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CASE NO.: Appeal (civil) 686  of  1987

PETITIONER: NIRMAL CHANDRA

       Vs.

RESPONDENT: VIMAL CHAND

DATE OF JUDGMENT:       08/05/2001

BENCH: D.P. Mohapatra & Brijesh Kumar

JUDGMENT:

BRIJESH KUMAR, J. L...I...T.......T.......T.......T.......T.......T.......T..J

   This  appeal has been preferred against the judgment and decree  dated  August  30, 1996 passed by a  learned  Single Judge  of Madhya Pradesh High Court, Gwalior Bench  allowing the  revision  petition  preferred by the  respondent  Vimal Chand  and setting aside the order passed by the trial court by  which  the  respondent  was directed to  hand  over  the physical  possession  of  the disputed  property  to  Nirmal Chandra  in proceedings under Section 83 of the Transfer  of Property Act.

   The  controversy  involved in this case relates  to  the nature   of  possession  of  a  tenant-mortgagee   and   the obligations  of  the  respective  parties in  the  event  of redemption  of  mortgage  in  so far as it  relates  to  the possession  of  such  properties.   We  have  heard  learned counsel appearing for the parties and have also gone through orders passed by the Courts below.

   The  respondent Vimal Chand is a tenant of the appellant Nirmal  Chandra  in  respect  of a  shop  situate  at  Pared Chauraha,  Bhind, Madhya Pradesh.  It is not in dispute that the  tenancy  of  the said shop had been coming  down  since long.   The  appellant-landlord however executed a  mortgage deed, duly registered, in respect of the shop in question in favour  of  the  tenant-respondent   Nirmal  Chandra.    The mortgage  was  for a sum of Rs.10,000/-.  The mortgage  deed was  executed  on 19.4.1973.  According to the appellant  he was  handed over the possession of the property.   According to  the  terms and conditions of the mortgage the  appellant was  entitled to get the mortgage redeemed on expiry of  ten years.   On completion of ten years the appellant  requested the  respondent to receive the mortgage money and redeem the mortgage  and  a  notice  is said to  have  been  served  on 6.12.1983  but  it brought not results.  Hence, he  moved  a petition under Section 83 of the Transfer of Property Act in the  Court  of  a  Civil  Judge   by  depositing  a  sum  of Rs.10,000/-  in the Court.  The respondent-tenant filed  its reply  contesting  the case of the petitioner-  landlord  in

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respect to the possession of the property.  The execution of the  mortgage deed was not denied but it was pleaded that he has  been  tenant of the accommodation in question  since  a long  time  and according to the conditions of the  mortgage agreement rent and the interest was agreed to be equal.  The delivery  of  possession  on mortgage was only  symbolic  in nature  and  the  tenant-respondent  namely,  the  mortgagee continued  to be in possession.  This position has not  been disputed before us during the hearing of the case.

   Section  83 of the Transfer of Property Act provides  as under:

   83.   Power to deposit in Court money due on  mortgage.   At any time after the principal money [payable in respect of  any  mortgage  has  become due] and before  a  suit  for redemption   of  the  mortgaged   property  is  barred,  the mortgagor,  or  any other person entitled to institute  such suit,  may  deposit,  in any court in which  he  might  have instituted  such suit, to the account of the mortgagee,  the amount remaining due on the mortgage.

   Right  to money deposited by mortgagor:- The Court shall thereupon  cause written notice of the deposit to be  served on  the  mortgagee, and the mortgagee may, on  presenting  a petition  (verified  in  manner prescribed by  law  for  the verification  of plaints) stating the amount then due on the mortgage,  and  his  willingness  to  accept  the  money  so deposited  in  full  discharge  of   such  amount,  and   on depositing  in  the  same court the mortgage-deed  [and  all documents  in  his  possession  or  power  relating  to  the mortgaged  property],  apply for and receive the money,  and the  mortgage-deed  ,  [and  all such  other  documents]  so deposited  shall be delivered to the mortgagor or such other person as aforesaid.

   [Where  the mortgagee is in possession of the  mortgaged property,  the court shall, before paying to him the  amount so  deposited,  direct him to deliver possession thereof  to the  mortgagor  and at the cost of the mortgagor  either  to re-transfer  the  mortgaged property to the mortgagor or  to such  third person as the mortgagor may direct or to execute and  (where  the mortgage has been effected by a  registered instrument)  have  registered an acknowledgment  in  writing that  any  right in derogation of the  mortgagors  interest transferred to the mortgagee has been extinguished.]

   For  coming  to  a conclusion that on  redemption  of  a mortgage,  the mortgagor is to be handed over the possession of  the  property,  learned trial court  considered  certain decisions  of  the Madhya Pradesh High Court referred to  in the order and Shah Mathuradas Maganlal & Co.  versus Nagappa Shankarappa  Malage,  AIR 1976 S.C.  1565 and observed  that where  the  mortgagee was in possession and no interest  was agreed  to be paid nor any time limit to return the  amount, in  such a situation the tenancy rights will come to an  end and  on redemption of the mortgage, the possession shall  be handed  over  to the mortgagor.  It was also  observed  that intention  of the parties was to be taken into account as to whether  the tenancy was liable to be continued or not.  The petition  was allowed with a direction to the respondent  to hand   over   the  possession  of   the  property   to   the mortgagor-landlord, the appellant in this appeal.

   Aggrieved  by  the order passed by the trial court,  the

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respondent-tenant  preferred  a  revision   which  has  been allowed  as indicated earlier and set aside the part of  the order directing handing over the possession of the mortgaged property  to the mortgagor-landlord.  Considering the  terms and conditions of the mortgage, the revisional court came to the  conclusion that tenancy rights had not been surrendered and  on  redemption of the mortgage,  the  respondent-tenant would be entitled to continue in possession as tenant of the premises.   It was also found that tenancy rights could only be brought to an end under the provision as contained in the Madhya Pradesh Accommodation Control Act.  It is against the said order that this appeal has been preferred.

   Before  considering  the  terms and  conditions  of  the mortgage  deed, it may be better to first consider the legal position  on  the point.  In a case reported in AIR 1984  SC 1728,  Gambangi  Appalaswamy Naidu and others versus  Behara Venkataramanayya Patro ,this Court held that there can be no merger  of  lease  and  a   mortgage,  even  where  the  two transactions  are  in respect of the same property as for  a merger  it  is  necessary that lesser estate  and  a  higher estate  should merge in one person at one and the same  time and  no interest in the property should remain  outstanding. Neither  of the two rights are higher or lesser estate  than the  other.  It is further observed that a tenant  mortgagee could  be directed to deliver the possession of the property at  the  time  of  redemption only if at  the  time  of  the mortgage  there  was surrender of lease rights in favour  of the  lessor.  It all depends on the intention of the parties at  the time of execution of the mortgage and its terms  and conditions  as  well as the surrounding  circumstances.   On facts  it  was found that rent was payable by the lessee  in the  shape of share in the crop and there was an  adjustment of  rent  and interest that is to say liability to pay  rent during mortgage was kept alive which runs counter to implied surrender  of  lease rights.  It was further held  that  the mere  fact  that  owner creates a mortgage in  favour  of  a lessee  is  not  by itself decisive to hold that  the  prior lease  was  surrendered  and the possession on  the  earlier lease  was  only  that  of  a  mortgagee.   The  nature   of possession would however be a question of fact in each case. In  Gopalan  KRISHNANKUTTY VERSUS Kunjamma  Pillai  Sarojini Amma  and  others  AIR 1996 S.C..  1659, a  Bench  of  Three Judges of this Court, held that unless there was a surrender of the lessees rights, at the time of execution of mortgage deed,  mortgagor would not be entitled to obtain delivery of physical possession on redemption of mortgage.  The question of  actual surrender of rights depends upon the intention of the  parties  at the time of execution of the mortgage.   It would  be a question of fact depending upon evidence.  It is further  observed  that in absence of proof of surrender  of lease  by the defendant, there is no automatic merger of  an interest  as lessee with that of the mortgagee when the same person is lessee as well as mortgagee.  On redemption of the mortgage,  the  mortgagee is not entitled  automatically  to recover  possession of the lease.  In Narayan Vishnu  Hendre and  others  versus  Baburao Savalaram  Kothawale  (1995)  6 S.C.C.  608 this Court held that doctrine of merger does not apply where tenanted premises are mortgaged in favour of the lessee  and such an inference cannot readily be inferred  in the absence of any clear statement or indication in the deed or  conduct of the parties.  It has also been observed  that lease of a property is a very valuable right and its implied

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surrender  on execution of a mortgage would not be  inferred unless  there  was a clear statement or indication  to  that effect in the document itself.  Redemption of mortgage would revive  the  tenancy  of the mortgagee, the only  effect  of mortgage  was that the lessees rights were kept in abeyance and  they  stood revived by the redemption of the  mortgage. In  Nemi  Chand  versus  Onkar Lal AIR 1991  S.C.   2046  in similar  situation it was held that where it was  stipulated that  neither interest nor rent was payable as both  amounts were  equal,  it clearly shows that rent was kept alive  and there  was no merger of lease.  Lessee was held entitled  to be  in  possession  of the property as  lessee  despite  the redemption  of mortgage.  In Nand Lal and others versus Sukh Dev  and  another 1987 (Supp) S.C.C.  87 also the same  view was  taken  that  tenancy  rights   would  get  revived   on redemption  of  the mortgage and the lessee mortgagee  would not be liable to be evicted.

   From  a  perusal  of  the decisions  of  this  Court  as indicated  above,  it  clearly  emerges  that  there  is  no automatic merger of two rights where mortgage is executed in favour  of  a  tenant  and on redemption  of  mortgage,  the tenancy rights kept in abeyance would revive and entitle the tenant  to continue in possession even after the  redemption of  the mortgage.  On execution of mortgage, tenancy  rights would  terminate only if it is clear expressly or  impliedly by  conduct or other related circumstances that the  parties had  intended so which would be a question of fact.  Thus as a  normal  rule except in intention being to  the  contrary, mortgage  and lease operate independent of each other and on mortgage  coming  to  an end by  redemption,  tenancy  would revive.

   In  the light of the law on the point indicated above we may  now advert to the terms and conditions of the  mortgage deed  in hand.  The Condition No.1 of the mortgage deed lays down that the interest of the mortgage money and the rent of the  shop would be equal.  The Condition No.4 which is  also relevant and as quoted, on being translated into English, in the order of the High Court, is as follows:

   After  the expiry of the period of ten years when I get the  shop redeemed, I would use it for my own purpose for at least  three  years.   After getting it  redeemed,  I  would neither  give  it on rent nor keep any partner with me.   In case  it  is given to someone on rent, the  mortgagee  shall have  right  to  take  back possession of the  shop  in  his capacity as a tenant.

   It  is  to  be  noticed that under  Condition  No.1  the payment  of rent is kept alive.  It is sought to be adjusted by the amount of interest payable by the mortgagor-lessor to the  lessee.  Thus it is quite clear that element of tenancy and  payment  of  rent  operated throughout  the  period  of mortgage.   It is not denied before us that during all  this period,  the  tenant  remained in  actual  possession.   His status  as  a tenant never ceased as amount of  interest  to which  he  was  entitled  to   on  Rs.10,000/-  advanced  to mortgagor  was  adjusted  towards rent payable by him  as  a tenant  of  the accommodation to the landlord.   In  similar circumstances  we  have  already seen that in the  cases  of Gambangi  Appalaswamy  Naidu as well as Nemi Cchand  (Supra) this  Court  held  that where rent is kept  alive,  it  runs contrary  to the intention or conduct of the parties leading to  any  inference of surrender of lease.  In our view  this

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fact alone is enough to hold that there was no merger of two rights  nor  surrender of tenancy could be inferred  on  the facts  and  circumstances or on the basis of the  terms  and conditions  of the mortgage.  As a matter of fact, Condition No.4  on which much reliance has been placed by the  learned counsel  for the appellant does not help him very much.   It is  no  doubt initially indicated on expiry of ten years  on redemption of mortgage the lessor would use the shop for his own  purpose for at least three years.  It would neither  be given on rent nor he shall have any partner with him.  It is further  provided  that in case it is given to some  one  on rent,  the  mortgagee  shall  have the right  to  take  back possession  in his capacity as tenant (emphasis supplied  by us).  This condition no where speaks of surrender of tenancy by  the  lessee.  It only provides that for at  least  three years  shop will be in personal use of the landlord  failing which  there would be revival of the mortgagees capacity as tenant.   Such  a  condition cannot be said to  be  a  clear intention  of surrendering the lease rights in the property. Whatever little effect Condition No.4 if at all may have, is negated  by Condition No.1 which kept the rent alive and the element  of  tenancy  pervading  throughout  the  period  of mortgage.

   Next,  we  also  find that the High  Court  has  rightly observed   that   in  view  of   Section  12  of  the   M.P. Accommodation  Control  Act  it was not  possible  to  grant relief  of  possession  of  the  tenanted  premises  to  the landlord-lessor.   The  relevant  parts of  Section  12  are quoted below:

   Sec.12   Restriction   on   eviction  of   tenants.-(1) Notwithstanding  anything  to the contrary contained in  any other  law or contract, no suit shall be filed in any  Civil Court   against  a  tenant  for   his  eviction   from   any accommodation except on one or more of the following grounds only namely:-

   (a)----------------------------------------------------     (b) ------------------------------------------------     (d)------------------------------------------------------     (e)------------------------------------------------------

   (f)  that  the  accommodation  let  for  non-residential purposes  is  required  bona-fide by the  landlord  for  the purpose  of continuing or starting his business or that  any of  his major sons or unmarried daughters if he is the owner thereof   or   for  any  person   for  whose   benefit   the accommodation  is held and that the landlord or such  person has   no   other     reasonable   suitable   non-residential accommodation  of  his own in his occupation in the city  or town concerned.

   In  the  case  in  hand it can best  be  said  that  the accommodation  was  needed by the landlord for his  own  use more  particularly  in view of the fact that earlier he  had also  filed a suit for eviction of the respondent- tenant on the  ground of his bona fide requirement, in the civil court which  was pending at the time of execution of the mortgage. The  Madhya  Pradesh  Accommodation Control Act  1961  is  a special  Act  dealing  with the subject of eviction  of  the tenants  and  as  provided  under Section  12  of  the  Act, notwithstanding  any  rule to the contrary contained in  any other  law or contract, no suit shall be filed in any  civil court  against  a  tenant for his eviction  on  the  grounds

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enumerated  therein.   In  this light of the matter  if  the tenant  consented to hand over the possession and acts  upon such  consent,  it would entirely be a different matter  and whichever provisions of Madhya Pradesh Accommodation Control Act,  1961 may then be applicable shall become operative but in  case the possession is not handed over there is no other way  except  to file a suit under Section 12 of  the  Madhya Pradesh   Accommodation   Control  Act    to   bring   about determination of the tenancy by a decree of the Court on the grounds  permissible under the provision.  This we find  yet another  hurdle  in  the way of the appellant  in  making  a request  for  decree  for  possession  of  the  property  in question.   One more case was brought to our notice reported in  (1973)  3  SCC 198, M/s.Sachamal  Parasram  versus  Smt. Ratnabai  and  others.   In  that   case  the  mortgagee  in possession  had  admitted  one tenant who was sought  to  be evicted  on  the redemption of the mortgage.  The tenant  of the  mortgagee sought benefit of rent control laws.  It  was held  that  he was not entitled to that benefit.  This  case has no application to the facts and point of law involved is this case.

   In  view of the discussion held above, there is no merit in the appeal and it is accordingly dismissed.  Costs easy.