NATIONAL LAW UNIVERSITY, ODISHA

DOCTRINE OF SUBROGATION

SUBJECT: - TRANSFER OF PROPERTY

SUMMITTED BY: - SUMMITTED TO: -

AJEET KOTWAL (18BBA002) DR. DOLLY JABBAL
SEMISTER: - VII (PROFESSOR OF LAW)
YEAR: - 4TH
 TABLE OF CONTENTS

TABLE OF CASES.......................................................................................................................3

TABLE OF STATUTES...............................................................................................................4

INTRODUCTION.........................................................................................................................5

RESEARCH METHODOLOGY.................................................................................................7

AIMS AND OBJECTIVES...........................................................................................................7

RESERARCH QUESTIONS........................................................................................................7

HISTORICAL PERSPECTIVE...................................................................................................8

KINDS OF SUBROGATION.....................................................................................................10

1. LEGAL SUBROGATION...................................................................................................10

Puisne mortgagee.........................................................................................................................10

Co-mortgagor...............................................................................................................................11

Surety............................................................................................................................................11

Purchaser of equity of redemption.............................................................................................12

2. CONVENTIONAL SUBROGATION................................................................................13

IMPORTANT CASE LAWS......................................................................................................15

SUBROGATION AND ALLIED PRINCIPLES.......................................................................19

Subrogation and Assignment......................................................................................................19

Contribution, Indemnity and Subrogation................................................................................19

CONCLUSION............................................................................................................................20

BIBLIOGRAPHY........................................................................................................................21
 TABLE OF CASES

 Randal V. Cockran
 Stringer v. The English and Scotch Marine Insurance Co
 London Assurance Co. V. Sainsbury
 Craythorn V. Swinburn
 Gokuldas V. Puranmal
 Toulmin V. Steere
 Krishna Pillai Rajasekharan V. Padmanabha Pillai
 Graythorn v. Swimburne
 Malireddy Ayyareddy V. Gopi Krishnayya
 Gokuldas v. Puranmal
 Ram Tuhul Singh v. Bisewar lall Sahoo
 Janaki Nath Roy v. Pramatha Nath Malia
 Isap Bapuji Amiji' V. Umarji Abhram Adam
 Narain V. Narain
 Valliamma Champaka Pillai V. Sivathanu Pillai and Ors
 Sivasankara Pillai & Anr.V. Narayana Pillai & Ors
 Oriental Fire & General Insurance Co. Ltd. v. American President Lines Ltd. and Anr
 Thamattoor Chelamanna and Anr.V. Thamattoor Kurumbikkat Pare Manakkal
Parameswaran and Ors
 Raghavendracharya Appacharya Katti V. Vaman Shriniwas Deshpande
 Gujrat Andhra Road Carriers Transport Contractors V. United India Insurance Co. Ltd
 Hospital Serv. Corp.V. Pennsylvania Ins. Co
 TABLE OF STATUTES

 TRANSFER OF PROPERTY ACT OF 1882

 INDIAN CONTRACT ACT OF 1872
 INTRODUCTION

The doctrine of subrogation gives the insurer the right to benefit from the assured's rights and
remedies against third parties in connection with the loss, to the degree that the insurer has
indemnified and made good the loss. As a result, the insurer has the right to utilize whatever
rights the assured has to recover compensation for the loss to that degree, but it must do so in the
name of the assured. Section 92 of the Transfer of Property Act of 1882 establishes the doctrine
of subrogation, which was added after an amendment in 1929.

The section's plain text is as follows: “Subrogation: - Any of the persons mentioned in section 91
(other than the mortgagor) and any co-mortgagor shall, upon redeeming property subject to the
mortgage, have the same rights as the mortgagee whose mortgage he redeems against the
mortgagor or any other mortgagee in terms of redemption, foreclosure, or sale of such property.”

The right of subrogation provided by this provision is known as subrogation, and a person who
acquires it is said to be subrogated to the rights of the mortgagee whose mortgage he redeems. If
the mortgagor has agreed to such subrogation in a recorded instrument, a person who has
advanced to the mortgagor money with which the mortgage has been redeemed is subrogated to
the rights of the mortgagee whose mortgage has been redeemed. Nothing in this provision shall
be construed as conferring a right of subrogation on anyone unless and until the mortgage on
which the right is claimed has been fully paid.1

The persons referred in Section 91 of the Act are-

1) Any person who has interest in mortgaged property except mortgagor.
2) Any surety for the payment of the mortgage-debt or any part thereof
3) Any creditor of the mortgagor who has in a suit for the administration of his estate
obtained a decree for sale of the mortgaged property.2

1
Section 92, Transfer of Property Act, 1882
2
Section 91, Transfer of Property Act, 1882
From the above we can conclude that section 92 provides for:

1. any person other than the mortgagor referred to in section 91, and any co-mortgagor,

2. on redeeming the mortgaged-property,

3. shall have the same rights as the mortgagee whose mortgage he redeems may have against
the mortgagor or any other mortgagee,
4. the rights are regarding redemption, foreclosure or sale of the mortgaged property.

5. this right is known as the right of subrogation and the person acquiring the same is said to
be subrogated to the rights of the mortgagee whose mortgage he redeems.

Black's Law dictionary: - Subrogation is defined as the act of substituting one person for another
in respect to a valid claim, demand, or right, so that the person who is substituted succeeds to the
other's rights in relation to the debt or claim, as well as its rights, remedies, or securities.3

The doctrine of equity jurisprudence is known as doctrine of subrogation. Except insofar as

equity is assumed to be imported into the transaction and therefore raise a contract by
implication, it does not based on the privity of contract, express or inferred. The doctrine will be
applied in general where ever the person other than a mere volunteer pays a debt or a demand,
which in equity or good conscience should have been satisfied by another or where the liability
of one person is discharged out of a fund belonging to another, or where one person is compelled
for his own protection or that of some interest which he represents to pay a debt for which
another is primarily responsible or wherever a denial of right would be contrary to equity and
good conscience, the doctrine will never be permitted, where the application of it would work
injustice to the rights of those having equal or superior equities.4 Section 69 of the Contract Act
recognizes a similar idea of repayment, however that clause only grants a personal right, while
this section grants a charge on the property.

3
Mulla, The Transfer of Property Act, 9th Ed., LexisNexis Butterworths, 2004.
4
Biswar Prasad v. lal Sarnam Singh (1907) 6 Cal. L.j. 134
 RESEARCH METHODOLOGY

The methodology used for the research in this project is from doctrinal and primary sources,
books in relation to topic and various internet websites. Various case laws regarding the topic are
also being referred in the research to substantiate the arguments. The scope of the study is
limited to the section 92 of the transfer of property Act, 1882 which is subrogation.

AIMS AND OBJECTIVES

The aim of this research is to understand the concept of ‘subrogation’ under the Transfer of
property Act, 1882 and other property laws, the history and its development of the doctrine of
subrogation, also to critically analyze the rights and liabilities of mortgagor and mortgagee under
this doctrine. The researcher will also review the recent case laws related to this doctrine.

RESERARCH QUESTIONS

1) What are the various types of subrogations?

2) What are the latest developments under doctrine of subrogation?
3) Who all can sue and may be sued for redemption?
 HISTORICAL PERSPECTIVE

Subrogation is a phrase that means "substitution" in Latin. Lord Hardwicke indicated its
identification with equity in his decision in Randal V. Cockran, and in his view expressed, he
suggested a probable theoretical basis for the concept and a justification for equity's presence in
the field of contribution. In a letter to Lord Kames, he explained that new business situations,
new techniques of dealing with property, and different types of property needed equity playing a
new role in the evolution of subrogation.

The above issue resulted from King George II's decision permitting compensation to be awarded
to people who lost their lives in a conflict with Spain. Some people had previously been
compensated by their insurers for their losses, and the insurers had successfully sought to be
subrogated to their insured's entitlement to receive this compensation.5

Stringer v. The English and Scotch Marine Insurance Co was the first English case to use the
term "subrogation." The plaintiffs in this case insured a ship cargo with the defendants for the
'taking at sea, arrests, restraints, and detention of all Kings, princes, and people.' The ship was
eventually captured by a US cruiser and transferred to New orleans, where a suit for its
condemnation was filed. The plaintiffs successfully challenged the action, and the captors
appealed. The plaintiffs were compelled to provide security for fees, which they could not pay.
As a result, the ship was condemned, and the plaintiffs filed a formal notice of cargo abandonment,
requesting that the insurance compensate them for their whole loss. The court, in holding for the
plaintiff, noted that the plaintiff as the assured was free to choose between defending the appeal
before the American court or claiming a loss under the policy. Because the assured chose the
latter, the insurers were obligated to pay. However, having paid, the insurers were entitled 'to be
subrogated to them, and get what they can out of the hands of the Americans for their
own benefit.' In the case of London Assurance Co. V. Sainsbury, the rules of subrogation
established by equity were accepted and forged into common law. The common law, on the
other hand, played a significant influence in shaping the strictly equitable doctrine's future
5
M.L. Marasinghe, An Historical Introduction to the Doctrine of Subrogation, Valparaiso University Law Review,
(25 October, 2016), http://scholar.valpo.edu/cgi/viewcontent.cgi?article=1680&context=vulr. accessed on 17
September 2021
development. The Court of Exchequer in the case of Deering v. Winchelsea6, held that the
basis of 'bottom of contribution' was said to be a fixed principle of Justice, and is not founded
in Contract:
“This contribution is considered as founded in Equity; Contract is not mentioned. The
principle operates more clearly in a Court of Equity than at Law. At Law the party is driven to
an Audita Querela or Seire Facias to defeat the execution, and compel execution to be taken
against all.”

The court explained the basis on which courts of law could justify the adoption of equitable
laws in the field of contribution in Craythorn V. Swinburn 7: “It has long been established that if
there are co-sureties under the same instrument, and the creditor requires one of them to pay the
principal obligation, or any part of it, that surety has the right to call upon his co-surety for
contribution in this Court, either on the basis of equity or contract.and I think, that right is
properly enough stated as depending rather upon a principle of Equity than upon Contract:
unless in this sense; that, the principle of Equity being in its operation established, a Contract
may be inferred upon the implied knowledge of that principle by all persons, and it must be
upon such a ground of implied assumption, that in modern times Courts of Law have
assumed a jurisdiction upon this subject.”8 The Privy Council in the case of Gokuldas V.
Puranmal9 held that Gokuldas was subrogated to the rights of the prior mortgagee whom he
had paid off and that this claim could not be disposed unless it was redeemed. As per the
facts of the case Gokuldas, was the creditor of the mortgagor, purchased the equity of
redemption at a sale in execution of a money decree and got possession. He paid off a prior
mortgagee but was sued for possession by a puisne mortgagee. Furthermore, the council
declared the rule in Toulmin V. Steere10 inapplicable in India. According to the principle
established in this case, when a purchaser of equity of redemption redeems a mortgage, there is
no presumption that he intends to keep it alive against subsequent encumbrances of which he is
unaware but may have had constructive notice. The party who initially fulfils the duty is referred
to as the'subrogee,' while the party who is rewarded is referred to as the 'subrogor.'
6
(vol. 1, pp. 60-71, with American notes in the Law Library edition, vol. 65, pp. 78-104)
7
(1807) 33 ER 482
8
Ibid.
9
11 IA 26.
10
(1817) 3 Mer. 210
 KINDS OF SUBROGATION

1. LEGAL SUBROGATION

This type of subrogation occurs by operation of law and is based on the reimbursement concept.
When a person wants to make a payment that another person is legally obligated to make, that
person must be reimbursed when he makes the payment. Legal or equitable subrogation is not
available to volunteers, and is not available until full compensation has been paid. It is based
on equitable considerations.

Paragraph 1 of the Section deals with legal subrogation and the persons mentioned in the
paragraph acquire the right of subrogation by the mere fact of their redeeming property subject
to the mortgage irrespective of any agreement or consent of the mortgagor.11 This Section says
that any of the person referred to in Section 91 of the Act on redeeming the 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 following persons are included as having a right of subrogation: -

1) A puisne mortgagee;

2) A surety;

3) A co-mortgagor; and

4) A purchaser of the equity of redemption

Puisne mortgagee
He is a subsequent mortgagee, who redeems a prior mortgage; he has a right to be subrogated to
the position of the prior mortgage.

Illustration: -

A mortgages X to B for Rs 10,000- First mortgage

A mortgages X to C for Rs 8,000- Second Mortgage

11
Nandi, N . , The Transfer of Property Act, 1882, 2nd Ed., Dwivedi Law Agency, Allahabad, 2010.
A mortgages X to D for Rs 7,000- Third Mortgage

In the above illustration, A when he mortgages X a second time, he mortgages part of the equity
of redemption, that is to say, C is the assignee of part of the equity of redemption of A against B
and has therefore the right to redeem B. For the same reason D can redeem C and B.

Now when D redeems B, i.e., pays to B Rs 10,000, then D is subrogated to the right of B. In
effect, D steps into the shoes of B and acquires all his rights. For instance, D gets the right of
priority of B which means that if C were to enforce his mortgage, C must pay to D Rs. 10,000.

A subsequent mortgagee when he sues for redemption of a prior mortgage acts on his own
behalf and not an agent of the mortgagor. In fact, it is to the interest of such subsequent
mortgagee to wipe off the prior encumbrances and take away the right of prior mortgage.

Co-mortgagor

He is alone responsible for his portion of the loan. When, besides redeeming his own share, he
pays off the share of the other mortgagor also, he becomes entitled to be subrogated in place of
such other mortgagor. In the case of Krishna Pillai Rajasekharan V. Padmanabha Pillai 12, the
question arose as to what the parties' rights and liabilities were in relation to one another, and if a
partition suit could be maintained. According to the court, it was not a case of subrogation by
agreement, but rather by operation of law, according to the court. A substitute does not become a
mortgagee as a result of Section 92. The provision gives the redeeming co-mortgagor certain
rights and makes redemption, foreclosure, and sale remedies available to the substitutes, just as
they were to the substituted.13 Therefore, the suit for declaration, partition and recovery of
possession by non- redeeming co-mortgagor was held to be maintainable.
Illustration- A and B having equal shares in X mortgage X to C for Rs. 5000. B pays off C Rs
5,000. B stands in the mortgagee’s shoes to the extent of the amount paid in excess.

Surety

A surety of the mortgagor is one of the persons listed in Section 91 as having the right to redeem
the mortgaged property, and as a result, if he pays him off, he is entitled to be subrogated to the
12
AIR 2004 SC 1206.
13
Row, Sanjiva, The Transfer of Property Act, 4th Ed., V0l. 1, The Law Book Company (P) Ltd., Allahabad, 1989.
creditor's rights. “A surety will be entitled to every remedy which the creditor has against the
principal debtor to enforce every security and every methods of payment,” Sir Romilly argued in
Graythorn v. Swimburne14: “to act in the place of the creditor, not only through contract, but also
through securities entered without the knowledge of the surety, with the right to have those
securities transferred to him notwithstanding the lack of a clause to that effect; and to use all of
those securities against the debtor.”

Purchaser of equity of redemption

There were some doubts about whether the purchaser of redemption equity may be subrogated.
The mortgagor's equity of redemption is treated as his property, which he can sell or assign. The
purchaser of such equity becomes the property's owner. The Privy Council, in the matter of
Malireddy Ayyareddy V. Gopi Krishnayya15 was elected.

“It is now settled law that where in India there are several mortgages on q property, the owner
of the property subject to a mortgage may, if he pays off an earlier charge, treat himself as
buying it and stand in the same position as his vendor, or to put it in another way, he
may keep the encumbrance alive for his benefit and thus come in before a later mortgagee.
This rule would not apply if the owner of the property had covenanted to pay the later
mortgage- debt but in this case, there was no such personal covenant.”

In Gokuldas v. Puranmal16, the Privy Council had said that it was a question of intention of the
person paying off the mortgage whether he wanted to keep the mortgage alive. The position,
therefore, is that where X mortgages his property first to A and then to B, and C purchases, the
equity of redemption and pays off A, C is subrogated to the rights of A and in action by B to
enforce his mortgage, C can use the prior mortgage in favour of A as a shield.

Mortgagor redeeming his own share and purchasing mortgage rights in respect of remaining
property. He can hold the mortgagee right in view of his purchase. The law permits mortgagee
14
14 Ves. 160
15
AIR 1924 PC 36
16
(1884) 10 Cal. 1035;11 I.A. 126
rights to be acquired both by subrogation if the conditions of Section 92 of the T.P. Act are
satisfied and also purchase. 17

Covenant excludes subrogation-

Although ‘mortgagor’ includes a purchaser of the equity of redemption, yet the purchaser of an
equity of redemption is not excluded from the right of subrogation. But where he discharges a
mortgage because he has undertaken to do so, he cannot claim subrogation.

2. CONVENTIONAL SUBROGATION

The conventional Subrogation occurs when the person paying off the mortgage obligation is a
stranger with no interest to protect, but he lends the money under the condition that he will be
subrogated to the rights and remedies of the paid-off mortgagee. only if the mortgagor has
agreed to be subrogated by recorded document may the right to subrogation be claimed.

The real question in all such cases, writes Ghosh on mortgage, “is whether the payment made by
a person who has no interest in the mortgaged property or the right of redemption was merely a
loan to the debtor on his personal security, or whether it was made under an agreement that he
should be substituted for the creditor. Although the court may in most circumstances assume
such an agreement, we believe it is better to require that such an agreement be reduced to written
and registered.” 18

In Ram Tuhul Singh v. Bisewar lall Sahoo19 it was held that to support the claim to subrogation
by one who has lent money to a mortgagor to redeem a mortgage, an agreement expresses or
implied that the lender shall be subrogated to the rights of the creditor was necessary to be
proved.

In Janaki Nath Roy v. Pramatha Nath 20Malia it was held that in order to succeed on the
equitable doctrine of subrogation to prove that there was an agreement between him and the
debtor or creditor that he should receive and hold an assignment of the debt as security. As he

17
Roshan v. UOI, AIR 1972 Punj. And Har. 352.
18
Sinha, Dr.R.K., The Transfer of Property Act, 11th Ed., Central Law Agency, Allahabad, 2010
19
(1875) LR 2 IA 131.
20
(1939) LR 67 IA 82
has not been able to prove such agreement his appeal failed.

After the amendment of the Act the right of subrogation can be claimed by the lender only if the
mortgagor has by a registered instrument agreed that he shall be so subrogated. The question is
not to be determined by nice considerations of what maybe fair or proper according to the
highest morality. To support such a suit there must be an obligation express or implied to
repay.21

21
The Transfer of Property Act, 1882, Bare Act, Universal Law Publishing Co. Pvt. Ltd., New Delhi, 2010.
 IMPORTANT CASE LAWS

The issue before the court in the case of Isap Bapuji Amiji V. Umarji Abhram Adam 22 was
whether Section 92 of the Transfer of Property Act, 1882, has retrospective effect or not;
according to Broomfield, J., the retrospective effect should be used as a guide for determining
what equitable rules not inconsistent with the Act should be adopted as valid in India in cases
where there is a conflict of authority; whereas according to N.J. Wadia, J., Section 92 of the
Transfer of Property Act, as amended in 1929, has a retrospective effect.

In the case of Narain V. Narain23, it was decided that this concept could not be used if the
mortgagor redeems the property himself. A mortgagor who pays off a previous obligation is not
entitled to be subrogated to his creditor's rights and remedies. This is because he is discharging
his own debt to his creditor by removing a past encumbrance that he established.

In the case of Valliamma Champaka Pillai V. Sivathanu Pillai and Ors.24, the Supreme Court
held that the rights created in favour of a redeeming co-mortgagor as a result of debt discharge
are 'the same rights as the mortgagee whose mortgage he redeems in terms of redemption,
foreclosure, or sale of such property'. Further, rather than the privity of contract, subrogation is
based on the concept of equity and natural justice principles, one of which is that a person who
pays money that another is legally obligated to pay is entitled to recovery from the other. Section
69 of the Contract Act of 1872 codifies this idea. Another concept in equity is that "he who seeks
equity must do equity.”

In the case of Sivasankara Pillai & Anr.V. Narayana Pillai & Ors.25, the High Court of Kerala
made a distinction between section 92 of the TP Act and section 69 of the Indian Contract Act,
1872, on the basis that subrogation is based on the doctrine of equity and natural justice, rather
than privity of contract. S. 92 of the Transfer of Property Act and S. 69 of the Contract Act both
recognise the principle of equity of reimbursement. When the court considered the scope of
22
(1937) 39 BOMLR 1309
23
AIR 1931 All 40
24
1979 AIR 1937
25
AIR 1956 Mad 670
section 92 of the Transfer of Property Act, as well as the extent of subrogee rights and powers, in
the case of Krishna Pillai Rajasekharan Nair V. Padmanabha Pillai26, the court described the
principles laid down in the case of Ganeshi Lal as follows:

After considering the issue from all angles and consulting Sir Rashbehary Ghose on Indian
Mortgage Law, Harris on Subrogation, Sheldon on Subrogation, Pomeroy on Equity
Jurisprudence, and a few other English and Indian authorities on the subject, Their Lordships'
conclusion in the Ganeshi Lal27 case can be summarized as follows:

1. When a co-debtor or co-mortgagor pays the creditor more than his share of the debt to
redeem a mortgage, the redeeming mortgagor is the principal debtor for the amount of his
part of the debt and a surety for the amount of other co-mortgagors' debt. The redeeming co-
mortgagor's right is strictly speaking a right of repayment or contribution, as he is merely a
guarantee for the other co-mortgagors.

2. For all intents and purposes, substituting the redeeming co-mortgagor for the mortgagee does
not exactly place the new creditor (i.e., the redeeming co-mortgagor) in place of the original
mortgagee. If one of the multiple mortgagors pays off the full mortgage obligation, even if
he is subrogated to the creditor's rights and remedies upon redemption, the principle must be
applied in such a way that the goals of substantial justice are achieved, independent of form;
In other words, the false cession in favour of the person who effects the redemption only
works to the extent that it is required for his indemnification and protection.

3. The theory of subrogation must be used in concert with other equity rules to ensure that the
person who discharges the mortgage is properly protected while the other joint debtors are
not treated unfairly. Whoever seeking equity must also seek equity.

26
[2003] Insc 642 (15 December 2003)
27
AIR 1953 SC 1
 4. There is a distinction between a third party who claims subrogation and a co-mortgagor
who claims the right. Co-mortgagors have a fiduciary responsibility with one another. The
redeeming co-mortgagor is only entitled to the price he has really paid, plus incidental costs.
In a strict sense, when one of multiple mortgagors redeems a mortgage, he is entitled to be
recognised as an assignee on the security, which he can enforce in the normal way to
recover his losses. The mortgage property redeeming by co-mortgagor, the mortgagee's
rights is limited to the amount necessary for his own equitable protection. Just like the surety,
the redeeming co-mortgagor can apply for indemnification for his loss, and he can use the
theory of subrogation to support his right of contribution.

The Maharashtra High Court differentiated between sections 92 and 135A of the legislation in
Oriental Fire & General Insurance Co. Ltd. v. American President Lines Ltd. and Anr.28, saying:
The difference between subrogation under Section 92 of the Transfer of Property Act, 1882, and
subrogation under Section 135A of the Act is that,

I. Under Section 92, subrogation results in the extinction of the original mortgagee's rights, and
thus the original mortgagee has no more rights under the mortgage, whereas a subrogee
under Section 135A acquires rights only to the extent of his payment, which may be less than
the assured's rights.
II. A person redeeming under Section 91 is an interested person, a surety, or a creditor, and that
subrogee would receive the rights conferred under Section 69 of the Indian Contract Act,
1872, because it would be a payment made by a person interested; however, in the case of
subrogation under Section 135A, the insurer pays under his own contract of insurance and is
not interested in discharging the wrongdoer's liability or the wrongdoer or the tortfeasor.
III. Section 92 confers on the person redeeming rights of the mortgagee 'against the mortgagor
or any other person'. It is these words that confer the right to sue. There are no such
words in Section 135A (2) and (3) as 'against the wrongdoer or tortfeasor.'

28
(1968) 70 BOMLR 487, 1968 38 CompCas 294 Bom
The question before the Kerala High Court in Thamattoor Chelamanna and Anr. V. Thamattoor
Kurumbikkat Pare Manakkal Parameswaran and Ors. 29 was whether the person redeeming has a
right of subrogation in respect of redeemed sub-mortgage. The court here held that where the
person redeeming is a mortgagor, no such right of subrogation arises, and further, there is no
question of the mortgagor.

In addition, the Bombay High Court made a parallel between subrogation and substitution in the
case of Raghavendracharya Appacharya Katti V. Vaman Shriniwas30 Deshpande:

Subrogation means neither more nor less than substitution. A person who is subrogated to the
status of a mortgagee possesses all of a mortgagee's rights, not just parts of them, and those
rights must include rights in connection with the particular mortgage for which he receives the
benefit of Section 92 of the Transfer of Property Act by redeeming it. The theory of subrogation
has the effect of allowing the subrogee to keep the mortgage alive for his personal advantage.
The paid-off mortgage is not considered extinguished, but rather transferred to the subrogee.

SUBROGATION AND ALLIED PRINCIPLES

29
AIR1971Ker3
30
(1943) 45 BOMLR 253
Subrogation and Assignment
It was held in the case of Gujrat Andhra Road Carriers Transport Contractors V. United India
Insurance Co. Ltd31., an assignment or transfer can take place only with specific acts of
parties. All of the property's rights are transferred to the assignee or transferee. The totality of
the rights is transferred when a transfer is made. In the case of Western Cas. & Sur. Co. v
Bowling32, the American courts established a similar concept in Hospital Serv. Corp.V.
Pennsylvania Ins. Co.33

Subrogation is the result of a mortgage being redeemed by someone other than the mortgagor,
and he subrogated only to the rights of the mortgagor and no more. While subrogation is not
the same as assignment, it may be considered of as assigning a cause of action by operation of
law, and typical contractual subrogation clauses may contain assignment language. In a single
case, further assignment and subrogation may be applicable.

Contribution, Indemnity and Subrogation

Technically speaking, 'contribution' and 'indemnity' are mutually exclusive remedies but are
often asserted as alternative causes of action in the same lawsuit. 'Indemnity' shifting less than
complete liability is really contribution and 'contribution' shifting all liability is actually
indemnity. Additionally, Contribution and indemnity actions sometimes appear to seek the
same relief as subrogation allows and are often asserted as alternative theories to
subrogation recovery.34 The distinction between contribution/indemnity and subrogation lies in
the person claiming the right and the person whose debt is paid is because contribution and
indemnity require a common liability with the one against whom contribution and indemnity
are sought.

31
AIR 2006 AP 401, 2006 (5) ALD 519
32
39 Colo. App. 357, 565 P.2d 970 (1977)
33
101 R.I. 708, 227 A.2d 105 (1967)
34
Vakil, Darashaw J., Commentaries on the Transfer of Property Act, 2nd Ed., Wadhwa and Company Nagpur,
New Delhi, 2004.
 CONCLUSION

Countries that have inherited the common law system will almost always have a concept of
subrogation, though its doctrinal foundation may vary depending on how much Equity remains a
separate body of law in that jurisdiction.

The idea of unjust enrichment has now been acknowledged by English courts as a factor in
subrogation. The High Court of Australia, on the other hand, has completely rejected this
approach, stating that the doctrinal basis of subrogation is to prevent unconscionable outcomes,
such as the discharge of a debtor or one party receiving double recovery.

Supreme Court of India held that in the case of subrogation, Rights of Subrogation vests
by operation of law rather than as the product of express agreement. Right of Subrogation
can be enjoyed by the insurer as soon as payment is made, whereas an assignment requires an
agreement that the rights of the assured be assigned to the insurer. In the case of subrogation, the
assignee can recover whatever amount has been paid by him to the insurer whereas in the case of
assignment, he can recover more than the actual loss from the insurer/third party. Thus,
Supreme Court of India came to the conclusion that the letter styled as "subrogation" was in
fact assignment of the rights by the insured and, therefore, the insurer was not a 'consumer'
within the meaning of the Consumer Protection Act, 1986 and, therefore, not entitled to
maintain the complaint. Where subrogation is available, the subrogated party is entitled to
stand in the shoes of another and enforce that other party's rights. If the equity is established,
the court may affect the subrogation remedy by way of equitable lien, charge, or a constructive
trust with a liability to account. Crucially, the claimant's rights are wholly derivative; hence the
claimant has no higher rights than the person to whom he or she is subrogated.
 BIBLIOGRAPHY

BOOKS
 Mulla, The Transfer of Property Act, 9th Ed., LexisNexis Butterworths, 2004.
 Nandi, N . , The Transfer of Property Act, 1882, 2nd Ed., Dwivedi Law Agency, Allahabad,
2010.
 R0w, Sanjiva, The Transfer 0f Pr0perty Act, 4th Ed., V0l. 1, The Law B00k C0mpany (P)
Ltd., Allahabad, 1989.
 Sinha, Dr.R.K., The Transfer 0f Pr0perty Act, 11th Ed., Central Law Agency, Allahabad,
2010.
 The Transfer 0f Pr0perty Act, 1882, Bare Act, Universal Law Publishing C0. Pvt. Ltd.,New
Delhi, 2010.
 Vakil, Darashaw J., C0mmentaries 0n the Transfer 0f Pr0perty Act, 2nd Ed., Wadhwa
and C0mpany Nagpur, New Delhi, 2004.

WEBSITES AND BLOGS

 M.L. Marasinghe, An Historical Introduction to the Doctrine of Subrogation, Valparaiso
University Law Review, (25 October, 2016), http://scholar.valpo.edu/cgi/viewcontent.cgi?
article=1680&context=vulr.

CASE LAW
 Biswar Prasad v. lal Sarnam Singh (1907) 6 Cal. L.j. 134