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Vohra Habsu Vs. Shah Chhaganlal Devachand and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtGujarat High Court
Decided On
Case NumberSecond Appeal No. 532 of 1966
Judge
Reported inAIR1973Guj203
ActsTransfer of Property Act - Sections 60
AppellantVohra Habsu
RespondentShah Chhaganlal Devachand and ors.
Appellant Advocate Bhagubhai H. Shah, Adv.
Respondent Advocate R.M. Christie, Adv. for; S.B. Vakil, Adv.
Cases ReferredIn Madhavji Megji v. Lalji
Excerpt:
.....of 'khas' possession but only symbolic delivery of possession - held, if property let by express powers of mortgagee redemption would be possession through tenant and not 'khas' possession. - - the legal position in this connection is well settled that a person can never give a better title than what he has. therefore, the aforesaid decision clearly shows that if there is concurrence of the mortgagor to the grant of the lease the case shall be one of exception. therefore, their lordships' ratio is clearly applicable to a case where the concurrence need not be necessary at the time of the lease, if general power is conferred on the mortgagee to induct the tenant. in agricultural tenancies their lordships had to consider the context of the liability clause in section 76(a) of the..........power on the mortgagee to settle the tenants in question. in such a case because of the express power a tenant who is brought on the premises would be continued there even after the redemption of mortgage because he had come on the premises with the concurrence of the mortgagor. in the all india film corporation ltd., v. sri rajagyan nath, (1969) 3 scc 79 at p. 82 = (air 1969 nsc 185) their lordships referred to this settled legal position by pointing out that the relationship of lessor and lessee could not subsist beyond the mortgagee's interest unless the relationship is agreed to by the mortgagor or a fresh relationship was recreated. this the mortgagor or the person succeeding to the mortgagor's interest might elect to do. but if he did not, the lessee cannot claim any rights.....
Judgment:

1. Defendant No.6 - tenant of the mortgagee- has filed this appeal as both the Courts have while passing the decree for redemption of the suit mortgage ordered the defendants to deliver actual possession of the mortgaged property Mr. shah for the tenant at the outset tried to challenge the fact that the mortgage was duly proved. Mr. Shah cannot be permitted to do so as he is claiming title only under the mortgagees. Once the mortgagees passed Purshis, Ex.47, admitting the suit mortgage, redemption decree was rightly passed. The only question would be whether Khas possession would be given or such possession as this very property was capable of because of the terms of this very mortgage, but that question could surely be agitated by this tenant defendant No.6. Under the terms of the mortgage deed in question it is provided that possession was delivered of the house in question and the mortgagees could use or let the suit property or get the rental income in lieu of interest. The mortgagors plaintiffs would have no right to that rental income. The term was of 25 years. It is also agreed that at the end of the term when the house was returned on repayment of the mortgage debt, the rental income during the period would belong to the mortgages and their heirs while the plaintiffs mortgagors would have no right to that rental income. It was further stated that at the expiry of the term on acceptance of the mortgage dues, the mortgagees will return the house in question to the mortgagors. Therefore, it is very clear that his mortgage conferred specific power on the mortgagees to induct the tenant in the suit house and earn rental income in lieu of interest during the continuance of the mortgage and the rental income was to be of the mortgagees and their heirs. Therefore, when such express power is conferred by the mortgage deed to enable the mortgagees to induct the tenant, the tenure of these tenants could never be conterminous with the mortgagees' interest. The only effect of redemption mortgagees had a right to take would thereafter be taken by the mortgagors. Therefore, the very nature of this mortgage revealed because of its express stipulation that a redemption was not intended between the parties by way of delivery of Khas possession but only the symbolic delivery of possession when a tenant had been lawfully inducted by the mortgagee in view of the express conferment of that power. The case would be analogous to power of attorney holder inducting the tenant. Even if thereafter the power of attorney is cancelled the tenancy would not come to an end. the legal position in this connection is well settled that a person can never give a better title than what he has. Therefore, when a mortgagee inducts a tenant, such tenant's interest would be conterminous with the interest of the mortgagee. The recognised exceptions, however to these general principles are:

(1) Because of Sec. 76(a) of the Transfer of Property Act under which the mortgagee is liable to manage the property as his own and, therefore, if for the purposes of prudent management he bona fide inducts a tenant for a longer period, that tenancy in exercise of this statutory provision would ensure for a longer period and would not automatically come to an end. However if such a mortgagee were to induct a tenant without any further stipulation of a longer period of duration etc. the tenancy would come to an end when the mortgagees' interest comes to an end.

(2) Another exception would be where a statute confers on the mortgagees' tenants a statutory protection as in the Bombay tenancy Act or any other similar legislation.

(3) The next exception which is also a recognised exception is where the mortgage deed by its own terms confers power on the mortgagee to settle the tenants in question. In such a case because of the express power a tenant who is brought on the premises would be continued there even after the redemption of mortgage because he had come on the premises with the concurrence of the mortgagor. In the all India Film corporation Ltd., v. Sri Rajagyan Nath, (1969) 3 SCC 79 at p. 82 = (AIR 1969 NSC 185) their Lordships referred to this settled legal position by pointing out that the relationship of lessor and lessee could not subsist beyond the mortgagee's interest unless the relationship is agreed to by the mortgagor or a fresh relationship was recreated. This the mortgagor or the person succeeding to the mortgagor's interest might elect to do. But if he did not, the lessee cannot claim any rights beyond the term of his original lessor's interest. Their Lordships pointed out the recognised exception under section 76(a) of the Transfer of Property Act under which the acts done bona fide and prudently in the ordinary course of management might bind even after the termination of the title of the mortgagee in possession. Their Lordships, however, pointed out that this principle applied only to the management of the agricultural land and had seldom been extended to urban properties so as to tie it up in the hands of the lessees or to confer on them rights under special statutes. Thereafter their Lordships made pertinent observations as under:- '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.' It is true that in that case there was no express power conferred by the terms of the mortgage for creating tenancy. That is why the tenant's interest was held to be conterminous with the interest of the mortgagee. Even the Rent Restriction Act protection could not be had by such a tenant, because after the terminated, and he could not be said to be tenant of that land. Their being no landlord and no tenant their Lordships held at page 83 that the provisions of the Rent Restriction Act could not apply any further. Therefore, the aforesaid decision clearly shows that if there is concurrence of the mortgagor to the grant of the lease the case shall be one of exception.

2. Mr. Christie, however, vehemently argued that their Lordships' ratio is applicable only to such a case where after the termination of the mortgagee's interest the mortgagor elects to continue tenancy. If that was the intention, in that case there would be a fresh direct tenancy. Therefore, their Lordships' ratio is clearly applicable to a case where the concurrence need not be necessary at the time of the lease, if general power is conferred on the mortgagee to induct the tenant. In such a case it is not because of the relationship of the mortgagor and the mortgagee that the mortgagee inducts the tenant but because of the express power conferred on him. The only difference between the express power and when the mortgagee inducts a tenant because of the liability under Section 76(a) is that in the case of an ordinary tenant who is inducted under the contractual power the tenancy would not come to an end because the mortgage was redeemed, while in the other case where the tenant was inducted in ordinary course of bonafide prudent management, the tenancy would come to an end, especially in urban properties as pointed out by their Lordships. Index Note the aforesaid decision of all India Film corporation their Lordships approved the ratio of two earlier decisions in Mahabir Gope v. Harbans Narain Singh, 1952 SCR 775 =(AIR 1952 SC 205) and Asaram v. Mst. Ram Kali, 1958 SCR 986 = (AIR 1958 SC 183). In Mahabir Gope's case, in para 7 their Lordships pointed out as under:

'Act permissible settlement by a mortgagee in possession with a tenant in the course of prudent management and the springing up of rights based on the nature of the land and possession for the requisite period is a different matter altogether. It is an exception to the general rule. 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. This exception will not apply in a case where the terms of the mortgage prohibit the mortgagee from making any settlement of tenants on the land either expressly or by necessary implication.'

In that case their Lordships found that the relevant term in the Ijara disentitled the mortgagee from locating tenants on the land mortgaged. Therefore, this decision itself makes it clear that the exception would apply where the mortgage contains such a term enabling the mortgagee to induct the tenant. Mr. Christie tried to distinguish this decision on the ground that his was in the context of agricultural tenancy and not for urban properties. In agricultural tenancies their Lordships had to consider the context of the liability clause in Section 76(a) of the Transfer of Property Act where that exception would enable the mortgagee to induct a tenant who might have either the rights of occupancy or non-occupancy like raiyat, depending on the nature of the permissible settlement by the mortgagee in possession in view of that provision in Section 76(a). In the context of the express power conferred under the mortgage deed induct a tenant on the urban property, the case would be clearly of an exception as indicated by their Lordships. In Harihar Prasad v. Dev Narayan Prasad, AIR 1956 SC 305 at page 312, their Lordships first consider the effect of the first exception under Section 76(a) of the Transfer of Property Act and pointed out that if the power was exercised as contemplated under S. 76(a) to continue lessees as tenements that would confer on them at best the status of tenant from year to year and would not give them a right to continue in possession after the termination of the agricultural year during which the redemption took place. That power could not avail the tenants to claim occupancy rights over the land. similarly the Tenancy Act which conferred occupancy rights on settled Rajyat could be claimed only as per the provisions of that Act being a creature of the statute. Thereafter their Lordships considered this relevant question first under Section 76(a) of the Transfer of Property Act and pointed out that by itself that provision could not confer a right of occupancy on the tenant. Thereafter their Lordships referred to this pertinent question as to the effect of the term of the mortgage deed under which the mortgagee could settle Rajyat on the lad. Their Lordships pointed out that the term itself was clear that on redemption of the mortgage the mortgagors were entitled to possession of the land-Khas possession, which term would be rendered nugatory if the deed was construed as authorising the mortgagees to settle the tenants on the land with the status of the Rajyat. Therefore, on the facts of that case their Lordships came to the conclusion that mortgage confers no authority on the mortgagee to admit tenants so as to confer on them the rights of occupancy and therefore the mortgagee's tenants could be evicted under a decree of redemption. Even in the last decision in this context 1958 SCR 986=(AIR 1958 SC 183) their Lordships considered the question under Section 76(a). Their Lordships pointed out that if there was a prohibition in the mortgage deed against letting of the lands, the authority in Mahabir Gope's decision was that the lease would not be binding on the mortgagor. Where there was no such prohibition the only consequence was that the parties would be thrown back on their rights under the Transfer of Property Act and the lessee must still establish that the lease was binding on the mortgagor under Section 76(a). That decision could not help Mr. Christie for the simple reason that here there is an express power conferred to create a lease and, therefore, such a lease once created in exercise of this power of the mortgagee would clearly bind the mortgagor.

3. In Dinkar Bhagwant v. Rau Babaji (1957) 59 Bom LR 101 the Division Bench consisting of Bavdekar and Gokhale, JJ., in terms observed at pages 114-115 that if it was intended to argue that any lease which was created by the mortgagee in possession was binding upon the mortgagor after the redemption, there must be found either a statutory power in the mortgagee to make such a lease or an express power. Am express power could obviously be given by the mortgage itself. In such a case the lease would be created by a mortgagee as binding upon the mortgagor, that is, not because of the provisions of Section. 76(a) of the Transfer of Property Act or any analogous provision of the English law applicable to agricultural leases, but because there was express power conferred by the mortgage document upon the mortgage under which he was undoubtedly entitled to lease the property. In that case there was no such special power conferred on the mortgagee in possession to let the property and no stature was shown conferring such power. Consequently, it was held that it was not correct to say that the lease which was created in that case did not come to an end along with the redemption of the mortgage. Even at page 115 the Division Bench rightly pointed out that there might be exceptions when leases created by the mortgages either in exercise of statutory or express power might be binding on the mortgagor after redemption. Mr. Christie, however, vehemently relied upon the decision in Bhanshali Khushalchand Shamji v. Sha Shamji Jivraj 59 Bom LR 684 = (AIR 1958 Bom 53), where M.C. Shah, J., had followed the general principle because there was no such express power conferred under the mortgage deed and, therefore, the tenants' interest would come to an end being conterminous with the mortgagee's interest at the time of redemption.. In such a case naturally the Rent Restriction Act could never apply by giving protection because there was no landlord-tenant relationship. Therefore, that decision could hardly help Mr. Christie when there is express power conferred as in the present case. In Madhavji Megji v. Lalji, 12 Guj LR 980 = (AIR 1972 Guj 37) Dave J. has in terms considered this question after interpreting All India film Corporation Limited's ratio, (1969) 3 SCC 79 =(AIR 1969 NSC 185), that where the mortgage deed confers such a power the tenancy would not come to an end. Such a case was one of the exceptions recognised by their Lordships because concurrence of the Mortgagor could be found from the mortgage deed itself. At page 997 our learned brother rightly pointed out that if the tenancy was not automatically terminated on the redemption of the mortgage, the tenancy would continue until the mortgagor terminated the same by a valid notice under the Transfer of Property Act, Such a tenant would have the protection of the Bombay Rent Act because on the redemption of the mortgage the interest of the mortgagee reverted in the mortgagor and he could be the person entitled to receive rent. Therefore, such a person would be entitled even to the protection of the Rent Control Act. I would clearly agree with the aforesaid reasoning of our learned Brother Dave J.

4. In the present case also the terms of the mortgage make it clear that the right to recover rent was given to the mortgagees only during the period of the mortgage and after redemption the right reverted to the mortgagor and, therefore the mortgagor would be the landlord and when there is such relationship of landlord-tenant the Rent Restriction Act would clearly be applicable. It is true that in the present case the purchaser of equity of redemption had sought redemption but he steps in the shoes of the mortgagor. Even through at the present stage, the only material question is whether he is entitled to Khas possession or symbolic possession, one thing is certain that this defendant No.6 tenant could not be deemed to be a person who was a trespasser or who had no tenancy rights after the interest of the mortgagee came to an end. As is earlier pointed out, the vital question at this stage is whether Khas possession should be awarded when the mortgage document itself makes it clear that only possession which was contemplated between the parties was such possession as the property was capable of at the time of redemption. If the property was actually let by exercising power given by the mortgagor only possession which could be decreed at the time of redemption would be possession through tenant and not Khas possession. Therefore, as per the settled legal position this appeal must be allowed by reversing the decree of both the Courts and by modifying the preliminary decree of redemption by providing that only the symbolic possession shall be delivered by attainment of this tenant and not by actual delivery of possession. This appeal is accordingly allowed with costs.

5. Mr. Christie at the end made a request that a certificate for Letters Patent appeal may be given. Ordinarily as the question has already been settled by their Lordships I would have been less inclined to grant a certificate. However, Mr. Christie pointed out that in the decision in 12 Guj LR 980 = (AIR 1972 Guj 37), our Brother Dave, J., has granted a certificate and, therefore, I would grant a certificate under clause 15 of the Letters Patent.

6. Appeal allowed.


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