Section 134 of TPA : Section 134: Mortgaged Debt

Explanation using Example

Imagine that Alice takes a loan of $50,000 from a bank. To secure this loan, she transfers a debt owed to her by Bob, which is worth $60,000. Bob eventually pays off his debt, and the bank receives the $60,000. According to Section 134 of The Transfer of Property Act, 1882, the bank must first use the money to cover any legal or collection costs incurred while recovering Bob's debt. After that, the bank must apply the remaining funds towards Alice's loan balance. If there is any money left after paying the loan and recovery costs, it should be returned to Alice.