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Kidar Lall Seal and Another Vs. Hari Lall Seal

  Supreme Court Of India Civil Appeal /101/1950
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Appeal by special leave from the Judgment and Decree of the High Court of Judicature at Calcutta, Appeal arising out of Decree , of the Hon’ble S.B. Sinha J. ...

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PETITIONER:

KIDAR LALL SEAL AND ANOTHER

Vs.

RESPONDENT:

HARI LALL SEAL.

DATE OF JUDGMENT:

18/12/1951

BENCH:

BOSE, VIVIAN

BENCH:

BOSE, VIVIAN

FAZAL ALI, SAIYID

CITATION:

1952 AIR 47 1952 SCR 179

CITATOR INFO :

D 1971 SC2177 (7)

RF 1978 SC1329 (28)

ACT:

Transfer of Property Act (IV of 1882), ss. 82, 92--Indian

Contract Act (IX of 1872), s. 43--Mortgage--Contribution

between co-mortgagors--Liability to contribute--Whether

proportionate to value of properties mortgaged, or benefit

derived by each mortgager- General and special law--Equita-

ble considerations.

HEADNOTE:

The right to contribution as between co-mortgagors is

governed by ss. 82 and 92 of the Transfer of Property Act

and not by s. 43 of the Indian Contract Act, inasmuch as s.

43 of the Contract Act deals with contracts generally, while

ss. 82 and 92 of the Transfer of Property Act specifically

deal with the right of contribution between co-mortgagors.

It is an established principle that when there is a general

law, and a special dealing with a particular matter, the

special excludes the general. Consequently, in the absence a

contract to the contrary, co-mortgagors are bound to con-

tribute proportionately to the value of the shares or parts

of the mortgaged property owned by them and not in propor-

tion to the extent of the benefits derived by each of them.

As ss. 82 and 92 of the Transfer. of Property Act prescribe

the conditions in which contribution is payable in India

when there is a mortgage, it is not proper to introduce into

the matter extrinisic principles based on equitable consid-

erations.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 101 of

1950. Appeal by special leave from the Judgment and Decree

dated the 20th September, 1949, of the High Court of Judica-

ture at Calcutta (Hurries C.J.and Chatterice J.) in Appeal

No. 46 of 1949 arising out of Decree dated the 31st August,

1948, of the Hon'ble S.B. Sinha J. of the Calcutta High

Court in Suit No. 343 of 1943 instituted under the

Original Jurisdiction of the High Court).

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M.C. Setalvad, Attorney-General for India

(B. Sen,with him) for the appellant.

S.C. Isaac (B. Barterice, with him) for the

respond-

ent.

1951. December 18. The leading judgment was delivered

by Bose J. Fazl Ali J. agreed,

180

Bose J.--This is a defendant's appeal in a suit for

contribution brought by the son of a mortgagor against the

co-mortgagors.

The parties are related as below :--

Balai Lall Seal

(died1917)

I

Megharnala Dassi

(died 1945)

I I I I I

Bejoy Lall Biswa Lall Tarak Lall Kedar Lall NakuLall

(D. 23-5-33) (D. Nov. 1936) Deft 1 Deft. 2

(Born (Born

I I

Jugal Lall Hari Lall 22-11-1907) 7-2-1910)

(Plff.)

The mortgagors were the plaintiff's father Tarak Lall and

Tarak's two brothers Kedar and Naku. The mortgage was exe-

cuted on the 12th June, 1936, in favour of one Mst. Gyarsi

for a consideration of Rs. 80,000. For convenience I will

call this the suit mortgage though this is not a suit on the

mortgage.

The mortgagee sued in the year 1938 and obtained a

preliminary decree for sale on the 17th of February, 1939,

for a sum of Rs. 89,485-12-9 plus costs. The decree was

made final on the 22nd of December, 1989.

In execution the mortgagee proceeded against the proper-

ty of the plaintiff alone (as Tarak's son) and, during the

pendency of the execution, assigned her rights in the decree

to the Hooghly Flour Mills. The Mills continued the execu-

tion and on the 11th of March, 1943, the claim was satisfied

in this way.

An order of the Court was obtained sanctioning sale of a

part of the mortgaged property, 20 Round Tank Lane (which

belonged exclusively to the plaintiff), to the decree-holder

for a sum of Rs. 1,50,000. It was directed that the consid-

eration should first be applied in payment of the claim and

costs and that the decreeholder should execute a reconvey-

ance of the rest of the mortgaged properties in favour of

the mortgagors. The sanction of the Court was necessary

because the judgment-debtor Hari Lall (present plaintiff)

was a minor.

181

This was done and 20, Round Tank Lane, was conveyed by

the present plaintiff to the Hooghly Flour Mills on the

18th of March, 1943. Out of the consideration a sum of Rs.

97,116-11-0 was paid to the Mills in lull satisfaction of

the claim and costs then outstanding. The Mills executed a

reconveyance of the rest of the properties to the mortgagors

in release of the mortgage on the same day.

In addition to this Rs. 97, 116-11-0, further sums of

Rs. 14,400 and Rs. 8,100 had also been paid before the dates

of these transactions. These sums were paid by a Receiver

who had been appointed by the Court pendente lite. These

sums came out of the rents which the Receiver obtained from

the plaintiff's property, 20 Round Tank Lane.

The plaintiff says that in this way he paid a total of

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Rs. 1,19,116-11-0 in satisfaction of the mortgage. His one-

third share in this comes to Rs. 39,872-3-8. He claims that

he is entitled to receive the balance of Rs. 79,744-7-4 from

the two defendants and that each of them is liable for a

half of that sum namely, Rs. 39,872-3-8.

In addition to this the plaintiff had incurred costs

amounting to Rs. 1,144-8-6 in resisting Mst. Gyarsi's claim

and in connection with the reconveyance. He also claims

one-third of this sum, namely Rs. 381-8-2, from each of the

defendants. The total claim against each defendant accord-

ingly comes to Rs. 40,253-11-10. In addition to this the

plaintiff asked for-

(1) "a declaration that the properties mentioned in

Schedule 'A'...belonging to the defendants stand charged

with the repayment of the sum of Rs. 80,507-7-8 being the

aggregate amount due and payable by the two defendants," and

(2) "Decree under Order XXXIV of the Civil Procedure

Code in proper form."

Schedule A contains a list of the rest of the mortgaged

properties which belong exclusively to the defendants,

24

182

It will be seen that the plaintiff claims on the basis

that each of the three mortgagors is liable to contribute in

equal shares towards payment of the mortgage debt.

The defendants did not deny their liability to contribute.

They only challenged the basis on which it was to be comput-

ed. They ,pleaded a special agreement between Tarak Lal and

themselves under which their liabilities were to be calcu-

lated in the following way. According to them, the bulk of

the Rs. 80,000 was borrowed on what I have called the suit

mortgage to pay off previous debts which had been incurred

by the parties on earlier mortgages. The amount which went

towards satisfaction of the defendant's portion of these

earlier liabilities was only Rs. 13,259-2-4. Therefore, the

only benefit they got out of this Rs. 80,000 was to that

extent. The plaintiff's father Tarak on the other hand

benefitted to the extent of Rs. 53,481-11-4. They therefore

agreed at the date of the suit mortgage that their respec-

tive liabilities as between themselves should be proportion-

ate to the benefit derived by each as above.

Sinha J., who tried the suit on the Original Side of

the Calcutta High Court, held that the agreement was proved.

On appeal the learned Chief Justice of the High Court and

Chatterjee J. disagreed and held that it was not. As I

agree with the learned appellate Judges for reasons which I

shall give hereafter, it will be necessary to set out the

further facts. But I need not do so in any detail as they

are given in full in the two judgments of the High Court. We

are only concerned here with the question of principle; so

it will be more convenient to reduce the problem to its

simplest terms.

We are concerned here with four items of property which

I shall term Chittaranjan Avenue, Strand Road, No. 16 Round

Tank Lane and 20 Round Tank Lane. These properties were

originally joint family properties, but in the year 1932

there was a partition which was compelled by reason of a

suit filed by Tarak

183

against his brothers and mother. The upshot was that the

properties were divided as follows: -

(1) Bejoy, Kedar, Naku and the mother Meghamala

obtained Chittaranj an Avenue.

(2) Tarak (plaintiff's father) obtained 16 Round Tank

Lane and 20 Round Tank Lane.

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(3) Kedar, Naku and Biswa Lall obtained Strand Road.

Before this partition there were three mortgages: The

first of these was executed on the 16th of June, 1925. All

five brothers joined in it and they mortgaged the Strand

Road property for Rs. 10,000. This was in favour of Bhuvan

Chandra Bhur.

The second was on the 11th of October, 1926. In this

Bejoy and Tarak mortgaged their 2/5 share in Chittaranjan,

Strand, Dum Dum and 20 Round Tank Lane for Rs. 5,000. The

mortgagee was Binode Behari Sen.

The third was on the 28th January, 1927. In this Bejoy

and Tarak again mortgaged their 2/5 share in the same items

of property for Rs. 7,000 to Binode Behari Sen and Kunja

Behari Sen.

All three sets of mortgagees, or their representatives,

instituted suits on their respective mortgages and obtained

final decrees-

Bejoy died on the 23rd of May, 1933, leaving a son

Jugal.

On the 12th of June, 1936, came what I have called the

suit mortgage executed by the three brothers,Tarak, Kedar

and Naku, for Rs. 80,000. The properties mortgaged were-

(1) the shares of Kedar and Naku in Chittaranjan

Avenue and 16 Round Tank Lane;

(2) 20 Round Tank Lane which had been allotted to Tarak;

(3) the reversionary interest of all three in the share

allotted to the mother.

The consideration of Rs. 80,000 was expended as

follows:Rs. 29,667-10-0 was paid by Tarak, Kedar and Naku in

satisfaction of the first mortgage and the

184

later decretal charge; Rs. 11,519-11-0 in satisfaction of

the second and Rs. 13,502-14-0 in satisfaction of the third.

The balance of Rs. 25,310 is alleged by the appellants to

have been retained by Tarak. I have taken these figures

from the judgments of the High Court. I understand some of

the details are disputed, so I make it clear that I am not

setting out the decision of this Court regarding the de-

tails but only giving an overall picture.

Shorn of overburdening detail the problem, reduced to

its simplest terms, comes to this. Three persons A, B and C

separately own properties of unequal value, Blackman,

Whiteacre and Greenacre. Let us assume that their values at

the material date are Rs. 30,000, Rs. 20,000 and Rs. 10,000

respectively.

A, B and C, acting in various combinations from time to

time, incur debts. It matters not for present purposes

whether those debts are secured on these properties or not

because a time must come when their separate liabilities as

amongst themselves have to be ascertained and apportioned.

Let us assume that when that is done, A's responsibility

extends to Rs. 2,000, B's to Rs. 3,000 and C's to Rs. 5,000.

In order to clear off these debts, A, B and C jointly

mortgage their three estates for Rs. 10,000, the total

aggregate sum due at the date of the mortgage from the three

of them. There is no contract between them, either in the

mortgage deed or otherwise, regarding their respective

shares of responsibility in the Rs. 10,000.

At the date of redemption the mortgage debt has swollen

to Rs. 15,000. A alone redeems by selling Blackacre, which

is his separate estate, to the mortgagee for Rs. 35,000 that

being the value of Blackacre at the date of redemption. Rs.

15,000 of this is applied in satisfaction of the mortgage

debt and the balance of Rs. 20,000 is retained by A. What

are A's rights as against B and C ?

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Three solutions readily suggest themselves. One is that

the three contribute equally. In that event B would pay A

Rs. 5,000 and C would pay Rs. 5,000.

185

A second solution is that they pay in proportion to the

extent of the benefits derived. In that event B's share

would be 3/10 of Rs. 15,000, that is to say, Rs. 4,500. and

C's would be 5/10 of Rs. 15,000, that is Rs. 7,500.

A third solution is that they pay proportionately to the

values of the properties mortgaged. In that event B would

have to pay 2/6 of Rs. 15,000, that is Rs. 5,000, and C 1/6

of Rs. 15,000' which come to Rs, 2,500.

The problem is to know which of these three solutions to

apply. In the absence of other considerations, the most

equitable solution is obviously the second. But the matter

is not as simple as that. There are certain statutory provi-

sions which must first be examined.

The learned counsel for the plaintiff-respondent con-

tended that section 43 of the Contract Act applied. He

relied on the following provision :-

"Each of two or more joint promisors may compel every

other joint promisor to contribute equally with himself to

the performance of the promise, unless a contrary intention

appears from the contract.

If any one of two or more joint promisors makes default in

such contribution, the remaining joint promisors must bear

the loss arising from such default in equal shares."

The argument is that unless a contrary intention appears

from "the contract" the. loss must be borne equally. It was

contended, and with that I agree, that the words "the con-

tract" can only refer to the main contract between the

promisors on the one side and the promisee on the other.

That contract in this case is the suit mortgage. There is no

contract to the contrary in the document, therefore, it was

contended, the section must apply. That of course would be

the clear, logical and simple conclusion ii there were no

other provision of law to consider. But we are dealing

here with a mortgage and so we have also to look to the

provisions of the Transfer of Property Act.

186

Incidentally, if this argument is pushed to its logical

conclusion it would exclude any collateral or subsequent

agreement between the promisors inter se which does not

appear in the main contract. But we need not enter into

that here.

The sections of the Transfer of Property Act which

concern us are 82 and 92. The first confers a right of

contribution. The second a right of subrogation. I will

consider section 82 first. It runs :--

"Where property subject to a mortgage belongs to two or

more persons having distinct and separate rights of owner-

ship therein, the different shares in or parts of such

property owned by such persons are, in the absence of a

contract to the contrary, liable to contribute rateably to

the debt secured by the mortgage ......... "

That is the position here.

Next I turn to section 92. That runs--

" ...... any co-mortgagor shall, on redeeming property

subject to the mortgage, have, so far as regards redemption,

foreclosure or sale of such property, the same rights as the

mortgagee whose mortgage he

redeems may have against the mortgagor ...... "

That also applies.

Now these provisions at once raise a competition between

sections 82 and 92 of the Transfer of Property Act, section

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43 of the Contract Act and what I might term the principle

of beneficial, as opposed to proportionate or equal, distri-

bution of liability.

I am of opinion that the second solution adumbrated

earlier in this judgment, based on equities, must be ruled

out at once. These matters have been dealt with by statute

and we are now only concerned with statutory rights and

cannot in the face of the statutory provisions have recourse

to equitable principles however fair they may appear to be

at first sight.

The Privy Council pointed out in Rani Chhatra Kumari v.

Mohan Bikram (1) that the doctrine of the

(1) (1931) I.L.R. 10 Pat. 851 at 869.

187

equitable estate has no application in India. So also refer-

ring to the right of redemption their Lordships held in

Mohammad Sher Khan v. Seth Swami Dayal(1) that the right is

now governed by statute, namely section 60, Transfer of

Property Act. Sulaiman c.J. (later a Judge of the Federal

Court) ruled Court equitable considerations in the Allahabad

High Court in matters of subrogation under sections 91, 92,

101 and 105, Transfer of Property Act, in Hira Singh v. Jai

Singh(2) and so did Stone C.J. and I in the Nagpur High

Court in Taibai v. Wasudeorao (3). In the ease of section 82

the Privy Council held in Ganesh Lal v. Charan Singh(4) that

that section prescribes the conditions in which contribution

is payable and that it is not proper to introduce into the

matter any extrinsic principle to modify the statutory

provisions. So, both on authority and principle the deci-

sion must rest solely on whatever section is held to apply.

So far as section 43 is concerned, I am not prepared to

apply it unless sections 82 and 92 can be excluded. Both

sections 43 and 82 deal with the question of contribution.

Section 43 is a provision of the Contract Act dealing with

contracts generally. Section 82 applies to mortgages. As

the right to contribution here arises out of a mortgage, I

am clear that section 82 must exclude section 43 because

when there is a general law and a special law dealing with a

particular matter, the special excludes the general. In my

opinion, the whole law of mortgage in India, including the

law of contribution arising out of a transaction of mort-

gage, is now statutory and is embodied in the Transfer of

Property Act read with the Civil Procedure Code. I am clear

we cannot travel beyond these statutory provisions.

Now, when parties enter into a mortgage they know, or

must be taken to know, that the law of mortgage provides for

this very question of contribution. It confers rights on the

mortgagor who redeems and directs that, in the absence of a

contract to the contrary, he

(1) (1922) 49 I.A. 60 at 65. (3) I.L.R. 1938 Nag. 206

at 216.

(2) A.I.R. 1937 All. 588, at 594. (4) (1930) 57 I.A. 189.

188

shall be reimbursed in a particular way out of particular

properties. The parties are at liberty to vary these rights

and liabilities by special contract to the contrary but if

they do not do so, I can see no reason why these provisions

should be abrogated in favour of a section in the Contract

Act which does not deal with mortgages. Slightly to vary

the language of the Judicial Committee it is the terms and

nature of the transaction viewed in the light of the law of

mortgage in India which exclude the personal liability and

therefore section 43, except where there is a contract to

the contrary.

It was suggested that the rule is inequitable and will

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operate harshly in cases like the present. But the remedy

lies in the parties' own hands. It is open to them to make

a contract to the contrary. If they do not, then the law

steps in and makes statutory rules to which effect must be

given. It is not for judges to consider whether that is the

best possible solution but the rule at any rate obviates the

necessity of roving enquiries into the objects of a borrow-

ing and the application of the funds. On an overall basis

it is perhaps as good as any other. But that hardly matters.

The rule is there and full effect must be given to it.

The learned counsel for the plaintiff-respondent urged

that the defendants are shut out from relying on section 82

because that was not their case and the question was never

raised by them in the High Court. Such reference as there is

to the section was with reference to an argument urged on

behalf of the plaintiff. I am not impressed with this

objection., On the facts set out by the plaintiff it is

evident that he is entitled to contribution. The method of

computation is a matter of law and it is for the judges to

apply the law to the facts stated and give the plaintiff

such relief as is appropriate to the case.

I turn now to the question of fact, the special agree-

ment pleaded by the defendants. The only evidence in sup-

port of it is that of the first defendant Kedar. According

to him, the agreement was an oral one

189

though the parties contemplated writing and registration.

His explanation for lack of any writing is this. He was

asked whether anything was put down in writing and he re-

plied :-

"No, nothing was done then, but there was an understand-

ing that it would be done but Tarak went away to Darjeeling

and when he came back he died soon after he came back and

nothing could be done in writing."

Later, he was asked-

"Therefore, you, contemplated that there would be a

document which would have to be registered in connection

with the adjustment ?"

and he replied' 'Yes". He also tells us that the parties

regarded the matter as confidential and so only three per-

sons were present, Tarak, Naku and himself. It is to be

observed that Naku, who is the second defendant, has not

entered the box.

Stopping there, it is evident that we have to rely on

the memory of a very interested person speaking nearly

thirteen years after the event about a transaction affecting

some Rs. 80,000. Nor is it the memory of some simple event

which might well have fixed itself in his mind. The question

whether and at what stage parties reach finality when writ-

ing is in contemplation is a difficult and complex one

involving delicate considerations of much nicety even when

the preliminaries are all in writing. The turn of a phrase

here, the use of a word there, may make a world of differ-

ence. The law regarding this was examined by me at some

length in the Nagpur High Court in Shamjibhai v. Jagoo

Hernchand Shah (1). How much greater are the difficulties

when we do not know the exact words the parties used and

have to delve into the mind of a dead man (Tarak) through

the impressions of an interested witness given some thirteen

years after the event.

I find it difficult to accept this version and consider

it would be dangerous to do so, particularly when the

(1) I.L.R. 1949 Nag. 381 at 586-588, and 598

25

190

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witness is a hesitant and reluctant one, as his examination

discloses, and even evasive on some points; also when the

defendants have deliberately withheld from the Court assist-

ance which it was in their power to render--I refer to the

absence of Naku, the only other person present, from the

box. I am unable to accept this testimony.

Nor is this the only point. Despite the insistence of

the witness that the parties were on good terms and trusted

each other, the fact remains that Tarak found it necessary

to institute a suit for partition against his brothers and

fight it to a finish. They were not able to arrange matters

amicably. it was suggested in argument that was probably

because of creditors who could not be persuaded to agree and

it was pointed out that creditors were joined in the suit,

but that is not wholly convincing particularly when it is

admitted that Tarak was insisting on writing and regis-

tration.

It is evident that he, at any rate, was not prepared

to leave matters as they were and trust to the good faith of

his brothers.

Now we know that Tarak was in Calcutta about three

months after the date of the alleged agreement. We also know

that Kedar was most anxious to have such an agreement, for

he tells us so. He tells us further that there was before

them a rough draft of the terms. That document was produced

in Court. But the draft was neither signed nor initialled.

The only inference I can draw from these facts is that Tarak

either refused to agree or had not made up his mind. The

figures put forward by the defendants were contested on

behalf of the plaintiff and we were given an alternative set

of figures which in turn were contested by the other side,

but they were enough to show that the matter is not as

straightforward or as simple as the defendants would have us

believe. Therefore, Tarak's inaction during the three

months and the omission of either side to initial the draft

point clearly, at the lowest, to hesitancy on Tarak's part.

It may be he wanted his lawyers to examine his position or

it may be he refused to have anything to do with it.

191

It is just possible that there were negotiations, but on

those broad facts I am not prepared to believe the witness

when he tells us, or rather suggests, that the parties

reached finality. It would in any event be dangerous to

believe a witness in circumstances like this. But when the

defendants deliberately withheld from the Court that assist-

ance which is its due I can only conclude that their case

was too shaky to stand further proving. On these broad

grounds alone I would hold that the agreement is not proved.

Much was made in argument about the rule regarding the

weight to be given to the estimate of the judge who saw and

heard a witness. I do not doubt the soundness of the rule

but it can be pushed too far as their Lordships of the

Judicial Committee pointed out in Virappa v.

Periakaruppan(1). In the present case, the learned Judge

who tried the case believed Kedar not because of his demea-

nour but because the learned Judge considered that his story

was inherently probable. That, however, is a matter which

the learned appellate Judges were in as good a position to

appreciate as the learned trial Judge. If probability is to

be the test, then the conduct of Tarak suggests that it is

very improbable that he could have agreed.

That leaves at large the nature of the relief to which

the plaintiff is entitled. In the view I take, there being

no contract to the contrary, the plaintiff's only remedy is

under section 92 of the Transfer of Property Act read with

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section 82. The question is, has his suit been so framed ?

The plaintiff has claimed separate personal reliefs

against the defendants. As there is no personal covenant as

between the mortgagors or any "contract to the contrary",

that relief' cannot be granted.

The plaintiff has also asked for a declaration of charge

and for a decree under Order XXXIV, Civil Procedure Code.

The declaration of charge standing by itself is superfluous

although Order XXXIV, rule 2 (1) does require that the

decree in a mortgage suit shall

(1) A.I.R. 1945 P.C. 35 at 37.

192

"declare the amount so due" at the date of the decree. But

reading the two reliefs together, I am of opinion that

though the claim is inartistically worded the plaintiff has

in substance asked for a mortgage decree up to a limit of

Rs. 40,253-11-10 with interest against each defendant. No

other kind of decree could be given under Order XXXIV.

Therefore, though he has not used the word "subrogation" he

has asked in substance for the relief to which a subrogee

would be entitled under the Transfer of Property Act.

I would be slow to throw out a claim on a mere techni-

cality of pleading when the substance of the thing is there

and no prejudice is caused to the other side, however clum-

sily or inartistically the plaint may be worded. In any

event, it is always open to a court to give a plaintiff such

general or other relief as it deems just to the same extent

as if it had been asked for, provided that occasions no

prejudice to the other side beyond what can be compensated

for in costs.

In the circumstances, in the absence of agreement be-

tween the parties as to the figures, I would remand this

case to the High Court for (1) an enquiry regarding the sum

paid by the plaintiff's father for satisfaction of the

mortgage dated the 12th June, 1936, (2) for the interest due

on that sum at the contract rate in the mortgage from the

date of payment to the date of decree, (a) lot the values of

the various properties mortgaged at the date of the mort-

gage.

When the figures are ascertained, I would direct that

the liability of each defendant be ascertained separately in

the manner prescribed by section 82, Transfer of Property

Act.

In. the event of this liability exceeding Rs.

40,253-11-10 with interest against either defendant, I would

direct that his liability be reduced to Rs. 40,253-11-10

plus interest.

When these figures are ascertained, I would direct that

a mortgage decree for sale be drawn up in the usual way

affording either defendant the right to redeem the whole of

the balance of the property

193

(excluding the plaintiff's) for the aggregate sum due as

above and, in default of payment, limiting the liabilities

of each item of property to the sum rateably due on it under

section 82.

On the question of costs. The plaintiff repudiated

section 82 in the course of the arguments before us and

rested his case on section 43 of the Contract Act, nor did

he clearly and unmistakably plead a case of subrogation in

his plaint even in the alternative. The defendants, on the

other hand, set up a case which has failed on the facts. I

would, therefore, direct each side to bear its own costs in

this appeal.

As regards the costs incurred in the Courts below and

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any costs which may be necessitated by a further enquiry,

they will be determined according to the final result of the

litigation and with due regard to all matters bearing on the

question of costs.

FAZL ALI J.--I agree.

Case remanded.

Agent for the appellant: M.S.K. Sastri.

Agent for the respondent: Ganpat Rai.

Reference cases

Description

Supreme Court on Contribution Between Co-Mortgagors: A Definitive Analysis of Kidar Lall Seal v. Hari Lall Seal

The Supreme Court of India's judgment in Kidar Lall Seal and Another v. Hari Lall Seal (1951) remains a cornerstone ruling on the principle of contribution between co-mortgagors. This seminal case, extensively cataloged on CaseOn, provides a conclusive interpretation of the relationship between the Indian Contract Act, 1872, and the Transfer of Property Act, 1882 (TPA), establishing a clear hierarchy of laws that governs the liabilities of parties in a joint mortgage.

Background of the Dispute

The case stemmed from a complex family financial arrangement. Three brothers, Tarak, Kedar, and Naku, jointly executed a mortgage for Rs. 80,000. This amount was primarily used to settle pre-existing, separate debts, with each brother benefiting to a different extent. Subsequently, the mortgagee enforced the debt, and the entire mortgage was satisfied by selling a property belonging exclusively to the plaintiff, Hari Lall Seal (son of Tarak).

Hari Lall then sued his uncles, Kedar and Naku, seeking contribution for the amount he had overpaid. The central legal battle was not over the liability to contribute, which the defendants admitted, but over the method of calculating their respective shares. The plaintiff argued for equal contribution, while the defendants claimed their liability should be proportionate to the actual benefit each had derived from the loan, alleging a specific oral agreement to this effect.

Legal Analysis: The IRAC Framework

Issue: The Core Legal Question

The Supreme Court was tasked with determining the precise legal principle for calculating contribution among co-mortgagors. The key issue was:

Which law governs the liability of contribution between co-mortgagors? Is it Section 43 of the Indian Contract Act (mandating equal contribution), the equitable principle of benefit received, or the specific provision under Section 82 of the Transfer of Property Act (mandating contribution based on property value)?

Rule: The Competing Statutory Provisions

The Court had to reconcile two key statutory provisions:

  • Section 43, Indian Contract Act, 1872: This is a general provision concerning joint promisors, stating that they must contribute equally to the performance of a promise unless a contrary intention appears in the contract.
  • Section 82, Transfer of Property Act, 1882: This is a special provision that specifically deals with mortgages. It dictates that where a mortgaged property belongs to multiple owners, their respective shares are liable to contribute “rateably” to the mortgage debt based on the value of their shares, in the absence of a “contract to the contrary.”

Analysis: The Supreme Court’s Reasoning

Justice Vivian Bose, delivering the judgment, systematically dismantled the arguments presented and laid down a clear legal precedent.

Special Law Overrides General Law

The Court's primary line of reasoning was the well-established legal maxim, Generalia specialibus non derogant (general provisions do not derogate from special ones). It held that while Section 43 of the Contract Act provides a general rule for all joint contracts, Sections 82 and 92 of the Transfer of Property Act are special laws specifically enacted to govern the rights and liabilities arising from a mortgage transaction. Therefore, the specific provisions of the TPA must prevail over the general provisions of the Contract Act in matters of mortgage contribution.

Rejection of Extrinsic Equitable Principles

The Court firmly rejected the notion of applying equitable principles to determine liability based on the benefit derived by each party. It reiterated the position that in India, where the law of mortgage is codified, statutory provisions must be given full effect. The Court observed, "it is not proper to introduce into the matter extrinsic principles based on equitable considerations." The statute itself provides the default rule, and if parties wish for a different arrangement (like contribution based on benefit), they must explicitly create a "contract to the contrary."

Distinguishing between general and special laws is a nuanced task that requires deep legal understanding. For legal professionals looking to quickly grasp the core arguments in rulings like this, the 2-minute audio briefs on CaseOn.in offer a powerful tool to distill complex judicial reasoning into concise, actionable insights, saving valuable time in case preparation.

The Alleged “Contract to the Contrary”

The defendants had pleaded an oral agreement to vary the statutory rule. The Supreme Court, agreeing with the High Court appellate bench, found the evidence for this agreement to be weak and unreliable. The testimony of a single, interested party nearly thirteen years after the event was deemed insufficient, especially given the history of litigation among the brothers. This part of the judgment underscores the high burden of proof required to establish a “contract to the contrary” that displaces a clear statutory mandate.

Conclusion of the Court

The Supreme Court concluded that the right to contribution between co-mortgagors is governed exclusively by Section 82 of the Transfer of Property Act. In the absence of a proven contract to the contrary, the liability is not equal nor is it based on the benefit received. Instead, co-mortgagors are bound to contribute proportionately to the value of their respective properties that were part of the mortgage. The court, therefore, remanded the case to the High Court to ascertain the property values and calculate the liabilities on this basis.

Final Summary of the Judgment

In essence, the Supreme Court held that Section 82 of the TPA creates a statutory liability based on the value of the security offered by each co-mortgagor. This liability attaches to the property itself and is the default rule unless the parties have expressly agreed otherwise. The Court dismissed technical objections regarding pleadings, affirming that it is the duty of the court to apply the correct law to the facts presented. The case was sent back for a mortgage decree for sale to be drawn up, limiting each defendant's liability to the rateable sum due on their properties.

Why This Judgment is an Important Read for Lawyers and Students

  • For Lawyers: This case is a crucial authority on the interplay between contract and property law. It highlights the critical importance of drafting clear and unambiguous terms in mortgage deeds, especially in multi-party transactions. Any deviation from the default rule of rateable contribution under Section 82 must be explicitly documented as a “contract to the contrary” to be enforceable.
  • For Law Students: Kidar Lall Seal is a textbook example of the application of the rule of statutory interpretation where a special law excludes a general one. It also serves as an excellent illustration of how Indian courts prioritize codified law over abstract equitable principles, a fundamental concept distinguishing the Indian legal system from purely common law jurisdictions.

Disclaimer: This article is for informational and educational purposes only and does not constitute legal advice. For advice on any specific legal problem, please consult with a qualified legal professional.

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