Chinnaya vs Ramayya

Chinnaya v Ramayya is a landmark case in Indian contract law that addresses the concept of consideration in a contract. The case is significant for its interpretation of Section 2(d) of the Indian Contract Act, 1872, which deals with the notion of consideration in a contract. This case is often cited to illustrate that consideration for a contract can be provided by a third party, not necessarily a party to the contract.

Facts of Chinnaya vs Ramayya

The case involves a gift deed wherein a lady transferred her property, consisting of certain lands, to her daughter (the defendant) through a registered deed of gift. One of the terms of this gift deed was that the daughter would pay an annual sum of Rs. 653/- to the lady’s sister (the plaintiff).

To fulfil this term, the defendant executed an Iqrarnama or agreement in favour of the plaintiff, promising to pay the specified sum annually. However, the defendant failed to make the payments as agreed, leading the plaintiff to file a lawsuit for the recovery of the amount.

Issues Raised

The central issue in the Chinnaya vs Ramayya was whether the plaintiff could bring an action against the defendant for the amount promised in a contract where the consideration for such a promise was furnished by a third party, in this case, the mother of the defendant (the plaintiff’s sister).

Arguments

Contentions by the Plaintiff

The plaintiff argued that the consideration for the defendant’s mother to gift the property to the defendant was the defendant’s promise to pay an annuity to the plaintiff. Hence, the plaintiff claimed entitlement to sue the defendant to recover the promised amount.

Contentions by the Defendant

The defendant contended that the plaintiff had not furnished any consideration under the contract. Therefore, she argued that the plaintiff was not entitled to sue the defendant for the recovery of the amount promised to her.

Chinnaya vs Ramayya Judgement

The Madras High Court held that in the agreement between the defendant and the plaintiff, the consideration had been furnished on behalf of the plaintiff (the sister) by her sister (the respondent’s mother). Although the plaintiff was a stranger to the consideration, since she was a party to the contract, she could enforce the promise made to her by the promisor. The court referenced Section 2(d) of the Indian Contract Act, 1872, which states that consideration may be given by the promisee or anyone on her behalf.

Thus, the court concluded that the consideration furnished by the old lady constituted sufficient consideration for the plaintiff to sue the defendant based on her promise. The judgment held that the sister was entitled to a decree for the payment of the annual sum of money.

Conclusion

Chinnaya vs Ramayya is a seminal case in Indian contract law that established the principle that consideration in a contract can be provided by a third party, not necessarily a party to the contract. This case is often used to distinguish Indian contract law from English contract law, where consideration must move from the promisee. The judgment in this case has had a profound impact on the understanding and interpretation of consideration in Indian contract law.