Doctrine of Contribution is an important concept relating to mortgage. This doctrine talks about the rateable contribution by various mortgagors. This doctrine is discussed in Section 82 of the Transfer of Property Act, 1882. When several persons who own several properties mortgage them to secure a debt then according to section 82 of the Act, every such person and property has to contribute in proportion to their interest towards the debt. The doctrine of contribution grants a right to recover the excess from the other mortgagors when a mortgagor had paid more than his rateable proportion of the loss incurred.

For Example- Property A is owned by S, Property B is owned by V, Property C is owned by R. Now they mortgage these properties to one K for a secured debt of 30,000. Each of the property is valued at the time of mortgage to be equal. K recovered the entire debt amount 45,000 from Property B owned by V. Now V has a right and he can demand a rateable contribution from both S and R to pay 15,000 each.

Contribution must be rateable and Section 82 clearly lays down that no alternative method can be adopted for the purpose of ascertaining the rate at which persons who are jointly responsible to contribute should do so[1]

When one property is first mortgaged and then mortgaged again with another. Where, of two properties belonging to the same owner, one is mortgaged to secure one debt and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property is liable to contribute rateably towards the second mortgage.

For Example- property X is mortgaged for Rs. 200 to A. Properties X and Y are mortgaged for Rs. 400 to B. X and Y are each worth Rs. 500. X is sold to c and Y is sold to D. The contribution of C and D to the mortgage of Rs. 400 is in the ratio of 300 to 500, Because Property X would have been used to pay off A's mortgage the balance (500-200) Rs. 300 shall be available from property X to contribute for subsequent mortgage along with property Y the value of which is Rs.500.

Thus, the contribution is in the ratio of 3:5 off Rs. 400. Now, C is liable for Rs. 150 and D for Rs. 250. As a consequence of this rule, the person who has paid in excess of his share or who has discharged the whole is entitled to be reimbursed by the others. Thus, if B has recovered the whole debt of Rs. 400 from C's Property X, C would be entitled to recover Rs. 250 from D by suit for contribution.[2]

Historical Perspective:
The doctrine originated from the ancient law of Rhodes relating to maritime where for the sake of reducing the weight of a ship, a jettison of goods shall be made i.e. some goods may be thrown into the sea, this usually happens on emergency situations. The principle goes like 'what has been given for all shall be made up by the contribution of all.[3]

In Dickerson v. Jardine,[4] The court reasoned that once the insurer pays pursuant to the policy, he becomes entitled to stand in the place of the assured with respect to the general average contribution. General average contribution is a principle of maritime law. When it is decided by a master of a vessel, acting for all the interests concerned, to sacrifice any part of the venture exposed to a common and imminent peril in order to save the rest, the interests saved are compelled to contribute rateably to the owner of the interest sacrificed so that the cost will fall equally among them.[5]

Then the Roman Law adopted the same where it was originally used only in the equity courts. However, the common law courts adopted this concept in a relatively recent period. It is to be noted that there were common law writs such as, de contributione, and de feoffment. One of the earliest reported cases in the English law is that of Hicks v. Palington, F. Moore,[6] where contribution principle is stated as a rule of the civil law.

In Rogers v. Mackenzie,[7] the court held that as a, general principle of Law . . . when one surety pays the whole debt, there shall be a contribution. It is unjust to throw the whole burden on one estate. They are bound to the Crown jointly and severally. Their several estates are therefore equally liable. By accident they are unequally charged. To correct that inequality is within the principle, upon which the court compels contribution.

By the end of the eighteenth century, both the common law and the equity courts appeared thoroughly accustomed to applying this equitable doctrine. In Sterling v. Forrester,[8] The court recognized that the equitable remedy was applicable both in the courts of equity and at common law.

Doctrine of Contribution has evolved over the years and today it is an important concept relating to Mortgage. In the recent times there has been a debate on whether the law of contribution is an equitable doctrine or a law related to unjust enrichment.

Definitions:
The doctrine of contribution may be defined as the rule by which one person, when compelled to discharge more than his share of any joint liability, can recover from those liable with him their aliquot proportion of the common burden.[9]

Sir Rash Behari Ghosh, explained the doctrine as under:
"It is reasonable in such a case, the person who is compelled to discharge the common burden should be permitted to seek indemnification from the others and no fairer rule can be suggested than that each of them should contribute according to the value of the property owned by him or the extent of his interest in it for the law would not suffer the creditor to select his own victim, and from caprice of favoritism to turn 'common burden' into "gross personal oppression"[10]

In Dering v/s Earl of Winchelsea[11] it was held that, the doctrine of contribution enunciated in the section is based upon the plainest principles of justice and equity, inasmuch as it enacts that as between persons who may be liable with respect of the same debt, their liability will be only in proportion to the quantum of their interest in the property.

Legal Perspective:
Section 82 in The Transfer of Property Act, 1882: Contribution to mortgage-debt:
Where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership 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, and, for the purpose of determining the rate at which each such share or part shall contribute, the value thereof shall be deemed to be its value at the date of the mortgage after deduction of the amount of any other mortgage or charge to which it may have been subject on that date.

Where, of two properties belonging to the same owner, one is mortgaged to secure one debt and then both are mortgaged to secure another debt, and the former debt is paid out of the former property, each property is, in the absence of a contract to the contrary, liable to contribute rateably to the latter debt after deducting the amount of the former debt from the value of the property out of which it has been paid.

Nothing in this section applies to a property liable under section 81 to the claim of the subsequent mortgagee.

The three paragraphs into which the section is sub-divided enunciate rules which have to be discriminated. The first paragraph merely declared the manner in which a debt charged on several properties shall be borne by them. The second paragraph then deals with a case in which the first mortgage having been laid off out of the only property comprised in it, it remains to be determined how the second mortgage-debt is to be borne as between the remainder of that property and another property which is also made a security for the second debt. In such a case contribution works, not in favour the other of the two properties comprised in the mortgage. The thirds and last paragraph only subordinate this section to the rule of marshalling set out in the preceding section.

In the above Section, 'Where property subject to mortgagee belongs to two or more persons etc.' means that two or more independent owners of the property should execute a joint mortgage. It is not necessary that the properties should be distinct but what is necessary is that their ownership should be distinct. It excludes a mortgagor mortgaging several items of his own property.

'In the absence of a contract to the contrary': in the first clause means as between the mortgagor and the mortgagee and not merely mortgagors inter se, the contract may be made at the time of the mortgage or afterwards[12] in the second clause it means a contract between the parties who are liable to contribute.[13]

The expression 'contract to the contrary' occurring in Section 82 was interpreted by the Full Bench in Damodaraswami Naik V. Govindarajalu Naidu[14] as meaning a contract between the mortgagee on the one hand and the mortgagor on the other and not a contract inter se between the mortgagors or their representatives-in-interest.[15]

'Nothing in this section, etc' means that when 'marshalling' and 'contribution' conflict, the former will prevail.[16] 'Debt' in this section is used in the sense of mortgage money.

Marshalling supersedes Contribution:
By the last paragraph, it is in effect declared that, where marshalling and contribution might conflict with each other, marshalling is to prevail. For instance, the owner of two properties, X and Y after mortgaging them separately to B and C, mortgages them together to D, and then mortgages X to E. Here E is under Section 81 entitled to compel D to resort to property Y and satisfy his claim out of that security as far as it will go. On the other hand, according to the first paragraph of this section, the two properties X and Y are liable to contribute to the debt secured by them rateably. The last paragraph of this section prevents this section being thus used to the prejudice of a subsequent mortgagee to the position of E.[17]

Valuation of Properties:
The rateable burden which the several properties are to bear would be no doubt have to be calculated according to their valuation at the time of mortgage,[18] The proper date at which the value of the properties should be calculated for purposes of contribution is the date of the mortgage, and not that of the sale[19]

Contribution to several debts:
Where two or more properties are mortgaged to secure one debt, one of them having been already mortgaged, and they are subsequently sold, the one who gets the estate bearing the prior encumbrance is entitled to deduct the amount of the mortgage due thereon and then bear a rateable share in discharging the latter incumbrance.[20]

In Hira Chand V. Abdul,[21] It was held that the purchaser of a share in a mortgaged estate, who has paid off the whole mortgage-debt in order to save the estate from foreclosure or sale, can claim from each of the other mortgagors a contribution proportionate to his interest in the property, but he cannot claim from the other mortgagors collectively the whole amount paid by him.

Position of a Co-mortgagor redeeming the mortgage:
It is important to remember that a co-mortgagor who paid the full amount of the mortgage-debt may under Section.82 not only sue for contribution but under Section. 92 of the Act he may be subrogated to the rights of the mortgagee whose mortgage he redeemed. It is plain that the remedies granted by these sections are independent and not mutually exclusive, and a co-mortgagor who pays the mortgage money has right of contribution and acquires a charge under Sections. 82 and 100 in addition to his right of subrogation under Sections. 91 and 95 of the Act.

A person who is bound to pay only a part of the mortgage-debt acquires on redemption two distinct rights. He may simply sue for reimbursement under Section. 82 of the Act. He may also sue to enforce the rights of the mortgagee to follow the mortgaged properties.[22]

Duration of the right:
While right to contribution may be affected by the term of the contract or the rules of equity, In re Dunlop,[23] once a person becomes entitled to the right, he cannot be deprived of it by the fact that he had indemnified himself against loss in some other way.[24]

A claim for contribution though not laid in plaint, would still be decreed, if it is at least pressed in argument, and the title which can be lawfully asserted is clear from the facts on record.[25]

Judicial Perspective:
It has already been stated that the principle of contribution primarily affects only the mortgagors inter se. In Deekshitalu V. Venkataramayya[26] it has been held that if a mortgagee gives up one or more of the properties and proceeds against only the other properties, still the person whose properties have been sold is entitled to proceed against the owner of the properties which have been released by the mortgagor, by a fresh suit for contribution under Section. 82 of the Transfer of Property Act.

Whether contribution imply payment of the whole debt:
Courts had a diversity of views on whether the right to contribution implies the discharge of the whole debt or only payment of a sum in excess of the rateable proportion chargeable on the property of the person claiming contribution. According, to the view taken by the majority of the Full bench in an Allahabad case[27] contribution cannot be claimed unless the whole debt had been discharged by the person claiming contribution but this view, though shared in some cases but in Madras, it has been abandoned.[28] Madras High Court in Nanjappa Goundan V. Pacha Goundan,[29] has held that it is not necessary under Section82 that the owner of one of the mortgaged properties should pay the whole of the common debt before he can claim contribution.

No Contribution on void contracts:
There can be no claim for contribution in respect of illegal or void contracts. Thus, for instance, no suit for contribution will lie in respect of losses in joint betting on horses.[30] A claim for contribution cannot be admitted whereby a document by which it is created is inadmissible for registration.[31]

Does contribution create a charge?
The High Courts were, at one time, however, sharply divided on the question whether the right of contribution also carried with it a charge on the property. Apart from Section 95 which applies only to a co-mortgagor there was held to be no explicit provision in the Act to create a charge in all cases of contribution. Its existence was held to be dependent upon the principle of subrogation or other equitable considerations apart from the statutory enactment. It was on this point that the difference of opinions had arisen.

According to the earlier cases of the Allahabad,[32] and Calcutta[33] Courts, it would be contrary to the policy of legislative enactments to recognize an equitable charge superadded to the right created by the statute.[34] A similar view echoed by the Allahabad Full Bench though in a latter case its existence was recognized, it being held that the rule here enacted created a statutory charge independently of Section.95, which as regards limitation might, like any other charge, be enforced under Article. 132 (new Article 62) of the Limitation Act[35]

The Bombay and Madras Courts have always adhered to the view favoring a charge, though while it has been justified in Bombay on the ground of salvage, the Madras Court has upheld it on the construction it places upon this section coupled with Section 100[36]

Extension of the rule:
The principle of contribution is not peculiar to the law of mortgage. Whenever estates are subject to a common demand and that demand is satisfied by the person interested in one of them, he has the right to call upon the other owners to contribute, and, if the demand was on account of land- revenue payable to the Government, the Madras Court has held in Sheshagiri V. Pichu, [37] that he has in addition a lien on the land of others forming part of the entire estate in respect of which revenue was payable. And the Allahabad High Court appears to regards the section itself as having wider operation,[38] but the Madras Court has not acceded to this view.[39]

The same principle runs through cases of contribution as between partners, joint-tenants, tenants-in-common and co-owners of property

The rule does not affect the mortgagee, and is no authority for splitting up his security. Its sole object is to determine the liabilities of the holder of several properties when they are owned by different mortgagors, or when, being all the properties of one mortgagor, they are prior incumbrances on some of the properties.[40]

International Perspective:
A turnaround in New Zealand regarding the Doctrine:
The courts in New Zealand have not been asked to consider whether it might be appropriate to apply an unjust enrichment analysis to a contribution claim. The Supreme Court in a recent decision, Hotchin v New Zealand Guardian Trust Co Ltd,[41] approached the claim as if it was a claim in equity. This suggests that contribution is still considered by the New Zealand courts as an equitable doctrine, attracting an equity analysis. However, it may now be possible, in light of the changes made to the equitable doctrine by the Court in Hotchin, to apply an unjust enrichment analysis to resolve future claims. The approach taken in Hotchin's case opens the door to that possibility.

Doctrine of Contribution & Insurance in United Kingdom:
The principle of contribution is a concept commonly used in insurance and refers to the idea that multiple insurance policies covering the same loss or damage should each pay a proportionate amount towards the claim. The importance of contribution principle in insurance is, it ensures that each insurer contributes their share towards a claim when multiple insurance policies cover the same risk or loss.

Doctrine of Contribution in United States:
Contribution is an important term in the field of tort law.

In the field of tort law, contribution refers to an action a defendant may bring in a joint and several liability jurisdictions to recover for damages they paid out but did not cause. In a jurisdiction that follows joint and several liability, a negligent defendant is liable to pay damages for all harm suffered by the plaintiff, even if the negligence of other parties caused some of that harm.

A defendant may file a different case to recover costs from the other defendants after a plaintiff receives payment from a jointly and severally liable defendant. Co-defendants in this lawsuit shall be obligated to reimburse damages based on how much of the injuries they admittedly caused.

Conclusion
Doctrine of contribution discussed in Section 82 of the Transfer of Property Act, 1882 is an important concept related to mortgage. It gives the right to demand rateable contribution to a mortgagor from those co-mortgagors for whom he redeemed the mortgage debt. It is also seen as an equitable principle in other parts of the world and are applied not only in property law but also in insurance, tort and others areas. The legal and judicial perspective has been deliberated here. The provision is necessary to protect the rights of the mortgagor who was compelled to pay for all more than his interest in the property, thus every such property has to rateably contribute.

Journals:

• The Law of Contribution in The American Law Register August, 1869
• The Historical Position of the Rhodian Law in Yale Law Journal vol. xviii February:1909. No. 4
• The Law of Contribution – An Equitable Doctrine or Part of the Law of Unjust Enrichment? By Victoria Stace
• An Historical Introduction to the Doctrine of Subrogation: The Early History of the Doctrine II By M. L. Marasinghe pp.275-299, Valparaiso University Law Review

Books:

• Dr. Sir Hari Singh Gour's Commentary on The Transfer of Property Act 12th Edition, Delhi Law House
• S.N. Shukla's Transfer of Property Act, Allahabad Law Agency

Websites:

• https://indiankanoon.org/
• https://www.law.cornell.edu/
• https://www.lawctopus.com/

End Notes:

1. Indian Overseas Bank Ltd. V. R.E.M. Ibrahim and others, A.L.R. 1975 Mad 92
2. S.N. Shukla's Transfer of Property Act
3. The Historical Position of the Rhodian Law in Yale Law Journal
4. L.R. 3 C.P. 639 (1868)
5. An Historical Introduction to the Doctrine of Subrogation: The Early History of the Doctrine II
6. 297 (22 Eliz.)
7. 4 Ves. jun. 752, 31 Eng. Rep. 389 (1799)
8. 3 Bli. 575, 4 Eng. Rep. 712 (1821)
9. The Law of Contribution in The American Law Register August, 1869
10. The Law of Mortgage in India (5th Ed pp. 393, 394)
11. 1 Cox 318; 29 ER. 1184
12. Rama V. Manak, 7 Bom. L.R. 191
13. Muthiah V. Venkatarama. I.L.R. 59 Mad. 121
14. I.L.R (1943) Mad 531: (1943) M.W.N 229: AIR, 1943 Mad. 429 (F.B)
15. Vadula Satyanarayanamurthy V. Official Receiver, West Godavari (1948) M.W.N. 733 at p.734: AIR 1949 Mad. 384
16. Bartholomew V. May 1 Atk 487
17. S.N. Shukla's Transfer of Property Act
18. Bhagwan Singh V. Mohd. Mazhar Ali Khan, I.LR. 36 all. 272
19. Fakiraya V. Gadiya
20. Faqir Chand V. Aziz Ahmad, 59 I.A. 1061589
21. I.I.R, 1 All 455
22. Sibanad Misra V. Jagmohan Lal, II.R, 1 Pat 780
23. 21 Ch. D, 583
24. Ramabhadrachar V. Srinivasa, I.LR. 24 Mad. 85 at p.93
25. Danappa V. Yamnappa, I.LR. 26 Bom. 379 at p. 387
26. (1936) M.W.N. 439
27. Ibm Hasan V. Brij Bhukan, I.IR. 26 AIL 407 (F.B)
28. Rajah of Vizianagaram V. Rajah Setrucherla, I.I.R. 26 Mad 686at p.716 (F.B)
29. (1947) 2 M.L.J. 276
30. Suffery V. Mayer (1901) 1 Q.B 11
31. Kamta Singh V. Chattarbunj, 61 L.A. 185
32. Seth Chitor Mal V, Shib Lal, I.LR. 14 All 273 p. 299 (F.B)
33. Kinu Ram V. Mozaffer Hosain Shaha, I.LR.14 Cal. 809 at p.826(F. B)
34. ibid
35. Bhagwan Das V. Karam Husain, I.L.R. 33 All 708 at pp.716
36. Achut Ramchandra V. Hari, I.LR. 11 Bom. 313 at p.319
37. I.L.R. 11 Mad. 452 at p. 457
38. Ibn Hussain V. Ramdai, I.LR. 24 Mad 110 at p.115
39. Sesha Ayyar V. Krishna, I.LR. 24 Mad. 96 at 108
40. Raghunath V. Harlal, I.L.R. 18 Cal. 320 at p.321
41. NZSC 24, (2016) 1 NZLR 906

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