Chinnaya v. Ramayya (Venkataramaya)

Facts

An old lady gifted her zamindari property to her daughter by registered deed, making it a condition that the daughter pay an annuity of Rs 653 to the lady's brothers, which the lady had been paying. On the same day the daughter executed a separate agreement with the brothers (her uncles) to pay the annuity. When the daughter refused to pay, the brothers sued.

Issues

• Could the brothers enforce the daughter's promise when the consideration (the gift) moved from their sister, not from them?
• Was the daughter's promise supported by valid consideration under S2(d)?

Arguments

The brothers argued that the gift and the contemporaneous agreement formed one transaction supplying good consideration under the wide ICA definition. The daughter argued there was no consideration moving from the brothers and that, as strangers to the consideration, they had no right to sue.

Held

The court held that under the wide definition in S2(d) consideration need not move from the promisee; it may move from any person at the desire of the promisor. The deed of gift and the contemporaneous agreement were treated as one transaction, and the gift of the estate furnished sufficient consideration for the daughter's promise to pay the annuity. The brothers, though strangers to the consideration, could therefore enforce the daughter's promise.

Ratio decidendi

Consideration under S2(d) of the Indian Contract Act may move from the promisee or any other person; a promisee who has furnished no consideration himself may still sue, departing from the strict English rule that consideration must move from the promisee.

Significance

The leading Indian case establishing that consideration may move from a third party, marking a key divergence from English law (Tweddle v. Atkinson; Dunlop v. Selfridge); central to the doctrine of privity and consideration in India.

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