Abdul Ghafur Butt v. Mohammad Salim

Harnam Singh, J.:— To appreciate the points of law involved in this appeal the facts of the case may be set out in some detail.

2. The facts, so far as material, are that after the death of Abdul Ali house No. 112 Baltastani Mohalla, Simla which was the property of Abdul Ali was mortgaged on the 30th of May, 1927 with Munshi Shah Mohammad and Maulvi Ali Naqi for Rs. 14,000 on the foot of a registered mortgage deed executed by Mohammad Ali and Hira Wazir, sons of Abdul Ali and Mst. Ghulam Fatima, widow of Abdul Ali, both on her own behalf and on behalf of her minor children, Mohamad Salim, Mst. Badri-Munir and Mst. Badr-i-Amin. Clause No. 16 of this mortgage deed provided that as the mortgagors have been paying to Mst. Ghulam Fatima Rs. 50 per mensem out of the income of the mortgaged property for the maintenance of Mohammad Salim, Mst. Badr-i-Munir and Mst. Badr-i-Amin the mortgagees will pay Rs. 50 per mensem to Mst. Ghulam Fatima for the maintenance of the aforesaid minor children of Abdul Ali as if the maintenance allowance were a charge of a public nature. It is common ground that Munshi Shah Mohammad and Maulvi Ali Naqi on the basis of the mortgage made on the 30th of May, 1927 obtained a decree for Rs. 24,096/2/- against the mortgagors. The dispute between the parties was later compromised in the High Court, the mortgagees agreeing to accept a sum of Rs. 20,000 with interest by the 20th of August, 1935 in full and final settlement of their claim. Hira Wazir it may be mentioned had sold his share in the mortgaged property to Mohammad Ali on the 23rd of July, 1927. Mohammad Ali with a view to save the property from being sold and with the object of taking benefit of the reduced amount in terms of the High Court's compromise decree raised a loan of Rs. 20,000 from Abdul Ghafur Butt and executed a registered instrument in his favour on the 10th of August, 1935 conferring upon him the status of a subrogated mortgagee. Clause 16 of the registered instrument, Exhibit C.W 1/1, made on the 10th of August 1935 by Mohammad Ali in favour of Abdul Ghafur Butt provided—

“As in the past the mortgagee will continue paying Rs. 50 per mensem pending settlement to Mst. Fatima, widow of Abdul Ali for bringing up the children and their maintenance.”

3. Mohammad Salim, Mst. Badri-i-Munir and Mst. Badr-i-Amin instituted the suit out of which this appeal has arisen on the 9th of August 1941, for the recovery of Rs. 2,893-6-3 on account of arrears of the maintenance allowance, interest thereon and incidental charges.

4. At the trial Abdul Ghafur Butt defendant No. 1 pleaded that clause No. 16 in the agreement Exhibit C.W 1/1 was to operate only if Mst. Ghulam Fatima became a party to the instrument made on the 10th of August 1935 on her behalf and on behalf of the plaintiffs and that as she had not done so, the maintenance clause was void. Defendant No. 1 further pleaded that the plaintiff's could not sue as they were not parties to Exhibit C.W 1/1 and further that their right to redeem the property had been sold on the 8th of February 1940. Defendant No. 1 also claimed set-off in a sum of Rs. 1,164-12-0 on account of rent and water-tax or in the alternative as compensation for use and occupation of a portion of the premises in suit. Mohammad Ali was impleaded to the litigation but he died during the pendency of the suit and on his death Zafar Ali, his son and Khair-un-Nisa, his widow, were brought on the record on the 9th of September 1941, as his legal representatives. Mst. Ghulam Fatima died before the institution of the suit in November 1940.

5. On the pleadings of the parties the following issues were framed:—

1. What were the terms of the mortgage?

2. Can defendant No. 1 plead an oral condition precedent?

3. If so, was there such a condition precedent and if so what is its effect?

4. Was any instalment offered to and refused by Mst. Fatima as alleged? If so, what is its effect?

5. Is defendant No. 1 not liable?

6. For what period did the plaintiffs occupy the premises in suit?

7. Are the plaintiffs liable for rent or damages for use and occupation for this period?

8. If so, to whom and for what amount?

9. To what relief are the plaintiffs entitled and against whom?

10. Are the plaintiffs entitled to special costs?

6. After an exhaustive enquiry the trial Court found that the third proviso to section 92 of the Indian Evidence Act permits proof of the existence of a separate oral agreement constituting a condition precedent to the attaching of an obligation under a contract which has been reduced to the form of a document but that the condition precedent to the enforcement of clause 16 of the instrument made on the 10th of August 1936 had been proved. The trial Court further found that clause No. 16 in agreement C.W 1/1 regarding payment of maintenance money to the plaintiffs could be enforced by the plaintiffs against defendant No. 1. The defendant's claim for set off was allowed against Mst. Badr-i-Amin and Mst. Badr-i-Munir to the extent of Rs. 63-9-0. Issue No. 4 was decided against defendant No. 1 for want of proof. The trial Court held that the plaintiffs were competent to maintain the suit for the recovery of maintenance allowance under clause 16 of the instrument made on the 10th of August 1935 despite the fact that they were not parties to the instrument, Exhibit C.W 1/1 and their right to redeem the property had been sold on the 8th of February 1940. On the findings set out above, the trial Court decreed the plaintiffs' claim with costs for the amount claimed as maintenance together with interest thereon from the date of notice to defendant No. 1 and allowed the defendant's claim for set off to the extent of Rs. 63-9-0.

7. Mr. Abdul Ghafur Butt, defendant No. 1, went up in appeal from the decree passed by the trial Court on the 23rd of July 1943 and the Court of first appeal maintained the decree under appeal in all respects except that the amount allowed on account of set off was raised from Rs. 63-9-0 to Rs. 573. Mr. Abdul Ghafur Butt was awarded costs proportionate to the sum of Rs. 573 from Mohammad Salim, Mst. Badr-i-Munir and Mst. Badr-i-Amin with the direction that the costs allowed to Mr. Abdul Ghafur Butt will the adjusted towards the decree passed in favour of the plaintiffs. Mohammad Salim was further made liable for the costs of proving his signatures through the Examiner of Questioned Documents, Simla.

8. Mr. Abdul Ghafur Butt has come up in further appeal under section 100 of the Civil Procedure Code, 1908, from the decree passed by the Court of first appeal on the 6th of April 1945.

9. Mr. R.S Bhasin has a double-barrelled objection to the decree passed by the Court of first appeal. He contends that under section 92 of the Transfer of Property Act a person who has advanced to a mortgagor money with which the mortgage has been redeemed is subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the mortgagor has by a registered instrument agreed that such person shall be so subrogated but he does not subject himself to the liabilities of the previous mortgagee. He next contends that the plaintiffs in the present case not being parties to the registered instrument executed on the 10th of August 1935 by Mohammad Ali in favour of Mr. Abdul Ghafur Butt are not competent to maintain the present suit.

10. As regards the first objection first, I find that Mr. Abdul Ghafur Butt in the registered instrument made on the 10th of August, 1935 expressly agreed to pay out of the income of the mortgaged property Rs. 50 per mensem for the maintenance of the plaintiffs. That being so, the contention raised by the learned counsel for the appellant has no force.

11. The second objection proceeds upon the well-known rule that no one but the parties to a contract can be bound by it or entitled under it and that a third person cannot become entitled by the contract itself to demand the performance of any duty under the contract.

12. Now, it may be taken as an established rule of English law 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 qua trust, or of a principal through an agent, that under the old procedure he could have fried a suit in equity even if he could not have sued at common law. Those cases are a recognised exception to the general principle that only parties to a contract can sue upon it. A very full discussion of the subject will be found in the judgment of Tyabji, J., with which Ayling J. concurred, in A.B Iswaram Pillai v. Sonnivaveru Taraqan . I.L.R 38 Mad. 753.. In that case Tyabji, J. after an exhaustive examination of the English and Indian case law on the subject reached the conclusion that the general rule in such cases is that the person who acquires a right to enfore the contract is the promisee himself and not a stranger to the contract, who may benefit under the contract. Indeed, most of the reported cases on this point fall within two well-known exceptions. Of the two main exceptions one is to be found in the provisions embodied in Chapter IV of the Indian Trusts Act, 1882, dealing with the Rights and Liabilities of the Beneficiary. A trust as now understood, possesses characteristics incompatible with the strict theory of contracts, for a trust, if executed, may be enforced by a beneficiary who is not a party is it, whilst only the actual parties to a contract, as a rule can sue upon it. For the other main exception reference may be made to section 23 of the Specific Relief Act, 1877, which enumerates persons, besides the contracting parties, who are entitled to sue on a contract. 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. The most authoritative pronouncement of the Madras High Court on the point is in Subu Chetti v. Arunachalam Chettar . I.L.R 53 Mad. 270 F.B. and is to the effect: “Where on a contract between A and B, B agrees to pay a sum of money to and no more circumstances appear, C being a stranger to the contract, cannot sue B for the money, though all the parties to the contract are parties to the suit”. In this case several exceptions to the general rule are enumerated, the most important of them being the case where an express or implied trust is created in favour of the plaintiff.

13. More recently in Kshirodebihari Datta v. Mangobinda Panda . I.L.R 61 Cal. 841.. Lort Williams and A.C Ghose, JJ. said:—

“There is nothing in the Indian Contract Act, which prevents the recognition of a right in a third party to enforce a contract made by other, which contains a provision for his benefit; and the definition of consideration in section 2(d) is wider than in English Law.”

14. The rule laid down in Kshirodebihari Datta v. Mangobinda Panda was considered in The National Petroleum Company Ltd. v. Popat Lal Mulji . I.L.R 60 Bom. 954.. In this last mentioned case Beaumont, C.J and Rangnekar, J., preferred the Madras decision to the reasoning in Kshirodebihari Datta v. Mangobinda Panda for the reason that the reasoning in Kshirodebihari Datta v. Mangobinda Panda went beyond the rule laid down by their Lordships of the Privy Council in Jamna Das v. Ram Avtar . I.L.R 34 All. 63 F.B.. With great respect, I prefer to follow the rule laid down in Subu Chetti v. Arunachalam Chettiar and The National Petroleum Company Ltd. v. Popatlal Mulji to the reasoning in Kshirodebihari Datta's case.

15. Now, the present case does not fall within the second exception set out in the proceeding paragraph. As stated above, Munshi Shah Mohammad and Maulvi Ali Naqi had contracted with Mst. Ghulam Fatima on the 30th of May, 1927 that they would pay to Mst. Ghulam Fatima, guardian of Mohammad Salim, Mst. Badr-i-Munir and Mst. Badr-i-Amin Rs. 50 per mensem out of the income of the mortgaged property as if the amount were a charge of a public nature. As already mentioned, Mohammad Ali, brother of the plaintiffs, raised a loan of Rs. 20,000 from Mr. Abdul Ghafur Butt and executed a registered instrument in his favour on the 10th of August, 1938 conferring upon him the status of a subrogated mortgagee. Clause 16 of this registered instrument made on the 10th of August, 1935 provided:—

“As is the past the mortgagee will continue paying Rs. 50 per mensem pending further decision to Mst. Fatima widow of Abdul Ali for bringing up the children and their maintenance.”

16. The question really is, where A and B enter into a contract under which A confers upon B the status of a subrogated mortgagee and B agrees to pay Rs. 50 per mensem to a minor brother of A for his maintenance out of the income of the mortgaged property transferred to him as if the amount of the maintenance were a charge of a public nature, whether that brother of A can sue B on that contract.

17. Now, according to the provisions of section 6 of the Indian Trusts Act, 1882, trust is an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared or accepted by him, for the benefit of another; or of another and the owner. In order to constitute a man a trustee, there must be a person or persons for whom he is a trustee called cestui or cestuis que trust and there must be property vested in him of which he is trustee for such person or persons. In volume 38 of Halsbury's Laws of England, 2nd edition, at page 87 we find:

“A trust in the Modern and confined sense of the word is a confidence reposed in a person with respect to property of which he has possession or over which he can exercise a power to the intent that he may hold the property or exercise the power for the benefit of some other person or object.”

18. Again, Sir John Salmond in his celebrated work on Jurisprudence says:—

“A trust is created by any act or event which separates the trust ownership of any property from the beneficial ownership of it and vests them in different persons.”

19. And to use the terms of section 94 of the Indian Trusts Act, 1882, where the person having possession of the property has not the whole beneficial interest therein, he must hold the properly for the benefit of the person having such interest, or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands.

20. Applying the principle set out above to the facts of this case it appears that Mr. Butt has the legal possession or control of the mortgaged property which would be complete but for the equitable interest therein of the plaintiff. As stated above, Mr. Butt subrogated mortgagee in possession of house No. 112 Baltastani Mohalla, contracted with Mohammad Ali, brother of the plaintiffs, on 10th of August, 1935 to pay a sum of Rs. 50 per mensem out of the mortgaged property to the plaintiffs for their maintenance as if the maintenance allowance were a charge of a public nature. Clearly, on these facts, the plaintiffs have a beneficial interest within the meaning of the rule embodied in section 94 of the Indian Trusts Act, 1882, in the income of the property mortgaged with Mr. Butt.

21. Finding as I do, that the contract embodied in clause 16 of Exhibit C.W 1/1 is in the nature of a trust, the appeal fails and is dismissed with costs.

22. Kapur, J.:— I have read the judgment prepared by my brother Harnam Singh, J. and I agree with his conclusion and the reasons therefor, but to that judgment I would like to add my own opinion.

23. In the Law of England as stated by Lord Haldane L.C in Dunlop Pneumatic Tyre Company, Limited v. Selfridge and Company, Limited . 1915 A.C 847, 853. “certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our law knows nothing of a jusquaesitum tortio arising by way of contract.” To this rule, however, Courts of equity introduced certain exceptions and as stated by Leake on Contracts, page 306, (8th edition), “a contract can create no right or liability in a person who is not a party to it, unless he can claim or be charged through a party, as in the case of a cestui que trust claiming through a trustee; or a principal claiming or being charged through an agent.”

24. If we examine examine the English decisions on the point we find that they are really based upon a fiction. The first case that I shall refer to is Dutton v. Poole . 1677 2 Lev. 210. in which a donee beneficiary was allowed to sue in assumpsit, although not & party to the contract and she gave no consideration; and in Tomlinson v. Gill . 27 R.R 221. a defendant had promised a widow that if he was appointed a co-administrator with her of her deceased husband's estate be would make up the deficiency in the assets for payment of the debts of the deceased. A creditor of the deceased brought a bill to enforce his promise and Lord Hard wick held that he could get a decree as the promise was for the benefit of the creditors and the widow was not a trustee for them.

25. In Gregory v. Williams . 17 R.R 136. an agreement between debtor Parker and his landlord and creditor Williams that he (Parker) shall surrender his tenancy and assign all his property to Williams the landlord and creditor and that the latter shall there out pay to Gregory and another creditor about £ 900 and apply the residue in satisfaction of his claim and pay the surplus, if any, to Parker was held to create a trust in favour of Gregory and when Gregory and Parker brought a bill against Williams to compel the performance of that promise Sir William Grant, M.R, held that the bill was maintainable on the ground that Parker acted as trustee for Gregory and that “Gregory may derive an equitable right through the mediation of Parker's agreement”, even though he was not a party to it, nor had any part of the consideration moved from him. Reliance was placed on the judgment of Lord Hardwicke referred to above and it was held that Gregory dad a right to insist upon the benefit of the promise made to Parker.

26. In Fletcher v. Fletcher . 1829 14 L.J Eq. 66. E.F executed a deed in favour of them trustee covenanting that within 12 months after his death his trustees and executors would pay them a sum of £ 60,000 upon trust for his two natural sons. This deed was formally executed by E.F but was retained in his possession till death in 1834. By his will he gave up all his property upon trust for the benefit of his wife, his natural children and his legitimate children. The existence of the deed was known neither to the trustees nor to the patties beneficially entitled until it was found in his papers after his death. One of the natural children filed a bill against the trustee on the deed of 1829 and the executors and trustees and party interested under the will claimed for payment of £ 60,000 in addition to any benefit they might take under the will. It was held by Wigram V.C that the convenant in the deed of 1829 constituted a debt recoverable at law and that the plaintiff, though a volunteer, was entitled in equity to prove the £ 60,000 and interest against the assets of E.F It may be noticed that as a matter of fact no money was ever held in trust and that there was merely an executory covenant for the payment of money which was to be held in trust and it was held that the covenantees were trustees of the covenant even though there was no assent on the part of the trustees or knowledge on the part of the beneficiaries.

27. In Gandy v. Gandy . 1885 30 Ch. D. 57. a husband covenanted with the trustee to pay to them an annuity for the use of the wife and two eldest daughters and also to pay to the trustee all expenses of the maintenance and education of the two youngest daughters. Upon one of the two youngest daughters attaining the age of 16, the husband refused any longer to maintain her, whereupon she brought an action against the husband and the trustees of the deed to enforce the husband's covenant, the trustees having refused to bring the suit themselves. The Court held that there was no trust by virtue of which the children could sue in their own name, but the wife as a beneficiary, who had the children to support, obtained a decree for every thing that had been promised. It may be pointed out that she was not a promisee nor was there any promise made to pay to her; and it was also held that she had such an interest as entitled her to sue.

28. There are cases where a creditor can confer upon a third person an enforceable right by giving directions to his debtor to pay the debt to that third person. One such case is Paterson v. Murphy . 1853 22 L.J Eq. 822.. There the testatrix had advanced to the plaintiff, a trustee, £ 300 upon security of a deposit of certain title deeds and by a memorandum had directed him to repay to her the sum of £ 70 by quarterly payments of £ 10 each and afterwards to invest the residue to the amount of £ 200 by like quarterly sums in consols and after her decease to pay the principal, interest and dividend to the children of B. Murphy when the youngest attained 2 years of age. By a subsequent memorandum the testatrix countermanded the payment to the children of Murphy and directed the payments to be made to herself. Both these memorandums were written by the plaintiff and signed by the testatrix without notice to the cestuis que trust and sundry payments had actually been made by the plaintiff under the second memorandum to the testatrix. The infant child of B. Murphy claimed the sum of £ 200 and interest and it was held that the first memorandum constituted a complete declaration of trust in favour of the beneficiaries and was irrevocable by the settlor. The learned Vice-Chancellor Wood V.C observed:—

“In the present case the document was written by the trustee and signed only by the settlor and without notice of it to the cestui que trust; but there is not any case which requires notice of a trust to the cestui que trust to render the declaration of the trust complete or binding…………………It is clearly an express declaration of trust, without reserving any power of revocation.”

29. In the next case Parker v. Stones . 38 L.J Eq 46. the creditor after revoking legacies which he had given under a will verbally instructed his debtor who owed him £ 300 to pay two sums of £ 50 and £ 200 to third parties the lagetees under his will. This trust was accepted and it was held that a valid trust was effectively created in favour of the donees.

30. In Lamb v. Vise . 1840 9 L.J Exch. 177. an officer of the Palace Court, with others as sureties became bound to the marshal of that Court, for the due performance of the duties of his office and that he should take sufficient bail from all persons arrested by him. Haying taken insufficient bail in an action in that Court, an order was made requiring him to pay the debt and costs. It was held that in an action on the bond for disobedience to the order, the marshal, though he himself sustained no injury, could recover the amount of the debt and costs as trustee for the party really damnified. Park B. in delivering the judgment observed:—

“The plaintiff is a trustee for parties who may be really injured by the breach of the conditions of the bond. The very form of the bond shows this and that it must have been made for the benefit of third parties.”

31. This was a case where the performance promised by the defendant was not payment of money to anybody. Damages awarded belonged to the creditor.

32. In The Robertson v. Wait . 1853 22 L.J Exch 209. the plaintiffs chartered from the defendants a ship to convey a charge from Liverpool to Calcutta under a charter-party which stipulated that the ship was to be consigned to E and Co. Calcutta on the usual terms, one of which was that E and Co. might procure the homeward freight at a commission of £ 5%. The defendants accordingly consigned the ship to E and Co., but made an agreement with a third party for the homeward freight. The plaintiffs, who had previously agreed with E and Co. for a share in the commission, thereupon sued the defendants for a breach of their agreement, but were unable to prove at the trial in what proportion the commission was to be divided between themselves and E and Co.

33. The plaintiffs in Touche v. Metropolitan Railway Warehousing Company . 1871 L.R Ch. 671. had incurred labour and expence in organizing a scheme for certain Exhibition Rooms and had entered into negotiations with and sent the plans to, some of the promoters of a certain Company and offered to accept £ 2,000 for remuneration. After the formation of the Company and by the Articles of Association it was provided that £ 2,000 should be paid and it was arranged with one of the promoters that he should pay this £ 2,000 as soon as the Company was in a position to commence business. The plaintiffs sued the Company for the recovery of £ 2,000 and it was held that the plaintiffs could maintain the suit against the Company in their own name and were not obliged to sue in the name of the promoter, because the Company's promise to pay £ 2,000 was made to the promoter as trustee for the plaintiffs. It was observed by the learned Lord Chancellor:

“I am justified in holding that the plaintiffs have a right to come here and obtain the benefit of the arrangement entered into between Walker and the Company Davenport v. Bishop . 2 Y. & G. 451. and Gregory v. Williams are authorities to that effect.”

34. It may be noted that the plaintiffs in this case were neither the promisees nor had given any consideration for the Company's promise. They were merely beneficiaries of a contract and there was no trust in the ordinary sense of the term and as it is remarked by Lort Williams J. in Kshirodebihari Datta v. Mangobinda Panda the concept of trust was being used as a mere device for the recognition and enforcement of the right of a third party beneficially created by a contract to which he was not a party.

35. In Lloyd's v. Harper . 1880 16 Ch. D. 290. a father, on the occasion of the admission of his son as an underwriting member of Lloyd's, addressed to the managing committee of that body a letter, by which be held himself responsible for all his son's engagements in that capacity. The association as such incurred no liability on the policies underwritten by its members. The son having become bankrupt, there was a default on certain marine insurance polices and Lloyd's sued the father's estate (the father being then dead) on certain marine insurance policies and it was held that the committee of Lloyd's were trustees for the benefit of the guarantee for all the persons, with whom the son had contracted engagements as an underwriting member and they could maintain an action to enforce the guarantee against the fathers estate for the benefit of those persons. Fry J. said:

“It appears to me from the cases which were cited in the course of the argument, especially Tomlinson v. Gill and Lamb v. Vise (supra) that where a contract is made for the benefit and on behalf of a third person, there is an equity in that third person to sue on the contract and the person who has entered into the contract may be treated as a trustee for the person for whose benefit it has been entered into.”

36. In the Court of appeal James L.J observed:—

“I am of opinion that Mr. Justice Fry was well warranted in the conclusion at which he arrived, that the engagement was made with the committee as trustees for and on behalf of the person beneficially interested.”

37. and Lush L.J said:—

“I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B and recover all that B could have recovered if the contract had been made with B himself.”

38. In Les Affretours Reunis Societe Anonyme v. Leopold Walford (London) Limited . 1919 A.C 801. a clause in a time charter party provided that “a commission of three per cent, on the estimated gross amount of hire is due to Leopold Walford (London) Limited, on singing this charier” No hire was in fact earned under the charter party. The broker Walford brought an action against the shipowner for effecting a time charter party. The brokers were not parties thereto. It was held that the brokers could sue. Lord Finlay said at page 811:—

“We must regard the charterer as having entered into that bargain in the interest of the broker and as a trustee for the broker.”

39. Lord Birkenhead L.C said:—

“The broker in such cases, in effect, nominates the charterer to contract on his behalf, influenced probably by the circumstance that there is always a contract between charterer and owner in which this stipulation, which is to enure for the benefit of the broker, may very conveniently be inserted.”

40. In India the definition of ‘consideration’ is wider than that in English Law. section 2(d) of the Indian Contract Act runs as follows:—

“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abtains from doing or promises 10 do or abtains from doing something, such act or abstinence or promise is called a consideration for the promise.”

41. It has been held in Rambux Chittangeo v. Madoosoodum Paul Chowdhry . 7 W.R 377. that in the Muffasil Courts in India the rights of parties are to be determined according to general principles of equity and justice without any distinction, as in England, between that partial justice which is administered in the Courts of Law and the more full and complete justice for which it is frequently necessary to seek the assistance of a Court of Equity. In the Courts in India the administration of justice is not to be hampered in any way by the doctrine laid down in Tweddle v. Atkinson . 134 R.R 610.. There is a remark by Lord Macnaghten in Khwaja Mohammad Khan v. Hussaini Begumi . I.L.R 32 All. 410. which is to be found in the report given in 14 C.W.N 868 which indicates the limit imposed on a Court of Common Law. Lord Macnaghten there says: “Supposing she (that is the plaintiff) were an English woman, it is true she could not bring an action in the King's Bench Division, but could she not bring, a suit in Equity?” The answer of the learned counsel was “Yes”. The bar then in the way of an action by a person not a direct party to the contract was probably one of procedure and not of substance and in India we are to be guided in matters of procedure by the rule of justice, equity and good conscience and I agree with the observations of M.C Ghose J. in Kshirodebihari Datta v. Mangobind Panda at page 862 where it is said:—

“Though ordinarily only a person who is a party to the contract can sue on it, where a contract is made for the benefit of a third person, there may be an equity in the third person to sue upon the contract.”

42. This equitable exception was applied by their Lordships of the Privy Council in Khwaja Mohammad Khan v. Hussaini Begunm. There the father of the bridegroom had contracted with the father of the bride to make the daughter an allowance called “Kharche Pan dan” if she married his son. After the marriage the daughter sued her father-in-law to recover arrears of the allowance and it was held by their Lordships that though she was no party to the contract yet she was clearly entitled to proceed in equity to enforce her claim.

43. It is true that their Lordships of the Privy Council in Jamnadas v. Ram Autar held that a purchaser's contract to pay off a mortgage cannot be enforced by a mortgagee who was no party to the contract and it may also be conceded that decisions in India favour the view that a person not a party to the contract cannot sue on the contract unless the case comes within one of the recognized exceptions as is indicated by the provisions of sub-sections (a), (b), (c) and (i) of section 23 and on this principle in Ganesh Das v. Mst. Banto . I.L.R 16 Lah. 118 a Division Bench of the Lahore High Court, Tek Chand and Jai Lal JJ. held that where in a registered sale deed the payment of an unsecured debt of Rs. 600, due from the vendor to a third party, was recited as party of the consideration and the vendee undertook to pay this debt, the third party in whose favour this recital was entered being wholly ignorant of the sale could not recover the sum because no trust was created in his favour and he was not a party to the contract, the general rule being that a contract affects only the parties to it and cannot be enforced by or against a person who is not a party, even if the contract is made for his benefit.

44. The principle of the decision in Khwaja Mohammad Khan v. Hussaini Begum were followed by Sir Lawrence Jenkins C.J and Mookerjee J. Debnarayan Dutt v. Chunilal Ghose . I.L.R 41 Cal. 137. and this was followed by the same Court in a later case where there was no communication of the arrangement between the contracting parties to the third party and yet the third party was allowed to enforce the contract holding the absence of communication did not make any difference in principle and this was followed in Kshirodeblhari Datta v. Mangobinda Panda where Lort Williams J. has discussed this matter at great length and be came to the Conclusion that there is nothing in the Indian Contract Act, which prevents the recognition of a right in a third party to enforce a contract made by others, which contains a provision for its benefit; and the definition of consideration in section 2(d) is wider than in English law.

45. No doubt there are cases of the Calcutta as well as of Madres High Courts where a contrary view had been taken but I would prefer to follow the judgment of Sir Lawrence Jenkins C.J in the esse mentioned above.

46. In the case now before us in the mortgage which had previously been effected in favour of Maulvi Ali Naqi and Munshi Shah Mohammad a provision had been made for the payment of a sum of Rs. 50 a month to Mst. Ghulam Fatima, widow of Abdul Ali for the maintenance of herself and her children out of the usufruct of the mortgage. To the mortgage Mst. Ghulam Fatima on behalf of herself and as guardian of her minor children was a party and in the subrogated mortgage which was effected in favour of Abdul Ghaffoor Butt a similar provision has been made for the continuance of the payment of this amount, although Ghulam Fatima was not a party. This provision had really been made for the benefit of Ghulam Fatima and her minor children and this would be governed by the rule laid down in Shuppu Ammal v. Subramaniyam . I.L.R 33 Mad. 238. and Arumuga Giundan v. Chinnamal . 21 M.L.J 918. where it was held that a person who is no party to a document but in whose favour a trust is created by such document is entitled, to maintain a suit to enforce his terms, either as the actual beneficiary or as the charge bolder.

47. I am of the opinion therefore that in the circumstances of this case where provision had been made for the maintenance of Ghulam Fatima and her minor children, although she was not a party to the case, she or the other beneficiaries can enforce the provision in the contract which was for their benefit. I would, therefore, dismiss the appeal with costs throughout.

48. Appeal dismissed.