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Marshalling and Contribution

The document outlines the Doctrine of Marshalling and Contribution under Sections 56, 81, and 82 of the Transfer of Property Act. Marshalling allows a mortgagee to satisfy their debt from multiple properties owned by a mortgagor, while Contribution enables a mortgagor who pays off a joint mortgage to seek reimbursement from co-mortgagors. Key principles include the necessity of multiple properties and common mortgagors in both doctrines.

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125 views2 pages

Marshalling and Contribution

The document outlines the Doctrine of Marshalling and Contribution under Sections 56, 81, and 82 of the Transfer of Property Act. Marshalling allows a mortgagee to satisfy their debt from multiple properties owned by a mortgagor, while Contribution enables a mortgagor who pays off a joint mortgage to seek reimbursement from co-mortgagors. Key principles include the necessity of multiple properties and common mortgagors in both doctrines.

Uploaded by

ratnakumari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Doctrine of Marshalling and Contribution

Sec 56 and 81….Marshalling


Sec 82….Contribution
Sec 56: Marshalling by subsequent purchaser
Sec 81:Marshalling of securities
Marshalling:
Essential Ingredients
1.The owner must have two or more properties.
2.There must a common mortgagor or debtor between two or more
mortgagees.
3.Marshalling in transfer of property act dictates that
the owner must sell one or more properties out of those properties to a
purchaser after mortgaging them to the mortgagee.

Sec 81: Essential Ingredients


1.The owner must have two or more properties.
2.The owner must mortgage those properties to one mortgagee and
afterwards mortgages one or more of the properties to a puisne
mortgagee.
3.There must be a common mortgagor between two or more
mortgagees.
Example:
If the mortgagor mortgages three of his properties X,Y,and Z to A.
Then Mortgages X to B. B is entitled to have the mortgagor satisfy his
debt from the sale proceeds of the properties Y and Z and only if the
said sale proceeds fall short, Property X be sold.
Case law: Barness vs Rector:
W mortgaged two of his properties A and B to X.W then mortgaged
property A to Y and property B to Z.
Here the court held that X’s mortgages will be apportioned
proportionately between properties A and B and surplus of A will go to
Y and surplus of B will go to Z.
The Doctrine of Marshalling is thus based on the principle that a
creditor who has the means of satisfying his debt out of several funds
shall not, by the exercise of his right, prejudice another creditor whose
security comprises only one of those funds.
Doctrine of Contribution:
Sec 82 of TPA
The rule of contribution relates to the collective contribution
towards a mortgage debt by mortgagors.
Sometimes, 2 or more properties separately owned by different
persons are mortgaged jointly to the same mortgagee for securing
debt.
In such case, if one mortgagor repays the entire debt, the other
mortgagors released from liability. Then, the mortgagor who cleared
the debt has a right to claim contribution from other mortgagors.
Example:
A, B, C, mortgaged their properties X,Y,Z, respectively to Union Bank
for 9 lakhs, A alone paid the amount and redeemed the X,Y,Z
properties from Union Bank. Now, A can ask for contributions from B
and C.
Essentials:
1.The mortgaged property must belong to 2 or more persons based on
a common loan.
2.Each Mortgagors, in absence to a contrary contract, is liable to
contributed as per his share of the mortgage.
Kampta Singh vs Chaturbhuj
It has been held that if a person owns one property subject, with
the property of other persons, to a common mortgage, and has paid off
the mortgage debt, he is entitled to call upon the owners of other
property to bear their portion of the burden.

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