TaxTMI 
TaxTMI 
1978 (3) TMI 218
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....ised agent in connection with the tender enquiry in question, still it offered resistance to the suit contending, infer alia, that while returning the signed copies of the contract, in its letter dated 29-4-1971 defendant No. 2 had intimated nomination of defendant No. 3 as its agent in place of the plaintiff and there was a reference in this letter to an earlier communication dated 3-3-1971. As the plaintiff had ceased to be the agent of defendant No. 2 it was not entitled to the commission sued for. It was urged by the Union of India further that there was no privity of contract between it and the plaintiff and it was bound to follow the instructions of defendant No. 2 in respect of the payment of the commission. It was denied by this defendant that the plaintiff was a registered partnership firm or that the plaint has been signed 'and verified by a person competent to do so. Defendant No. 3 also controverter the plaintiff's claim to the payment of the commission in dispute and pleaded that defendant No. 2 had nominated this defendant as its agent and the payment of the commission at the stipulated rate was due to it Defendant No. 2 did not put in appearance and was proce....
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....ring in the clause be substituted to read as "M/s. Metal International Corp., F Block, Connaught Place. New Delhi"." A copy of this letter was forwarded to Madhav Trading Company and the firm was asked to note that it was no more agent against the contract and, Therefore, not authorised to exchange correspondence in respect thereof. It is plain from the aforesaid documentary evidence that defendant No. 2 had nominated the plaintiff as its agent in India for purposes of the aforesaid contract and that its de-recognition as agent of the said defendant did not take place before 27-8-1971. The defendants have led no evidence whatever to make out that defendant No. 3 performed any functions as agent of defendant No. 2 after 27-8-1971 nor it has been pointed out from the side of the defendants that services of an agent were needed for the execution of the contract in any manner subsequent to that date. (6) As per Exhibit D-5, its letter dated 16-2-1971, defendant No. 2 informed the Railway Board that Messrs. Madhav Trading Company was authorised to negotiate on its behalf with the 1st defendant about tender enquiry S-99 of 1971 and, as already stated, it informed the 1st defendant aga....
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....of the contract was sent to the plaintiff because up to that time it was shown by the records to be the Indian Agent of defendant No. 2, that as per the contract 2 per cent commission was payable to the Indian Agent of defendant No. 2, that when the contract was issued by defendant No. 1 the plaintiff was shown as Indian agent, that the document returned duly signed by defendant No. 2 did contain the name of the plaintiff as the Indian agent, that as far as defendant No. 1 was concerned the formal deletion of the name of the plaintiff as Indian agent of defendant No, 2 was made in August 1971 and it was only after that amendment that they started dealing with defendant No. 3, that vide contract dated 19-4-1971 the name of the Indian agent was communicated to the Calcutta cell of the Railway Board and the Integral Coach Factory on 26-4-1971 and those quarters were informed regarding the change of agent's name through their letter dated 27-8-1971, that defendant No. 3 did not send any letter to defendant No. 1 with regard to this tender between 19-4-1971 and 27-8-1971, that shipment regarding the stores took place between 28-5-1971 and 25-9-1971, that part of the quantity must ha....
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....rformed 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 recognised 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. It was held by a Division Bench of the Lahore High Court in torabaz Khan and another v. Nanak Chand and another A.I.R. 1932 Lah 566 that the principle that a person who is not a party to a contract could not take advantage of its provisions is inapplicable to India. This ruling was followed by Tapp, J. in Gauri Shankar and another v. Mangal and others A.I.R. 1933 Lah 178 who found that a beneficiary under the contract can enforce the same in spite of not being a party thereto. Their Lordships of the Privy Council observed in Mt. Dan Kuer v. Mt. Sarla Devi, a case concerning a fa....