Property II Final Draft Nazim

DR. RAM MANOHAR LOHIYA NATIONAL NATIONAL LAW UNIVERSITY, LUCKNOW

RESEARCH

PROJECT

RULE OF

SUBROGATION

SUBMITTED TO: DR . R ADHEYSHYAM  (LAW), AS PART OF ADHEYSHYAM PRASAD , ASSISTANT P ROFESSOR  (L PROPE RTY LAW II’. THE ‘WRITTEN ASSIGNMENT  (PROJECT WORK )’ )’ FOR  ‘  ‘PROPERTY SUBMITTED  BY: NAIM ASHRAF (R OLL OLL NO. ! 76), B.A. LL.B. (HONS.) SEM. VI " #$%&!%'

ACKNOWLEDGEMENT

Though this research ro!ect i"itia##$ ca%e u as !ust o"e su&%issio" 'or the e"( o' the se%ester) I a% *er$ ha$ to su&%it that a su&sta"tia# a%ou"t o' research has go"e i"to the %a+i"g o' the sa%e. Here I shou#( ac+"o,#e(ge Dr. Ra(he$sh$a% Prasa() Assista"t Pro'essor o' La, at Dr. Ra% Ma"ohar Lohi$a -atio"a# La, "i*ersit$) Luc+"o, ,ithout ,hose gui(a"ce this research  ro!ect ,ou#("/t ha*e &ee" ossi&#e. I ,ou#( a#so a #so #i+e to tha"+ Dr. Ma(hu Li%a$e Li&rar$) Dr. Ra% Ma"ohar Lohi$a -atio"a# La, "i*ersit$) Luc+"o, ,hich ro*i(e( %e ,ith the re0uire( suort &oth i" the 'or% o' &oo+s a"( o"#i"e (ata&ase ,hich has &ee" o' i%%e"se *a#ue to this  ro!ect. I" the course o' this ro!ect) I ha*e ha* e a#so a #so rero(uce( *arious arts o' u&#ishe( a"( "o" %

 u&#ishe( researches ,hich ha*e &ee" (u#$ cite(. I ,ou#( a#so #i+e to tha"+ the authors o' the sa%e.

 -a1i% Ashra'  Luc+"o,) March) 2346.

CONTENTS

INTRODUCTION.........................................................................................................................

HISTORICAL PERSPECTIVE.................................................................................... ...............&

KINDS OF SUBROGATION...................................................................................................... ..

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CASE LAWS..................................................................................................................................*

SUBROGATION AND ALLIED PRINCIPLES................................................................ .......%

BIBLIOGRAPHY........................................................................................................................%+



INTRODUCTION

The Doctri"e o' su&rogatio" i" the Tra"s'er o' Proert$ Act) 4552) has &ee" #ai( (o," u"(er  sectio" 2) i"serte( a'ter a" a%e"(%e"t i" the $ear 42. The #ai" tet o' the sectio" is as u"(er8 Su&rogatio"8 A"$ o' the erso"s re'erre( to i" sectio" 4 9other tha" the %ortgagor: a"( a"$ co; %ortgagor sha##) o" re(ee%i"g roert$ su&!ect to the %ortgage) ha*e) so 'ar as regar(s re(e%tio") 'orec#osure or sa#e o' such roert$) the sa%e rights as the %ortgagee ,hose %ortgage he re(ee%s %a$ ha*e agai"st the %ortgagor or a"$ other %ortgagee. The right co"'erre( &$ this sectio" is ca##e( the right o' su&rogatio") a"( a erso" ac0uiri"g the sa%e is sai( to &e su&rogate( to the rights o' the %ortgagee ,hose %ortgage he re(ee%s. A  erso" ,ho has a(*a"ce( to %ortgagor %o"e$ ,ith ,hich the %ortgage has &ee" re(ee%e( sha##  &e su&rogate( to the rights o' the %ortgagee ,hose %ortgage has &ee" re(ee%e() i' the %ortgagor has &$ a registere( i"stru%e"t agree( that such erso"s sha## &e so su&rogate(.  -othi"g i" this sectio" sha## &e (ee%e( to co"'er a right o' su&rogatio" o" a"$ erso" u"#ess the %ortgage i" resect o' ,hich the right is c#ai%e( has &ee" re(ee%e( i" 'u##. #ac+?s La, (ictio"ar$) ?Su&rogatio"? is8 the su&stitutio" o' o"e erso" i" the #ace o' a"other ,ith re'ere"ce to a #a,'u# c#ai%) (e%a"( or right) so that he ,ho is su&stitute( succee(s to the rights o' the other i" re#atio" to the (e&t or c#ai%) a"( its rights) re%e(ies) or securities.

HISTORICAL PERSPECTIVE

Su&rogatio" is a ro%a" ter%) ,hich %ea"s ?su&stitutio"?. Lor( Har(,ic+e i" his (ecisio" i" Ra"(a# =. Coc+ra" %ar+e( its i(e"ti'icatio" ,ith e0uit$) i" his oi"io" eresse() he suggeste( a  ossi&#e theoretica# &asis 'or the (octri"e a"( a !usti'icatio" 'or the ro#e o' e0uit$ i" the area o'  co"tri&utio". I" a #etter to Lor( @a%es) he ha( "ote( that "e, co%%ercia# co"(itio"s) "e, %etho(s o' (ea#i"g ,ith roert$) a"( (i''ere"t 'or%s o' roert$ %a(e it "ecessar$ 'or e0uit$ to  #a$ a "o*e# art i" the 'urther (e*e#o%e"t o' su&rogatio". The a&o*e case arose out o' a (ecree &$ @i"g eorge II a##o,i"g co%e"satio" to &e ai( to those that su''ere( #oses i" a ,ar ,ith Sai". So%e i"(i*i(ua#s ha( a#rea($ &ee" i"(e%"i'ie( &$ their i"surers 'or the #osses that the$ ha( su''ere() a"( the i"surers success'u##$ sought to &e su&rogate( to the rights o' their i"sure( to recei*e this co%e"satio". The 'irst E"g#ish case to a(ot the ,or( ?su&rogatio"? ,as Stri"ger =. The E"g#ish a"( Scotch Mari"e I"sura"ce Co. I" this case) the #ai"ti''s i"sure( a shi cargo ,ith the (e'e"(a"ts 'or  ?ta+i"g at sea) arrests) restrai"ts) a"( (etai"%e"t o' a## @i"gs) ri"ces a"( eo#e.? The shi ,as su&se0ue"t#$ cature( &$ a "ite( States cruiser a"( ta+e" i"to -e, Or#ea"s) ,here a suit 'or its co"(e%"atio" ,as i"stitute(. The #ai"ti''s co"teste( the actio" success'u##$ a"( the cators aea#e(. The court or(ere( the #ai"ti''s to 'ur"ish securit$ agai"st costs) ,hich the$ cou#( "ot a''or(. As a resu#t) the shi ,as co"(e%"e(B the #ai"ti''s ga*e 'or%a# "otice o' a&a"(o"%e"t o'  the cargo) a"( re0ueste( the i"surers a$ 'or their tota# #oss. The court) i" ho#(i"g 'or the  #ai"ti'') "ote( that the #ai"ti'' as the assure( ,as 'ree to choose &et,ee" (e'e"(i"g the aea#  &e'ore the A%erica" court or c#ai%i"g a #oss u"(er the o#ic$. >ecause the assure( chose the #atter) the i"surers ,ere o&#igate( to a$. Ho,e*er) ha*i"g ai() the i"surers ,ere e"tit#e( ?to &e

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su&rogate( to the%) a"( get ,hat the$ ca" out o' the ha"(s o' the A%erica"s 'or their o,"  &e"e'it.? Though) there has &ee" so%e (isagree%e"t i" E"g#ish courts a&out ,hether su&rogatio" is a" e0uita&#e or #ega# (octri"e. Ca"a(ia" courts ha*e treate( it as the 'or%er. The #ea(i"g case i" Ca"a(a is -atio"a# au!i A%i!i? =. %ar!i A&hra% A(a% ) ,as ,hether) Sectio" 2 o' the Tra"s'er o' Proert$ Act) 4552) has retrosecti*e e''ect or "otB as er  >roo%'ie#() J.) the retrosecti*e e''ect shou#( &e ta+e" as a gui(e 'or (eter%i"i"g i" cases) ,here there is a co"'#ict o' authorit$) ,hat e0uita&#e ru#es "ot i"co"siste"t ,ith the Act shou#( &e a(ote( as *a#i( i" I"(iaB ,hereas accor(i"g to -.J. Wa(ia) J.) Sectio" 2 o' the Tra"s'er o'  Proert$ Act) as a%e"(e( i" 42) has a retrosecti*e e''ect. It ,as he#( i" the case o' -arai" =. -arai" ) that ,here the %ortgagor hi%se#' re(ee%s the  roert$ this (octri"e cou#("?t &e i"*o+e(. The %ortgagor ,ho (ischarges a rior (e&t is "ot e"tit#e( to &e su&rogate( to the rights a"( re%e(ies o' his cre(itor. This is &ecause &$ (ischargi"g a rior e"cu%&ra"ce create( &$ hi%se#') he is (ischargi"g his o," o&#igatio" to his cre(itor. I" the case o' =ish"u >a#+rish"a -ai+ =. Sha"+area ur#i"gaa Wagara#i ) the >o%&a$ High Court has oi"e( that8 Where a erso" hi%se#' re(ee%s a %ortgage) that is to sa$) a$s the %ortgage %o"e$ out o' his o," oc+et a"( "ot %ere#$ (ischarges a co"tractua# #ia&i#it$ to %a+e the a$%e"t) he is e"tit#e( to the right o' su&rogatio" u"(er the 'irst aragrah o' Sectio" 2) i' he is o"e o' the erso"s) other tha" the %ortgagor) e"u%erate( i" Sectio" 4. Where) ho,e*er) such erso" (oes "ot hi%se#' re(ee% the %ortgage) that is to sa$) (oes "ot hi%se#' a$ the %o"e$ out o' his o,"  oc+et i" ecess o' his co"tractua# #ia&i#it$ &ut a(*a"ces %o"e$ to a %ortgagor a"( the %o"e$ is uti#i1e( 'or a$%e"t o' a rior %ortgage) ,hether the %o"e$ is actua##$ ai( through the ha"(s o' the %ortgagor or is #e't 'or such a$%e"t i" the ha"(s o' the erso" a(*a"ci"g the %o"e$ a"( it is the" ai( to the rior %ortgagee through the ha"(s o' that erso") the #atter ac0uires the right o' su&rogatio" u"(er the thir( aragrah o' Sectio" 2) o"#$ i' the %ortgagor has &$ a registere( i"stru%e"t agree( that he sha## &e so su&rogate(. The Sure%e Court i" the case o' a"esh La# =. Joti Prasa( (iscusse( the "ature a"( ete"t o' a re(ee%i"g co;%ortgagors right to reco*er co"tri&utio" 'ro% his co;(e&tor) The court here he#( that) E0uit$ i"sists o" the u#ti%ate a$%e"t o' a (e&t &$ o"e ,ho i" !ustice a"( goo( co"scie"ce is  &ou"( to a$ it) a"( it is ,e## recog"i1e( that ,here there are se*era# !oi"t (e&tors) the erso" %%

%a+i"g the a$%e"t is the ri"cia# (e&tor as regar(s the art o' the #ia&i#it$) he is (ischarge( a"( a suret$ i" resect o' the shares o' the rest o' the (e&tors. Such &ei"g the #ega# ositio" as a%o"g the co;%ortgagors) i' o"e o' the% re(ee%s a %ortgage o*er the roert$ ,hich &e#o"gs  !oi"t#$ to hi%se#' a"( the rest) e0uit$ co"'ers o" hi% a right to rei%&urse hi%se#' 'or the a%ou"t se"t i" ecess &$ hi% i" the %atter o' re(e%tio"B he ca" ca## uo" the co;%ortgagors to co"tri&ute to,ar(s the ecess ,hich he has ai( o*er his o," share... ,hi#e it ca" &e rea(i#$ co"ce(e( that the !oi"t (e&tor ,ho #a$s u a"( (ischarges the %ortgage sta"(s i" the shoes o'  the %ortgagee... he ,i## &e su&rogate( to the rights o' the %ortgage o"#$ to the ete"t "ecessar$ 'or his o," e0uita&#e rotectio"... so 'ar as it is "ecessar$ to e"'orce his e0uit$ o'  rei%&urse%e"t?.... It is as regar(s the ecess o' the a$%e"t o*er Ms o," share that the right ca"  &e sai( to? eist.... The re(ee%i"g co;%ortgagor &ei"g o"#$ a suret$ 'or the other co;%ortgagors) his right) strict#$ sea+i"g is a right o' rei%&urse%e"t or co"tri&utio". The a&o*e %e"tio"e( !u(g%e"t has &ee" uhe#( ti%e a"( agai" &$ the Sure%e Court itse#' a"( *arious High courts. The sa%e *ie, ,as uhe#( &$ the Sure%e Court i" the case o' =a##ia%%a Cha%a+a Pi##ai =. Si*atha"u Pi##ai a"( Ors. ) ,here it ,as he#( that the rights create( i" 'a*or o' a re(ee%i"g co; %ortgagor as a resu#t o' (ischarge o' (e&t are ?so 'ar as regar(s re(e%tio") 'orec#osure or sa#e o'  such roert$) the sa%e rights as the %ortgagee ,hose %ortgage he re(ee%s?. o,#i"g a"( Hosita# Ser*. Cor.=. Pe""s$#*a"ia I"s. Co. Whereas Su&rogatio" is the e''ect o' the situatio" ,here a %ortgage is re(ee%e( &$ a erso" other tha" the %ortgagor) a"( he su&rogate( o"#$ to the rights o' the %ortgagor a"( "o %ore. Whi#e su&rogatio" is "ot a" assig"%e"t) i" a &roa( se"se su&rogatio" %a$ &e co"si(ere( as assig"i"g a cause o' actio" &$ oeratio" o' #a, a"( t$ica# co"tractua# su&rogatio" ro*isio"s %a$ use assig"%e"t #a"guage.