Bombay High Court

1. Jamna Das vs Pandit Ram Autar Pande on 2 November, 1911

Equivalent citations: (1912) 14 BOMLR 1

1. 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. Therefore, he is not a person from whom, in the words of the 90th section of
the Transfer of Property Act, u the balance is legally recoverable.

2. Their Lordships will therefore humbly advise His Majesty that this appeal must be dismissed
with costs.

2. Chinnayya (Vs) Ramayya.

A case is Chinnayya (Vs) Ramayya. In this case A has a daughter namely B and a brother
namely C. A makes an offer to B according to which A will transfer certain property to B and
B has to pay annuity to C. Thus a Contract gets formed in between them. There after B
promises to C to pay annuity. Afterwards B gets failed in paying annuity to C on the ground
that she (B) has no Consideration from C. Here Court decides that consideration is obtained
by B from A. Thus it is held that B has to pay annuity to C.

3. Tweddle v. Atkinson : This is considered to be one of the most significant decisions which to
the doctrine of privity. In this case, the plaintiff’s father, and his prospective father-in-law,
mutually agreed to pay sums of money to the plaintiff on marriage. The plaintiff duly
married, but the father-in-law died before his portion of money had been paid. It was held
that the plaintiff could not recover the money, even though the agreement had expressly
provided that the plaintiff should have the right to sue on it. Wightman J said: “It is now
established that no stranger to the consideration can take advantage of a contract, although
made for his benefit.”, whereas, Crompton J said that “consideration must move from the
promisee”.
4. Price v Easton (1833) 4 B&Ad 433

Facts

A declaration between the parties stated that X owed the plaintiff £3. As such, X agreed
to complete work for the defendant in exchange for payment, which would clear the
debt that he owed to the plaintiff. The defendant agreed he would pay the plaintiff on
X’s behalf once the work was finished. X completed the work for the defendant but the
defendant did not pay the plaintiff, or X, as had been promised. The plaintiff sued the
defendant for the money that X owed him, which would have been paid by way of the
defendant’s payment.

Held

It was found that X performed his part of the agreement with the defendant but the
plaintiff was a stranger to the contract between the parties and therefore could not sue
for the sum owed by the defendant. This was despite the fact that the money owed
would have been paid to the plaintiff to clear the previous debt. The court found this on
the basis that the plaintiff had not provided any consideration for the promise between
the parties. The plaintiff’s claim was dismissed by the court.
In spite of the fact that the doctrine of Privity of Contracts has no solid base for
its standing however there are a few avocations which still backing its
survival[1]:

Firstly, as a contract is based on a mutual agreement, it would not be fair to

force commitments on any party who might not have given his consent to be
bound. Furthermore, empowering third parties to enforce contracts would
influence or limit the rights of contracting parties to differ or end the contract.
Next, a third party might not have provided the consideration, and consequently
should not have the capacity to authorize the agreement. What’s more, finally,
the promisor is liable to face two activities, from the promisor and the third
party.

As we are aware there is no separate/independent enactment of the principle of

Privity of Contract in India however luckily, unlike England, the law of Contract
in India is classified. It is to be, notwithstanding, noticed that the Indian
Contract Act 1872 does not expressly contain a solitary procurement/provision
connected with the doctrine of Privity of Contract. Hence, the position of the
tenet may be pictured in the light of different procurements/provisions of the
Contract Act. Those provisions are: Sections 2(a), 2(b), 2(c), 2(e), 2(h), 73, 74,
and 75 of the Indian Contract Act, 1872.

It can, accordingly, be induced from the above procurements of the Contract

Act that the promisor is liable to the promise and the promisee is answerable to
the promisor. It recommends that only the parties to any specific contract are
the proper persons who can authorize/compel the contractual rights and
shoulder the contractual commitments. Further, it is evident from section 73 of
the Indian Contract Act, 1872 that the party who endures by breach of a
contract is entitled to be awarded damages from the other party to the contract.
In perspective of section 74 of the Act, it can be said that if an amount is
named in the contract as the sum to be paid if there should arise a breach of a
contract, the party claiming the breach of contract is qualified for get a
reasonable compensation not surpassing the sum so named, or may be, the
penalty/fine stipulated for.

In India there has been an incredible difference of opinion in the courts in the
matter of how far a third party to a contract can uphold/enforce it. There are
numerous chosen old cases which proclaim that a contract can’t be
implemented by an individual who is not a party to it and that the doctrine/
tenet in Tweddle v. Atkinson, which is as much pertinent in India as it is in
England[2]. The Privy Council extended the principle to India in its choice
in Jamna Das v. Ram Autar Pande. According to the opinion of RANKIN CJ,
this is by all accounts the impact of the Contract Act itself in the case
of Krishna Lal v. Promila Bala. The principle in Tweddle v. Atkinson was
maintained by the Supreme Court of India in M.C. Chacko v. State Bank of
Travencore[3]. For this situation, SHAH AG CJ supported the proclamation of
RANKIN CJ in Krishna Lal Sahu v. Promila Bala Dasi in the wake of alluding
to the perception of Lord Haldane in Dunlop v. Selfridge.