This article is written by Avneet Kaur. It offers an extensive exploration of the case of Nawab Khwaja Muhammad Khan vs. Nawab Husaini Begum (1910), a significant judgement of the Privy Council dealing with recognition of third-party rights to sue for enforcement of a contract made for his benefit. The article discusses various legal provisions involved in the case, along with various aspects of the judgement. It also attempts to analyse the significance of the judgement in succeeding cases. 

Introduction 

The case of Nawab Khwaja Muhammad Khan vs. Nawab Husaini Begum (1910) revolves around the common law concept of privity of contract and its application in India. To better understand this, let us take an example: suppose ‘A’ and ‘B’ enter into a contract in which they create a trust for the benefit of ‘C’. In this case, the parties involved in the contract are ‘A’ and ‘B’ only; therefore, if we go by the principle of privity of contract, only ‘A’ and ‘B’ can have the right to bring an action for the enforcement of the contract. However, this will hamper the right of ‘C’ as he will not be entitled to sue for the contract if any party breaches the same. 

The present case also deals with a similar situation wherein an agreement executed between parents of minor children for their marriage stipulated a provision that entitled the wife to receive a monthly allowance from her father-in-law. The right of the wife to claim arrears was challenged on the grounds of privity of contract. The Privy Council gave a landmark decision and recognized that the rule of privity cannot be applicable in all cases. There may be situations where its application might result in injustice. Therefore, it will depend on the facts and circumstances of each case. 

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Details of the case 

  • Name of the case: Nawab Khwaja Muhammad Khan vs. Nawab Husaini Begum 
  • Date of judgement: 07.06.1910
  • Parties to the case:
  1. Appellant: Nawab Khwaja Muhammad Khan
  2. Respondent: Nawab Husaini Begum 
  • Equivalent citations: (1910) 12 BOMLR638, (1910) LR 37 I.A.152
  • Type of case: Civil Suit (appeal)
  • Bench: Justice Macnaghten, Justice Collins, Justice A. Wilson and Justice A. Ali.

Facts of the case 

Nawab Khwaja Muhammad Khan (appellant) entered into an agreement with the father of Husaini Begum on 25th October 1877. The agreement was regarding the marriage of his son, Rustam Ali Khan, with Husaini Begum (respondent). Nawab Khwaja Muhammad Khan voluntarily declared in the agreement to pay Rs 500 per month in perpetuity from the date of marriage to Husaini Begum as her Kharcha-i-pandan. 

The agreement stated that Nawab Khwaja Muhammad Khan would pay this amount using the income from certain properties that were specifically described in the contract. The agreement stipulated the date of marriage as 2nd November 1877. However, Husaini Begum as well as Rustam Ali Khan were minors at the time. Therefore, Husaini Begum moved into her in-laws’ house in 1883, upon gaining the age of majority. The husband and wife continued to live together until 1896. Due to differences, she left her husband’s home and has since lived more or less continuously in Moradabad. During this time, Nawab Khwaja Muhammad Khan discontinued the monthly payment of Rs 500 to Husaini Begum. 

Therefore, Husaini Begum brought a suit to claim arrears of the Kharcha-i-pandan against her father-in-law, Nawab Khwaja Muhammad Khan. The Subordinate Judge, Agra dismissed the suit by holding that Husaini Begum is not entitled to claim allowance. Aggrieved by the decision of the Subordinate Judge, Husaini Begum filed an appeal before the Allahabad High Court. The Allahabad High Court reversed the decision of the Subordinate Judge by holding that Husiani Begum has a right to claim the arrears. In response to this, Nawab Khwaja Muhammad Khan filed the present appeal before the Privy Council.

Decision of Subordinate Judge, Agra

The Subordinate Judge held that Husaini Begum had forfeited her right to claim allowance when she ceased to live with her husband. Allegations regarding Husaini Begum’s chastity post-marriage had been raised by Nawab Khwaja Muhammad Khan. The Subordinate Judge held that, though in the present case, unchastity had not been proved, if she had been proved unchaste or refused to live with her husband, then her father-in-law’s obligation would cease. Therefore, it was held that as Husaini Begum’s refusal to live with her husband is satisfactorily proved, she shall not be entitled to the allowance. 

Decision of Allahabad High Court 

The Allahabad High Court considered the provisions of the agreement. It was observed that Nawab Khwaja Muhammad Khan had committed to paying an allowance in perpetuity to Husaini Begum. Additionally, the agreement stipulated that neither Nawab Khwaja Muhammad Khan nor his heirs could raise any objection regarding the monthly allowance. Husaini Begum was granted the right to recover the allowances in any manner she pleased from the property listed in the agreement for this purpose. 

The High Court also held that there is no condition precedent or subsequent put on Husaini Begum for claiming the allowance. The agreement does not mention anything regarding the chastity or unchastity of Husaini Begum or whether Nawab Khwaja Muhammad Khan’s liability to pay allowance would cease when Husaini Begum refuses to live in a matrimonial home with her husband. 

The High Court held that the decision of the Subordinate Judge, wherein it was held that Husaini Begum’s refusal to live with her husband in conjugal domicile has relieved Nawab Khwaja Muhammad Khan of his liability, is wrong because no such provision is present in the agreement. The High Court also rejected the contention of Nawab Khwaja Muhammad Khan, stating that since Husaini Begum was not a party to the contract, she could not sue for recovery of arrears. The High Court held that the agreement was executed with the father of Husaini Begum when she was a minor. Further, she was expressly named in the agreement as the beneficiary. Therefore, Nawab Khwaja Muhammad Khan cannot use the agreement to the disadvantage of Husaini Begum. 

The High Court allowed the appeal in favour of Husaini Begum and set aside the decision of the Subordinate Judge, Agra. The High Court decreed Husaini Begum payable for the sum of Rs 15,000/- with a 6% interest rate per annum from 10.11.1903 till the date of payment with costs. And if the said amount is not paid on or before 01.06.1907, then the property or a part of the property listed for paying allowance shall be sold. 

Issues involved 

The issues raised before the Privy Council were as follows: 

  • Whether the respondent, i.e., Husaini Begum, can sue the appellant, i.e., Nawab Khawaja Muhammad Khan, as she is not a party to the contract.
  • Whether the right of the respondent to receive Kharcha-i-Pandan ceases once she stops living with her husband in the matrimonial home. 

Legal concepts involved in Nawab Khwaja Muhammad Khan vs. Nawab Husaini Begum (1910 

Privity of contract 

The principle of privity of contract as followed under English law stipulates that when a contract is entered into between two parties, upon its breach, only such parties can sue the other for enforcement of their rights and obligations. Only parties to a contract can sue for enforcement. Even the beneficiaries under such a contract do not have this right. 

However, in the case of Dunlop Pneumatic Tyre Co. Ltd. vs. Selfridge and Co. (1915), the rigidity of the privity of contract saw a substantial shift. It was held that a person who is a stranger to the consideration in the contract can also sue. Therefore, exceptions to the rule of privity can be made when justice so demands. 

The Indian legal system also follows a slightly different approach regarding this principle. In the case of Babu Ram Budhu Mal and Ors. vs. Dhan Singh Bishan Singh (1956) , the Punjab and Haryana High Court held that the definition of the term “consideration” under the Inidan Contract Act is much wider than that in English law. In another case, Shuppu Ammal and Anr. vs. K. Subramaniam and Ors. (1909), the Madras High Court  observed the case of marriage settlements and family arrangements wherein a third party is made the beneficiary and a property charge is created to secure the interest of the beneficiary. It was held that in such cases, the beneficiaries can sue for enforcement of the contract. It was also held that no aspect of the Indian Contract Act discourages the right of a third party to enforce a contract made for his benefit. Therefore, the rulings of the courts in India led to the development of several exceptions to the principle of privity of contract, such as:

Beneficiary under the contract

If a contract has been entered into for the benefit of a person who is not a party to the contract, then in the event of a breach of such a contract, the beneficiary can also sue for enforcement of his/her rights. The fact that the beneficiary is not a party to the contract is immaterial. The case of Nawab Khwaja Muhammad Khan vs. Nawab Hussaini Begum (1910) deals with such a situation and the Privy Council upheld the exception of a beneficiary under a contract to the rule of privity of contract. 

Consent or acknowledgement

According to the rule of privity, a third party to a contract cannot sue. However, if one of the parties to the contract recognises, acknowledges or admits the right of such a third person, then such person will have the right to sue, and the party who acknowledged such right will be estopped from denying his/her liability for the same. 

Family arrangement

The purpose behind this exception is to protect the rights of those family members, such as daughters, who are not likely to get a specific share of the property of the family. For instance, if ‘X’ distributes his property among his two sons, ‘Y’ and ‘Z’, with the condition that they shall pay a certain sum of money to their sister ‘W’, who has not gotten any share, then if Y’ and/or ‘Z’ fail to fulfill this condition, ‘W’ can sue them. Therefore, the concept of privity of contract has undergone many changes in its application in India.

Arguments of the parties

Appellant

  • The appellant contended that since the respondent was not a party to the contract, her action for claiming arrears of allowance is not maintainable.
  • The appellants supported the above contention by relying on the authority of Tweddle vs. Atkinson (1861), wherein it was held that only a party to a contract can sue for its enforcement. The appellants referred to the principle of privity of contract and contended that, as the respondent is a stranger to the contract, she cannot sue for it.
  • It was also put forward that the respondent had forfeited her right to claim an allowance when she refused to live with her husband.
  • The appellant argued that his liability would cease on account of the respondent’s misconduct or suspicious and unchaste character.
  • The appellant also urged that the nature of the allowance involved in the present case is similar to that of pin money under English law. The husband exercises control over the application of such money and as the respondent has refused to live with her husband in their conjugal domicile, she has waived her right to the same.

Respondent 

  • The respondent put forward that the reason behind her decision to leave her matrimonial home was her husband’s misconduct and unchaste character. However, after leaving, she had been visited several times by her husband, who had taken no steps to enforce the restitution of conjugal rights. 
  • The respondent urged that she had a right to sue for enforcement of the appellant’s liability under the contract since she was a beneficiary under it, even though she was not a party to the agreement. 

Judgement by the Privy Council

Privity of the contract is not applicable. 

The Privy Council held that the decision of Tweddle vs. Atkinson (1861) does not apply to the facts and circumstances of the present case. The former, in essence, was an action to claim damages for loss suffered on account of a breach of a simple contract. The Tweddle vs. Atkinson case relied on the principle of privity of contract in its decision. According to the Privy Council, this principle cannot be referred to in the present case because the agreement stipulates that Nawab Khwaja Muhammad Khan has set aside specific charges from certain immovable property for the allowance that is to be paid to Husaini Begum. The Privy Council held that Husaini Begum is the only beneficiary entitled under the agreement, therefore, she is entitled to enforce her claim despite the fact that she is not a party to the agreement in question. 

The reasoning given by the Privy Council behind its decision to not rely on the doctrine of privity of contract was that there are many communities in India, such as the Mohamedans, who engage in marriages of minors contracted by their parents or guardians. In such a situation, if the doctrine of privity of contract is to be applied, then it will result in serious injustice against minors. The doctrine of privity of contract postulates that only those parties shall have a right to sue who have provided consideration in the agreement. And since minors did not provide any consideration, nor were they parties to contracts, the agreements entered into under which they are beneficiaries will become redundant. 

Comparison between pin money and Kharcha-i-pandan

The Privy Council also drew a comparison between the English concept of pin money and Kharcha-i-pandan. The Privy Council construed Khrach-i-pandan as a personal allowance provided to the wife in the Mohemadan community. The amount may be fixed either before or after the marriage and can vary as per the means and position of the parties. According to the Privy Council, the concepts of pin-money and Kharch-i-pandan stand on different legal footings due to differences in the social institutions that gave rise to these concepts. 

The Privy Council held that though pin money is also recognized as the personal expense of the wife, it is often described as a fund that she might be required to use during marriage with influence, guidance and upon her husband’s request. However, the concept of Kharcha-i-Pandan carries no such obligation. Though usually the allowance, or Kharcha-i-pandan, is received and spent in the marital residence, the husband has little to no control over the utilisation of such an allowance. 

Liability of the appellant does not cease

The Privy Council held that the agreement in the present case binds Nawab Khwaja Muhammad Khan to pay the fixed allowance of Rs 500 to Husaini Begum. There is neither any condition or obligation present in the agreement that shall mean that allowance will be paid only while she is living at her marital residence with her husband nor any clause that states that the defendant’s liability shall cease to exist when Husaini Begum leaves the conjugal domicile. The agreement only deals with conditions as to when and under which circumstances the appellant’s liability is determined. Under Mohammedan law, these conditions would come into operation when the wife entered her husband’s home, giving effect to the conjugal rights and obligations. 

The Privy Council held that there were no other conditions in the agreement because of Husaini Begum’s close relations with the ruler of Rampur. Therefore, Nawab Khawaja Muhammad Khan entered into the agreement to maintain Husaini Begum’s status. Based on the statements given by Husaini Begum, the Privy Council concluded that even though she had left her conjugal domicile, she was still often visited by her husband, who had taken no step to file for restitution of conjugal rights. Therefore, the Privy Council upheld and affirmed the judgement of the Allahabad High Court. The appeal was dismissed and the appellant was ordered to pay the costs. 

Rationale behind the judgement

The reasoning behind the Privy Council’s decision in the present case was based on the fact that the practice of child marriage is common in some areas. In such situations, the parents or guardians of the minor children enter into contracts with each other. The agreements often stipulate the date of marriage, rights and obligations subsequent to marriage, along with allowances to the wife. One such allowance under Mohammedan law is known as Kharcha-i-pandan, which is also the subject of discussion in the present case. 

Therefore, the minor children are not parties to the contracts but can be listed as beneficiaries under them. If the common law rule of privity of contract is applied here, then it can result in injustice against the beneficiaries as their right to bring a suit for enforcement of the contract will be barred. To prevent such injustice, the Privy Council attempted to establish that the principle of privity of contract does not have universal application. The rule can be done away with when justice so requires. Thus, even when a person is not party to the contract, he or she shall be entitled to sue for it if the contract involves his benefit. 

Significance in subsequent cases 

Mannath Veettil Itti Menon vs. Thazheth Meladem Dharman (1917)

The case of Mannath Veettil Itti Menon vs. Thazheth Meladem Dharman (1917) involved a situation wherein the execution of a melcharth (a legal document that allows for the transfer of rights in the context of land) led to a legal dispute over its interpretation and effects on the rights of the parties. The melcharth was executed between the plaintiff and the 1st defendant, which allowed the plaintiff (landowner) the right to redeem kanom (the land tenure system in Malabar, Kerala) in exchange for the transfer of rights on the land. However, the 1st defendant entered into an agreement with the 2nd defendant, who became the melkanomdar and had the responsibility of paying the rent to the plaintiff (landowner). 

The Madras High Court relied on the decision in the Husaini Begum case (1910) and held that the common law rule of privity of contract might be done away with in light of justice. However, it must also be noted that the Privy Council did not intend to lay down that the privity principle had no application in India. The Madras High Court held that though the plaintiff was not a party to the agreement between the defendants, he still had a right to sue for the contract. 

Adhar Chandra Mondal vs. Dolgobinda Das and Ors. (1936)

The case of Adhar Chandra Mondal vs. Dolgobinda Das and Ors. (1936) deals with property disputes among different parties engaged with each other through a network of transactions arising out of a co-owned estate in Murshidabad. The Calcutta High Court, while deciding the matter, relied on the judgement of the Privy Council in the case of Nawab Khwaja Muhammad Khan vs. Husaini Begum (1910). The High Court referred to a remark of Lord Macnaghten on the Husaini Begum case, which provided that if we were to assume that the plaintiff in the case was an English woman, she would not have been able to bring an action before the King’s Bench division. However, she could still bring a suit in equity. 

This is the result of the evolution of legal actions like assumpsit, in which the plaintiff had to prove that the defendant had intentionally committed a breach in order to deceive the plaintiff. Therefore, only the person who had been deceived could sue. This displays the limitations of the English courts. However, the Calcutta High Court held that the Indian legal system is not bound by such restrictions and, in matters of procedure, is guided by principles of justice, equity and good conscience. 

Analysis of Nawab Khwaja Muhammad Khan vs. Nawab Husaini Begum (1910

The general rule is that only those who have paid consideration in a contract can have the right to sue for enforcement of their rights or obligations. However, there are several situations wherein a third party can also have the right to sue, for instance, trust deeds, family arrangement agreements, prenuptials or agreements related to marriage under Mohammedan law. Therefore, in such situations, exceptions may be made on the basis of justice and equity. 

The Husaini Begum case also reflects a deviation from the traditional approach of following the privity principle. The Privy Council’s unique observation of the concept of marriage under Mohammedan law led to the recognition of the fact that the application of the privity principle in India cannot be the same as that in England. The Privy Council’s decision to not follow the authority of Tweddle vs. Atkinson (1861) brought a change in perspective for the Indian legal system. 

Additionally, the comparison drawn between pin-money and Kharcha-i-pandan also reflects the acceptance of differences in social, cultural and legal institutions in England. This provided a meaningful interpretation of the application of personal allowances within different cultural and sociological frameworks, underlying the unique traits of such situations that should be analysed while making a decision on the same. 

Conclusion 

The judgement in the present case has emphasised the differences in the application of the doctrine of privity in India and England. The Privy Council, while holding that the doctrine does not have universal application, also attempted to establish through subsequent cases that the same should not be construed to mean that the privity rule has no application in India. The facts and circumstances of each case should be considered to determine its application. The right of the respondent to claim arrears on her allowance was also recognized in light of the agreement involved in the case. This has also uplifted the rights of minor children, especially females, whose marriages are contracted by their parents. Any benefit or interest assigned to such minor children in the contracts should be upheld. 

The extreme emphasis put by the Allahabad High Court and the Privy Council on the interpretation of the terms of the agreement prevented the appellant from enforcing the contract to the disadvantage of the respondent when, in the first instance, it was made for her benefit only. This case marked one of the pivotal turns from the traditional rigid common law principles and recognized the unique cultural, social and legal nuances that exist amongst different communities in India. 

Frequently Asked Questions (FAQs) 

What is Kharcha-i-Pandan?

The literal meaning of Kharcha-i-pandan is ‘betel box expense’. It is a form of personal allowance provided to the wife in a marriage under Mohammedan law. The quantum of such an allowance can vary depending on the means and positions of the parties. The amount is usually given by either the father-in-law or husband. It may be fixed either before the marriage or subsequent to it.

What are some other personal allowances under Mohammedan law?

Apart from Kharcha-i-Pandan, there may be several other forms of personal allowance given to the wife under Mohammedan law. This may include Mehr or Dower, which is an amount given by the groom to his bride at the time of marriage, Nafaqah or maintenance, refers to the husband’s duty to fulfill the basic needs of his wife and children, Haddiya, which refers to gifts given by the husband to his wife out of affection, and a divorce settlement paid by the husband to his wife for her maintenance during the iddat period. 

Can a stranger to the contract bring a suit for its enforcement? 

The doctrine of privity of contract provides that only those parties who have given consideration to a contract shall have the right to bring an action for its enforcement. However, there may be circumstances where a third person can bring a suit for the contract. Some of these situations are trust deeds, contracts through an agent, family settlements, beneficiaries under contract, acknowledgement, estoppel, covenants running with land, etc. 

References 

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