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Bava Sahib Vs. C.K. Krishna Boyan and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1936Mad898
AppellantBava Sahib
RespondentC.K. Krishna Boyan and ors.
Cases ReferredFaqirchand v. Aziz Ahmad
Excerpt:
.....en-cumbrances other than the said two..........all 358.3. in that case two properties k and m were mortgaged on 8th november 1906. the mortgagor sold the property k to one sher singh on 19th may 1914 and a considerable portion of the purchase money was left with him to enable him to discharge the said mortgage and other debts of the vendor. in july 1914 the property m was sold in execution of a decree against the mortgagor and purchased by a subject to the mortgage. on 21st may 1914 the property k was sold in execution of another decree and purchased by b subject to the mortgage and b subsequently assigned the property to sher singh. the mortgagee sought to enforce his mortgage and in execution of the decree obtained thereon put up both the properties to sale, and the properties were sold before the sale could be confirmed. sher.....
Judgment:

Venkataramana Rao, J.

1. This Second Appeal raises a question of contribution. Defendant 2 was the owner of two houses and four items of lands bearing Survey Nos. 157/1, 158/2, 152/2 and 157/2. On 5th February 1918 he mortgaged the houses and survey Nos. 152/2 and 157/2 for Rs. 2,000 to one Rangammal. On 26th September 1919 he mortgaged the houses as well as all survey numbers for Rs. 4,000 to one Subramania Chetty. On 28th April 1920 he sold to defendant 1 survey Nos. 152/2, 158/2, 157/2 and 157/1 for Rs. 5,750. Out of the purchase money Rs. 750 was paid as advance and this was utilised in payment of interest to the two mortgagees aforesaid. Out of the balance of Rs. 5,000 Rs. 2,000 was reserved to be paid to Rangammal towards principal in full discharge and Rs. 3,000 was reserved to be paid to Subramania Chetty in part discharge. On 25th January 1922, defendant 2 sold the two houses to the plaintiffs by Ex. A. Under the said purchase he was asked to pay Rs. 1,200 towards the mortgage in favour of Subramania Chetty. As defendant 1 did not pay immediately the sums reserved in his sale deed to the mortgagees, suits were filed on the mortgages. The suit on the mortgage in favour of Subramania Chetty was filed in 1921 being O.S. No. 231 of 1921 on the file of the Principal Subordinate Judge of Coimbatore. ' The preliminary decree therein was passed on 11th February 1922 and defendant 1 deposited Rs. 3,000 into Court on 29th June 1922 in part satisfaction of the decree and the plaintiff paid Rs. 1,200 on 1st July 1922. For the balance due the properties mortgaged were being brought to sale and the plaintiff to save the properties in his possession-being sold paid Rs. 1,983 in two sums (Rs. 1,000 on 17th April 1926 and Rs. 983 on 9th April 1927) in addition to Rs. 1,200 paid in pursuance of his sale-deed. Rangammal brought a suit on her mortgage being O.S. No. 698 of 1923 on the file of the Principal Subordinate Judge of Coimbatore, and in execution of the decree, survey Nos. 152/2 and 157/2, in the possession of defendant 1, were sold, and in the Court auction sale held on 13th October 1924, Rs. 2,985 was realised, and for the balance due, the plaintiff, to save his properties from being sold, paid Rs. 660 on the same date. The plaintiff has now filed the suit out of which this second appeal arises to recover the said two sums of Rs. 1,983 and Rs. 66 with interest thereon from defendant 1.

2. The main defence of defendant 1 is that the properties purchased by the plaintiff have contributed far less than their proportionate liability and therefore defendant 1 is not liable. Both the lower Courts have decreed the plaintiff's suit. It is contended by Mr. Sampath Ayyangar on behalf of defendant 1 that the lower Courts have not correctly applied the law bearing on the matter, that Section 69, Contract Act, on which their decisions are based, is not applicable; that Section 82, T.P. Act governs the case, and if the principle of that section is applied, his client, defendant 1 would not be liable; and he relies strongly on the decision in Kunchithapatham Pillai v Palamalai Pillai 1918 32 MLJ 347 which lays down that Sections 69 and 70, Contract Act, do not apply to claims for contribution arising under circumstances mentioned in Section 82, T.P. Act, that the expression ' contract to the contrary' in the section is not applicable to a contract between the vendor and a purchaser of a share of equity of redemption, but the benefit of that agreement may be assigned in favour of a subsequent purchaser of another portion of the mortgaged property and when such an assignment was expressly made, a valid defence may be raised by the subsequent purchaser to a claim for rateable contribution. The view expressed therein that an express assignment was necessary does not seem to be correct in view of the decision of the Privy Council in Ganesh Lal v. Charan Singh 1930 52 All 358.

3. In that case two properties K and M were mortgaged on 8th November 1906. The mortgagor sold the property K to one Sher Singh on 19th May 1914 and a considerable portion of the purchase money was left with him to enable him to discharge the said mortgage and other debts of the vendor. In July 1914 the property M was sold in execution of a decree against the mortgagor and purchased by A subject to the mortgage. On 21st May 1914 the property K was sold in execution of another decree and purchased by B subject to the mortgage and B subsequently assigned the property to Sher Singh. The mortgagee sought to enforce his mortgage and in execution of the decree obtained thereon put up both the properties to sale, and the properties were sold before the sale could be confirmed. Sher Singh deposited the mortgage amount into Court and filed a suit for contribution against A. A tried to resist the claim by pleading that under the sale by the mortgagor to Sher Singh dated 19th May 1914 he was bound to have discharged the mortgage out of the money reserved with him and he having failed to do so cannot seek any contribution. The Allahabad High Court took the view that as A was not a party to the contract between Sher Singh and the mortgagor and as the benefit of the contract had not passed to A, A was not entitled to take advantage of that contract and he was bound to contribute. Their Lordships of the Privy Council approve of this conclusion of the High Court and observe that Section 82 is the section that governs the case and that as the Act prescribes the conditions in which contribution is payable it is not proper to introduce into the matter any extrinsic principle to modify the statutory provisions.

4. Referring to Muhammad Abbas v. Muhammad Hamid (1912) 9 ALJ 499 their Lordships again observe:

The decision in the case to which the Subordinate Judge referred may be justified on the footing that in that case there passed to the party from whom the contribution was sought the benefit of the contract by which the money was to be applied, so that he could say 'I have a contract which frees me from the liability to contribution which the section would otherwise impose on me.' No such plea is available to the appellants in this case. They were not parties to the contract of 19th May 1914, nor has the benefit of that contract passed to them in law or in equity.

5. This decision of the Privy Council is authority for the following propositions : (1) the statutory liability to contribution under the section ought not to be controlled by extrinsic principles; (2) the expression 'contract to the contrary' in the section might include a contract between the mortgagor and purchaser of equity of redemption and can be enforced by the mortgagor or a subsequent purchaser of the equity of redemption of another portion of the mortgaged property if the benefit of the contract has been assigned to him : vide Muthiah Bhagavathar v. Venkatarama Ayyar 1936 69 MLJ 303 at p. 316; (3) the benefit of that contract might pass to the subsequent purchaser either in law or in equity. That no express assignment of the benefit of the contract is necessary in favour of a subsequent purchaser of the equity of redemption as laid down in Ramabhadrachar v. Srinivasa Ayyangar 1918 32 MLJ 347 is clear from the expression used by their Lordships of the Privy Council, viz., 'in law or in equity' especially having regard to the facts of Muhammad Abbas v. Muhammad Hamid (1912) 9 ALJ 499 with reference to which the said observation was made. In Muhammad Abbas v. Muhammad Hamid (1912) 9 ALJ 499 II and W owned two properties J and B subject to certain mortgages. In April 1900 they sold a certain share in B property to the plaintiffs therein reserving a major portion of the consideration with the purchaser to be paid to the prior mortgagees. H and W received a portion of the said consideration from the plaintiffs and entered into an arrangement that they would pay that portion to the mortgagees and the plaintiffs undertook to pay the balance as per arrangements in the sale-deed. Subsequently in April 1902 they sold portions of property to certain persons free of encumbrances; the plaintiffs having failed to pay the mortgagees, the mortgagees sued on their mortgages and the plaintiffs paid the entire amount and filed a suit for contribution against the vendees under the deeds of 1902 to recover the share proportionate to the shares in their hands which they were liable to contribute. Their Lordships held that the plaintiffs were not entitled to claim contribution to the extent of the amount reserved under the sale-deed. Chamier, J. observed in that case as follows:

It is clear that as between the vendors and the defendants the latter are entitled to hold the share in Hamalpore free from liability to contribute to the mortgage debts and that as between the vendors and the plaintiffs the latter are bound to discharge the greater part of those debts. The plaintiffs were supplied with funds for that express purpose. It was not the intention of any of the parties concerned after 10th April 1900, that the shares in the two villages should contribute rateably to the mortgage debts.

6. Their Lordships of the Privy Council justify this decision on the ground that the benefit of the contract which H and W entered into with the plaintiffs must be deemed to have passed to the vendee defendants under the sale-deed of 1902. This inference, it may be noticed, was based on the fact that the property was sold free from encumbrances though the mortgages were subsisting on the property on the date of the sale. It is therefore necessary to see whether in this case by virtue of the sale-deed in favour of the plaintiffs the benefit of the agreement between defendant 2 and defendant 1 passed to the plaintiff. The sale-deed mentioned two mortgages as subsisting on the properties, one in favour of one A, Ramaswami Chetty and the other in favour of Subrahmaniam Chetty. In regard to the latter Rs. 1,200 was reserved with the plaintiff for discharging a portion of the debt due to him, but no mention was made of Rangammal's mortgage. The covenant for assurance is significant. It is to this effect:

In respect of the undermentioned properties, there are no encumbrances other than the aforesaid two mortgages. If any such encumbrances exist or happens to exist, I myself shall come forward and discharge the same at my own expense.

7. It is therefore plain that it was intended to sell the property free of encumbrances including Rangammal's mortgage save the two mortgages aforesaid, and there is further a covenant to make good the loss arising from the enforcement of any en-cumbrances other than the said two mortgages. Thus, so far as Rangammal's mortgage is concerned, I am inclined to draw the inference which their Lordships of the Judicial Committee drew from the transaction in Muhammad Abbas v. Muhammad Hamid (1912) 9 ALJ 499, i.e., the benefit of the agreement must be deemed to have passed either in law or in equity to the plaintiff: of. also Kamta Singh v. Chaturbhuj Singh 1929 8 Pat 585 cited with approval in Muthiah Bhagavathar v. Venkatarama Ayyar 1936 69 MLJ 303, . The result of the agreement is this: that as between the plaintiff and defendant 1 the houses stand exonerated from all liability to the mortgage of Rangammal and the plaintiff standing in the shoes of defendant 2 is entitled to recover what he had to pay towards the said mortgage.

8. But the same cannot be said of Subramania Chetty's mortgage. It is difficult to draw any inference as to the benefit of the said agreement passing to the plaintiff so far as it relates thereto. There was an express recital in the sale-deed in favour of the plaintiff that the encumbrances in favour of Subramania Chetty were subsisting on the mortgage and the covenant of defendant 2 was only in respect of encumbrance other than Subramania Chetty's mortgage. Further the facts also do not warrant such an inference. The date of the sale-deed in favour of defendant is 28th April 1920. On that date the amount payable to Subramania Chetty was Rs. 4,000, and the understanding arrived at as spoken to by defendant 2 is that defendant 1 should pay Rs. 3,000 and defendant 2 Rs. 1,000. There is no evidence that Subramania Chetty was willing to receive Rs. 3,000 and exonerate the suit property, nor any evidence that defendant 2 was ready with the sum of Rs. 1,000. Further, it transpires from the evidence that five days after the sale in favour of defendant 1 the defendant 2 appears to have sold the same properties to Subramania Chetty and there appears to have been a litigation and an injunction issued to defendant 2 therein : vide D. W. 2's evidence, p. 19; and defendant 1 states that he was not put in possession of the properties for nearly two years after the date of the sale. It may be noticed that the suit of Subramania Chetty to enforce his mortgage was filed in 1921 and the said suit was pending when the plaintiff purchased the property on 25th January 1922 and the preliminary decree in Subramania Chetty's mortgage suit was passed on 11th February 1922. Defendant 1 deposited the sum of Rs. 3,000 reserved with him into Court in June 1922 within four months after the date of the preliminary decree.

9. As already stated it is difficult to say from the evidence that there was really a non-fulfilment of the obligation entered into by defendant 1 and in these circumstances presumption of any benefit of the agreement relating to this mortgage being transferred to the plaintiff would not arise. In this view it is unnecessary to consider the correctness or otherwise of the decisions in Karuppan Ambalagaran v. Sakuth Levvai : (1914)26MLJ74 and other cases cited at the bar. The decree of the learned District Judge, so far as it allows payment made towards Rangammal's mortgage, must stand, but in regard to the amount paid towards Subramania Chetty's mortgage, I reverse his decree and remit the case to the lower appellate Court to ascertain the proportionate amount of liability which the properties purchased by the plaintiff will have to contribute, and pass a decree for the amount found to have been paid by him in excess of the sum payable. In ascertaining the rateable contribution, the Court will have regard to the decision of the Privy Council in Faqirchand v. Aziz Ahmad 1932 54 All 199 and that the amount payable to Rangammal and the interest on Rs. 3,000 from date of plaint by Subramanian Chetty up to date of deposit by defendant 1 into Court should be borne by defendant 1. I direct the parties to pay proportionate costs, only in this appeal.


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