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Rama Shankar Prasad v. Ghulam Husain

Allahabad High Court

Apr 9, 1921

Judgment

Subsequent
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CITATION CODES

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CASE NO.

Second Appeal No. 86 of 1919 from a decree of I.B Mundle, Additional Judge of Gorakhpur, confirming a decree Shambhu Nath Dube, Second Additional Subordinate Judge of Basti

Attorney(S)

Dr. Kailas Nath Katju, for the appellant, submitted that the suit had been wrongly dismissed. The rule relating to contribution was formulated in section 82 of the Transfer of Property Act. That section rendered the properties liable, and not their owners. The right to claim contribution was as much open to a mortgagor and his heirs as against a purchaser of one of the mortgaged properties as to any other person. There was nothing in section 82 to exclude the mortgagor from its operation. It was only controlled by section 56 of the Transfer of Property Act which was not applicable to the facts of this case for three reasons. Firstly, that section only dealt with cases of sale by private treaty. Here the defendants were purchasers in an execution sale. Secondly, section 56 was founded upon the general presumption that if one of two properties subject to a common charge was sold by the mortgagor, the intention of the parties to the sale was that it should be sold free of that charge. This presumption could be rebutted by proving that in fact nothing but the mere equity of redemption had been sold. Here the execution sale could transfer nothing more than the equity of redemption and it was proved that the defendants had in fact bought the property subject to the mortgage. Thirdly, section 56 created an equity in favour of the purchaser as against the seller personally. The plaintiff here was not the seller but his son, and was not personally liable to pay the mortgage debt due to Raghubans Shukul; Siraj-ud-din Ahmad v. Siraj-ud-din . The lower courts apparently thought that a mortgagor could in no case claim contribution. It was, submitted that this statement was too wide and was not well founded in principle or on authority. The case of Magniram v. Mehdi Hossein Khan relied upon by the lower courts was in applicable. There the question was whether the benefit of section 56 could be claimed by an earlier purchaser from the mortgagor as against subsequent purchasers from him, and the High Court held that he could not. Any general dictum in that cage must be read with reference to the actual questions in dispute there.

Maulvi Iqlal Ahmad (with him Mr. G.W Dillon and Munshi Baleshwari Prasad) for the respondents, submitted that the right to contribution was an equitable right. The mortgagor was primarily liable to pay the mortgage debt. Assuming that the plaintiff could claim the benefit of section 82, his suit must fail as it was admitted that the property in his possession had not completely satisfied the mortgage debt. A right to contribution only arose if the plaintiff himself or his property discharged the mortgage debt in full. Partial discharge was insufficient and it was immaterial that the mortgage had been subsequently paid off by the sale of another property belonging to some one other than the plaintiff. He relied upon Ibn Hasan v. Brijbhuhan Saran .

[Dr. Kailas Nath Katju submitted that this question was concluded by the Full Bench decision in Bhagwan Das v. Karam Husain ].

Furthermore, the plaintiff should have brought into account the other two properties which had been sold privately by him in order, as he alleged, to discharge the earlier prior mortgage debts. A private sale was quite different from an execution sale under the decree on a prior mortgage. The liability of defendants' properties under section 82 must be worked out on the basis of all the six properties.

Dr. Kailas Nath Katju was heard in reply.

JUDGES

Hon'ble Mr. Pramoda Charan Bannerji

Hon'ble Sir Edward Grimwood Mears

Hon'ble Sir Charles Ross Alston

ACTS

Order XLI, Rule 23 of the Code of Civil Procedure,

SECTION 82 TRANSFER OF PROPERTY ACT

SECTION 56 TRANSFER OF PROPERTY ACT

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Smart Summary (Beta)

Factual and Procedural Background

This appeal arises from a suit for contribution related to mortgages on eight villages originally owned by Sarju Prasad, the plaintiff-appellant's father. Sarju Prasad had mortgaged these villages, with some already subject to prior mortgages which were discharged through sales of certain villages. The plaintiff's village, Lonha, was sold at auction to satisfy a mortgage held by Raghubans Shukul, but the sale proceeds were insufficient, requiring further sales of shares in other villages. The plaintiff alleged that his village contributed more than its rateable share under the mortgage and sought contribution from the villages purchased by the defendants under a simple money decree, which were also subject to the mortgage. The trial court dismissed the suit, holding that the mortgagor could not sue purchasers of the equity of redemption for contribution. This decision was upheld by the lower appellate court, prompting the present appeal.

Legal Issues Presented

Whether a mortgagor can maintain a suit for contribution against purchasers of parts of the mortgaged property who hold the equity of redemption.
Whether the liability for a common mortgage on multiple properties should be apportioned proportionately according to the value of each property under Section 82 of the Transfer of Property Act.
Whether the plaintiff is entitled to contribution after the mortgage debt has been fully discharged by sales of parts of the mortgaged property.
Whether prior sales of certain villages to third parties to discharge earlier mortgages affect the calculation of contribution under the current mortgage.

Arguments of the Parties

Appellant's Arguments

The plaintiff contended that his village Lonha had contributed more than its rateable share of the mortgage liability and was therefore entitled to recover the excess from the defendants who purchased other mortgaged villages.
He relied on Section 82 of the Transfer of Property Act, which mandates proportional liability among properties subject to a common mortgage.
The plaintiff argued that since the mortgage debt had been fully discharged by sales, he was entitled to claim contribution for the excess amount paid by his property.

Respondents' Arguments

The respondents, represented by Mr. Iqbal Ahmad, relied on a Full Bench ruling in Ibn Hasan v. Brijbhukhan Saran, arguing that a suit for contribution cannot be maintained unless the entire mortgage debt has been discharged, which they claimed was not the case.
They contended that the mortgagor could not maintain the suit against purchasers of the equity of redemption.
They also requested that the court consider prior sales of certain villages to strangers, which had discharged earlier mortgages, in assessing the rateable liability of the plaintiff's village.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Magniram v. Mehdi Hossein Khan, 31 C. 95 : 8 C.W.N. 30	Used by the lower court to support the view that mortgagor cannot sue purchasers of equity of redemption for contribution.	The Supreme Court found this precedent inapplicable to the present case.
Ibn Hasan v. Brijbhukhan Saran, 26 A. 407 : A.W.N. (1904) 74 : 1 A.L.J. 148 (F.B.)	Whether a suit for contribution can be maintained unless the whole mortgage debt has been discharged.	The Court distinguished this case, noting that here the entire mortgage debt had been discharged.
Bhagwan Das v. Karam Hussain, 11 Ind. Cas. 145 : 33 A. 708 : 8 A.L.J. 854	Supports the right of an owner of one mortgaged property to claim contribution after full discharge of the mortgage.	The Court found this precedent analogous and supportive of the appellant’s claim.

Court's Reasoning and Analysis

The Court analyzed the case under Section 82 of the Transfer of Property Act, which mandates that when multiple properties belonging to different owners are subject to a common mortgage, each property's liability is proportionate to its value relative to the aggregate. The Court rejected the lower courts' reliance on the precedent that a mortgagor cannot sue purchasers of the equity of redemption for contribution, finding it inapplicable here. The mortgage debt in this case had been fully discharged by sales of certain villages, including the plaintiff’s village Lonha and a share in Dudrajh. Consequently, the plaintiff was entitled to claim contribution for any excess payment beyond his rateable share. The Court also clarified that villages previously sold to strangers to discharge prior mortgages were no longer liable under the current mortgage and should not be considered in apportioning liability. The Court remanded the case for trial on the merits to ascertain the amount of contribution due, limiting claims to the villages still liable and in possession of the defendants.

Holding and Implications

The Court allowed the appeal, set aside the decrees of both lower courts, and remanded the case to the Court of first instance with directions to reopen and dispose of the suit according to law, considering the observations made in its judgment. The appellant was awarded costs of the appeal on a higher scale, with other costs to be costs in the cause.

The direct effect of this decision is to permit the plaintiff to maintain a suit for contribution against purchasers of parts of the mortgaged property who hold the equity of redemption, provided the mortgage debt has been fully discharged. The ruling clarifies the application of Section 82 of the Transfer of Property Act in such contexts. No new precedent beyond the case's facts and established statutory interpretation was created.

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1. This appeal arises out of a suit for contribution brought under the following circumstances. Sarju Prasad, the father of the plaintiff-appellant, owned shares in eight villages which he mortgaged on the 20th of April 1893 to one Raghubans Shukul. Before this mortgage was executed, he had mortgaged four out of the eight villages under three prior mortgages. These prior mortgages were discharged by sale of two of the villages, namely, Khargara and Banwarpara, and a 4-anna share of Dudrajh. The two villages Baharia and Khargara were sold under a private sale to persons who are not parties to the present suit and the proceeds of the sale went to discharge the three prior mortgages. The Court below has found in respect of these two villages that they had contributed more than their rateable share of liability for the three prior mortgages.

2. Of the mortgaged villages Pakri Zabti, Sukroli and two annas of the village Dudrajh were purchased at auction by the defendants in execution of a simple money decree. Both the Courts below have held that the purchase was sub jest to the mortgage held by Raghubans Shukul, Baghubans Shukul obtained a decree on the basis of his mortgage of the 20th of April 1893 and in execution of it be caused the village of Lonha, which remained in the hands of the plaintiff, after the death of his father Sarju Prasad, to be sold by auction and a sum of Rs. 4,114, was realised by that sale. As this amount was insufficient for the discharge of the mortgage held by Raghnbans Shukul, he cause the 2 annas share in Dudrajh to be sold by auction and the sale realised a sum which was sufficient to discharge the whole mortgage. There was a surplus left which was attached and obtained by other creditors. The plaintiff instituted the present suit for contribution, on the allegation that his village Lonha had contributed more than its rateable share of liability under the mortgage in favour of Raghubans Shukul and that he was, there fore, entitled to recover the excess amount from the villages purchased by the defend, ants in execution of a simple money decree, to which we have referred, and subject to the mortgage in favour of Raghubans Shukul. The Court of first instance dismissed the suit, on the ground that the mortgagor could not maintain the suit for contribution against purchasers of the equity of redemption of a part of the mortgaged property. In support of this view the learned Judge of the Court below referred to a decision of the Calcutta High Court in the case of Magniram v. Mehdi Hossein Khan 31 C. 95 : 8 C.W.N. 30.

3. In our opinion that ruling has no application to the present case. The case of the plaintiff, we think, falls within the purview of Section 82 of the Transfer of Property Act, which provides that where property belonging to different owners is subject to a common mortgage, the liability of each of the property subject to the mortgage is proportionate to its value as compared with the value of all the properties mortgaged.

4. After the sale of the three villages mentioned above in execution of a simple money decree in satisfaction of which those villages were purchased by the defendants, the defendants became owners of part of the mortgaged property and under the principle of the rule laid down in Section 82, the property subject to the mortgage of Raghubans Shukul became the property of the plaintiff and other owners of other parts of the property, that is to say, became the property of the plaintiff and the defendants. If, therefore, the plaintiff's property has contributed more than its rateable share of liability, the plaintiff is entitled to obtain contribution in respect of the amount which is in excess of his rateable share of liability. The view which the learned Subordinate Judge and the learned Judge of the lower Appellate Court have adopted seems to us to be erroneous.

5. Mr. Iqbal Ahmad on behalf of the respondents referred ns to the Full Bench ruling in Ibn Hasan v. Brijbhukhan Saran 26 A. 407 : A.W.N. (1904) 74 : 1 A.L.J. 148 (F.B.). The question in that case was whether a suit for contribution could be maintained unless whole of the mortgage debt had been discharged. That is not the case here, Admittedly the whole of the mortgage of Raghubans Shukul has been discharged by the sale of the village Lonha and the 2-annas share in Dudrajh. This case is very similar to the case of Bhagwan Das v. Karam Hussain 11 Ind. Cas. 145 : 33 A. 708 : 8 A.L.J. 854. The mortgage having been completely discharged, the plaintiff, as owner of one of the properties whish was subject to the mortgage, is entitled to claim contribution, and we hold that the Courts below were wrong in dismissing the suit simply on the ground that the plaintiff represents one of the original mortgagors. There was no question of the application of Section 56 of the Transfer of Property Act to the present case. There was no private sale of the property by the mortgagor to the defendants and the question of the whole of the burden of the mortgage debt being taken over by the mortgagor, to be borne by his property whish was left unsold, did not arise.

6. In this view the case must go bask to the Court of first instance for trial on the merits as to the amount of the contribution to whish the plaintiff is entitled. As a 2-annas share of the village of Dudrajh has been sold by auction and has thus already contributed its share of liability for this mortgage there san be no claim as against that village. The only other villages whish are liable to rateable contribution are the villages Pakri Zabti and Sukroli whish are in the possession of the defendants.

7. Mr. Iqbal Ahmad asked us to hold that the Court of first instance should be directed to take into consideration, in ascertaining the amount of rateable liability of the village Lonha, the two villages of Baharia and Kherighat which were sold to strangers by the mortgagor in order to discharge the three prior mortgages. As we have said above, the learned Subordinate Judge has found that those villages had contributed more than their rateable share of liability for the three prior mortgages. Therefore, those villages ceased to be liable under the mortgage in favour of Raghubans Shukul, Similarly the two villages of Khargara and Bhawapur and 4-annas share of Dudrajh, which were sold by auction in execution of the decree on the three prior mortgages, also cased to he liable under Baghubans Shukul's mortgage. This is conceded on behalf of the respondents. In view of the finding of the lower Court as to the discharge of the prior mortgages out of the proceeds of the sale of the villages Baharia and Kherighat, those villages should not be taken into consideration in this case. So that in apportioning liability the Court below has to take into account the three villages Lonha, Pakri Zabti and Sukroli.

8. The result is that we allow the appeal, set aside the decrees of both the Courts below and remand the case to the Court of first instance under Order XLI, Rule 23 of the Code of Civil Procedure, with directions to re admit the suit under its original number in the register and to any and dispose of it according to law, bearing in mind the observations made above. The appellant will have his costs of this appeal including fees on the higher scale. Other costs will be costs in the cause.