BHAGWANDAS GOVERDHANDAS KEDIA Vs. GIRDHARLAL PARSHOTTAMDAS AND CO

JUDGEMENT

(1.) Messrs. Girhdarilal Parshottamdas and Company - hereinafter called "the plaintiffs" - commenced an action in the City Civil Court at Ahmedabad against the Kedia Ginning Factory and Oil Mills of Khamgaon - hereinafter called "the defendants" for a decree for Rs. 31,150 on the plea that the defendants had failed to supply cotton seed cake which they had agreed to supply under an oral contract dated July 22, 1959 negotiated between the parties by conversation on long distance telephone. The plaintiffs submitted that the cause of action for the suit arose at Ahmedabad, because the defendants had offered to sell cotton seed cake which offer was accepted by the plaintiffs at Ahmedabad, and also because the defendants were under the contract bound to supply the goods at Ahmedabad, and the defendants were to receive payment for the goods through a Bank at Ahmedabad. The defendants contended that the plaintiffs had by a message communicated by telephone offered to purchase cotton seed cake, and they (the defendants) had accepted the offer of Khamgon, that under the contract delivery of the goods contracted for was to be made at Khamgon, price was also to be paid at Khamtgaon and that no part of the cause of action for the suit had arisen within the territorial jurisdiction of the City Civil Court, Ahmedabad.

(2.) On the issue of jurisdiction, the Trial Court found that the plaintiffs had made an offer from Ahmedabad by long distance telephone to the defendants to purchase the goods and that the defendants had accepted the offer at Khamgaon, that the goods were under the contract to be delivered at Khamgaon and that payment was also to be made at Khamgaon. The contract was in the view of the Court to be performed at Khamgaon, and because of the offer made from Ahmedabad to purchase goods the Court at Ahmedabad could not be invested with jurisdiction to entertain the suit. But the Court held that when a contract is made by conversation on telephone, the place where acceptance of offer is intimated to the offeror, is the place where the contract is made, and, therefore, the Civil Court at Ahmedabad had jurisdiction to try the suit. A revision application field by the defendants against the order, directing the suit to proceed on the merits, was rejected in limine by the High Court of Gujarat. Against the order of the Higher Court of Gujarat, this appeal has been preferred with special leave.

(3.) The defendants contend that in the case of contract by conversation on telephone, the place where the offer is accepted is the place where the contract is made, and that Court alone has jurisdiction within the territorial jurisdiction of which the offer is accepted and the acceptance is spoken into the telephone instrument. It is submitted that the rule which determines the place where a contract is made is determined by Ss. 3 and 4 of the Indian Contract Act, and applies uniformly whatever may be the mode employed for putting the acceptance into a course of transmission, and that the decisions of the Courts in the United Kingdom, dependent not upon express statutory provisions but upon the somewhat elastic rules of common law, have no bearing in determining this question. The plaintiffs on the other hand contend that making of an offer is a part of the case of action in a suit for damages for breach of contract, and the suit lies in the Court within the jurisdiction of which the offer has made the offer which on acceptance has resulted into a contract. Alternatively, they contend that intimation of acceptance of the offer being essential to the formation of a contract, the contract takes place where such intimation is received by the offeror. The first contention raised by the plaintiff is without substance.