REDEMPTION,

MARSHALLING
AND
CONTRIBUTION
By
D.V.N.Murty
REDEMPTION SEC-60
 It is a right which a mortgagor may enforce.

 Incident of subsisting mortgage and subsists so long as the mortgage subsists.

 This right can be exercised by the mortgagor after the paying the mortgage debt.

 The mortgagor may require the mortgagee:

a) to deliver the mortgage deed and documents.

b) to deliver the property.
c) to re-transfer the mortgaged property to third person at mortgagor’s expenses.
REDEMPTION CONT.…
 The right of redemption extinguishes:

a) by the act of parties; or

b) by the order of the court
i) under Ord 34 Rl. 3(2)
ii) under Ord 34 Rl. 8(3)
 Mortgagor must give a notice to the mortgagee of the right of redemption.
 Part redemption is not allowed except mortgagee acquires the part share.
EXCEPTION TO THE GENERAL RULE
OF NON REDEMPTION IN PART

 General rule:
“ Part of the property cannot be redeemed”
Exceptions:
1. Terms of the mortgage providing for partial redemption
2. Distinct and separate shares of the co-mortgagors
3. Mortgagee himself acquires a portion of the mortgaged property.
PERSONS WHO CAN REDEEM
 Under Section- 91
1. Any person other than the mortgagee, who has an interest in the mortgaged
property
2. Any surety for the payment of the mortgage debt
3. Any creditor of the mortgagor obtaining a sale of the mortgaged property
1. Mortgagor and subsequent mortgagees can redeem

Anshul is the mortgagor------A-----5 Lkhs

B-----5 Lkhs
C----2lkhs mortgagees
D---2 Lkhs-
EFFECT OF REDEMPTION.
 Return of the documents and return of the possession of the mortgaged property (Section 60
and 62)
 Mortgagor may require the mortgagee to assign the mortgage debt to third person (Section-
60A).
 Mortgagor becomes entitled to

1. Any accession to mortgaged property during the mortgage (Section 63)

2. Improvements made thereon (Section 63A)
3. Renewed mortgage lease (Section 64).
REDEEM UP AND FORECLOSE
DOWN
 Redemption has been provided under section 60 and 91(a)
 Foreclosure has been provided under section 67 and 94.
 The combined reading of both Section 91(a) and 94 five the above mentioned concept.
 Here redemption does means redemption by the mortgagee

A mortgages the property to B, C, D & E. how the concept works

E can redeem up all his prior mortgagees D,C&B
D can redeem C&B
C can redeem B
• Similarly forclosure operates downward in the reverse manner.
SUBROGATION
 Roman word meaning substitution.
 Based on the principle of justice, equity and good conscience.
 A persons stands in the place of creditor by paying off the debts.
 This can apply only in case of redemption

a) full redemption not partial redemption

 To clothe a person with all the rights of a mortgagee/creditor
 Not applicable where the mortgagor himself redeems the property.
KINDS OF SUBROGATION
 Legal subrogation

a) puisne mortgagees
b)co-mortgagors
c) surety
 Conventional subrogation
 Stranger pays off the mortgage debt
 Has not interest in the mortgaged property
 Agrees by an agreement
MARSHALLING OF
SECURITIES
 One mortgagor, two or more mortgagees and two or more properties
 Mortgages the properties to one mortgagee.
 Mortgages one of the mortgaged properties to another mortgagee
 Subsequent mortgagee can exercise marshalling right against the properties not mortgaged to
him/her.
 Marshalling must not be prejudicious to the prior mortgagee or any person whose debt is to
be satisfied.
 Subject to the contract to the contrary.
CONTRIBUTION
 Giving something with the help of others.
 It is based on the principles of equity, justice and good conscience.
 Law does not allow a one of the common debtor to bear the burden of debt.
 Rules of contribution under Section 82:

1. Property belonging to two or more persons

2. One property mortgaged first then both the properties mortgaged to another person.
3. Marshalling to supersede contribution
PROPERTY BELONGING TO
TWO OR MORE PERSONS
 Persons taking a common loan having distinct shares in the property
 If one of the debtor/mortgagor pays the entire debt, others debtors/mortgagors shall contribute
rateably.

A, B and C are the owners of the property holding it in common. They have taken a debt of Rs.
3 Lakhs. Later they got their shares divided. ‘A’ was having share of Rs. 2 Lakhs, B & C were
having Rs. 50,000 each. C has paid the entire Rs. 3 lakhs debt.
How the contribution will happen?
MORTGAGED TO ONE AND
THEN BOTH THE PROPERTIES
MORTGAGED TO ANOTHER
 Mortgagor having two properties, mortgages one of them to secure a debt
 Mortgagor thereafter mortgages both the properties to another for securing another debt.

Rs. 1 Lakh
X B for debt of 1.5 lakhs

A Y C for debt of Rs. 50,000

Rs. 1 Lakh
How the contribution will happen.
MORTGAGEE’S RIGHTS
 Mortgagee has a right to foreclose by filing a suit for foreclosure (Section 67 and order 34 Rule 3)
 Mortgagee has right to sue for mortgage money (Section 68)
a) mortgagor binds to pay
b) mortgaged property is destroyed wholly or partly without the fault of
mortgagee
c) mortgagee entitled to the possession of property but not delivered by
mortgagor
d) when the mortgagee is deprived of the security wholly or partly
MORTGAGEE’S RIGHT CONT…
 Mortgagee has a right to sell the property (Section 69)
 Appoint a receiver (Sec- 69A)
 Right to accession during the mortgage (Section 70)
 Right to renewed lease (Section-71)
 Reimbursement with interest of the expenses for the preservation of property (Section- 72)
 Mesne mortgagee right to redeem the prior mortgagee and forclose the subsequent mortgagee
MORTGAGEES LIABILITIES
 Mortgagee has to manage the property as a person of ordinary prudence as if it was were his
own.
 Must collect the rents and profits thereof.
 Absence of the contract to the contrary, mortgagee may pay the government revenue and other
charges of a public nature and rent out of the income of the property.
 Make necessary repairs as may be required in the absence of a contract to the contrary.
 Must not commit any act which is detrimental to the property either wholly or partly
 To keep clear all the accounts