It is in the Tirokuṭṭasutta.
Tirokuṭṭesu tiṭṭhanti, sandhisiṅghāṭakesu ca;
Dvārabāhāsu tiṭṭhanti, āgantvāna sakaṁ gharaṁ.
Outside the walls they stand and wait, at the junctions and the crossroads
Returning to their former homes, they wait beside the door posts.
Pahūte annapānamhi, khajjabhojje upaṭṭhite;
Na tesaṁ koci sarati, sattānaṁ kammapaccayā.
But when lavish food and drink of many kinds is set out,
no-one remembers them at all, because of those beings’s deeds.
Evaṁ dadanti ñātīnaṁ, ye honti anukampakā;
Suciṁ paṇītaṁ kālena, kappiyaṁ pānabhojanaṁ.
That’s why those who have compassion, give to their relatives
food and drink at the right time, that’s clean, delicious, and suitable.
Idaṁ vo ñātīnaṁ hotu, sukhitā hontu ñātayo;
Te ca tattha samāgantvā, ñātipetā samāgatā.
“May this be for our relatives! May our relatives be happy!”
Those ghosts who have gathered there, the departed relatives who have come
Pahūte annapānamhi, sakkaccaṁ anumodare;
Ciraṁ jīvantu no ñātī, yesaṁ hetu labhāmase.
for the lavish food and drink, gratefully express appreciation:
“May our relatives live long! For those to whom we owe this gain,
Amhākañca katā pūjā, dāyakā ca anipphalā;
Na hi tattha kasī atthi, gorakkhettha na vijjati.
who have given honor to us, it will not be fruitless for the donor.”
There is no farming there, no cow pasture can be found;
Vaṇijjā tādisī natthi, hiraññena kayākayaṁ;
Ito dinnena yāpenti, petā kālagatā tahiṁ.
likewise there’s no trading, and no commerce in gold coin.
The departed, the dead in that place, live on what is given here.
Unname udakaṁ vuṭṭhaṁ, yathā ninnaṁ pavattati;
Evamevaṁ ito dinnaṁ, petānaṁ upakappati.
Just as water that rains on high, flows down to the plains,
so too what is given here, aids the departed ghosts.
Yathā vārivahā pūrā, paripūrenti sāgaraṁ;
Evamevaṁ ito dinnaṁ, petānaṁ upakappati.
Just as the rivers full, swell the ocean seas
so too what is given here, aids the departed ghosts.
Adāsi me akāsi me, ñāti mittā sakhā ca me;
Petānaṁ dakkhiṇaṁ dajjā, pubbe katamanussaraṁ.
Thinking: “They gave to me, they did for me, they were my family, friend, companion”,
give offerings to departed kin, remembering past deeds.
Na hi ruṇṇaṁ vā soko vā, yā caññā paridevanā;
Na taṁ petānamatthāya, evaṁ tiṭṭhanti ñātayo.
For neither tears nor grief, or other lamentations
are of any use to the departed, so long as their relatives stay like this.
Ayañca kho dakkhiṇā dinnā, saṅghamhi suppatiṭṭhitā;
Dīgharattaṁ hitāyassa, ṭhānaso upakappati.
This offering that has been given, well placed in the Saṅgha,
is for their lasting welfare, and aids them right away.
So ñātidhammo ca ayaṁ nidassito, Petāna pūjā ca katā uḷārā;
Balañca bhikkhūnamanuppadinnaṁ, Tumhehi puññaṁ pasutaṁ anappakanti.
The relative’s duty has now been shown: how high honor to departed is performed,
how the mendicants can be kept healthy, and how no little merit is produced by you.
- The story Sir Lal is referring to is Part 3 – The Buddha’s Delivery of The Tirokuṭṭa Sutta
The petas mentioned were relatives of King Bimbisāra during the time of Lord Buddha Phussa. They stole alms intended for the noble Maha Sangha, which was led by Lord Phussa. Lord Buddha Phussa was the 21st of the 28 Buddhas and appeared just before Lord Buddha Vipassi. From the Parinibbāna of Lord Phussa until the time of Lord Gotama, these relatives spent the majority of their rebirths either in the nirayas or as petas (hungry ghosts), suffering for countless lifetimes.
In another version I read, they appealed to the seven Lord Buddhas to alleviate their suffering. Each time, the Buddhas advised them to reach out to the next Buddha until they eventually met Lord Gotama.
- Another interesting sutta on the transfer of merits is the Janussoni sutta.
Take someone else who kills living creatures … and has wrong view.
Idha pana, brāhmaṇa, ekacco pāṇātipātī hoti …pe… micchādiṭṭhiko hoti.
When their body breaks up, after death, they’re reborn in the ghost realm.
So kāyassa bhedā paraṁ maraṇā pettivisayaṁ upapajjati.
There they survive feeding on the food of the beings in the ghost realm. Or else they survive feeding on what friends and colleagues, relatives and kin provide them with from here.
Yo pettivesayikānaṁ sattānaṁ āhāro, tena so tattha yāpeti, tena so tattha tiṭṭhati, yaṁ vā panassa ito anuppavecchanti mittāmaccā vā ñātisālohitā vā, tena so tattha yāpeti, tena so tattha tiṭṭhati.
The conditions there are right, so the gift aids the one who lives there.”
Idaṁ kho, brāhmaṇa, ṭhānaṁ yattha ṭhitassa taṁ dānaṁ upakappatī”ti.
“But Mister Gotama, who partakes of that gift if the departed relative is not reborn in that place?”
“Sace pana, bho gotama, so peto ñātisālohito taṁ ṭhānaṁ anupapanno hoti, ko taṁ dānaṁ paribhuñjatī”ti?
“Other departed relatives reborn there will partake of that gift.”
“Aññepissa, brāhmaṇa, petā ñātisālohitā taṁ ṭhānaṁ upapannā honti, te taṁ dānaṁ paribhuñjantī”ti.
“But who partakes of the gift when neither that relative nor other relatives have been reborn in that place?”
“Sace pana, bho gotama, so ceva peto ñātisālohito taṁ ṭhānaṁ anupapanno hoti aññepissa ñātisālohitā petā taṁ ṭhānaṁ anupapannā honti, ko taṁ dānaṁ paribhuñjatī”ti?
“It’s impossible, brahmin, it cannot happen that that place is vacant of departed relatives in all this long time.
“Aṭṭhānaṁ kho etaṁ, brāhmaṇa, anavakāso yaṁ taṁ ṭhānaṁ vivittaṁ assa iminā dīghena addhunā yadidaṁ petehi ñātisālohitehi.
It’s never fruitless for the donor.”
Api ca, brāhmaṇa, dāyakopi anipphalo”ti.