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1942 Supreme(Mad) 216

IN THE HIGH COURT OF MADRAS
Chandrasekhara Ayyar, J.
Ghulam Asadullah Khan and Ors.
Versus
Mohamed Ali Khan and Ors.
Decided On : 16.07.1942

Headnote:

mortgage - distribution of estate - Transfer of Property Act - Section 69, Equity - indemnity - liability - default - surety - relief - decree

Fact of the Case:

The plaintiffs filed a suit against the defendants to make good their liability and the contract of indemnity by bringing their share of the amount due under the mortgage and thus save the plaintiffs from the harm of their properties being brought to sale by the Society.

Finding of the Court:

The court found that the suit was maintainable as the plaintiffs' properties were in danger of being brought to sale for the default of the defendants. The court also held that the defendants were to blame for the situation and directed them to pay up their share of the liability to the Egmore Benefit Society within three months or bring a specified amount into court in default.

Issues: The main issue was whether the suit was maintainable, with the defendants claiming that the action was premature and misconceived.

Ratio Decidendi: The court relied on the principles of equity and indemnity, holding that the surety was entitled to come to equity to compel the principal debtor to pay what was due from him, and that the relief to which the plaintiffs were entitled was in anticipation of any loss that may occur as a result of the defendants' default and breach of the contract of indemnity.

Final Decision: The court directed the defendants to pay up their share of the liability to the Egmore Benefit Society within three months or bring a specified amount into court in default, and made provisions for any loss that may occur as a result of the defendants' default and breach of the contract of indemnity. The plaintiffs were awarded taxed costs of the suit.

JUDGMENT

Chandrasekhara Ayyar, J.

1. This is a quia timet action by eight plaintiffs against three defendants, all of whom are the heirs and legal representatives of a gentleman called Madhi Hussain Khan, who died on 26th July, 1932, leaving a will under which he appointed the first plaintiff as the sole executor. The first four plaintiffs are the sons and plaintiffs 5 to 8 are the daughters of Madhi Hussain Khan. Defendants 1 and 2 arc his sons and the 3rd defendant is his widow. The first plaintiff obtained probate of his fathers will. On 10th July, 1933, he mortgaged a part of the estate, namely, houses bearing Nos. 50, 51, 51-A, 52 and 53, Peters Road, Royapettah, with the Egmore Benefit Society for a sum of Rs. 30,000 and paid off some debts due by the cstate. This mortgage in favour of the Society contained a power of sale under Section 69 of the Transfer of Property Act. Subsequently all the heirs entered into an agreement about the distribution of the estate and the discharge of their liabilities. Under this agreement plaintiffs 2 to 8 were to take houses Nos. 50, 51, 51-A and 53, Peters Road, Royapettah and were liable to the Egmore Benefit Society in a sum of Rs. 23,070 as representing their share of the amount due under the mortgage deed executed by the executor, while defendants I to 3 were to take house No. 52, Peters Road, Royapettah and were liable to the Society in a sum of Rs. 9,780 in respect of the same mortgage as representing their share.

2. This agreement was followed on 30th August, 1938, by two deeds, one of which Ex. P-2 was executed by the executor in favour of several heirs making the allotment of properties and distributing the liabilities as per the agreement, and the other is Ex.P-3 which is a deed of release and indemnity as between the several heirs inter se undertaking to pay and discharge the several liabilities imposed upon each within three months from the date of the deed or to make within the same period the necessary arrangements to release the properties of the other branch or branches from the liabilities they are subject to. This deed further provides as follows:

The heirs further jointly and severally covenant with the executor and each other that they, the heirs and each of them will at all times hereafter keep the executor and estates of the remaining heirs indemnified from and against all claims and demands whatsoever for or in respect of any liability allotted to each branch and hereby undertaken by them to pay and discharge. Each branch further undertakes not to alienate, incumber, or create a charge over the properties conveyed to it till all the liabilities imposed upon and undertaken by it are cleared, except for discharging the liabilities; imposed upon each or to pay their advocates fee.

The plaintiffs paid to the Egmore Benefit Society by selling House No. 50, Peters Road, Royapettah, a sum of Rs. 14,700 in April, 1939, and their assertion that they have paid every pie of interest due to the Society on their share of the liability up to this date has not only not been challenged but is proved beyond any doubt by the pass book Ex. P-26. The Society refused at first to recognise the arrangement come to among the heirs concerning the division of the mortgage liability and insisted on their right to bring all the properties to sale for the amount of principal and interest due after giving credit to the payment of Rs. 14,700 and to the sums paid by way of interest by the plaintiffs. This will be seen from Ex. P-9. The position then was this. Under the agreement the plaintiffs were due to pay to the Society only Rs. 8,500 for their share, while the defendants were liable to pay to the Society not only a sum of Rs. 9,780 but something more for interest which they had defaulted to pay. The Society advertised the properties for sale on 31st December, 1939, but the sale was stopped at the request of the plaintiffs for time. The plaintiffs wrote to the defendants Ex. P-12 on 28th November,










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