Docker-compose external_links not able to connect

Documentation at https://docs.docker.com/compose/compose-file/#/externallinks says

If you’re using the version 2 file format, the externally-created containers must be connected to at least one of the same networks as the service which is linking to them.

Ex:

Create a new docker network

docker network create -d bridge custom

docker-compose-1.yml

    version: '2'

    services:
      postgres:
        image: postgres:latest
        ports:
          - 5432:5432
        networks:
          - custom

    networks:
      custom:
        external: true

docker-compose-2.yml

    version: '2'

    services:
      app:
        image: training/webapp
        networks:
          - custom
        external_links:
          - postgres:postgres

    networks:
      custom:
        external: true

Yuva's answer above for the version 2 holds good for version 3 as well.

The documentation for the external_links isn't clear enough.

For more clarity I pasted the version 3 variation with annotation

version: '3'

services:
  app:
    image: training/webapp
    networks:
      - <<network created by other compose file>>
    external_links:
      - postgres:postgres

networks:
  <<network created by other compose file>>:
    external: true