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1996 DIGILAW 769 (MP)

Vimal Chand S/O Ramswaroop v. Nirmal Chandra S/O Babooram

1996-08-30

T.S.DOABIA

body1996
ORDER T.S. Doabia, J. 1. The short question which arises for determination in this Revision Petition is as to whether a tenant acquiring mortgagee rights would cease to have the status of tenant when mortgage is redeemed. The brief facts for the purpose of disposal of this petition be noticed : The present petitioner was admittedly a tenant on shop in dispute. He became a mortgagee under a mortgage deed dated 19th April, 1973. The relevant conditions on which reliance is being placed are conditions Nos. 1, 2, 3, 4. The purport of these conditions are as under : (i) Condition No. 1 of the mortgage deed lays down that the interest of mortgage amount and the rent of shop would be equal. (ii) The period of mortgage as per condition No. 2 has been ascertained as ten years. Before the expiry of the period of ten years, the mortgagor had no right to get the shop redeemed and at the same time the mortgagee was also not to have a right to get back the refund of his money. (iii) One month's notice was required to be given to the mortgagee before getting the shop in dispute redeemed after the expiry of ten years. (iv) Condition No. 4 is relevant and its English rendering is as under : "After the expiry of the period of ten years when I get the shop redeemed, I would use it for my own purpose for at least three years. After getting it redeemed, I would neither give it on rent nor keep any partner with me. In case it is given to someone on rent, the mortgagee shall have right to take back possession of the shop in his capacity as a tenant." 2. These conditions merely specify that: (i) interest would be equal to rent, (ii) mortgagor cannot get the mortgage redeemed before the expiry of period of ten years, (iii) after the period of ten years and before getting the mortgage redeemed, notice of one month would have to be given, (iv) after ten years when the shop is got redeemed then the premises would be used for personal use by the mortgagor and in case there is breach of this condition then the mortgagor would be entitled to regain possession as tenant. It be seen that in spite of a clever attempt and astute drafting in laying down the conditions there is no stipulation that on redemption the mortgagee would lose his status as tenant. As a matter of fact the requirement is merely to give one month's notice. For what purpose this notice was to be given remains unspecified. Before further dealing with this aspect of the matter the legal position be also noticed. The law is well settled that if a tenant is already in possession and he becomes a mortgagee of that property and if that mortgage is redeemed then, he would reacquire the status of tenant. 3. The learned counsel for the respondent however submits that the above settled position would not be attracted to this case on account of condition No. 4 referred to above. It is argued that if a tenant agrees to certain terms and conditions and that agreement is to the effect that he would surrender the possession in terms of mortgage deed then the above settled principle of law would not be attracted. 4. It is not in dispute that the premises are located at a place where the provisions of M. P. Accommodation Control Act, 1961 are applicable. The landlord is entitled to have possession only in terms of the provisions contained in the aforementioned Act. Section 12(1) is specific. It reads as under: "12(1) Restriction on eviction of tenants. - (1) Notwithstanding anything to the contrary contained in any other law or contract, no suit shall be filed in any Civil Court against a tenant for his eviction from any accommodation except on one or more of the following grounds only." The argument raised by the petitioner is that a contract to the contrary would not enable a landlord to seek possession under condition No. 4 on account of the bar created under section 12(1) of the 1961 Act. 5. The learned counsel for the respondent however submits that the proceedings which he has taken are not in the nature of the suit, but is an application preferred under section 83 of the Transfer of Property Act, 1882. This provision be also noticed : "83. Power to deposit in Court money due on mortgage. 5. The learned counsel for the respondent however submits that the proceedings which he has taken are not in the nature of the suit, but is an application preferred under section 83 of the Transfer of Property Act, 1882. This provision be also noticed : "83. Power to deposit in Court money due on mortgage. -At any time after the principal money payable in respect of any mortgage has become due and before a suit for redemption of the mortgaged property is barred, the mortgagor, or any other person entitled to institute such suit, may deposit in any Court in which he might have instituted such suit, to the account of the mortgagee, the amount remaining due on the mortgage. Right to money deposited by mortgagor. - The Court shall thereupon cause written notice of the deposit to be served on the mortgagee, and the mortgagee may, on presenting a petition (verified in manner prescribed by law for the verification of plaints) stating the amount then due on the mortgage, and his willingness to accept the money so deposited in full discharge of such amount, and on depositing in the same Court the mortgage deed and all documents in his possession or power relating to the mortgaged property, apply for and receive the money, and the mortgage deed and all such other documents so deposited shall be delivered to the mortgagor or such other person as aforesaid. Where the mortgagee is in possession of the mortgaged property, the Court shall before paying to him the amount so deposited, direct him to deliver possession thereof to the mortgagor and at the cost of the mortgagor either to retransfer the mortgaged property to the mortgagor or to such third person as the mortgagor may direct or to execute and where the mortgage has been effected by a registered instrument have registered an acknowledgment in writing that any right in derogation of the mortgagor's interest transferred to the mortgagee has been extinguished." Before dealing with the scope of section 83 of the 1882 Act it would be apt to notice the position vis-a-vis rights of a tenant who becomes a mortgagee and when later on mortgage is redeemed. In Motilal Govindram vs. Gopikrishan, 1961 MPLJ 66 , a usufructuary mortgage was created by the owner of a house in favour of the tenant and it was even recited in the mortgage deed that the mortgagor is giving up his possession and that on redemption he would take back possession. In a suit brought by the mortgagor for redemption and possession of the house it was held that the lessee's right and the mortgagee's right are not mutually inter-related, but derived by independent routes from the right of proprietorship and the lessee's right and mortgagee's right can co-exist. Hence where usufructuary mortgage is created in favour of the lessee's right into the mortgagee's right. It was further held that there was no implied surrender of the lease by operation of law by the lessee at the time he took the mortgage, because there was no impossibility in a person being a mortgagee in possession and a lessee at the same time. There was no surrender by the terms of the agreement and it was only intended that on redemption, the mortgagee should take back the symbolic possession. On redemption the mortgagee reverted to his position as a lessee subject to all the terms and incidents that were in force at that time. 6. Again, it will depend on the facts of each case whether the second agreement is inconsistent and incompatible with the existing one and whether it must be implied that the tenant intended to surrender or cancel the first lease. While dealing with clause (d) of section 111 of the Transfer of Property Act, 1882 the observations made by the Calcutta High Court in Suraj Chandra vs. Beharilal Mondal, AIR 1939 Cal. 692 at page 696, were quoted with approval in a Letters Patent Appeal reported as Gian Chand Sham Chand vs. Rattan Lal Krishan, AIR 1962 Punj. 210 as follows : "If the general principle of merger apart from section 111(d), Transfer of Property Act, is sought to be applied to the present case other difficulties would arise. It would then be primarily a question of intention and we have no materials to decide that the defendant intended to merge the two interests.... A man is presumed to intend that which is for his benefit and judged by that test it would obviously be to the advantage of the defendant to keep the two interests separate. It would then be primarily a question of intention and we have no materials to decide that the defendant intended to merge the two interests.... A man is presumed to intend that which is for his benefit and judged by that test it would obviously be to the advantage of the defendant to keep the two interests separate. His interest as a lessor is affected by the mortgagee and if he allows his lessee's interest to be merged in the superior one, he would be hit by the mortgage decree and the sale and his rights would be extinguished. There was no intention on the part of the tenants to surrender the rights under the lease already taken by them from the landlord and to take a lease from the mortgagee, who obviously had only a transitory interest which could come to an end at any time the mortgage was redeemed. Apart from this if it is clear that a lease in favour of the mortgagee cannot be treated to be inconsistent with the pre-existing lease from the mortgagor. Under the law mortgagee with possession became entitled to the rent that was payable by the appellants to the mortgagor. Even if there had been no writing executed by them in favour of the mortgagee, he became entitled to recover the rent from them in view of the interest created in him. The tenants would not have been justified in making the payment of the rent to the landlord in view of the intimation given to them by the landlord of the creation of this interest but the mere fact that they entered into an agreement to pay the same rent to the mortgagee, would, in no way, be inconsistent with the previous lease which, for the period of the existence of the mortgage, would only remain in suspense. As soon as the intermediary estate created by the owner came to be vested in him, and once again, he became the full owner, the previous lease would revive and come into full operation." In this case there was no intention to surrender possession. In any case this is not apparent from the clauses reproduced above. 7. This matter was considered recently in Gopalan Krishnankutty vs. Kunjamma Pillai Sarojini Amma, AIR 1996 SC 1659 . In any case this is not apparent from the clauses reproduced above. 7. This matter was considered recently in Gopalan Krishnankutty vs. Kunjamma Pillai Sarojini Amma, AIR 1996 SC 1659 . J. S. Verma, J. summed up the position of law as under : In Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage, (1976) 3 SCC 660 = AIR 1976 SC 1565 , the distinction between the rights of a lessee and a mortgagee was pointed out and the conditions for the merger of the two rights were indicated. It was held that surrender of a lease takes effect like a contract by mutual consent on the lessor's acceptance of the act of the lessee; and that there must be a taking of possession,, not necessarily a physical taking, but something amounting to virtual taking of possession. Whether this has occurred is a question of fact. Thus, the mere fact that the owner creates a mortgage in favour of the lessee is not by itself decisive to hold that the prior lease was surrendered and the possession of the earlier lease is only that of a mortgagee on creation of the mortgage. The nature of possession, is a question of fact in each case. In Gambangi Appalswamy Naidu vs. Behara Venkataramanayya Patro, (1984) 4 SCC 382 = AIR 1984 SC 1728 , it was reiterated that the answer to the question whether upon redemption of usufructuary mortgage a tenant-mortgagee was required to deliver actual or physical possession of the mortgage property to the lessor mortgagor must depend upon whether there was surrender of the lessee's right when the usufructuary mortgage was executed in his favour by the lessor-mortgagor; and this depends upon the intention of the parties at the time of execution of the mortgage deed in favour of the sitting tenant. Thus, unless there was a surrender of the lessor's rights at the time of execution of the mortgage, the mortgagor would not be entitled to obtain delivery of physical possession upon redemption. Recently in Narayan Vishnu Hendre vs. Baburao Savalram Kothawale, (1995) 6 SCC 608 = 1995 AIR SCW 4197 = (1996) 1 RCR 150, these decisions have been followed and it has been held that the doctrine of merger does not apply where tenanted premises are mortgaged in favour of the lessee. Recently in Narayan Vishnu Hendre vs. Baburao Savalram Kothawale, (1995) 6 SCC 608 = 1995 AIR SCW 4197 = (1996) 1 RCR 150, these decisions have been followed and it has been held that the doctrine of merger does not apply where tenanted premises are mortgaged in favour of the lessee. It has been held that implied surrender of the lease would not be readily interred. It was reiterated that unless surrender of the lease was proved, the only effect of the mortgage was that the lessee's rights were kept in abeyance and it would revive upon redemption of the mortgage. It is, therefore, clear that in a case like this the question whether there was surrender of the lease by the lessee at the time of execution of the mortgage in his favour by the lessor-mortgagee is a question of fact to be answered on the evidence." It was then observed - The High Court, in the present case, proceeded on the erroneous assumption in law that surrender of the lease by the lessee (defendant) must be implied from the fact of execution of the usufructuary mortgage in his favour by the lessor (plaintiff). As indicated, this is an erroneous assumption in law. 8. Earlier as pointed in Gopalan Krishna Kutty's case this aspect was considered in Narayan Vishnu Hendre vs. Baburao Savalaram Kothawale, 1996 (1) RCR 150. Previous decisions were taken note of. B. N. Kirpal, J. summarised the position of law as under : "In Sambangi Appalswamy Naidu vs. Behara Venkataramanayya Patro, 1985 (1) SCR 651 , while following the ratio of decision in Shah Mathuradas's case (supra) to the effect that there could be no merger of lease and a mortgage, even where the two transactions are in respect of the same property, it was held that the question whether upon redemption of usufructuary mortgage, a tenant mortgagee could be directed to deliver actual or physical possession of the mortgaged property would depend upon whether there was an implied surrender of the lessee's right when the mortgage was executed in his favour by the lessor mortgagor. In order to find an answer to this question, this Court observed that the intention of the parties at the time of execution of the mortgage deed in favour of the sitting tenant had to be gathered from the terms and conditions of the mortgage transaction in the light of the surrounding circumstances of the case.' After seeing the terms of the mortgage deed and the other circumstances of the case, it was concluded that the effect of the mortgage deed in that case was that the lessee's rights were kept in abeyance and they revived upon the redemption of the mortgage because there was no implied surrender of the tenancy. On examining the mortgage deed in Nand Lal vs. Sukhdev, 1987 (Suppl.) SCC 87, where there was a merger in favour of the lessee, this Court after perusing the mortgage deed came to the conclusion that there was nothing to warrant an inference of relinquishment of the rights of the tenants by obtaining the mortgage deed. Similarly, in Nemi Chand vs. Onkar Lal, 1991 (2) RCR 425 (SC) = AIR 1991 SC 2046 , this Court construed the mortgage deed and concluded that there was no implied surrender of the lease in favour of the landlord-mortgagor." In para 19 it was observed as under : "Accordingly, we are of the opinion that the only effect of the mortgage was that the lessee's rights were kept in abeyance and they stood revived upon the redemption of the mortgage. We, therefore, allow the appeal, set aside the impugned judgments of the High Court and the Courts below and we hold that the respondent-plaintiff is not entitled to delivery of physical possession of the front portion of the house in question." Thus creation of mortgagee rights in favour of tenant does not bring about the result that mortgagee on redemption shall have to surrender the possession to the mortgagor. On redemption status as a tenant would revive. In the condition referred to above there is neither express nor implied, condition to surrender tenancy right. Apart from this putting an end to the tenancy rights by resorting to contract would be in breach with the provisions of section 12 of the 1961 Act. This contract cannot be enforced. The same would be the position vis-a-vis section 83 of the 1882 Act. Apart from this putting an end to the tenancy rights by resorting to contract would be in breach with the provisions of section 12 of the 1961 Act. This contract cannot be enforced. The same would be the position vis-a-vis section 83 of the 1882 Act. The provisions of section 83 cannot have overriding effect on the 1961 Act. This revision petition is accepted. The order passed by the Court below is set aside with costs. Cost Rs. 500/-.