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Nand Lal Vs. Ramjilal and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 53 of 1978
Judge
Reported inAIR1981Raj243
ActsTransfer of Property Act, 1882 - Sections 111
AppellantNand Lal
RespondentRamjilal and anr.
Appellant Advocate S.B. Mathur, Adv.
Respondent Advocate H.C. Rastogi, Adv.
DispositionAppeal dismissed
Cases ReferredIn Lachhman Das v. Heeralal
Excerpt:
- - 2, the deed of agreement executed by the mortgagee, on july 27, 1955, and other evidence on record clearly proved that 'after the execution of the mortgage-deed the tenant expressly as well as impliedly surrendered his tenancy rights in the property' and that such rights could not, therefore, revive on the redemption of the mortgage by the mortgagors......to an end or it would be merely put in suspension so that on the redemption of the mortgage, the tenant mortgagee could remain in possession on the basis of the tenancy rights?.2. the material facts which are no longer in dispute may be shortly stated here. ramji lal and murari lal (hereinafter called the mortgagors), who instituted the suit for redemption, giving rise to this second appeal, are owners of the shop in dispute which has been in possession of nand lal the defendant-appellant, herein, since, 1943. to start with nand lal (hereinafter called the mortgagee), was given possession of this shop as a tenant on a rent of rs. 8/-per month. on june 27, 1955, the mortgagee advanced rs. 4500/- to the mortgagors by way of loan. the mortgagors executed a mortgage-deed on the even date,.....
Judgment:

K.S. Sidhu, J.

1. This second appeal by the defendant from the appellate Judgment and decree, dated, January 12, 1978, of the District Judge, Sawai Madhopur, in affirmance of the judgment and decree of the trial Court, dated.April 4, 1975, was admitted by Kudal, J., in this Court on February 12, 1978, formulating a question of law as under :

Whether on the execution of a usufructuary mortgage by the landlord in favour of a tenant, the relationship of landlord and tenant will come to an end or it would be merely put in suspension so that on the redemption of the mortgage, the tenant mortgagee could remain in possession on the basis of the tenancy rights?.

2. The material facts which are no longer in dispute may be shortly stated here. Ramji Lal and Murari Lal (hereinafter called the mortgagors), who instituted the suit for redemption, giving rise to this second appeal, are owners of the shop in dispute which has been in possession of Nand Lal the defendant-appellant, herein, since, 1943. To start with Nand Lal (hereinafter called the mortgagee), was given possession of this shop as a tenant on a rent of Rs. 8/-per month. On June 27, 1955, the mortgagee advanced Rs. 4500/- to the mortgagors by way of loan. The mortgagors executed a mortgage-deed on the even date, stating therein that the rate of interest agreed to by them was nine annas per cent per mensem, that they had delivered possession of the mortgaged shop to the mortgagee and that the mortgagee will retain possession and receive rents and profits accruing from this shop in lieu of interest. The mortgage-deed further recites that the mortgagee will be entitled to realise from the mortgagors the difference, if any, between the amount of monthly interest and the amount of monthly rent. The mortgagee also executed a separate deed on the even date mentioning therein that he had acquired possession of the shop as an usufructuary mortgagee, that a sum of Rs. 25/- per month as presumptive rent would be appropriated by him in lieu of interest, that if the market rent would fall below Rs. 25/- per month, notice thereof would be duly given to the mortgagors who would in that case, be liable to make up the difference between the amount of interest payable and such lower market rent, and that if the market rent would exceed Rs. 25/- per month, the mortgagee would have the option to retain possession on payment of enhanced market rent or deliver possession to a prospective tenant who may be willing to pay such rent and partlyadjust the receipt of rent in lieu of interest.

3. One of the pleas raised by the mortgagee in answer to the mortgagors' claim for redemption was that even if the mortgagors were to be allowed to redeem the mortgage in question, he would not be liable to be evicted from the shop in dispute because his leasehold rights as they obtained before the mortgage would revive on the redemption of the mortgage to provide him the necessary shield of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, against eviction by the mortgagors.

4. It appears that the mortgagors' learned counsel countered this plea with an argument that on the creation of the usufructuary' mortgage on June 27, 1955, the mortgagee's leasehold rights, as they obtained before the mortgage, merged in his mortgagee rights, and that thus the leasehold rights stood extinguished altogether. In the alternative, counsel appear to have argued that, in any case, the earlier lease determined by express or implied surrender by the mortgagee at the time of the creation of the usufructuary mortgage in his favour.

5. By its judgment, dated, April 4, 1975, the trial Court held that it was proved in the facts and circumstances of this case that by accepting delivery of possession of the shop as a usufructuary mortgagee on June 27, 1955, and by executing a deed on the even date expressly stating therein that he would retain possession and, therefore, the usufruct of the shop, in lieu of interest, the mortgagee made it clear that the earlier lease stood determined by express or implied surrender and that the lease was, therefore, no longer in existence at the time of the institution of this suit for redemption.

6. The lower appellate Court affirmed the aforesaid view of the trial Court and held on facts that Ex. 1, the mortgage-deed executed by the mortgagors and Ex. 2, the deed of agreement executed by the mortgagee, on July 27, 1955, and other evidence on record clearly proved that 'after the execution of the mortgage-deed the tenant expressly as well as impliedly surrendered his tenancy rights in the property' and that such rights could not, therefore, revive on the redemption of the mortgage by the mortgagors.

7. This Court admitted the second appeal from the judgment and decree made and passed by the lower appellate Court, because it appears to have been argued before it then, as it is argued even now, that on the creation of the usufructuary mortgage of the shop by the owner in favour of the same person who was already in occupation thereof as a lessee, the latter came to acquire two parallel estates in the shop, that is to say, the leasehold estate and the estate of mortgagee rights and that these two estates could not possibly merge so as to bring about extinction of the leasehold estate. Put another way, the argument is that the leasehold estate which has remained dormant will revive on the redemption of the mortgage and that on redemption the mortgagee would still retain possession of the shop as a lessee conceding to the mortgagors no more than mere symbolical possession.

8. This argument is partly correct inso far as it is urged that the tenant, on accepting the usufructuary mortgage from his landlord did not ipso facto merge his leasehold rights into the mortgagee rights. It will however be presently shown that though there was not merger, the parties in the instant case determined the lease by express surrender in accordance with the provisions of Section 111(e), Transfer of Property Act, 1882. The surrendered lease cannot revive, proprio vigore, on the redemption of the mortgage by the mortgagors. The mortgagors would, therefore, be entitled to recover actual possession from the mortgagee in execution of the decree for redemption of the shop in dispute.

9. The doctrine of merger, in common law, points an event, as a proposition of law, which takes place when a particular estate (lesser estate) and an expectant estate (greater estate) both become vested in the same person without any intervening estate in another person. An estate which was carved out of a greater estate and which immediately preceded the remainder or reversion was called a particular estate. That being the technical rule of merger, it cannot apply, as a proposition of law, to a tenant accepting a mortgage from his landlord, for the simple reason that the leasehold estate is not carved out of the mortgagee rights, which he subsequently acquires and as such leasehold estate could not be legally described as a particular estate qua the mortgagee rights, just as the mortgagee rights could not be legally described as an expectant estate qua the leasehold estate. It will be seen that both the leasehold estate and the mortgagee rights were carved out of a still higher estate, that is to say, the proprietary and ownership rights of the lessor-cum-mortgagor. Even after the creation of these two estates, the lessor-cum-mortgagor was still left with the estates of reversion and redemption. The expectant estates are, therefore, still left with the lessor-cum-mortgagor. Notwithstanding the leasehold estate and the mortgagee rights vesting in the same person. There is no question of merger of these estates in the technical sense, for none of them is a particular estate qua the other. They are instead independent and parallel estates which can co-exist as such.

10. The nearest thing to the doctrine of merger in the context of leasehold rights in our codified law is Section 111(d), Transfer of Property Act, 1882. Section 111 deals with determination of a lease. Clause (d) of this section provides that :--

A lease of immoveable property determines in case the interests of the lesseeand the lessor in the whole of the property become vested at the same time in one person in the same right.

Sow it is obvious in the instant case that, to quote the language of the Section, 'the interests of the lessee and the lessor in the whole of the property' could not and did not vest in the same person, merely because that person, who was a lessee to start with, acquired the mortgagee rights in the same property subsequently. Acquisition of mortgagee rights is not the same thing as acquisition of the interests of the lessor in the whole of the property. To be able to claim that the lessee had acquired the interests of the lessor in the whole of the property, he had to acquire not merely the mortgagee rights, but also the right of redemption in the shop in dispute, it has already been explained that even after the creation of the lease and the usufructuary mortgage in that order, the lessor-cum-mortgagor was still left with the residuary estates of reversion and redemption. Under the circumstances, the interests of the lessee and the lessor in the whole of the propertydid not vest in the same person, and, therefore, the prior lease was not determined on the creation of the subsequent mortgage.

11. A careful study of our case-law on the point also reveals that reliance has seldom been placed on the doctrine of merger, as a proposition of law, to draw an inference that by accepting a usufructuary mortgage a tenant necessarily puts an end to his tenancy. The inapplicability of the doctrine of merger, dehors the provisions of our codified law, to our land tenures appears to have been at the back of the mind of Burkett, J. of the Allahabad High Court in Second Appeal No. 122 of 1898, decided on December 20, 1898 (a brief report of his Lordship's judgment is to be found printed as a footnote of the judgment reported in Kallu v. Diwan, (1902) ILR 24 All 487), wherein his Lordship held that on the grant by a landlord of a usufructuary mortgage of agricultural land in favour of his occupancy tenant, the occupancy tenure is not extinguished or merfied in the mortgage. The opinion of the lower Appellate Court that there was such a merger of the two estates invited a share comment from Burkett, J. describing it as 'a novel and extraordinary doctrine (of merger)'.

12. Following Burkett, J., a Division Bench of the Allahabad High Court held in Kallu v. Diwan, (1902) ILR 24 All 487, that it could not be accepted as a proposition of law that a tenant accepting a mortgage from his landlord ceased to be a tenant. Their Lordships however added the caveat that it would be open to the party pleading merger to prove by other evidence that by accepting the mortgage the tenant had finally put an end to his tenancy. Their Lordships were obviously having in mind determination of the tenancy by surrender. Surrender is entirely a different matter. It has nothing to do with merger.

13. Turning now to a comparatively recent period, I may refer to the opinion of Modi, J. of our own High Court in Dhulilal v. Pannalal, 1963 Raj LW 265 : (AIR 1963 Raj 110). A careful reading of the report of the cited judgment would reveal that even Modi, J. was not prepared to draw, from the vesting of the leasehold rights and the mortgagee rights in one and the same person, an inference, as a proposition of law, that the leasehold rights had merged in themortgagee rights. His Lordship held on the facts of the case that the acceptance of the mortgage by the tenant coupled with other evidence proved that the tenant had made an implied surrender of his tenancy.

14. Similarly, in Roshanlal v. Baboolal, 1963 Raj LW 594: (AIR 1964 Raj 120) Beri, J. (as his Lordship then was) held on the facts of the case that there was no merger of the tenancy rights, with the mortgagee rights and that in view of the express agreement between the parties the old relationship of landlord and tenant between them automatically revived on the redemption of the mortgage by the mortgagor-landlord.

15. In Lachhman Das v. Heeralal, AIR 1966 All 323, another Division Bench of that Court speaking through Dwivedi, J. who later adorned the Supreme Court Bench affirmed the earlier view of that Court that if a tenant accepted a usufructuary mortgage from his landlord it cannot be inferred therefrom as a proposition of law that his tenancy stood extinguished and merged in the mortgage. His Lordship further held that the question as to whether or not the tenancy determined by implied surrender under Section 111(f), Transfer of Property Act, 1882, is a question which must be decided on the evidence, circumstantial or otherwise, produced in the case.

16. It may, therefore, be safely concluded that the doctrine of merger of legal estates, as it is known to common law, is alien to our codified law, except, in so far as, and to the extent, express provision is made in our statutory law providing for merger and the effect of merger on one or the other of the merging interests or tenures. So far as the problem in hand is concerned, we may reproduce here the relevant provisions of Section 111, Transfer of Property Act, 1882, which deals with the subject of determination of lease. It reads:--

'Section 111. A lease of immoveable property determines:--

(a) to (c) ... ... ... ... ... ... ...

(d) in case the interests of the lessee and lessor in the whole of the property become vested at the same time in one person in the same right,

(e) by express surrender, that is to say, in case the lessee yields up his interest under the lease to the lessor by mutual agreement between them.

(f) by implied surrender.'

As for the effect of Clause (d) on the leasehold rights and mortgagee rights coming to vest in the same person, it has been held above that by such convergence of leasehold rights and mere mortgagee rights, the interests of the lessee and the lessor in the whole of the property do not become vested in the same person and, therefore, by such convergence alone the lease is not determined or extinguished.

17. I may now turn to evidence to find out if the tenant, while accepting the usufructuary mortgage of this shop, had yielded up his interest under the lease to the mortgagors by mutual agreement between them and thus determined the lease by express surrender under Clause (e) or implied surrender under Clause (f) above. As distinguished from the so-called merger under Clause (d) which is question of law, express surrender or implied surrender under Clauses (e) and (f) is a question of fact which has to be decided on evidence produced in the case. The trial court and the lower appellate Court have returned a concurrent finding on the basis of evidence on the record that the tenant mortgagee had expressly or impliedly surrendered his tenancy rights to the lessor-mortgagor by mutual agreement between the parties and that the lease, therefore, stood determined with the creation of the usufructuary mortgage. I have no reason to disturb this unanimous finding of fact arrived at by the two courts below. Enough evidence is available on the record to support this finding. For example, it is expressly mentioned in the mortgage-deed, Ex. 1, that the mortgagors had delivered possession to the mortgagee. The mortgagee acknowledged in the contemporaneous deed, Ex. 2, executed by him that he had taken possession as a mortgagee. The mention of delivery of possession is a clear indication that before accepting the usufructuary mortgage, the lessee had surrendered the lease and then entered possession in his character as a mortgagee. Moreover, the mortgagors undertook to pay a fixed amount of interest on the mortgage amount and the mortgagee to whom the possession of the mortgaged property was given did not agree to pay any fixed rent. All that he agreed to pay was the market rent, making it clear that if the market rent would fall below the amount ofinterest, the mortgagors would be liable to make up the difference. This stipulation further confirms that the lease was at an end and that the mortgage had taken its place.

18. In view of the foregoing reasons this appeal fails and is dismissed with costs.


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