BHAGWANDAS GOVERDHANDAS KEDIA versus M/S. GIRDHARILAL PARSHOTTAMDAS AND CO. AND OTHERS

Citation: [1966] 1 S.C.R. 656 · Decided: 30-08-1965 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Dismissed

Judgment (excerpt)

656 
BHAGWANDAS GOVERDHANDAS KEDIA 
A 
• 
I'. 
l\f/S. GIRDHARILAL PARSHOTfAMDAS AND CO. AND 
OTHERS 
" 
August 30, 1965 
[K. N. WAl'CllOO, M. HIDAYATULLAH ASD J. C. SHAH, JJ.) 
lndUin (."ontract Act, 1872, ss. 2. 3, 4--Contract 
when 
complete-
Offer and Acceptance by telephone-Acceptance cornplete lvhert spoktn 
or where heard'! 
The respondents enlered inlo a contract with the appellants by loog-
distancc telephone. 
The offer was spoken by the respondent at Ahmeda-
bad and the acceplarice was spoken by 
the appellants at 
Khamgaon. 
Alleging breach of the said contract 
the 
respondents filed a ruit at 
Ahmedabad. 
On the i5'ue of jurisd1c1ion raised by the appellants, the 
tnal court found that the Ahmedahad Court had jurisdiction to try the 
suit. The High Court rejected the appellant's revLsion petition in /imine 
whereupon by special leave, he came to this Coort. 
B 
c 
HELD: (1) Making of an offer at a place which has been accepted 
D 
elsewhere doe') not form part of the cause of action in a suit for damages 
for breach of conlract. 
Ordinarily it is 1he acceptance of offer and inti-
mation of that acceptance which result in a contract. 
The intimation 
must be by same external manifest;'ltion which the law regards as suffi-
cient. [660 C-E] 
Bar0<.la Oil Cakt·s Traders v. Purshouam Nara~'aJJdas mid Anr. I.L.R. 
11954) llom. 1137 and Sepulechre Brothers v. Sait Khusha/ Das Ja1:jii'l1n 
E 
!Jas Mehta, 1.1..R. 11942] Mad. 243. referred to. 
{ii} On the general rule that ;1 contract is concluded when an offer 
ifl accepted and acceptance is intimated to the offerer. is engrafted 
an 
exception bas~d on grounds of convenience which has the merit not or 
Jogic or principle in support, but of long acceplance by judicial decisioo. 
The exception may be summarised as follows : 
When 
by 
agreement. 
course of contract or usage of trade. acceptance by post or telegram is 
F 
authorised, the bargain is struck and the contract 
is complete when the 
acceptance is put into a course of transmission the offeree by posting a 
:etter or dispatching a telegram. 11>62 G-H] 
(iii) The rnlc that applies 10 acceptance by post of telegram does not 
however apply to contracts ma<le by telephone. 
The rule which applies 
to contracts by telephone is the ordinary rule which regards a contract 
~s complete only \~·hen accepbnce i'> intimated to the purchaser. In the 
..::ase of a telephonic conversation in a sense the parties are in the pri> 
~ence of each other, each party is able to hear the voice of the other. 
'l"here is an instantaneous communication of speech intimating offer alKI 
acceptance, rejection and 
counter-offer. 
Intervention 
of an electrical 
:mpulse which results in the inslantancous communication of 
messages 
from a distance doc-. not alter the nature of the conversation so as to 
make it analogous to that of an offl!r and acceptance through post or by 
'elegram. [664 A-Bl 
It is true 1h~1t rho Posts and 'l"clegr;iphc; Departmcnl has general con-
trol <>ver communication by telephone and especially over long distance 
:clephones, but thilt is not a ground for assuming that the analogy of a 
G 
H 
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A 
B 
c 
D 
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E 
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F 
G 
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H 
B. G. KEDIA v. GIRDHARILAL (Shah, /.) 
657 
contract made by post will govern this mode of making contract:>. 
In 
the case of correspondence by post or telegraphic 
commurucation, a 
third agency intervenes and without the effective intervention of 
that 
third agency, letters or messages cannot be transmitted .. In the cas~ ?f 
a conversation by telephone, once connection is 
estabbshed there is m 
the normal course no further intervention of another 
agency. 
Parties 
holding conversation on the telephone are unable to see each othe~; they 
are also physically separated in SJ?ace, 
bu.t they art? in the hearing .of 
each other by the aid of a mechanical contrivance which makes the voice 
of one heard by the other instantaneously and communication does not 
depend on external agency. [664 D-E] 
Entores Ltd. v. Miles Far Eastern Corp. [1955] 2 Q.B.D. 327 relied 
on. 
(iv) In the administration of the law of contracts the courts in India 
have generally been guided by the rules of English common law applica-
ble to contracts, when no statutory provision to the contra:ry is in force. 
The courts in the former Presidency towns by the terms of their respec-
tive letters patents, and the courts outside 
the 
Presidency 
towns 
by 
Bengal Regulation Ill of 1793, Madras Regulation 

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