Grease a shallow vessel( similar to a jelly mould ) with little butter or vanaspati. Set aside.
In another container, beat the eggs one by one, by adding vanilla essence to it. Add milk and sugar too and mix properly.
To prepare the caramel, put the sugar in a heavybased saucepan and heat. When it gets melted properly and becomes brownish (see to that it is not getting burnt ) pour water and stir it continously. When it reaches a medium consistency, switch off the stove.
Pour this caramel to the greased vessel and now pour the custard mix carefully. Do not blend too much with the caramel.
To cook as double boiling:
Take a vessel ( this should be of double the size of the custard bowl ) with half of water in it and place the caramel custard mix bowl into this by closing it with a firm lid.
Now close the big vessel too and cook for 30 minutes or until the custard is cooked properly.
:-You can ensure this by inserting a skewer on to it and the skewer should come out almost clean.
:-Refrigerate it and serve with little of caramel sauce.