DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY,

VISAKHAPATNAM, A P., INDIA

PROJECT TITLE:
DOCTRINE OF SUBROGATION - CASES TILL 1950

SUBJECT:
TRANSFER OF PROPERTY

NAME OF FACULTY:
MR. P JOGI NAIDU SIR

NAME OF STUDENT:
Ojas Pandey

ROLL NO.:
20LLB072

SEMESTER: IV
 TABLE OF CONTENTS

1. ACKNOWLEDGEMENT

2. ABSTRACT

3. AIM OF THE STUDY

4. SCOPE OF THE STUDY

5. SIGNIFICANCE OF THE STUDY

6. RESEARCH METHODOLOGY

7. LITERATURE REVIEW

8. RESEARCH QUESTIONS

9. INTRODUCTION

10.TYPES OF SUBROGATION

11. CASE OF GOKALDAS GOPALDAS AND RAMBAKSH

SEOCHAND VS PURANMAL PREMSUKHDAS

12.CASE OF ISAP BAPUJI AMIJI VS UMARJI ABHRAM ADAM

13. CASE OF TOTA RAM AND ORS. VS RAM LAL AND ORS

14.CONCLUSION
 -- ACKNOWLEDGEMENT --
I would sincerely like to thank our Transfer of Property Professor, Mr. P Jogi Naidu Sir, for
allowing me the privilege to work on this topic, and for helping me and guiding me when
necessary. I have collected information and compiled it here to the best of my knowledge.
 ABSTRACT :
The Law of Subrogation is based on the standards of equity, yet it is nevertheless quite
concise. The notion is that whomever pays off a mortgage is entitled to all of the benefits of
the mortgagee. Study of the doctrine and how it relates to areas of India that are not covered
by the Act was the subject of this work. This study looks at how the theory developed and
became important in India, as well as how it relates to pertinent property cases up until 1950.
Doctrine of subrogation is just one of many guidelines. Essentially, the theory of subrogation
is a combination of two concepts: substitution as a legal phrase and salvage as a legal
concept. Rather than relying just on the fact that the payment was made for the benefit of the
debtor, the subrogate must show that it was done with the latter's approval, whether it was
spoken or inferred.
There are two types of subrogation, legal and conventional: A third mortgagee who redeems
the first mortgage will be subrogated to the position of the first mortgagee against the second
mortgagee. Legal subrogation is the term for this process. Conventional subrogation, on the
other hand, occurs when the person who pays off a debt has no interest to protect but provides
money on an understanding that he will be subrogated to the rights and remedies of the
original encumbrancer.
An overview of all the important ideas is provided in the first paragraph of my study paper.
Subrogation has been institutionalised in Indian law as a borrowed notion. This is the
beginning of the project's history of development of the concept. Explanation of the concept
as it applies to Indian scenarios and the presentation of relevant case laws are next on the
agenda for the project.
Finally, the research concludes with the researcher's opinions on some of the most notable
cases surrounding the theory of subrogation.

AIM OF THE STUDY :

To understand about the Doctrine of Subrogation, its application and intricacies with the help
of case laws. To study about the evolution of doctrine of Subrogation in India with the help of
Judgements till 1950.

SIGNIFICANCE OF THE STUDY :

It is essential that one would understand about the Doctrine of Subrogation in great detail as
Subrogation plays an important role in Property and litigation surrounding it and the doctrine
is incorporated with many complexities. In this project the researcher tried to put together
significant aspects of the doctrine in detail for better understanding.

SCOPE OF THE STUDY :

The scope of the study is limited to features of Doctrine of Subrogation under Transfer of
Property Act, 1882 and Case Laws till 1950.

RESEARCH METHODOLOGY :
The researcher has primarily used primary and secondary sources to collect data. This study
is a doctrinal study

LITERATURE REVIEW :

The researcher has collected information from various online sources, journals and articles.
The researcher compiled information from above motioned sources, and put together relevant
information to his understanding.

RESEARCH QUESTIONS :
1. Whether doctrine of subrogation plays a major role in Indian Property related
litigations?
 INTRODUCTION :

Subrogation is a basic idea. It's a euphemism for the act of replacing one person with another.
In this part, subrogation rights are discussed for two distinct groups of people. In the first
place, it addresses the rights of those who already have an interest in the property, and in the
second place, it addresses the rights of those who acquire an interest in the property for the
first time. Sec. 92 of the Transfer of Property Act clearly states that any co-mortgagor who
redeems property to the creditor will have the same rights as the mortgagee whose mortgage
he redeems against the mortgagor or any other creditor as they have up to now with regard to
redemption, proceeding, or sale of such property.
The proper of subrogation gets its name from this term. Even while subrogation does not
allow the redeeming co-mortgager to argue that he is the mortgagee, it does allow him to seek
compensation for whatever money he has spent prior to the co-desire mortgager's to reclaim
ownership from him. Co-mortgagees can be redeemed by simply stating how much money
they paid before handing up the property. It's not required for the co-mortgagor to launch a
separate redemption suit for this to be resolved. Any remaining issues might be resolved in a
final decree action that takes place concurrently with this lawsuit. If the mortgage in question
is not repaid in full, no one can claim the right of subrogation, according to Section 92 of the
Transfers of Property Act. Legal subrogation is based on the notion of equitable
compensation.
Second-lien holder sued for his mortgage without notifying the first-lien holder; he won the
case and sold the hypothecate, paying off the decree in part; he then entered partial
satisfaction. Under the terms of the mortgage agreement, he still owes him money. When
such a person pays off a prior encumbrance, the question that arises is whether he can step
into the shoes of the first mortgagee. On the day that the second mortgagee redeemed his
mortgage, the first mortgagee's right to enforce his mortgage has not expired by limitation.
According to the decision in Mst. Azizunnisa V. Komal Singh1, a person who buys
mortgaged property in accordance with a mortgagee decree is entitled to redeem additional
mortgages placed on the same property by the mortgagor, as well as the interest accrued on
the mortgage.
The equity of a redeeming co-mortgagor who discharges the entire mortgage debt, which was
his and his co-joint mortgagor's and several liability, was entitled to be subrogated to the right

1
AIR. 1930 Pat. 579
of the mortgagee redeemed and treated as his mortgagor to the extent of the latter's portion or
share in the hypotheca and held that portion or share as security for the excise tax, even if the
transfer of property acts were not in force. That equitable right stems from the doctrine that
the redeeming co-mortgagor was only responsible for his own share, and that when the surety
had discharged the entire mortgage debt, he could be Subrogated to the creditors held
securities, in order to get reimbursed for the amount paid by him in excess of his share to
disburse, and thus, he was entitled to be Subrogated.
Sec. 92 of the Act does not apply to the State of Punjab as a whole, but the principles outlined
therein, which are founded on justice, equality, and good conscience, have always been
relevant. The Supreme Court's decision in Ganeshi Lal's case was based on the basis of SC.92
of the Act, which states that the theory of subrogation, which implies substituting one person
for another and granting him the rights of that person, is applicable. The latter is based on a
principle of fairness2. A debt must be paid by the person who is legally and morally obligated
to do so, and in the case of several joint debtors, the individual making the payment is both a
principle and a surety. Sec. 92 of the Transfer of Property Act has been interpreted to apply to
the Punjab, despite the fact that the Act has not been extended to his territory.
A legitimate claim for subrogation must meet the following requirements:
A person claiming the right to redeem a mortgage must have an interest in or a charge on the
mortgaged property.
Otherwise, he'll have to pay off the mortgage.
To be subrogated to the rights of the mortgagee whose mortgage is discharged, a person must
have given money to a mortgagor pursuant to an arrangement under a recorded document.
Law holds that in addition to the two requisite conditions, the plaintiff must show that he was
paying the amount from his own pocket and his own money to protect his own interest, and
not out of the amount retained by him – as of the mortgagor – for that purpose under a
covenant so that it can be said that he acted and redeemed the property. Prior to coming under
paragraph 1 of Section 92 of the Act, it is an important need. Sec 92 of the Act requires proof
that the borrower was not redeemed on the amount owed.
As stated in the Transfer of Property Act, a person who is not the mortgagee can be
subrogated. The term "mortgagor" includes those who derive their title from the mortgagor in
light of sec-59-A. The subrogation rights of a mortgagor cannot consequently be exercised
under section 92.

2
AIR 1935 All 435
It was found that the plaintiff in Piarey Lal v. Dina Nath3 was not entitled to the right of
subrogation under Section 92 since he had acquired the equity of redemption and thereby
obtained his title from the mortgagor.
As in Taibai vs. Wasudeorao Gangadhar4, the mortgagee paid the money out of his own
pocket and not from his own money, which was left in his possession by the mortgagor. The
test used is to determine who owned the money that was used to pay. If the vendee or the
mortgagee has acquired the property and agreed to pay off a previous obligation with the sale
price or the mortgage money, he is paying the transferor's money instead of his own.
The definition of the term "subrogation" varies from area to area. To be clear, the main focus
here is on the English common law principle of subrogation and how it is applied in India
under the British-enacted Transfer of Property Act of 1882. The Doctrine of Subrogation was
developed outside of Roman law as an English jurisprudence. It has its origins in equity
courts.
Buckland has spoken out about subrogation and voiced his views on the matter. When
subrogation first appeared in English common law, the Romans had no idea what they had.
Roman law employed the term "subrogation," which is probably familiar in constitutional
law, to describe the act of substituting one official for another and replacing their activities.
"It is not until the time of Justinian that it clearly emerges in private law, and even then it is
not in our meaning," stated Buckland in the Private Law. To cope with testators who couldn't
get all of their witnesses together for various reasons, an enactment in the code states that
those who came later might be subrogated, being advised of what happened in their absence.
Subrogation to a buyer of equity of redemption was accepted in Gokuldas vs Puranmal by the
Privy Council5, which held that Gokuldas was subrogated to the rights of the preceding
mortgagee whom he had paid off and that this allegation could not be disposed of unless
Gokuldas paid back the prior mortgage. According to the circumstances of the case,
Gokuldas, the creditor of the mortgagor, purchased the equity of redemption at a sale in
execution of a money decree and gained possession. A former lender sued him for possession
after he paid off the previous lender, but the puisne lender won.

3
AIR 1939 All 190
4
AIR 1937 Nag 372
5
(1884) I.L.R., 10 C., 1035
 TYPES OF SUBROGATION:
Legal subrogation, or subrogation by operation of law, and customary subrogation are two
forms of subrogation.
Subrogation in law
Legal subrogation is based on the notion of just compensation, which is the cornerstone of the
right. The other person has the right to compensate a person who pays money that another
person is legally obligated to pay. Sec. 69 of the Indian Contract Act and Sec. 92 of the
Transfer of Property Act contain the personal responsibility arising under certain
circumstances, as does the equitable right of subrogation.
In other words, someone who has a stake in the property will use it, rather than someone who
does not have a financial commitment to repay. It comes with a fair price attached. The
amount of money that someone who has an interest in the property owes might create an
equitable charge in their favour if they pay a sum of money to prevent the property from
being sold.
Without regard to intent, the rights of a puisne mortgagee who redeems an earlier mortgage
are legitimately subordinated to those of its predecessor.
In the case of Gopalakrishnadi Gopalakrishnan vs. Gopalakrishna6.
It was held that the buyer could treat himself as buying the property by paying off an earlier
charge and being in the same position as his vendor, but this wouldn't apply if the owner of
the property (in this case, the buyer) had covenanted to pay the latter mortgage debt. Next,
the justices ruled in favour of holding that the mortgage payment covenant must be with the
original mortgagor or his legal heir. Judges were unanimous in their subsequent decision to
find an implicit covenant of subrogation by vendee to redeem earlier mortgage out of
consideration for sale under terms of sale agreement that stipulated that the transaction would
be free of encumbrances.
The second type of subrogation is called “conventional subrogation”. Sec.92 of the Transfer
Property Act has been amended, allowing for the claim of a right of conventional subrogation
if a specific contract is in place between the lender and the mortgagee or customer,
respectively. Sec. 92 of the Transfer of Property Act applies whenever an individual buys or
takes a puisne mortgage on property that is already subject to a mortgage, and the
consideration for the sale or mortgage is the discharge of the amount due on the mortgage
that he is ordered to pay off. The conventional wisdom holds that subrogation occurs when

6
(1910) ILR 33 MAD 123
the person making the payment agrees, in any form, express or implied, to assume the rights
and powers of the original creditor, and that only a sliver of evidence is needed to establish
such an agreement. Although the law on conventional subrogation has been updated, Sec.92,
which requires that the agreement of subrogation be written and registered. The creditor's
interests aren't served by any payment made by a volunteer or a mortgagee. No one can claim
the benefit of the creditor's protection if they pay off a mortgage debt. Anyone simply paying
off a mortgage is frequently entitled to the security of the mortgagee if there isn't a registered
document.

CASE NO. 1 -

GOKALDAS GOPALDAS AND RAMBAKSH SEOCHAND VS PURANMAL

PREMSUKHDAS 7

FACTS :
Amraoti bankers Puranmal Premsukhdas and Bhairaodin executed a mortgage to Rambaksh
Seochand for Rs. 26,500 and interest on the 22nd of June 1873. Rambaksh Seochand owed
the business an additional Rs. 40,000 on the 18th of December, thus on that day the firm
issued a similar mortgage to him in Amraoti to guarantee the return of that figure, with
interest. One of the nine homes specified in the decree of August 8th, 1879, which was the
subject of the litigation, was included in the previous mortgage, while the other eight were
included in the second. Six of the properties had been turned over to the mortgagee by the
time the foreclosure process was complete.
If you're interested in the following three houses, which we've already mortgaged to the New
Bombay Bank in order to pay Rs. 16,000, we'll give you the properties in exchange for the
New Bombay Bank's lien on them, which will remain in place until we've recovered all the
money we owe the bank. If there's any money left over, you'll get it. In the event of a
shortfall, the bill will be ours to bear. Until the New Bombay Bank reclaims these properties,
we cannot hand the homes over to you; nevertheless, as soon as the Bank's ownership of them
ends, you should realise that these properties will be yours.
The appellant, Gokaldas Gopaldas, got a decree against Puranmal Premsukhdas for roughly
Rs. 19,000, and in September 1876, he acquired the right, title, and interest of Puranmal
7
22 AIR 1884
Premsukhdas in the nine homes that had been attached and sold in execution of the decree. he
paid the bank Rs. 5,000 for the mortgage debt on April 21st, and Rs. 137-2-10 on May 10th
as complete payment for the bank's claim on the mortgage. After a prior reduction in the
Bank's debt, When Rambaksh Seochand initiated an action against him and Puranmal
Premsukhdas, the first defendant, to reclaim ownership of the nine properties on July 11th,
1877, he claimed under the two mortgages he held on them that he was entitled to them. And
if he didn't get the residences back, he was entitled to the mortgage and interest payments.
ISSUES
1. Is the appellant in this instance entitled to the mortgage money and interest as a result
of subrogation ?
2. To what extent have the plaintiff's rights as a mortgagee have been affected by
Puranmal's debt repayment to the Bank of Bombay. Is he now the owner of the
property as a result?
HELD : Judicial Commissioner upheld this decision; Haiderbad Resident's Court denied
appeal based on this.

JUDGEMENT :
Deputy Commissioner's rejection of the claim, and Judicial Commissioner's remand of the
case, are all that is required to be mentioned here. There was good consideration and
"possession went to the plaintiff in line with the conditions of those documents," according to
the Deputy Commissioner's findings on remand. The plaintiff was in possession when the
defendants attached the residences. According to him, Gokaldas was in the exact same
situation as first defendant had he paid off his mortgage to be able to stand before plaintiff as
if Gokaldas paid off the Bank's obligation and that the payment to Bank gave instant
ownership to plaintiff over any residences it had mortgages on. He issued a ruling for the
plaintiff to take ownership of the nine dwellings, and ordered him to be assigned in charge of
the properties.

REASONING
One of the reasons for appealing to Her Majesty in Council is that the mortgages to
Rambaksh Seocband were not made in good faith or for good consideration; and that the
appellant is entitled to retain possession of the three houses he owes the Bombay Bank until
he pays back the money he borrowed from the bank.
It was undisputed at the bar that the appellant was wrongly adjudicated in lower courts on the
first of these two grounds: As a result, the appeal is dismissed on this basis and as a whole for
six of the properties. Second, whether the Toulmin v. Steere 3 Mer. 210 theory should be
used in this case is the question. According to Sir William Grant's ruling in that case, "The
cases of Greswold v. Marsham8 and Mocatta v. Murgatroyd9 are express authorities to show
that one purchasing an equity of redemption cannot set up a prior mortgage of his own, nor
consequently a mortgage which he has gotten in, against subsequent encumbrances of which
he had notice",
When their Lordships heard the case before them, the bank's obligation was not paid from the
purchase price. Only the interest of the mortgagor was acquired by the appellant, and he was
in no way obligated to pay back the amount. After six months, he decided to pay the bank
since he didn't feel obligated to do so. Since their Lordships aren't willing to extend the
theory of Toulmin v. Steere to India, their Lordships may have separated this case from that
one.
As a matter of Indian law, Toulmin's concept in Toulmin v. Steere is not relevant. When
applied to any broad, understandable notion of justice, it would be appropriate to do so.
That's not the basis for it, however. If it did, statements of purpose or formal devices of
conveyancers would not be able to exclude or defeat it, although it is defeated every day by
such methods. After paying off a previous mortgage, it is standard procedure to transfer the
property to a trustee for the benefit of the owner of a subsequent interest, who is not
personally accountable for the debt.
Sixth, their Lordships believe that the lower courts' decision to treat the appellant as a
mortgagor in this matter was incorrect. Against put it another way: The appellant, the second
defendant, has a solid defence to an action for the three residences included in the Bank's
mortgage, according to these judges. To this end, they will respectfully recommend to Her
Majesty that the judgement under appeal be adjusted to remove the dwellings listed under
numbers 4, 5, and 6, as well as dismissing the suit in relation to those residences, with costs
in the lower Courts proportional. They also issue no ruling regarding the appeal's costs
because the appellant has been found ineligible to challenge the legality of the mortgages
held by Rambaksh Seochand.

8
Greswold v. Marsham 2 Ch. Cas. 170
9
Mocatta v. Murgatroyd, I.P. Wms. 393
THE OPINION OF THE RESEARCHER
Having read through the lengthy legal discussion, the researcher comes to the conclusion that
Gokuldas was subrogated to the rights of the prior mortgagee, and that this assertion could
not be disposed of unless it was redeemed, in light of the court's ruling that the Privy Council
had adopted the subrogation doctrine.
The rights and remedies of a creditor are not transferred to a mortgagor who pays off a
previous obligation. In order to fulfil his responsibility to the creditor, he is eliminating an old
lien that he had placed on his own property.
When a later mortgagee pays off a previous mortgage, "no issue arises as to whether the
payment benefits the mortgagor or mortgagee," according to the Madras High Court. Section
92 is only applicable if the individual seeking the benefit of this section was a mortgagee at
the time he made the payment.

CASE NO 2 -
ISAP BAPUJI AMIJI VS UMARJI ABHRAM ADAM 10

FACTS :
The appellant filed the action to recover Rs. 5,998 as principal and Rs. 4,001 as interest from
the suit property. His claim was that on April 3, 1919, a Mahamad Asmal donated him the
land in question. On March 14, 1918, Mahamad Asmal mortgaged a portion of the property
to the plaintiff for Rs. 999, and on November 29, 1918, Mahamad Asmal mortgaged the
entire suit property to one Darasha for Rs. 4,999. The mortgage to Darasha required the
mortgagee to pay down the plaintiff's earlier mortgage of Rs. 999. On April 2, 1919, the
mortgage for Darasha was paid off. It states that Isap Bapuji (the plaintiff) paid Rs. 4,999 on
lieu of the mortgagor Mahamad Asmal that day and that the document duly marked as
satisfied was handed to the mortgagor Mahamad Asmal and that he was given ownership of
the land. On behalf of the plaintiff, Mahamad Asmal requested that he pay off Darasha's
mortgage, and the plaintiff paid off Darasha's mortgage the next day, and the deed of gift was
signed. Some months after the gift-deed was signed, Mahamad Asmal issued a sale-deed for
the suit property in favour of Vali Bagas and Umar Ali, and the other defendants.

10
(1937) 39 BOMLR 1309
The plaintiff filed a lawsuit to regain ownership of the property. The claim was rejected and
the High Court affirmed the judgement on October 9, 1929. Then he filed the current action,
claiming a charge on the suit property for Rs. 5,998 paid to the mortgagee Darasha, plus Rs.
9,999 in interest. The learned trial Judge held that the plaintiff had no relation to the
mortgagor Mahamad Asmal other than that of a money-lender to a debtor in this transaction,
and that there was no agreement, So it was dismissed.

ISSUES :
1. that the mere fact that the plaintiff had paid off Darasha's debt at the request of the
mortgagor created an equitable charge on the property in his favour entitling him to
recover the amount which he had paid to the mortgagee
2. that in the circumstances in which the money had been paid by the plaintiff, it must be
presumed that there was an agreement between them that the plaintiff was to be
subrogated to the rights of the mortgagee.

JUDGEMENT :
The evidence does not support the claim that the plaintiff was expressly or impliedly
subrogated to the mortgagee's rights. Specifically, the plaintiff claims Mahamad Asmal
advised him to pay off the mortgagee's debt so that Mahamad Asmal could regain possession
of the property before gifting it to the plaintiff, and that the next day, after the mortgagee's
debt was paid, Mahamad Asmal executed a gift-deed in his favour. Since the mortgagee's
rights were to be paid off by the gift-deed, the plaintiff and the mortgagor had no intention of
keeping the mortgagee's rights alive. It is clear from the mortgage deed endorsement and
Darasha's testimony that the plaintiff paid the mortgagee on behalf of the mortgagor, and the
mortgage deed was properly endorsed and turned over to him. In light of these circumstances,
it appears that the mortgagee's rights were terminated and the property was re-granted to the
mortgagor, who could then make a legal gift to the plaintiff.. Nothing in the circumstances of
the payment justifies us in assuming an implied agreement that the plaintiff would be
subrogated to the mortgagee's rights, and the learned Counsel for the appellant has admitted
in his reply that this claim is unsupported by the facts.
The appellant further contends that paying up the debt at the request of the mortgagor
generated an equitable charge against the property. A person who advances money to a
mortgagor to redeem a mortgage is subrogated to the rights of the mortgagee who has
advanced the money, if the mortgagor has agreed to be so subrogated by a recorded
document. The Amending Act, 1929 initially added this provision. Prior to then, the only
provision in the Act dealing with the issue was Section 74, which stated that any second or
subsequent mortgagee may tender the amount due on the next prior mortgage to the next
prior mortgagee, who is bound to accept the tender and issue a receipt for the amount.
Granted, the plaintiff was not a later mortgagee, therefore that provision was useless. The
appellant argued that since Section 92 of the Act did not apply to transactions before April 1,
1930, the claim must be considered on equitable grounds.
This Count relied on a judgement in Tangya Fala v. Trimbak Daga11 to buttress his claim that
Darasha's mortgage payment had established equity in his favour.
That case is distinct from the one before us because of this fact. When the plaintiff paid off
the mortgagee, Darasha, using plaintiff's money, there is no evidence to support the Court's
presumption of an implicit agreement between plaintiff and mortgagor that the plaintiff was
to be subrogated to Darasha's rights.
Even if we accept the appellant's argument, we cannot declare that the mere fact that a
stranger has paid off a mortgage obligation on behalf of the mortgagor establishes a charge in
his favour or subrogates him to the mortgagee's rights only because he was asked to do so.
A reasonable guideline would be to use legislation that established the standard of fairness,
justice, and morality as a basis for resolving disputes that occurred before the Act
The Court has no reason to dispute that the plaintiff loaned the money to Mahamad Asmal to
pay off Darasha's mortgage on his behalf and in his name. Whether the plaintiff is subrogated
to the mortgagee's position, that is, has the benefit of the discharged security, is at issue here.
In any instance, there is no proof that the plaintiff and Mahamad Asmal had any arrangement
to maintain the mortgage for the plaintiff's benefit. Mahamad Asmal, on the other hand,
pledged to make a gift of his land to the plaintiff if the mortgage was paid off, and that was
the only reason he did so: to fulfil the Mahomedan law's demand that he give the property to
the plaintiff as an act of gift. Under the circumstances, it cannot be stated that the plaintiff
had any purpose of keeping the mortgage alive. In order for the property to be transferred to
him, he wanted the mortgage to be paid off. Because of this, it is quite likely that no one ever
considered keeping this mortgage alive. On the next day, the plaintiff received a present from
the defendant. These conditions leave the plaintiff with little choice but to rest on the fact that
he was able to get the mortgage dismissed at the request of the debtor. Equitable theory holds

11
(1916) 18 BOMLR 700
that a stranger who pays off a mortgage on an estate intends to keep that debt alive for his
own advantage, rather than dismiss it.
As far as it is concerned, the only way out of this conundrum is to argue that the right to
subrogation developed after the lender's original goal was thwarted when he couldn't prove
his claim under the gift-deed. If that's the case, then the cause of action would only have
arisen after the gift-deed dispute was settled. However, that would be an odd stance to take,
and no authority has been presented to back it up in any way.
HELD :
It was held that the appeal should fail and that it should be dismissed with costs.
REASONING :
According to Mr. Justice Sundara Ayyar in Narayana Kutti Goundan v. Pechiammal12, the
scope of the rule appears to be even narrower; and that a mere agreement, either with the
creditor holding the mortgage or with the debtor, cannot give a person lending money to pay
off the mortgage a lien on property.
The appellant's theory that he would be entitled to the mortgagees' rights via subrogation
simply by making a payment on a debt has never been accepted in India. It's hard to make the
case that someone may discharge a mortgage he has no interest in, and claim a lien as a
result. This means that the plaintiff cannot assert that he is entitled to the rights of the
daughters or Muthu Goundan just because he paid off the latter's mortgage.
Calcutta High Court ruled in Gurdeo Singh v. Chandrikah Singh13 that a person can invoke
the equitable right of subrogation only if he is either a surety for the debt or made the
payment under an agreement with the debtor or creditor to receive and hold an assignment as
security, or he must be in a position to do so in relation to the mortgaged asset. The argument
that the plaintiff's payment of Darasha's mortgage debt created an equitable charge in his
favour on the property for the amount of the mortgage debt without any express or implied
agreement to be subrogated to the rights of the mortgagee is unsupported by authority and
cannot be allowed.
The Amending Act XX of 1929 modified the Transfer of Property Act at the time this lawsuit
was brought. By signing a registered document, the mortgagee agreeing to be subrogated,
Section 92 of the modified Act states that a person who has given money to an individual to
be used for the redemption of a mortgage is entitled to be subrogated to the rights of the
original mortgagee. To the extent that any amendments to the Amending Act are assumed to

12
(1912) 22 MLJ 364
13
(1909) ILR 36 Cal 193
influence any terms or occurrences of property transfers made before April 1st, 1930, they are
expressly excluded under Section 63 of the Amending Act. anything done or suffered before
to the date stated in the preceding paragraph is not affected by this provision. In the event that
a remedy or process relates to a right, title, obligation, or liability that existed prior to the
effective date, the remedy or proceeding will control. There is no mention of Section 47,
which enacted Section 92 of the current Act. After then, Section 63 says nothing in the Act
will impact anything that was already done prior to April 1, 1930, in any process that was in
progress on that date. A complete Allahabad High Court bench held in Tota Ram v. Ram Lal
that Section 92 is retroactive, and this appears to be the notion that the new Act's
retrospective impact is intended to convey. It was decided in that instance that the
amendments to the Transfer of Property Act of 1929, which included Section 92, had
retroactive application. In Jagdeo Sahu v. Mahabir Prasad, a division bench of the Patna High
Court held that Section 92 of the Transfer of Property Act, 1882, which came into force in
1930, did not apply to a case in which the rights that the defendant claimed had already
vested in him prior to that date, and thus, it did not apply to the case at issue here. Section 63
of the Amending Act is not mentioned in any way, nor are there any explanations for the
decision. I believe that the Allahabad High Court's decision is valid, and that Section 92 has
retroactive effect as far as our case is concerned. even if this isn't right, it would be necessary
to follow Allahabad High Court's ruling that the equitable theory of subrogation previous to
Section 92's insertion must be recognised as a reference in making that decision.
In Chhotcdal Karsandas v. Vishnu Gmesh14, sec. 23 of the Boma Law Reports, the learned
Counsel for the defendants brought our attention to a previous judgement of this Court in that
case. It was in 1914 that the plaintiff filed a lawsuit for the sale of the mortgaged property,
claiming that a payment he made in 1901 to the mortgagee to pay off a previous mortgage put
a charge on that property to that amount. Despite the plaintiff's payment in 1901, the court
ruled that he was not entitled to go into possession or sell the property, and that he had to ask
for a declaratory decree that a charge had been established before the Court could have
jurisdiction over the property. This request for a declaratory decree would be governed by
Article 120 of the Indian Limitation Act. After making the payment on December 2, 1919,
the plaintiff's right of action with regard to the charge accumulated; he could not pursue
enforcement of the charge without first requesting a declaration of it, which would have been
plainly time-barred.

14
(1920) I.L.R. 45 Bom. 597
 CASE NO 3 -
TOTA RAM AND ORS. VS RAM LAL AND ORS 15
FACTS :
There was a property whose owner was Ram Chandra. On the 19th of October 1915, he
loaned an amount of Rs. 200 to a man named Paras Ram. His son Tika Ram's sons, Ram Lal
and Ganga Sahai, were the beneficiaries of a simple mortgage he executed on the same land
the next year, on October 16, 1916. 'Ram Lal and Ganga Sahai withheld some of the money
from the second mortgage to pay off Paras Ram, who had a debt of Rs. 400 on it. Even
though they were supposed to have paid Paras Ram back, Ram Lal and Ganga Sahai didn't do
so. As a result, they filed a lawsuit to try to recoup Rs. 176 in principle and interest.
An individual named Ganga Sahai, a son of Shimbhoo, was unaware of the date on which
Ram Chandra sold the land. Ganga Sahai then placed a simple mortgage on the property,
which was then sold for Rs. 2,000 to the present appellants (defendants 3 to 5). There was a
total sum of Rs. 2,00,000 in the mortgage consideration of Rs. 676-3-0 left with the
mortgagees for payment to Paras Ram, a sum of Rs. 737-0 left with them to pay the second
mortgage held by Ram Lal and Ganga Sahai, son of Tika Ram, a sum of Rs. 557-13-6 was
left with them to pay off a simple money decree against the vendor, and a sum of Rs. 35-7-6
was paid to the vendor. An amount of Rs. 704-12-0 was given to the heirs of Paras Ram on
November 29th, 1926, by the appellants in full payment of the first mortgage dated October
19, 1915. Ram Lal and Ganga Sahai, the son of Tika Ram, have claimed their money because
the second mortgage has not been discharged. The appellants were named as third mort
gagees, and they argued that they had paid off Paras Ram's mortgage and that the plaintiffs
were not authorised to auction the property in issue until they paid that sum.

ISSUE :
1. Where a third mortgagee professes to keep in his hand a part of the mortgage money
in order to pay off the first and second mortgages and pays of only the first mortgage,
whether in a suit by the second mortgagee to enforce his mortgage it is open to the
third mortgagee to insist on his being treated as a first mortgagee whose mortgage
must be paid of before the plaintiff brings the mortgaged property to sale.

15
AIR 1932 All 489
JUDGEMENT :
Section 47, Act 20 of 1929 dealing with Section 92, T.P. Act and Section 51, Act 20 of 1929
dealing with Section 101, T.P. Act, fall under this Clause 2, Sec. Clause 2 does not, in our
judgement, have any bearing on the current dispute. These provisions are to be interpreted
retroactively, save to the extent that the rule put out forbids them from doing so.
Panna Lal has failed to explain what actions were taken in this matter before to April 1, 1930,
which are now nullified by the new rule of law, or what remedy or procedure are now
affected by Sections 92 and 101's changes. Only a rule of subrogation that was absent from
the unamended Act has been established. Any remedy or process which was legal under the
previous Act would not be affected by the new Act, as the rule was based on broad concepts
of equity. Sections 92 and 101 of the Amendment Act, therefore, have retroactive effect, in
our judgement.
However, if the portions in question have no retroactive effect, we have arrived at this
conclusion. Other High Courts have reached various conclusions on the law of subrogation in
the facts of this case. The Privy Council case in Dinbandhu v. Jogmaya and Ibrahim Husain
v. Ambika Prasad cited above may or may not have an impact on the judgments of the High
Courts, depending on the opinions of the judges. Legislation's rules on justice, equity, and
good conscience for cases before 1929's Act 20 are safe to follow in this situation. Because of
this, we believe the question before us must be answered in favour of the appellants, and we
hold and do hold that the appellants are subrogated to the first mortgagee's position. It was
requested that the matter be sent back to the Bench with the reference stated in the
judgement.

REASONING :
That which was codified in Section 101 of the TP Act before its amendment and which is still
codified therein, does not lay down that a merger can occur where the person paying off the
earlier charge was only a charge-holder or mortgagee and not a full owner of the property at
the time of the earlier charge being paid off. A smaller stake dissolves when a bigger interest
is acquired on the basis of merging. Following decisions by this Court, a concept of agency
was developed, ignoring this fact. As a mortgagor cannot be subrogated, the money used to
pay off the first mortgage belongs to the mortgagor, and the third or subsequent mortgagee
making the payment is just acting as an agent of the mortgagor and is not entitled to be
subrogated to the position of the first mortgage. Makhan Lal v. Nathi16 was one such
instance. When Muhammad Sadiq v. Ghaus Muhammad17 was cited, the learned Judge did
not separate the fact that in that case, the person making the payment was a purchaser from
the mortgagor. There have been other cases like Shiam Lal v. Basir Uddin and Chhote Lal v.
Bansidhar in this Court that have adopted a different stance. The cases of Vanmikalinga v.
Ghidambara18 in Madras and Jagatdhar v. Brown in Calcutta agree with this Court's decision
in the two preceding instances.
There is a lot to be stated against the idea of free will. As a general rule, there appears to be
no fundamental distinction between a case where the buyer pays the vendor or the mortgagee,
as the case may be, some money and then pays off the first mortgage, and a case where a
buyer or a third mortgagee pretends to take the transfer for a larger sum than in earlier cases
and keeps with him the money needed for paying off the earliest mortgage, and actually does
not hand it to the seller or the borrower, as he claims. In the first situation, subrogation is
acknowledged, while in the second, it is disputed. A subsequent mortgagee who contributed
nothing to the discharge of a burden should not be entitled to the benefit of the discharge for
which he has not participated, according to the concept of subrogation, which has been
established. A theory of agency advanced by the High Courts is at odds with two Privy
Council cases: Dinbandhu v. Jogmaya and Ibrahim Husain v. Ambika Prasad 19. However,
since the Transfer of Property Act was amended, the issue has been greatly clarified, if not
eliminated totally from the public debate.
The law of subrogation had to be drawn from English decisions and basic principles of equity
prior to the revision of the Transfer of Property Act in 1929. Subrogation law was outlined in
Section 74 of the T.P.A., which has since been abolished, and thus was of little value.
Because of the modification of 1929, Section 92 no longer recognises any notion of agency.
For the sake of readability, the relevant section has been condensed to the following:
Section 91 of the Uniform Commercial Code (UCC) grants the mortgagee whose mortgage
has been redeemed the same rights against the mortgagor or any other mortgagee as any of
the individuals listed in Section 91 (other than the mortgagor).
The appeal must be successful, and the appellants must be considered as the first mortgagee,
since Mr. Panna Lal, who has argued the case for the respondents, has not denied. As the

16
AIR 1933 Cal 467
17
7 Ind Cas 200
18
[1906] 29 Mad. 37
19
AIR 1939 All 64
third mortgagees, the appellants have redeemed the property subject to the first mortgage and
have the same rights as that mortgagee and any other mortgagees, the last expression
including the plaintiff, under the terms of the rule of law. They've done so because they're
among the people entitled to redeem property under Section 91, T.P. Act. This doesn't take
anything away from the fact that the appellants are third-mortgagees and have paid off the
first mortgage, even though a little portion of that money was left with them. If Section 92 as
amended by Act 20 of 1929 is applicable, the appeal must succeed.
Because of Section 63, Act 20 of 1929, Mr. Panna Lal claimed that Section 92 did not apply
to him. Two parts of the Amendment Act are addressed in Section 63. Before the 1st April
1930, any property transfer before that date, as well as any other action taken prior to that
day, will not be impacted by the requirements of the 20th Amendment to the Code of Civil
Procedure (20 of 1929) in any manner. Sections 92 and 101 of the T.P. Act are addressed by
Sections 47 and 51 of the Act 20 of 1929, and they are not mentioned in the first provision of
Section 63. Section 63, Act 20 of 1929's second paragraph reads as follows:
If this Act had not been passed, no other provision of this Act would have affected or
invalidated anything that had been done before to the 1st of April 1930; and any such
remedy, or process, as is hereby referred to can still be used as if this Act had not been
passed.

CONCLUSION :
Subrogation as a legal notion has been around for centuries, although it has only recently
been used in a modern context. The law of subrogation has its conceptual foundation in the
idea of unjust enrichment, it is claimed from time to time. As a matter of English, this is
undoubtedly correct, however some legal scholars argue that subrogation is in keeping with
the recognised legal theory in this area. In truth, the legal technique's intellectual
underpinnings are more theoretical than practical, as the argument suggests. Subrogation
rights are also hotly debated in the legal community, with lawyers debating whether an
agreement is required to provide them or if they are granted automatically by law. Although
the courts' rationale has not always been clear in this regard, in many circumstances the
answer is likely to be all of the above. It is obvious that subrogation rights can exist even if
there is no contract between the subrogor and the subrogee, therefore an express or implicit
condition is definitely not essential.
If the insured party receives compensation from the insurer, the insurer will be entitled to
subrogation, which is an implied provision of any contract of insurance or guaranty. Most
insurance plans, however, will include a provision governing subrogation rights.
One of the most frequent concepts of subrogation is an equal solution to avoid unfair
enrichment, however the theory incorporates more than one notion. Where goods were
delivered from place A to place B and the forwarding note had a stipulation stating
jurisdiction between parties would be at place D, and a power of attorney was provided to the
insurer there, a claim for damages brought by the insurer and consignee at a location 'D' was
found to be maintainable.
If you discharge someone else's debt, you might become a subrogee for that debt's protection
through a legal process known as subrogation. When someone pays off their debt, they are
essentially acting as though they have been granted permission to safeguard that loan and
benefit from any assets that they may have acquired along the way. A right to subrogation
cannot be granted until the mortgage in question has been fully repaid under the requirements
of Section 92 of the Transfer of Real Property Act. The advantage of this is that it prevents a
successor from being a mortgagee as well. There are no subrogation privileges unless they
are provided by law, the Indian Supre