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Citation Codes
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citation codes
Case Number
Advocates
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Acts
  • section 69 of the Indian Contract Act,
  • section 69 or section 70
  • Indian Contract Act
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • section 69 of the Indian Contract Act,
  • section 69 or section 70
  • Indian Contract Act
Smart Summary

Factual and Procedural Background

A mortgagee (X) sued A, B and C as representatives of the mortgagor and obtained a decree (by consent as to two defendants and ex parte as to one). A paid the judgment debt in full and sued B and C for two-thirds by way of contribution. B and C denied that A had any interest in the mortgaged property and contended the payment was voluntary. The Court of first instance found that A had an interest and could maintain the suit for contribution. On appeal the Sub-ordinate Judge found A had no interest and dismissed the suit. The present appeal challenges that legal position.

Legal Issues Presented

  1. Whether the plaintiffs (A) were "interested in the payment of money which another is bound by law to pay" within the meaning of section 69 of the Indian Contract Act.
  2. Whether, alternatively or additionally, section 70 of the Indian Contract Act applies so as to entitle A to recover from B and C.
  3. Whether the payment made by A was voluntary or lawful (given plaintiffs' status as parties to the decree and their bonâ fide claim).

Arguments of the Parties

Plaintiffs' Arguments

  • The plaintiffs asserted they had an interest in the mortgaged property (equity of redemption) and therefore were entitled to contribution from B and C after satisfying the decree.
  • They relied on provisions of section 69 (and, alternatively, section 70) of the Indian Contract Act to recover the amount paid.

Defendants' Arguments

  • B and C denied that A had any interest in the mortgaged property and contended the payment by A was voluntary, defeating any right of contribution.
  • The respondents relied on previously decided cases (Raja Baikunto v. Udoy and Panchcowri v. Hari Das) in support of their position regarding the lawfulness/voluntariness of the payment.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mathooranath v. Kristo Kumar Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Cited as part of the body of authorities evidencing divergence; no specific application beyond that classification.
Futteh Ali v. Gunganath Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Classified with other cases as part of divergent authorities; not separately applied.
Nawab Mir v. Partap(3) Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Not separately applied; included in overview of conflicting decisions.
Swarnamoyee v. Hari Das(4) Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Not separately applied; cited as part of the background of conflicting authorities.
Manindra v. Jamahir(5) Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Not separately applied; cited in the survey of authority.
Jinnat v. Fateh(6) Listed among cases showing divergence of judicial opinion on applicability of section 69 to contribution suits. Included in the compilation of divergent cases; no distinct application.
Motichand v. Bajrang(7) Listed among cases taking a view on section 69's applicability to contribution suits. Not separately applied; part of the authorities on the point.
Joynarain v. Badri Das(8) Listed among cases taking a view on section 69's applicability to contribution suits. Referred to as part of the divergent body of case law; not further applied.
Satya Bhusan v. Krishna Kali(9) Listed among cases taking a view on section 69's applicability to contribution suits. Included in survey of authorities; no specific application.
Rajani v. Ram Nath(10) Listed among cases taking a view on section 69's applicability to contribution suits. Not separately applied; cited within the context of divergent opinions.
Pankhabati Chaudhurani…Defendant, v. Nani Lal Singh…Plaintiff, . Held that "interested in the payment" includes persons under apprehension of loss or inconvenience, not only those sure to suffer assessable detriment. Applied to expand the meaning of "interested" so as to include plaintiffs who bonâ fide claimed an interest and faced risk of loss.
Bindubashini Dasi v. Harendralal Ray Where payment is made by a person who bonâ fide claims the disputed property, section 69 protects that payer even if ultimately no legal interest exists. Applied to support that a bonâ fide claimant who paid is protected by section 69 despite ultimate failure of title.
Radha Madhab Samonta v. Sasti Ram Sen Same principle as Bindubashini Dasi: protection under section 69 for bonâ fide claimants who pay. Applied jointly with Bindubashini Dasi to justify protection for plaintiffs who honestly claimed an interest.
Desai v. Bhavabhai Mentioned in prior judgment (Jinnat Ali v. Fateh Ali); treated as distinguishable from present facts. Distinguished from the present case on the facts; court found the present case not analogous.
Jinnat Ali v. Fateh Ali Referenced in connection with Desai v. Bhavabhai; appears in discussion of earlier authorities. Used to note that Desai v. Bhavabhai was mentioned in that judgment and is distinguishable here.
Raja Baikunto v. Udoy Relied upon by respondents on the question whether the payment was lawful or voluntary. The court did not depart from the exposition in this case but held it consistent with the view that a party to a decree who satisfies it pays lawfully under section 70.
Panchcowri v. Hari Das Relied upon by respondents on the lawfulness/voluntariness of payments. The court accepted the exposition in this case as consistent with holding that payment by a party to a decree is lawful under section 70.
Parbhu Narain v. Beni One of the authorities cited in connection with the doctrine of subrogation. Mentioned as an authority relevant to subrogation but the court deemed it unnecessary to consider subrogation to decide the appeal.
Dhakeswar v. Harihar Cited among authorities on subrogation. Not applied; referenced only to note that subrogation could have been invoked but was unnecessary to decide the case.
Adusumalli v. Valurapalli Cited among authorities on subrogation. Mentioned in passing; the court did not rely on it because subrogation was unnecessary to the decision.

Court's Reasoning and Analysis

The court examined whether the plaintiffs were "interested in the payment of money" within section 69. Noting divergent authority on section 69's applicability to contribution suits, the court relied on Pankhabati Chaudhurani (expanding "interested" to include those under apprehension of loss) and on Bindubashini Dasi and Radha Madhab Samonta (protecting bonâ fide claimants who pay even if they ultimately lack legal title). Given that the plaintiffs had been joined as parties to the mortgage suit, had been decreed against as to the equity of redemption in which they claimed an interest, and had a bonâ fide claim, the court concluded they could not be regarded as having no interest in the payment that satisfied the decree.

The court further held that, even if section 69 did not apply, section 70 covered the case: a person who lawfully does something for another not intending to act gratuitously, and whose act is enjoyed by the other, is entitled to compensation. The payment was made by plaintiffs as parties bound by the decree and not gratuitously; therefore it was a lawful payment within section 70. The court observed that the respondents' cited authorities (Raja Baikunto v. Udoy and Panchcowri v. Hari Das) do not conflict with this conclusion.

The court added that it was unnecessary to decide whether the plaintiffs could also invoke subrogation; authorities on subrogation were noted but not required for the decision.

Holding and Implications

Holding: The appeal is allowed; the decree of the Sub-ordinate Judge is set aside and the decree of the Court of first instance is restored. Costs are awarded here and in the lower Appellate Court.

Implications: The court held that the plaintiffs were entitled to recover (whether under section 69 or section 70 of the Indian Contract Act) because they bonâ fide claimed an interest and lawfully satisfied a decree that affected the defendants' interest. The decision directly reverses the appellate dismissal and enforces the trial court's finding of entitlement; the court did not purport to lay down a novel principle beyond applying existing sections and authorities.

    Serafat Ali v. Issan Ali

    Mookerjee and Walmsley, JJ.:— This is an appeal by the plaintiffs in a suit for contribution. The facts material for the determination of the question of law raised before us, stripped of superfluous details, may be briefly stated. X, a mortgagee, sued A, B and C, as representatives in interest of his mortgagor, and obtained a decree. The decree was by consent as to two of these persons and was ex parte as regards the other. A thereafter satisfied the judgment debt in full. A now sues to recover two-thirds of the money paid by him from B and C. B and C deny that A had any interest in the mortgaged property and urge that the payment made by A must consequently be deemed voluntary. The Court of first instance, upon the evidence, came to the conclusion that A had an interest in the mortgaged property and was entitled to maintain the suit for contribution against B and C. Upon appeal, the Sub-ordinate Judge has held that A had no interest in the property, and, in this view, he has dismissed the suit. The result is that though the decree for the sale of the mortgaged properties has been satisfied with the money of A, though B and C have reaped the benefit of that payment, they escape all liability. The question arises, whether this position is supported by legal principle.

    Section 69 of the Indian Contract Act provides that a person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other. There has been some divergence of judicial opinion [Mathooranath v. Kristo Kumar, Futteh Ali v. Gunganath, Nawab Mir v. Partap(3), Swarnamoyee v. Hari Das(4), Manindra v. Jamahir(5), Jinnat v. Fateh(6)] upon the question whether this section is applicable to suits for contribution properly so called, that is, suits where the plaintiff admits his liability to pay a portion of the money actually paid by him and claims to recover the balance from the defendant: Motichand v. Bajrang(7), Joynarain v. Badri Das(8), Satya Bhusan v. Krishna Kali(9), Rajani v. Ram Nath(10). But whether the section is or is not applicable to suits for contribution, it has a never been disputed that it applies to suits where the plaintiff is, upon the facts found, entitled to recover the whole sum from the defendant on the ground that the same was in law payable by the latter. In the case before us, it has been found that the plaintiffs had no interest in the mortgaged properties, as was, indeed, the contention of the defendants. In this view, the plaintiffs would be entitled, if section 69 applies, to recover the whole sum from the defendants. They have, however, claimed to recover only a portion of that amount. There can be no serious doubt that the money paid by the plaintiffs was money which the defendants were bound by law to pay. The only question in controversy is, whether the plaintiffs were persons interested in the payment of that money.

    The true meaning of the expression “interested in the payment of money” has formed the subject of judicial discussion in recent years, and in the case of Pankhabati Chaudhurani…Defendant, v. Nani Lal Singh…Plaintiff, ., it was ruled that the words “interested in the payment of money which another is bound by law to pay” were comprehensive enough to include the cases of persons who were under apprehension of any kind of loss or inconvenience and were not restricted to cases of individuals who were sure to suffer actual detriment capable of assessment in money. On this principle it was ruled in the cases of Bindubashini Dasi v. Harendralal Ray and Radha Madhab Samonta v. Sasti Ram Sen, that where payment is made by a person who puts forward a bonâ fide claim to the property in dispute, he is entitled to the protection afforded by section 69 of the Indian Contract Act, even though it ultimately transpires, as a result of litigation, that he had not in fact or in law the interest for the protection whereof the payment was made. In the case before us, the plaintiffs were joined as parties to the mortgage suit by the mortgagee on the allegation that they were some of the legal representatives of the deceased mortgagor. A decree was made against the property to the equity of redemption wherein they claimed an interest. In the present suit the Court of first instance, upon the facts, came to the conclusion that they had an interest in the equity of redemption. The Court of appeal below has, however, come to a different finding upon the evidence. In these circumstances, it is impossible to maintain the view that the plaintiffs were persons in no way interested in the payment of the money which went to satisfy the decree. That decree bound the mortgaged properties wherein the defendants in the present litigation are undoubtedly interested; and the plaintiffs also bonâ fide claimed an equal interest. This case is consequently clearly distinguishable from Desai v. Bhavabhai mentioned in the judgment of this Court in Jinnat Ali v. Fateh Ali. It cannot, we think, be reasonably maintained by any stretch of language, that the payment was made by the plaintiffs with a view to manufacture evidence of title to the mortgaged properties when they knew that they had no claim whatsoever.

    It is also fairly clear that even if section 69 were not applicable, the case would be covered by section 70. That section provides that where a person lawfully does anything for another person or deliver anything to him, not intending to do so gratuitously, and, such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered. There is no controversy that the payment was made by the plaintiffs without intention to do so gratuitously. The only question is whether this was done lawfully. Much reliance has been placed by the respondents on the cases of Raja Baikunto v. Udoy and Panchcowri v. Hari Das. We do not in any way depart from the exposition of the law contained in these cases, which is perfectly consistent with the view we now take, namely, that a payment in satisfaction of a decree, by a person who is a party to the decree and is bound thereby, is a payment made lawfully within the meaning of section 70.

    We hold accordingly that whether section 69 or section 70 be applied, the plaintiffs are bound to succeed. In these circumstances, it is not necessary for us to consider, whether the plaintiffs might not have successfully invoked the aid of the doctrine of subrogation [Parbhu Narain v. Beni, Dhakeswar v. Harihar, Adusumalli v. Valurapalli], to support the line of reasoning that the plaintiffs are some of the joint judgment debtors, that they have satisfied the mortgage decree whereby they were bound, along with the defendants, and that they have accordingly been subrogated to the lights of the mortgagee decree-holder.

    The result is that this appeal is allowed, the decree of the Sub-ordinate Judge set aside, and that of the Court of first instance restored. This order will carry costs both here and in the lower Appellate Court.

    L.R
    Appeal allowed.

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    Comments

    Serafat Ali v. Issan Ali
    (May 22, 1917)