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Sri Rajah Inuganti Kasturamma Bahadur, Zamindarini Vs. Chelikani Venkatasurayya Garu - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported inAIR1916Mad65; 30Ind.Cas.878
AppellantSri Rajah Inuganti Kasturamma Bahadur, Zamindarini
RespondentChelikani Venkatasurayya Garu
Cases ReferredGokaldas Gopaldas v. Puranmal Premsukhdas
Excerpt:
contract act (ix of 1872), sections 2(d), 37 ill.(a), 40 ill.(a) - consideration--past services--suit by beneficiary, not party to contract--trust, creation of--transfer of property act (iv of 1882) sections 101, 124, 126. - - ' there is a reference to natural love and affection, but there is no registered document between the plaintiff and the zemindar and section 25(1) of the indian contract act has not been relied upon. 2. the written statement denies both (1) the alleged consideration and (2) generally the agreement to pay during the plaintiff's lifetime, and raises the contentions (3) that exhibit b is 'indefinite and cannot be legally enforced' and that (4) its terms were controlled by a letter, exhibit i, alleged to be written by the late zemindar to the defendant, which made the.....1. the plaint is to the effect (1) that the plaintiff and his father rendered great services to the defendant's husband, the late zemindar of kirlampudi; (2) that in consideration of such services the late zemindar agreed to give to the plaintiff a salary of its. 20 per mensem during the plaintiff's life-time; (3) that accordingly the defendant's husband gave possession of his estate to the defendant and executed a deed of mortgage with possession' (viz., exhibit b on the record) and asked the defendant to pay the allowances payable to the plaintiff.' there is a reference to natural love and affection, but there is no registered document between the plaintiff and the zemindar and section 25(1) of the indian contract act has not been relied upon. the prayer is that a decree be passed for.....
Judgment:

1. The plaint is to the effect (1) that the plaintiff and his father rendered great services to the defendant's husband, the late zemindar of Kirlampudi; (2) that in consideration of such services the late zemindar agreed to give to the plaintiff a salary of Its. 20 per mensem during the plaintiff's life-time; (3) that accordingly the defendant's husband gave possession of his estate to the defendant and executed a deed of mortgage with possession' (viz., Exhibit B on the record) and asked the defendant to pay the allowances payable to the plaintiff.' There is a reference to natural love and affection, but there is no registered document between the plaintiff and the zemindar and Section 25(1) of the Indian Contract Act has not been relied upon. The prayer is that a decree be passed for recovery of the arrears of the alleged allowances after July 1907 from the estate of the late zemindar (who died on 2nd November 1906) in the hands of the defendant.

2. The written statement denies both (1) the alleged consideration and (2) generally the agreement to pay during the plaintiff's lifetime, and raises the contentions (3) that Exhibit B is 'indefinite and cannot be legally enforced' and that (4) its terms were controlled by a letter, Exhibit I, alleged to be written by the late zemindar to the defendant, which made the alleged salary payable only during the plaintiff's good behaviour. This last contention need not be dealt with any further, as Exhibit I has been held to be spurious. It is admitted that the defendant is the heir of the deceased zemindar, and it is not denied that she has assets from his estate out of which the plaintiff's claim may be satisfied.

3. Two entirely distinct cases are alluded to in the plaint and issues which have to be considered separately, though in our opinion they ultimately depend on a determination of the same facts.

4. One case open to the plaintiff is that there was an unconditional and irrevocable contract between the zemindar and himself for payment to him of Rs 20 per month so long as he lived; that as the zemindar predeceased the plaintiff, part of the contract has to be performed after the death of the promisor; that that part would be enforceable against the defendant as the legal representative of the promisor under Section 37 of the Indian Contract Act, illustration (a), and Section 40, illustration (a); and that the fact that the consideration had already been executed prior to the contract would not affect its enforceability.

5. The finding of the lower Appellate Court that there was a contract to the effect mentioned on which the plaintiff may sue cannot, however, be accepted, as (1) Exhibit B has been referred to even for this aspect of the case not merely as evidence of the contract between the zemindar and the plaintiff, but as if Exhibit B were itself the contract on which the plaintiff could sue, though he is not a party to it; (2) the defendant's position as the legal representative of the zemindar and as a party to Exhibit B have been confused; and (3) no attention has been paid to the question whether the promise by the zemindar was intended to be irrevocable or to be subject to any condition of good behaviour on the part of the plaintiff, or revocable at the mere will of the promisor. This last question is distinct from the defence based on Exhibit I, which was that, as a matter of fact, the promise had been revoked or validly altered.

6. The question whether or not the promise by the zemindar was revocable is of great importance to the question whether the promise amounts to a contract, and requires detailed examination.

7. The only consideration alleged for the contract is past services. The plaintiff could not, therefore, have insisted on the performance of the contract by threatening not to perform his own part of the alleged contract, as there was nothing for the plaintiff to perform. In such a case the promisee cannot, by any act of his own, oblige the promisor to fulfil his promise, nor can there be any legal obligation to do anything, unless a liability to perform the promise (not depending on the mere will of the promisor) is imposed by the promisor upon himself by his agreement, and unless such liability is made to rest upon the acts already done by the promisee.

8. The mere fact that at the desire of the promisor the promisee has already done something prior to any agreement [Indian Contract Act, Section 2(d)] cannot be sufficient to make any subsequent agreement a contract. It would not amount to a contract if it was no more than a promise to make a gift at the mere will of the promisor [Transfer of Property Act, Sections 124, 126]. Whether the zemindar intended to impose a legally enforceable liability upon himself, or whether he merely promised to make a series of gifts, has not been considered by the lower Appellate Court. It is clear that if the zemindar left to himself the option of revoking the promise at his mere will, or of otherwise putting an end to the duration of the promise, that in itself would negative any intention of imposing upon himself a legal liability (which would necessarily be independent of his own will); such a revocable promise could not, therefore, be called a contract at all.

9. In order to determine whether or not the zemindar intended to impose upon himself a legal liability, the lower Appellate Court ought to have considered (1) the nature of the services rendered by the plaintiff to the zemindar, (2) whether at the time that the zemindar made the promise upon which the plaintiff relies, there was any outstanding liability on the part of the zemindar to - remunerate the plaintiff or (3) whether the services were of a nature for which no compensation was expected or (4) which had already been fully compensated for. If there was an outstanding liability, then, as pointed out by Bowen, L.J., in In re Casey's Patents, Stewart v. Casey (1892) 1 Ch. D. 104 : 61 L.J. Ch. 61, the subsequent promise may be almost conclusive evidence of the value that the parties intended to put upon the liability. On the other hand, there might have been no outstanding liability either because the remuneration which was legally due to the plaintiff had already been paid prior to the promise, or because, apart from an express promise to remunerate, the plaintiff did not expect any remuneration. Whether there was any expectation of remuneration would depend (amongst other things) upon the nature of the service. The effect of Section 2(d) of the Indian Contract Act upon each of these distinct sets of circumstances might be different. Where acts have been done in the past which might or might not (at the opinion of a party) support a contract, it has to be determined whether the party did, as a matter of fact, desire to place his liability on that foundation. There must be not only the intention to create a liability, but that intention must be given effect to by reference to consideration, though the consideration may be already executed.

10. None of these matters have been adverted to by the lower Appellate Court, nor are there findings on them from which any legal inference may be drawn either in favour of or against the plaintiff on the question, whether the zemmiar intended to enter into an enforceable contract in consideration of past services, or whether the past services of the plaintiff were only a motive for promise, the performance of which was intended to depend on the mere will of the zemindar.

11. The second aspect of the case depends upon Exhibit B as its foundation.

12. In this aspect the plaintiff can succeed only if Exhibit B was such a transaction with reference to the plaintiff as to bring him within any exception to the rule which prevents a parson who is not privy to a contract from enforcing it--for Exhibit B was a mortgage between the defendant and her husband, and the plaintiff is not a party to the document. The exceptions to that rule have been considered in Iswaram Pillai v. Taregan 23 Ind. Cas. 951. For the present purpose it may be stated that this aspect of the plaintiff's case depends upon whether or not Exhibit B or rather Clause 31 thereof on which the plaintiff relies, though in form it is a contract to which the plaintiff was not a party, was intended to secure a benefit to the plaintiff so that the plaintiff 'is entitled to say that he has a beneficial right as cestui que trust under that contract.' See per Cotton and Bowen, L.J.J., in Gandy v. Gandy (1884) 30 Ch. D. 57. To this aspect of the plaintiff's case the existence or non-existence of any prior contract binding the zemindar would be only indirectly relevant. The prior contract would merely indicate the history or the motive for the creation of the trust (assuming that a trust was created) by Exhibit B. The liability of the defendant would in this aspect arise (if at all) as a party to Exhibit B; her character as legal representative of the zemindar would not be material.

13. The direction in Exhibit B to pay to the plaintiff is not enough to create a trust in his favour. When A simply contracts with B to pay money to C, C cannot merely on the basis of such a contract sue A In re Empress Engineering Co. (1880) 16 Ch. D. 125. In order to enable G to sue, the contract must (as we have already said) be intended to secure benefit to the plaintiff, so that the plaintiff is entitled to say that he has a beneficial right cestui que trust. The circumstances which have to be considered in order to determine whether the contract 13 intended so to secure a benefit cannot, of course, be categorically and exhaustively laid down. But the following four considerations may be referred to see Wall v. Bright (1820) 1 Jac. & W. 494; Shaw v. Foster (1872) 5 H.L. 321and the cases cited in Iswaram Pillai v. Taregan 23 Ind. Cas. 951. It must be determined (1) whether the defendant was made a trustee for the plaintiff by Exhibit B or whether her position was merely such that she might become a trustee if certain events were to take place which were contemplated in Exhibit B; (2) if she was made or had become a trustee, had she any personal and substantial interest in the property (viz., as wife and presumptive heir of the zemindar or as mortgagee) which she had. a right to protect, or did the contract override any interest of her own in the property; in other words; (3) was any specific property charged with the payment to the plaintiff in which the defendant was to have no beneficial interest whatever; (4) was Exhibit B communicated to the plaintiff, and did he accept it in lieu of any rights that he had prior to Exhibit B.

14. The defendant's position as the mortgagee and as the wife and presumptive heir of the zemindar might have important bearing in the question involved in the consideration above referred to. Assuming that she agreed to become a trustee for the plaintiff, did she agree to do so in derogation of her own present and presumptive interest in the property, or merely in so far as her rights as mortgagee and heir were not affected. For if the zemindar made the defendant trustee of so much of the property as would produce an income of Rs. 20 per month, and the trust was to subsist after -the death of the zemindar, the defendant would not become absolutely entitled to that property until after the death of the plaintiff. Was that the intention of the parties? Was it intended by the zemindar and agreed by the defendant that the trust was to subsist only so long as the zemindar (and after him his representative) did not revoke the directions in Exhibit B, or was that payment to continue independently of the zemindar's will? Hence the real question in this aspect of the case also is whether the zemindar intended (at the time when Exhibit B was executed) to create a liability binding upon himself and the defendant in her dual capacity of mortgagee and the zemindar's representative, or whether it was a mere revocable promise without any legal obligation. This question cannot be conclusively decided by reference to Clause 31 of Exhibit B, which is consistent with either view.

15. What is important, however, is that the plaintiff, in order to rely upon Exhibit B, has to establish not only the same facts which he would have to establish for succeeding on the first aspect of his case, but if he wishes to rely upon Exhibit B as giving him a distinct cause of action, he would also have to establish in effect that the defendant consented to become a party to the zemindar's contract with the plaintiff.

16. This becomes clearer by referring to the facts. The plaintiff claims on a two-fold basis that the zemindar (1) agreed to pay, (2) made what may be called a trust for payment. The trust is not explicit, and in order to determine whether the clause in question did create a trust, it has to be determined, amongst other things, whether it was meant that the zemindar himself and his legal representative were to have no control over the property alleged to be impressed with the trust, or whether any option was reserved to the zemindar and this legal representative of not acting upon the clause, and thus liberating the property in question from the trust: in other words, did the zemindar intend to place on himself and his legal representative an irrevocable liability to pay or did he not. Section 78 of the Indian Trusts Act is not alleged to be applicable and Clauses (b) and (e) need not be considered.

17. It was argued before us for the defendant that the plaintiff's right to receive the payment as against the defendant would be co-terminus with the existence of the mortgage created by Exhibit B and that as the defendant became owner of the properties mortgaged, the mortgage must be taken to have merged (Section 101 of the Transfer of Property Act). The argument is curiously inverted from the shape it took in Gokaldas Gopaldas v. Puranmal Premsukhdas 11 I.A. 126 (and the shape it would ordinarily take), inasmuch as it is the mortgagee who asserts that the mortgage is merged and a third party who denies the merger. The question, however, whether the mortgage subsists or not, except in so far as that question is involved in those that we have already referred to, does not affect the rights of the plaintiff, for the plaintiff can sue the defendant only if and in so far as she is either a representative of the zemindar or a trustee on behalf of himself. It may be that the mortgage has merged and yet the trust (if it was ever created) would subsist; on the other hand, if the direction to pay did not create a trust, then the subsistence of the mortgage would not create it. If it be the fact, as the plaintiff claims, that there was a trust created in his favour by Exhibit B, then the property impressed with the trust would go out of the private property of the zemindar and be held by the defendant not as the mortgaged property, nor as the zemindar's property after his death, but as trust property: to such property, consequently, the defendant would not become absolutely entitled' (See Transfer of Property Act, Section 101) on the zemindar's death, and no question of merger would arise. If there was no trust created, it is an academic question, so far as the plaintiff is concerned, whether the mortgage subsists or is merged. The question of trust is of no other importance except to establish the plaintiff's right to the allowance; for there is no question of want of assets, or of following the property in the hands of an alienee.

18. The lower Appellate Court must be asked to submit a finding on the question, whether the zemindar agreed to impose upon himself a legal liability to pay the sum of Rs. 20 a month to the plaintiff. In arriving at a finding on this question the lower Appellate Court will deal specifically with the various subsidiary questions of fact and law indicated above. The finding will be submitted in six weeks and seven days will be allowed for filing objections.

19. In compliance with--the order contained in the above judgment, the Temporary Subordinate Judge of Rajahmundry at Cocanada submitted the following

Finding

20. In obedience to the order of the High Court calling for a finding on the question

Whether the zemindar agreed to impose upon himself a legal liability to pay the sum of Rs. 20-0-0 a month to the plaintiff.1. I beg to submit the following finding:

2. As observed by their Lordships the, suit is to recover arrears of grant or salary at the rate of Rs. 20-0-0 per mensem during the plaintiff's life-time. The claim is based on two grounds:

(1) as the promise under a contract between the plaintiff and the zemindar;

(2) as a beneficiary under a trust created by means of Exhibit B.

The consideration for the contract is said to be the services rendered to the zemindar by the plaintiff.

3. The defendant's case is, not that the services rendered should in law be held inadequate for the purpose of invalidating the contract, but her plea is that no services were rendered at all. It leaves room, therefore, for the inference that, if the plaintiff had rendered any services, the defendant does not intend to question the value put upon such services.

4. As regards the value of the services rendered, I should think the value put upon them by the parties to the contract should be accepted, taking the position, the status and the remuneration offered and other things existing in the case into consideration, unless there is any evidence of any pressure or undue influence necessitating an over-valuation, or rendering the contract void or illegal. There is no evidence, or even an allegation, that any pressure or undue influence was brought to bear upon the zemindar with reference to the contract under consideration. It cannot be denied that the plaintiff's family has been connected with the estate of the zemindar for at least two generations. The plaintiff's father was the personal guardian of a late zemindar. Even the interested defendant's 1st witness admits it. When the defendant's witnesses say that the plaintiff and the zemindar were not friends, or that the plaintiff rendered no kind of service, they do not seem to state any truth. The plaintiff is not a beggar.... He is a relation of the zemindar and it may be a remote relation. The defendant's 1st witness states that the zemindar used to address the plaintiff as bava (Telugu). The defendant's 2nd witness and the plaintiff state that the plaintiff had his meals in the zemindar's kitchen.... The plaintiff states he was allowed to go as a rajahandhu (Telugu). The plaintiff in his evidence states that lie was a personal attendant upon the zemindar, meaning that he was neither a menial servant nor a monied person, but a poor relation of the zamindar, entitled to have an equal status so far as social relations went. He also states that the zemindar used to consult him on some points and take advice. He swears that he gave up his paternal estate in favour of his brother and settled at the zemindar's head-quarters to keep him company and to render him any services he could do. The plaintiff and the zemindar were friends and companions from youth. The plaintiff had a position to maintain and a reputation to lose. He was Chairman for some years of Jagapathinagaram, which fact shows he had a social status. It is not possible to categorically state the services rendered during nearly a life-time, or to adduce any direct evidence thereof. As he made several sacrifices at the suggestion of the zemindar, he was promised a salary of Rs. 20 per month for his life and that promise was introduced in the mortgage-deed executed to the defendant. He swears that the understanding was that the salary agreed to be paid was not to last at the pleasure of the zemindar or of anybody else, but to last for his life. I do not see any reason to disbelieve the plaintiff, while there are ample grounds to discredit the evidence on the defendant's side. The defendant does not seem to dispute her liability if the plaintiff, continued in her good graces. She wanted to make the contract a revocable one and put forward a document to prove the rovocable nature of the contract, but that document has been held a spurious one, brought about at her instance by her interested witnesses. After all, the charge of misbehaviour brought against the plaintiff seems to be that he gave evidence on behalf of his cousin in a criminal case brought by the defendant against him. I am not sure that, if he has given true evidence, he could be charged with any misbehaviour. The frame of the 2nd issue shows that the plaintiff's case is that primarily there was a contractual liability undertaken by the zemindar and subsequently a transfer thereof to the defendant with her consent. With, reference to the contract between, the zemindar and the plaintiff there is, not much evidence. The plaintiff alone speaks to it and a lot of other circumstances are relied upon in., corroboration of the plaintiff's evidence. There is 'no. evidence to the contrary. The zemindar, the promisor, is dead and the liablility has been transferred to the defendant under Exhibit B with her consent. The two facts account for the paucity of more direct evidence on the contract itself. The direction to pay the plaintiff in the document Exhibit B is a circumstance to presume a contract existing behind it as basis. No doubt the plaintiff, who was no party to Exhibit B, cannot rely upon that document as the contract itself, but from the allegations in the plaint, from the frame of the 2nd issue and from his evidence, it is clear that the plaintiff relies upon a contract apart from Exhibit B, and relies upon Exhibit B as some evidence of contract which formed as the basis of the trust he alleges in his favour. The plaintiff swears that the grant was to hold good for his life and irrevocable and the plaintiff was not only being paid the amount contracted for both during the interval between the date of Exhibit B and the zemindar's death but also for sometime after the zemindar's death. There is no reliable evidence to show that there was any valid revocation of the contract, even assuming for a moment that the zemindar had the option to withdraw. That the intention of the parties to the contract was that it was to be in force for the plaintiff's life, is inferable from Clauses 31 and 33 of Exhibit B. Considering the services rendered and the sacrifices made to the knowledge of and at the suggestion of the zemindar himself, it looks to me that a man in the socially high position of a zemindar intended, and should have intended, to bind himself to that contract rendering himself liable to pay the petty monthly allowance to the plaintiff. The plaintiff did expect to be remunerated for whatever services he rendered and he was not disappointed in his expectations.

21. It might be that the plaintiff was remunerated to a certain extent when it was in the power of the zemindar to remunerate, but there is no proof that the plaintiff had been fully compensated for the services rendered by him. I, therefore, find that as a matter of contract between the plaintiff and the zemindar, the latter intended to contract, and contracted, to render himself liable to pay the monthly allowance for the plaintiff s life-time. I may in this connection refer to the absence of any qualifying clause in Exhibit B such as so long as the plaintiff renders service or at the 'pleasure of the payer or until revoked' as adding strength to the above conclusion regarding the intention of the parties on the other hand, past services being the consideration for the grant of a monthly allowance, no such qualifying clause was considered relevant or necessary. Exhibit I, by which the defendant attempted to qualify the grant, has been found spurious. The plaintiff admits he has not been rendering any service to the defendant now. All these only show that the grant of allowance was absolute and unconditional for the plaintiff's life. The defendant, as her husband's heir to the estate, is bound to perform her husband's contract.

22. Again, the defendant is sought to be held liable to the plaintiff in another aspect, namely, as a trustee. The author of the trust is the zemindar. The defendant, the alienee of the estate, is the trustee. The plaintiff is the beneficiary and the maintenance of the plaintiff is the purpose of the trust, which is not unlawful. Exhibit B clearly indicates an intention to create a trust. Exhibit B was not a hasty or an ill-considered document. It was brought into existence after some correspondence regarding the terms. Even the defendant's 2nd witness states that the allowances sought to be payable by the defendant were...payable only if the defendant consented to the said terms in Exhibit B. The defendant had admittedly paid the plaintiff for several months and expressed her consent thereto; thus a clear intention to create a trust in favour of a poor relation and friend of the zemindar is clearly inferable from the evidence on record. The defendant took the mortgage subject to the plaint' liability. This suit was originally filed as a Small Cause Suit but since Small Cause Courts have no jurisdiction to try suits relating to trust, the plaint was returned and filed as an original suit in the Munsif's Court. So the plaintiff's claim, as put forward from its inception, has been a case of a trust in his favour. The circumstance that he has authorised the defendant to pledge the estate if the income there from should at any time fall short and be found deficient to pay any of these allowances, shows that the zemindar intended the grant to be binding on the estate. Reading Sections 6 and 8 of the Indian Trusts Act, I find that the facts of this case go to establish a trust for the benefit of the plaintiff. I do not see any indefiniteness about it when the purpose of the trust suggests that that liability was to hold good for the life of the beneficiary. The wording is the same in regard to the payments to the zemindar, his mother and others provided for in Exhibit 13. Exhibit B looks and reads as if it is a family settlement. The defendant's status as a wife is recognised in Clause 29, as distinguished from that of a mortgagee. I also find that the trust is based on a prior enforceable contract. The plaintiff states that lie was present at the registration of Exhibit B and there is no evidence to the contrary. Exhibit B has been proved to have been fair-copied from a draft made, approved of and sent by the defendant. The defendant has made payments of the allowances to the plaintiff for some time. Nothing more seems to be required to infer consent on the part of the trustee. The plaintiff, who knew of the execution of Exhibit IS, has accepted the arrangement, which was also consented to by the defendant, but the trust. I should think, relates only to the period of the existence of the mortgagee's interest possessed by the defendant. The trust was completed when the defendant began to pay the plaintiff. In this case the defendants rights are not only that of a mortgagee but also that of an heir to the estate. She would be a trustee as a mortgagee and not as the heir who succeeded to the equity of redemption. If the mortgage disappears, she would be the heir to the whole estate and would cease to be a trustee, but nonetheless she would be liable to pay the plaintiff as the heir of her husband, who had contracted this liability and who is not shown to have gone beyond his legal rights to charge the estate with his liability. (See Indian Contract Act, Section 25, Clause 2 and Explanation 2.) No doubt, the parties did not contemplate that the zemindar would die and that the mortgagee would become the heir. If the heir and the mortgagee should be two different persons and if the heir happens to be in possession after the discharge of the mortgage and the consequent extinguishment of the trust, he would be liable to pay on the basis of a contract and if the mortgage subsists the mortgagee or her assignees and heirs would be liable as trustee.

23. For these reasons my finding is that the zemindar agreed to impose upon himself a legal liability to pay the sum of Rs. 20 a month to the plaintiff.

24. We accept the finding which is one purely of fact. We see no reason for thinking that the learned Subordinate Judge did not give due consideration to the various points mentioned in the judgment calling for findings. Several, though perhaps not all, of the points have been alluded to by him.

25. The result is that the appeal is dismissed with costs.


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