Kedarnath Bhattacharji v. Gorie Mahomed

The Commissioners of the Howrah Municipality raised a fund for a Town Hall and agreed with a builder on the strength of the subscriptions. When a subscriber of Rs. 100 did not pay, the Vice-Chairman sued him. On 26 November 1886 the Calcutta High Court held that the subscription bound the subscriber and that the plaintiff could enforce it.

Quick Revision

Citation note: the judgment text prints the reference as 14 C. 64 and Civil Reference No. 13 A of 1886. Other citations are not in the judgment text.

Source note: the judgment text used is the report of the case in Indian Decisions (New Series), Calcutta, Vol. VII (a reprint of the Calcutta report). The text has no numbered paragraphs, so no paragraph numbers are cited.

Parties

Kedarnath Bhattacharji — plaintiff; a Municipal Commissioner and Vice-Chairman of the Howrah Municipality, and one of the trustees of the Howrah Town Hall Fund.

Gorie Mahomed — defendant; a subscriber of Rs. 100 to the Howrah Town Hall Fund who did not pay.

Procedural History

1. The plaintiff sued the defendant in the Howrah Court of Small Causes to recover the subscription of Rs. 100.
2. The Registrar of that Court gave the plaintiff leave to sue for himself and all others in the same interest, under s. 30 of the Civil Procedure Code.
3. The defendant contended that the plaintiff had no right to sue.
4. The Judge of the Small Cause Court held that the Registrar had no power to give leave to sue.
5. The Judge held that the Town Hall was trust property, so the case fell under s. 437 of the Code. He held that the suit was bad ab initio (from the beginning).
6. On whether such a suit would otherwise lie, the Judge referred to Kedar Nath Mittra v. Alisar Rahoman (10 C.L.R. 197). He found that the defendant was a man of no education.
7. The Judge held that such a man could not be expected to have signed the subscription book with full knowledge of the object and utility of the Town Hall. He found that the defendant was under no legal obligation to pay.
8. The Judge dismissed the suit. He made his judgment contingent on the opinion of the High Court on two points.
   • Whether the suit as laid was legally maintainable.
   • Whether the trustees were entitled to judgment on the facts stated.
9. The matter came to the High Court as a civil reference (a case sent up by a lower court for the High Court's opinion): Civil Reference No. 13 A of 1886. It was made by Babu Krishna Mohun Mukerji, Officiating Judge of the Small Cause Court of Howrah, and is dated 8 August 1886.
10. 26 November 1886: the High Court (Petheram C.J. and Beverley J.) gave its opinion, delivered by Petheram C.J.

Facts

1. It was thought advisable to build a Town Hall at Howrah, provided enough subscriptions could be got together.
2. The Commissioners of the Howrah Municipality set out to get the funds by public subscription. By deed they made themselves trustees of the Howrah Town Hall Fund.
3. When the subscriptions allowed, the Commissioners, including the plaintiff, made a contract with a contractor to build the Town Hall. The plaintiff was also Vice-Chairman of the Municipality.
4. Estimates and plans were put before the Commissioners and approved. The original estimate was Rs. 26,000.
5. The estimate was later increased to Rs. 40,000. The subscriptions were found enough to cover that amount, so the original plans were enlarged and altered.
6. The additions were made with the authority and sanction of the Commissioners. The Commissioners, including the plaintiff, stayed liable to the contractor for the whole Rs. 40,000.
7. The defendant, when applied to, signed his name in the subscription book for Rs. 100.
8. The defendant did not pay. The plaintiff sued him in the Howrah Court of Small Causes.
9. The plaintiff sued as Vice-chairman and trustee. He also sued as one of the persons who had made himself liable to the contractor for the cost of the building.
10. The plaintiff sued to recover the amount entered in the subscription book.

Issues Raised

1. Whether the suit as laid by the plaintiff was legally maintainable?
2. Whether, upon the facts stated in the reference, the trustees were entitled to judgment?
3. Raised in the opinion: whether the plaintiff could sue for himself and all those in the same interest to recover the subscription from the defendant?

Arguments Contended

The report does not set out counsel's arguments before the High Court. It names only the counsel for each side. The only contention recorded is the defendant's, in the Small Cause Court.

For the plaintiff:

• The report records no argument for the plaintiff before the High Court.
• The plaintiff sued as Vice-chairman and trustee, and as one of the persons liable to the contractor. He sued on behalf of himself and all others in the same interest, with leave from the Registrar.

For the defendant:

• The defendant contended that the plaintiff had no right to sue.
• The report records no other argument for the defendant before the High Court.

Court's Reasoning

The judgment does not number its paragraphs. The steps below follow the order of the opinion. The opinion of the Court was delivered by Petheram C.J. The report states that it is the opinion of both judges, so there is no separate opinion by Beverley J.

Opinion of the Court (Petheram C.J. and Beverley J.), delivered by Petheram C.J.

1. Noted: Two questions are put to the Court in this reference from the Small Cause Court.
2. Noted: The first is whether the suit as laid by the plaintiff is legally maintainable. The second is whether, on the facts stated, the trustees are entitled to judgment.
3. Noted: The plaintiff is a Municipal Commissioner of Howrah and a trustee of the Howrah Town Hall Fund.
4. Noted: A Town Hall was in contemplation, if the funds could be raised. The interested persons set to work to see what subscriptions they could get.
5. Noted: When the subscription list reached a certain point, the Commissioners, including the plaintiff, contracted with a contractor to build the Town Hall. Plans were submitted and passed.
6. Noted: As the list grew, the plans grew too. The intended cost of Rs. 26,000 grew to Rs. 40,000.
7. Noted: The Commissioners, including the plaintiff, stayed liable to the contractor for the whole sum, because the additions were made with their authority and sanction.
8. Noted: The defendant, on being applied to, put his name in the book for Rs. 100.
9. Noted: The question is whether the plaintiff, as one of the persons liable to the contractor, can sue for himself and all in the same interest to recover the subscription.
10. Held: He can. The Court says "We think he can."
11. Held: This is so without reference to his being a trustee or a Municipal Commissioner.
12. Why: Under the provisions of the Code of Civil Procedure he is entitled to bring an action for himself and others jointly interested with him.
13. Held: If the action could be maintained for all, and no other section precluded it, that would cure any technical defect in the case.
14. Noted: The next question is whether the suit could be maintained by the whole of the persons who made themselves liable to the contractor, if they were all joined.
15. Noted: There are a great many subscriptions that cannot be recovered.
16. Noted: A man may put his name down for some charitable object, for instance. The amount cannot be recovered from him because there is no consideration.
17. Noted: This case is different. Persons were asked to subscribe, knowing the purpose to which the money was to be applied.
18. Noted: They also knew that on the faith of their subscriptions an obligation was to be incurred to pay the contractor for the work.
19. Held: In these circumstances, "this kind of contract arises".
20. Noted: The subscriber, by subscribing his name, says in effect: "In consideration of your agreeing to enter into a contract to erect or yourselves erecting this building".
21. Noted: He adds: "I undertake to supply the money to pay for it up to the amount for which I subscribe my name".
22. Held: That is a perfectly valid contract, made for good consideration.
23. Why: It contains all the essential elements of a contract that the persons to whom the liability is incurred can enforce in law.
24. Held: Both questions must be answered in the affirmative. There is a contract for good consideration, and it can be enforced by the proper party.
25. Held: The plaintiff can enforce it, because he can sue for himself and all persons in the same interest.
26. Held: The Judge of the Small Cause Court ought to decree (formally grant) the suit for the amount claimed.
27. Held: The plaintiff ought to get his costs, including the costs of the hearing in the High Court.

Authorities

• Kedar Nath Mittra v. Alisar Rahoman, 10 C.L.R. 197: cited by the Judge of the Small Cause Court, as recorded in the reference, on whether the suit would otherwise lie. The High Court does not discuss it.
• Code of Civil Procedure, s. 30: the Registrar gave leave under it to sue for himself and others in the same interest. The Small Cause Court Judge held that the Registrar had no such power.
• Code of Civil Procedure, s. 437: the Small Cause Court Judge held that the case fell under it because the Town Hall was trust property. The High Court does not discuss it.
• Code of Civil Procedure, provisions on suing for oneself and others jointly interested: the Court relied on them to hold that the plaintiff could sue. It names no section.
• Report headnote marker: [F., 13 C.P.L.R. 57 (59).] The report prints this after the headnote. The judgment text does not explain it.
• Also cited in footnotes: none. The footnotes give only the reference number and date, and the citation of Kedar Nath Mittra v. Alisar Rahoman.

Judgement

1. The Court answered both questions put in the reference in the affirmative.
2. The Court held that the Judge of the Small Cause Court ought to decree the suit for the amount claimed.
3. The Court held that the plaintiff ought to get his costs, including the costs of the hearing in the High Court.

Legal Principle / Ratio

A person who subscribes to a fund knowing its purpose, and knowing that a liability will be incurred on the faith of his subscription, makes a contract for good consideration. Those who incurred the liability can enforce it. One of them may sue for himself and all others in the same interest.

Key holding: "That is a perfectly valid contract and for good consideration".

The report's headnote says the same. A suit will lie to recover a subscription promised. The subscriber must know that an obligation is to be incurred to a contractor on the faith of his and other subscriptions.

Critical Analysis

Analysis based on the judgment text.

• The Court says a subscription to a charitable object may be unrecoverable for want of consideration. It does not say what test separates such a case from this one beyond the subscriber's knowledge and the liability incurred.
• The Court does not say whether the contract arises when the subscriber signs, or when the Commissioners contract with the builder. It speaks of the subscriber's undertaking in return for the Commissioners agreeing to enter into a contract.
• The Small Cause Court Judge relied on the defendant's lack of education. The opinion does not discuss that finding.
• The opinion does not discuss the Judge's view that the Registrar had no power to give leave, or that s. 437 applied. It holds only that the plaintiff may sue for himself and others in the same interest.

Significance

• The case shows when a subscription promise becomes a contract: the subscriber knows the purpose and knows that liability will be incurred on the faith of it.
• It explains that an ordinary charitable subscription may fail for want of consideration, but this one did not.
• It allows one of the persons liable to the contractor to sue for himself and all others in the same interest.

Exam-Important Points

• Rule: a subscriber who knows the purpose, and knows that a liability will be incurred on the faith of his subscription, makes a valid contract for good consideration. Trap: a bare charitable subscription is not recoverable for want of consideration.
• Rule: the consideration is, in effect, the promisee's agreeing to enter into a contract to erect the building, or itself erecting it.
• Rule: the plaintiff may sue for himself and all others in the same interest. This holds without reference to his being a trustee or a Municipal Commissioner.
• Trap: the Small Cause Court Judge had dismissed the suit. The High Court did not decide the case itself. It gave its opinion on a reference, and the Judge was to decree the suit.
• Facts to remember: subscription of Rs. 100; estimate raised from Rs. 26,000 to Rs. 40,000; decided 26 November 1886; Petheram C.J. and Beverley J.
• Result: both questions answered in the affirmative, and the plaintiff gets costs, including the costs of the hearing.

Prepared from the full text of the judgment. The judgment text has no numbered paragraphs, so no paragraph numbers are cited.