By Neha Mohanty, a first-year B.B.A. L.L.B student from KIIT Law School, Bhubaneswar, Odisha
Lalman Shukla V. Gauri Dutt is touted as a landmark judgment for the validity of the contract under the Indian Contract Act, 1872. The case was filed in the Allahabad high court in the year 1913 and was presided over by Justice Banerji at the Allahabad High Court.
Facts of the case:
In this case, the defendant Gauri Dutt’s Nephew had absconded and was nowhere to be found. After the defendant became aware of the same, Dutt had sent all the servants in search of the missing nephew. The plaintiff Lalman Shukla was one of the servants who had gone out in search of the nephew. The plaintiff eventually found him and brought him back.
When Lalman Shukla had left the house to leave for Haridwar from Kanpur he was handed some money for his railway fare and other expenses. As soon as Lalman Shukla had left the house, the defendant announced a reward of Rs. 501 for whosoever found Dutt’s nephew. Shukla had no idea that such an announcement was made. The plaintiff found the missing nephew and brought him back to his home in Kanpur. Six months after the said incident occurred, Dutt sacked the plaintiff.
After being removed from the job, the plaintiff claimed the money from the defendant and the latter denied to pay the said remuneration. As a result the plaintiff Lalman Shukla filed a case against Gauri Dutt, his master, for not rewarding him as he was entitled to.
Issues raised in this case:
The main issues which were raised in this case were as follows:
- Whether Lalman Shukla was entitled to get the reward from Gauri Dutt for tracing the missing boy.
- Whether there was a valid acceptance of the offer made by the plaintiff.
- Whether there exists a contract or whether the situation amounts to a contract between the two.
Arguments on behalf of the plaintiff (Lalman Shukla)
The plaintiff Lalman Shukla strongly affirmed that the very performance of him finding the missing boy was sufficient enough for him to be entitled to the reward. Since according to Gauri Dutt’s condition whoever found the lost boy and brought him back would get the reward. Therefore, as per the condition of the defendant, the plaintiff had traced the boy and brought him back.
He stated that it is not important to have prior knowledge about the reward, especially under this circumstance. He also emphasized the fact that section 8 of the ICA 1872, states that ‘the performance of the act or the acceptance of any consideration of a proposal is an acceptance of the proposal’.
And in this present case, the condition as stated by the defendant Gauri Dutt was to find the missing child to be rewarded Rs 501.
He stated that it was immaterial that the person who has performed the act must have the knowledge of the condition to claim the reward.
Arguments on behalf of the respondent
The defendant asserted and strongly argued that the plaintiff Lalman Shukla was not aware of the offer and had no knowledge about it before finding the defendant’s nephew.
So an offer without the knowledge of the offeree or the promise cannot be accepted and also there was no such possibility for the plaintiff to accept the offer without even knowing about it.
Gauri Dutt argued that according to section 2(a) of the Indian Contract Act, 1872,
“When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”.
Further under section 2(b),
“When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise”
Therefore, the defendant contended that assent was essential to create a contract between both parties. This means that before accepting the offer the offeree must have complete knowledge about the facts to give assent or approval. But in this particular case, the plaintiff was completely unaware of the reward which was associated with it and the plaintiff was merely doing his duty.
Therefore, according to section 2(h) of the ICA, since there was no acceptance there was no agreement that can be enforceable by law.
So according to the defendant Gauri Dutt, Lalman Shukla was not entitled to get the reward and hence he couldn’t claim it.
In the present case of Lalman Shukla vs Gauri Dutt, it is derived that in order to enter into a contract, two critical aspects should be considered,
- To have complete knowledge of the facts of the offer or proposal
- Acceptance of the offer
A person to whom the offer is made, the offeree, must accept the proposal. The communication regarding the offer is also very important as mentioned in section (4) of the ICA. It states that communication can only be complete when it comes to the knowledge of the person to whom it is made.
To convert a proposal into an agreement both knowledge and assent must be present. Here, in the given instance, both were missing.
As the plaintiff had no knowledge and hadn’t given his approval or accepted the proposal there did not exist a valid contract between the two.
At the time when the plaintiff was searching for the boy, his obligations and duties were as a servant. Therefore the plaintiff Lalman Shukla was not entitled to get the award.
In the said case, the petitioners’ appeal against the respondent Gauri Dutt was dismissed by the court.
After analyzing all the facts of the case, the honourable high court held that for creating or entering into a valid contract there has to be knowledge and assent to the offeree made by the proposer.
Here, the plaintiff did not know the reward before performing his act. He only came to know about it later, in which case there was no possibility of accepting the offer.
Hence, there was no contract. Therefore, Lalman Shukla was not entitled to get or claim the reward.
The judge reiterated that the plaintiff was fulfilling his obligations as a servant of tracing the missing boy which was a part of his duty. Therefore, the plaintiff’s suit against the defendant was completely dismissed by the court.
The petitioner in presenting his case had relied upon Gibbons v. proctor (1891) in the English Contract Law. In this case, the court had held that if any person performs certain conditions of the contract, even if he is not aware of the reward or he does not have the knowledge of the reward, he is entitled to get the reward.
The respondent on the other hand relied on the famous U.S. case Fitch v Snedaker (1868).
In this case, Fitch after giving the information about the murderer’s identity found out about the reward and then claimed it. The court in the said case had held,
“The form of action in all such cases is an assumption. The defendant is proceeded against as upon his contract to pay, and the first question is, was there a contract between the parties? To the existence of a contract, there must be mutual assent, or, in another form, offer and consent to the offer. . .without that there is no contract. How, then, can there be consent or assent to that of which the party has never heard?. . The offer could only operate upon plaintiffs after they heard of it”
Therefore, Fitch was not entitled to the reward as he accepted the offer in ignorance. And the person accepting the offer, the offeree, must have all the information regarding the reward before claiming for rewards associated with that action.
In the end…
The case between the plaintiff Lalman Shukla and the defendant Gauri Dutt examined the validity of the contract in the absence of prior acceptance. According to the judgement given by the Allahabad high court, a contract without acceptance is void.
Therefore, despite his services, the plaintiff Lalman Shukla was not entitled to get the reward as the mere performance of the act does not mean an assertion to the contract. Additionally, to turn an agreement into a proposal, it has to be enforceable by law. And lastly, the communication of the proposals which means that the person to whom the offer or the proposal is made must come to the knowledge of the acceptor before accepting the proposal.
- Lalman Shukla vs. Gauri Dutt  40 ALJ 489
- Fitch vs. Snedaker  38 N.Y. 248
- Gibbons v Proctor  64 LT 594