“Critical analysis on the doctrine of subrogation under

transfer of property act”

Author- Shakti Divyansh
Co-author- Rishabh Gupta

Abstract

Subrogation is a doctrine whose concept depends on the degree of fairness, equity, and, perhaps
most importantly, conciseness. According to the doctrine, whoever pays off a mortgage also
receives all of the mortgagee's rights. This paper examines the doctrine and how it applied in
those regions of India where the Act itself was inapplicable. Convergent equity, one stated by the
phrase substitution and another in the form of a salvage claim, resulted in the doctrine of
subrogation. The subrogate owes his claim more to the fact that he made the payment for the
debtor, to his relief, and with his express or implied permission than just to the fact that it was
made. This describes subrogation and its two varieties, legal and traditional.
In the event that a third mortgagee redeems the first mortgage, he will be subrogated to the first
mortgagee's position in relation to the second mortgagee. Legal subrogation is the term used for
this. Conventional subrogation is a little different and occurs when the party paying off the debt
has no interest to defend but advances money pursuant to an express or implied understanding
that he would be subrogated to the rights and remedies of the initial encumbrance.

Introduction

The Transfer of Property Act, which oversees the transfer of property rights in India, contains a
legal principle known as the doctrine of subrogation. A concept called subrogation enables
someone who has paid off another person's debt or obligation to assume the role of the creditor
and get all the rights and remedies connected to that debt or obligation.
Subrogation is covered in detail in Section 92 of the Transfer of Property Act. It asserts that a
third party is entitled to the same rights and remedies as the original creditor when they pay off a
debt or complete a duty on the debtor's behalf in an effort to secure the discharge of the debt.
The idea of equity and fairness serves as the foundation for the subrogation theory. It safeguards
against undue enrichment and guarantees that someone who has settled a debt or carried out a
duty on behalf of another is not left with no options. It enables the subrogated party to pursue
proper remedies, such as collecting the amount paid or enforcing any security interests connected
to the debt, against the original debtor and enforce the debt or obligation.

It is significant to remember that subrogation does not result in the creation of a new right;
rather, it transfers the original creditor's rights and remedies to the subrogated party. The person
who has been subrogated assumes the role of the creditor and receives access to the same rights,
priorities, and legal options as the debtor. Thanks to this principle, the subrogated party can
secure their position in relation to the debt or obligation or recoup the money paid.
In conclusion, the Transfer of Property Act's subrogation theory enables someone who has
settled a debt or met a commitment on behalf of another to take the place of the original creditor.
By doing so, the subrogated party is guaranteed the ability to enforce its rights and remedies.

Doctrine of Subrogation

In its most basic form, the subrogation doctrine is straightforward. It refers to the replacement of
one individual by another. Two entirely different sorts of people's subrogation rights are covered
in this section. It first addresses the rights of those who already have an interest in the property
and then addresses the rights of outsiders who acquire an interest in the property. According to
Section 92 of the Transfer of Property Act, any co-mortgagor who redeems property for a
creditor will undoubtedly have the same rights going forward with regard to the redemption,
proceeding, or sale of that property as the mortgagee whose mortgage he redeems might have
against the mortgagor or any other creditor.
The right is referred to as the right of subrogation. The rule of subrogation, however, does not
give the redeeming co-mortgagor the right to claim to be the mortgagee; rather, it gives him the
right to seek restitution for whatever money he has spent before the co-mortgagor wants to
regain possession from him. The only way to redeem a co-mortgagor is to state the actual
amount spent prior to giving up possession. It is not essential for the co-mortgagor to initiate a
separate claim for redemption in order to resolve this. The dispute might be resolved during the
current lawsuit's final decree proceedings. According to Section 92 of the Transfer of Property
Act, no person shall be granted the right of subrogation until and until the mortgage in respect of
which the right is claimed has been fully redeemed.
The equitable principle of reimbursement serves as the cornerstone of the legal subrogation right.
In this instance, the second mortgagee sued his mortgage without naming the first mortgagee,
received a ruling, put the hypothecate up for sale, bought it himself, and entered partial
satisfaction of the ruling. He still owes money in accordance with the mortgage decree. The
question of whether he can assume the role of the first mortgagee when such a person pays off a
prior encumbrance arises. The second mortgagee's redemption date did not put a time limit on
the first mortgagee's ability to enforce his mortgage.
1
Mussamat Azizunissa V. Komal Singh, it was held that the purchaser of the mortgaged
properties in execution of a mortgagee decree, acquired not only the interest of the mortgage
but also the equity of redemption of the mortgagor, and that he is entitled to redeem other
mortgages on the same property created by the mortgagor.

The right of subrogation is available on equitable principles where the transfer of property
does not apply:
Even in cases where transfer of property acts were not in effect, a redeeming co-mortgagor who
paid off the entire mortgage debt, which was his and his co-mortgagor's joint and several
liability, was still entitled to be subrogated to the right of the mortgagee to be redeemed and to
treat the non-redeeming co-mortgagor as his mortgagor to the extent of the latter's portion or
share in the hypotheca. This equitable right of the redeeming co-mortgagor is based on the
doctrine that he was only a principal debtor with regard to his own share of the mortgage debt,
and that his liability with regard to his co-mortgagors' share of the mortgage debt was only that
of a surety. After the surety discharged the entire mortgage debt, he was then entitled to be
subrogated to the securities held by the creditor, up to the point of recovering the debt.
Although Section 92 of the Act does not, in and of itself, apply to the State of Punjab, the
underlying principles of justice, equity, and good conscience have always been deemed
applicable.

1 AIR. 1930.Pat.579.
In, 2Ganeshi Lal’s case, the supreme court held that, the principle contained in section 92 of the
Act were made applicable as it was held there in that the doctrine of subrogation which means
the substitution of one person in place of another and giving him the rights of The latter is
essentially an equitable doctrine in its origin. Equity insists on the ultimate payment of a debt by
one who in justice and conscience, is bound to pay it, and it is well recognised that where are
several joint debtors, the person making the payment is a principal debtors as regards part of the
liability he discharged and a surety in respect of the shares of the rest of the debtors. The
principle of
subrogation, as embodied in sec.92, has been applied to the Punjab although the Transfer of
property Act has not been extended to his part.

Essential requisites for valid claim for subrogation

 The right to redeem the mortgage must be supported by an interest in or charge over the
property that is subject to the mortgage.
 He has to pay off the mortgage.
 To be entitled to the rights of the mortgagee whose mortgage is discharged, a person must
have delivered money to a mortgagor together with a written agreement when redeeming
a mortgage.

"A person claiming the right must have an interest in or charge over the mortgaged property that
entitles him to redeem the mortgage." In order to claim the right to redeem a mortgage, a person
must have a legal interest in or a charge over the property that is subject to the mortgage. This
means they must have a direct connection or legal relationship with the property, such as being
the owner, co-owner, or having some other form of legal interest or claim on the property.
Without such an interest or charge, they would not have the right to redeem the mortgage.
"He must redeem the mortgage." Once a person meets the requirement of having a legal interest
or charge over the mortgaged property, they are obligated to exercise their right to redeem the
mortgage. Redemption refers to the act of paying off the outstanding debt secured by the
mortgage and obtaining a release or discharge of the mortgage. This typically involves repaying

2 AIR. 1953, SC. 1

the principal amount borrowed plus any interest or other charges that have accrued over the
mortgage term.
"A person must have given money to a mortgagor to redeem a mortgage with an agreement in
writing that he will be subrogated to the rights of the mortgagee whose mortgage is discharged."
In order to redeem the mortgage, the person claiming the right must provide the necessary funds
to the mortgagor (the borrower) to pay off the mortgage debt. This payment is usually made in
exchange for a written agreement between the person providing the funds (referred to as the
redeemer) and the mortgagor. This agreement should specify the terms and conditions of the
redemption, including the amount to be paid, the timeline for repayment, and any other relevant
details.
Furthermore, the agreement should include a provision stating that upon the discharge of the
mortgage, the redeemer will be subrogated to the rights of the original mortgagee. Subrogation is
a legal concept that allows a party who pays off a debt on behalf of another party to step into the
shoes of the original creditor. In this context, it means that the redeemer, after paying off the
mortgage, will acquire the same rights and remedies that the original mortgagee had against the
mortgagor. This ensures that the redeemer has a legally recognized position with respect to the
mortgage and can exercise the same rights and protections as the original mortgagee.

Types of subrogation
Under the Transfer of Property Act, there are two types of subrogation: conventional subrogation
and legal subrogation. Let's explore each type in detail:
Conventional Subrogation: Conventional subrogation occurs when there is an agreement or
contract between the parties involved, specifically stating that the person paying off a debt will
be subrogated to the rights of the original creditor. In this case, the subrogation is based on the
mutual consent and agreement of the parties.
For example, if a third party lends money to a borrower to pay off an existing mortgage, and the
borrower and lender have a written agreement stating that the lender will step into the shoes of
the original mortgagee, it would be a case of conventional subrogation.
Legal Subrogation: Legal subrogation is a type of subrogation that arises by operation of law,
even without an explicit agreement between the parties. It is based on the principle of equity and
is recognized to prevent unjust enrichment or to promote fairness in certain circumstances.
Legal subrogation can occur in various situations, such as:
a) Insurance Payments: When an insurance company compensates a person for a loss or damage,
the insurance company may be legally subrogated to the rights of the insured person to recover
the amount paid from any third party responsible for the loss or damage.
b) Co-mortgagors: If two or more individuals are co-mortgagors (jointly liable for a mortgage),
and one of them pays off the entire mortgage, that person becomes legally subrogated to the
rights of the mortgagee and can claim the proportionate share from the other co-mortgagors.
c) Guarantor or Surety: If a person guarantees or acts as a surety for the debt of another person,
and the guarantor pay off the debt, the guarantor may be legally subrogated to the rights of the
original creditor and can seek reimbursement from the debtor.
In legal subrogation, the subrogated party steps into the shoes of the original creditor and
acquires all the rights, remedies, and securities that the original creditor had against the debtor.
This allows the subrogated party to enforce those rights and recover the amount paid on behalf of
the debtor.
It's important to note that the specific provisions and requirements for subrogation may vary in
different jurisdictions, so consulting the relevant laws and seeking legal advice is recommended
for a comprehensive understanding.

Conclusion
In conclusion, subrogation is a legal concept that allows a person or entity who pays off a debt
on behalf of another party to step into the shoes of the original creditor. It grants the subrogated
party the same rights, remedies, and securities that the original creditor had against the debtor.
Under the Transfer of Property Act, there are two types of subrogation: conventional subrogation
and legal subrogation. Conventional subrogation occurs when the parties involved have a written
agreement explicitly stating that the person paying off the debt will be subrogated to the rights of
the original creditor. Legal subrogation, on the other hand, arises by operation of law and does
not require a specific agreement. It occurs in situations such as insurance payments, co-
mortgagors, or when a person acts as a guarantor or surety for another's debt.
Subrogation is a crucial principle that ensures fairness and prevents unjust enrichment. It allows
the party who pays off a debt to seek reimbursement and enforce the rights against the debtor.
However, the specific provisions and requirements for subrogation may vary in different
jurisdictions, so it's essential to consult the relevant laws and seek legal advice when dealing with
subrogation matters.