Gajanan Moreshwar Parelkar vs Moreshwar Madan Mantri on 1 April, 1942

CASE BRIEF
Gajanan Moreshwar Parelkar vs Moreshwar Madan Mantri on 1 April, 1942 

Facts:

1. The plaintiff entered into an agreement with the Municipal Corporation for the City of Bombay in 1934 to lease a plot of land (No. 226A of the Dadar Matunga Estate) for 999 years.

2. The plaintiff, in response to the defendant's request, agreed to transfer the lease agreement to the defendant, who then took possession of the land and started constructing a building.

3. The defendant, in the process of construction, obtained materials from Keshavdas Mohandas, with the amount exceeding Rs. 5,000.

4. At the defendant's request, the plaintiff mortgaged the property to Keshavdas Mohandas to secure a sum of Rs. 5,000, with a due date of January 14, 1938.

5. Another charge on the property was made in favor of Keshavdas Mohandas for a further sum of Rs. 5,000 and interest, with the due date also being January 14, 1938.

6. The defendant, in 1939, assured the plaintiff that he would be responsible for discharging the mortgages and would execute a new mortgage deed in favor of the mortgagee.

7. The plaintiff, at the defendant's request, wrote to the Bombay Municipality asking for the transfer of the land to the defendant's name, which was duly sanctioned in August 1939.

8. Despite the transfer, no formal lease had been executed by the Bombay Municipality in favor of the defendant.

9. The plaintiff repeatedly asked the defendant to secure a release from the mortgage liability, but the defendant failed to do so.

10. The plaintiff alleges that the defendant is in possession of the property, enjoying rents and profits, but has not paid all the interest to the mortgagee. The defendant also failed to pay ground rent and insure the property.

11. The plaintiff claims that he executed the mortgage and the further charge at the defendant's request, and therefore, the defendant is liable to indemnify the plaintiff for all liabilities under the mortgage and further charge.

Issues:

1. Whether the plaintiff's suit discloses a cause of action.

2. Whether the suit is premature.

Arguments:

1. The defendant, Mr. Tendolkar, argues that the plaintiff cannot sue for indemnity until he has suffered actual loss, relying on Sections 124 and 125 of the Indian Contract Act, 1872.

2. Mr. Tendolkar contends that the indemnity-holder is not entitled to sue the indemnifier until he has incurred a loss for which he is compelled to pay.

Judgment:

1. Justice Chagla distinguishes Sections 124 and 125 of the Indian Contract Act as not exhaustive of the law of indemnity.

2. The court applies equitable principles and holds that if the indemnified has incurred an absolute liability, he can call upon the indemnifier to pay off the claim or to pay into Court sufficient money to constitute a fund for paying off the claim.

3. The plaintiff is held entitled to be indemnified by the defendant against all liability under the mortgage and further charge.

4. The defendant is ordered to procure from the mortgagee a release of the plaintiff from all liability. In default, the defendant must pay into Court the amount required to pay off the entire debt to the mortgagee, to be used for that purpose.

5. A decree is made for the plaintiff for the costs of the suit.

6. The judgment allows for parties to apply under the decree in case of difficulties in working out certain aspects of the order.

AUTHOR:

SRIVATHSA EKALAVYA YEEDU

1ST YEAR STUDENT AT

NATIONAL LAW UNIVERSITY KOLKATA (WBNUJS)