1. This second Appeal under Section 100 of the Code of Civil Procedure has been filed by the defendants against the appellate judgment and decree of the Senior Subordinate Judge dated the 15th of November, 1965 by which the learned Judge has allowed the appeal and reserved the decree of the trial court dated the 5th of February, 1965 and finally decreed the suit of the plaintiffs restraining the defendant-appellants from disturbing the possession of the plaintiffs and third defendant who were the owners of the property in dispute except by due process of law.
2. The brief facts leading to this appeal are that Ram Kalan father of Padam Singh along with his relation Lala, appellant, son of Devi Singh was the owner of the land in dispute. According to Jamabandi (Ex.P.3) for the year 1940-41 Bhagwan Dass, respondent was as found by the lower appellate court shown as the tenant in possession of the land in dispute. Later on Ram Kalan mortgaged the property in dispute in favor of one Ram Sarup and after redeeming the same he sole it to Ram Sarup in 1943. The sale was pre-empted by Lala and Padam Singh, appellants, both of whom were at the time minors and the pre-emption claim was preferred by them through Bhagwan Dass, respondents who is a relation of the appellants and the pre-emption money of Rs.950/- was advanced by him in the name of and on behalf of the appellants and the land was pre-empted. As collateral security for the advance of this amount the land in dispute was mortgaged by way of usufructuary mortgage by mutation sanctioned on the 13th of February, 1954 (Exhibit D4) by and on behalf of the minor-appellants through their mother with Bhagwan Dass, respondent and this mortgage has an important bearing on the case. Eventually the appellants after attaining majority filed a suit on the 30th of April, 1958 for redemption of the mortgage. This suit was decreed on the 5th of May, 1961 and in pursuance of the decree symbolic possession was taken by the appellants on the 7th of June, 1961. Thereafter the contesting respondent contended that his pre-existing rights as a tenant of the land in dispute revived upon the redemption and he claimed that the appellants should not interfere with his possession. This suit was filed on the 4th of September, 1961 and was dismissed by the trial court on the finding that the plaintiff respondent was the non-occupancy tenant who had impliedly surrendered his tenancy rights upon the mortgage resulting in merger of the assets and extinguishment of his rights as a tenant and on appeal the lower appellate court came to concrete conclusion and it found that upon the mortgage the plaintiff-respondent had no intention to surrender his rights as a tenant and in fact he had intend to preserve his possession and had advanced money for success of the claim of the appellants for pre-emption; otherwise the respondent could and well become a tenant of the original transferee. The court further held in agreement with the trial court that there was neither implied surrender nor merger of the estate to extinguish the relationship of landlord and tenant. As a result it decreed the suit. The defendant-appellants in this second appeal have challenged the decision of the lower appellate court and have urged that the suit of the plaintiff-respondent was barred by rest judicata and the plea of tenant ought not to have raised as a defense in the suit for a redemption and secondly the civil court had no jurisdiction by virtue of Section 17(d) of the Punjab Tenancy Act to record a finding that the plaintiff-respondent was an occupancy tenant. The counsel has strongly contended that upon the grant of the mortgage the rights of the respondent as a tenant had, by operation of law, merged in the mortgage and had not survived for revival on the redemption of the mortgage. He has urged that the finding of the lower appellate court that the respondent was a tenant is based on no evidence, nor is the finding of the lower appellate court on the intention of the parties to preserve the tenancy rights founded on any evidence and the lower appellate court has mis-directed itself with regard to burden of proof in respect of this finding.
3. The first two contentions about rest judicata and jurisdiction of the civil court had neither been pleaded by the appellants nor raised in the trial court or in the lower appellate court nor have been raised in the grounds of appeal in this court and I have not allowed the counsel to raise them in this court at this stage. The reason is that rest judicata is a mixed question of law and fact and the material in the shape of pleadings of the parties in the previous suit as well as the judgment must have been placed on the file and the intention of the parties must have been attracted to an issue on this point. Even otherwise there does not appear to be any substance as in a suit for redemption of a mortgage which had been filed in the revenue court the question of the rights of the mortgagor as a tenant existing prior to the grant of mortgage could scarcely constitute the grant of defense which ought no to have been raised.
4. The learned counsel moved an application in this court for amendment of his written statement which was opposed on behalf of the plaintiff - respondent and I have disallowed it.
5. The second contention with regard to jurisdiction of the court again has no substance. This is also a plea which had not been raised in either of the courts below nor has it been raised in the grounds of appeal in this court. It would appear that at one stage the suit was dismissed by the court of first instance and then on appeal the Additional Senior Sub Judge remanded the case to the trial court for trial on the issues framed by it and the judgment of the court of first instance in dispute before me has been delivered after remand. The order of the remand has become final between the parties and it impliedly presupposed the jurisdiction of the court below to determine the issue No. 1 as framed by the court of appear, namely, 'were plaintiff and Ram Dass tenants of the land in dispute prior to the mortgage in their favor and if so do they become tenants on redemption of the mortgage--' Moreover, S. 17 (d) of the Punjab Tenancy Act of 1987 on which the learned counsel for the appellants relies has been repealed in its application to Delhi and the rights claimed by the respondent may be available to him under the Delhi Land Reforms Act or Delhi Urban Areas Tenants Relief Act 30 of 1961 whichever applies. The question is again academic as the land in dispute has since been acquired by the State and the parties before me are fighting for apportionment of the compensation which has been awarded. The question of jurisdiction raised is not a pure question of law and I have declined permission to the appellants to raise it in the arguments and have rejected the application to amend the written statement.
6. This takes us to the question of law requiring determination. The extinguishment of the rights of a lessee are provided for in section 111 of the Transfer of Property Act, the clauses (d) and (f) of which and on which the learned counsel for the parties rely read as under:--
'111. A lease of immoveable property determines-
(d) in case the interests of the lessee and the Lesserr in the whole of the property become vested at the same time in one person in the same right.
(f) by implied surrender'.
In my opinion the clause (d) has no application to the facts of the case. The reason is that when a tenant becomes the mortgage, the rights of the landlord mortgagor are shrunk to be the owner of the equity of redemption, but there is no complete merger of all rights in the whole of the property and the two interest of the tenant-mortgagee and the landlord - mortgagor do stand distinct. Consequently in agreement with the lower appellate court I find that the interest of the respondent as a tenant has not been extinguished by merger as provided by clause (d) of Section 111 of the Transfer of Property Act.
7. There is however, force in the submission of the learned counsel that the tenancy rights came to an end by implied surrender mentioned in Clause (F). As notice in the commentary in Mulla's Transfer of Property Act, implied surrender or surrender by operation of law occurs firstly by the creation of a new relationship and secondly by relinquishment of possession and this clause has been applied as embodying a rule of justice, equity and good conscience to agricultural leases. The grant of a new lease for acceptance of an office inconsistent with the lease, e.g., by remaining in possession as a servant has been held to construe implied surrender in Godasankara Valia Raja v. Tharappan Vareed, : AIR1961Ker293 . As a matter of law where a tenant in possession becomes a mortgagee with possession, he does not have a duty to pay rent but acquires a right to realise interest from the mortgagor and he has also advanced money to the mortgagor which he is entitled to receive back. He has also a duty to manage the mortgaged property at the risk, expense and for the benefit of the mortgagor and he renders himself liable to deliver up vacant possession of the mortgaged property upon redemption of the mortgage. These characteristics of a mortgage are plainly inconsistent with the relation of a Lesser and lessee. It is obvious that during the continuance of the mortgage the mortgagor can without payment of the mortgage debt not obtain possession of the land from the tenant mortgagee on the ground of forfeiture of any term of the lease or on efflux of time or expiration of a notice to determined. In other words most of the substantial terms of tenancy will not be enforceable during the period of the currency of the mortgage. This supports the view that the rights of landlord and tenant are determined by implied surrender upon the acceptance of a mortgage. This in my opinion is the correct legal position.
8. This legal result is however, subject to the intention of the parties at the time of the execution of the mortgage and they may agree to keep the relationship of landlord and tenant in abeyance so as to revive it on the termination of the mortgage or they may agree to treat it as a surrender and determination of the lease.
9. The lower appellate court has in the facts and circumstances of the case found that in this case it was the intention of the parties to keep the rights of the tenant alive. There is good finding for this inference in the facts and circumstances of the case. The parties were near relations. The respondent was a tenant already in possession of the land and claimed protection from dispossession under the relevant statutes. The predecessor-in-interest of the appellant has sold the land to Ram Sarup and the respondent could well have become his tenant, but he prosecuted the claim of the appellants for pre-emption and he advanced money for the purpose and simultaneously with obtaining the land for the appellants by pre-emption obtained a usufructuary mortgage in his favor for payment of the amount advanced. The lower appellate court has consequently rightly held that the respondent had no intending to surrender his rights as a tenant and I find that the finding is correct and justified.
10. In Kallu v. Diwan (1902) 2nd 24 All 487 the High Court held that the fact of a tenant's taking a mortgage of land comprised in his holding from his landlord does not of itself extinguish the tenancy by merging the rights of the tenant in those of the mortgagee. The affect of such a mortgage on the tenant's rights would be merely that they would be in abeyance and upon the redemption of the mortgage the parties would revert to their former position, and the landlord would not be entitled to get possession of the land except by ejecting the tenant in due course of law. This authority has been followed by the Board of Revenue. United Provinces in Tej Prasad v. Ramjas Pande. (1919) 52 Ind Case 236 where the Board held that the tenancy of non-occupancy tenant upon holding a mortgage was in abeyance during the existence of the mortgage and, although he cannot reckon the period of the mortgage towards the acquisition of occupancy rights on redemption he reverts to his position of tenant and is not a trespasser. This authority was also followed by the Chief Court of Oudh in Jagmohan Ahir v. Ram Kishen Misir Air 1936 Oudh 322.
11. These authorities have not been followed by the High Court of Madhya Pradesh in Ramrao Govindrao Akolkar v. Pahumal Peshuram Sindhi. : AIR1963MP296 where their Lordship have held that the tenant who accept from his landlord a pure usufructuary mortgage of the same house in which he is the tenant is not entitled to continue in its possession and the mortgage is redeemed and in the absence of a contract to the contrary the relationship of landlord and tenant ceases as soon as the tenant accepts a pure usufructuary mortgage and on redemption, the mortgagor is entitled to get back actual possession for the mortgagee without revival of the pre-existing tenancy rights. The High Court of a Punjab in Sardarilal v. Ramlal, did not follow the authority of the Allahabad High Court in (1902) 2nd 24 All 287 and it observed that upon the mortgage the relationship of landlord and tenant stood impliedly renounced and in a suit for redemption the mortgagor was entitled to actual and not only symbolic possession of the land in dispute unturmoiled by the revival of tenancy rights. The matter came up before the High Court of Allahabad in Lachhman Dass v. Heera Lal, : AIR1966All323 where their Lordship dissented from the view of the aforesaid authority of the High Court of Punjab and they reiterated the views expressed in (1902) 2nd 24 All 487 and their Lordships held that there was no merger of the two interests so as to determine the tenancy under clause (d) of Section 111, but with regard to its determination their Lordships observed that it was a question of fact and depended on the intention of the parties and their conduct.
12. Ramaswami. J, of the High Court of Madras (as his Lordship Judge of the Supreme Court then was) in Meenakshi Amma v. Kizhakke Valath Narayani, : AIR1957Mad212 did not follow the Allahabad view and preferred the view of the High Court of Travancore and Cochin and held that where a possessory mortgage is executed in favor of a lessee, the mortgage rights at its acquisition as a larger and superior interest and on accepting the possessory mortgage there is an implied surrender of the leasehold In velu v. Lakshmi, Air 1953 Tra 584 which was followed by Ramaswamy. J., in Meenakshi Amma, : AIR1957Mad212 (supra) Subramania Iyer, J. Observed as follows:--
'The principle underlying Clause (F) of Section 111 is that whenever a certain relationship exists between two parties in respect of a subject-matter and a new relationship arises as regards the identical subject - matter if the two sets of relationships cannot co-exist as being inconsistent and incompatible, that is to say, if the latter can come into effect only on termination of the earlier that would be deemed to have been terminated in order to enable the latter to operate.
The acceptance by the lessee, who takes possessory mortgage of his leasehold from the Lesser, of the obligation to surrender the property on redemption by payment of the price of redemption, namely all the mortgage money and value of improvements necessarily implies the non-existence of his rights to possession of the property as lessee. There is, thereforee, an implied surrender of the lease, with the execution and acceptance of the possessory mortgage'.
13. A Division Bench of the High Court of Andhra Pradesh in Cheekati Kuriminaidu v. Karri Padmanabhan Bhukta. Air 1964 Andh Pra 536 applied clause (f) to Section 111 of the Transfer of Property Act as the principle of equity, justice and good conscience to agricultural leases and held that the mention in a document that possession was delivered when the possession was already with the lessee was not conclusive of the matter and that the taking of such mortgages by the lessees did not amount to an implied surrender by them of their leases and that the leases were capable of co-existence with the mortgages.
14. I have carefully considered all the aforesaid authorities. I am of the view that a usufructuary mortgage in favor of a lessee does not bring about the merger of the two interests in terms of clause (d) of Section 111 of the Transfer of Property Act since the whole estate is not merged and the Lesser-mortgagor remains owner of the equity of redemption which he can assign or enforce against the mortgagee. Further in my opinion the relationship of a usufructuary mortgagee and mortgagor is incompatible with the relationship of a Lesser and a lessee. The rights as liabilities of Lesser are in the absence of contract to the contrary normally determined by the provisions of Section 108 of the Transfer of Property Act and the rights of mortgagee are determined by the provisions of Chapter Iv of the Transfer of Property Act. The result is that the mortgagee is entitled to receive interest or rent from the mortgagor instead of paying it as a tenant; the period of possession as a mortgagee is different from the term of the lease; the rent or the interest is also likely to be different. The mortgagee also has a right to the accession of the property as well as improvement of the property under Section 70 of the Transfer of Property Act. The mortgagee possesses a right to foreclose the property which is inconsistent with his rights and duties as a tenant. He is entitled to manage the property in accordance with Sections 72, 73 and 76 of the Act and upon redemption the mortgagee is bound to deliver possession of the property to the mortgagor along with its accession and improvement in accordance with Sections 60, 62, 63 and 64 of the Act. These are illustrations taken from the statutory provision to show that the two relationships are incompatible, and they would point out to an implied surrender. The authorities which have taken the view against implied surrender or merger have been forced to the conclusion that the rights of a Lesser and a lessee do, during the continuance of the mortgage, remain in abeyance. There is, in my opinion no scope for the introduction of any principle of abeyance in such circumstances in the absence of an intention of the parties. If the two relationships cannot co-exist one would be extinguished before the other prevails but any theory of absence of any intention of the parties, be a foreign intrusion on the contractual relationship. My conclusion, thereforee, is that it depends on the facts and the circumstances of each case as to what was the intention of the parties on the execution of the mortgage whether a lessee upon obtaining a usufructuary mortgage has not surrendered his right as a tenant irrevocably, and the parties have agreed to allow them to subject and revive on the redemption of the mortgage and no hard and fast rule can be laid as a matter of law.
15. Coming to the facts of the present case, as mentioned above the lower appellate court has found that the intention of the parties was that the rights of the respondent - plaintiff as a tenant would not be extinguished and they would revive on the redemption of the mortgage. The said finding is amply justified on the material on the record and is binding on this court in second appeal. The appeal is consequently dismissed with no order as to costs, in the circumstances of the case.
16. Appeal dismissed.