ARIES ADVERTISING BUREAU versus C.T. DEVARAJ (DEAD) BY LRS.

Citation: [1995] 2 S.C.R. 251 · Decided: 22-02-1995 · Supreme Court of India · Bench: K. RAMASWAMY, B.L. HANSARIA · Disposal: Dismissed

Judgment (excerpt)

ARIES ADVERTISING BUREAU 
A 
v. 
""-{ 
C.T. DEVARAJ {DEAD) BY LRS. · 
FEBRUARY 22, 1995 ... 
[K. RAMASWAMY AND B.L. HANSARIA, JJ.] 
B 
Indian Contract Act, 1872 : S. 7~Advertisement for circus-Charges 
not paitf-Suit laid for recovery against cirau owner and its financier-&-
,/ 
paTte decree against circus owne,-Decree against jinancier-l'rivity of tontract 
\ 
and Benefit pursuant to the advertisement-Yl.bsence of-Hence S.70 not at- - c 
tracted. 
/ 
The appellant-plaintifl' had advertised for the Circus ·run by the 
second-defendant; it nJed a suit for recovery of advertisement charges of 
Rs. 27,000 and odd against the respondent and the second-defendent. D 
Ex-parte decree was passed against the second defendant and it had 
become final. The trial Court decreed the suit against the respondent-first 
defendant on finding that there was privity of contract between the appel· 
lant and respondent. 
On appeal, the High Court found that there was no privity of E 
contract; since he was only a financier, tie did not derive any benefit under 
the contract. 
In this appeal it was contended that in view of clause (4) of the 
agreement between the respondent and the first defendant, wherein the 
~ 
respondent undertook to pay the advertisement charges, he was bound to F 
pay.the same to the appellant, that since the proposal sent for advertise-
. ment by the appellant was admittedly approved by the respondent, there 
emerged a concluded oral contract bet.en the appellant and the respon· 
dent; and that since the respondent ~ 
to receive the-benefit of 30% of 
__, 
the profit from Income derived by running of the circus, the respondent G 
derived benefit pursuant to the advertisement, he ls bound to reimburse 
the appellant by operation of S.70 of the Contract ~ 
Dismissing the appeal, this Court 
HELD : 1. There ls no prlvity of contract between the appellant and H 
251 
252 
SUPREME COURT REPORTS 
(1995] 2 S.C.R. 
A the respondent. Though proposal sent for the advertisement by the appel· 
lant was approved by the respondent, he did it on behalf of the second 
defendant. Th'e approval sought by the appellant was not given in writing 
so as to bind the respondent with the expenditure incurred from advertise-
ment. The High Court had considered this aspect of the matter and 
B concluded that in the absence of any approval in writing by the respondent, 
reliance upon self-serving statement made by the appellant in this regard, 
was not sufficient to fasten the liability on the respondent for the expen- · 
diture incurred by the second defendant for advertisement to run the 
circus. (253-E·F] 
C 
2. In the present.case, the respondent was only a financer to run the 
circus and pursuant to the contract the respondent had suffered huge loss. 
In the absence of any benefit derived by the respondent pursuant to the 
advertisement made by the appellant, s. 70 of the Contract Act is not 
attracted. (254-C] 
D 
CIVIL APPELLATE JURISICTION : Civil Appeal No. 907 (N) of 
1976. 
·~ 
I 
From the Judgment and Order dated 14.2.75 of the Madras High 
..,, 
Court in A.S. No. 326 of 1971. 
E 
A.T.M. Sampath for the Appellant. 
The following Order of the Court was delivered : 
This appeal by special leave arises from the judgment of the Division 
F Bench of the Madras High Court in A.S. No. 226nl dated February 14, 
1995. The facts lie in a short compass. The appellant-plaintiff had adver-
tised for the circus run by the second defendant Balakrishnan. It laid a suit 
for recovery of a sum of Rs. 27,000 and odd towards the advertisement 
charges impleading the respondent, as first defendant, alongwith Balakrish-
nan as second defendant. Balakrishnan remained ex-parte and an ex-pane 
G decree against him became final. We are concerned only with the liability 
of the first defendant- respondent, C.T. Devaraj. The trial court decreed 
the suit against him on finding that there was privity of contract between 
the appellant and the respondent. The High Court, on appeal, found that 
there is no privity of contract. Though the appellant, relying on s. 70 of the 
H Indian Contract Act, 1872, (for short 'the Act') attempted to fasten the 
/ 
ARIES ADVERTISING BUREAU v. C.T. DEV ARAJ 
253 
liability on the respondent, it was found that the respondent did not derive A 
any benefit under the contract between him and Balakrishnan. On the 
other hand, he was a financier to run the circus which had incurred a huge 
loss. Consequently, it was held that the be

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