Durga Prasad v. Baldeo

A man said he set up a market at the Collector's request and that shopkeepers later signed a written promise to pay him a commission. The High Court at Allahabad held that his expense was not at the desire of the shopkeepers. So the agreement (a promise or set of promises the parties make to each other) had no consideration (something given or done in return for a promise). The case is cited for the rule that consideration must move at the desire of the promisor (the person who makes the promise).

Quick Revision

Parties

Durga Prasad — plaintiff in the suit and appellant in the second appeal. He sued to establish a written agreement and claimed commission from the defendants.

Baldeo and Ors. — defendants in the suit. Twenty-five of them had appealed to the Judge, and they are the respondents in this second appeal.

Procedural History

The judgment is by Oldfield, J. It has two numbered paragraphs, so it is cited by opinion and not by paragraph number.

1. The plaintiff filed a suit to establish an agreement in writing dated 22 June 1875. It was alleged to have been executed by the defendants.
2. Of the defendants, nineteen confessed judgment (admitted the claim), twenty-eight put in no appearance, and seventy-one defended the suit.
3. The Court of first instance passed a decree (a formal order) for the claim against all but five defendants.
4. Twenty-five of the defendants appealed to the Judge. The grounds of appeal are set out under Arguments Contended.
5. The Judge rejected all the objections on whether the suit could be maintained. He found that there was no consideration as defined in section 2(d) of Act IX of 1872. He found that the agreement was not valid under clause (2) of section 25. He also held that the document was not executed with proper formality and fairness. He reversed the first Court's decree and dismissed the claim against those defendants.
6. The plaintiff filed a second appeal (a further appeal to the High Court) in the High Court, as Second Appeal No. 1056 of 1879. He made the defendants who had appealed to the Judge the respondents.
7. The High Court at Allahabad decided it on 31 March 1880. It dismissed the appeal with costs (Oldfield, J.).

Facts

1. The plaintiff alleged that the defendants executed an agreement in writing on 22 June 1875.
2. By that agreement they agreed to pay him certain commission on the price of articles brought for sale in a market called Hume Granj in Etawah.
3. The plaintiff alleged that he established the Granj at his own expense, by request of the Collector at that time.
4. He built shops. Some of the defendants occupied them.
5. Those defendants received commission at Re. 1-8-0 per cent on articles brought for sale. They used to pay eight annas per cent to the plaintiff.
6. The plaintiff alleged that the agreement was executed to give effect to this understanding between the parties.
7. The deed is silent about the character of the consideration for the promise. The only ground for making the promise was the expense the plaintiff incurred in establishing the Ganj.
8. The Judge found that what the plaintiff did was to please the Collector. When he established the Ganj, the defendants were not in his mind.

Issues Raised

The judgment does not list issues. The questions below are the ones its reasons address.

1. Was the expense the plaintiff incurred in establishing the Ganj consideration for the defendants' promise, as the Contract Act defines it?
2. If not, did the agreement still come within the exceptions in section 25, in particular clause (2)?
3. Was the Judge's finding on consideration open to question in second appeal?
4. Could the High Court disturb the decree in respect of defendants who were not made parties to the second appeal?

Arguments Contended

The reported judgment does not record arguments of counsel in the High Court. It records the following grounds and objections.

For the plaintiff (appellant in the second appeal):

• The Judge's finding that the agreement is invalid for want of consideration is wrong.
• The Judge's finding that the agreement is invalid for want of proof of its proper execution is wrong.
• The Judge should not have dismissed the suit against the defendants who had not appealed to him.

For the defendants (respondents), as the grounds of appeal before the Judge:

• A suit of this nature, to establish a right to fees as chaudhri of a bazar, is not maintainable.
• The agreement was not registered, and that is fatal to the suit.
• The suit should be dismissed because a Criminal Court had held the document to be a forgery.
• There was no consideration for the agreement under section 25 of Act IX of 1872. It cannot be a binding agreement on them under the circumstances in which it was drawn up.

Court's Reasoning

Oldfield, J. delivered the judgment. The Bench is listed as Francis Boyle Pearson and Oldfield, JJ. The judgment has one opinion.

Justice Oldfield

1. Noted: The object of the suit is to establish an agreement in writing dated 22 June 1875. It was alleged to have been executed by the defendants. They agreed to pay certain commission to the plaintiff on the price of articles brought for sale in a market called Hume Granj in Etawah.
2. Noted: The plaintiff says he established the Granj at his own expense by request of the Collector. He built shops, which some defendants occupied.
3. Noted: Those defendants received commission at Re. 1-8-0 per cent and used to pay eight annas per cent to the plaintiff. The agreement was executed to give effect to this understanding.
4. Noted: Nineteen defendants confessed judgment, twenty-eight put in no appearance, and seventy-one defended. The first Court decreed the claim against all but five. Twenty-five appealed to the Judge, and they are the respondents in the second appeal.
5. Noted: The grounds of appeal before the Judge were four.
   • A suit to establish a right to fees as chaudhri of a bazar is not maintainable.
   • The absence of registration of the document is fatal.
   • The suit should be dismissed since a Criminal Court had held the document to be a forgery.
   • There was no consideration for the agreement under section 25 of Act IX of 1872, so it is not binding on the appellants.
6. Noted: The Judge rejected all the objections on the maintenance of the suit. But he found no consideration for the agreement, as defined in section 2(d). He found it was not an agreement valid under clause (2) of section 25.
7. Noted: The Judge further held that the document was not executed with proper formality and deliberation. Considerable interests were concerned. It was also not executed with the fairness or openness needed to be fully trusted.
8. Noted: The Judge reversed the first Court's decree and dismissed the claim against the defendants.
9. Noted: The plaintiff presented a second appeal, making the defendants who had appealed to the Judge respondents.
10. Noted: The plaintiff's objections are that the Judge's finding of invalidity for want of consideration and for want of proof of proper execution is wrong. He also objects that the Judge should not have dismissed the suit against defendants who had not appealed to him.
11. Held: The Judge's finding on the question of consideration is one that is not open to question in second appeal.
12. Noted: To make the agreement valid as a contract, it must be shown that there was consideration as defined in the Contract Act. Otherwise it must be shown that the agreement comes within the exceptions in section 25.
13. Noted: The deed is silent about the character of the consideration for the promise. The only ground for making the promise is the expense incurred by the plaintiff in establishing the Ganj.
14. Held: It is clear that anything done in that way was not "at the desire" of the defendants, so as to constitute consideration.
15. Noted: The Judge had very distinctly found that the matter is not under clause 2 of section 25 of Act IX of 1872. The plaintiff had contended that it was.
16. Noted: To bring the case within that clause, it must be shown that what the plaintiff did voluntarily was done "for the promisors". Or it must be shown that it was "something which the promisor was legally compellable to do". The Judge finds that this has not been shown.
17. Noted: The Judge says he does not see clearly what the respondents (the defendants) had done for the appellant (the plaintiff). He says that what the plaintiff did was to please the Collector.
18. Noted: In fact, when the plaintiff established the Ganj, "the defendants were not in his mind". There was nothing done for them for which compensation might be given.
19. Held: On the Judge's finding there is no case for second appeal.
20. Held: The High Court cannot disturb the decree in respect of those defendants who have not been made parties to the appeal by the appellant.
21. Held: The appeal is dismissed with costs.

Authorities

• The judgment names no decided case. It refers only to the statute, the Contract Act (Act IX of 1872), described below.

Also cited in footnotes: none. The judgment has no footnotes.

Provisions mentioned

• Section 2(d), Act IX of 1872 (the Contract Act): it defines consideration. The Judge found that there had been no consideration as the term is defined there.
• Section 25, Act IX of 1872: it makes certain agreements valid without consideration. The Court says the agreement must be shown to come within the exceptions in this section if it has no consideration.
• Clause (2) of section 25: as the Court describes it, a voluntary act can support the promise if it was done "for the promisors". The same applies to something the promisor was legally bound to do. The Judge found that this was not shown.

Judgement

1. The second appeal is dismissed with costs. The judgment does not say who pays the costs.
2. The Judge's decree dismissing the claim against the defendants who appealed to him stays.
3. The High Court does not disturb the decree in respect of the defendants who were not made parties to the appeal.

Legal Principle / Ratio

For a promise to be supported by consideration under the Contract Act, the act relied on must be done at the desire of the promisor. Expense the plaintiff incurred to oblige a third person, with the defendants not in his mind, is not consideration. It also does not fall within clause (2) of section 25. A finding of fact on consideration by the lower appeal court is not open to question in second appeal.

Key holding: anything done in that way was not "at the desire" of the defendants. In plain words, the promisors did not ask for it, so it cannot be consideration.

Critical Analysis

Analysis based on the judgment text.

The point of law is stated briefly. The Court sets out the rule in a few sentences. It does not discuss the meaning of the words of section 2(d) beyond saying that what was done was not at the desire of the defendants.

Much rests on the Judge's findings. The High Court treats the Judge's finding on consideration as not open in second appeal. It refers to the Judge's findings that the defendants were not in the plaintiff's mind and that he acted to please the Collector. It does not re-examine the evidence.

Other grounds are not separately decided. The judgment records objections on maintainability, registration and forgery. It also records the Judge's view on the formality of execution. The High Court's reasons concentrate on consideration and on the second-appeal limit.

Significance

The case shows how the words at the desire of the promisor work in practice. A person may spend money or effort after a request from someone else, such as the Collector here. That does not make it consideration for a promise by others who never asked for it.

It also shows a limit of a second appeal. On the Judge's finding about consideration, the Court saw no case for second appeal.

Exam-Important Points

• Facts in one line: the plaintiff built a market and shops at the Collector's request. He sued to enforce a written promise by shopkeepers to pay him commission. The agreement failed for want of consideration.
• Consideration must be at the desire of the promisor (section 2(d)). Here the plaintiff acted to please the Collector, and that was not at the defendants' desire.
• Trap: the exception in clause (2) of section 25 did not help the plaintiff. The act was not done for the promisors and was not something the promisors were legally bound to do.
• Trap: this is a second appeal. The Court said the Judge's finding on consideration was not open to question there. It did not independently retry the facts.
• The Court did not disturb the decree for defendants who were not made parties to the second appeal.
• Source note: the Court is the High Court of Allahabad, not the Supreme Court. The decision is of 31 March 1880.

Prepared from the full text of the judgment. The judgment has only two numbered paragraphs, so it is cited by opinion. The source copy has some typing slips. For example, the Act number appears as IS and the year as 1372. This page uses Act IX of 1872, as the judgment also writes it.