Doctrine of Subrogation

Subrogation has been derived from the Roman law. Subrogation means substitution.
Substitution of one person or thing for another, and because of such substitution, the same rights
and obligations attached to the original person or thing, the same rights and obligations also get
attached to the substitute person or thing. Therefore, it enables a person to stand in the shoes of
the creditor. In other words, when a mortgagee transfers his mortgaged debt, the assignee gets
all the rights of the mortgagee. Unless there is redemption by the assignee there can be no
subrogation. Subrogation is a right of a person to stand in the place of the creditor after paying
off his liabilities. The right of subrogation is statutorily recognized and described in section 92
of transfer of property act, 1982. The doctrine of subrogation is based on the principle of equity,
justice and good conscience. In Mst.Azizunnissa 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.
Section 92 of transfer of property act says Any of the persons referred to in section 91 (other than
the mortgagor) and any co-mortgagor shall, on redeeming property subject to the mortgage,
have, so far as regards redemption, foreclosure or sale of such property, the same rights as the
mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee.
The right conferred by this section is called the right of subrogation, and a person acquiring the
same is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. A
person who has advanced to a mortgagor money with which the mortgage has been redeemed
shall be subrogated to the rights of the mortgagee whose mortgage has been redeemed, if the
mortgagor has by a registered instrument agreed that such persons shall be so subrogated.
Nothing in this section shall be deemed to confer a right of subrogation on any person unless the
mortgage in respect of which the right is claimed has been redeemed in full.
Essential conditions for claim of subrogation:
1. There should be redemption by a person other than the mortgagor
2. The person claiming the right must have an interest in or charge upon the property
mortgaged entitling him to redeem the mortgage.
3. The redemption should be with regard to the full property
 4. A person must have advanced money to a mortgagor to redeem a mortgage with an
agreement under a registered instrument that he shall be subrogated to the rights if the
mortgagee whose mortgage is discharged.
In accordance with sec.92 of the transfer of property Act the person entitled to subrogation is
one other than the mortgagor. In view of sec-59-A the expression ‘mortgagor’ includes a
person deriving title from him. A person in the position of a mortgagor cannot therefore
be entitled to subrogation under sec.92. In the case of Piarey Lal v. Dina Nath, the
plaintiff had purchased the equity of redemption, and thus had derived his title from the
mortgagor and being, a mortgagor within the meaning of sec.59-A he was held not to be
entitled to the right of subrogation under sec.92.
Reason for the recognition of subrogation:
1. If the person redeeming the property is not given the right of subrogation, the subsequent
mortgagees will gain priority to his detriment
2. It is also benefit that the first mortgagee to get his purchase money
3. Doctrine is based on equity and justice because it removes many hardship.
Types of Subrogation: Legal and conventional subrogation
1. Legal subrogation
When subrogation is taking place by the operation of law, then it is known as legal
subrogation. Here the person redeeming the property has some interest towards the
mortgaged property. If an individual is interested in the payment of money that another
person is bound by the law to pay and thus pays it he’s entitled to be compensation by the
other the personal obligation arising underneath the circumstances is embodied in sec. 69
of the Indian contract act and also the equitable right of subrogation underneath sec. 92 of
transfer of property act.
In Mallireddi Ayyareddi v. Gopalakrishnayya, It was held that the purchaser may by
paying off an earlier charge, treat himself as buying it and stand in the same position as
his vendor, but it would not apply if the owner of the property (by which expression is
meant the purchaser) has covenanted to pay the latter mortgage debt. The court held that
to proceed to hold the covenant must be with the original mortgagor who was personally
bound to pay the mortgage or his heir at law. The court further held that the stipulation
that the sale was to be free of all encumbrances implied a covenant that the vendee was to
 be entitled to subrogation on redeeming prior mortgage from out of consideration for the
sale.
Legal subrogation may occur in four ways:
a) A subsequent mortgagee may redeem the property from a prior mortgagee
b) A co-mortgagee may redeem a mortgage
c) The mortgagor’s surety may redeem the mortgage.
d) Purchaser of equity redemption may redeem the mortgage.

2. Conventional subrogation
A conventional subrogation takes place by the act of parties and the person redeeming the
property has no interest towards the property. Such a stranger may advance money under
an agreement and get the right of subrogation, But there should be a written agreement
between the mortgagor and the redeemer. It has been said that subrogation is
conventional, when there's an agreement which is specified in either of form express or
implied, that the person making the payment shall exercise the rights and powers of the
original creditor, and that very slight evidence is spare to determine such an agreement.
However the law on conventional subrogation has been amended, sec.92 which acquires
that the agreement of subrogation ought to be in writing and that the writing ought to be
registered.
Conventional subrogation is possible only under certain conditions:
1. There should be an agreement with the mortgagor
2. The agreement for subrogation should be by means of a registered document. Legal
subrogation can be claimed only when the person paying the debt is already having an
interest in the property. Any person who has no such interest cannot claim
subrogation.