Kedar Nath Bhattacharji v. Gorie Mahomed

Facts

• The residents of Howrah decided to construct a Town Hall
• Subscriptions were invited; the defendant (Gorie Mahomed) signed the subscription book promising Rs 100
• Based on the total subscriptions received (including the defendant's), the building committee enlarged the plans and entered into contracts with builders
• The plaintiff (Kedar Nath Bhattacharji) was the Vice-Chairman and Trustee who had made himself liable to the contractor
• The defendant failed to pay his subscription
• The plaintiff sued to recover Rs 100

Issue

1. Whether a promise to subscribe to a charitable/public fund is enforceable, and if so, what constitutes the consideration for such a promise?

Held

• The court held in favour of the plaintiff: the subscription was enforceable
• When the organisers, on the faith of the subscriptions, entered into contracts with builders and incurred liabilities, this constituted consideration for the subscriber's promise
• The defendant's subscription induced the committee to act, enlarge plans, and commit to expense: this was "something done at the desire of the promisor" within Section 2(d)
• A bare promise to donate (before any action is taken on its faith) may be gratuitous, but once the promisee acts on it to their detriment, consideration crystallises

Ratio Decidendi

A subscription to a charitable or public fund is enforceable as a contract when the promisee, acting on the faith of the subscription, incurs definite liabilities or changes position. The act of incurring liability at the desire (express or implied) of the subscriber constitutes consideration under Section 2(d) of the Indian Contract Act. The subscription induces the action; the action is the consideration.