Veeramma vs Appayya and Another

Viswanatha Sastri, J.—If Plaintiff is the Appellant. The fact is are these One Nagayya owned a house and vacant site forming the subject-matter of this second appeal. He had a daughter Veeramma, the Plaintiff. She married K. Basavayya, a nephew as well a the wife''s brother of Nagayya. Nagayya was a whimsical old man who quarrelled with his wife frequently. Their quarrels culminated in a, suit by the wife for separate maintenance against Nagayya and a decree allotting a portion of the suit house for her residence. Nagayya gifted the house and site in favour of his nephew K. Appayya the Defendant, under Exhibit A-1, dated 20th June, 1945. There is a recital in Exhibit A-1 that the donee had been maintaining Nagayya and that the gift was made out of love and affection. Differences soon arose between the Plaintiff and the Defendant the former being backed by her husband and other relations.

The Defendant was unable to take possession of the property gifted under Exhibit A-1. The gift was challenged as having been procured by fraud practised on Nagayya. The lower appellate Court was inclined to the view that the gift Exhibit A-1 was nominal- and could have been got cancelled by Nagayya. Be it as it may, the Defendant filed a'' criminal complaint Exhibit A-2 dated 26th March. 1946, against the Plaintiff''s husband K. Basavayya and three Ors. accusing them of offences under Sections. 323, 341, 447 and 504, Indian Penal Code. The defence was that the complaint was false. On the intervention of certain mediators the parties compounded the case under Exhibit A-3 dated 24th April, 1946. One of the terms of Exhibit A-3 is that the Defendant should execute a dakhal deed conveying the house and site in favour of the Plaintiff who should thereafter maintain her father Nagayya in the house for his life.

The Plaintiff however, was not a party to Exhibit A-3 though she and her father Nagayya took an active part in bringing about the compromise. There was a settlement of a family quarrel and Plaintiff took charge of her father and maintained him till his death pendente lite. The Defendant defaulted to execute a dakhal deed in her favour as agreed by him m Exhibit A-3. The plaintiff therefore sued for specific performance of the arrangement. The Defendant pleaded that Exhibit A-3 had been obtained from him fraudulently and that a sum of Rs. 100 and a quantity of paddy had been agreed to be paid to him though not so specified in Eximit A-3 and that I there'' had been default in such payment. The Courts below, have rejected this plea of the Defendant the trial Court granted a decree for specific performance while the appellate Court dismissed the suit. Hence this second appeal. (2) It appears to have been conceded by the advocate for the Plaintiff in the lower appellate Court, in deference to authority that the Plaintiff being a stranger to the arrangement evidenced by Exhibit A-3 could not sue to enforce its terms. It was argued before me that this admission was due to a misapprehension of the law. On question of fact parties are bound by the admissions of their advocates, whether made in the course of the trial or in the appellate Court, because an Advocate''s General Powers in the conduct, of u suit include the abandonment of an issue of fact, which in his discretion, he thinks it inadvisable to press. Bom-Imadevara Venkata v. Bhashyakarlu 25 Mad 867 (PC) (A) and Ulichi Kotayya Vs. Nallamalli Sreeramulu and Others, . Such admissions cannot be resiled from merely on the ground that the party or his advocate was not posted with all the facts 1 at the time.

Admissions of counsel on a point of law are, however, not binding on the'' parties as an estoppel '' and the Court is free to give effect to its view of the law irrespective of such admissions. Jotindramohan Tagore v. Gancndramohan Tanore 9 Eng LR 377 at p. 40l'' (PC) (C), Beni Prasad V. Duclh-nath, ILR 27 Cal 156 at pp. K 10 (D), Societe Banque, etc. v. Girdhari, AIR ffi-M) PC ) (E) A. Muthuswami Ayyar and Another Vs. P.B. Loganatha Mudali and Others, and Nachiappa v. Muthu, AIR 1948 Mud S9y (G). The question of law whether the Plaintiff, being a stranger to the arrangement evidenced by Exhibit A-3, is entitled in the circumstance,; of the case, to specific performance therefore falls to be decided here.

English case-law oscillated and wavered for a considerable time between yielding to the demands of justice, commonsense and business convenience on the one hand and loyal adherence to the venerable old traditions of the common law on the other. It will be a profitless task to attempt to follow the course of English decision during the last three centuries. Suffice it to say that Tweddle v. Atkinson (1801) 1 B & Section 303 (H) au''ho. ritatively decided that a stranger to a contract could not enforce it because there was no Privity of contract between him and the promisor and he was a stranger to the consideration. Earliar decisions to the contrary like Datum v. Poole (1978) 2 Lev 210 (I) were considered of have, been erroneously decided and devoid of authority. In Dunlop pneumatic Tyre Co. Ltd. v. Sel fridge Co. Ltd. 1915 A.C.C. 847 (.''/). Viscount Haklam, L. G., enunciated the law of England in these terms:

My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to the contract can sue on it. Our law knows nothing of a jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in personal. A second principle is that if a person with whom a contract not under seal has been: made is to be able to enforce it consideration must have been given by him to the promisor or to I some'' other person at the promisor''s request.

This passage was cited and followed by t the Judicial Committee in Vand.ptte v. Preferred 1 Accident Insurance Co. of N. Y. 1933 A.C.C. 70 (K).

After these weighty pronouncements one would have thought that the ghost of (16/8) 12 Lev 210 (I) had been laid for ever. That was not to be. Not only was there a resurrection but 1678-2 '' Lev 210 (I) strode so impressively on the legal stage in 1953.that I am tempted to quote the ] following passage from the judgment of Denning L. J., in Drive Yourself Hire Co. v. Strutt 1953 2 All ER 1475 at pp (1482-1483) (L).

It is often said to be a fundamental principle 5 pie of our law that only a person who is a party } to a contract can sue on it. I wish to assert, as; distinctly as I can, that the common law in its original setting knew no such principle. Indeed, it said quite the contrary. For the 200 years before 1861 it was settled law that, if a promise,\\ in a simple contract was. made expressly for the benefit of a third person in such circumstances that it was intended to be enforceable by him then the common law would enforce the promise at his instance although he was not a party to the contract. That was clearly laid down by the Court of Exchequer Chamber in 1677 in 1678 2 Lev 210 (I): 100 years later it was so well accepted that Lord Mansfield in Maityn v. Hind, (1776) 2 Cowp 437 (M), said it was a matter of surprise how a doubt could have arisen about it: and Buller, J. said in Marchington v. Vernon (1787) 1 Bos and P 101 (N) quite categorically that "if one person makes a promise to Anr. for the benefit of a third that third person may maintain an action upon it.'' Finally, in 1823 the Court of King''s Bench then in its golden age including as it did Abbot C. J. and Bayley, Holroyd JJ" specifically so held: see Carnegie v. Waugh (1823) 12 Dow and Ry KB 277 (O) and in 1844 Joseph Chitty in his highly authoritative work on Pleading, 7th edition, Volume I. pages 4 and 5 treated the law as settled accordingly. He would be a bold man who would say that a principle supported by the names I have mentioned did not represent the law of England, especially when it is so eminently just; and reasonable

In 1861, however, came the unfortunate case of (1861) IB & S 393 (H), in which the Court of Queen''s Bench departed from the law as it had been understood for the previous 200. years and held, quite generally, that no stranger could take advantage of a contract ni thrush made for hi3 benefit, and that was assumed, without argument, to be the law by the House of Lords in 1915 A.C.C. 847 (J). I do not pause to consider whether this new rule was legitimately introduced into the law.

Referring to Section 56(1) the Law of Property Act of 1925 which, so far as it is now relevant provided that

a person may take ... .the benefit of any agreement ........respecting ....property, although he may not be named as a party to the Instrument.

Dennirig, L. J., observed that he could think of no words more apt to do away with the rule in (1861) 1 B&S ''393 (H), leaving the Courts free, in cases respecting property, to go back to the old common Jaw, whereby a third party can sue on a contract made expressly for his benefit and be rid of the old rule about deeds inter partes. The learned Judge cited some recent decisions in support of his view.

In spite of or on account of the reluctance I of common law judges to relax the rigour of the rule that a person not a party to the contract could not enforce it, Courts of equity resorted to the device of a trust to afford relief strict en contract against the ''strict enforcement of the doctrine of privity contract. Lord Hardwicke, considered to be one I the greatest exponents of English equity, expressed the view that where A contracted with B to pay money to C, B could be regarded a; a trustee for C of the benefit of the contract. Tomlinson v. Gill (1756) Amb. 330 (P). This view was given effect to by Grant M. R. in Gregory,v. Williams, (1817) 3 Mer 582 (Q). Thai; was a f, case where a vendee agreed to pay a creditor of "the vendor as part of the consideration for the sale but defaulted to do so. The Court held, that the avendor of the creditor could in equity complete iyperformance of his promise by vendee. In Ml Touche v. Metropolitan Railway Ware housing Co. the 1871 6 Ch A 071 at P. 677 (ii) Lord Haoherley, L.C. laid:

The case comes within the authority Where a sum is payable by A. E. for yof CD., C.D. can claim under the contract as if it had been made with himself. In Lloyds v. Karpen (380.1 1G Oil consideration of the admission of IV fast an underwriting member of Lloyi Harper tendered his guarantee on Informer and held himself responsible 1 engagements as underwriter. It Habit defaulted on certain marine insurance Lloyd''s sued Samuel Harper on the guarantee contract for the benefit of the holders of safety that it be tract as 5), in Mo, fennel a If of tho all his )or having ; policies, there convalesce 4nilt was-held that Lloyd''s could recover tbe craount I that was" due to the holders of the iavuranee polled cies. Lush, L.J. said:

I consider it to be an established role of law that where a contract is mode with A for the,U benefit of E. A can su0 on the contract for the if benefit of B and recover all that B could have d recovered if the contract had been made with B d himself.

The ratio decidendi was that the promise Lloyd''s was a trustee for the. beneiitov third persons, that is to say the holders of the marine insurance policies, and entitled to recover on the contract of guarantee the full amount that was due to the policy-holders. It was not because that ''(-, the promisee had a right to such amount that it L; Was allowed to due but because the; Court the policy holders. In has (. where the promisee is a trustee for a third person, it is a mere formality to require the suit to be brought in the name of the promisee and there case. be no objection to the beneficiary himself subs in his own name imp leading the promisee as a co-Defendant.

In Les Affreteurs Reunis Soclete Anonyme v. Leopold Watford (London) Ltd. 1919 ACC 801 CD the House of Loads allowed a broker who was not a party to a charter party to sue the owners of a steamship for recovery of his commission or broke-A 5-age. Lord Birkenhead, L. C" said that the character, could sue the owners of the steamship as trustees on behalf of the broker, (house so far /. as the broker was concerned, the contract was reach and that since the parties agreed to treat the action as if it had been laid by the broker and the chatterers as co-Plaintiffs, the broker could recover his commission in his action.

It must however, be confessed that the course of English decisions has not been uniform & this device of a trust has been employed and rejected on no obvious principle except, if I may be pardoned for saying the predilections of the presiding judges. It is unnecessary t0 examine the opposing sets of decisions at length. In Re Klavell, Murray v, rival (1883) 25 Ch D 89 (U), a trust in favour of a third party to the contract was implied, but in Gandy v. Gandy (188) 30 Ch D 57 (V), it was not, Pry, L. J., observing "that the covenant is not simple covenant, to pay a sum of money or the benefit of the children but a covenant contingent on the observance of many things by the trustee " Even the Judicial Committee in J933 AC 70 (K) looked askance at the resort to the theory of a trust fen'' enabling a stranger to a contract to sue for a benefit secured we him the re under. It was observed that the burden of proof of a trust was heavy & that the intoned on to constitute the trust, "must tie affirmatively proved." It was no doubt recognized that a party to a contract can constitute himself a trustee for a third party of a right under the contract and thus confer such rights enforceable in equity on the third party. Emphasis was also laid on the need for the third party and the trustee to remain merely as passive instruments, the former to pass and the latter to receive the benefit of the contract without the necessity for the performance of active duties or the exercise of discretion on the part of the trustee. On facts similar to these of (1883) 25 Ch I.) 89 (U). a contrary conclusion was come to in Me Sohebsman; Official Receiver v. Super in newels (London) Ltd. 1914 Ch. 83 (W), Duparcq, L. J., observing in a slightly cynical vein as follows:

"It is true, that by the use possibly of unguarded language, a person may create a trust as monsieur Jourdian talked prose without knowing it, but unless an intention to create a trust h- clearly to be collected from the language used and the circumstances of the case, I think that the Court ought not to be astute to discover indications of such an intention."

The devise of a trust could well have been applied by a sort of fiction even to cases where the contracting parties; did not adopt it and perhaps were not even conscious of such a legal concept. This was a comparatively small and sweet pill to swallow in comparison with the inebriates assumpsit�s writ in which the allegation was made, without factual basis that the Defendant "not regarding his said promise and undertaking, but contriving and fraudulently intending craftily and habetlely to deceive and defraud the said Plaintiff, hath not yet paid the said sum of money." If the device charging a breach of contract as deceit and resorting to the writ of inebriates assumpsit�s for relief in respect of a breach of contract was permissible, I fail to see why the Courts should haw shrunk from finding a trust in. order to support an action by a stranger to a contract. Various and varying excuses were found for not invoking the doctrine of trust in such cases and this uncertainty of the law led a learned Writer to remark that "the way in which the Court will decide a novel case is almost completely unpredictable." In Pollock on Contracts, page 167,. Professor Winfield candidly remarks:

It must be confessed that some of the English-decisions raise the inference that if the Courts wish to enable X to sue they make Y a trustee, but that if they wish to prevent him from doing so they fall back upon the dogma that there is no privity of contract between X and Y.

The unsatisfactory state of the English law was referred to by the Lord Chancellor''s Lav/ Revision Committee in their aixth Interim Report, 1937. To quote Professor Winueid, again, the committee:

Pointed out the inconvenience arising from the uncertainty whether the Courts will, in any particular case, apply the trust idea or the idea of privity of contract the procedural dkUeultks where the trust idea is held to be applicable; and the special necessity of clarifying this brunch of the law in the case of Bankers'' Commercial Credits, which are a prominent feature in modern business, particularly foreign far. They recommended that Where a contract by its express terms purports to confer a benefit to a third party, it shah be enforceable by the third parky subject to any defences that would have been valid between the contracting parties, but Unit the parties to the contract may, unless it otherwise provides cancel it at any time before the third party has adopted it expressly or by conduct.

The common law in England with regard to the necessity of consideration for supporting a contract has also come in for criticism. It is well known that till the middle of the last century, a moral obligation was regarded as a sufficient consideration and it was only thereafter that the view that the moral obligation was sufficient to support a contract was abandoned by the Courts. Consideration in the sense of either a benefit to the Defendant or a detriment to the Plaintiff war, considered essential for a valid contract. The commercial instincts of the penciled to the recognition of contracts supported by valuable consideration and only those contracts, as deserving of legal recognition and sanction. Indeed, Lord Dunedin in tire House of Lords r-.;-se already cited 1915 A.C.C. 847 (J) adopted the follwing; definition of consideration by Sir Frederick Pollock:

An act or forbearance of one party, or the terms thereof is the price for which the promise of the other is bought and the promise thus given for value is enforceable.

The problem of consideration came to be presented by jurists and Judges in the language of purchase and sale. Once the idea of the sufficiency of moral obligation to sustain a contract was abandoned, it was an easy step for the Courts to take that only he could sue on a Promise who had paid the price for it. This view was often expressed by saying that

the consideration must move from the promisee.

A person may be a party to the contract and yet may not furnish the consideration, and a third person may furnish it. The person for whose benefit a promise is made and, who is anxious to enforce the promise may not be the promise at all. If the promisor fails to fluid his part of the bargain it was only the proimise who had given the consideration that could sue on the contract und not the person for who benefit the promise was intended but who did not furnish the .consideration. There was widespread dissatisfaction with these views which had been recognized by the lawyers and judges of a previous age as vital in the law of contracts. The report of the Law Revision Committee adverted to the difficulty of discovering the raison entire of the English doctrine of consideration and recommended that consideration should no longer be required when the promise upon which the Plaintiffs sued was contained in a comprehensive written, document. Indeed, under the English Law, there is no need to prove consideration for a contract under seal and the distinction between contracts under seal and ordinary contracts is artificial. The only test of the-enforceability of a contract should be whether it, was intended to create a legal obligation binding on the parties.

The position in England to-day is that no one can enforce a contract to which he is not a. party even though he has a direct interest in the performance of it. To this rule, Courts of equity introduced an exception by resort to the fiction, of a trust. It was held that if a person can claim through a party to a contract, as in the case of a cestui que trust claiming through a trustee, he could enforce the contract though he is not a party to it.

When the Courts of equity said that a promise was trustee of the contract right and was entitled as such to enforce the promised performance it was only Anr. way of stating that the facts created a right in the third party who was entitled to the benefit. In an action by the beneficiary for enforcing the benefit secured to him, the participation of the trustee as a party was a formality required for the purpose of making- the judgment conclusive against him. The object of the action was to compel performance by a promisor who-has received a consideration for his Promise.

The expansion of the conception of. a trust to,-include cases where a third party to a contract sought to recover the benefit secured to him under it was quite legitimate. After all, what is a trust? Professor Maitland in his work on Equity, at page-44, observed:

Where a person has rights which he is bound to exercise on behalf of Anr. or for the accomplishment of some particular purpose, he is-said to have those rights in trust for Anr. or for that purpose and he is called a trustee.

If the subject-matter of a trust is some property such as land or a fund, the application of the above rule is easy. In other cases, the promisee may be considered to be a trustee of a contract right, that is to say, a right created by a-promise made for a third person''s benefit.

In view of the divergent trends of decisions in England, it was not to be expected that the course of Indian decisions would run smooth.. In Khwaja Muhammad Khan v. Hussaini Begarn ILR 32 All 410 (PC) (X), the Judicial Committee applied the equitable exception to the rule that a stranger to a contract cannot sue to enforce it. It was held that although the Plaintiff was not party to the contract which she sought to enforce yet she "was clearly entitled to proceed in equity to enforce her claim" against her father-in-law for the recovery of money which under a contract between him and the plaintiff''s father, he had agreed to pay to the Plaintiff. With reference to the authority of (1861) 1 B & S 393 (H) the Judicial Committee observed that

It is enough to say that the case relied upon wad an action of assumpsit and that the rule of common law, on the basis of which it was dismissed, is not, in their Lordships'' opinion applicable to the facts and circumstances of the present case.

Their Lordships held that although no party to the contract between her father and her father-in-law, the Plaintiff was entitled to proceed in equity to enforce her claim. The formality of the trustee of the promise being made a party was dispensed with. Shortly after this decision, the-Judicial Committee upheld the common law ruler and decided that a purchaser''s contract to pay off a mortgage on the property could not be enforced by the mortgagee who was not a party to the contract of sale, jamna Das v. Rain Aular ILR 34 As 63 (PC) (Y). Unfortunately, Lord Macnaghten�s judgment was a summary one without any adequate statement of the law.

The Calcutta High Court had to deal with the question in a number of decisions. In Deonarayan Dutt v. Chanilal Chase, ILR 41 Cal 117:(AIR 1914 Cal 129) (Z) Sir Lawrence Jenkins,C.J; delivering the judgment or the Bench concealing of himself and MooKerjee, C.J., held that where a transferee undertakes an obligation to pay a creditor of the transferor and the under taxing is for the benefit of thai creditor it: is open to the �creditor to sue the transferee for enforcing the latter''s liability tinder the contract The learned Chief Justice expressed his conclusion in these terms:

We have here then a position in which it would be in accordance with the Principles of justice, equity aid good conscience, the abiding rule in these Courts, that the Plaintiff should be entitled to enforce this claim against the Defendant.

The authority of (1801) 1 B & U 393 (H) was held not to be be bindng on Indian Courts in view of the wide definition of consideration in section 2(d) of the Contract Act. Later decision one, of the Calcutta High Court however spoke in a different voice. In Jiban Krishna Mullik Vs. Nirupama Gupta and Another, , Page J. (sitting with Cuming J.) criticised the view of Sir Lawrence Jerkins C.J., in the case previously cited and arrived at a conclusion contrary to that reached in the entire case on more or less similar facts. In Krishna Lal Sadhu and Another Vs. Mt. Promila Bala Dasi, Rankin C( and C. C. Chose J., held that a widow could not sue recovery of money payable under an insurance policy taken out by her husband under which the policy was made payable to her on the death of the husband. It was held that there was no priviiy of contract between the widow and the insurance company and that no trust was created in favour of the widow by a life policy expressed in he for the benefit of the wife of the named the George Rankin, C. J., adverted to the wide definition of consideration in Section 2 no of the Contract Act and the Possibility Indian Courts enforcing contracts in certain cases in Which the English law would refuse to do so on the ground of naudum pactum and observed:

Not only, however, is there nothing in Section 2 (of the Contract Act) to encourage the idea that contracts can be enforced by a person who is not a party to the contract lint this n boa is rigidly excluded by definition of promisor and promisee.

The learned Chief Justice held that, pitting aside cases where ''there is an obligation a equity amounting to a trust arising out of the contract, the principle that a contract .car, only be sued upon by a party thereto held good under the Contract Act and that in the case of a trust founded on the contract, it should be enforced by a party to the trust in appropriate proceedings ''including the beneficiary as a party. The next decision in order of date is Khirod Behari v. Mangobinda, ILR 61 Cal 841: (AIR 1934 Cal G32) (Z3) where Lort-WiHiams and M.O. Gbose, JJ., took a contrary view. Lort- Williams J., considered the evolution of English law on this topic and came to the conclusion that there was nothing in the Contract Act which prevented the recognize of a right in a third party to enforce a contract match by Ors. which contains a provision or his benefit. According to the learned Judge, the administration of ''the law of contracts in India was not affected by the doctrine laid down in (1861) 1 B&S 393 (H) that only a person who was a Party to the contract could sue upon it. The expansion of the equitable concept of a trust to enable a third party to enforce a contract between Ors. was held only to be an instance o.[ the growth of law by means of legal lections resorted to for getting rid of common law rules which had become out of date and irrational.

The learned Judge boldly asserted that there was No. need for Indian Courts - empowered to decide according to the rules of justice, equity and good conscience, to import the anomalies of English law into India and that without pretending that there was something in the nature of a trust or agency in such cases. Indian Courts should recognize a right in a third party to enforce a contract made by Ors. which contains a provision for his benefit. This view of Lort-Williams, J,, was i considered to be heretical even by his Indian colleagues and soon dissented from in Emperor Vs. Durga Charan Sing, , where it was broadly laid down that a stranger to a contract cannot take the benefit of the contract between two (.(.her persons reserving a benefit to him, unless from the terms of the contract it is clear that a trust for him was intended. The learned Judges were of the opinion that Sir Lawrence Jenkins, C. J" ia ILR 41 Cal 137: (AIR 1914 Cal 129) (Z) had laid down the rule regarding the right of a stranger to a contract too broadly. The followed JI/R Jiban Krishna Mullik Vs. Nirupama Gupta and Another, and WAX 55 Cal 1315: (AIR 1928 Cal 518) (Z2).J Vuikla District Board v. Chandra Ketu Narayan Singh ILR(1937) 2 Cal 698: (AIR 1.937 Cal 625) (''/.< 5) was Anr. case where the Calcutta High Court dissented from ILR 41 Cal .137: (AIR 1914 Cat 129) V/.) and ILR Cal 841: (AIR 1934 Cal (M(2) (Z3) and laid down that the only exceptions to the rule that a stranger to a contract could not sue for a benefit, conferred upon him there under, were where the third party was shown to hold a beneficial interest in the performance of the contract, that is to say, to be in the position of a cestui que trust vis-�-vis one of the contracting parties or where the third party might be regarded as a principal claiming through an agent who was a party to the contract. The last of the Calcutta decision cited was Jnan Chandra, v. Manoranian Mitra, ILR (1941) 2 Cal 576: (AIR 1912 Cal 251 (Zfi) wlr''ch held that a creditor of a vendor could not sue purchaser for recovery of a debt which the purchaser had are ed with his vendor to discharge as part of the. consideration for the sale. The learned Judges held that the vendee was not in any way a trustee for the creditor in respect of the money due to him and the creditor could not enforce the contract. The earlier English and Indian decisions were all reviewed.

The Bombay High Court in Vishwanath Ganshet Kode Vs. Raghunath Ganu Padave, , decided that where A & B entered into a contract under which A agreed to indemnify B against his debts, a creditor of B could not sue upon the contract. Beaumont, C.J., observed as follows:

The rule of Engilsh law is clearly established that the only persons who can sue upon a contract are the parties to that contract. No doubt there are many cases in the books in which persons who are not in terms parties to a contract have been allowed to sue upon it. But those cases are based on the view that the Plaintiff is claiming through a party to the contract, that he is in the position of a cestui que trust or of a principal suing through an agent, and that under the old procedure he could have filed a suit in equity even if he could not have sued at common law. Those cases ''are a recognized exception to the general principle that only parties to a contract can sue upon it. There seems to me to be nothing in the Indian Contract Act which suggests that that principle does not apply in India.

If the rule is to be introduced into this country that any person may sue upon a contract if he takes a benefit under it, although a stranger to such.Contract I think that such rule must be introduced by the Legislature and not by the Courts.

The Court dissented from Khirod Behari Dutt Vs. Man Gobinda and Ors, . It is unnecessary to consider the earlier decisions of the Madras High Court in view of the decision of the Pull Bench in Thirumulu Subbu Chetti Vs. Arunachalam Chettiar, where it was decided that if all that appeared was that a person transferred property to Anr. and stipulated for the payment of the purchase price to a third Person, a suit to enforce that stipulation by the third party would not he . The Court further held that a person not a party to a contract cannot sue on it though a beac-fit is secured to him thereunder, unless the case fell within the exceptions recognize to by the decisions to which, reference was made;. The exceptions to the rule recognized by previous decisions were not precisely formulated by the Pull Bench. It is, however, gatherable from the discussion of the case-law that where the contract between A and B creates a trust in favour of O or where a payment is to be made to C under a partition or other family arrangement, it would be open to C to enforce the contract though he is not a party to it. It is unnecessary to discuss the cases referred to by the Pull Bench relating to provisions made in family partitions or family arrangement for the maintenance or marriage expenses of the female members of the family. It has since been -authoritatively laid down by the Judicial Committee in AIR 1947 8 (Privy Council) that:

Where a contract is intended to secure a benefit to a third party as a beneficiary under a family arrangement he may sue in his own right to enforce it. This seems to be the orlnciple under. lying the decision of this Board in ILR 32 All. 410 (P.C.) (X)....

This ruling has since'' been followed in India in many cases, where provision is made for the maintenance of the female members, of a Hindu family on a partition of the joint family property between the male members.

The result of the foregoing'' discussion is that I am bound by authority to hold that a person not a party to a contract cannot sue on the contract unless the case comes within one of the recognised exceptions. One such exception is where the contract creates a trust in favour of a stranger. Persons not parties to partitions or family arrangements claiming benefits provided for them in such transactions really come under the category of ''beneficiaries and the arrangements conferring benefits on them are in the nature of trust. The fact that third persons benefited under a contract are near relations of the parties to the contract will not per se enable the former to sue on the contract but would be a circumstance indicative of a trust, per Rankin, C.J., in Krishna Lal Sadhu and Another Vs. Mt. Promila Bala Dasi, .

That a trust may be inferred from the situation of the parties, their relationship to one Anr. and the nature of the provisions made in a document is established by the decisions of the Judicial Committee and these decisions have also recognized the rights of persons not parties to the original contract to sue directly as beneficiaries. See Uma -Nath v. Jang Bahadur, AIR 1S38 PC. 245 (Z10). Suleman Quadir v. Salimullch Bahadur,. ILR 49 Cal 820: (AIR 1922 PC 107) (Zll), Lakshmi Narayana Anangagam v. Sri Durga Ma-clhava Deo ILR 16 Mad 268 (1C) (Z12); ILR 32 All. 410 (FB) (X). See also Section 56 the Trusts Act.

The gift deed Exhibit A-l executed by Nagayya to- the Defendant was being challenged and its rescission could well have been demanded by Nagayya according to the lower Appellate Court. The quarrels between the members of the family over the house and site comprised in Exhibit A-l had reached the criminal Court and were likely to lead to a ruinous civil litigation. In these circumstances, the arrangement now sought to be enforced came into existence. It is obvious that Nagayya was a party to the arrangement though Exhibit A-3 presented to the criminal Court was signed only by the complainant, the accused and the mediators. Nagayya wanted the house and site to be conveyed to his daughter instead of to himself and the Defendant agreed to do so.

The Defendant undertook to convey lire house and site to the Plaintiff at the instance of Nagayya who had a claim to a reconvene of the Property. The Defendant stated that the only reason for his not conveying the house as agreed was that he was not paid Rs. 100 and the value of 10 bags of paddy. The Courts below held that there was no agreement at all to pay these sums and the Defendant''s case in this respect was not true. The Defendant was relieved from the necessity of maintaining Nagayya and this obligation was undertaken by the Plaintiff. Till he died, Nagayya was maintained by the Plaintiff as stipulated in the compromise. In these circumstances, the Plaintiff as a beneficiary under the compromise arrangement and as one who has discharged her obligations there under is entitled to specific performance. If the arrangement is to be considered as one directly effected between the Plaintiff and the Defendant as was done by the trial Court, it will clearly be enforceable.

The lower Appellate Court did not give a finding on this point under the erroneous view that there was no consideration for such an arrangement. In this evidence, the Defendant stated that he had to maintain Nagayya and was maintaining him pursuant to the terms of Exhibit A-l. This obligation was undertaken by the Plaintiff who maintained Nagayya for the rest of his lifetime. This undertaking was sufficient consideration. For these reasons, I allow the second appeal and restore the decree of the District Munsif. In view of the difficulties caused by the informal manner in which the arrangement sought to be enforced was treated by the part''s and in, view of the admission of the point of law made by the Appellant''s counsel in the Court below, I.