Kunchithapatham Pillai vs Palamalia Pillai (deceased) and Others

The owner of the properties was one Murugappa Pillai. He mortgaged them to one Krishnachariar in 1895. In September 1897, he sold some

of the properties com. prised in the mortgage to one Kunjithapatham with a direction to pay Krishnachariar, the mortgagee, Rs. 1,200. A portion

of this amount was paid, but a good portion remained unpaid. In October, some other properties also included in the mortgage, were sold to one

Duraisami, with a direction to pay Rs. 460 and odd to the mortgagee, the deed also containing a covenant to clear off prior mortgages. This was

not paid, The remaining properties comprised in the mortgage were sold to Rajagopal and others and they were asked to pay the mortgagee Rs.

2,000 and odd. This sale deed is not before us on appeal, but it is admitted that there is no assignment or specific covenant in favour of the

purchaser on which he"" can rely for the purpose of this suit. The mortgagee sued Murugappa Pillai and the three aliences among others on the

mortgage. Kunjithapathim and Duraisami entered into a compromise with the plaintiff regarding the amounts payable by them. Rajagopal (we shall

call the third party by this name, although there are others who have equal interest with him) was no party to this compromise. The decree in the

suit was for Rs. 3,000 and odd, and it directed that out of the said amount Duraisami should pay Rs. 500, Kunjithapatham Rs. 1,000, that in

default their properties should be sold for the amounts specified, and that for the balance the other properties which were in the possession of

Rajagopal and others should be sold. Rajagopal had to pay a considerable sum, as he was the largest purchaser. This suit is by his heirs for

contribution. It was found by the District Munsif and not disputed before us, that both Duraisami and Kunjithapatham paid under the decree the

portion of the debt which would have been chargeable on the properties purchased by them, if there were no directions to them to pay particular

sums. The plaintiff''s base their suit on the allegation that as both Duraisami and Kunjithapatham undertook to discharge a specific portion of the

mortgage debt, and as their failure to pay the amount within the time mentioned by the mortgagor increased the amount due to the mortgagee, their

liability should not be calculated upon the value of the properties purchased by them, but upon the quantum of the liability undertaken by them at

the direction of the mortgagor. The District Munsif dismissed the suit. On appeal, the District Judge relying on Sections 69 and 70 of the Indian

Contract Act decreed the claim. Duraisami and Kunjithapatham preferred separate appeals to this Court.

The question has been agreed with great ability before us, and the arguments covered a very wide ground of the law of mortgages. We think the

solution has to be found in the Transfer of Property Act and not in the English cases quoted at the bar.

The liability to rateable contribution of properties mortgaged in the first instance and sold subsequently in lots to different persons is imposed by

the Transfer of Property Act. The legislation may have been based on equitable grounds; but its limits are prescribed by the statute. In the second

clause of Section 82, the liability is denned in a particular way, ""in the absence of a contract to the contrary."" Now, ""this contract to the contrary

can only be between the parties who are liable to contribute. That is the plain meaning of the section. See also the observations in Ramabhadrachar

v. Srinivasa Aiyangar ILR (1901) M. 85. Mr. Venkatarama Sastriar in his very able argument referred us to certain English decisions to the effect

that a contract as between the mortgagor and the purchaser of a portion of the property is within the meaning of the expression ""contract to the

contrary."" We are unable to accept this contention. We shall have a word to say about the English authorities later on; but before doing so, we

shall deal with the sections of the Act.

u/s 55, Clause 4(b), the vendor has a lien for the unpaid mortgage money over the properties sold. This lien, it was held in a recent Full Bench

ruling of this Court Subramania Iyer v. Sivasubramania Iyer ILR (1916) M. 997 : 31 M.L.J. 530 is not lost by the direction given by the vendor to

pay the mortgagee or any other third party. This right can be transferred, if the vendor executes a proper conveyance in this behalf. But until such a

transfer is made, the right inheres in the vendor and in him alone. A subsequent purchaser from him cannot acquire this right by the mere fact of his

purchase. The Transfer of Property Act has prescribed the mode by which such transfers can be effected and in our opinion, there is no room for

the applicability of equitable considerations when the legislature has enacted specific rules.

Mr. Venkatarama Sastriar''s contention, if accepted, must lead us to hold that when the vendor sells a portion of the property with direction to

pay a portion of the mortgage debt, the mortgage debt to that extent is extinguished. This would violate the principle that it is open to the

mortgagee to sell any portion of the mortgaged property to recover the amount due to him. The learned Vakil argued that when the owner directed

the purchaser to pay a certain amount, he impliedly transferred his right of lien to the second purchaser. There are some decisions which lend

support to this contention. In Bute (Marquis of) v. Cunynghame (1826) 2 Russ. 275 : 38 E.R. 339, Lord Eldon said : ""But may not a man make a

mortgage of two estates in such a way, that though the incumbrancer may go against both or either, yet if the owner of the equity of redemption

shall have created in the meantime, two different titles to those estates, so that they shall go to different persons, the estate, which was the primary

security, shall remain the primary security, as between the persons claiming under that mortgagor"" This is the passage very strongly relied on; but

towards the close of the judgment, the Lord Chancellor said : ""Taking the whole of this transaction together, and without venturing to lay down any

general principle, it is my opinion, that, in this case, there is no right to that contribution towards satisfaction of the mortgage, which is prayed by the

bill."" This was a case of voluntary settlement, and the question was whether persons claiming under the settlement were not bound by the directions

of the settlor. No question of legal rights to contribution arose in the case. That this case enunciated no general principle is pointed out by Jessel,

M.R. in Leonino v. Leonino (1879) 10 Ch. D. 460. Chitty, J. in In re Dunbp; Dunlop v. Dunlop (1882) 21 Ch. D. 583 stated : ""The proposition

has been stated (and I think not incorrectly) that the right of contribution arises where there are two properties available in equity for the debt, of

course in equal degree. It is quite clear that either by special agreement to be found in the instrument creating the mortgage itself, or by declaration

on the part of the testator, he can, where two or more properties are comprised in the same security, direct the order in which the securities are to

be applied inter se so as to make one the first and another the second, and so forth, available for the purposes of the charge."" There can be no

doubt that the special agreement referred to by the learned Judge is one which binds the mortgagee and is embodied in the deed of mortgage. The

reference to the declaration of the testator, indicates that a volunteer must accept the gift with obligations annexed to it. We do not think these

cases support the proposition that by the mere fact of the subsequent purchase, the purchaser gets an implied transfer of the undertaking given to

the vendor by the 1st purchaser. On the other hand, in Fisher on Mortgages, paragraph 1347, the law is stated as we find it in the Transfer of

Property Act.

Turning to the Indian Cases relied on in the argument, Mothuranath Chuttopadhya v. Kristokumar Ghose ILR (1878) C. 369 is against the

position contended for by the respondent. That case was before the Transfer of Property Act. Dr. Rash Behary Ghose doubts the correctness of

the decision, presumably on the dictum of Lord Eldon in Bute (Marquis of) v. Cunynghame (1826) 2 Russel. 275 . The decision in Muhammad

Abbas v. Muhammad Hamid (1911) 9 A.L.J. 499 is under the Transfer of Property Act. The learned Judges, correctly (if we may say so, with

respect) lay down that the contract between the vendor and one of the purchasers would not amount to a contract to the contrary u/s 82; but they

proceed to say, ""If the defendants are entitled to resist the claim for rateable contribution it must be on equitable grounds or because the benefit of

the agreement has been assigned to them."" We agree that if the benefit of the agreement was expressly assigned in a form which the law requires, a

valid defence may be raised. But we are unable to accede to the introduction of equitable grounds on a question settled by the legislature. If there

is no contract to the contrary, the provisions of the law must be given effect to.

So far we have been dealing with a question on which there is no authority in the decisions of this Court, Mr. Venkatarama Sastriar''s second

contention involves an examination of two decisions of this Court. The contention is that notwithstanding Section 82 of the Transfer of Property

Act, the liability has to be ascertained with reference to Sections 69 and 70 of the Indian Contract Act. Very recently, the Chief Justice and

Srinivasa Aiyangar, J., held that these sections of the Contract Act do not affect the claim for contribution under S, 82 of the Transfer of Property

Act, Sree Rajah Simhadri Jagapatiraju v. Sree Rajah Dakshina Kavata Dugaraju (1915) 29 M.L.J. 639. We agree with that conclusion. In

Muthurakku Maniagaran Vs. Rakkappa Maniagaran and Others, Mr. Justice Sadasiva Aiyar rested the claim for contribution on Sections 69 and

70 of the Contract Act. Mr. Justice Miller who took part in the decision based his conclusions on other grounds. It may be pointed out that no

argument seems to have been addressed to Mr. Justice Sadasiva Aiyar on Section 82 of the Transfer of Property Act. Further, in the case before

the learned Judge, apart from the Transfer of Property Act, there was some ground for saying that one man paid what the other was bound to pay.

To our mind, the obvious inapplicability of the Contract Act sections arises from the consideration that the plaintiff in this case cannot be said to

have paid anything which the other was ""bound by law to pay"". What is intended is a contractual obligation and not a legal one. It is argued that a

person is bound by law to pay his contracted debts; and in one sense this is true; but we are inclined to think that that it is not what was intended

by the section. The illustration seems to indicate the class of liability covered by the section; and it has been very recently held by the Privy Council

in Mahomed Syedol Ariffin Bin v. Yeoh Ooi Gark (1916) L.R. 43 IndAp 256 : 20 C.W.N. 786 in an appeal from the decision of the Supreme

Court of the Straits. Settlements in construing Section 32, Clause 5 of the Evidence 4ct that the illustrations to a section are a guide to the intent of

the legislature. It is on this ground that the decisions of this Court which refused relief to a man in whose name pattah btands and who has been

compelled to pay the revenue which the person in enjoyment ought to have paid, rest. See Boja Sellappa Reddy v. Vridhachala Reddy ILR

(1906) M. 35 : 16 M.L.J. 569. One other distinction between the present case and that decided by Sadasiva Aiyar, J., may be pointed out. In the

latter there was a personal liability under the decree. We therefore see no reason for resorting to Sections 69 and 70 of the Contract Act. Even if

the application of Section 69 is not limited as we suggest, it could not, in our view, assist the respondent, because all the assignors of the

mortgaged property are equally bound to pay the mortgage debt and we cannot agree with the contention that any equities between co-obligors

would make any one of them the less ""bound by law to pay"" the mortgagee.

Mr. Ramachandra Aiyar rested his case, also on the decision in Satya Kripal Bandopadhya v. Gopi Kishore Mandul (1902) 6 C.W.N. 583,

and contended that whatever may have been the rights under the purchase the decree worked a merger of those rights : and that parties claiming

rights under that decree are not bound by previous obligations. In the case relied on, the auction purchaser was held disentitled to fall back on

rights which existed before the decree. We do not think the position of the plaintiffs is analogous to that of an auction purchaser.

In the view we take, and on the finding of the District Munsif not impeached in this Court that the appellants paid the amount proportionate to

the value of the properties in their possession, the appeals must be allowed and the suits as against them must be dismissed with costs in all the

Courts.