Utair Aviation vs Jagson Airlines Limited & Another
2012 Latest Caselaw 2387 Del

*          THE HIGH COURT OF DELHI AT NEW DELHI

%                                              Judgment decided on: 13.04.2012

+            I.A. No.8381/2009 in CS (OS) No.203/2009

UTAIR AVIATION                                                   ....Plaintiff
                                                                 .

                           Through          Mr. Neeraj Kishan Kaul, Sr. Adv. with
                                            Mr. Vaibhav Mishra, Mr. Prashant &
                                            Mr. S. Kachwaha, Advs.

                           Versus


JAGSON AIRLINES LIMITED & ANOTHER              .....Defendants
                 Through Mr. Sakal Bhushan, Adv. with
                         Mr. Sumit Gupta, Adv. for D-1.
                         Mr. P.S. Bindra, Adv. with
                         Ms. Shweta Priyadarshini, Adv. for
                         defendant No.2.

CORAM:
HON'BLE MR JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order, I propose to decide the defendant No.1's application under Order VII, Rule-11(a) read with Section 151 of the Code of Civil Procedure, 1908 for rejection of plaint on the ground of lack of cause of action against defendant No.1.

2. The plaintiff filed the present suit for mandatory injunction and alternatively recovery of suit property and mesne profits.

3. Plaintiff's Case

(a) The plaintiff is the joint owner of the stock company incorporated under Russian Laws, having its registered office in Russia.

The suit is filed through Mr. Mirzayanovich Mirzayanov, duly constituted person of the company. Defendant No.1 is a public limited company incorporated under the Indian Laws. Defendant No.2 is a company under the laws of Russian Federation.

(b) Defendant No.2 entered into a contract dated 24.4.2005 which is herein after mentioned as the "Supply Contract" with defendant No.1 for supply of two MI-172 Helicopters which are to be supplied to defendant No.1. For maintenance of the delivered helicopters, defendant No.2 entered into a contract dated 07.07.2005, which is hereinafter referred to as the "Maintenance Contract", with defendant No.1.

(c) The plaintiff states that it is a "confirming party" with regard to the maintenance contract and in view thereof, the plaintiff delivered its own equipments, spare parts and tools for the maintenance of the said helicopters to defendant No.1 at IGI Airport, New Delhi. The equipments, spare parts and tools are hereinafter referred to as the "suit property".

(d) As per the terms and conditions of the maintenance contract, defendant No.1 was obliged to provide necessary customs clearance and formalities in India for import and re-export of the suit property subsequent transportation to and from Itanagar and provide secure room for safe keeping of the suit property. In May, 2007, defendant No. 2 terminated the maintenance contract with defendant No.1 in accordance with clauses 2.09 and 3.08 and requested defendant No.1 to return the suit property as to dispatch the same to Russia.

4. It is stated by the plaintiff that despite of various written requests by the plaintiff and defendant No.2 to defendant No.1 by way of letters exchanged between them, dated 28th May 2007, 5th June 2007, 18th June 2007, 12th July 2007, 31st July 2007, 3rd September 2007 and 24th January 2008, defendant No.1 failed to deliver the suit property. Thus, the present suit has been filed by the plaintiff. It is also stated by the plaintiff that defendant No.1 is having illegal possession of the suit property without any authorization or consent from plaintiff or defendant No.2 who has, without consent, transferred part of the suit property out of Itanagar for its own use, as admitted by defendant No.1 in correspondence exchanged with defendant No.2 in its letters dated 06.07.2007 & 16.07.2007.

5. Before filing the present suit, the plaintiff issued a legal notice dated 19.08.2008 to defendant No.1. Even an agent was also sent to recover the suit property. However, defendant No.1 refused to return the suit property, except on 05.09.2008 the plaintiff received defendant No.1's reply to the legal notice.

6. As per the plaintiff, the current market value of the suit property is USD 469,492 equivalent to Rs.2,11,27,140/- (Rupees two crores eleven lakhs twenty seven thousand one hundred forty only), and the plaintiff has also suffered a loss who has also claimed compensation from defendant No.1 equivalent to Rs.24,30,000/-.

7. After filing the written statement, defendant No.1 has filed the present application under Order VII, Rule 11 CPC for rejection of plaint. The defendant No.1 states that plaintiff has deliberately suppressed material facts, as supply contract dated 24.4.2005 and the

maintenance contract dated 7.7.2005 were only executed between defendant No.1 and defendant No.2, the plaintiff is merely a stranger to the contract and has no locus standi to file the present suit and has no right to drag defendant No.1 into litigation for the dispute facing by the plaintiff with defendant No.2 who has no right to the suit property. In view of two contracts, defendant No.1 also issued a bank guarantee bearing No.0480306FG0006847 dated 11.5.2006 amounting to USD 25,000 in favour of defendant No.2 for re-transportation from India to Russia of all the equipments. The same was enchased by defendant No.2 pursuant to the payment of invoice No.76/09633 dated 22.4.2009. Hence, encashment of the bank guarantee was done illegally and against the procedure in law when disputes were already pending inter-se.

8. Defendant No.1 denies that the plaintiff is a "confirming party" as nowhere in the contract, it is so mentioned. As per defendant No.1, defendant No.2 has also not complied the terms and conditions of the contracts.

9. The plaintiff in its reply has denied the allegations of the defendant No.1 about the suppression of maintenance contract dated 24.4.2005 and the supply contract dated 7.7.2005. Plaintiff states that enough evidence has been adduced along with the plaint, to show that the property belongs exclusively to the plaintiff. Even, defendant No.2 despite of notice has not shown any interest to pursue with the case.

10. In support of his submissions, the learned counsel appearing on behalf of defendant No.1 has referred the following decisions:-

(a) Welldone Estate Projects Pvt. Ltd. vs. Today Homes & Infrastructure Pvt. Ltd., reported in 178 (2011) DLT 118, the relevant paras of which read as under:-

"19. There was a privity of contract between the two petitioners and the respondent company. The doctrine of privity in the common law of contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it. Cheshire and Fifoot in the Law of Contract, Thirteenth Edition, have put the Doctrine of Privity of Contract as:

"The doctrine of privity, while in principle, at least it prevents a third party beneficiary from suing on a contract, operates with equal logic to forbid the contracting parties to enforce obligations against a stranger. It has long been an axiom of the common law that a contract between A and B cannot impose a liability upon C."

20. The Doctrine of Privity of Contract has been explained in L. Shiv Dayal Kapoor and Ors. Vs. Union of India (UOI), New Delhi and Anr, AIR 1963 P&H 538 as under:

"16. I may now consider the implications of the rule underlying the doctrine of privity of contract, which means the relationship subsisting between two contracting parties. "Privity" in this context implies a mutuality of will and is an interaction of parties and their successors. It creates a legal bond or tie or a vinculum juris. The rule of privity of contract is that no one but the parties to a contract can be bound by it or entitled finder it. In the words of Pollock,

"A third person cannot become entitled by

the contract itself to demand performance of any duty under the contract,"

Salmond and Winfield put in thus:-

"No man can enforce a contract to which he is not a party, even though he has direct interest in the performance of it."

17. The doctrine of 'privity of contract', as above stated, is well settled in England, but it has certain exceptions. There is deemed to be an artificial privity in the case of a trustee and beneficiary and also principal and agent. The rule of common law was expanded by engrafting fictions in order to prevent the rigour of the law. The leading case on the subject is Tweddle v. Atkinson, (1861) I.B. and Section 393, settling the rule that the third person cannot sue on a contract made by the contracting parties for his benefit and confirmed the rule in In Price v. Esston, (1833) 4 B.: Ad. 433, that a contract cannot confer rights on strangers. Lord Haldane in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge and Co. Ltd., (1915) AC. 847 at p.853 stated the principle thus:

"In the law of England 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 jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in perso-nam.".......

........Pollock in his book on Contracts puts it thus:-

"A contract cannot be annexed to goods so as to follow the property in the goods either at common law or in equity".

(vide 13th edition at page 187).

At page-162 the matter was put thus:

"It is obvious on principle that it is not competent to contracting parties to impose liabilities on other persons without their consent."

The principle that when an obligation is founded upon a contract the assent of a person to be bound is at the root of the matter and is indispensable as the third party is not an assenting party he cannot be called upon to bear the burden of the contract. It is thus open to the plaintiffs to say to the Government that under contract with Captain S. Kirpa Ram you could have taken the materials, stores etc, brought by him on the site but it is not open as a defence to the plaintiffs' claim with respect to their assets as not being contracting parties they had not incurred that obligation. According to Anson, "it is a trite principle of law that a person cannot be subjected to the burden of a contract to which he is not a party." (Vide Anson's Law of Contract, 21st edition, page 161). The principle is firmly established that contractual liabilities cannot be imposed upon a party who is not a privy to the contract. It is the counter-part of the principle that a third party cannot acquire rights under a contract........"

(ii) M.C. Chacko vs. The State Bank of Travancore, reported in AIR 1970 Supreme Court 504, the relevant para of which reads as under:-

"9. ......It is settled law that a person not a party to a contract cannot subject to certain well recognized exceptions, enforce the terms of the contract: the recognized exceptions are that beneficiaries under the terms of the contract or where the contract is a part of the family arrangement may enforce the covenant........It must therefore be taken as well settled that except in the case of a beneficiary under a trust created by a contract or in the case of a family arrangement, no right may be enforced by a person who is not a party to the contract."

(iii) Madhav Trading Company vs. Union of India and others, reported in ILR (1978) 2 Delhi 74, the relevant para reads as under:-

"7. It has been urged on behalf of the Union of India that there was no privity of contract between the plaintiff and this defendant and the plaintiff had no right to sue this defendant for the amount in dispute. It has, however, been established as stated above beyond doubt that under the contract between the Union of India and the 2nd defendant, 2 per cent of the price of the goods was to be retained by the Union of India for payment as commission to the Indian agent of the German Firm on the completion of the contract and that amount has, in fact, been retained by it and the contract stands already performed by the German Firm. The contract aforesaid thus reserved a benefit for the plaintiff and the amount of the commission remains with the Union of India by way of trust for the plaintiff. The general rule of law, of course, is that only one or the other party to the contract can approach the court for its enforcement, not a stranger. But there are exceptions engrafted on this rule on equitable considerations and one of them firmly recognized is that if the contract has the

effect of creating a trust in favor of a third person such person may sue to have the obligation arising for his benefit fulfilled......"

(iv) Khushalbhai Mahijibhai Patel vs. A firm of Mohamadhussain Rahimbux, reported in AIR 1981 Supreme Court 977, the relevant para reads as under:-

"9. .......The fact that the goods had been sent to the defendant firm by the plaintiff and had been received by the former was admitted on all hands and was sufficient to raise a presumption, till the contrary was proved, that an order had been placed for the supply of the goods with the plaintiff by the defendant firm........

11. The case of the plaintiff, in nut-shell, is that the plaintiff also executed the maintenance contract as a confirming party. The plaintiff has also delivered its own equipments to defendant No.1 at IGI Airport, New Delhi for the purpose of service of two helicopters. The shipment of all the maintenance tools/equipments was made directly by the plaintiff from Russia. Mr. Fanis Mirzayanov has, apart from signing at the last page of the maintenance contract itself, also signed Enclosure No.3 of the maintenance contract which provides the list of equipments that were provided by the plaintiff under the maintenance contract. The same was also counter signed by defendant No.1's representative, Mr. J.P. Goel.

12. The contention of the learned Senior counsel appearing on behalf of the plaintiff is that due to non-payment of the contract price by defendant No.1 on 28.05.2007, the maintenance contract was duly terminated by defendant No.2 under Clause 3.08. All tools, spares and

equipment belonging to the plaintiff were thereafter duly packed and boxed by the Engineers of the plaintiff at the sites. Defendant No.1 was requested for assistance for transportation of the said tools and equipments to Russia. However, despite of various requests, defendant No.1 did not agree for that rather took the possession of the said tools. In the letter dated 27.11.2006, defendant No.1 has even recognized that it was the plaintiff that was actually performing the maintenance services under the maintenance contract.

13. Not only that, defendant No.1 in para-6 of its written statement itself has admitted that the plaintiff has signed the maintenance agreement. Further, in its letters dated 27.11.2006 and 06.03.2007, defendant No.1 recognized that it was the plaintiff who was to perform the maintenance services under the maintenance contract. Defendant No.1 has also participated in the process of obtaining the approval of the DGCA for the plaintiff to perform the maintenance services. In its additional Statement of Defence dated 21.01.2010, it was confirmed that the plaintiff had signed the maintenance contract as well the Addendum No.1 dated 19.07.2006. Therefore, the plaintiff submits that the proper construction of the contract also requires a consideration of the correspondence exchanged between the parties. The learned Senior counsel further submits that the conduct of defendant No.1, under these circumstances, is also to be examined. He has also referred the judgment passed in the case of McDermott International Inc. vs. Burn Standard Co. Ltd. and Ors., reported in (2006) 11 SCC 181. He submits that in view of the law laid down by the Supreme Court in the said case, this Court would,

while constructing the terms of the maintenance contract, also have to take into consideration the letters mentioned above.

14. Mr. Kaul, learned Senior counsel appearing on behalf of the plaintiff has also argued that assuming for the sake of arguments, the plaintiff was not a confirming party to the maintenance contract, but it was merely a representative of defendant No.2, as per the conduct of the parties, still, under the law, it is held that where the plaintiff has an interest in the property, it can demand the return of the property without having to establish any privity to the contract. The learned counsel has referred the judgment passed in the case of Klaus Mittelbachert vs. East India Hotels, reported in AIR 1997 Delhi 201 wherein this Court, while holding that the employees of an Airline staying in a hotel can claim against the hotel in case there is an injury suffered by them while staying in the hotel both under tort as well as under the Contract. This Court in respect of suing under a Contract held as follows:-

"....the doctrine of privity of contract is subject to many exceptions, one of them being that a beneficiary can sue on a contract for enforcement of the benefit intended to confer on him by the Contract. In Bhujendra Nath vs. Sushamoyee Basu, AIR 1936 Cal 66, the Division Bench has held that "a stranger to a Contract which is to his benefit is entitled to enforce the agreement to his benefit." In Pandurang vs. Vishwanath, AIR 1939 Nag 20, it has been held "the person beneficially entitled under the contract can sue even though not a party to the Agreement itself."

15. Mr. Kaul submits that the same view has been expressed by the Punjab & Haryana High Court in the case of Punjab National Bank vs. Khazan Singh, AIR 2004 P&H 282.

16. The plaintiff relies upon a list of inventories along with an affidavit of Mr. Ram Parkash dated 28.08.2010 which contains the details of 58 items supplied under the maintenance contract by the plaintiff.

17. It is well established principle of law that a party who is not privy to the contract, cannot sue for enforcement of the said contract and the said principle has been laid down by the English courts from time to time which has been appreciated by the Indian Courts with the well recognized exceptions. There are number of exceptions which have been carved out by the courts to the principle of privy to the contract ever since the said principle was evolved by the English Courts. This is due to the reason that the definition of consideration under Section 2(d) of the Indian Contract Act, 1872 is wide enough to encompass a situation wherein contract is entered into between the two parties and the consideration may or may not pass from them and can pass from the third party.

18. In the case of Debnarayan Dutt vs Chunilal Ghose, reported in (1914) ILR 41 Cal 137 decided on 16th June, 1913, the Division Bench comprising Hon'ble Chief Justice Jenkins and Hon'ble Justice Mookerjee, while analyzing the applicability of doctrine of privity of contract, has also referred to the observation of Lord Macnaghten, and proceeded to observe that Indian Contract Act is unlike the English Contract Act and the limits with which the doctrine of privity of contract operates in English law cannot with same vigour be applicable to Indian Contract Act. Learned Division Bench thus observed:-

"3.........We have here then a position in which it would be, in accordance with the principles of justice, equity and good conscience, the abiding rule in these Courts, that the plaintiff should be entitled to enforce this claim against defendant No.5. If we were governed by Twaddle v. Atkinson (1861) 1 B. &S. 393; 181 E.R. 762; 124 R.R. 610, there might possibly be a difficulty in our way, but it has to be borne in mind that Twaddle v. Atkinson (1861) 1 B. &S. 393; 181 E.R. 762; 124 R.R. 610 was a decision on a form of action peculiar to the Common Law Courts in England and that the case was influenced by the rule that no action in assumpsit could be maintained upon a promise unless consideration moved from the party to whom it was made. Here we have a definition of consideration which is wider than the requirement of the English law: [Section 2(d) of the Contract Act]. And it has been laid down by Sir Barnes Peacock in a Full Bench decision of this Court in relation to Courts in the mofussil [Rumbux Chittangeo's Case (1867) B.L.R. Sup. Vol. 675. 7 W.B. 377] that in those Courts the rights of parties are to be determined according to the 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. The rules and the fictions which have been in many cases adopted by the Common Law Courts" in England for the purpose of obtaining jurisdiction in cases which would otherwise have been cognizable only by the Courts of Equity, are not necessary to be followed in this country where the aim is to do complete justice in one suit. More than that we now have ample authority for saying that the administration of justice in these Courts is not to be in any way hampered by the doctrine laid down in Tweddle v. Atkinson, (1910) I.L.R. 32 All. 410 L.R. 37 I.A. 152. That take to be" the result of the decision of the Privy Council in the recent case Khwaja Muhammad Khan v. Husaini Begam, (1910) I.L.R. 32 All. 410 L.R. 37 I.A. 152. In the report of that case, in 14 Calcutta Weekly Notes (1910) 14 C.W.N. 868, there is an

interlocutory remark of Lord Macnaghten which indicates the limits imposed on a Court of Common Law. He 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." It is possible that this distinction can be explained by the history of the action of assumpsit which was a development of the writ of trespass. In the old writ in indebitatus assumpsit it was alleged that the defendant "not regarding his said promise and undertaking but contriving and fraudulently intending craftily and subtilly to deceive and defraud," had not paid and so forth. The breach of contract was charged as deceit and it was only the person deceived who could sue. The bar then in the way of an action by the person not a direct party to the contract, was probably one of procedure and not of substance. In India we are free from these trammels and are guided in matters of procedure by the rule of justice, equity and good conscience. The case with which we are now dealing finds a close parallel in Gregory & Parkar v. Williams (1817) 3 Mer. 582; 36 E.R. 224 and also in the more recent cases of Touche v. Metropolitan Railway Ware housing Company (1871) L.R. 6 Ch. App. 671, 677 and Gandy v. Gandy (1885) 30 Ch. D. 55. There is a valuable exposition of the law by Lord Hatherley in the first of these last two cases which was adopted by Lord Justice Cotton in the second. The Lord Chancellor said, "The case comes within the authority that where a sum is payable by A.B. for the benefit of C.D., C.D. can claim under the contract as if it had been made with himself." That appears to me to be a principle which is of distinct use in the consideration of this case. It appears to me that we have therefore, in the circumstances of this case, a condition of affairs in which it would be right to hold that the plaintiff is entitled, to enforce his claim in this suit. The claim is one under the registered instrument of the 18th of August 1903: and it is unnecessary to consider whether the plaintiff is entitled to rely on the deposition as an acknowledgment for the purpose of taking this case out of the operation of the statute of Limitation, for

admittedly if this is a suit on the registered instrument of transfer, it is within time."

19. It is clear from the aforementioned observations of Division Bench of Calcutta High Court that the doctrine of privity of contract although is applicable even in India but, the same has been applied with well recognized exceptions and the court of equity like in India may not be strictly guided by the said dictum of Twaddle v. Atkinson (supra) in order to defeat the claims of the parties. This was the era to carve out the exceptions to the principle of privity of contract which is that a stranger to a contract cannot sue. From time to time, number of exceptions has been evolved against the rule of privity of contract and more than often quoted exceptions are that a person for whose benefit the contract is entered into, can certainly sue as he is beneficiary in the contract. Similarly, a person who is a trustee of the third party can also sue likewise, even if he is a stranger to a contract. These are not exhaustive exceptions and as seen above from the observations of Division Bench that in a given facts and circumstances.

20. One has to see as to whether there is any other exception which is permissible under the law, as no one can deny that these are exceptions which are also judicially recognizable, nowhere written in the rule book. Therefore, it would not be appropriate to confine the applicability of privity of contract principle with having only two exceptions.

21. There are other exceptions also which are equally recognized to the said principle of privity to the contract and reference is invited to the case of Jnan Chandra Mukherjee vs Manoranjan

Mitra And Ors., decided on 27 June, 1941 reported as AIR 1942 Cal 251 wherein the Division Bench of Calcutta High Court after analyzing the authorities on the aspect of privity to the contract has observed:-

"3. So far as the first point is concerned, the law seems to be fairly well settled. A stranger to a contract which reserves a benefit for him cannot sue upon it either in English or in Indian law even though in India the consideration need not move from the promisee. There are two well-recognised exceptions to this doctrine. The first is where a contract between two parties is so framed as to make one of them a trustee for a third; in such cases the latter may sue to enforce the trust in his favour and no objection can be taken to his being a stranger to the contract. The other exception covers those cases where the promisor, between whom and the stranger no privity exists, creates privity by his conduct and by acknowledgment or otherwise constitutes himself an agent of the third party." (Emphasis Supplied)

22. From the reading of the aforementioned, it is also clear that the courts have also evolved the exception to the privity of contract wherein the privity of contract is created by the conduct or by the acknowledgement or otherwise besides other two well recognized exceptions which are beneficial interest or trustee. The said observations of Jnan Chandra (supra) finds approval in the later decision of Calcutta High Court in the case of Smt. Narayani Devi vs Tagore Commercial Corporation Ltd. & Anr., reported in AIR 1973 Cal 401 decided on 27 June, 1972, wherein the learned Single Judge of Calcutta High court while finding respectful agreement with the observations in Jnan Chandra (supra) excluded the applicability of doctrine of privity of contract on basis of express admission made by

the defendant. Learned Judge observed thus:-

"27. In my opinion, even if it is held, that there was no privity between the plaintiff and these two defendants, when the said contract was entered into, yet in the facts and circumstances of this case, it must be held that the two defendants have created such privity with the plaintiff by their conduct and by acknowledgment and by admission, as stated above and they have constituted themselves the agent of the plaintiff. Such admission will also be found in Exhibit 'C' and such conduct will be found from the evidence both oral and documentary. This is a case which comes directly within the exceptions to the general doctrine that the stranger to the agreement cannot sue to enforce his right because of want of privity between the promisor and the stranger (Vide: observation of the Division Bench of this Court in Jnan Chandra Mukherjee vs Manoranjan Mitra And Ors. AIR 1942 Cal 251 at p. 252)." (Emphasis Supplied)

23. The case of Jnan (supra) was also followed by learned Single Judge in the case of Babu Ram Buddu Mal Vs Dhan Singh Bishan Singh and Ors, reported in AIR 1957 Punjab & Haryana 160. In 'Bigelow on Estoppel', 6th Edn., at pp. 158 and 159, the learned author observes the following on the aspect of creation of privity by way of estoppel:-

"In the law of estoppel one person becomes privy to another (1) by succeeding to the position of that other as regards the Subject of the estoppel, (2) by holding in subordination to that other...................... But it should be noticed that the ground of privity is property and not personal relations. To make a man a privy to an action he must have acquired an interest in the subject-matter of the, action either by inheritance, succession, or purchase from a party

subsequently to the action, or he must hold property subordinately."(Emphasis Supplied)

24. What is apparent from the reading of the said observations of Calcutta High Court in the afore-quoted case and the opinion expressed in the authorities that there may be cases, where there is no privity existing at the first place but, the party may by acknowledgement or by his conduct, can proceed to create such privity with the said third party by virtue of it being a subordinate to the party to the contract or dealing with the parties to the contract etc. The said privity can be created by way of conduct also either express or implied and the court has to see in those cases as to whether actually the party can be said to be a complete stranger to a contract or where the plea is taken only to defeat the claims of the party. All this can be seen by looking into the attending circumstances after the contract.

25. This is more so when all the parties are before the court including the contracting parties as well as the stranger. In that event of the matter, it cannot be said that the court is precluded from complete justice between the parties.

26. There are ample line of authorities to suggest the proposition when all the parties are there before the court including the contracting parties as well as the stranger as plaintiff and defendant, then the court can do complete justice between the parties and that was even a rationale as laid down in Debnarayan Dutt (supra) while departing from the views expressed in Twaddle (supra) and making a fine distinction between a court of equity and the court of law in

England and the justice oriented approach adopted by the Indian Courts as noted therein.

27. Likewise, Patna High Court in the case of Post Master General And Anr. vs Ram Kripal Sahu And Anr., reported in AIR 1955 Pat 442 thus observed that:

"....if the Courts consider that it would be in aid to justice to adjudicate between the parties to the suit, although plaintiff is not a party to the contract, the Courts in such a case would not be said to be legislating that they are only giving effect to the common place saying that Courts exist for doing justice between the suitors before them."

This also finds approval in the case of N. Devrajr & Ors. Vs M. Ramakrishniah, reported in AIR 1952 Mysore 109 DB.

28. A reading of the aforementioned judicial opinion coupled with well recognized exceptions that the privity can be created by virtue of conduct acknowledgment and admission, it becomes clear that any case where one party is made aware about the relationship of the other party with that of a stranger and the said party proceeds to contract out only with other party in question, knowing fully well the participation and role of the said stranger, further, it corresponds with the said third party/ stranger, and conduct suggests kind of relationship, then there can be said to be a nexus or a privity which can be said to have been created by virtue of conduct. The said question essentially becomes a question of fact and basing upon the said fact finding, the law has to be necessarily applied as to whether the said person is a complete stranger to a contract or whether the privity can be said to have been created by way of conduct.

29. Therefore, the said question relating to privity having been created by virtue of conduct, acknowledgment and admission becomes a mixed question of fact and law as it requires a fact finding as well as due application of law. Furthermore, once the judicial opinion exists that courts are entitled to do justice when all are before the court, then it is unwise to reject the plaint at the threshold, considering the question of privity of contract as a pure question of law when actually the conduct of the parties and the attending circumstances reveal otherwise.

30. The law is well-settled for deciding the application under Order VII, Rule 11 CPC. It is no more res integra that to decide under Order VII, Rule 11 CPC, the averments in the plaint have to be read without looking at the defence and thereupon, it has to be seen whether on the averments made in the plaint, Order VII Rule 11 gets attracted or not.. Rejection of a plaint is a serious matter, as it non-suits the plaintiff and kills the cause of action. It cannot be ordered cursorily without satisfying the requirement of the said provision. Reliance for this proposition can be placed on 121 (2005) DLT 98, Kanwal Kishore Manchanda Vs S.D.Technical Services Pvt. Ltd.; 2005 (11) AD (Delhi) 430, Arvinda Kumar Singh Vs Hardayal Kaur; 116 (2005) DLT 191, Asha Bhatia Vs. V.L.Bhatia; 2003 (5) AD (Delhi) 370, Punam Laroia Vs Sanjeev Laroia; and 111 (2004) DLT 121, M/s Condour Power Products Pvt. Ltd. Vs Sandeep Rohtagi. The test is, if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed or not. In ascertaining whether the plaint shows a cause of action, the court is not required to make an

elaborate enquiry into doubtful or complicated questions of law or fact. By the statute the jurisdiction of the court is restricted to ascertaining whether on the allegations a cause of action is shown.

31. In Vijai Pratap Singh v. Dukh Haran Nath Singh And Another, reported in AIR 1962 SC 941 the Supreme Court held as under:-

"By the express terms of Rule 5 clause (d), the court is concerned to ascertain whether the allegations made in the petition show a cause of action. The court has not to see whether the claim made by the petitioner is likely to succeed: it has merely to satisfy itself that the allegations made in the petition, if accepted as true, would entitle the petitioner to the relief he claims. If accepting those allegations as true no case is made out for granting relief no cause of action would be shown and the petition must be rejected. But in ascertaining whether the petition shows a cause of action the court does not enter upon a trial of the issues affecting the merits of the claim made by the petitioner. It cannot take into consideration the defences which the defendant may raise upon the merits; nor is the court competent to make an elaborate enquiry into doubtful or complicated questions of law or fact. If the allegations in the petition, prima-facie, show a cause of action, the Court cannot embark upon an enquiry whether the allegations are true in fact, or whether the petitioner will succeed in the claims made by him..."

32. In the light of the above-settled law, I am of the view that in this case, if paras No.6 to 16 and 18 of the plaint are read together, one can easily gather that there are positive averments in the plaint regarding the interest of the plaintiff in the suit property. Without expressing and deciding anything on merit raised by the parties in the present application, I am of the considered view that the present case

warrants trial. No doubt, an issue raised by defendant No.1 in the matter has to be determined after the trial, but the plaint, at this stage, cannot be rejected. Under these circumstances, the application of defendant No.1 is dismissed, with no order as to costs. CS(OS) No.203/2009 & I.A. No.21075/2011 (u/o XXVI, R.9 CPC) List on 08.05.2012 the date already fixed.

MANMOHAN SINGH, J.

APRIL 13, 2012