Sasthi Kinkar Banerjee vs Panchanan Das

Lahiri, J.—This appeal which raises an interesting question as to the interpretation of Section 82, Transfer of Property Act, has been brought by the Defendant against concurrent decrees made against him in a suit for contribution u/s 82, Transfer of Property Act. The facts which are undisputed are as follows:

One Shib Chandra Das mortgaged 10 items of property to secure a loan advanced by one Ram Ranjan Hati. After the mortgage, lot No. 1 was sold to the Plaintiff for Rs. 500, lot No. 2 to the Defendant for Rs. 700, lots 7 and 8 were sold away in a rent and revenue sale and lots Nos. 9 and 10 were sold to one Kalidas Das (pro forma Defendant No. 2) and Hari Prosad Dutt (pro forma Defendant No. 3) for Rs. 150 each. In execution of the mortgage decree, the mortgage in the first instance brought lots Nos. 3 to 6 to sale in Title Execution Case No. 73 of 1944 and realised a sum of Rs. 2,028 in partial satisfaction of his claim and then applied for sale of the remaining lots 1, 2, 9 and 10, which as I have already said passed to the Plaintiff, Defendant- Appellant and pro forma Defendants 2 and 3 and the executing court ordered the properties to be sold one after another. In order to protect his own property, viz., lot No. 1, from sale the Plaintiff deposited a sum of Rs. 1,014-6-9 in the executing court whereupon the execution case was dismissed on full satisfaction. The Plaintiff then brought the present suit for contribution against lot No. 2 owned by the Defendant. In decreeing the suit, both the courts below have taken the value of lot No. 1 as Rs. 500, lot No. 2 as Rs. 700 and lots Nos. 9 and 10 as Rs. 150 each. Lots Nos. 3 to 6 which were sold in execution of the mortgage decree and lots Nos. 7 and 8 which were sold away in rent and revenue sale have not been valued at all and the amount to which lot No. 2 has been held liable to contribute is Rs. 1,014-6-9. No decree has been passed against lots Nos. 9 and 10 held by pro forma Defendants 2 and 3 because the Plaintiff alleged in his plaint that pro forma Defendants 2 and 3 had paid their proportionate contribution to the Plaintiff. There was some controversy between the parties as to the values of the different lots at the date of the mortgage, but the values, as stated above, have been found to be the true values by both the courts below and have not been challenged before us. The principle upon which the Plaintiff''s suit has been decreed by the courts below, therefore is this:

Value of lot No. 2 at the date of the /mortgage The balance of the mortgage debt that X remained unsatisfied after the sale in execution of the mortgage decree.

Such value of all the properties that were ex ded from the sale in execution of the mortgage decree." i.e.,700/1,500,X1,041-6-9. It may be mentioned that the total dues of the mortgages under the decree ex. 11 = Rs. 3,048.

It is the legality of the aforesaid principle that is challenged before us on the ground that it is not warranted by Section 82, Transfer of Property Act.

After hearing learned advocates on both sides it seems to me that the first question that arises for consideration in this appeal is: what is the point of time at which the liability of the different mortgaged properties to contribute to the debt secured by the mortgage arises? Does it arise on the date on which a redeeming co-mortgagor pays more than the proportionate share of his liability or on the date of the execution of the mortgage or the date when the ownership of the different lots passes to different persons? The language of Section 82 indicates that the liability to contribute arises as soon as the ownership of the mortgaged property passes to different individuals. The property which is subject to. mortgage may belong to different persons at the date of the mortgage and the different co-owners may join in executing the mortgage or the property which was at the date of the mortgage under the ownership of a single individual may come to be owned by different persons by succession, partition and assignment. In the former case the liability to contribute attaches to the different shares from the very date of the mortgage and in the latter case the liability attaches on the date of succession, partition and assignment. This liability becomes enforceable under the law whenever a co-owner has paid more than his proportionate share of the liability. It is in my opinion, a mistake to suppose that the liability to contribute arises only when a co-owner has paid more than his share. The liability is already there and it can be enforced only when one co-sharer has paid more than his proportionate share of the debt secured by the mortgage. On the happening of that contingency the liability of the different mortgaged properties held under different ownership has to be worked out by reference to the point of time when the ownership of the different items of mortgaged property passed to different individuals.

A desperate attempt has been made before us by the learned advocate appearing for the Respondent to establish that by paying a part of the mortgage debt in full satisfaction of the mortgage decree the Plaintiff was subrogated to the position of the mortgagee u/s 92 of the Transfer of Property Act and, therefore, his right arose on the date on which he made the deposit, and the liability of lot No. 2 held by the Defendant must be worked out by reference to date on which he made the deposit. On a perusal of the plaint however, I am satisfied that the Plaintiff based his claim entirely upon Section 82 and there is no averment anywhere in the plaint that he was enforcing his right of subrogation nor was any such case put forward on his behalf in either of the courts below. In paragraph 6 of the plaint the Plaintiff alleges that on account of the deposit made by the Plaintiff the properties belonging to the principal Defendant and pro forma Defendants 2 and 3 were saved from auction sale and therefore, those properties are liable to contribute proportionately. In schedule (Kha), the Plaintiff works out the proportionate liabilities of lots 1, 2, 9 and 10 and asserts that lot No. 1 belonging to himself is liable for Rs. 522-6-3, lot No. 2 belonging to the Defendant is liable for Rs. 731-5-6 plus Rs. 102-11 as interest, lot No. 9 for Rs. 78-5-6 and lot No. 10 for Rs; 78-5-6. The prayers made are for a declaration of a charge for Rs. 731-5-6 plus Rs. 102-11 on lot No. 2 in the alternative for declaration of a charge for any other amount that might be found due and for a final decree for sale of lot No. 2 on the Defendant''s failure to pay the amount within a specified period. In a suit to enforce the right of subrogation a declaration of charge for the proportionate liability of a particular lot is unthinkable and the working out of the proportionate liability of the different lots is also equally unthinkable. u/s 92 a redeeming co-mortgagor''s right is a right to recover "in solidum" from all other mortgagors whereas u/s 82 he must split up his claim into a claim against each of the different lots. Section 82 defines the liability of co-mortgagors inter se and Section 92 gives a redeeming co-mortgagor all the rights of the mortgagee as regards redemption, foreclosure and sale of the mortgaged property. In a suit to enforce a right of subrogation u/s 92 the working out of the proportionate liabilities of the principal Defendant and pro forma Defendants 2 and 3 would be wholly out of place. I accordingly hold that upon the claim made by the Plaintiff in his plaint any reference to Section 92, Transfer of Property Act, is wholly misconceived. The rights of the parties in the present case must be determined upon Section 82 alone. For this reason I find it unnecessary to consider any of the case cited by Mr. Grhose on the principle of subrogation.

On a plain construction of Section 82 it seems to me that there are two fallacies in the principle upon which the courts below made a decree in favour of the Plaintiff. In the first place, the mortgage debt to which lot No. 2 is liable to contribute is not the balance that remains after partial satisfaction of the mortgage decree, but the entire debt secured by the mortgage. The expression "debt "secured by the mortgage" in Section 82 does not mean the balance of the debt that remains after partial satisfaction, but the total debt secured by the mortgage. If the legislature had intended that the right of contribution would be available in respect of a part of a mortgage debt the expression in Section 82 would have been "the whole "or any part of a debt secured by the mortgage" instead of "debt "secured by a mortgage" which has been actually used. Moreover the liability to contribute u/s 82, Transfer of Property Act, attaches to a property as soon as the ownership of the different properties passes to different hands and the liability has to be determined by reference to that point of time. There can be no question in the present case that lot No. 2 was sold to the Defendant before the institution of the mortgage suit and the liability of lot No. 2 to contribute arose on that date and it is that liability that is to be enforced by a suit u/s 82. This ground alone is sufficient for discharging the decrees made by the courts below.

There is, however, still another reason for which the decrees cannot be sustained. Contribution u/s 82 is not in the ratio of the value of each of the properties which was excluded from the mortgage sale to the value of all the properties which were 80 excluded but is the ratio of the value of each of the mortgaged properties to the value of all the mortgaged properties at the date of the mortgage. In order to determine the liability to contribute the question which of the properties were sold at the mortgage sale has to be left on one side because, as I have already said, the liability to contribute arises not after the mortgage sale but attaches to the different lots as soon as they pass to different persons. With regard to lots 7 and 8 which were sold at rent and revenue sales, it may be that the mortgage security was completely extinguished and the mortgagee lost his right to bring those properties to sale and in that case the burden on the remaining lots would increase and the value of those lots on the date of mortgage would not be added to the value of the remaining lots in determining the ratio of contribution; and it appears in this case that the mortgagee did not obtain any decree for sale in respect of lots 7 and 8. In this case, however, it is not necessary to pursue the question further, because the courts below have excluded from consideration not only lots 7 and 8 but also lots 3, 4, 5 and 6 which were sold in execution of the mortgage decree. The courts below have held that lots 3 to 6 having already contributed to the satisfaction of the mortgage decree it would be preposterous to make them liable to contribute for the second time. This decision is open to a twofold objection. In the first place, as I have already said, liability to contribute arose not after the sale held in execution of the mortgage decree but at the time when ownership of lot No. 2 passed to the Defendant and the liability must be determined by reference to the state of things prevailing on that date. In the second place, lots 3 to 6 will not be made liable to contribute over again in this suit, but only their value will be taken into account in determining the proportionate liability of lot No. 2. Though the Plaintiff''s right to sue for contribution arises on the date he made the deposit, the liability that he can enforce is the liability which attached to lot No. 2 when it was purchased by the Defendant. In my opinion, both the courts below committed an error of law in proceedings on the footing that the liability of lot No. 2 should be ascertained on the state of things which prevailed on the date the Plaintiff made the deposit, The proportionate contribution of lot No. 2 should be determined according to the following ratio:

Value of lot No. 2 at the date of the mortgage./ Value of all the lots on that date excluding lots 7 and 8. X Total dues under the mortgage.

Mr. Mookerjee relied upon the decision of the Supreme Court in the case of Kidar Lall Seal and Another Vs. Hari Lall Seal, . In that case in the illustration given by his Lordship Bose, J. three properties Black acre (valued at Rs. 0,000), White acre (valued at Rs. 20,000) and Green acre (valued at Es. 10,000) belonged to three persons A, B and C respectively, all of whom executed a mortgage of those properties to secure a loan of Rs. 10,000 which had swollen to Rs. 15,000 at the date of redemption. This debt was redeemed by A alone by selling his property Black acre and the question arose on what principle should the proportionate liability of the remaining two properties be determined. His Lordship considered three alternative solutions and found that u/s 82, Transfer of Property Act, the remaining properties were liable proportionately to their value, i.e., White acre was liable for 20,000/60,000=1/3 and, Greenacre for 10,000/60,000=1/6 of the mortgage debt. The remaining two solutions, viz., equal liability of the three properties and liability to the extent of the benefit received which was described as equitable principle, were ruled out. This case certainly establishes the principle that in construing Section 82, Transfer of Property Act, we must not take into account equitable considerations nor the principle embodied in Section 43 of the Contract Act, but must give full effect to the provisions of Section 82, Transfer of Property Act. It is to be noticed that in this decision Bose, J. took into account the value of Black acre owned by A, which had been sold by him to redeem the mortgage, for the purpose of determining the proportionate liability of White acre owned by B and of Green acre owned by C. Therefore, in determining the proportionate liability of each of the properties the value of that property has to be divided by the value of all the mortgaged properties irrespective of the question which of them has been sold for the redemption of the mortgage. This decision undoubtedly supports the ratio which I have indicated above. If the decree passed by the courts below were right the proportionate liability of White acre and Green acre in the illustration given by Bose, J. would be 20,000/60,000 - 30,000=20,000/30,000=2/3 AND 10,000/60,000 - 30,000=1/3 respectively. Therefore, it follows that the value of the properties that were sold for the redemption of the mortgage cannot be excluded in ascertaining the proportionate liability of the rest.

Gtjha, J.

I agree.

August 8, 1957:

Lahiei, J.

The question of law argued in this appeal was decided by us on May, 29, 1957, but in order to avoid a remand we had to send for further records so that we might calculate the liability of the Appellant upon the materials on the record. Those records have now been sent up to this Court and from those records we find that the both the courts below valued the lot No. 1, lot No. 2, lot No. 9 and lot No. 10 on the basis of a solemn affirmation made by the decree-holder on January 4, 1945. According to that affirmation which has been accepted by both the courts below, we find that the valuation of all the lots is as follows:

Rs.

Lot No. 1 ... ... 500

Lot No. 2 ... ... 700

Lot No. 3 ... ... 1,000

Lot No. 3 ... ... 5

Lot No. 3 ... ... 5

Lot No. 3 ... ... 5 and

Lots Nos. 9 and 10 ... ... 150 each

As this valuation has been accepted by the courts below, and as that valuation has not been challenged in appeal before us, we shall be justified in accepting that valuation for the remaining lots as well. It is admitted before us that the total dues of the decree- holder under the mortgage decree is Rs. 3,407. According to the principle of valuation which has been accepted by us in our judgment dated May 29, 1957, the liability of the Appellant will be Rs. 700/Rs. 2515*3,407, and working out this sum, the liability of the Appellant is found to be Rs. 948-4. The decree made against the Appellant, however, by the courts below, was only for a sum of Rs. 749-4-7. As a result of the argument that has been advanced before us, the liability of the Appellant increases by about Rs. 200 but since the Respondent has not filed an appeal or any cross- objection against the decree made by the courts below, we shall not be justified in increasing the liability of the Appellant on his own appeal.

The result, therefore, is that although the Appellant succeeds on the point of law, argued by him, the appeal must be dismissed on the merits. We should, however, like to make it clear, that u/s 82 of the Transfer of Property Act, there can be no personal liability against the Appellant, because the liability attaches only to lot No. 2.

In the result this appeal is dismissed with costs to the Respondent.

Gtjha, J.

I agree.