Aligarh Muslim University

Malappuram Centre

End-Term Assignment

Topic : Co-Mortgagor and Doctrine Of Subrogation

Subject : Transfer of Property Act-II

Submitted By : Submitted To :
Mohd Natiq Khan Dr. Shally Victor
18BLLB078 / GI0153 Assistant Professor

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4th year Department of Law

CONTENT

Introduction

Section 91 Co-Mortgagor

Section 91(a) Intrest in the mortgaged Property

Lessees

Case law

Criticisms

Recommendation

DOCTRINE OF SUBROGATION

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Nature and Scope

Kind of Subrogation

Legal Subrogation

Illustration

Co-Mortgagor

Surety

Purchaser of Equity of Redemption

Conventional Subrogation

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Introduction
The right of redemption and its limitations as well as other remedies having been
dealt with, the Act proceeds to lay down who can redeem. Section 91 reads-

Besides the mortgagor, any of the following persons may redeem, or institute a
suit for redemption of the mortgaged property, namely:-

(a) any person (other than the mortgagee of the interest sought to be redeemed)
who has any interest in, or charge upon, the property mortgaged or in or upon
the right to redeem the same;

(b) any surety for the payment of the mortgage-debt or any part thereof; or

(c) any creditor of the mortgager who has in a suit for the administration of his
estate obtained a decree for sale of the mortgaged property."

Section 91-Co-mortgagor.-
Under this section, besides the mortgagor, the other specified persons may also
redeem the mortgaged property. The case of co-mortgagor is not dealt with in
specified words, but there can hardly be any doubt that the co-mortgagor falls
within the expression "mortgagor".1 In general, when a mortgage is created
jointly on property in which several persons are interested, each of the
mortgagors is liable to pay the entire debt, unless there is a contract to the
contrary.

Thus, a debtor, who is a co-mortgagor, is liable for the whole debt jointly and
severally with the other mortgagors and is entitled to redeem the entire property
on payment of the debt. It was so held in a Bombay case3 and, with respect, this
appears to be the correct view. If so, there can hardly be any doubt that a co-
mortgagor falls within the principal expression "mortgagor" in section 91 and it is
not necessary to relate his case to clause (a)-'Any person who has any interest in
the property mortgaged or in or upon the right to redeem the same'.

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The reason why, in section 92, after providing for the persons referred to in
section 91, other than the mortgagor, a co-mortgagor is specifically mentioned, is
that since the mortgagor was excluded by its very terms, the case of a co-
mortgagor had to be provided for in the context of subrogation in that section. If
the co-mortgagor is not mentioned specifically in section 92, then he would be
excluded by the words excluding the mortgagor.

Cf section 95.

Cf section 40, Contract Act.

Ambu Ram Mhatra v. Blew Halya Patil, AIR 1957 Born 6 (7), para. 6 (Shah, J.).

Section 91(a)-Interest in the mortgaged property.-

In section 91(a), the words "interest in property mortgaged or in the right to
redeem the same" have created considerable controversy. It is to be borne in
mind that the interest must be in the property which is mortgaged and it,
therefore, becomes necessary to determine whether the person claiming a right
of redemption under section 91(a) is a person who is interested in such property.
We are not concerned with the law as it was before 19291, although it would
appear that the law was not in this respect, substantially different.

The expression "property mortgaged" means the interest of the mortgagor which
has been made the subject matter of the mortgage. Hence a person claiming
paramount title has no interest in the property.2 This is the reason why the
landlord of a mortgagor lessor cannot redeem, nor can the puisne mortgagee
redeem the subsequent mortgagee. It is also well-settled3 that the interest is a
present interest, and not a contingent one, and further it must be a validly
created one.4

It is immaterial how the interest came into being. Thus, where, by the law
applicable to the last owner, there is a total failure of heirs, the property escheats
to the Government as the ultimus haeres. If there is a valid and subsisting
mortgage existing on the property, the Government will take the property subject

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to such mortgage,5 and will, as owner of the mortgagor's interest, be entitled to
redeem the mortgage.6

Lessees.-
Difficulty, however, seems to have arisen in the case of a lessee of a mortgaged
property. The matter has been considered at length in a judgment of the Nagpur
High Court, to which we shall refer later. On principle, it would seem that a lessee
is entitled to redeem the mortgage, being a person who has an "interest in the
property mortgaged" or in the right to redeem the same. There are, in fact,
observations to that effect of the Supreme Court1 though the case did not raise
this particular question. However, decisions of the High Courts do not seem to be
uniform in this regard.

Case law.-
According to one view, section 91(a) clearly confers the right of redemption on
any other person than the mortgagee who has an interest in the mortgaged
property and there is nothing in that clause to indicate that the right can only be
exercised where the interest is likely to be or can be affected by the mortgage. No
fetters have been imposed in the clause, as it stands, on the right of redemption
by a person "who has any interest in the property mortgaged", and the words
"any interest" are wide enough to cover an interest, however, exiguous and
remote it may be. The Nagpur High Court, has, however, in an elaborate
judgment1 which reviews the case law, taken a different view on the ground that
the lessee is not affected by the mortgage.

Criticism.-
With respect, this view goes counter to the language of the section. prima facie,
as was held by the Madras High Court,1 the word "interest" is not confined to a
right of ownership, but is sufficiently large to include any minor interest such as
that of a tenant. It is for this reason that a perpetual lessee2 and other lessees
have been held to have an interest within the meaning of section 91(a).

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Some decisions make a distinction between a lease for a term of years and a year
to year lease.1 There does not, however, appear to be any justification for such a
distinction in the language of the section. Of course, if the lease is void, the lessee
has no right to redeem, because then he does not acquire any lawful interest.2

In an Allahabad case,3 it was held that a perpetual tenant was entitled to redeem.
In the same case, it was observed that a tenant-at-will and a tenant on sufferance
are not entitled to redeem.

In a Patna case,4 Chatterji and Reuben, JJ. held that a lessee is always entitled to
redeem the mortgage as a person "interested". In an Oudh case,5 redemption
was not allowed when the lease was binding upon the mortgagee. The extreme
view on the side of redemption is expressed in a Calcutta case6 where a person
whose lease was void was allowed to redeem.

Recommendation.-
In this position, it is desirable to make the matter clear by adding an Explanation
in section 91 to the effect that a lessee of property is a person interested in the
property. We recommend such an amendment.

DOCTRINE OF SUBROGATION

Nature and Scope:

The term “Subrogation” means substitution. Any individual other than mortgagor
or co-mortgagor, who having interest in the mortgaged property and who
redeems the mortgage, is entitled to be substituted in place of mortgagee. In
other words, the person who pays off the debt amount of mortgage, steps into
the shoes of mortgagee(creditor) This is called subrogation or substitution of that
person in place of mortgagee for purpose of redemption, foreclosure or sale.

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By the Amendment Act of 1929, doctrine of subrogation under Section 92 had
been included in the Transfer of Property Act. Before this amendment, only the
principles of equitable doctrine of subrogation existed and were applied in India.
In Bisseswar Prasad v. Lala Sarnam Singh (1910) 6 Cal. LJ 134, the nature and
scope of the doctrine of subrogation was explained by the Calcutta High Court in
the following words :

“The doctrine of subrogation is a doctrine of equity jurisprudence. It does not

depend upon the privity of contract, express or implied, except in so far as equity
may be supposed to be imported into transaction and thus raise a contract by
implication. It is founded on the facts and circumstances of each particular case
and on the principles of natural justice,”

Kinds of Subrogation:
Section 92 of the Transfer of Property Act, 1882, provides for two kinds of
subrogation : (i) Legal Subrogation and (ii) Conventional Subrogation.

Legal Subrogation:
Paragraph 1 of Section 92 deals with legal subrogation. Any person (apart from
the mortgagor) who has an interest in the mortgaged property or in the equity of
redemption, is entitled to be subrogated in place of mortgagee. Such kind of
people have legal or statutory right of being substituted in place of mortgagee for
purposes of redemption, foreclosure or sale. Legal right of subrogation arises by
operation of law.

Under Section 92 legal subrogation may be claimed by following persons :

(a) Puisne mortgagee

(b) Co-mortgagor

(c) Surety

(d) Purchaser of equity of redemption

(a) Puisne mortgagee:

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Where the same property is mortgaged successively in favour of several persons,
all such persons are entitled to redeem their respective prior mortgage. A puisne
or subsequent mortgagee is entitled to redeem his prior mortgage by making
payments. When he does so he takes the place of that prior mortgagee. In other
words, in between the mortgagees of the same property, every subsequent
mortgagee has right to be substituted in place of prior mortgagee by discharging
the debt due to such prior mortgagee.

Illustrations
(i) A mortgaged X to B in 1990.

(ii) A mortgaged X to C in 1991.

(iii) A mortgaged X to D in 1992.

Here, the last mortgagee D can redeem the (i) mortgage executed in 1990 by
making payments to B. Where D discharges the debt due to B he (D) is entitled to
be substituted in place of B for all purposes of redemption, foreclosure or sale,
Further, it may be noted that D can redeem the first mortgage without redeeming
mortgage (ii) which is immediately prior to him. Accordingly, when D redeems
mortgage (iii) he has all the rights not only against mortgagor (A) but also C who is
mortgagee in 1991, prior to him.

(i) A mortgages X to B for Rs. 5000.

(ii) A mortgages X to C for Rs. 3000.

(iii) A mortgages X to D for Rs. 2000.

In this illustration B is first mortgagee and C and D are the subsequent

mortgagees. For C, B is prior mortgagee. For D, B and C both are prior mortgagee.
Under Section 92, D who is third mortgagee, can redeem mortgage (i) by making
payment of Rs. 5000 to B. When D pays Rs. 5000 to B he (D) shall be subrogated
for all purposes of redemption, foreclosure or sale in place of B. In other words, D
shall step into the shoes of B, i.e., become first mortgagee instead of the third
mortgagee. There are two effects of such subrogation. First, as against mortgagor

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(A), D shall be treated as first mortgagee and A would enforce redemption against
D. Secondly, as against C, D shall get priority over C. Accordingly, if C wants to
enforce his mortgage he (C) must pay Rs. 5000 to D.

Subrogation is the right of every subsequent mortgagee. Therefore, subrogation

may be claimed not only by any one mortgagee. Other subsequent mortgagee has
equal right of being subrogated.

(b) Co-mortgagor:
Co-mortgagor is co-debtor. In the debt secured by a mortgage, he is a sharer of
the debt and his property is a part of the whole mortgaged property. Hence, he
would only be liable to the extent of his own share of debt. But, if apart from
redeeming his own share, he pays off also the share of other mortgagor, he would
be entitled to be subrogated in place of such mortgagor.

(c) Surety:
In a mortgage, there may be an individual who stands as surety for repayment of
loan in case mortgagor defaults to do so. Such surety would be liable to redeem
the mortgage under Section 91. Under Section 92, when the surety of mortgagor
redeems the mortgage, he is substituted to the rights of the creditor, That is to
say, where surety pays off the debt to the creditor (mortgagee) the surety stands
in the shoes of that creditor.

(d) Purchaser of Equity of Redemption

The purchaser of equity of redemption is also entitled to be legally substituted or
subrogated. But, this subrogation may give rise to some confusion. It is important
to note that equity of redemption has been regarded as ‘property’ of mortgagor
which he may assign or sell. The purchaser of such equity of redemption becomes
‘owner’ of this property in place of seller (mortgagor). But, in the transaction of
mortgage, can he be treated as mortgagor? If yes, he shall become mortgagor
who under Section 92 has no right of subrogation. If the answer is no, then how
can he get back the money which he spent in purchasing the equity of
redemption? This confusion was removed by the Courts by introducing the

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principle of intention. It has been laid down by the Courts that in such cases the
intention of the purchaser of equity of redemption is simply to keep the mortgage
alive. Such purchaser neither intends to become owner of the mortgaged
property not even a mortgagor.

Conventional Subrogation:
Paragraph 3 of Section 92 deals with conventional subrogation. Conventional
subrogation comes into the play when any person who is stranger to mortgage,
advances money to the mortgagor under an agreement that he would be
substituted to the rights of mortgagee if mortgagor pays off the mortgage form
such money. The person who advances money to the mortgagor for redemption
need not be interested in the mortgage; he may be stranger to the transaction.
But, he must provide money to the mortgagor only for redemption and for no
other purpose and for this, there will be an agreement in writing and registered
between him and the mortgagor that when the debt is paid off from that money,
such stranger would be stepped into the shoes of mortgagee. In the absence of
any such agreement there cannot be subrogation of a person merely because
mortgage was redeemed from the money advanced by him.

The last paragraph provides that the doctrine of subrogation cannot be unless the
prior mortgage is discharged as whole. There would be no subrogation In case of
partial redemption

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