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Petro Antonio Luciano Sequeira and anr. Vs. Goolbai Nadirshaw and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberCivil Revn. Appln. No. 1279 of 1952
Judge
Reported inAIR1954Bom81; (1953)55BOMLR739; ILR1953Bom1153
ActsTransfer of Property Act, 1882 - Sections 58; Presidency Small Cause Courts Act, 1882 - Sections 41
AppellantPetro Antonio Luciano Sequeira and anr.
RespondentGoolbai Nadirshaw and anr.
Appellant AdvocateK.B. Sukhtankar, Adv.
Respondent AdvocateD.P. Madon, ;N.S. Khambata, ;Narielwala and ;Framroze, Advs.
Excerpt:
.....the mortgagees would be entitled to enter into possession. 3. now, well-known text books on mortgages and eminent english judges have admitted frankly the difficulty in defining the relationship between a mortgagor and a mortgagee when the mortgagor remains in possession of the mortgaged property. 4. with regard to the nature of the mortgagor's possession, under an english mortgage, there are interesting observations of lord selborne in -heath v. 359): the possession of the mortgaged land by the mortgagor, during the subsistence of the security, and while the mortgagee did not choose to take possession, was held (at law as well as in equity), to be 'at the will' or by the 'sufferance,'or 'permission' of the mortgagee, under a 'tacit agreement' which the mortgagee might determine at his..........of possession against the mortgagor. it appears that the petitioners mortgaged a property by an english mortgage to secure a sum of rs. 33,000 and the mortgage was transferred to the opponents on 26-1-1949. there was a covenant in the mortgage deed that on the failure on the part of the mortgagors to pay interest as stipulated and to pay the mortgage amount on 26-1-1950, the mortgagees would be entitled to enter into possession.admittedly the petitioners committed default both in respect of payment of interest and the payment of principal. thereupon the opponents gave notice to the petitioners to attorn to' them as tenants. the petitioners refused to do so and thereupon the opponents took out proceedings under chap, vii of the presidency small cause courts act to eject. an order for.....
Judgment:
ORDER

1. A very interesting question arises in this revision application with regard to the right, of a mortgagee under an English mort-.gage to enforce his right of possession against the mortgagor. It appears that the petitioners mortgaged a property by an English mortgage to secure a sum of Rs. 33,000 and the mortgage was transferred to the opponents on 26-1-1949. There was a covenant in the mortgage deed that on the failure on the part of the mortgagors to pay interest as stipulated and to pay the mortgage amount on 26-1-1950, the mortgagees would be entitled to enter into possession.

Admittedly the petitioners committed default both in respect of payment of interest and the payment of principal. Thereupon the opponents gave notice to the petitioners to attorn to' them as tenants. The petitioners refused to do so and thereupon the opponents took out proceedings under Chap, VII of the Presidency Small Cause Courts Act to eject. An order for ejectment was passed by the Small Causes Court, and it is against that order that this revision application is preferred.

2. Mr. Sukhtankar's contention is that the Small Causes Court had no jurisdiction to entertain these proceedings under Chap. VII. Mr. Sukhtankar's contention is that what the opponents were doing was to enforce a provision under the mortgage and the opponents could not enforce that provision in the Small Causes Court, but they should have filed a suit in the High Court for doing so. On the other hand, Mr. Madon's contention on behalf of the opponents is that the petitioners were in possession of the property by leave and license, that the license determined when there was a default as provided in the mortgage deed, and on the default taking place the license was revoked and the opponents became entitled to the possession of the property.

3. Now, well-known text books on mortgages and eminent English Judges have admitted frankly the difficulty in defining the relationship between a mortgagor and a mortgagee when the mortgagor remains in possession of the mortgaged property. We are here dealing with an English mortgage and an 'English mortgage' is defined under Section 58(e) of the Transfer of Property Act as:

'Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortage.'

Therefore, in an English mortgage there is thetransfer of the absolute interest of the mortgagor to the mortgagee, but the transfer isnot complete and some interest is left in themortgagor because he has a right to the reconveyance of the property and also to theright of redemption. To that extent it maybe said that the whole of the interest of themortgagor is not transferred to the mortgagee,but subject to this right which I have justindicated there is a complete and absolutetransfer of the interest of the mortgagor to themortgagee. Therefore, under an English mort-gage a mortgagee is entitled to the same rightsas the mortgagor himself had in the propertyand one of the most important rights is the;right of possession.

There can be no doubt that on an English mortgage being executed the mortgagee becomes entitled to possession of the property. He may not take actual possession, in which case the mortgagor continues in possession by sufferance of the mortgagee or by permission express or implied given by the mortgagee. The mortgage may provide that on the mortgagor committing a certain default the mortgagee would be entitled to enter into actual possession. In such a case the stipulation amounts to the permission being withdrawn or the license being terminated on the default taking place. Therefore, in this case when the English mortgage was executed, the possession of the mortgagor was a permissive possession. The mortgagee had bound himself not to with draw that permission unless there was a default, and when the default did take place, the mortgagee withdrew the permission and the licence came to an end.

It seems to me that under these circumstances the mortgagee was entitled under Section 41 to institute proceedings for ejectment, because Section 41 provides that when any person has had possession, of any immovable property as the tenant or by permission of another person and the tenancy or permission has been determined or has been withdrawn, the person to whom the property belongs can apply for a summons against the occupant calling upon him to show cause why he should not be compelled to deliver up the property. In this particular case the person had possession of the property not as tenant but by permission of another person, and as that permission has determined, that other person is entitled to a summons against the occupant.

4. With regard to the nature of the mortgagor's possession, under an English mortgage, there are interesting observations of Lord Selborne in -- 'Heath v. Pugh', (1881) 6 QBD 345 (A) (p. 359):

'.........The possession of the mortgaged land by the mortgagor, during the subsistence of the security, and while the mortgagee did not choose to take possession, was held (at law as well as in equity), to be 'at the will' or by the 'sufferance,' or 'permission' of the mortgagee, under a 'tacit agreement' which the mortgagee might determine at his pleasure. It was of the nature of the transaction that the mortgagor should continue in possession. His possession was rightful and not by wrong. He was entitled to the rents and profits as long as he remained in possession; mesne profits accrued due and received prior to action or demand could not be recovered from him by the mortgagee.'

Mr. Sukhtankar has relied on a decision of the Privy Council in -- 'Ram Kinkar v. Satya Charan', and his contention is that whatever view might have been taken of an English mortgage prior to this decision, after this decision it could not be said that a mortgagor under an English mortgage had no interest in the mortgaged property at all. Now, all that the Privy Council has done in this case, with respect, is to emphasise the fact that under an English mortgage a mortgagor has some interest left in the mortgaged property. That is undoubtedly so, because, as the definition of an English mortgage under the Transfer of Property Act itself indicates, a mortgagor has the right to have the property reconveyed to him and also the right of redemption. This important right that the mortgagor has does create an interest in the mortgaged property which the mortgagor enjoys. But the Privy Council has not discussed in this judgment what are the rights of a mortgagor to the mortgaged property or what is the nature of the possession that a mortgagor has of the mortgaged property under an English mortgage.

5. In my opinion, therefore, the Court below was right in taking the view that proceedings can be instituted under Chap. VII of the Small Causes Court Act by a mortgagee under an English mortgage to obtain possession from the mortgagor. The result is that the revision application fails. Rule discharged with costs.

6. Rule discharged.


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