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CASE NO.: Appeal (civil)  1957 of 2008

PETITIONER: Chandrakant Shankarrao Machale

RESPONDENT: Parubai Bhairu Mohite

DATE OF JUDGMENT: 13/03/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.  1957 OF 2008 (Arising out of SLP (C) No.2491 of 2007)

S.B. Sinha, J.

1.      Leave granted. 2.      Appellant was the owner of a house property situated in Taluka  Gandhinglaj, District Kolhapur.  On 28.2.1983, Bhairu Rama Mohite and  Krishna Rama Mohite (the predecessor of the first respondent herein)  executed a registered deed of mortgage in favour of the appellant.  The  possession of the said property was delivered in favour of the mortgagee.  The period prescribed in the said Deed of Mortgage was seven years.  The  amount of mortgage was Rs.20,000/-. It was agreed that upon expiry of the  said period, the property would revert back to the mortgagor. 3.      Allegedly, an unregistered agreement was entered into by and  between the parties herein, stating : "This agreement in writing executed by us in  respect of land C.S. No.1943 admeasuring 252 Sq.  meters situated Mouje Gadhinglj which includes  house and open space belongs to us absolutely.   Earlier the house admeasuring East West 39 feet  i.e. 11 meters 89 centimeters and South-North 49  feet i.e. 14 meters 94 centimeters, totally  adm.177.63 59 meters house as also the open space  in front of the house East West 21.89 meters and  South-North 6.10 meters totally adm.72.52 sq.  meters from out of which house and the open  space on the Western side admeasuring 36.26  meters was given to you by way of mortgage by  conditional sale for Rs.20,000/- under registered  document No.229 dated 1.3.1983 and the same is  recorded in your name."

       Some other terms and conditions were also laid down therein. 4.      Respondents, being the predecessors in interest of the mortgagor filed  a suit for redemption of the mortgage.  Krishna died during the pendency of  the suit.  As the period specified in the said Deed of Mortgage was to expire  on 28.2.1990, the plaintiff served with a notice dated 17.2.1990 for  redeeming the suit property.  As the same was not acted upon, a suit for  redemption of mortgage was filed.   5.      Contention of the appellant, inter alia, was that he has been put in  possession of the said property as a tenant.  It was urged that by reason of  the said mortgage, his right to occupy the premises as a tenant was not  extinguished.  

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In view of the aforementioned rival contentions of the parties, the  learned Trial Judge framed the following issues : "1.     Do the plaintiff prove that Bhairu Rama  Mohite and the defendant No.10 Mortgaged  the suit property to the defendant by  conditional sale on 1.3.1983? 2.      Does the defendant prove that he is in  possession of the suit property as a monthly  tenant? 3.      Are the plaintiffs entitled to redeem the  mortgage by obtaining reconveyance of the  suit property from the defendant? 4.      Are they entitled to possession of the suit  property? 5.      What order and decree?"

6.      On issue No.1, learned Trial Court opined : "Now we have to see what was intended by the  parties to these three documents. It may be noted  that parties to these documents are the same.  The  defendant claims tenancy rights by virtue of  agreement dated 24.2.1983 (Exh.52).  On the other  hand according to the plaintiff the property  comprising this agreement is not the subject matter  of the mortgage the controversy has to be solved  by going through the contents of the document.   From the recitals it appears that the Municipal  House No.1440 was agreed to be let for the period  of 7 years on lease by accepting Rs.20,000/-.  It  also appears from the recitals that the plaintiff  received Rs.1,000/- on the day of agreement.  I do  not come across recitals of the defendant having  been put in possession of the property.  On the  contrary, the recitals do show that the agreement  was executor (sic) in nature and the intended  transaction was to be completed within15 days.   Therefore, I do not subscribe to the submission of  the defendant that the lease was created by Exh.52  on 24.2.1983.  It is true that if we peruse the  description of the property given in the mortgage  deed Exh.62, it does not correspond with the  description given in Exh.52.  However, the  plaintiff has failed to prove that on the day of  execution of the mortgage deed there were two  Municipal House numbers viz., 1440 and 1440-A.   However, since I have already observed document  Exh.52 to be an agreement of the lease to be  created within 15 days, I do not wish to rely  strongly on that document since the fate of the suit  is rest on subsequent document Exh.53 and  Exh.62."

       The suit, however, was dismissed opining that the plaintiff has leased  the suit property in favour of the defendant.   7.      An appeal preferred thereagainst by the plaintiff was allowed by the  Court of Appeal, holding : "After going through terms and conditions of deed  of lease styled as Kararpatra (Exh.53) it reveals  that it is not fresh contract of lease but, under that  document, the right created by plaintiffs, in favour  of the defendant in the immovable property for  Rs.20,000/- as a mortgagee, has been extinguished.   By the terms and conditions of this agreement,  parties, intended to change the right created in

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favour of defendant, under registered deed of  mortgage, which was admittedly executed for the  mortgage amount of Rs.20,000/-.  Therefore, U/s.  17(1)(b) of the Indian Registration Act, this second  agreement dated 1.3.1983 (Exh.53) requires  registration.  Admittedly, this document is not  registered document.  Therefore, under this second  agreement (Exh.53) the relations created in  between the plaintiffs and defendant as mortgagor  and mortgagee, cannot be extinguished.  I hold  that, the Kararpatra (Exh.53) cannot extinguish the  right created in favour of the defendant as  mortgagee in the suit property.  So also when  under deed of mortgaged deed (Exh.62) in lieu of  amount of Rs.20,000/- interest has been created in  favour of the defendant, after execution of this  deed of mortgage, plaintiffs had no right to lease  out the same property to the defendant by  canceling this registered deed of mortgage under  unregistered agreement of lease (Exh.53) I hold  that, the learned trial court, totally ignored the  legal position that, by unregistered agreement  (Exh.53) the contract of mortgage (Exh.62) cannot  be extinguished or cancelled.  Therefore, the  agreement (Exh.53) is of no help to the defendant  to prove that under that document he acquired  interest in the suit property as a tenant of the  plaintiff."

8.      As regards the contention that the appellant became a tenant under the  plaintiffs, the Court of First Appeal held that the relationship between the  parties were that of a mortgagor and mortgagee and the defendant-appellant  had failed to prove that he was in possession of the suit property as a tenant.   The appeal was, thus, allowed and the suit was decreed. 9.      A second appeal preferred by the appellant herein has been dismissed  by the High Court opining that no substantial question of law arose for its  consideration.  10.     Mr. S.N. Bhat, learned counsel appearing on behalf of the appellant,  would, in support of the appeal, contend that the transactions of mortgage  and the lease were separate and independent transactions.   The Court of First Appeal as also the High Court, thus, committed a  serious error in passing the impugned judgment.  The learned counsel  furthermore urged that although a decree for redemption could be granted  but in execution of the said decree, only symbolical possession could be  directed to be issued. 11.     The Deed of Mortgage dated 28.2.1983 was a registered document.   The terms of a registered document could be varied or altered only by  another registered document.  A finding of fact has been arrived at that the  appellant could not prove his possession as a tenant.  We have noticed  hereinbefore that the appellant was put in possession as a mortgagee.  It was,  therefore, in our opinion, impermissible in law to change his status from a  mortgagee to that of a lessee by reason of an unregistered deed of lease  (even if we assume that the same had been executed).   The learned Court of Appeal may not be entirely correct in taking  recourse to Section 92 of the Indian Contract Act or holding that the deed of  lease required registration even for the purpose of month to month tenancy,  but, as indicated hereinbefore, we have considered the question from a  different angle.  12.     Furthermore, the only question of law which was pressed before the  High Court was : "The lower appellate court ought to have held that  the respondents and appellant executed an  agreement dated 28.2.1983 i.e. Exh.62 and  immediately on the next day, i.e., on 1.3.1983

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executed the agreement for tenancy which is a  subsequent agreement.  Hence it ought to have  been held that the parties have by their conduct  agreed to treat the transaction as a lease and hence  suit filed by respondents for redemption of  mortgage is not maintainable in law and ought to  have been dismissed with costs."

       No substantial question of law, thus, had been raised.   13.     The deed of mortgage was a registered one.  It fulfilled the conditions  of a valid mortgage.  Its terms could not have been varied or altered by  reason of an unregistered document so as to change the status of the parties  from mortgagee to a lessee.  [See S. Saktivel (dead) by L.Rs. v. M.  Venugopal Pillai & Ors. [AIR 2000 SC 2633 para 67]   14.     Our attention has been drawn to a decision of this Court in Gopalan  Krishnakutty v.Kunjamma Pillai Sarojini Amma & Ors. [(1996) 3 SCC 424]  wherein upon taking into consideration some of its earlier decisions, this  Court held : "The High Court, in the present case, proceeded on  the erroneous assumption in law that surrender of  the lease by the lessee (defendant) must be implied  from the fact of execution of the usufrucuary  mortgage in his favour by the lessor (plaintiff).  As  indicated, this is an erroneous assumption in law.   This question has to be decided on the contents of  the deed since there is no other evidence of  surrender of the lease by the defendant on  execution of the mortgage. We find nothing in the  mortgage deed (Annexure A-1) dated 18.7.1974  read with the release deed of the same date to  prove either an express or an implied surrender of  the lease by the defendant in favour of the plaintiff  on execution of the mortgage deed.  Since there is  no automatic merger of the interest of a lessee with  that of a mortgagee when the same person is the  lessee as well as the mortgagee, in absence of  proof of surrender of the lease by the defendant, on  redemption of the mortgage, the plaintiff is not  entitled automatically to recover possession of the  leased premises.  The defendant’s right to continue  in possession as a lessee, therefore, continues to  subsist."

15.     We are concerned here with a converse case.  The case as to whether  the interest of a lessee merged with the interest of a mortgagee would  depend upon facts and circumstances of each case, as indicated in Gopalan  Krishna Murti.  There cannot be any hard and fast rule for arriving at only  one decision as the decision thereupon will depend upon the terms of the  document. 16.     For the aforementioned reasons, there is no merit in the appeal. The  same is dismissed accordingly.  In the facts of the case, there shall, however,  be no order as to costs.