Kedarnath Bhattacharji v. Gorie Mahomed, (1886) ILR 14 Cal 64

Kedarnath Bhattacharji was a Municipal Commissioner of Howrah and a trustee of the Howrah Town Hall Fund. A public initiative was undertaken for the construction of a Town Hall in Howrah, and funds were being raised through public subscriptions. Various persons pledged contributions toward the project, including Gorie Mahomed, who subscribed Rs. 100.

Once sufficient subscriptions had been obtained, the Commissioners entered into a construction contract with a builder for erection of the Town Hall. The project costs later increased significantly as the building plans expanded. Subsequently, the defendant refused to pay the amount he had pledged, arguing that the subscription was merely a gratuitous promise lacking consideration. The plaintiff filed a suit to recover the subscribed amount.

General Rule Regarding Voluntary Subscriptions: The Court acknowledged that many charitable subscriptions are ordinarily unenforceable because they lack consideration. A mere moral obligation does not create a binding contract.

Reliance and Incurring of Liability Constituted Consideration: The Court observed that the subscriptions were made with the understanding that the trustees would enter into contractual obligations for construction of the Town Hall. Acting upon the defendant’s promise and similar subscriptions, the trustees incurred legal liabilities by contracting with the builder. Thus, the defendant’s promise induced action and financial responsibility on the part of the trustees.

Existence of Valid Consideration: The Court held that the trustees’ act of entering into a binding construction contract constituted sufficient consideration for the defendant’s promise. The Court explained that the subscriber effectively stated: “In consideration of your entering into a contract to erect this building, I undertake to supply the money subscribed.”