Skip to main content

subrogation u/TPA

 Subrogation under TPA: Kinds & Essentials

By Shreya Verma

The equitable principle of subrogation is as old as a Roman law and was earlier applicable in Indian and English courts as an equitable principle. Subrogation means ‘substitution’- i.e., when a person having any interest in the mortgaged property redeems the mortgage which means, he pays off the mortgaged money to the mortgagee, he substitutes mortgagee and acquires all his rights. Meaning thereby, if a person other than the mortgagor himself, redeems the mortgage, then in such case, he enters into the shoes of mortgagee and substitute the mortgagee for the purpose of redemption, foreclosure and sale.

In Bisseswar Prasad vs. Lala Sarnam Singh (1910) Cal., It was held that, subrogation is not dependent upon the doctrine of privity of contract. Which means a third person (Other than the parties to mortgage- The mortgagor and the mortgagee) can enforce foreclosure, sale or redemption of the mortgage if he redeems the mortgage on the behalf of the mortgagor.

Essentials of subrogation:

  1. There has been a mortgage;

  2. In that mortgage-

 -> a person interested in the mortgage property other than the mortgagor; or

 ->Any other person has advanced money to the mortgagor for redemption of the mortgage;

  1. Such person is then said to be subrogated (substituted) to the right of the mortgagee – whose mortgage is redeemed; and

  2. by virtue of such subrogation or substitution, that person acquires a right of redemption, foreclosure or sale of such property in the same manner as the of the mortgagee would have. 

Illustration: ‘A’ and ‘B’ Are joint owners of the property X, having equal shares each. The mortgaged X to ‘C’ And advanced a loan of Rs.10,000. ‘B’ then paid the entire sum of Rs.10,000 to ‘C’. Here, ‘B’ by this act of his substitutes ‘C’ and gets all the rights which ‘C’ would otherwise have against ‘A’ as a mortgagee. 

It is necessary for this provision to be applicable that, the person redeeming must have some interest in the property, or else, he may enter into a contract with the mortgagor that he would pay off the mortgagee only if he gets the right of subrogation.

 Kinds of subrogation:

  1.  Legal Subrogation: When a person interested in the mortgage property is entitled to be subrogated in the place of the mortgagee.

Following are the persons who are interested in the mortgaged property or equity of redemption-

(a) Puisne or subsequent mortgagee:

Illustration: ‘A’ mortgaged X to ‘B’ for Rs. 5000

‘A’ mortgaged X to ‘C’ for Rs. 3000

‘A’ mortgaged X to ‘D’ for Rs. 2000

‘D’ paid Rs. 5000 to ‘B’. Here, ‘D’ By virtue of this act-gets priority over ‘C’.

Also, he will be treated as the first mortgagee, i.e., when ‘C’ wants to get mortgage from ‘D’ will get a priority him.

(b) Co-mortgagor: He’s a person who is also the co-owner of the mortgaged property. Thus, is the one interested in mortgaged property. Therefore, by paying off the whole of the loan advanced to the mortgagee, he gets clothed as mortgagee against the other co-mortgagor.

  1. (c) Surety: If a surety, who has been appointed to satisfy the loan advanced, in case of failure of mortgagor to repay -> The surety gets all the rights, be it the right of redemption, foreclosure or sale whichever the mortgagee would get against the mortgagor.

(d) Purchaser of equity of redemption: In Gokuldas vs Puranman (1884) Cal., Gokul das, the creditor of the mortgagor, purchased equity of redemption and paid off the prior mortgagee as well. The Privy Council held, that Gokuldas, being the purchaser of equity of redemption has been subrogated to the rights of mortgagee.

By Such act – the purchaser does not become owner of the mortgaged property, but he has all rights which the mortgagee would have against the mortgagor who sold equity of redemption.

  1.  Conventional Subrogation- When a person by an agreement in writing and registered, advances money to the mortgagor on the condition that he would be subrogated to the rights of the mortgagee and thereby redeems the mortgage by that money. Then, that person Subrogates mortgagor- It is necessity that the prior mortgage must be discharged as a whole.


Comments

Popular posts from this blog

INCOME TAX SECTION 32AD - Investment in new plant or machinery in notified backward areas in certain States

 Description (1) Where an assessee, sets up an undertaking or enterprise for manufacture or production of any article or thing, on or after the 1st day of April, 2015 in any backward area notified by the Central Government in this behalf, in the State of Andhra Pradesh or in the State of Bihar or in the State of Telangana or in the State of West Bengal, and acquires and installs any new asset for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020 in the said backward area, then, there shall be allowed a deduction of a sum equal to fifteen per cent of the actual cost of such new asset for the assessment year relevant to the previous year in which such new asset is installed. (2) If any new asset acquired and installed by the assessee is sold or otherwise transferred, except in connection with the amalgamation or demerger or re-organisation of business referred to in clause (xiii)or cla

60 Minute Marriage Counselling Session On Phone

Description A 60 minute phone call with an expert Marriage\Relationship Counselor to discuss your marriage\relationship related issues. Counselling aims to resolve issues and improve communication in a relationship. Couples’ counselling works with both people in the relationship, however sessions can start with one individual, working towards the involvement of the other partner. What's Included a) 60 minute phone call with the counselor where you can discuss all your issues and seek guidance. What's Not Included a) Counselling session via meeting

Send Legal Notice for Divorce

 India being a secular country derives a large part of its laws from various religious practices. One such area of law is Divorce law of India. A divorce case in India can be initiated by either party based on the procedure relevant as per the law applicable to the parties. However, the procedure for divorce always starts with sending a legal notice.   Either party can send a legal notice to the other spouse intimating his/her intent to initiate legal proceedings for divorce. Sending a legal notice acts as a formal way of communication by one party to the other acting as a warning and at the same time creating chances for a last attempt for conciliation, if possible. Connect with an expert lawyer for your legal issue   What is a legal notice for divorce? A legal notice refers to a formal communication to a person or the opposite party in a case, informing him/her about one’s intention to undertake legal proceedings against him/her. Therefore, a legal notice for divorce is a formal inti