INSTITUTE OF LEGAL STUDIES
LL.B
SUBJECT : TPA
Ms. Megha Middha DISCOVER . LEARN . EMPOWER
TRANSFER OF PROPERTY
ACT INCLUDING
EASEMENTS (23LLT-154)
Course Outcome
CO Title Level
Number
CO4 Understand
The student will be in a position to
analyse and define the concept and
nature of the transfer of immovable
property.
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Course Name: Transfer of Property Act Including
Easements
Marshalling
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Marshalling
The Rule of Marshalling and Contribution are concepts embodied in the Transfer of
Property Act, 1882 (‘TOPA”). Section 81 and 82 of TOPA deals with the Rule of
Marshalling and contribution respectively. Before the supersession of the rules are
discussed, an understanding of the concepts themselves is imperative.
Marshalling means “to arrange” and the Rule is first introduced in TOPA under
Section 56. Section 56 may be explained in the following manner:
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Rule
[Link] must be an owner of two or more properties,
[Link] must mortgage two or more of his properties to any person,
[Link], he must sell one or more of these properties to any person other than
the one he mortgages the properties to. The sale must include at least one property
that has been mortgaged by the owner,
[Link] buyer of such properties is entitled to have the owner satisfy the mortgage-
debt out of the property or the properties not sold him before he purchases the
property. This can be subject to a contract stating the contrary,
[Link] rule of marshalling should not be so exercised so as to prejudice the rights of
the mortgagee, any persons claiming under the mortgagee, or any person who has
acquired an interest with consideration in any of the properties.
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CONTINUE…
In short, the Rule of Marshalling provides the buyer, in the above case, the right to
demand from the owner that the property be free from any and all encumbrances
before the buyer purchases the property.
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Section 81
[Link] must be an owner of two or more properties. He must mortgage two or
more of these properties to any person,
[Link] must then mortgage one or more of these properties to another person,
[Link] subsequent mortgagee is entitled to have the mortgage-debt of the prior
mortgagee satisfied out of the properties not mortgaged him. This can be subject
to a contract stating the contrary too,
[Link] to Section 56, the rule of marshalling here too should not be so exercised
so as to prejudice the rights of the mortgagee or any person who has acquired an
interest with consideration in any of the properties.
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CONTINUE…
• Marshalling, in this context, may be explained by an illustration. If the
mortgagor mortgages three of his properties X, Y and Z to A and 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, can property X be sold.
• In Barness v. 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 the surplus of A will go to Y and
surplus of B will go to Z.
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CONTINUE…
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.
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CONTINUE…
• The doctrine of marshalling is originated from the equitable principles
of justice and good conscience.
• Lord Eldon elaborated the doctrine of marshalling in the case
of Aldrich v Cooper [1803] 32 ER 402. He said –
• “If a creditor has two funds, the interest of the debtor shall not be
regarded, but the creditor having two funds shall take that which,
paying him will leave another fund for another creditor.”
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CONCLUSION
Marshalling is the right of subsequent mortgagees whereas contribution
is with respect to mortgagors. Marshalling is if a creditor has multiple
funds to realize his debt, he must first pursue the multiple funds instead
of prejudicing the creditor who is secured only by one fund. Whereas in
contribution all the co-mortgagors who have taken a debt by mortgaging
their properties have to make contributions towards debt proportionately
according to their respective shares. The Proviso to Section 82 of TOPA
gives precedence to the former over the latter.
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APPLICATIONS
• The students will be able to understand the concept OF MARSHALLING.
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REFERENCES
Textbooks:
• T1. Dr. HN Tiwari, Transfer of Property Act, Allahabad Law Agency
• T2. Dr. R.K. Sinha, Transfer of Property Act, Central Law Agency
• T3. Dr. H.P. Gupta, The Indian Easements Act, Central Law Publications
• T4. Sir Dinshaw Fardunji Mulla , Mulla, The Transfer of Property Act, Lexis Nexis
Websites
• [Link]
• [Link]
• [Link]
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THANK YOU
For queries
megha.e15722@[Link]
