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Thirumulu Subbu Chetti Vs. Arunachalam Chettiar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1930Mad382; (1930)58MLJ420
AppellantThirumulu Subbu Chetti
RespondentArunachalam Chettiar
Cases ReferredPeria Thiruvadi Aiydngar v. Pokutti Janaki
Excerpt:
- - sadagoppachariar (1911)21mlj983 .there it was held that where a transferred his property to b in consideration of b agreeing to pay certain sums to third persons, a was himself entitled to sue b for the recovery of those sums as if they were due to him in case of b's failure to pay the creditors within a reasonable time. this is a perfectly plain case. in their lordships' judgment, although no party to the document, she is clearly entitled to proceed in equity to enforce her claim. 762 is inapplicable to british courts in india and that the aim of the mofussil courts of justice in british india is to do complete justice in one suit according to the general principles of justice, equity and good conscience, has not been followed in later cases. nearness of relationship is a fact.....kumaraswami sastri, j.1. the facts leading to this reference are these : the 1st defendant executed a sale-deed, dated the 21st of december, 1922, in favour of the 3rd defendant for rs. 3,500 and he directed the vendee to pay the plaintiff rs. 1,200 which he, the 1st defendant, owed the plaintiff. the plaintiff sued to recover the sum of rs. 1,574-10-3 the balance which was due on a promissory note executed by the 1st and 2nd defendants, dated the 25th of june, 1921. he made the 3rd defendant a party on the ground that he was a vendee from the 1st defendant under an obligation to pay the debt due by the 1st defendant to the plaintiff.2. the sale-deed has been filed as exhibit d in the case. it purports to be for rs. 3,500. after reciting that the vendee had undertaken to pay rs. 1,500 due.....
Judgment:

Kumaraswami Sastri, J.

1. The facts leading to this reference are these : The 1st defendant executed a sale-deed, dated the 21st of December, 1922, in favour of the 3rd defendant for Rs. 3,500 and he directed the vendee to pay the plaintiff Rs. 1,200 which he, the 1st defendant, owed the plaintiff. The plaintiff sued to recover the sum of Rs. 1,574-10-3 the balance which was due on a promissory note executed by the 1st and 2nd defendants, dated the 25th of June, 1921. He made the 3rd defendant a party on the ground that he was a vendee from the 1st defendant under an obligation to pay the debt due by the 1st defendant to the plaintiff.

2. The sale-deed has been filed as Exhibit D in the case. It purports to be for Rs. 3,500. After reciting that the vendee had undertaken to pay Rs. 1,500 due to one Viswanatham Chetti and another sum of Rs. 500 due to the same creditor the material portion continues as follows:

Whereas you have consented to pay on my behalf to P.L.M. Palaniuppa Chettiar term carrying on money-lending business at Thenkarai, Periyakulam Town, the amount due by me to him, and obtain a receipt, i am m receipt of Rs. 1,200.

3. Then it proceeds to state the other creditors who were to be paid and the consideration is said to have been received in that manner.

4. The 3rd defendant pleaded that there was no privity between him and the plaintiff and that there was no cause of action.

5. The District Munsif dismissed the suit against the 3rd defendant and passed a decree against the 1st and 2nd defendants.

6. On appeal the Subordinate judge reversed the judgment of the District Munsif and remanded the case for trial.

7. On appeal against this order of remand the High Court set aside the order of remand and directed the Subordinate Judge to dispose of the case in the light of the observations made by the High Court. One of the questions which the High Court wanted the Sub-Judge to decide was whether the 3rd defendant undertook orally to pay the money to the plaintiff and pointed out that if the oral agreement was proved, the plaintiff would be entitled to a decree against the 3rd defendant, but if it was not proved, then the question whether the principle in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 would apply would have to be considered.

8. The Subordinate Judge found on the evidence that the oral agreement was not proved and that the 3rd defendant did not apart from the obligation under Exhibit A orally agree to pay the sum to the plaintiff. He, however, held following the decisions in Itti Panku Menon v. Dharman-Achan I.L.R.(1917) M. 488 : 1917 34 M.L.J. 193 Debnarayan Duti v. Chunilal Ghose I.L.R.(1913) C. 137 and Areti Singarayya v. Areti Subbaya : AIR1924Mad861 that the principle in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 did not apply and passed a decree against the 3rd defendant also.

9. Against that judgment this second appeal was filed which came on before Wallace and Sundaram Chetty, JJ., and they were of opinion that in view of the conflict of decisions on the point of law it was desirable to have the decision of a Full Bench on the question.

10. On the findings of facts of the Courts below the only question for decision is whether a contract between A and B to pay C who is a creditor of A. would without more entitle C to sue B. We have already set out the sale-deed and we think that on the terms of the sale-deed there is no trust express or implied created and that the sale-deed merely constitutes the vendee the agent of the vendor to pay some of his creditors.

11. The law in England is that the mere payment of money by A to B with a direction to pay it to C in cases where B is not C's agent is revocable and confers no right of action. A distinction has been drawn between cases where the defendant has constituted himself the agent of plaintiff to pay him a particular sum of money received from a third person and cases where there is no such agency or trust express or implied.

12. A similar view has been taken in India in Raghunathachariar v. Sadagoppachariar : (1911)21MLJ983 . There it was held that where A transferred his property to B in consideration of B agreeing to pay certain sums to third persons, A was himself entitled to sue B for the recovery of those sums as if they were due to him in case of B's failure to pay the creditors within a reasonable time. The learned Judges have referred to all the cases bearing on the point. We may also refer to Komu Kutti v. Kumara Menon : (1918)35MLJ692 .

13. The question has therefore to be decided on the footing that no trust has been created, that the 3rd defendant was not plaintiff's agent and that there was no novation or obligation undertaken by the 3rd defendant to the plaintiff.

14. The rule of common law laid down in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 is that a stranger to the consideration cannot sustain an action on the promise made between two persons unless he has in some way intervened in the agreement.

15. As regards relief given by Courts of Equity, Gandy v. Gandy (1885) 30 Ch. D. 57 gives a right of action to the third person only when the person with whom the contract is made is a trustee express or implied for the third person for whom the benefit is intended. The conditions necessary to be fulfilled before a person not a party to a contract can enforce any claim under it in a Court of Equity are laid down in Gandy v. Gandy (1885) 30 Ch. D. 57 in In re Empreiss Engineering Company (1880) 16 Ch. D. 125 and in In re Rotherham Alum and Chemical Company (1883) 25 Ch. D. 103. The observations of Lord Hatherley in Touche v. Metropolitan Railway Warehousing Company (1871) L.R. 6 Ch. App. 671 have been dissented from as stating the rule too widely.

16. Section 23 of the Specific Relief Act deals with the persons for whom contracts may be specifically enforced and Clause (c) of that section enacts that specific performance may be obtained where the contract is a settlement on marriage, or a compromise of doubtful rights between members of the same family by any person beneficially entitled thereunder.

17. There has been great divergence of opinion in Courts in India as to how far a stranger to a consideration can enforce the contract and how far the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 is applicable in India. There are decisions which decide that the rule of English law as laid down in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 and Gandy v. Gandy (1885) 30 Ch. D. 57 will apply to cases in India. There are other decisions which are to the effect that the principle in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 founded as it is on English Law on the form of action known as Assutnpsit is not applicable to contracts in India governed by the Indian Contract Act where all the parties are before the Court and the Court can do complete justice between them. There are other decisions which take a middle course and decide that the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 is applicable subject to certain specified exceptions which we shall refer to later on.

18. It is difficult to reconcile the various views and we think the balance of authority is in favour of the view that a stranger to a contract cannot without more sue to enforce it.

19. In Jamnadas v. Ram Autar Pande I.L.R.(1909) A. 352. A mortgaged certain properties to B. He sold the property to C and left with him sufficient money out of the consideration to redeem B. B obtained a decree on his mortgage and as the sale-proceeds were insufficient to meet his claim he applied for a personal decree against C on the ground that C was liable as he retained part of the consideration payable to A agreeing to pay it to B. It was held by Richards and Griffin, JJ., that C did. not become liable to B. The learned Judges observed:

It is contended that by retaining in his hands part of the purchase money and expressly or impliedly agreeing to pay the amount to Jamna Das, the respondent became personally liable. In our opinion this contention is not sound. Jamna Das was no party to the contract between Mussammat Lakhpati Kuar and Pandit Ram Autar Pande. No Indian or English case has been cited to us in which it has been ever held or suggested that the transferee of the equity of redemption in mortgaged property becomes personally liable to the mortgagee.

20. The case was carried in appeal to the Privy Council and the decision of their Lordships of the Privy Council is reported in Jamna Das v. Ram Autar Pande and the decision of the Allahabad High Court was upheld. Lord Macnaghten observed:

This is a perfectly plain case. The action is brought by a mortgagee to enforce against a purchaser of the mortgaged property an undertaking that he entered into with his vendor. The mortgagee has no right to avail himself of that. He was no party to the sale. The purchaser entered into no contract with him, and the purchaser is not personally bound to pay this mortgage debt.

21. In Itti Panku Memon v. Dharman Achan I.L.R.(1917) M. 488 : 34 M.L.J. 193 the question arose as to a third party's right to sue on a contract. Sir John Wallis, C.J., and Bakewell, J., were of opinion that a Jenmi was not entitled to sue on an assignment by a Melkanomdar to a Kanomdar whereby as between them the Kanomdar agreed to pay the rent due by the Melkanomdar to the Jenmi. The case arose out of a difference of opinion between Abdur Rahim and Phillips, JJ., Phillips, J., held that the Jenmi can sue, whereas Abdur Rahim, J., differed. Sir John Wallis, C.J., observed : 'One of the questions argued before us was whether the plaintiff is entitled to sue on this contract made between the 1st defendant and 2nd defendant. As regards this I agree with ' Abdur Rahim, J., that he cannot, and that the question is concluded by the recent decision of the Privy Council in Jamna Das v. Ram Autar Pande where Lord Macnaghten in delivering their Lordships' judgment held that a purchaser's contract with his vendor to pay off a mortgage on the property sold could not be enforced by the mortgagee.' Then the learned Chief Justice refers to Khwaja Muhammad Khan v. Husaini Begam and distinguishes the case : on the ground that it was a contract made by a guardian for the benefit of a minor in contemplation of her marriage.

22. The question has been elaborately considered by Ayling and Tyabji, JJ., in Isutaram Pillai v. Sonnivaveru Taragan I.L.R.(1913) M. 753 : 1913 26 M.L.J. 127. That was a case where A mortgaged his lands to B and part of the consideration was B's promise to discharge a debt of A to C. C sued B and it was held that C who was a stranger to the contract cannot sue B for the payment of his debt without joining A as a party. The learned Judges deal exhaustively with the cases and lay down the general rule of law to be that a party who is a stranger to a contract cannot sue on the contract. The exceptions which the learned Judges enunciate are (a) the creation of a trust in favour of the plaintiff in respect of the amount sued for; (b) the creation of a charge on immoveable property by the promisor or allocation by the promisor of the specific money in suit in favour of the plaintiff; (c) the creation of a settlement on marriage in which the plaintiff may be beneficially entitled as provided by Section 23 of the Specific Relief Act, and (d) estoppel as against the promisor owing to transactions between the plaintiff and the promisor.

23. This question again arose in C. S. No. 325 of 1926 on the Original Side of the High Court. Beasley, J., after an exhaustive review of the authorities came to the conclusion that a second mortgagee who retained in his hands sufficient portion of the consideration to discharge the first mortgage and who does not discharge the first mortgage cannot be sued by the first mortgagee on the covenant between the mortgagor and the second mortgagee. This case was carried in appeal (O.S.A. No, 95 of 1927) where Sir Murray Coutts Trotter, C.J. and Pakenham Walsh, J., upheld the decision of Beasley, J. The learned Judges observed:

The learned Judge held that as there was no privity between the plaintiff and 2nd defendant with regard to the mortgage Exhibit A(1), the plaintiff could not claim any benefit under it...The point of law has been fully discussed by the learned Judge and he has considered all the important authorities. It is not disputed as a general rule of law that only those who are parties to a contract can sue on it. The Privy Council decision in Jamna Das v. Ram Autar Pande (1911) L.R. 39 LA. 7 : I.L.R. A. 63 : 1911 21 M.L.J. 1158 (P.C.) and in Nanku Prasad Singh v. Kamla Prasad Singh 26 C.W.N. 771 (P.C) are conclusive that the reservation of part of the purchase money to pay a previous mortgagee does not of itself create a trust in favour of that previous mortgagee nor can the prior mortgagee make the purchaser personally liable. The case of such a reservation in a mortgage is indistinguishable from its reservation in a sale-deed.

24. This decision was given on the 1st of May this year. In view of this decision of Beasley, J., which was confirmed in appeal we think we may take it as settled law in Madras that a stranger to a contract cannot without more sue to enforce it. It is unnecessary, therefore, to refer with detail to cases in Madras which took the opposite view. This view was based upon a decision of their Lordships of the Privy Council in Khwaja Muhammad Khan v. Husaini Begam . In that case there was an arrangement made between the defendant and the father of the plaintiff who was then a minor on the occasion and in consideration of her marriage with the defendant's son who was also a minor that a certain sum should be paid to the plaintiff for her betel nut expenses, etc., from the date of the marriage. A suit was filed to recover the arrears of allowance and the contention was that the plaintiff being a stranger to the contract could not sue on it, and reliance was placed on Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762. Their Lordships of the Privy Council distinguished the case and said that the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 had no application to the circumstances of the case which they were trying in which the agreement specifically charged immoveable property for the payment of the allowance and the plaintiff was the only person beneficially entitled under it. Their Lordships pointed out that in India where marriages were arranged during minority and contracts for the benefits of the minors were entered into by parents and guardians, it would cause serious injustice if the strict rule of English law were applied. Their Lordships in dealing with the contention based on the rule laid down in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 observed:

First it is contended, on the authority of Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 that as plaintiff was no party to the agreement, she cannot take advantage of its provisions. With reference to this, it is enough to say that the case relied upon was 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. Here the agreement executed by the defendant specifically charges immoveable property for the allowance which he binds himself to pay to the plaintiff. She is the only person beneficially entitled under it. In their Lordships' judgment, although no party to the document, she is clearly entitled to proceed in equity to enforce her claim. Their Lordships desire to observe that in India and among communities circumstanced as the Muhammadans, among whom marriages are contracted for minors by parents and guardians, it might occasion serious injustice if the common law doctrine was applied to agreements or arrangements entered into in connection with such contracts.

25. This case has in some decisions of this Court been taken as laying down the rule that Indian Courts are not bound by the common law doctrine laid down in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 In Itti Panku Menon v. Pharman Achan I.L.R. (1917) M. 488 : 34 M.L.J. 193 one of us (Kumaraswami Sastri, J.) took this view while Sir John Wallis, C.J. and Bakewell, J., took the opposite view. He referred to the numerous cases on the subject. The view he was inclined to take was that having regard to the definition of the word 'contract' in the Indian Contract Act and the observations of their Lordships of the Privy Council, the ruling in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 has no application and it was open to us to follow the rule laid down in Button v. Poole (1793) 2 Lev. 210 and earlier cases. We may also refer to Ramaswami Aiyar v. Deivasigamani Pillai : AIR1922Mad397 .

26. In Singarayya v. Subbayya : AIR1924Mad861 and in Krishna Swami Batter v. Gopalakrishna Reddiar (1926) 25 L.W. 190 the same view was taken by Jackson, J., and Devadoss, J.

27. A similar view was taken in Debnarayan Putt v. Chunilal Ghose I.L.R.(1913) C. 137 but it was not followed in Jiban Krishna Mullik v. Nirupama Gupta I.L.R.(1926) C. 922 and Krishna Lal Sadhu v. Pramila Bala Dasi I.L.R.(1928) C. 1315.

28. We do not think that in view of the current of authority in Madras which we have referred to and especially the last pronouncement by Beasley, J., confirmed on appeal by Sir Murray Courts Trotter, C.J., and Pakenham Walsh, J., the view which some of our learned brothers took can be followed.

29. Cases where on a partition a benefit is secured to the female members of the family who would be entitled in law to maintenance or cases of family settlement stand on a different footing.

30. In Shuppu Ammal v. Subramaniyan I.L.R.(1909) M. 238 : 19 M.L.J. 739 there was a deed of partition whereby provision was made for the plaintiff's maintenance and it was held that although the plaintiff was no party to the document she was entitled to sue. The learned Judges held that a person who was not a party to a document but in whose favour a charge was created by such document was entitled to maintain a suit to enforce its terms, either as the actual beneficiary or as the charge-holder, and referred to Rakhmabai v. Govind (1904) 6 Bom. L.R. 421 and Husaini Begum v. Khwaja Muhammad Khan I.L.R.(1906) A. 151.

31. In Sundafuraja Aiyangar v. Lakshmi Ammal I.L.R.(1914) M. 788 Oldfield, J., held that a person though not a party to a contract could sue to enforce its terms if it was a settlement by which some provision was made for him as a member of the family, e.g., for maintenance or marriage though the same was not made a charge.

32. We may also in this connection refer to Sudalai v. Gomathi (1912) M.W.N. 908 Arumugha v. Chinnammal (1911) 2 M.W.N. 524 and Rajagopala v. Radhayya (1912) M.W.N. 39 Reference has been made by the respondent's advocate to the observations of Coutts Trotter, C.J., in Muniswami Naicken v. Vedacliella, Naickdn : AIR1928Mad23 . All that was decided was that the case fell within the rule in Khwaja Muhammad's case . After referring to that case and to the provisions of Hindu Law he observes:

All I desire to say is that I think that in view of that the provisions of law in such matters should he applied with greater flexibility than they would be applied in England and that it is quite possible to argue that such a case as this if it occurred in England would be covered by the general principle I have referred to.

33. Cases of estoppel or of novation obviously stand on a different footing and have nothing to do with the principle laid down in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762.

34. We may point out in this connection that the view taken in Debnarayan Dutt v. Chunilal Ghose I.L.R. (1913) C. 137 by Jenkins, C.J., and Mookerji, J., which lays down broadly, that the doctrine in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 is inapplicable to British Courts in India and that the aim of the Mofussil Courts of Justice in British India is to do complete justice in one suit according to the general principles of justice, equity and good conscience, has not been followed in later cases. We may refer to Jiban Krishna Mullik v. Nirupama Gupta I.L.R.(1926) C. 922. In that case a patnidar created a darpatni and the darpatnidar created a sepatni in favour of another person. The sepatnidar was to pay certain sums due both to the patnidar and darpatnidar. The patnidar sued the sepatnidar for the rent due. It was held that he could not sue. Page, J., referred to and discussed the English cases and was of opinion that the rule laid down by Jenkins, C.J., was too wide, and the learned Judge was inclined to support the decision in Debnarayan Duti v. Chunlal Ghose I.L.R.(1913) C. 137 on the ground that it came within the ruling of Cotton, L.J., in Gandy v. Gandy (188S) 30 Ch. D. 57.

35. In Krishna Lal Sadhu v. Pramila Bala Dasi I.L.R.(1928) C. 1315 it was held that where a life policy was expressed to be for the benefit of the wife of the assured, she was not entitled to sue as no trust was created in her favour and she was a third party to the contract. So far as the decision that no trust was created in her favour was concerned, the learned Judges dissented from the view taken in Balamba v. Krisknayya : AIR1914Mad595 and to that extent this case may not be authority binding on us, but the view of Rankin, C.J., and Ghose, J., on the general question of the legal consequences following from that view supports the view taken in the Madras cases which we have already referred to. Ghose, J., at page 1321 refers to the rule of English Law that if A contracts with B for a benefit to be given to C although that was the object and purpose of the contract, C may not sue on that contract unless in certain excepted cases and then refers to the excepted cases. After referring to Khwaja Muhammad Khan v. Husaini Began the learned Judge deals with Debnarayan Dutt v. Chunlal Ghose I.L.R.(1913) C. 137 and attempts to bring that case within the exceptions laid down in the English cases on the ground of the special facts of that case. The learned Judge, however, agrees with the criticism passed on that case by Page, J., in Jiban Krishna Mullik v. Nirupama Gupta I.L.R.(1926) C. 922. Rankin, C.J., took the view that it was wrong on the authority of either Khwaja Muhammad Khan's case or Debnarayan Dutt's case I.L.R.(1913) C. 137 to suppose that in India persons who were not parties to a contract could be admitted to sue thereon except where there was an obligation in equity amounting to a trust arising out of the contract or in case of communities where marriages were contracted for monies by parents and guardians. The learned Chief Justice observed:

But putting aside such cases, I see no reason to think that the law in India contains a series of exceptions to the principle that a contract can only be sued upon as such by a party thereto. A trust may be founded on the contract and is capable of being enforced by a party to the trust in appropriate proceedings as was pointed out in Page v. Cox (1852) 10 Hare 163 : 68 E.R. 882. It is another matter altogether to say that a person not a party to a contract may bring a suit upon the contract by reason of near relationship to the promisee. Nearness of relationship is a fact which, like many other facts, cannot be disregarded in determining the question whether or not a trust arises out of or is founded on a contract, but it has no other importance. Cases such as the present can be decided and ought to be decided on the settled principles of equity. In Cleaver's case (1892) 1 Q.B. 147 the Court considered whether the policy amounted to a trust for the widow and, having found that it did not, determined the matter by the ordinary law of contract. This, in my judgment, is the only method which can be justified in principle. To hark back to such cases as Button v. Poole (1793) 2 Lev. 210 : 83 E.R. 523 and Bourne v. Mason 86 E.R. 5 is, in my judgment, a clear mistake, and the mistake is not cured by the circumstance that, under the Contract Act, the definition of 'consideration' is wider than in English Law.

36. A. similar view was taken in Shankar Vishvanath v. Umabai I.L.R.(1913) B. 471 where after holding that though the policy of insurance effected by the assured upon his own life was for the benefit of his wife, it did not create any trust in her favour, the learned Judges dealt with the question whether she could sue on the contract apart from any trust and observed:

It was, however, argued that as under Section 2, Clause (d) of the Contract Act the consideration might be provided by some other person, the plaintiff could sue on a policy the consideration for which was provided by her husband. There is, however, nothing in the present case to show that the plaintiff was either the promisor or the promisee and therefore a party to the agreement. There is nothing in the Act to show an intention that a person not a party to the contract can sue on it. So far as it goes, Section (2) (i) is an indication to the contrary.

37. The learned Judges distinguish Samuel v. Ananthanatha I.L.R.(1883) M. 351 and Chinnaya Ran v. Venkataramayya Garu I.L.R.(1881) M. 137 on the ground that there was a contract between the parties in those cases. This decision was referred to with approval in Rose' Fernandes v. Joseph Gonsalves I.L.R. (1924) B. 673.

38. In Achuta Ram v. Jainandan Tewary I.L.R.(1926) Pat. 468 it was held that a person who was not a party or privy to a contract could not maintain an action to secure any benefit conferred on him by it. In that case A executed a mortgage in favour of the plaintiff and subsequently sold the property to B. In the recital in the sale-deed B agreed to pay off the mortgage and the plaintiff sued B. It was held that the plaintiff cannot avail himself of the stipulation in the sale-deed between the mortgagor and the vendee that the vendee was to redeem the mortgage. Bucknill, J., in the course of the judgment refers to Nanku Prasad Singh v. Kamta Prasad Singh 26 C.W.N. 771 : 3 Pat. L.T. 637 (P.C.) where their Lordships of the Privy Council held that a recital in a sale by A to B that B is to pay off a mortgage would give no cause of action to the mortgagee to sue B. The learned Judge quotes the judgment of Lord Atkinson who dismissed the appeal with the following remark:

Their Lordships have considered this case and they think it is clear that no personal liability was incurred by the purchasers of the equity of redemption. Their Lordship, therefore, think that the decree of the High Court was right and that the point made by the appellant failed,

39. It is argued that where all the parties to a contract are before the Court and complete justice can be done between them, there is nothing to prevent the Court from giving a decree to a person although he is not a party to the contract and that this is one of the exceptions that should be grafted on the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 and reliance was placed on the observations of Tyabji, J., in Iswaram Pilled v. Sonnivavem Taragan(tm) where the learned Judge deals with the question as to how far the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 can be said to be a rule of procedure. There is nothing in the observations of Tyabji, J., to indicate that the mere presence of parties would make the rule in Tweddle v. Atkinson (1861) 1 B. & Section 393 : 121 E.R. 762 inapplicable.

40. Reliance has also been placed on the judgment of Devadoss, J., in Singarayya v. Subbayya : AIR1924Mad861 where the learned Judge after referring to Iswuram Pillai v. Sonnivaveru Taragan I.L.R.(1913) M. 753 : 26 M.L.J. 127 and the observations of Sir Lawrence Jenkins, C.J., in Debnarayan Dutt v. Chunilal Ghose I.L.R.(1913) C. 137 observed:

But apart from that where a Court has before it all persons and is in a position to do complete justice to the case, it would be straining the law to hold that the suit should fail on the ground that the defendant did not contract with the plaintiff to pay the amount which he contracted to pay on his behalf.

41. The learned Judge also refers to the observations of Venkatasubba Rao, J., in Peria Thiruvadi Aiydngar v. Pokutti Janaki : (1923)45MLJ693 .

42. With respect it seems to us that if the law is that a person not a party to a contract cannot sue on the contract though a benefit is secured to him and unless the case falls within the exceptions indicated in the cases above referred to the plaintiff has no cause of action, it is no answer to say that all the parties are before the Court.

43. Order 1, Rule 3 of the Civil Procedure Code is very clear. There should be a right to relief in respect of the transaction set out in the plaint before a party can be added as defendant. The; addition of others would not so far as he is concerned alter his rights. We do not think that there is any legal basis for holding that the mere joinder of the original parties to the contract would give the plaintiff a cause of action which does not exist before the suit.

44. We are of opinion that where all that appears is that a person transfers property to another and stipulates for the payment of money to a third person a suit to enforce that stipulation by the third party will not lie.


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