Transfer of Property Act (TPA)
Contribution and Subrogation Between Co-mortgagors: What One Who Redeems May Claim from the Others
Several people own a property together and mortgage it as one. One of them pays off the whole debt. He has relieved the others of a burden they were bound to share, and the law gives him two distinct remedies for it. Under section 92 he is subrogated to the mortgagee he paid, taking that mortgage's rights against the property. Under section 95 he has a charge on the shares of the other co-mortgagors for their proportion of what he spent. What he does not acquire is the property itself: redemption by one co-mortgagor enures for the benefit of them all.
1. The Position of Co-mortgagors
- They are jointly liable to the mortgagee. He may realise the whole of his money from the property, and is not concerned with how the burden falls among them.
- Each of them may redeem. A co-mortgagor is a person having an interest in the property within section 91, and section 92 names him expressly.
- But none of them may redeem partially. He cannot pay a proportionate share and take his own part of the property out of the security; the mortgage is one and indivisible, save in the cases section 60 and section 61 allow.
- And redemption by one enures for all. The co-mortgagor who pays does not become the owner of the shares of the others; he acquires a right to be reimbursed, secured on their shares.
2. The Two Remedies of the Redeeming Co-mortgagor
Subrogation — section 92 | Charge for contribution — section 95 | |
|---|---|---|
What it gives | The rights of the mortgagee whose mortgage he redeemed, so far as regards redemption, foreclosure and sale | A charge on the share of each other co-mortgagor for his proportion of the expenses properly incurred in redeeming and preserving the property |
Against whom | Against the mortgagor and any other mortgagee of the property | Against the other co-mortgagors, on their shares |
What it secures | The mortgage debt he discharged, with the priority that attached to it | The other co-owners' rateable proportions of what he paid, and of preservation expenses |
How it is enforced | As the redeemed mortgage would have been enforced | As a charge under section 100, that is, by sale in the manner provided for a simple mortgage |
Condition | The mortgage must have been redeemed in full | He must have obtained possession of the property, as the section requires |
3. How the Proportions Are Worked Out
Contribution among co-mortgagors The starting point is section 82: where property subject to a mortgage belongs to two or more persons having distinct and separate rights of ownership, the shares are liable to contribute rateably to the debt, the value of each share being taken as at the date of the mortgage after deducting any other mortgage or charge to which it was then subject. So a co-mortgagor who has paid the whole recovers from each of the others the proportion his share bears to the whole, and he recovers it as a secured claim by virtue of the charge in section 95. |
Item | Recoverable? |
|---|---|
The mortgage money he paid to redeem | Yes — rateably from the other shares |
Interest properly paid to the mortgagee | Yes — it forms part of what was necessary to redeem |
Expenses properly incurred in preserving the property | Yes — section 95 says so in terms |
Costs of the redemption proceedings, properly incurred | Yes, so far as they were properly incurred in redeeming |
Improvements he chose to make for his own benefit | Not within the section; his claim is for redemption and preservation |
A profit on the transaction | No. He is reimbursed, not rewarded; he cannot make a gain out of his co-owners |
4. What the Redeeming Co-mortgagor Cannot Do
- He cannot exclude the others. Having redeemed, he holds the property subject to their right to have it treated as redeemed for the benefit of all, on payment of their shares.
- He cannot stand on the redeemed mortgage as though he were a stranger mortgagee and foreclose his own co-owners out of their shares; his remedy is the charge, enforced by sale, with an account.
- He cannot tack. Section 93 prevents him from adding any separate advance of his own to the priority of the mortgage he redeemed.
- And he cannot delay indefinitely. The other co-mortgagors' right to come in and pay their shares is itself subject to limitation, and the redeeming co-mortgagor's charge must be enforced within time.
5. Where a Co-mortgagor Buys the Mortgage Instead
A co-mortgagor sometimes takes an assignment of the mortgage from the mortgagee rather than redeeming it, hoping to hold it as a mortgagee against his own co-owners. The substance of the transaction governs: as between co-mortgagors, a payment made by one of them in discharge of the common burden is treated as a redemption, and he takes the statutory charge for contribution rather than a mortgagee's right to foreclose his co-owners. The form of the receipt does not convert a discharge into an acquisition.
6. A Worked Illustration
Three co-owners, one payer A, B and C own a property in shares of one half, one quarter and one quarter, and mortgage it as one to M for ₹12 lakh. A redeems the whole for ₹12 lakh, together with ₹1 lakh properly spent in preserving the property. A is subrogated to M's mortgage under section 92, and may enforce it against the property as M could have done. And under section 95 he has a charge on B's share and on C's share for their proportions: on the rateable footing of section 82, B's quarter and C's quarter each bear one quarter of ₹13 lakh, that is ₹3.25 lakh each. A does not become the owner. B and C may each discharge their proportion and hold their shares free; the redemption has enured for the benefit of all three. |
7. Landmark Cases
📖 Valliamma Champaka Pillai v. Sivathanu Pillai, (1979) 4 SCC 429 Held: The Court considered the rights of a person who redeems a mortgage in which others are interested. Legal subrogation arises by operation of law in favour of one who has an interest to protect; and where a co-mortgagor redeems, the redemption operates for the benefit of the other co-mortgagors, the redeeming co-mortgagor being entitled to be reimbursed their proportionate shares. Ratio: Redemption by one co-mortgagor enures for all; his remedy is reimbursement, secured on their shares, and not acquisition of the property. |
📖 Aldrich v. Cooper, (1803) 8 Ves 382 Held: The equitable principle underlying both contribution and subrogation was stated: the burden of a common obligation must fall on those who bear it in law, and a person who has discharged it for the protection of his own interest is entitled to be placed, so far as the court can place him, in the position of the creditor he has paid. Ratio: The person who pays a common debt is reimbursed by those it relieved, and is not treated as a volunteer. |
8. Related Topics and Provisions
- Subrogation, Section 92 — legal and conventional subrogation, and sections 94 and 95
- Contribution to a Mortgage Debt, Section 82 — the rateable measure
- Persons Entitled to Sue for Redemption, Section 91 — the co-mortgagor's standing to redeem
- Section 100, TPA — charges, and the enforcement of the section 95 charge
- Section 60, TPA — partial redemption, and the exception where the mortgagee has acquired a share
- Section 44, TPA — the position of a transferee of one co-owner's share