- Bookmark
- Share
- CaseIQ
Ratan Lal Gattani v. Harcharan Lal
Judgment Summary — Sudhir Bhushan Malik, J.
Factual and Procedural Background
The dispute arises from correspondence between a Plaintiff resident of Jhansi (who carries on business there) and a Defendant who lives in Kanti (C. P.) and carries on business in C. P. The sequence of relevant communications in August 1942 as recorded in the opinion is:
- 13 August: The Plaintiff wrote to the Defendant requesting information about the "rate of time" and whether it could be sent from Kanti to Jhansi by railway.
- 22 August: The Defendant replied (the text of this letter is quoted in the lower courts' judgments). He provided the information requested, stated that an advance would be necessary if the Plaintiff wished to buy time from him, but did not specify any quantity, the amount of advance, or detailed quality beyond noting it was "okunna rodi."
- 26 August: The Plaintiff wrote that he wanted "40 tons of rodi No 1 -quality white" and sent a bank draft for Rs 200. The goods ("time") were not supplied, and the Plaintiff sued for breach of contract in the Court at Jhansi.
The Defendant contended that by a letter dated 28 August he had shown willingness to supply if railway trucks were available and if the Plaintiff sent gunny bags as required; the Plaintiff did not send the gunny bags and railway trucks were not available, so the Defendant could not complete the contract.
The lower appellate Court disbelieved that an additional letter dated 20 August (alleged by the Defendant) was ever sent; the revisional court therefore proceeded on the basis of the three letters dated 13, 22 and 26 August. At trial the Plaintiff argued there was a mistake in dating and that the offer was originally dated 22 August and the 26 August letter was merely an acceptance. The trial Court and the lower appellate Court reached differing conclusions on whether the 22 August letter was an offer and whether posting the 26 August letter at Jhansi gave jurisdiction to the Jhansi Court.
Legal Issues Presented
- Whether the 22 August letter from the Defendant amounted to an offer (a proposal) within the meaning of the Indian Contract Act or was merely an invitation to offer/reply to queries.
- Whether the posting (despatch) of the Plaintiff's 26 August letter at Jhansi constitutes part of the "cause of action" such that the Jhansi Court had jurisdiction under Section 20(c) of the Code of Civil Procedure.
- Whether the lower appellate Court's order (which treated the 22 August letter as a definite proposal or alternatively held that posting in Jhansi gave jurisdiction) should be set aside on revision.
Arguments of the Parties
Plaintiff's Arguments
- The Plaintiff pleaded that the offer was made on 26 August to buy 40 tons of white time, No. 1 quality, at Rs. 20 per ton, and relied on the Jhansi Court to try the suit.
- At hearing, the Plaintiff argued there was a mistake in dating and that the offer was really the letter dated 22 August and the 26 August letter was an acceptance of that offer.
- It was argued (by Plaintiff's side at appellate level) that posting the letter at Jhansi gave the Jhansi Court jurisdiction under Section 20(c) C.P.C., because part of the cause of action (the offer) arose in Jhansi when the letter was posted.
Defendant's Arguments
- The Defendant maintained that he had not bound himself by the 22 August letter to supply any unspecified quantity; that letter was a reply to queries and explained his mode of business requiring an advance.
- The Defendant asserted that by a letter dated 28 August he indicated willingness to supply provided railway trucks were available and the Plaintiff supplied gunny bags; since the Plaintiff did not send bags and trucks were unavailable, the contract could not be completed.
- The Defendant (through lower courts' findings) disputed the existence of a 20 August letter said to be sent by him; the lower appellate Court disbelieved that letter.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Durga Prasad-Mutsaddi Lal v. Rulia Mai-Dogar Mal (1922) 65 I.C. 282 | Used by the trial Court to support the proposition that a letter similar to the 22 August correspondence could amount to an invitation to offer rather than a binding offer. | The trial Court relied on this Lahore High Court decision to hold the 22 August letter was only an invitation to offer; the revisional court agreed with the trial Court's reliance and reasoning. |
| Cooke v. Gill (1873) Rep C P. 107 | Definition of "cause of action": "every fact which it would be necessary for the Plaintiff to prove, if traversed, in order to support his right to the judgment of the Court." | The court quoted this definition to explain what constitutes a "cause of action" for the purposes of Section 20(c) C.P.C., and used it to analyze whether posting an offer is part of the cause of action. |
| Read v. Brown (1888) 2 Q B D. 128 (at 131) | Supportive authority cited alongside Cooke v. Gill for the definition and scope of "cause of action." | Used as supporting authority for the definition of "cause of action" when considering whether posting an offer forms part of it. |
| Borthwick v. Walton (1855) 15 C. B. 501 | Authority for the proposition that "an offer is a part of the cause of action." | The court acknowledged this precedent to recognize that an offer can constitute part of the cause of action, but proceeded to examine where an offer is "made" for jurisdictional purposes. |
| Green v. Beach (1873) (Exchequer) 208 | Also cited for the proposition that an offer is part of the cause of action. | The court cited this decision together with Borthwick to show that making an offer is relevant to cause of action analysis, while focusing on the locus of making (receipt) for jurisdictional purposes. |
| Clarke Brothers v. Knoles L. R. 1918 I K.B. 128 | Held that posting of the offer is no part of the cause of action within the meaning of the relevant statutory provision (comparable to Section 20(c) C.P.C.) — the making of an offer is proved by showing that it was received. | The revisional court relied on this authority to conclude that posting an offer from one place is not a material factor in establishing that a part of the cause of action arose there; the offer is made where it is received. |
| Ahmad Bux v. Fazat Karim I L R 1940 Mad 195 | Held that posting or despatch of an offer from a particular place cannot be regarded as part of the cause of action; the making of the offer is at the place where it is received. | The court cited this Madras High Court decision approvingly to support the proposition that posting an offer at one place (Madras/Jhansi) does not create part of the cause of action there when the offeree lives elsewhere. |
| Engineering Supplies Ltd. v. Dhandanta and Co (1931) 58 Cal 539 | In that case the Chief Justice treated making of the offer by cablegram from Calcutta and rejection at Calcutta as parts of the cause of action in Calcutta; however, the decision turned on the contract being C.I.F. with delivery in Calcutta. | The revisional court examined this Calcutta decision, observed that parts of its reasoning were unnecessary to its decision (obiter) because the CIF nature of the contract produced delivery and rejection in Calcutta, and declined to follow any broader rule that posting or despatch of offer from a place automatically creates part of the cause of action there. |
Court's Reasoning and Analysis
The Court proceeded in two linked strands of analysis: (A) whether the 22 August letter was an offer; and (B) whether posting the 26 August letter at Jhansi made Jhansi a place where part of the cause of action arose for jurisdictional purposes under Section 20(c) C.P.C.
A. Was the 22 August letter an offer?
- The trial Court had held the 22 August letter could not be an "offer or proposal" as defined by the Indian Contract Act because it was a reply to queries and an explanation of the Defendant's mode of business (including a requirement for an advance), and it did not bind the Defendant to supply any specified quantity.
- The revisional court accepted the trial Court's findings: the 22 August letter mentioned no quantity, no amount of advance, and did not state that the goods would be white or of No. 1 quality. By contrast the Plaintiff's 26 August letter specifically sought 40 tons of white, No.1 quality at Rs. 20 per ton.
- Relying on the trial Court's reasoning and on Durga Prasad-Mutsaddi Lal, the revisional court agreed the 22 August letter amounted to an invitation to offer rather than a definite proposal capable of immediate acceptance by the Plaintiff.
- Therefore, the court concluded that the Plaintiff's 26 August letter constituted the offer.
B. Does posting at Jhansi make Jhansi a place where part of the cause of action arose?
- The lower appellate Court had alternatively held that if the 26 August letter was an offer, the fact that it was posted at Jhansi gave the Jhansi Court jurisdiction because part of the cause of action arose in Jhansi under Section 20(c) C.P.C.
- The revisional court examined the statutory test (Section 20(c) C.P.C.) and the definition of "cause of action" as "every fact which it would be necessary for the Plaintiff to prove ..." (Cooke v. Gill; Read v. Brown).
- The court recognized authorities holding that an offer is part of the cause of action (Borthwick v. Walton; Green v. Beach) but turned to the question where an offer is "made" for the purpose of establishing the locus of that element of the cause of action.
- The court applied Section 4 of the Indian Contract Act (as explained in the opinion): the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. Accordingly, an offer is to be treated as made where it is received, not where it was posted or despatched.
- The court relied on Clarke Brothers v. Knoles and Ahmad Bux v. Fazat Karim to support the position that posting/despatch is not a material factor and the place of making is where the offer is received. The revisional court explained that Engineering Supplies Ltd. v. Dhandanta was distinguishable because the contract there was CIF and delivery/rejection occurred in Calcutta, so observations that might suggest posting was relevant were unnecessary to that decision.
- On these grounds the revisional court found that posting the 26 August letter at Jhansi could not be treated as giving rise to a part of the cause of action in Jhansi when the offeree lived elsewhere.
Holding and Implications
Core Ruling: The revisional application was allowed; the order of the lower appellate Court was set aside and the order of the Court of first instance (trial Court) was restored.
Direct consequences for the parties as recorded in the opinion:
- The revisional court agreed with the trial Court that the 22 August letter was not a binding offer but an invitation to offer; the Plaintiff's 26 August letter constituted the offer.
- The court held that posting/despatch of the offer at Jhansi did not constitute a part of the cause of action for jurisdictional purposes under Section 20(c) C.P.C., and therefore the lower appellate Court's alternative basis for jurisdiction was incorrect.
- The applicant (the party who applied in revision) was awarded costs.
The opinion addresses statutory interpretation of where an offer is "made" and applies precedent; it does not purport to establish a novel precedent beyond its application of existing authorities and conclusions in this factual context.
JUDGMENT
Sudhir Bhushan Malik, J.
1. The only point in this case is whether the Jhansi Court had jurisdiction to bear the suit out of which this revision has arisen.
2. The Plaintiff is a resident of Jhansi and carries on business there. The Defendant lives in Kanti (C. P.) and carries on time business in C. P The Plaintiff sent a letter to the Defendant on the 13th August, 1942, asking for information about the rate of time and whether it was possible to have time sent from-Kanti to Jhansi by railway. The Defendant wrote a letter on the 22nd August, the material portions of which have been quoted in the judgments of the Courts below, in which-he gave the information wanted by the Plaintiff. He went on to say that in case the Plaintiff wished to buy time from the Defendant it would be necessary for the Plaintiff to make an advance. No quantity for time was mentioned in this letter dated the 22nd August, nor was the quality mentioned in it barring this much that it was okunna rodi. The Plaintiff in his letter dated the 26t, August said that he wanted 40 tons of rodi No 1 -quality white, and was sending a bank draft for Rs 200. The time was, however, not supplied and the Plaintiff filed this suit for breach of contract in the Court at Jhansi. The Defendant's contention is that by a letter dated the 28th August, he showed his willingness to supply the time if railway time(sic) were available and if the Plaintiff sent the gunny) bags for the time as he bad offered to send in his letter of the 26th August. The Plaintiff did not send the gunny bags nor were railway trucks available and he was, therefore, not able to complete the contract.
3. The lower, appellate Court has disbelieved the Defendant's case that he ever sent the letter dated the 20th August, 1942. We cannot, sitting in revision, set aside that finding of the learned Judge. We shall therefore, proceed on the basis that there are only three letters, the first dated the 13th August written by the Plaintiff to the Defendant, the second dated the 22nd August written by the Defendant to the Plaintiff and the last dated the 26th August written by the Plaintiff to the Defendant. In the plaint It was alleged that it was on the 26th August that the Plaintiff made the offer to buy 40 tons of time white quality No. 1 of Rs 20 per ton. At the time of the hearing of the case in the trial Court and the tower appellate Court it was argued on behalf of the Plaintiff 'that it was a mistake and the offer was really dated the 22nd August and that the Plaintiff's letter of the 26th August was an acceptance of the same.
4. The trial Court held that the letter of the 22nd August could not be an offer or proposal as defined by the Indian Contract Act. The Defendant was sending a reply to the various queries of the Plaintiff and intimating to him his mode of business, that the needed an advance before he under took to supply the time. The-trial Court rightly pointed out that it could not be said that the Defendant had by bis letter of the 22nd August bound himself to supply any quantity that the Plaintiff might demand. It would be noticed from the quotations of that letter given in the judgments of the Courts below that no quantity whatsoever was mentioned in that letter, neither was the amount of advance mentioned therein. The trial Court further pointed out that there was nothing in the letter dated the 22nd August as regards the time being white or of No. 1 quality, while the Plaintiff in his letter of the 26th August clearly intimated that be was willing to pay Rs. 20 per ton for white time, quality No. 1.
5. On all those considerations and relying on a case of the Lahore High Court in Durga Prasad-Mutsaddi Lal v. Rulia Mai-Dogar Mal (1922) 65 I.C. 282 the trial Court held that the letter dated the 22nd August amounted merely to an invitation to offer and did not constitute an offer. We are in full agreement with the reasonings given by the trial Court. The lower appellate Court, to our mind, misconstrued the letter of the 22nd August and erred in holding that it was a definite proposal. With the quantity and quality of the time unspecified and with the amount of the advance not being made clear, it is impossible to say that the letter of the 22nd August could be construed as an offer which the Plaintiff could accept by the letter of the 26th August. We are, therefore, in full agreement with the decision of the trial Court that the letter of the Plaintiff dated the 26th August, 1942, did constitute an offer.
6. The lower appellate Court has held in the alternative that if the letter of the 26th August was an offer or a proposal-the term that is used in the Indian Contract Act-then the fact that the letter was posted at Jhansi would give the Jhansi Court jurisdiction to try the suit as it must be held that a party of the cause of action arose in Jhansi. Under Section 20 (c) of the Code of Civil Procedure Code, which is the only provision relied on, on behalf of the Plaintiff, every suit shall be instituted in a Court within the local limits of whose jurisdiction the cause of action wholly or in part arises. The term 'cause of action' has been defined in Cooke v. Gill (1873) Rep C P. 107 as:
every fact which it would be necessary for the Plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not compromise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved (see also Read v. Brown (1888) 2 Q B D. 128 at 131.
7. That an offer is a part of the cause of action was held in Borthwick v. Walton (1855) 15 C. B. 501 and Green v. Beach (1873) VIII Bxchequer(sic) 208.
8. Under Section 4 of the Indian Contract Act the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made, while the communication of an acceptance is complete, as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor, when it comes to the knowledge of the proposer. The mere fact that the Plaintiff posted a letter at Jhansi would be no part of his cause of action because there will be no proposal till it came to the knowledge of the person to whom the proposal was made. Learned Counsel for the applicant has given very apt illustration that if a person while travelling in a train gets down at a railway station to, post a letter making an offer, it could not be said that the place where the letter was posted had anything to do with any part of the cause of action. The point is fully covered by a decision of the Madras High Court and Certain decisions of the English Courts.
9. In Clarke Brothers v. Knoles L. R.1918 I K,B 128 it was held that
where a contract is, made by offer and acceptanc sent through the post between parties residing in different county Court districts the posting of the offer is no part of the cause Of action within the meaning of that section.
10. The Section mentioned was Section 74 of the County Courts Act, 1883(sic), the relevant portion of which was as follows:
Every action or matter....may be commenced by leave of the Judge or registrar....in the Court in the district of which the cause of action or claim wholly or in part arose.
11. The language is very similar to the language of Section 20, Clause (c) C. P. C. Lawrence J. in the course of his judgment mentioned that the Plaintiffs in a case under Section 74 of the County Courts Act, 1888, had to establish that a part of the cause of action arose within the district as a condition of obtaiaing leave from the registrar to commence the action in that Court. Dealing with the question whether it could be said that a part of the cause of action arose at a place where the office was posted, he observed:
I agree that the posting of the offer was he part of the cause of action. The making of an offer is part of the cause of action, but an offer is made where it is received and that in this case was at Croydon.
12. Justice Lush (who later became Lord Justice Lush) held:
The material question is not where the offer was sent from but where it was made, and the making of the offer is proved by showing that it was received. Therefore, the offer here was made in Croydon. The posting of it was an part of the cause of action.
13. This case was fallowed by the learned Chief Justice Sir Lionel Leach, and Justice Kunhi Raman in Ahmad Bux v. Fazat Karim I L R 1940 Mad 195. In that case the Plaintiff sent a telegram from Madras to a mair(sic) at Hyderabad offering to buy hide at a certain price. The offer was accepted and the question was whether any part of the cause of action arose at Madras simply because the telegram was sent from Madras. After a careful review of the various decisions of the Madras High Coart and other Courts the learned Chief Justice observed as follows:
The proposal for the policy was posted from Madras and it was contended that the contract must therefore be deemeed to have been made here.............. I am unable to agree that the posting of an offer or the despatch by telegram of an offer from a particular place can be regarded as part of the cause of action. The making of the offer has to be proved in order to entitle a Plaintiff to succeed in such a case as this but the offer is made it the place where it is received and if it is made by post or telegram the place of despatch is not a material facto.
14. Section 4 of the Indian Contract Act puts it beyond any controversy that an offer must be deemed to have been made at the place where it was received and not at the place from where it was sent.
15. Learned Counsel for the Respondent has placed strong reliauce on a decision of the Calcutta High Court in Engineering Supplies Ltd. v. Dhandanta and Co (1931) 58 Cal 539. The decision was by Rankin C. J. and Ghose J Any observation on a point of law by Rankin C. J. is entitled to great weight. In that case an offer wase made by a cablegram to London from Calcutta and it was accepted which by cablegram from London, In accordance with the terms of the contract the goods were sent to Calcutta, but they were rejected because they were said not to be of the specified quality. The learned Chief Justice regarded the making of the offer by cablegram from Calcutta as part of the cause of action and the rejection of the goods in Calcutta as also a part of the cause of action. As was pointed out by Leach C. J in the case of Ahmad Bux v. Fazal Karim I L R 1940 Mad 195 referred to above the contract was a C. I. F. contract was much as the goods had to be delivered in Calcutta and therefore there could be no doubt that a part of the cause of action did arise in Calcutta. The observations of the learned Chief Justice were, therefore, not necessary for the decision of that case and the case having been decided on both points in favour of the Plaintiff the decision on the point may be treated as unnecessary. in any case after having carefully considered the law on the point, we are inclined to agree with the view of the Madras High Court that the posting of an offer cannot be considered to give rise to a part of the cause of action at a place where the offer is posted when the person to whom the offer is to be communicated lives at a different place.
16. For the reasons given above, we allow this application in revision, set aside the order of the lower appellate Court and restore that of the Court of first instance. The applicant is entitled to his costs.
Alert