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1930 Supreme(SC) 27
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD TOMLIN, SIR GEORGE LOWNDES, AND SIR BINOD MITTER
GANESHI LAL - Appellant
Versus
CHARAN SINGH - Respondents
On appeal from the High Court at Allahabad.
Decided On : Mar. 13. 1930.
Solicitor for appellant: H. S. L. Polak.
Solicitors for respondents: Douglas Grant & Dold.
Section 82 of the Transfer of Property Act, 1882, governs rateable contribution between owners of properties subject to a common mortgage. Such statutory rights cannot be modified by extrinsic contracts to which the contributing party was not a party and whose benefit did not pass to them.
Headnote:(A) Transfer of Property Act, 1882 - Section 82 - Right of contribution - Where several properties are mortgaged to secure one debt, such properties are liable to contribute rateably to the debt secured by the mortgage in the absence of a contract to the contrary - Statutory provision governs the contribution between owners of equities of redemption subject to a common mortgage.
(B) Contractual obligations - A contract between a vendor and a purchaser to apply purchase money toward discharging a mortgage does not bind a third party who purchases another property subject to the same mortgage - Such a contract cannot be used as an extrinsic principle to modify the statutory right of contribution under Section 82 unless the benefit of the contract passed to the party from whom contribution is sought.
Facts of the case:
Two properties were mortgaged to secure a single debt. One property was sold to a purchaser who agreed to use part of the purchase price to discharge the mortgage but failed to do so. The other property was sold in an execution sale subject to the same mortgage. Eventually, the purchaser of the first property paid off the mortgage in full and sued the purchasers of the second property for rateable contribution. The defendants argued that the plaintiff's failure to pay the mortgage earlier, despite having the funds, should preclude the claim for contribution.
Findings of Court:
The court found that the defendants purchased the property subject to the mortgage and paid a price based on that footing. They were not parties to the contract between the original owner and the plaintiff, nor did the benefit of that contract pass to them.
Issues: Whether a contract between a vendor and a purchaser to discharge a mortgage, which the purchaser failed to honor, precludes the right to seek rateable contribution under Section 82 of the Transfer of Property Act from other owners of properties subject to the same mortgage.
Ratio Decidendi: The statutory provisions of Section 82 of the Transfer of Property Act govern the right of contribution. It is improper to introduce extrinsic principles to modify these provisions. A party cannot claim the benefit of a contract to which they were not a party to avoid a statutory liability to contribute to a mortgage they purchased the property subject to.
Result: Appeal fails.
Legal Category Hierarchy
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property law
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transfer of property act
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mortgages
- right of contribution
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mortgages
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transfer of property act
Judgement
Appeal (No. 28 of 1929) from a decree of the High Court (February 11, 1927), reversing a decree of the Subordinate Judge at Aligarh (May 1, 1922).
The respondents, as representatives of one Sher Singh, sued the appellants for rateable contribution under s. 82 of the Transfer of Property Act, 1882, in respect of the sum paid by Sher Singh to discharge a mortgage upon certain villages.
The facts appear from the judgment of the Judicial Committee.
The High Court, reversing the decision of the trial judge, held that the plaintiffs were entitled to contribution. The learned judges (Mears C.J. and Lindsay J.) found that the purchase by Ganeshi Lal was not, as he contended, free from incumbrances, and held that he could not claim the benefit of the
Law. Rep. 57 Ind. App. 189 ( 1929- 1930)
Ganeshi Lal V. C haran Singh 48
contract of 1914 between Sher Singh and the mortgagor as he was not a party to it. For these reasons they held that Muhammad Abbas v. Muhammad Hamid (9 All. L. J. 499.) was distinguishable. [Reference was made also to Jamna Das v. Ram Autar Pande . (( 1916) I. L. R. 38 A. 209.)]
1930. March 13. Dube for the appellants contended that upon equitable principles the appellants were not liable to contribution in the circumstances of the case. [He referred to Transfer of Property Act, 1882, s. 55, sub-s. 5 (b) ; Jones on Mortgages, 6th ed., s. 743, cited in Seshagiri Aiyar v. Vythilinga Pillai (( 1909) I. L. R. 33 M. 211, 212.); and Muhammad Abbas v. Muhammad Hamid, (9 All. L. J. 499.)]
Subba Row for the respondents was not called upon.
The judgment of their Lordships was delivered by
LORD TOMLIN. This is an appeal from a judgment of the High Court of Judicature of Allahabad which reversed a judgment and decree of the Subordinate Judge of Aligarh.
In the suit the respondents, before their Lordships Board, being the representatives of the purchaser of one property (which may be called " K ") sued for contribution from the appellants, the purchasers of a second property (which may be called "M"), on the ground that the purchaser of K. had paid off a mortgage which covered both properties.
Now the section of the Transfer of Property Act which deals with the right of contribution is s. 82, and it is in these terms " Where several properties, whether of one or of several owners, are mortgaged to secure one debt, such properties are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage after deducting from the value of each property the amount of any other encumbrance to which it is subject at the date of the mortgage."
That is the statutory provision by which contribution as between owners of equities of redemption subject to a common mortgage is regulated.
The facts of this case are as follows. On November 8, 1906, the original owner of both properties created a mortgage for 8000 rupees in favour of one Mangal. On May 19, 1914, he purported to sell property K to Sher Singh, the ancestor of the respondents, for 33,000 rupees, and a sum of 32,000 rupees out of the purchase price was left with Sher Singh to enable him to discharge the mortgage of November 8, 1906, and other debts of the vendor, including certain debts for which creditors had already obtained decrees and had attached the properties. On May 21, 1914, property K was sold under a decree obtained by another creditor of the mortgagor before May 19, 1914. This sale was subject to Mangals mortgage and was for 1450 rupees. In July, 1914, the other property M was sold to the first appellant on behalf of himself and the second appellant in execution of a decree obtained by Kishin Singh, a creditor of the mortgagor before May 19, 1914. It was sold for 2900 rupees subject to Mangals mortgage. That sale constituted the title of the appellants to property M. The purchaser later on, on April 16, 1915, conveyed property K to Sher Singh. These sales, of course, overrode the sale to Sher Singh purported to have be
