This document discusses the concept of marshalling assets, which allows a creditor to satisfy a debt from multiple properties mortgaged by a debtor in a specified order. It provides an example where a debtor mortgages two properties and sells one, so the creditor must satisfy the debt from the remaining property first before pursuing the property that was sold. The document emphasizes that marshalling is an equitable principle intended to protect buyers, and notes the conditions for it to apply, such as multiple properties mortgaged to the same creditor and at least one property being sold.

1. (S. 57 of TPA)
Under the Guidance of
Submitted by
Madhukar Badiger
Created by
Jagannath R Ramapur

2.  Eg: Sunny mortgages his properties
at Jayanagar and Cox town to Bobby
and borrows Rs. 50,000. Sunny sells
away the property in Jayanagar to
Abhay. Now Abhay is the owner of
Jayanagar property. Bobby brings an
action to recover the money from
Abhay’s Jayanagar property. Now,
Abhay has the right whereby he
need not pay the amount. As per
Sec. 56, Sunny’s property in Cox
town has to be sold and the
proceeds should be used to pay
back that loan of Rs. 50,000.

3.  The concept of marshalling can be best understood
by way of examples.
 The more a teacher tries to explain marshalling in
writing, the more a student may get confused. The
concept should be explained orally / live where a
student can clarify his/her doubts then and there.
 You are advised to read the examples / illustrations
given in the text books and understand the concept
by making illustrations
 Marshalling is also a principle that was born out of
equity. Now some of you may be able to understand
why the rule is this way. It is only in the interest of
equity, the buyer is given this kind of advantage.

4.  Two or more properties should be mortgaged
to a single person.
 At least one of the property must have been
sold to a third person.
 There should be no contract to the contrary
of this rule.

5. ( S. 57 of TPA)

6.  Black’s Law Dictionary: A claim or liability that
is attached to property or some other right
and that may lessen its value, such as a lien
or mortgage; any property right that is not an
ownership interest. An encumbrance cannot
defeat the transfer of possession, but it
remains after the property or right is
transferred

7.  There are various fees / taxes to be paid by
the owners of land to authorities or to
persons. For example: municipal tax / land
revenue.
 Sometimes the property is mortgaged and
certain interest has to be paid by the owner
of the land.
 Such ‘liabilities’ over the land are called as
‘encumbrances’.

8.  Encumbrances affect the calculation of fair
value for a property.
 To avoid this, either the buyer or seller can
apply to the court and deposit certain amount
of money or government securities that
would discharge the property from
encumbrance.

9. A Special thanks to
for giving the opportunity