” “condition,” or “clause.”
In its true essence, the term condition refers to some operational term that occurs after acceptance and before acceptance, and it is a reality on which the rights and responsibilities of the contract’s parties are based.
The occurrence might be any act or omission by one of the contracting parties, an action by a third party, or the occurrence or non-occurrence of any natural event. There are three types of conditions- One, Implied Condition, an implied condition exists when some facts that serve as a condition are not specifically declared by the parties but may be inferred from the parties’ actions in contracting.
Two, Expressed Condition, Certain facts can function as a condition in an express condition because they have been specifically agreed upon by the contract’s parties.
And three, Constructive Condition, when a court considers that the parties to a contract must have expected to operate specific conditions also because the court considers that the existence of the condition is required by the Justice.
A contract comes into effect as a result of one party’s actions or conducts towards another party. Only a meeting of minds or an agreement between both parties may convert a party’s actions or conduct into a pledge.
Acceptance with a future condition may not have the same impact as a counter-proposal. When the offeree adds a counter-proposal to the initial proposal, the person whose proposal or offer has not been accepted completely or unqualifiedly by the offeree becomes obligated by the counter-proposal.
If the offeror’s conduct suggests that he has accepted the terms of the counter-proposal made by the offeree.
On June 3, 1926, Hargopal, a Barrister from Gujarat, applied to the Peoples Bank of Northern India, Limited, requesting an allocation of 150 shares in the bank worth Rs. 100 each.
The application was submitted on the document, but he inserted the following phrase in his manuscript to the written words: “This purchase of the shares is subject to the condition that I will be appointed a permanent Local Director. I will pay the allotment amount after the branch is opened here.”
An application for shares was proposed based on the bank deciding to nominate Hargopal as a permanent director of the local branch. The bank however allotted the shares to him disregarding their failure to comply with the provisions mentioned by Hargopal in the manuscript and the shares were granted to him.
Hargopal acknowledged the shares without objection even though the contract’s requirements had not been met. Hargopal filed a complaint against the Gujarat Branch of the Bank in Wazirabad on August 3, 1931, to collect dividends that the bank had failed to pay him.
The Bank accepted his designation as a shareholder and opposed the claim because the Bank held a lien on his property. On January 18, 1932, Hargopal received a decree of 450 Rupees. Meanwhile, on September 29, 1931, the Bank terminated the payment.
Hargopal filed the complaint that gave rise to this appeal on July 14, 1932, seeking a ruling that he was not a shareholder in the bank.
Hargopal contended that his application for shares was contingent on the Bank agreeing to nominate him as a permanent director of the local branch in Gujarat, and that the Bank had allocated him shares despite the requirement, and that the allocation processes were, therefore, null and invalid.
The Bank claimed that the condition had been withdrawn by Hargopal before the shares were distributed and that in any event, the appellant’s actions prohibited him from pursuing the complaint.
Was the bank’s allocation valid since it did not meet the requirements specified by Hargopal?
Rule of Law
A conditional acceptance, also known as an eligible acceptance, happens when a person to whom an offer has been made informs the offeror that he or she is prepared to accept the offer if certain conditions are changed.
This type of acceptance functions as a counter-offer. Before a contract may be created between two parties, the initial offeror must assess a counter-offer.
According to the evidence, the Senior Subordinate Judge of Gujarat determined that Hargopal acquired the shares with the awareness that the allocation would be conditional, but afterward accepted them as devoid of the specified condition.
The judge referred to the case of Piara Singh v. Peshawar Bank (54 P.R. 1915) and invalidated the complaint, stating that because Hargopal had behaved as a shareholder, pledged his shares, and not only claimed but also exercised his right to a dividend, he was unable to rely on the failure to execute the condition precedent.
When the rule of law is applied here, the counteroffer was never included in the actual contract, as the bank had never made any communication regarding its acceptance.
But Hargopal accepted those shares and made no mention of the condition precedent, which indicated that he did not want it to be fulfilled, and later on after receiving the shares, he told the court, that he was not one of the bank’s shareholders.
As a result, the court dismissed Hargopal’s claim that the contract was void because he had waived the stipulation by his action of accepting the shares.
Hargopal’s appeal was dismissed.