Contract Law

Doraswami Iyer v. Arunachala Ayyar

AIR 1936 Mad 135

Facts

Trustees of a temple undertook repairs to the temple.
The repair work had already been initiated, and money had initially been supplied from village common funds.
As the repairs progressed, additional money became necessary.
A subscription list was circulated among villagers and other persons.
Doraswami Iyer promised to contribute a stated amount.
The trustees later sued to recover that subscription.
The lower court treated the promise as enforceable.
Doraswami argued that the promise was unsupported by consideration.
The important factual question was whether the trustees had undertaken any new liability or work at Doraswami’s request after he made the promise.

Whether a charitable subscription is enforceable where the work had already been commenced independently of the subscriber’s promise.
Whether expenditure or liability not incurred at the promisor’s desire can constitute consideration.

Under Section 2(d), consideration must arise from an act, abstinence or promise done at the desire of the promisor.
A charitable or religious subscription is not enforceable merely because:
the purpose is worthy;
the promisee later needs money;
work connected with the purpose exists.
For the promise to be binding, the promisee must:
undertake a liability;
incur expenditure; or
perform an act in response to, and on the faith of, the subscriber’s promise.
Past or independently undertaken acts are not consideration for a later promise.

The temple repairs had already begun before Doraswami’s subscription was made.
The trustees had entered upon the work using funds available from another source.
The court found no clear evidence that Doraswami requested the trustees to:
commence the repairs;
enlarge the work;
enter into a new contract;
incur a fresh liability on the faith of his promise.
The trustees relied generally on the fact that temple repairs were being carried out and that subscriptions were later collected.
That was not enough.
Consideration must be legally connected to the promisor’s promise.
The court distinguished a case such as Kedarnath v. Gorie Mahomed.
In Kedarnath, the organisers incurred construction liabilities because of the promised subscriptions.
In Doraswami, the work and initial obligations existed independently before the defendant’s promise.
No subsequent act was shown to have been done specifically in reliance on his subscription.
The promise therefore remained a gratuitous charitable promise.
The moral desirability of contributing to temple repairs could not replace consideration.
The case illustrates the requirement that the promise must induce the act relied upon as consideration.

The Madras High Court held that Doraswami’s promise was unenforceable.
The trustees had not shown that they incurred any fresh liability or performed any act at his desire or in reliance on his promise.
Use this case for: a charitable subscription is not enforceable unless the promisee undertakes liability or acts on the faith of the promise.