Correct option is B
The
doctrine of substituted security is provided under
Section 73 of the Transfer of Property Act, 1882. This section deals with the rights of the mortgagee when the mortgaged property has been destroyed or acquired by the government, and compensation is paid to the mortgagor. In such a case, the mortgagee is entitled to claim the compensation or a portion of it as security in place of the mortgaged property.
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Doctrine of Substituted Security (Section 73 of the Transfer of Property Act, 1882)
The doctrine of substituted security allows a
mortgagee to claim compensation or substitute security when the original mortgaged property is lost due to destruction, compulsory acquisition by the government, or other circumstances leading to compensation being paid to the mortgagor. Section 73 ensures that the mortgagee’s interest is protected by giving them a right to the compensation or substituted security.
Key provisions under Section 73:
· If the government acquires the mortgaged property through compulsory acquisition or the property is destroyed, the compensation paid for the loss of property can be claimed by the mortgagee.
· The mortgagee may receive the amount of compensation equivalent to the value of their interest in the property or the entire compensation if it covers the full mortgage debt.
· This doctrine ensures that the mortgagee does not lose security for their loan, even if the original mortgaged property ceases to exist.
