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Shyam Sunder and ors. Vs. Seth Balmukand - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal Nos. 2683 of 1957 and 329 of 1959
Judge
Reported inAIR1964All370
ActsTransfer of Property Act, 1882 - Sections 58, 84 and 108(1)
AppellantShyam Sunder and ors.
RespondentSeth Balmukand
Appellant AdvocateG.P. Bhargava and ;A.N. Bhargava, Advs.
Respondent AdvocateA. Banerji, Adv.
DispositionAppeals and cross objection dismissed
Excerpt:
property - mortgage - sections 108 (1), 58 (d) and 84 of transfer of property act, 1882 - landlord usufructuary mortgage his house to reside in it by executing a rent note in favour of the mortgagee - held, landlord becomes tenant is liable to pay rent under the agreement and it is not an interest on loan. - - both these appeals must fail and are dismissed with costs......compensation for use and occupation. this is suit no. 394 of 1951. even after the filing of this suit the rent remained unpaid and in 1955 the plaintiff filed a second suit for the recovery of rent and compensation for use and occupation for the period upto 17th of january 1955. 2. the defendants resisted both the suits and pleaded inter alia that the rent note did not create any relationship of landlord and tenant between the parties but merely provided for a method of paying interest under the mortgage that the defendants were entitled to the benefit of sections 32 and 39 of the agriculturists relief act; that in any case, the defendants had redeemed the mortgage with effect from 12th of october 1954 and no rent was due after that date. 3. in each suit the pleas of the defendants.....
Judgment:

S.S. Dhavan, J.

1. These are two appeals by a defendant from the decisions respectively of the Additional District Judge, Meerut and the Judge Small Cause Court (functioning as Civil Judge) decreeing the plaintiff-respondent's suit for recovery of rent and compensation for use and occupation of a house. The facts are these. The defendant appellants are owners of the house. They borrowed a sum of Rs. 3200/- from the plaintiff respondent and executed a usufructuary mortgage of the house in his favour. Simultaneously they executed a rent note under which they became his tenants and continued to reside in the house for payment of rent at the rate of Rs. 25/-per month. The rent was not paid for several years and the plaintiff filed a suit in 1951 for the recovery of six years' rent and compensation for use and occupation. This is suit No. 394 of 1951. Even after the filing of this suit the rent remained unpaid and in 1955 the plaintiff filed a second suit for the recovery of rent and compensation for use and occupation for the period upto 17th of January 1955.

2. The defendants resisted both the suits and pleaded inter alia that the rent note did not create any relationship of landlord and tenant between the parties but merely provided for a method of paying Interest under the mortgage that the defendants were entitled to the benefit of Sections 32 and 39 of the Agriculturists Relief Act; that in any case, the defendants had redeemed the mortgage with effect from 12th of October 1954 and no rent was due after that date.

3. In each suit the pleas of the defendants were accepted by the trial Court and the suit was dismissed. The plaintiff appealed from both decisions and in each appeal the lower Court, held that the transaction between the parties under the rent note was that of landlord and tenant and the defendants were not entitled to the benefit of the Agriculturists Relief Act. It, however, accepted the plea of the defendants that no rent or damages for compensation were due after 12th of October 1954 when the mortgage was redeemed. It allowed the plaintiff's appeal and decreed the suit with the slight modification indicated above. The defendants have now come to this Court in second appeal. Both the appeals were connected and are being disposed of together by this judgment.

4. I have heard learned counsel for the appellant and am of the opinion that the appeal is without substance. Mr. A. N. Bhargava argued that the view of the lower appellate court that the transaction was that of landlord and tenant is erroneous. I cannot agree. It is true that under a usufructuary mortgage there may be provision for the realisation, of rent and profits of the rent by a mortgagee in lieu of Interest. In such a case the rent realised by the mortgagee from the tenant or any profits derived by him from the land is only a method of payment of interest and no question arises of any relationship of landlord and tenant. But if in addition to the usufructuary mortgage the mortgagor is permitted to use, occupy, or remain in possession of the mortgaged property on payment of rent to the mortgagee, this is an agreement of tenancy under which the mortgagor is the tenant and the mortgagee the landlord. This agreement is quite independent of the mortgage transaction, though it may be simultaneous with it.

The money which the mortgagor pays is not interest on the loan but rent for use and occupation of the property. The relationship remains that of landlord and tenant even if the parties stipulate that the mortgagee after receiving the rent from the mortgagor shall not be entitled to any interest under the usufructuary mortgage. The reason is two-fold : first, interest is not essential for a usufructuary mortgage which can be free of interest; secondly, the mortgagor's right to occupy the property is based on the tenancy which also creates his liability to pay rent for use and occupation of the property to which he would not otherwise be entitled under the mortgage. In the present case the defendants, after executing the usufructuary mortgage, were permitted to occupy the house on payment of rent at the rate of Rs. 25/- per month. The court below was right in its view that they became the tenants of the mortgagee.

5. The question of the defendants claiming any benefit under the Agriculturists' Relief Act does not arise as the sum is claimed by the plaintiff as rent and not under the mortgage or loan. The Agriculturists' Relief Act did not exempt an agriculturist from payment of rent for a house occupied by him as tenant. Moreover, the question of claiming any relief under the Act does not arise after it has been repealed. Both these appeals must fail and are dismissed with costs.

6. The plaintiff has filed a cross-objection against the dismissal of his suit for rent for the period between 12th October 1954 and 17th January 1955 which is the date of the filing of the wit. Mr. A. Banerji contended that the defendants' liability to pay rent continued till the court passed a formal order declaring the mortgage as redeemed. But, as observed by the lower appellate court, the defendants alleged in their application for redemption that the plaintiff had refused to accept that mortgage money and they were compelled to deposit in court. The plaintiff did not oppose this application nor did he contradict this allegation. Therefore, the mortgage must be deemed to have been redeemed on the data when the defendants were compelled to make the deposit in Court as a result of the plaintiff's own conduct. The cross-objection also fails and is dismissed with costs.

7. There is another cross-objection in the connectedappeal (No. 2683 of 1957) against the dismissal of theclaim for interest on the amount due as arrears of rent.But this was a matter within the discretion of the Courtand no error of law in the exercise of this discretion ispointed out to me. This cross objection also fails and isdismissed with costs.


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