KEDARNATH BHATTACHARJI V. GORIE MAHOMED (1886) 7 I.D. 64 (CAL.)
FACTS
It was thought advisable to erect a town Hall at Howrah provided sufficient subscriptions could be got together for the purpose. To this end, the Commissioners of Howrah Municipality set out work to obtain necessary funds by public subscription.
Gorie Mahomed, the defendant was a subscriber to this fund for Rs 100 having signed his name in the subscription book for that amount.
The plaintiff, Kedarnath Bhattacharji, was acting on behalf of the committee responsible for the construction of the town hall.
Based on the promises made by several people, including the defendant, the committee engaged contractors and started the construction work.
However, Gorie Mahomed later refused to pay the promised amount, leading to the plaintiff filing a suit to recover the pledged sum.
ISSUES
The primary issue was whether the defendant's promise to contribute money to the town hall was enforceable, given that the defendant did not receive any tangible benefit or consideration in return for his promise.
CONTENTIONS
Plaintiff (Kedarnath Bhattacharji): Argued that the defendant's promise to pay was binding because the committee, relying on this promise, had incurred liabilities by starting the construction work. The promise itself created an obligation to pay.
Defendant (Gorie Mahomed): Contended that there was no consideration for his promise, as he did not receive anything in return, and therefore, the promise was not enforceable under the Indian Contract Act, 1872.
ANALYSIS
The Calcutta High Court analyzed whether the act of starting construction based on the defendant's promise could constitute sufficient consideration.
The court considered the broader implications of allowing promises that lead to significant actions (such as the commencement of construction) to be disregarded simply because the promisor did not receive a direct benefit.
JUDGMENT
The court ruled in favor of the plaintiff holding that in this case persons were asked to subscribe knowing the purpose for which the money was to be applied, they knew that on the faith of their subscription, an obligation was to be incurred to pay the contractor for work.
The promise is: ”In consideration of your agreeing to enter into a contract to erect, I undertake to supply money for it”. It was held to be a perfectly valid contract having all the essential elements of a contract,which can be enforced in law by the persons to whom the liability in incurred.
The act of the plaintiff in entering into a contract with the contractor was done at the desire of the defendant, so as to constitute consideration within the meaning of Section 2(d).
The judgment established that where a party makes a promise to contribute to a public or charitable project, and the promisee acts on this promise by incurring expenses or liabilities, the promisor is bound by their promise.
COMMENTARY
The case is a landmark in Indian contract law as it introduces the concept of implied consideration in situations where a promise induces an action, even if the promisor does not receive a direct benefit.
The ruling is significant because it emphasizes the enforceability of promises in the context of public and charitable contributions, particularly when the promise leads to an action that incurs expenses.
The case also laid the foundation for the development of the doctrine of promissory estoppel in Indian jurisprudence, which prevents a party from reneging on a promise that another party has relied upon to their detriment.
The decision establishes the importance of upholding the integrity of promises, especially in the context of public and community projects.