What is Doctrine of Marshalling?
Section 81 of the Transfer of Property Act refers to the Doctrine of Marshalling. A mortgagor may have mortgaged more than one property to same person and further mortgages some of the said properties to another person. In such cases, the subsequent mortgagee is entitled to earlier mortgaged debt be satisfied out of the property not mortgaged to him but mortgaged to earlier mortgagee without prejudice to the right of the first mortgagee or any other person who has acquired interest in the said property for consideration.
Example: Mr. A mortgages his properties X and Y to B. There afterwards mortgages property Y to C. If the first mortgagee prefers to proceed against property Y, the subsequent mortgagee C may compel B to first proceed against property X and realise his dues. But, if B is unable to realise entire amount from property X, then he may proceed against property Y.