Subrogation refers to the act of replacing or taking the place of something or someone. Any individual, besides the person who borrowed the mortgage or co-borrower, who has a stake in the property being used as collateral and decides to pay off the mortgage, has the right to be named as the new mortgage holder. Let’s say an individual If the person providing the security for the mortgage makes a payment to cover the debt when the borrower fails to do so, they have the right to reclaim the mortgage. However, it is important to note that the individual in question has the right to retrieve their money from the mortgaged property, similar to how the mortgagee would have done so if the debt had not been repaid by that individual. To put it differently, the individual who settles the mortgage gains all the privileges of the lender. This process is known as subrogation or substitution, where one person takes the place of the mortgagee in order to handle matters related to redemption, foreclosure, or sale.


The concept of subrogation is an ancient principle rooted in equity, with its origins dating back to Roman Law. Ever since then, subrogation has been acknowledged in all legal systems.

Bisseswar Prasad against Lala Sarnam Singh from Calcutta in 1910.

The meaning and extent of the principle of subrogation were described as follows: 

The principle of subrogation is a concept within the field of equity law. The privity of contract, whether stated or implied, is not the determining factor, except when fairness is considered in the transaction, which may create an implied contract. 

“It is based on the specific details and situations of each individual case, as well as the principles of fairness and justice.”

In both England and India, the principle of subrogation was being implemented as a commonly accepted principle of fairness. If someone’s liability was paid using someone else’s funds or if someone was obligated to settle another person’s debt for their own safety, the doctrine was used to safeguard the interests of the person who made the payment. In India, Section 92 of the Act now includes precise and explicit legislation regarding subrogation. It is no longer a fair principle. 

All individuals (excluding the person who took out a mortgage) who possess a stake in the property. 

Individuals who hold mortgaged property or are in the process of redeeming it under Section 91 have the right to be subrogated or replaced by the mortgagee (creditor).


Section 92 of the Transfer of Property Act, 1882, provides for two kinds of subrogation −

  • Legal subrogation
  • Conventional Subrogation

Legal subrogation occurs automatically through the law, whereas conventional subrogation occurs when someone pays off a debt without any personal interest, but with the understanding that they will assume the rights and remedies of the original creditor.


Legal subrogation occurs automatically due to the law and is grounded on the principle of repayment. If someone intends to pay on behalf of another person who is obligated to make the payment, the person making the payment should be repaid.

It may be claimed by the following persons- 

  • Puisne mortgagee
  • Co – mortgagor
  • Surety 
  • Purchaser of equity by redemption

Puisne mortgagee: A mortgagee is an individual who possesses the authority to reclaim ownership of the property held as collateral in a previous mortgage agreement. He has the option to initiate legal action in order to repay the previous mortgage. If a previous mortgage holder is successful in obtaining a legal judgement without having sued the subsequent mortgage holder first, they are given the right to initiate legal action to reclaim the previous mortgage.

Co – mortgagor: A co-debtor and a co-mortgagor refer to the same person. He is responsible only for the portion of the debt that is his. When he repurchases his portion and settles the portion belonging to the other borrower, he acquires the privileges of taking the place of the other borrower in terms of rights and obligations.

Surety: A person acting as a guarantor for a loan repayment in a mortgage has the privilege to reclaim the mortgaged property if the borrower fails to fulfill their obligations, as stated in Section 91 of the Transfer of Property Act. If the guarantor of the mortgage pays off the property, they take on the same position and rights as the creditor.

Purchaser of equity by redemption: There were concerns about whether the person who bought the equity of redemption could be substituted in place of someone else. The mortgagor’s right to reclaim ownership of the property is regarded as a valuable asset that can be sold or transferred to another party. The individual who buys this equity will gain ownership rights to the property.


If an unknown person pays a debt with the expectation of taking the place of the original creditor, they have the right to be replaced by the debtor. However, the commonly accepted belief is that a conventional substitution can only happen if there is a direct agreement with either the person who is owed money or the person who owes the debt. It is not enough for someone who is paying off someone else’s debt to simply do so with the understanding that they will take on the rights of the person they are paying off. However, if the agreement has been made, there is no need for a formal assignment, and the agreement can be proven through subsequent actions.


There is no need to register in order to gain the subrogation rights in a situation where someone has a lawful interest in a property and has the right to pay off a mortgage on it by settling the debt. It is possible to uphold a legal subrogation claim. 

However, for conventional subrogation to be valid, there must be a written convention or agreement, which is then registered. It is important to note that the person providing money to the mortgagor in order to pay off a mortgage must not have any interest in the property or the right to redeem it. This modification occurred following the revision to the Act. A conventional subrogation claim arises from an agreed upon agreement made before any changes were made.

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