' This is a revision against the order dated 4-2-1982 of District Judge, Bahawalpur, whereby he dismissed the appeal of petitioner Allah Wasaya and maintained the order dated 23-7-1979 of Civil Judge, Bahawalpur, dismissing petitioner's application for grant of temporary injunction and rejecting at the same time plaint of petitioner's suit under Order VII, rule 11, C. P. C.
2. The facts of the case are that one Mst. Amna Bibi had filed a suit for declaration that she was owner of 100 Kanals of land situate in village Lal Sohara Cbak No. 1 B. C., Tehsil and District Bahawalpur, as detailed in the plaint and sale of said land by defendants 1 to 8 in that suit to Sardar Shah was illegal and void and for grant of permanent injunction to restain vendees- defendants from selling the suit land. The Civil Judge decreed the suit but in appeal the District Judge set aside the said decree and dismissed the suit with costs. Mst. Amna Bibi filed R. S. A. 65-70 B. W. R. During the pendency of R. S. A. She died and her legal representatives were brought on record. The said legal representatives of Mst. Amna Bibi filed an application, dated 20-9-1978 (C. M.
No. 868-78/B. W. P.) for withdrawal of the R. S. A. On the ground of Dast Bardari (relinquishment) of their rights claimed in the R. S. A. On the basis of a compromise arrived at between the parties to the R. S. A. The said application contains the relinquishment by the legal representatives of Mst.
Amna Bibi of tbeir rights on the basis of a further convenant that Sardar Shah would sell this land to Allah Wasaya for a sum of Rs. 25,000. To make things precise, it may be stated that sub-para. (1) of para. 3 of this application states that there has been a compromise between the parties to the suit on the intervention of some respectables of the Ilaqa according to which appellants-plaintiffs had relinquished their rights in the suit in question, while sub-para. (2) of para. 3 thereof states that the land in question will be considered to be the full ownership Sardar Shah respondent and the disputed sale in favour of the respondent would be considered to be a valid and rightful transaction. It is stated thereafter that respondent Sardar Shah shall be bound to sell the entire land in question for a sum of Rs. 25,000 in favour of Allah Wasaya son of Ilahi Bakhsh, Caste Ora, resident of Chak No. 1/B. G., Tehsil and District Bahawalpur, who was a near relative of the appellant-plaintiff Mst. Amna Bibi and was an old tenant of the land in question. It is further stated therein that on the basis of this mutual consent, the compromise in question shall be acted upon.
Endorsement made at the foot of this application appears to show that this application was signed by Sardar Shah in Urdu handwriting. This application (C. M. 868/78) came up for hearing before Mr. Justice M. E. Rana. In the order recorded by the learned Judge, the presence of Sardar Shah does not stand recorded. Only the presence of Mr. Nazir Ahmad Advocate, who was counsel on behalf of the legal representatives of Mst. Amna Bibi as well as others was recorded. In the order, the learned Judge observed that the appellants represented by the learned counsel want to withdraw this appeal and had filed C. M. 868/78/B.'W. P. Duly thumb-marked by them. In view of the said statement made by the learned counsel for said appellants, the learned Judge allowed the withdrawal of this appeal which was dismissed as withdrawn.
2-A. On the basis of the said agreement incorporated in this application for withdrawal of R. S. A., Allah Wasaya filed a suit on 7-11-1978, for specific performance of the said agreement and for grant of permanent injunction to restrain Sardar Shah from interfering in his possession of the suit land.
The legal representatives of Amna Bibi were not impleaded as party in this suit.
3. The averments of the petitioner-plaintiff Allah Wasaya in the said suit were controverted by the respondent-defendant Sardar Shah in his written statement on the ground that there was no executed agreement between the parties, respondent Sardar Shah had neither thumb marked nor signed the said applicatiop as he was not present on that day and that it was forged and fictitious document. It was further contended that assuming that respondent-defendant had signed the said application, even then it was only the legal representatives of Mst. Amna Bibi who could file such a suit against him and petitioner-plaintiff Allah Wasaya not being a signatory to it was not a party to any agreement and had no locus standi to file this suit.
4. Petitioner Allah Wasaya had filed alongwith the suit an application , under Order XXXIX, rules 1 and 2, C. P. C. For grant of temporary injunction to restrain the respondent Sardar Shah from interfering in the possession of the petitioner till the decision of the case.
' The said application came up for hearing before the Civil Judge, Hasilpur who by his order dated 23-7-1979, rejected the application for temporary injunction on the ground that it had been submitted by the defendant Sardar Shah that the said agreement of withdrawal to his extent was fictitious one and on the date it was submitted, he was not present in the High Court and that his Lordship Mr. Justice M. E. Rana had not mentioned his presence in his order dated 20-9-1978 whereby R. S. A. Was allowed to be withdrawn. The Civil Judge further held that even if the withdrawal application incorporating the said agreement (which the defendant Sardar Shah claimed to have never signed or thumb marked) is presumed to be a genuine document, it gave cause of action against respondent Sardar Shah to heirs of Mst. Amna Bibi who were party to the said R. S. A. And not to Allah Wasaya who was not a party to said R. S. A. And that the said agreement being not between Allah Wasaya petitioner and Sardar Shah respondent, it gave no cause of action or locus standi to Allah Wasaya.
5. Alongwith dismissal of the application for grant of temporary injunction, the learned Civil Judge by the same order, rejected the plaint of Allah Wasaya petitioner under Order VII, rule 11(a), C. P. C.
On the ground that Allah Wasaya had no cause of action against the defendant Sardar Shah.
6. Allah Wasaya filed an appeal before the District Judge against the rejection of the plaint of the said suit and against dismissal of his application for grant of temporary injunction. The said appeal was dismissed 4-2-1982 on the ground that the application for withdrawal incorporating the alleged agreement was not signed by Allah Wasaya and that it was merely an application for withdrawal of the suit and did not constitute an agreement between Allah Wasaya and Sardar Shah and that if it bad been an agreement, it would have been signed by Allah Wasaya as well, as agreement is always between two parties. On this data he held that Allah Wasaya had no cause of action and the plaint of his suit had rightly been rejected by Civil Judge under Order VII, rule 11(a), C.
P. C. And his application for grant of temporary injunction had rightly been dismissed by the Civil Judge.
7. In this revision, petitioner Allah Wasaya had challenged both the matters, one of rejection of his plaint and the other of the dismissal of his application for grant of temporary injunction.
8. By my order dated 9-6-1982 I dismissed that part of this revision which challenged the refusal by District Judge to grant temporary injunction to restrain respondent-defendant land-owner from interfering in possession of petitioner-plaintiff in the land in question.
9. As for the other part of revision petition which challenges the rejection by two Courts below of plaint of petitioner's suit, learned counsel has raised the following questions :-
(i) That the application for withdrawal of the' appeal prima facie showed that Sardar Shah had signed it in Urdu. Though this had been controverted by Sardar Shah in his written statement, the Civil Judge in arriving at the conclusion that plaint discloses no cause of action was confined to the averment, in the plaint alone and had no lawful authority to come to that decision on the basis of averments made in the written statement.
(ii) That the question as to whether Sardar Shah was actually present and had actually signed the said application comprising the said agreement was a matter of enquiry' and the plaint of the suit could not have been rejected under Order VII, rule 11, C. P. C. Which was confined in its scope to non-existence of any cause of action and matters of that nature on the plaint alone.
(iii) That the rejection of the plaint should not have been ordered at the stage of deciding the application for stay.
(iv) That the fact that the petitioner Allah Wasaya was not a party in the said compromise was wholly irrelevant as the agreement contained in the said application constituted a lawful compromise between the parties which could be extended to situations beyond the scope of the suit.
10. I have considered the above points in the light of arguments advanced by learned counsel for the petitioner. I have also heard in reply the learned counsel for the respondent to a great length.
11. There appears to be no doubt as regards the correctness of first two grounds as they are on the face of it based on well-settled proposition of law as regards the extent of power of Court under Order VII, rule 11, C. P. C. In the circumstances of the present case, however, the said two grounds do not appear to arise at all as this revision is against the order of District Judge who has not given the said reasons for maintaining the order of Civil Judge rejecting the plaint of the suit of petitioner. The District Judge obviously found that reasoning to be incorrect and did not rely upon it for same conclusion which he arrived at. The order of Civil Judge merged in the order of District Judge and the substantive order which is to be considered to hold the field, is the order of District Judge which as already shown does not reflect the said errorneous thinking. I would, therefore, pass .On to the third ground submitted by the learned counsel for the petitioner namely that plaint of the main suit should not have been rejected alongwith the dismissal of application for temporary injunction. The learned counsel has cited case of Muhammad Hussain and 54 others v. Federal Government of Pakistan through Secretary Communication and Worki and 2 others (I). However, the said case does not advance the proposition convassed by learned counsel for the petitioner. In my opinion, if at all while deciding an application for grant of temporary injunction, a Court comes to the conclusion that plaint shows no cause of action, it can, while dismissing the application for grant of temporary injunction, also proceed to reject the plaint of the suit under Order VII, rule 11, C. P. C.
There is nothing to bar a Court from rejecting the plaint at the same time it 'dismisses an application, for temporary injunction when it can find no A cause of action in a plaint on its perusal.
On the other hand, there are reasons to think that the Court should proceed to reject the plaint as well in that contingency. These reasons are firstly that a still-born suit should be buried in its inception so that no further time is wasted on fruitless litigation and secondly that rejection of the plaint of the suit would give the plaintiff a chance to retrace his steps at the earliest possible moment so that if permissible under the law he may found a properly constituted case. There is, therefore, no merit in this point and the same is repelled.
' As for the fourth and the last point, learned counsel for the petitioner has cited Muhammad Idris Mia v. Abdul Matleb Mia and others (2) and Messrs Country Products Exports Ltd. v. Messrs Bawany Sugar Mills Ltd. (3) to contend that under Order XXIII, rule 3, C. P. C. Compromise may contain matters extraneous to the suit, On the strength of these decisions he submits that the compromise arrived at between the parties even though it extended to matters which were not within the ambit of the suit, was valid and the compromise regarding matters which were beyond the scope of the previous suit was enforceable. This point, however, to my mind does not appear to be relevant as there was no compromise decree passed in the previous suit. On the other hand, on the basis of a private compromise between the parties, learned counsel for the heirs of Mst. Amna Bibi sought withdrawal of the
(1) 1980 CLC 1656 (2) PLD 1966 Dacca 234
(3) PLD 1968 Kar. 115 appeal which was allowed to be withdrawn and as a consequence, no compromise decree was passed in the R. S. A. In this view of the matter, the proposition advanced by the learned counsel for the petitioner appears to have no application to the facts of the case in hand.
' There was, however, a contract between parties to the previous suit in the form of a compromise and the crucial question in the present case is as to whether the petitioner beneficiary of the said contract to which he was a stranger could file a suit to enforce the said contract for his benefit or not? Learned counsed for the petitoner has not touched this point at all. Learned counsel for the respondent has, however, cited case of Jnan Chandra Mukherjee v. Manoranjan Mitra and 4 others
(1) to contend that a stranger to a ,contract cannot enforce a contract which reserves a benefit for him. He has, however, not been able to take his case beyond the said citation and beyond the said basic proposition laid down in that case.
I have given my anxious thought to the point in question. The English doctrine of privity of contract is that as a general rule, a contract cannot confer rights on or impose obligations against stranger to it, i. e. a person who is not party to it. The said doctrine is based upon two rules of English law of contract, firstly, that there are always two parties to a contract and a person who is not a party to a contract is not entitled to enforce it and file a suit for that purpose and secondly, the consideration must proceed from the promisee to the promisor. However, the rule was found very inconvenient by Courts of England. In case 'A' contracted with 'B' that 'B' would confer benefit on 'C', in that case under the said doctrine 'C' was not entitled to enforce by suit such right, but 'A' could obtain a decree against 'B' requiring 'B' to confer the promised benefit on 'C'. Attempts were made. To confer benefits on the stranger to a contract directly and in course of time there came into being two exceptions to the said doctrine of privity. The first is where a contract beween two parties is so framed as to make one of them a trustee for a third who is a stranger to the contract, 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 as an agent of the third party.
' In India including Pakistan the law of contract was in a codified form and under section 2(d) of Contract Act consideration could proceed not only from the promiser but from any other person as well. Thus, one of the rules which was the foundation of doctrine of privity of contract was taken away but the other rule that there are two parties to a contract and a person who is not a party to it cannot sue to enforce it remained intact to make the doctrine of privity of contract applicable to Indo-Pak Subcontinent. In case of Krishna Lal Sadhu and another v. Mst. Promila Bala Dasi (2) in a beautiful judgment by Panking, C. J. It was pointed out that not only there is nothing in section 2 of the Contract Act to encourage the idea that contracts can be enforced by a person who is not a party to the contract but this notion is rigidly excluded by the definition of promisor and promisee and it was held that it is erroneous to suppose that in India (including now Pakistan) persons who are not party to a contract can be permitted to sue on the said contract. However, in that case too an
(1) AIR 1942 Cal. 251 (2) AIR 1928 Cal. 518 exception was recognized and it was held that where there is an obligation of equity arising out of the contract a stranger to the contract can sue to recover the benefit reserved for him in the contract. Even in the case cited by learned counsel for the respondent, namely, Jam Chandra Mukerjee v. Hanoranjan Mitra the said circumstance has been recognized as a valid exception to the doctrine of privity of the contract. It was further held in that case that a trust may be founded on a contract and can be enforced in appropriate proceedings. Petitioner/plaintiff can, therefore, succeed in the instant case only if it can be said that his case prima facie falls within C this exception to the doctrine of privity of contract and defendant appears from the plaint to have a trust in his favour investing the petitioner with cause of action in his favour for enforcement of benefit reserved to him in the contract.
' We have now to see whether on the averments made in the plaint any trust can be said to have been created in favour of the petitioner. The heirs of Mst. Amna had relinquished the claim to the land which was subject-matter of the R.S.A. This was the consideration for the promise for Sardar Shah to sell his land to the petitioner for a sum of Rs. 25,000 as laid in one of the clauses of the compromise. But the question is whether promisor Sardar Shah was trustee for the petitioner in respect of the said' land which he had undertaken to sell to the petitioner on the latter offering the said sum of money. However, the question whether it amounted to trust or not has to be seen in the light of provisions of the law which are relevant. The provisions of law applicable to such trusts are sections 5 and 6 of Trust Act, 1882 (Act II of 1882) in respect of the trust of immovable property and section 94 of the said Act in respect of the obligations in nature of the trust. The said sections read as below :- "5. No trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the will of the author of the trust or of the trustee. No trust in relation to movable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee. These rules do not apply where they would operate so as to effectuate a fraud.
6. Subject to the provisions of section 5, a trust is created when the author of the trust indicates with reasonable certainty by any words or acts (a) an intention on his part to create thereby a trust, (b) the purpose of the trust, (c) the beneficiary, and (d) the trust-property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transfers the trust- property to the trustee.
94. In any case not coming within the scope of any of the preceding sections (sections 80 to 83), where there is no trust, but the person having possession of property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest, or the residue thereof (as the case may be), to the extent necessary to satisfy their just demands."
' Since no trust in respect of disputed land had been declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered or by the will of the author of the trust or of the trustee, nor ownership of the property was transferred to the trustee, nor was there any indication with reasonable certainty of intention of, any trust, there was no trust created in this case within the meaning of sections 5 and 6 of the Trust Act, 182.
' The case, however, appears to fall under section 94 of the Trust demands. In respect of the term "beneficial interest" it has been held in case of Atmaramrao Kheduramrao and others V.
Bhupendranath Sukharam and Act, 1882, which provides that when the person having the possession of the property has not the whole beneficial interest therein, he must hold the property for the benefit of the persons having such interest or the residue thereof (as the case may be) to the extent necessary to satisfy their just others (1), that it should not be given any restricted or technical meaning and the sum total of the interests of a beneficial owner contains among other things freedom from encumbrances and if the property is encumbered, then there is something missing from the whole beneficial interest. I am in respectful agreement with the said observation in that case. Now so far as the encumbrance is concerned, it has been defined in Black's Law Dictionary to be "any right or interest in, land which may subsist in another to the diminution of its value and it may be a claim, lien, charge or liability attached to and binding the real property and includes not only the mortgages or other voluntary charges but also liens, lites pendents, registered judgments and writs of execution etc. Therefore, if at all, the respondent Sardar Khan had entered into the said compromise as prima facie appears from availability of his signatures in Urdu on the said compromise deed, then he had created a liability in the nature of an encumbrance over the said land which made his interest in the land in question fall short of the full beneficial interest therein and, therefore, under the provisions of section 94 of the Trust Act, 1882, he was holding the land for the benefit of the petitioner/plaintiff who had the said interest, namely, that of purchasing the said land on payment of the stipulated sum of money. Thus, clearly a liability in the nature of trust had been created in favour of the petitioner and Sardar Khan respondent-defendant was the trustee thereof. I am fortified in this view of mine by the law laid down in case of G. Ramaswa my Aiyar v. Deivasigamani Pillai and others (2), in which it was held that "where a person gets a transfer of all the assets and subjects himself to the payment of debts, a creditor to whom such a transfer is communicated has a right to proceed against the transferee and he cannot evade his liability on the ground that there was no privity of contract between the parties, as, in such a case, section 94 of the Trust Act; 1882 applies". In section 95 of the Trust Act, 1882, it has been provided that the person holding property in accordance with section 94, must, so far as may be, perform the same duties, and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it .
Therefore, Sardar Khan respondent/defendant under the said provision was clearly to be considered to be a trustee of the beneficial interest which vested in the petitioner-plaintiff. In my view, therefore, the mere fact that the petitioner/plaintiff was a stranger to the contract was not sufficient to hold that the petitioner/plaintiff, had no cause of action in the suit filed G by him on the basis of a compromise arrived at between Sardar Kban and other persons of which agreement he was a. Beneficiary. The case of petitioner/plaintiff clearly fell under one of two recognized exceptions to the.Doctrine of privity of the contract and he could, therefore, file the suit
(1) AIR 1940 Nag. 149 (2) 69 I C 957 in question to enforce his right of purchasing the sain land on payment of the sum of money stipulated in the compromise deed. In may opinion, therefore the learned District Judge, Babawalpur, had acted illegally in exercise of bis jurisdiction in not reversing the finding of the Civil Judge that plaint of petitioner/plaintiff did not disclose any cause of action and in not setting aside the judgment and decree of Civil Judge rejecting base plaint under Order VI, rule 11, C. P. C. And in dismissing the appeal against the said order of the Civil Judge.
' For the foregoing reasons, in exercise of may powers under section 115, C. P. C., I set aside the impugned orders of the Courts below and remaned the case to the Civil Judge for decision of the suit on merits. The shall however, be no order as to costs.