Case Comment – Veeramma V. Appayya (1955)
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CASE COMMENT – VEERAMMA V. APPAYYA (1955)
Manassvi Sharrma, Chanakya National Law University, Patna CITATION: 1955 SCC AP 269
BENCH : Justice Viswanatka Sastri JUDGEMENT: 16 October
1955 INTRODUCTION
The landmark case of Veeramma v. Appaya(1995) is a landmark case of exceptions of privity of contract which is the upkeep or marriage provisions under a family arrangement. A common law concept known as privity of contract stipulates that only parties to a contract may bring legal action against one another to enforce it, and that no outsider may impose obligations on a non-party, even if the deal was entered into for that person's benefit. There are several statutory and equitable exceptions to the law of privity of contract. The most notable of these is found in the Contracts Act, which allows a third party to enforce a contract when it either explicitly states or implies that it will offer a benefit of that kind.
There are three exceptions of doctrine of privity of contract under the Indian scenario which are- beneficiary under a contract where there is a trust or fiduciary relationship which was highlighted in Muhammad Khan v. Husaini Begum. 1 second is Conduct , acknowledgement or Admission in this if one person recognises the right of another then he may be liable for the same , this was highlighted in the case Narayani Devi v. Tagore Commercial Corporation Ltd2 and the third is the provision for maintenance or marriage or family settlement which was further highlighted in the present case. The judgement given by the Andhra Pradesh High Court in this case marked a turning point with regards to protecting the rights of the family members
1 Muhammad Khan v. Husaini Begum 1910 , 37 IA 152.
2 Narayani Devi v. Tagore Commercial Corporation Ltd, AIR 1973 CALCUTTA 401
in these contracts and it made easier for the third party to enforce the contract when it is made for their benefit.
BACKGROUND
AND FACTS OF THE CASE A person named Nagayya, was an elderly man with a whimsical nature who owned a house and vacant site which formed the subject matter of this case. He had a daughter named Veeramma, who was the plaintiff. Veeramma was married to K. Basavayya, who was both Nagayya's nephew as well as his son-in-law. Nagayya was often at odds with his wife, and their arguments increased rapidly that led to a point where his wife filed a suit for separate maintenance against him. As a result of this , a portion of Nagayya's house was allotted for his wife's residence. Despite these family disputes, on June 20, 1945, Nagayya signed a gift deed (Exhibit A-1) transferring the ownership of the house and vacant site to his nephew K. Appayya, who was the defendant in this case.
The gift deed stated that Appayya had been maintaining Nagayya, for a long time and the gift was made out of love and affection. However, soon after this transfer of the property ,disagreements surfaced between Veeramma, the plaintiff, and Appayya, the defendant. Veeramma was backed by her husband and other relations in challenging the validity of the gift deed. Appayya was not able to take possession of the property as the gift was alleged to have been obtained by fraud on Nagayya. The disputes increased further, which led to Appayya filing a criminal complaint (Exhibit A-2) on March 26, 1946, against Veeramma's husband Basavayya and three others. In this complaint, Appayya charged them of offenses like assault, wrongful restraint, criminal trespass, and deliberate insult.
However, both the parties then reached a compromise (Exhibit A-3) on April 24, 1946, with the intervention of certain mediators. A key condition of this compromise was that Appayya would execute a deed (dakhal deed) transferring the house and site to Veeramma, who would then maintain her father Nagayya in the house for the remaining part of his life. Despite the fact that ,Veeramma was not a party to the document Exhibit A-3, she and her father Nagayya took an active part for bringing out this compromise settlement of the family dispute. In accordance with the conditions of the contract , Veeramma took charge of her father and maintained him until his death, which occurred during the pendency of the suit.
However, Appayya did not perform his obligation to execute the dakhal deed in Favor of Veeramma, which led to filing of the present suit for specific performance of the contract against Appayya. ISSUES Issues involved in the case of Veeramma v. Appaya were:
1. Whether a stranger to a contract can sue and enforce for the specific performance of the
contract?
2. Whether the arrangement decided in exhibit A-3 created any trust or fiduciary
relationship in favour of Veeramma that would allow her to file a suit for performance of contract?
3. Whether the fact that Veeramma maintained her father Naggaya as per the term constitutes
as a valid consideration for the enforcement of contract?
ANALYSIS
The court in this case discussed about the issue of whether a stranger to a contract can enforce a specific performance of the contract. It was highlighted that the common law principle has denied this right which was based on doctrine of privity of contract which got established in the case of Tweddle v. Atkinson (1861)3. However the court of equity created exceptions in this doctrine by highlighting the concept of a trust whereby the third-party beneficiary can treat the promisee as a trustee. The court looked at various Indian precedents on the matter. Some cases adhered to the principles of equity like Khwaja Muhammad Khan v. Husseni Begum4. Whereas others like Jamna Das v. Ram Autar5 adhered to the strict common law view. The Calcutta High Court gave conflicting judgements , in Deonarayan Dutt v.
Chunilal Ghose6 allowing the third party to sue for the specific performance , but in Krishna Lal Sadhu v. Promila Bala Dasi7 reaffirming the privity rule.
3 Tweddle v Atkinson (1861) 1 B&S 393
4 Khwaja Muhammad Khan v. Husseni Begum, ILR 32 All 410
5 Jamna Das v. Ram Autar ,ILR 34 All 63
6 Deonarayan Dutt v. Chunilal Ghose, ILR 41 Cal 137
7 Krishna Lal Sadhu v. Promila Bala Dasi ,ILR 55 Cal 1315
While examining the facts of the case, the hon’ble High court stated that Veeramma was not a party to Exhibit A-3, however she was a beneficiary to the contract under the family arrangement , which created a trust relationship allowing her to enforce the special performance of contract as it was also clearly highlighted in the case of Mt. Dan Kuer v. Sarla Devi8. In addition to it Veeramma also maintained her father as per the terms of the arrangement , as valid consideration to make the contract binding under the Indian Contract Act. The Hon’ble High court highlighted that although Indian laws recognise exceptions of the privity of contract like trust or family arrangements , the court decided that the exceptions would be too wide if court allows the third party to sue which is incidentally benefitted from the contract.
However, in this case , Veeramma as a beneficiary fulfilled the terms and conditions of the contract and also the principles of equity supporting such arrangements. Hence the court allowed the appeal. The court took a well-reasoned approach while delivering the judgement and the judgement is valid and rationale in my opinion. The judgement of this court was valid in its approach while delivering the judgement because it did not completely deny the common law doctrine as it highlighted the precedents which upheld the common law doctrine as well as the exceptions to that doctrine. The court also relied on the middle path while delivering the judgement as it excluded the incidentally benefitted party to sue for the enforcement of the contract.
While relying upon the precedents the court rightly stated that Veeramma could enforce the terms of the contract as she was the beneficiary under the contract. Hence, the judgement achieved a reasonable middle ground between conflicting legal principles.
CONCLUSION
The case of Veeramma v. Appaya was a landmark case of the exceptions of the privity of contract. This case highlighted the diverging and favouring view through different precedents and opinion of the jurists from England as well as India. On one side it was the strict common law doctrine which did not allow the third party to sue for the enforcement of contract whereas on the other hand it was courts of equity which allowed the stranger to contract to enforce the specific performance of the contract if the party is beneficiary to it.This approach was on the
8 Mt. Dan Kuer v. Sarla Devi, ILR 1946 All 756
basis of doctrine of equity , justice, good conscience. The court’s judgement gave a valid judgement while keeping in mind both the views while ensuring that injustice should not be done towards a third party due to evolution of exceptions.