(a) Meaning - As far as possible equity would put the litigating parties on an equal level so far as their rights and responsibilities are concerned. The maxim expresses the object of both law and equity in order to effectuate a distribution of property and losses, proportionate to several claims and liabilities of the parties concerned.
Equality, therefore, means proportionate equality. In interpreting the words and enforcing the rules of law, equity so acts that no party gets an undue advantage over the other or is put to unjustified loss.
Benefits and burdens of common interests and obligations cannot be imposed upon and pressed against any one individual but should be spread equally overall, following the principle of equality contained in this maxim.
(b) Application and cases - Application of this maxim can be discerned from the following:
(i) Equity's dislike for joint tenancy and presumption of tenancy-in-common - Just as one person can hold property, so two, three, or several persons can hold it, and that is called co-ownership or ownership in the community.
Three types of such ownership are recognised under English law, (1) joint tenancy, (2) tenancy-in-common, and (3) coparcenary (arising out of custom).
The main incidents of joints tenancy can be laid down as (1) unity of possession, (2) unity of interests, (3) unity of time, and (4) unity of title. Every joint tenant is (seisin per my et per tout) "possessed of the joint property by every part and by the whole", they have a single title and their possession is not adverse inter se.
The interest of each joint tenant originates from the same act, the estate of each begins at the same time and the extent and nature of the interest of each joint tenant are the same as that of the other.
Equity disliked joint tenancy and severed it on the slightest pretext by putting such construction on the words to avoid the principle of survivorship. Thus tenancy in common in equity existed not only at Common Law but also in certain other cases where the intention to create the same could be inferred or discerned. In the following instances, it was held to exist.
(1) Joint purchase in unequal shares - Where property is jointly purchased with co-purchasers, A and B providing money in unequal shares and A dies, B becomes entitled to the whole of the property at law.
But in equity B was treated as holding A's share in trust for A's representative proportionately to the purchase money advanced. But we have to note that in case of equal advancement to the principle of survivorship still holds the field on the ground that the co-purchasers intended to benefit by the rule of survivorship. Here there is joint tenancy both at law and in equity.
(2) Joint loan on the mortgage - In case of loan on the mortgage, advanced by A and B jointly to C, either in equal or in unequal shares, the surviving mortgagee is to hold the same in trust for the representative of the deceased mortgagee proportionately to the money advanced.
(3) Purchase by partners - The principle of joint tenancy does not apply as between partners in a business. The Latin expression for this is inter Mercator's locum non-habet pro beneficio commercili, which explains that the right of survivorship has no place among merchants.
As has been said before, on the slightest pretext in cases of joint tenancy at law and in equity, equity came forth to server it and avoided the incident of survivorship.
This it did in various ways e.g., in case of alienation by one of the joint tenants, in case of acquisition of greater interest by one co-tenant than that of the other, in case of partition, and in case of an application to the court for an order for sale
(ii) Equal distribution of joint funds or joints purchases
(iii) Contribution between co-trustees, co-sureties and co-contractors - Where a creditor has a simple claim against several debtors, he may realise his claim from any one of them. The debtor who was thus compelled to pay the whole of the claim had no remedy against the others at Common Law.
But equity, in order to set right the injustice and in order to treat all the debtors on the basis of equality, gave the debtor a right to contribution from the rest, thus pressing the burden equally on all. With co-sureties and co-contractors, the same rule is applied.
(iv) Rateable distribution of legacies - The principle is that while the testator bequeaths, he presumes that he has sufficient assets to answer all the legacies, but in cases where in fact it is not so, he is presumed to have meant that the deficiency must be borne by all the legatees pari passu or on an equal footing. In such cases, where a legatee whose legacy was liable to abate is paid in full, he must return the excess payment, for the benefit of all.
(v) Power to appoint - Powers are of two types - (1) general power of appointment, and (2) special power of appointment. A power given by deed or will which empowers the donee of the power to appoint any person (including himself) to take an interest in the property is a general power of appointment, and power which empowers the donee to appoint any member of a specified class of persons to take an interest in the property is a special power of appointment.
In cases where the donee of the power, in the nature of a trust fails to exercise his power, the court of equity on the principle of equality will carry the same into effect, so that it may not fail, and distribute the property equally among the persons concerned.
(vi)Marshalling of assets - Insofar as marshalling is concerned, equity, on the principle of equal treatment to equals, so marshaled (or arranged) funds that no cause of injustice could arise.
(c) Recognition in India - All these four doctrines resulting from the application of the maxim "equality is equity" have been recognised in India under various enactments:
(i) Indian Contract Act, Section 42, illustrates tenancy in common as regards devolution of liabilities.
(ii) Section 43 illustrates that one of a number of joint promisors who has performed the promise is entitled to compel the other promisors to contribute equally with himself.
(iii) Sections 69 and 70 illustrate the doctrine of marshalling.
(iv) Sections 149 and 147 explain that co-sureties are liable to contribute equally.
(v) Under the Transfer of Property Act, Section 56 illustrates the doctrine of marshaling.
(vi) Section 82 speaks about contribution to mortgage debt by co-mortgagors.
(vii) Section 330 of the Indian Succession Act incorporates and illustrates the principle of rateable distribution of assets explaining that the legacies abate rateably.
(viii) Under the Indian Trusts Act, Section 27, there is contribution also between co-trustees.
(ix) Section 73 of the Civil Procedure Code.
(x) Section 45 of Transfer of Property Act.