Durga Prasad v. Baldeo and Others

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Introduction

This case concerns an arrangement that is void due to a lack of legitimate respect between the parties. As a result of the parties’ lack of legitimate concern, there is not a valid arrangement between them. According to the Indian Contracts Act of 1872, “the contract without thought is invalid.” Every party’s concern is critical in a contract; otherwise, it would be invalid.  

In this case, there was no legitimate consideration between the parties throughout the duration of the transaction, rendering the arrangement invalid, and there was no personal benefit for the dedication, the complainant claiming that the building of the shop was not undertaken in response to the defendant’s needs, but rather in accordance with the district collector’s orders. 

Facts

In his neighbourhood, the complainant demanded that the district collector create several outlets. For doing business, those outlets were paid rent by the defendant. The rent was affixed at the same time. Later, the defendant told the plaintiff that he would pay him a 5% commission on all goods that he will supply from the shop in exchange for the plaintiff’s creation of the building through disbursement of vast sums of money. The claimant, on the other hand, did not pay the commission. As a result, Durga Prasad sued the shopkeepers who had refused to pay the commission. 

Issues

• Is the contract true or invalid? 

• Is this a legally binding deal or not? 

Contention

Plaintiff

The complainant said that the defendant promised to pay a 5% fee on all items sold from that store, even though the items were out of stock. As a result of the defendant’s act of constructing the structure, the contract is valid. As a result, the defendant is required to pay a 5% fee. 

Defendant

The defendant was not consulted prior to the building’s completion. The convict never stated that he intended to construct the structure. As a result, the contract is void. 

Ratio of the Case

Section 2(d) of the Indian Contract Act, 1872[1] says: ‘Any act, a commitment, or abstinence or pledge by the promisor or by any party that he has made, or does or refrains from doing, or pledge that he or she will do or refrain from doing, or that he or she makes, shall be deemed to be a promise.’ Section 2(d) of the act, followed by Section 25[2] of the act, expressly states that “any arrangement without consideration is void.”  

Section 2(d), Indian Contract Act, 1872 states, “When, at the wish of the promiser, the pledge or the other party has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing, something, such an act or abstinence or promise is called the consideration for promise.” Section 2(d) of the act, followed by Section 25 of the act, expressly states that “any arrangement without consideration is void.” 

  1. Chinnaya vs. Ramayya[3]

In this case, an elderly lady gave a property to her daughter D by a deed of gift, with the condition that she pay her aunt, P (the old lady’s sister), a set amount of money per year. D and P agreed to pay her the agreed-upon balance the next day. D later declined to pay the money, claiming that no thought had been exchanged between P and D. 

The Court held that P was entitled to continue the case because consideration had been paid by the old woman, P’s sister, to the baby, D.

  1. Abdul Aziz vs. Masum Ali, (1914)[4]

In this case, the secretary of the Mosque Committee filed a lawsuit to uphold a commitment made by the promiser to contribute Rs. 500 to the mosque’s re-building. The Court ruled that “the pledge was not enforceable because there was no consideration beyond the scope of benefit,” because the person who made the promise received little in return, and the secretary of the committee to which the promise was made suffered no harm because no renovations were carried out, and so the lawsuit was dismissed.  

  1. Kedar Nath vs. Gauri Mohamed[5]

In this case, the Mosque Committee’s secretary of a filed a suit to impose a pledge that the promiser had made to subscribe Rs.500 for the re-building of a mosque, and the secretary even suffered a loss on the basis of the promise during the course of the case. 

The secretary may reclaim the sum when the pledge was made during a spare disability to the secretary, but the commitment may only be carried out to the degree of the responsibility (detriment) sustained by the secretary, according to the Court. 

The pledge is enforceable in this situation, even though it was completely gratuitous, since the promise secretary’s religion had suffered a responsibility. 

Judgment

The plaintiff’s arguments were dismissed by the court because there was no valid contract between the plaintiff and the appellant, as defined by Section 25, and the contract has no reasonable consideration, as defined by Section 2(d). A contract without consideration is invalid. In relation to the bond, the promissory has no personal profit. The purpose of the dedication was not specified in the contract. As a result, the deal is null and void. 

Furthermore, the Court held that any contract that had not been executed with proper formality and deliberation necessary where such goodish interests were concerned, as well as the honesty and transparency required to allow confidence to result, threatens to render the arrangement invalid. 

Conclusion

When one negotiating party promises to try to do actions in exchange for reciprocal acts, a contract is formed. One of the necessary parts of contract validation is “consideration.” Though the Indian Contract Act of 1872 is based on English Common Law rules, prior consideration and consideration by a third party do not appear to be legitimate consideration in English law. 


[1] The Indian Contract Act, 1872, s. 2(d).

[2] The Indian Contract Act, 1872, s. 25.

[3] Chinnaya vs. Ramayya, ILR (1876-82) 4 Mad 137.

[4] Abdul Aziz vs Masum Ali Case Summary (1914).

[5] Kedarnath Bhattacharji vs Gorie Mahomed (1887) ILR 14 Cal 64.

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