Skip to content


Thacker Madhavji Meghaji Vs. Lalji Purshottam - Court Judgment

LegalCrystal Citation
SubjectTenancy;Civil
CourtGujarat High Court
Decided On
Case NumberSecond Appeal No. 1028 of 1965
Judge
Reported inAIR1972Guj37; (1971)GLR980
ActsCode of Civil Procedure (CPC), 1908 - Sections 107; Transfer of Property Act, 1882 - Sections 60 and 76; Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 - Sections 12
AppellantThacker Madhavji Meghaji
RespondentLalji Purshottam
Appellant Advocate M.D. Pandya, Adv.
Respondent Advocate B.J. Shelat, Adv.
Cases ReferredGhamandi Ram v. Shankar Lal
Excerpt:
tenancy - possession - section 107 of code of civil procedure, 1908, sections 60 and 76 of transfer of property act, 1882 and section 12 of bombay rents, hotel and lodging house rates control act, 1947 - appeal against decreeing suit for possession of premises - issue related to existence of tenancy between parties - appellant lawfully inducted as tenant on suit premises by mortgagee continued to be tenant after mortgage was redeemed prematurely - tenancy does not automatically come to end on redemption of mortgage - respondent did not terminate tenancy of appellant by giving proper notice - suit to recover possession from appellant with regard to property on which he was inducted as tenant lawfully by mortgagee during subsistence of mortgage does not lie - respondent failed to prove that.....1. this appeal is directed against the judgment and decree of the learned district judge. kutch in civil regular appeal no.21 of 1964 allowing the appeal and setting aside the decree of the lower court in regular civil suit no.224 of 1962 and decreeing the plaintiff's suit for possession of the suit premises.2. the, facts giving rise to this appeal briefly stated are as under:--the house bearing municipal census nos. 705 and 706 described in details in the plaint belonged to the respondent lalji purshottam. the said house was mortgaged with possession for a period of 99 years to lohana saraswati kanyashala, hereafter referred to as the mortgagee, as per mortgage deed ex.40. the mortgage deed specifically permitted the mortgage to lease out the said property during the subsistence of the.....
Judgment:

1. This appeal is directed against the judgment and decree of the learned District Judge. Kutch in civil regular appeal No.21 of 1964 allowing the appeal and setting aside the decree of the lower court in regular civil suit No.224 of 1962 and decreeing the plaintiff's suit for possession of the suit premises.

2. The, facts giving rise to this appeal briefly stated are as under:--

The house bearing Municipal Census Nos. 705 and 706 described in details in the plaint belonged to the respondent Lalji Purshottam. The said house was mortgaged with possession for a period of 99 years to Lohana Saraswati Kanyashala, hereafter referred to as the mortgagee, as per mortgage deed Ex.40. The mortgage deed specifically permitted the mortgage to lease out the said property during the subsistence of the mortgage. The mortgagee agreed to lease in favour of the present appellant Thacker Madhavji Meghaji. The lease was from month to month and the rent was fixed at Rs.12/- per month. Thereafter, on 15-3-1962, as per document Ex.44, by an agreement between the mortgagor and the mortgagee, reconveyance deed was executed under which, on payment of Rs.2,000/-, the mortgagee agreed to release the mortgaged property from possession. A notice, Ex.41 was given by the trustees of the Mandal to the present appellant informing him about the said reconveyance deed. Subsequently, the present respondent gave a notice, Ex 38 asking the appellant to hand over possession of the property on the ground that he required the suit house for his reasonable and bonafide personal use and that certain repairs were required to be effected in the house which could not be done unless the house was vacated by him. As the lessee, that is the present appellant refused to hand over possession a suit was filed in the court of the learned Civil Judge, Senior Division, Bhuj for recovering possession on the ground that the plaintiff required the suit premises for bona fide reasonable use. It was also averred by the plaintiff that there was no relationship of landlord and tenant between him and the defendant. The defendant appellant by his written statement contested the suit. He contended that the redemption of the house by the plaintiff did not affect his tenancy rights . he stated that he was ready and willing to pay the rent which was fixed at Rs.12/- per month. He denied that the plaintiff required the premises reasonably and bona fide for his personal use. He stated that the plaintiff had enough property in his possession for accommodating his family. He contended that the tenancy was not legally terminated and that he was protected by the provisions of the Rent Control Act. He also stated that even though the suit appeared to be brought under the Bombay Rent Control Act, the plaintiff had alleged that there was no relationship of landlord and tenant between the parties and therefore, the defendant contended that the plaintiff should pay full court fee stamp on the market value of the property regarding which possession was sought. From the pleadings of the parties, the learned Judge framed issues at Ex.34. The learned Judge gave his findings on these issues and held that the plaintiff did not require the suit premises for his personal use and occupation reasonably and bona fide. He also held that if a decree for possession was passed, greater hardship would be caused to the defendant. He held that the tenancy of the defendant was not legally terminated. On the finding on these issues, the learned Civil Judge dismissed the suit. Against the said judgment and decree, an appeal was preferred in the District Court at Bhuj. At the time of the appeal, the defendant again gave an application Ex.8, bringing to the notice of the court that the court fee stamp paid by the appellant-plaintiff on the appeal memo was not adequate and therefore, the appeal should be dismissed. Thereafter, the court directed the plaintiff who was appellant in that appeal, to pay proper court fee stamp after valuing the property which the plaintiff did. On merits, the learned District Judge was of the opinion that the suit was not between the landlord and tenant but it was a suit on title for possession of property. The learned Judge, therefore, was of the opinion that it was not necessary to decide whether the plaintiff required the suit premises for reasonably and bona fide personal use and decreed the plaintiff's suit for possession. Against the said judgment and decree, of the District court decreeing the plaintiff's suit for possession, the present appeal has been preferred by the original defendant to this court.

3. Mr. Mayur Pandya, learned Advocate appearing for the appellant raised several contentions. He submitted that the whole suit was fought in the trial court on the basis of the tenancy existing between the parties. He urged that the defendant in his written statement had at the outset urged that even though the suit appeared to be between the landlord the tenant, as the plaintiff had alleged that there was no relationship of landlord and tenant, proper court fee was not paid and that the plaintiff should be asked to pay the court fee on the market value of the property. However, the learned Judge did not frame any issue with regard to the adequacy of the court fee paid by the plaintiff nor the learned Judge raised any issue regarding the nature of the suit. Mr. Pandya urged that all the issues framed by the trial court clearly go to show that the suit was fought on the basis of a lease between the parties and under the circumstances, if the appellate court wanted to treat the suit on the basis as it was between the owner and trespasser, the plaint should have been suitably amended. He made a grievance that even when the defendant gave an application, Exhibit 8 to the learned District Judge, Bhuj for directing the plaintiff-appellant in that appeal to pay adequate court fees, the learned District Judge without hearing him, accepted the valuation put on the property by the plaintiff and accepted deficit court fee not only on the appeal memo but also on the plaint without making proper amendment of the plaint itself as required under law. Mr. Pandya, therefore, urged that the whole decree of the learned District Judge was vitiated by the irregularity and illegality committed by him and this decree deserved to be set aside on that point alone.

4. On merits, Mr. Pandya urged that the original mortgage, Exhibit 40 was for a period of 99 years and one of the terms of the mortgage deed specifically permitted the mortgagee to create a lease with regard to the said property during the subsistence of the mortgage. He urged that in pursuance of the said term in the mortgage deed, when the mortgagee had created a lease in favour of the original defendant, it was not open to the mortgagee to enter into an agreement with the mortgagor so as to defect the right to the tenant. He urged that even after the mortgage was redeemed by the mortgagor as per terms mentioned in Exhibit 44, the rights of the tenant would continue and unless the tenancy was terminated by a proper notice as envisaged in Section 106 of the Transfer of Property Act, the present suit would not be maintainable.

6. As against that, Mr. B.J. Shelat, learned Advocate for the respondent-plaintiff very seriously contended that in the plaint, it was specifically made clear that no relationship of landlord and tenant existed between the parties. He conceded that there were some averments in the plaint which did give an impression as if the suit was under the provisions of the Bombay rent Control Act. He, however, urged that pleadings in the mofussil court should be interpreted liberally and when the learned District Judge allowed the plaintiff to amend the pleadings by accepting the deficit court fee stamp and by permitting him to pay court fee on the market value of the property as valued by him, whatever defect initially was there, was remedied. He, therefore, urged that no prejudice was caused to the defendant by accepting the deficit court fee stamp by the learned District Judge. He urged that the order passed by the learned District Judge accepting the deficit court fee stamp was in the nature of ministerial order and in the absence of any positive evidence showing that the order was ex parte the same should not now be disturbed. Mr. Shelat urged, relying on several authorities, that once the mortgage was redeemed, the lease created by the mortgagee in favour of a tenant would automatically come to an end. He, therefore, urged that the plaintiff would be entitled to recover possession of his property from the defendant on the basis that he was a trespasser. He submitted that the defendant had no right to continue on the premises after the mortgage was redeemed, and therefore, when no relationship of landlord and tenant existed between them, the question of giving notice terminating the tenancy did not arise. In the alternative, he urged that even if it were held that a notice was necessary, the plaintiff had in fact given a notice Exhibit 38 giving full 15 days' time to the defendant to vacate the premises. He urged that the notice apparently was not in the form envisaged in Section 106 of the Transfer of Property Act but the notice given by a mofussil lawyer should be broadly interpreted and such technicality should not weight with the court in the interest of justice. He urged that the evidence of the plaintiff clearly showed that he required the suit premises reasonably and bona fide for his personal use and therefore, he urged that the decree passed by the learned District Judge should be confirmed.

7. This appeal raises a very important and interesting question of law. Both the sides have referred to several rulings to which I will presently refer. But before I refer to those rulings, on the legal aspect of the case with regard to the question whether the tenancy automatically came to an end on the redemption of the mortgage, I would like to refer to the first contention raised by Mr. Pandya. Mr. Pandya submitted that the reading of the plaint as a whole would clearly indicate that the suit was between the landlord and tenant. He urged that if the suit was not brought on the basis of the tenancy subsisting between the parties, it was not necessary for the plaintiff to make out a case that he required a suit premises bona fide and reasonably for personal use. He also referred to the issues framed by the trial court. Mr. Pandya urged that the defendant had taken a plea from the beginning in his written statement that apparently the suit appeared to be between the landlord and tenant but as, the plaintiff had, in the next breathe, stated that there was no relationship of landlord and tenant between the parties, the defendant had urged in the written statement that if the plaintiff considered the suit for possession against the trespasser, he should pay full court fee stamp on the market value of the property. No rejoinder was given by the plaintiff to the written statement filed by the defendant. The learned Judge framed the issues at Exhibit 34. It will be worthwhile to enumerate the issues framed by the learned Judge:--

'1. Whether the plaintiff proves that he requires the suit premises for his personal use and occupation reasonably and bona fide?

2 Who would be put to greater hardship?

3. Whether the notice given by the plaintiff to the defendant is legal and valid?

3-A. Whether the plaintiff proves that the tenancy of the defendant is legally terminated?

4 Whether plaintiff is entitled to mesne profits for use and occupation at the rate of Rs.100/- per month.

5. Whether plaintiff if entitled to possession of the suit premises?

6. What order and decree?

Relying on these issues, Mr. Pandya urged that the issues clearly indicate that the suit was filed under Section 13 (I) (g) of the Bombay Rent Control Act and it was not a suit for possession against a trespasser. He submitted that if the plaintiff's suit was for possession on title, he could have given an application to the court for amendment of the issues. No such application was given by either side and the endorsement of the court 'no more sought' would indicate that the parties were satisfied with the nature of issues. Mr. Pandya, therefore, urged that when the suit was fought out on the basis of a tenancy existing between the parties, it was not proper to change the whole nature of the suit at the appellate stage as was done by the learned District Judge. He submitted that when regular appeal was filed by the present plaintiff in the District Court, Bhuj, he paid the same court fee on the appeal memo as was done in the suit. Therefore, the defendant was constrained to give application, Exhibit 8 to the court drawing its attention to the inadequacy of the court fee stamp paid by the plaintiff. After hearing both the sides, the learned District Judge ordered the plaintiff to give valuation of the property and pay deficit court fee stamp. It is interesting to note that thereafter, the plaintiff gave an application, Exhibit 11 mentioning therein that the market value of the property was Rs.8,000/- and he valued the appeal at further amount of Rs.900/- for the purpose of mesne profit. When this application was shown to the advocate of the defendant, he made an endorsement that he objected to the valuation put by the plaintiff therein. Another application, Exhibit 13 was given by the plaintiff requesting the court to permit him to give deficit court fee stamp on the plaint also. The learned Advocate for the defendant also endorsed objection over this application. In spite of the defendant having objected to both these application, the learned District Judge did not think it necessary to hear the learned Advocate for the defendant and accepting the valuation put by the plaintiff, he directed him to pay the deficit court fee stamp which was accepted by the office. From the perusal of these documents, on the record of the District Court, it is clear that the learned District Judge has no observed proper procedure. After all, when the suit was fought as if it was a suit between the landlord and tenant, it cannot be converted into a suit against a trespasser without proper amendment being made in the plaint and without giving an opportunity to the defendant to raise disputes in the written statement about it. If proper opportunity was given to the defendant, he would have satisfied the court that the market value given by the plaintiff at Rs. 8,000/- was not correct and that it was much more than that. If the market value exceeded Rs. 10,000/- the whole question of jurisdiction would arise. Besides, if the suit had been fought on the basis that the defendant had no right to continue on the suit premises after the mortgage was redeemed the defendant could have been in a position to raise pleas that the tenancy has subsisted even after the mortgage was redeemed in view of specific term contained in the mortgage deed, Exhibit 40. In any case, it cannot be said that a proper opportunity was given to the defendant by the learned District Judge when he passed the order on Exhibits 11 and 13 permitting the plaintiff to pay the deficit court fee stamp. The learned District Judge has based his judgment treating the whole suit on the basis that it was against a trespasser. In my opinion , with great respect to the learned District Judge, the course of conduct adopted by him is contrary to the provisions contained in the Civil Procedure Code and is not conducive to justice. On this point alone, the decree passed by the learned District Judge deserves to be set aside. I do not agree with the learned advocate for the respondent, Mr. Shelat, that no prejudice was caused to the defendant, Mr. Shelat urged that the parties knew the bone of contentions between them and when the plaintiff in the plaint itself had alleged that there was no relationship of landlord and tenant, it was immaterial if no specific issue was framed in that connection. I am unable to agree with Mr. Shelat. The issues framed by the learned trial Judge referred to earlier, clearly show that he treated the suit as between the landlord and tenant. The suit which was fought on the basis of the landlord and tenant could not be converted into by accepting the deficit court fee stamp. If the learned District Judge was of the opinion that proper issues were not framed by the learned trial Judge in spit of specific averment made in the plaint by the plaintiff that no relationship of landlord and tenant subsisted between the parties he should have remanded the suit to the trail court after framing proper issues. The whole evidence shows that the suit was fought as if it was a suit under Section 13 (i) (g) of the Bombay Rent Control Act. The whole evidence by the parties has been direct in this light . in the absence of any specific issue regarding right of the defendant after redemption of the mortgage, naturally, the defendant could not raise any specific pleas which have been raised in this court. If these pleas were raised by the defendant in the trial court and if the suit was fought on proper issues perhaps the learned District Judge may have been inclined to take a different view. In any case, it is clear that the defendant was greatly prejudiced by the change in the nature of the suit by the learned District Judge at the time of the hearing of regular civil appeal in his court. In my opinion, the orders passed by the learned District Judge on application. Exhibits 11 and 13 accepting the deficit court fee stamp are not according to law. Even before the appeal came up for hearing, the defendant had given applications Exhibits 17 and 18 bringing to the notice of the learned District Judge that the orders were passed exparte. No orders were made by the learned District Judge on these applications. Thereafter, the appeal was heard and decided on the basis as if the suit was against a trespasser.

6. Apart from the irregularity and illegality committed by the learned District Judge, the most important question which arises for my consideration is whether the right of a tenant would automatically be terminated on the redemption of a mortgage as held by the learned District Judge. In order to appreciate the legal aspect of the case, it will be worthwhile to take into consideration the peculiar facts of this case. As stated earlier by me, the mortgage was of a period of 99 years. The mortgage deed, Exhibits 40 was executed in the month of Chaitra Vad 11 of Samvat year 1993, equivalent to 1937 A. D. or so. It was mortgage with possession. Under the terms of the mortgage deed, the mortgagee was authorised to create a lease of the mortgaged property. In pursuance of the terms of the mortgage deed the mortgagee gave the property on lease at Rs.12/- per month to the present appellant Thacker Madhavji Meghaji. No doubt, the tenancy was from month to month. But the tenancy would enure in favour of the tenant during the subsistence of the mortgage unless it was terminated by proper notice by the mortgage. For nearly 20 years, the present appellant continued as a tenant. 18.6.1971.

He could have continued as a tenant until his tenancy was terminated by the mortgagee. The tenancy is such a case would enure during the period of the subsistence of the mortgage and unless it was terminated as provided in the Transfer of Property Act, it would have continued in favour of the present appellant. However, the mortgagor and the mortgagee under the document of reconveyance, Exhibit 44, dated 15-3-1962, put an end to the usufruct mortgage created under the mortgage deed, Exhibit 40 before the expiry of the mortgage period mentioned therein with the result that the mortgage with possession in favour of the mortgagee was redeemed. Under document Exhibit 44, it was agreed that the possession of the mortgaged property should be handed over to the mortgagor on his agreeing to pay the balance by instalments. After the document, Exhibit 44 was executed, the mortgagor asked the defendant that is the present appellant, to give possession of the property, under the notice, Ex. 38. The present appellant by his reply Ex. 39 explained that he was not bound by the terms of Ex. 44 and that the tenancy created by the mortgagee still enured and that he was prepared to pay rent to the mortgagor. On these facts, Mr. Pandya learned Advocate for the appellant urged that merely by executing the document, Ex. 44, the rights of a tenant who was a third party could not be defeated. He urged that the present appellant was not a party to the document, Ex. 44. The tenancy was created by the mortgagee in pursuance of the special authority given to him by the mortgage deed itself to lease the property if he so desired. The mortgage document was for a fixed period of 99 years. There was no term in the mortgage deed which would entitle the mortgagor to redeem the property earlier unilaterally. Under the circumstances, if both the parties agreed and if as a result of their agreement, the mortgage was redeemed, the act of redemption would not automatically terminate the tenancy lawfully created by the mortgagee in favour of the present appellant. Mr. Pandya referred to the observations made in Broom's Legal Maxims, 9th Edition by W. J. Byrine at page 451 wherein, it was mentioned that-

' It is equally clear that an agreement entered into between two persons cannot in general, affect the rights of a third party, who is a stranger to it;...'

In my opinion, it is a correct principle. When the tenancy was created by the mortgagee, there was no reason for the tenant to believe that the mortgage would be redeemed before the period mentioned therein. No doubt, under the proviso to Section 60 of the Transfer of Property Act, it is open to the parties to extinguish a mortgage, by mutual agreement before the expiry of the term mentioned therein. But the question is whether in such an eventuality mere redemption of the mortgage would put an end to the tenancy created by the mortgagee lawfully. In the instant case, the tenancy was from month. But suppose hypothetically, a case is considered wherein the mortgagee may have created a lease for a fixed period say 40 to 50 years. If before the expiry of this period, the mortgage is redeemed could it be said that the mere redemption of the mortgage automatically terminated the tenancy which was lawfully created by could mortgagee In my opinion, it would not. In this connection , it is worthwhile to refer to the case of Hardei v. Wahid Khan, reported at AIR 1954 All 16 wherein, it was observed-

' If the property mortgaged is a shop which is let to tenants, the mortgagee is not bound either to keep the shop vacant or to occupy it himself. He is authorised under the provisions quoted above (Section 76 of the Transfer of Property Act) to let it out to a tenant and in the case of a house or a shop a month to month tenancy in the absence of a contract to the contrary, would be the usual tenure under S. 106, T. P. Act. If the mortgagee lets out the premises on a month to month tenancy it cannot be said therefore that he was doing anything beyond the powers conferred on him by Section 76(a) quoted above.

Reliance is placed on Section 111(c) T. P. Act, which provides that-

' A lease of immoveable property determines (c) where the interest of the lessor in the property terminates on or his power to dispose of the same extends only to the happenings of any event by the happening of such event; and it is urged that as the mortgagee's right to grant the lease extended only upto the period when the mortgage was in existence the tenant became a trespasser on the date the mortgage was redeemed.

No doubt, on the redemption of the mortgage, the mortgagor is not bound by the transfers made by the mortgagee or by contracts entered into by him unless his action can be supported on the ground that it was authorised by law or that he was empowered to act under implied, conferred on him by the mortgagor. The mortgagor in such a case may be entitled to claim back possession of the property free from any liability created by the mortgagee after the redemption of the mortgage, but this does not mean that, if in the exercise of his powers of due management as a person of ordinary prudence he has entered into an agreement of tenancy, on the mere redemption of the mortgage without the mortgagor exercising his option of putting an end to the tenancy the tenancy automatically and ipsofacto lapses on the date of the redemption.'

Relying on these observations. Mr. Pandya urged that in the instant case. under the term of the mortgage document, the mortgagee was specifically authorised by the mortgagee was specifically authorised by the mortgagor to give property on lease which he had done. the mortgage was for a period of 99 years. There was no condition in the mortgage document for redemption of the mortgage before the expiry of the period. Under the circumstances. Mr. Pandya urged that if there was premature redemption of the mortgaged property by the act of the parties that could not in any way adversely affect the rights of a third party who was a stranger to that agreement. There is great force in the contentions raised by Mr. Pandya. The appellant was a tenant of the suit premises for the last 20 years before the redemption of the mortgaged property. The tenancy was from month to month. Unless the tenancy was duly terminated by the mortgagee, he would have been entitled to continue possession of the property as a tenant during the subsistence of the mortgage that is for 99 years. No doubt, as observed earlier. It is open to the parties to extinguish the mortgage by an agreement as stated in the proviso to Section 60 of the Transfer of Property Act and unless it was pleaded that the act of redemption as per Ex. 44 was in collusion with each other. it cannot be said that the transaction was not valid. As any fraud or collusion is not pleaded by the present appellant in his written statement. I need not dilate on the same. No doubt, looking to the terms of the document, Ex. 44. an impression may be created in one's mind that it was executed for the sole purpose of taking possession of the property from the tenant. Ex. 44 clearly shows that the mortgaged debt was not paid off. Even cash amount of $s. 2,000/- mentioned therein was not in fact paid but was promised to be paid by the mortgagor and the balance had to be paid by annual instalments. Instead of mortgage with possession, simple mortgage was created on the suit property. All these factors do go to substantiate the submissions made by Mr. Pandya that the only purpose of the document. Ex 44 was to deprive the tenant of the possession of the property. However, I do not think it proper to enter into the merits of this aspect of the case in the absence of any specific plea by the parties. Suffice it to say that even if Ex. 44 operated as a valid redemption of the mortgaged property, that by itself could not terminate the tenancy which was lawfully created in favour of the appellant. A question may arise that after the mortgage is redeemed., it is the duty of the mortgagee to hand over possession to the mortgagor. If there was a tenant in the property, the mortgagee would not naturally be in a position to hand over actual possession of the mortgaged property. In that case, the mortgagee can as well give a symbolic possession to the mortgagor. In the case of Sm. Ram Piari v. Ram Adhin, reported at AIR 1953 All 472, this question was considered by the Allahabad High Court and reliance was placed on the observations made by the Allahabad High Court in the case of Ram Chand v. Rai Han, (1906) 3 All LJ 517, to the effect that-

'It is, of course, conceivable that during the term of the mortgage a right of occupancy might have been acquired by lapse of time, in which case the tenants would have been entitled to retain possession of the land.'

It was observed-

'.....such possession as the property is capable of at the time when the redemption takes place.'

Thus, even though under Section 83 of the Transfer of Property Act., on redemption of the mortgage, a mortgagee is bound to deliver possession back to the mortgagor, if lawful tenancy is created by him, only symbolic possession could be banded over to the mortgagor and the tenancy would continue. Mr. B.J. Shelat, learned Advocate for the respondent submitted that the tenancy would be conterminous with the mortgage and the moment the mortgage was redeemed, the tenancy would come to an end. In support of his say, he referred to several rulings to which I will presently refer. In the case of Bhanshali Khushalchand Ramji v. Sha Shamji Jivraj, reported at 59 Bom LR 684 = (AIR 1958 Bom 53), it was held that-

'Under Section 111(e) of the Transfer of Property Act, 1882, when the interest of the mortgagee defendant No. 1 came to an end on redemption the lease executed by him in favor of defendants Nos. 2 to 4 was also determined, that the protection sought by defendants Nos. 2 to 4 under Section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 was not available to them as no relationship of landlord and tenant was established between them and the plaintiffs, and that, therefore, the plaintiffs were entitled to actual possession of the shop.

The facts of that case were that the plaintiff was in possession of shop of defendant No.1. By a second possessory mortgage, the plaintiff mortgaged the shop to defendants Nos. 2 to 4 who were in possession of shop as tenants of defendant No. 1 before the date of this mortgage. In suit by the plaintiff for redemption of the mortgage, defendants Nos. 2 to 4 claimed benefit of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947 and Contended that they were not liable to deliver actual possession to the plaintiff even after the redemption and that the plaintiffs could be awarded symbolic possession of the shop only. This contention were negatived by the Bombay High Court and it was held that on the redemption of the mortgage, the tenancy came to an end and as there was no relationship of landlord and tenant between them the tenants could not avail of the benefit of the Bombay Rent Control Act. Mr. Shelat urged that this case being prior to 1960, was binding on, me as it was already held by the Bombay High Court that the tenancy came to an end of the redemption of the mortgage. I should follow it and hold accordingly. I agree that the rulings of the Bombay High Court Prior to 1960 are binding to this Court. However, the facts of the Bombay case could easily be distinguished from the facts of our case. There, the mortgage was for a period of one year only and on the expiry of the term, the mortgage was redeemed. In that case, a question arose whether the tenancy enured beyond the mortgage period. In that case, it was rightly held that the mortgage period having expired, the tenant could not get better interest in the property than what the mortgagee himself had. On the facts of that case, therefore, the view taken by the Bombay High Court is correct, though with respect, it is not possible for me to agree completely with the proposition of law made therein that a tenant inducted on the premises by the mortgagee could not get the benefit of the Bombay Rent Control Act on the ground that there was no relationship of landlord and tenant. I will consider in due course, by reference to the definitions of the words 'landlord' and 'tenant' given in the Bombay Rent Control Act in order to show that such definition of tenant given therein would apply to the appellant-tenant in this case. Another case referred to by Mr. Shelat was a Division Bench case of the Bombay High Court In the case of Kamlakar and Co.. v. Gulamshafi Imambhai, reported at AIR 1963 Bom 42. Therein, it was observed--

'A monthly tenancy created by a mortgage in possession in respect of the mortgage premises would come to an end when the mortgagor subsequently files a suit and obtains a decree for redemption. The decree would be binding on the tenant and he is not entitled to claim the protection of the Bombay Rents Hotel and Lodging House Rates Control Act when the mortgage seeks to evict him from the mortgagor seeks to evict him from the mortgage premises.'

The right of a mortgagee under Section 76(a) T. P. Act of making prudent management of property in his possession must necessarily be conterminous with this right to continue as a mortgage and it must come to an end as soon as his right to continue in possession ends. If during that period, the mortgagee creates a leased then by virtue of Section 111(c) T. P. Act the lease also necessarily terminates when the authority of the mortgagor to lease the property ends. This section must apply to all powers and authorities derived either from the Transfer of Property Act of from any other law. The mortgagee's rights cannot be any higher than of any other lessor whose rights are limited in point of time by the very nature of the relationship between the lessor and the owner. If once this position is reached, the court must hold that the mortgagor is entitled to get possession of the property unless there is some provision in law which creates an exception to this doctrine.'

It was further observed that --

'There is no provision in the Bombay Rents Act under which any rights as such are conferred on the tenant. Section 12 does not give the tenant a right to remain in possession of the properties, but it imposes a disability on the landlord and unless the person who seeks to recover possession is brought within the definition of the word 'landlord' the tenant cannot claim possession. After redemption there is no relationship either contractual or by privity of estate between the mortgagor and the tenant. He not being a landlord/ Section 12 does not come in has way of recovering possession.'

No doubt, this case supports the submissions made by Mr. Shelat on behalf of the plaintiff - respondent. However, with respect it may be noted that the observations made in this case go beyond the observations made by the Supreme Court in several cases which I will presently refer. In the case of Mahabir Gope v. Harbans Narain Singh, reported at AIR 1952 SC 205, it was observed that--

'The general rule is that a person cannot by transfer or otherwise confer a better title on another than he himself has. A mortgagee cannot therefore create an interest in the mortgaged property which will enure beyond the termination of his interest as mortgagee. Further the mortgages who takes possession of the mortgaged property, must manage it as a person of ordinary prudence would manage it if it were his own; and he must not commit any act which is destructive or permanently injurious to the property. It follows that he may grant leases not extending beyond the period of the mortgage; any leases granted by him must come to an end at redemption. A mortgagee cannot during the subsistence of the mortgaged act in a manner detrimental to the mortgagor's interests such as by giving a lease which may enable the tenant on acquire permanent or occupancy rights in the land, thereby defeating the mortgagor's right to khas possession; it would be an act which would fall within the provisions of Section 76 sub-clause (e).

A permissible settlement by a mortgagee in possession with a tenant in the course of prudent management and the springing up of rights in the tenant conferred or created by statute based on the nature of the land and possession of the requisite period is a different matter altogether. It is an exception to the general rule. In such a case, the tenant cannot be ejected by the mortgagor even after the redemption of the mortgage he may become an occupancy raiyat in some cases and a non-occupancy raiyat in other cases. But the settlement of the tenant by the mortgagee must have been a bona fide one.'

The ratio of this case, is that the Supreme Court accepted an exception to the general rule that person cannot by transfer or otherwise confer a better title on another than he himself has. As held by the Supreme Court, if a tenant is inducted under the provisions of Section 76(a) by the mortgagee in the course of prudent management of the property such a tenant cannot be ejected by the mortgage even after redemption case, the appellant was inducted as a tenant by the mortgagee lawfully during the subsistence of the mortgage under a specific authority given to him by the term of the mortgage deed, Ex. 40. As already stated earlier, the mortgage was for a fixed period of 99 years without any condition whatsoever indicating that it was not open to the mortgagor to terminate it earlier unilaterally. Under the circumstances, just as a tenant inducted by the mortgagee under Section 76(a) of the Transfer of Property Act in the Course of prudent management of the estate cannot be evicted by the mortgagor even after redemption of the mortgaged property, similarly, a tenant who is lawfully induced on the property under the terms of the mortgage cannot be evicted by the mortgagor on redemption of the mortgage before the expiry of the period mentioned therein. No doubt, as observed earlier, such premature redemption of the property is legal as provided by the proviso to Section 60 of the Transfer of Property Act but an agreement between the mortgagor and the mortgagee cannot operate in any way so as to defeat the rights of a tenant who was lawfully inducted on the property under the terms of the mortgage deed. Reliance was placed by Mr. Shelat on the observations of the Supreme Court in the case of The All India Film Corporation Ltd.. v. Sri Rajagyan Nath, (1969) 3 S. C. C. 79 = (AIR 1969 NSC 185). He particularly referred to the 'following observations at page 82:--

'The first question to consider is this : Did the tenancy created by the mortgagee in possession survive the termination of the mortgagee interest so as to be binding on the purchaser? A general proposition of law is that no person can confer on another a better title than he himself has. A mortgage is a transfer of an interest in specific immovable property for the purpose of securing repayment of a loan. A mortgagee's interest lasts only as long as the mortgage has not been paid off. Therefore on redemption of the mortgage the title of the mortgagee comes to an end. A derivative title from him must ordinarily come to an end with the termination of the mortgagee's title. The mortgages by creating a tenancy becomes the lessor of the property but his interest as lessor is conterminous with his mortgagee interest. Section 111(c) of the Transfer of Property Act provides that a lease of immovable property determines where the interest of the lessor in the property terminates on, or his power to dispose of the same, extends only to the happening of any event by the happening of any event by the happening of such event. The duration of the mortgagee's interest determines, his position an the lessor. The relationship of lessor and lessee cannot subsist beyond the mortgagee's interest unless the relationship is agreed to by the mortgagor or a fresh relationship is recreated. This the mortgagor or the person succeeding to the mortgagor's interest may eject to do. But if he does not, the lessee cannot claim any rights beyond the term of his original lessor's interest. These propositions are well understood and find support in two rulings of this court.'

Relying on these observations. Mr. Shelat very strenuously urged that it was immaterial if the mortgage was for a fixed period of 99 years. Proviso to Section 60 of the Transfer of Property Act authorised the parties to extinguish the mortgage even before the expiry of the period mentioned in the mortgage deed. The interest of the mortgagee as lessor in the property terminated the moment the mortgage was redeemed. He, therefore, urged that mere mentioning a particular period of mortgage in the document would not give better title to the lessee under the lease created by the mortgagee during the subsistence of the mortgagee. He urged that as provided in Section 111(c) of the Transfer of Property Act, the tenancy came to an end on the redemption of the mortgage and it was immaterial if it was redeemed before expiry of the term mentioned in the mortgage deed. I am unable to agree with him. If decision of the Supreme Court is carefully read. It clearly shows that the lease created in the circumstance analogous to the instant case, would enure even after the mortgage is redeemed. On the same page 82, it is further observed by the Supreme Court that --

'To the above proposition there is, however, one exception. That flows from Section 76(a) which lays down liabilities of a mortgagee in possession. It is provide there that when during the continue of the mortgage, the mortgage takes possession of the mortgagee takes possession of the mortgaged property, he must manage the property as a person of ordinary prudence would manage it if it were his own. From this, it is inferred that acts done fide and prudently in the ordinary course of management, may bind even after the termination of the title of the mortgagee in possession. This principle applies ordinarily to the management of agricultural lands and has seldom been extended to urban property so as to tie it up in the hands of lessees or to confer on them rights under special statutes. To this again, there is an exception. The lease will continue to bind the mortgagor or persons deriving interest from him if the mortgagor had concurred to grant it.'

In the instant case, as observed earlier, the lease was granted to the appellant by the mortgagee under the term of the mortgage deed. Thus it could be said that the mortgagor had concurred to the grant of the lease to the present appellant. Thus, in my opinion, to the observations referred to earlier that the relationship of lessee and lessor cannot subsist beyond the interest of the mortgagee, the instant case would provide an exception. Mr. Shelat urged that concurrence of the mortgagor referred to in this ruling is the concurrence after the redemption of the mortgage. I am unable to agree with him. I do not see any words in the above observations of the Supreme Court conveying the meaning that the concurrence should be after the redemption of the mortgage. The words actually used are 'The lease will continue to bind the mortgagor or persons deriving interest from him if the mortgagor had concurred to grant it.' The use of the words 'had concurred to grant' would only mean the lease which was granted by the mortgagee in favour of the tenant. The words 'The lease will continue to bind the mortgagor' also go to lend support to the interpretation put by mortgage under the circumstances, the observations of the Supreme Court do not in any way support the learned Advocate for the plaintiff - respondent in his contention that the moment the property was redeemed, the right of the tenant would come to an end irrespective of the period of the mortgage.

7. Mr. Shelat next urged that the principle mentioned in Section 76(a) extended mostly to agricultural lands and not to urban property. As the present case is not governed under Section 76(a) of the Transfer of Property Act, but as stated earlier, the tenancy was created pursuant to the specific term of the mortgage deed itself authorising the mortgagee to give the property on lease, This question that it would not extend to urban property would not arise at all. Besides, there is no specific prohibition to the extension of the principle flowing from Section 76(a) to urban property. It may be that only in few cases such a principle may have been extended to urban property. But that such a principle has been extended to urban property is clear from the cases referred to earlier viz, AIR 1953 All 472 and AIR 1954 All 16. In those cases, the property was an urban property wherein the tenancy as created by a mortgagee with regard to the urban property was held to enure even after redemption of the mortgage. In my opinion, therefore, the observations made by the Supreme Court did not necessarily go to show that in all cases, the relationship of lessor and lessee would come to an end as soon as the mortgage was redeemed. Two exceptions have been enumerated by the Supreme Court one of which is mentioned in Section 76(a) of the Transfer of Property Act and another where a mortgagor had concurred to the grant of a lease. In the light of the observations made by the Supreme Court holdings that the lease may enure in certain cases even after the mortgage had been redeemed with greatest respect. I am unable to agree with the observations made by the Bombay High Court.

8. Lastly. Mr. Shelat referred to the case of Thakkar Ramji Shamji v. Lohar Mulji Jethabhai, decided in Second Appeal No. 241 1966 on 19.2.1966 (Guj) by our High Court wherein the Bombay High Court rulings referred to above were followed and Mr. V. R. Shah, J, had negatived the contention raised by the tenant that the tenancy would enure after redemption of the mortgage and that the tenant would get protection under the Bombay Rent Control Act. No doubt, this ruling does support the contentions raised by Mr. Shelat and I am in duty bound by the said ruling. If I was inclined to take a different view. I should make a reference to a larger bench. But I need not do so in view of the special facts to which I will presently refer. Firstly, this ruling is not with regard to the tenancy created by the mortgagee wherein the mortgage was prematurely redeemed by the Act of parties. I have already held that an agreement of parties could not defeat the rights of a third party who is a stranger. In the instant case, the present appellant was not a party to the reconveyance document. Ex. 44 and hence, he could not be bound by the term of the agreement mentioned therein. If the tenancy was created lawfully by the mortgagee during the sub-sistence of the mortgage, merely because the mortgage was redeemed earlier by the act of the parties, the tenancy would not automatically come to an end but the tenancy has to be terminated by the mortgagor as provided in the Transfer of Property Act. In the instant case, notice Ex. 14 given by the trustees of the mortgagee-institution is not a legal notice as provided in the Transfer of property Act. By that notice, the mortgage had not duty terminated the tenancy of the present appellant. The said notice was given by the mortgagee after the document, Ex. 44 redeeming the mortgagee was executed. In fact, therefore, the mortgagee having no interest in his property was not authorised to give any notice to the tenant. Similarly, notice Ex. 38 given by the plaintiff - respondent also is not according to law. By that notice, the tenancy has not been terminate. The appellant is merely asked to hand over possession within 15 days from the date of the notice. In my view this notice is not legal. It does not legally terminates the tenancy. Thus, in the absence of a valid notice terminating the tenancy which was lawfully created by mortgagees during the subsistence of the mortgage, the tenancy enured even after redemption of the mortgaged property and the mortgagor was bound to accept the appellant as his tenant until he chose to terminate the tenancy as provided in law.

9. The next question which would arise for consideration is whether a tenant could claim protection of the Bombay Rent Control Act. No doubt, the two Bombay rulings referred to earlier and the decision of this court negative the contention of the present appellant in this regard and with respect, I would have followed the same. But these cases were decided on the basis that the tenancy ceased to exist on the redemption of the mortgage. But as stated above, the observation of the Supreme Court do indicate that in certain circumstances, the tenancy would continue even after redemption of the mortgage. The case decided by this High Court has considered the question whether a tenant in such a case could get protection of the Bombay Rent Control Act and Mr. V. R. Shah J. has answered the question in the negative. But the case decided by Shah, J. has answered the question in the negative. But the case decided by Shah. J.. could be distinguished on special facts of the present case. In order to decide whether Bombay Control Act could apply to the instant case, it will be necessary first to refer to the definition of 'tenant' as given in the Bombay Rent Control Act. Section 5(11) defines 'tenant'. It says--

''tenant' means any person by whom or on whose account rent is payable for any premises and includes--

(a) such sub-tenants and other persons as have derived title under a tenant before the commencement of the Bombay Rents. Hotel and Lodging House Rates Control (Amendment) Ordinance,

(aa) any person to whom interest in premises has been assigned or transferred as permitted or deemed to be permitted, under Section 15;

(b) any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title before the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Ordinance, 1959,

(c) any member of the tenant's family residing with him at the time of his death as may be decided in default of agreement by the court.'

Thus 'tenant' means any person by whom or on whose account rent is payable for any premises. As stated earlier, if the tenancy enured even after the redemption of the mortgage, the tenant under the lease created by the mortgagee, would be the person by whom or on whose behalf rent is payable I am supported in my view by the Rajasthan case in Ghamandi Ram v. Shankar Lal AIR 1966 Raj 19 within, at page 22, it was observed that--

'These words will clearly show that a person who has once entered the premises as a tenant in a lawful manner, in other words, having been inducted by a person who was at the time entitled to so induct him, then he will, by operation of law, be deemed to be a tenant till the tenancy is terminated under the provisions of this Act and not otherwise. This means that where the tenancy comes to an end in terms of the contract or by operation of laws other than the Act, such as the Transfer of Property Act, so far as the Act is concerned, the tenancy shall be deemed to be there and will subsist as long as it is brought to an end in accordance with the provisions of the Act. Thus, to our mind, even though it is true that by virtue of Section 111(c) of the Transfer of Property Act, the appellant ceased to be tenants on the redemption of the mortgage, they shall be deemed to be the tenants within the meaning of the Act as the termination of the tenancy has been brought about otherwise than under the provisions of the Act'.

The 'landlord' in the Rajasthan Act was defined as 'a person who, for the time being, is receiving or is entitled to receive the rent of any premises'. The same definition of landlord is given in the Bombay Rent Act.

10. As observed earlier, if the tenancy of the present appellant was not automatically terminated or redemption of the mortgage, he could not be evicted unless his tenancy was first terminated according to law by the mortgagee. The mortgagor did not give a valid notice terminating his tenancy as required under the Transfer of Property Act. Even after his tenancy was duly terminated, as mentioned in the Transfer of Property Act, it would not be open to the mortgagor to recover possession from the tenant unless his case fell within any of the clauses of section 13 of the Bombay Rent Control Act. In my view, the appellant who was lawfully inducted as a tenant on the suit premises by the mortgagee under the terms of the mortgage continued to be a tenant after redemption of the mortgage before the expiry of the period mentioned in the mortgage deed. His continuance on the premises which he had entered lawfully would bring him within the definition of 'tenant' as given in the Bombay Rent Control Act. Mr. Shelat, however, urged that there was no relationship of landlord and tenant between the mortgagor and the present appellant and therefore, the case could not be governed by the Bombay Rent Control Act. He referred to the definition of 'landlord' as given in the Act showing that landlord is a person who is, for the time being, receiving rent or is entitled to receive rent. He submitted that the mortgagor did not receive any rent from the appellant. The appellant was not his tenant. He stated that the mortgagor was not also entitled to recover any rent from the tenant because there was no relationship of landlord and tenant between them. No doubt, this view has been taken by the Bombay High Court in the cases referred to above. But as observed earlier, the definitions of 'landlord' and 'tenant' given in the Act are very wide and inclusive. It cannot be said that the appellant could not fall within the definition of 'tenant' as given in the Act. No doubt, the mortgagor did not receive any rent from the tenant. But once the interest of the mortgagee in the mortgaged property came to an end on the redemption of the mortgage, the interest of the mortgage reverted to the mortgagor and whatever right mortgagee as lessor of the mortgaged property had to recover rent from the present appellant, the same right would vest in the mortgagor on the redemption of the mortgage. The definition as given in the Act also includes a person who is entitled to receive rent. Naturally on redemption of the mortgage, if the tenancy enured, the mortgagor being the owner of the property would be entitled to receive rent from the tenant who was inducted on the property by the mortgagee lawfully during the subsistence of the mortgage. With respect, therefore. I am unable to agree that there was no relationship of landlord and tenant between the parties and therefore, the appellant in the instant case could not be protected by the provisions of the Bombay Rent Control Act.

11. In my opinion, the appellant who was lawfully inducted as a tenant on the suit premises by the mortgagee continued to be a tenant after the mortgagee was redeemed prematurely before the expiry of the mortgage period. In order to recover possession from the appellant, his tenancy is required to be terminated. His tenancy does not automatically come to an end on the redemption of the mortgage. Under the circumstances of this case, as the plaintiff - respondent had not terminated the tenancy of the appellant by giving a proper notice his suit to recover possession from the appellant with regard to the property on which he was inducted as a tenant lawfully by the mortgagee during the subsistence of the mortgage , could not lie. Even after termination of the tenancy as per provisions of the Transfer of Property Act, the mortgagor would not be entitled to recover possession unless his case fell within any of the clauses of Section 13 of Bombay Rent Control Act. The learned trial Judge from the evidence that was before him was of the opinion that the plaintiff did not require the suit premises for his bona fide and reasonable use. The learned trial Judge was also of the opinion that if a decree for eviction was passed, the defendant would be put to greater hardship. The suit was not fought on the basis that the defendant appellant was a trespasser. For the first time, the learned District Judge decided the suit holding that there was no relationship of landlord and tenant between the parties and that the interest of the defendant in the suit property having come to an end on the redemption of the mortgage, he had no right to continue his stay on the suit premises. If the learned District Judge had only decided the suit on the basis that the defendant was a trespasser and that there was no relationship of landlord and tenant. I would have remanded the case to the learned District Judge for deciding the issues for giving his finding with regard to the bona fide and reasonable requirement of the plaintiff. However, at paragraph 18 of his judgment, the learned District Judge has considered this aspect and he has agreed with the finding of the learned trial Judge that the plaintiff had failed to prove that he required the suit premises for bona fide and reasonable use. In view of the finding of the learned District Judge, it is not necessary now to remand the case.

12. In view of my finding that the present appellant continued to be a tenant and that he was protected under the provisions of the Bombay Rent Control Act. I need not consider the question whether mesne profits awarded by the learned District Judge to the plaintiff - respondent are proper or not.

13. Mr. Pandya, learned Advocate for the appellant submitted that mesne profits ascertained by the learned District Judge were not according to law. There was no data before the learned District Judge to ascertain the mesne profits. The calculations made by him at 6 per cent, interest on the valuation of the property placed by the plaintiff was not proper. I need not decide this point as it does not now arise in view of the finding given earlier.

14. In the result, the appeal succeeds. The appeal is allowed. The judgment and decree of the learned District Judge are hereby set aside and the judgment and decree of the learned trial Judge dismissing the suit are restored. In view of the special facts of this case, parties to bear their own costs throughout.

15. Mr. Shelat for the plaintiff - respondent at this stage made an oral request that in view of the important question of law being involved in this case, a certificate should be granted to the plaintiff - respondent in order to enable him to file an appeal under the Letters Patent Mr. Pandya appearing for the appellant has no objection. In my opinion, this is a fit case where a certificate should be granted. Certificate therefore, is granted as prayed for.

After the judgment in this appeal was signed by me, the office drew my attention to the fact that no separate order was passed with regard to the application for cross-objections given by the respondent. It may be noted that I have already considered the question of cross-objections in paras 12 and 13 of the judgment and in view of my observations made therein, the cross objections stand disposed of with no orders as to costs.

16. Appeal allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //