Doctrine of Contribution among Co-Promisors

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Doctrine of Contribution among Co-Promisors

February 3, 2025

The Doctrine of Contribution among Co-Promisors ensures equitable distribution of liability when multiple parties jointly promise to fulfill an obligation. Under this doctrine, if one promisor discharges more than their fair share of the joint obligation, they have the right to seek proportional reimbursement from the other co-promisors.

LEGAL PROVISIONS UNDER THE INDIAN CONTRACT ACT, 1872

The Indian Contract Act, 1872, specifically addresses the obligations and rights of joint promisors in Sections 42 to 44.

Section 42: Devolution of Joint Liabilities

This section states that when two or more persons make a joint promise, all such persons are bound to fulfill the promise during their joint lives. After the death of any of them, the responsibility passes to the surviving promisors jointly with the legal representatives of the deceased, and after the death of the last survivor, to the legal representatives of all jointly.
Section 43: Any One of Joint Promisors May Be Compelled to Perform

This section provides that the promisee may, in the absence of an express agreement to the contrary, compel any one or more of the joint promisors to perform the whole of the promise. It further states that each of the joint promisors may compel every other joint promisor to contribute equally to the performance of the promise, unless a contrary intention appears from the contract. If any one of the joint promisors defaults in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Section 44: Effect of Release of One Joint Promisor

According to this section, a release of one of the joint promisors by the promisee does not discharge the other joint promisor(s); neither does it free the joint promisor so released from responsibility to the other joint promisor(s).

ESSENTIALS OF THE DOCTRINE

Common Liability: There must be a shared obligation among co-promisors arising from a joint promise or contract.
Excess Payment by One Promisor: One co-promisor must have paid more than their fair share of the common debt.
Right to Reimbursement: The promisor who overpaid has the right to seek proportional reimbursement from the other co-promisors.

ILLUSTRATIONS

A, B, and C jointly promise to pay D ₹3,000. D may compel either A, B, or C to pay him ₹3,000.
A, B, and C jointly promise to pay D ₹3,000. C is compelled to pay the whole amount. A is insolvent, but his assets are sufficient to pay half of his debts. C is entitled to receive ₹500 from A’s estate and ₹1,250 from B.

CASE LAWS AND JUDICIAL INTERPRETATIONS

Dharni Dhar and Ors. vs. Chandra Shekhar and Ors. [AIR 1951 All 48]
- Facts: The Allahabad High Court addressed the applicability of the English rule from Merryweather v. Nixon (1799) 8 T.R. 186, which denied contribution among joint tortfeasors.
- Issue: Whether the English rule denying contribution among joint tortfeasors applies in India.
- Held: The court concluded that this English rule does not apply in India, emphasizing that the right to contribution is based on principles of equity, justice, and good conscience.
Ganeshi Lal vs. Joti Pershad [AIR 1953 SC 1]
- Facts: A co-mortgagor redeemed the entire mortgage and sought reimbursement from his co-mortgagors.
- Issue: Whether a co-mortgagor who redeems the entire mortgage is entitled to receive from his co-mortgagors their proportionate shares of the amount paid.
- Held: The Supreme Court of India held that a co-mortgagor who redeems the entire mortgage is entitled to receive from his co-mortgagors only their proportionate shares of the amount actually paid, underscoring the equitable foundation of the contribution doctrine in India.
S.P. Abraham Servai vs. Raphial Muthirian [AIR 1915 Mad 121]
- Facts: The case involved joint promisors where one promisor was released by the promisee.
- Issue: Whether the release of one joint promisor by the promisee discharges the other joint promisors from their obligations.
- Held: The Madras High Court observed that the duty of a promisor to contribute to the other joint promisors is distinct from his obligation to pay the promisee. Even though the promisor has been released from the performance of the contract by the promisee, the former’s responsibility towards the other joint promisors is not annulled.

COMPARISON WITH OTHER DOCTRINES

It is essential to distinguish the Doctrine of Contribution from the Doctrine of Subrogation. While both deal with rights arising from the payment of another’s debt, subrogation allows the paying party to step into the shoes of the creditor, acquiring all associated rights. In contrast, contribution merely provides the right to seek proportional reimbursement from co-debtors without assuming the creditor’s rights.

CONCLUSION

The Doctrine of Contribution among Co-Promisors is integral to Indian contract law, ensuring equitable distribution of liabilities. Grounded in principles of justice and fairness, it prevents undue burden on any single promisor, promoting harmonious financial relationships among parties with shared obligations.