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PETITIONER: HANUMANT KUMAR TELESARA

       Vs.

RESPONDENT: MOHAN LAL

DATE OF JUDGMENT01/12/1987

BENCH: RAY, B.C. (J) BENCH: RAY, B.C. (J) SEN, A.P. (J)

CITATION:  1988 AIR  299            1988 SCR  (2)  99  1988 SCC  377            JT 1987 (4)   545  1987 SCALE  (2)1470

ACT:      Rights of  tenant of  mortgaged  property  let  out  by mortgagee to  continue in  possession of  the property after redemption  of   the  mortgage-Mortgagor’s   right  to  have possession of the property after redemption.

HEADNOTE: %      The  respondent   mortgaged  his   shop  and  delivered possession thereof  to the  mortgagees  with  the  right  to collect rent  from the  tenant in payment of the interest on the mortgage  amount. The mortgagees let out the premises to the  appellant  (tenant),  during  the  subsistence  of  the mortgage.      The respondent filled a suit against the mortgagees for redemption of the mortgage and recovery of vacant possession of  the   mortgaged  shop.  The  appellant-tenant  was  also impleaded as  a party  defendant in  the suit.  The suit was decreed and  the mortgage was redeemed, with an order to the mortgagees to give possession of the shop to the respondent. The appellant-tenant  filed an application under Section 47, read with  Section 151 of the C.P.C. stating that the decree of redemption  could not be executed and possession given by the  mortgagees  to  the  respondent/decree-holder,  as  the tenancy of the appellant subsisted and the same had not been terminated under  the provisions  of the  Rajasthan Premises (Control of  Rent and  Eviction) Act, 1950. This plea of the appellant was  rejected by  the executing  Court which  held that the  decree was  executable and  the appellant  had  no interest and  he could  not  resist  the  execution  of  the decree.      Against this  Judgment and  order  of  the  court,  the appellant filed  an appeal which was allowed. Thereupon, the respondent preferred  a second  appeal which  was allowed by the High  Court. The  appellant appealed  to this  Court  by special leave against the order of the High Court.      Dismissing the appeal, the Court on a conspectus of the various decisions of the Court on the subject, 100 ^      HELD: The  lease given  by  the  mortgagee  during  the

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subsistence of the mortgage came to an end on the redemption of the  mortgage. The  tenant of the mortgagee in possession is not  entitled to  the protection  of the Rent Act against the mortgagor  after redemption  of the mortgage, as held by the Rajasthan  High Court  in 1984 R.L.R. 709, following the decisions of  this Court. The letting out of the premises to the appellant-tenant  was not  a prudent  act  done  in  the ordinary course  of management,  as held  by all  the Courts below. The  respondent/mortgagor-landlord is entitled to get recovery of possession. [106A-D]      M/s. Sachalmal  Parasram v. Mst. Ratanbai and Ors., AIR 1972 (SC)  637; The  All India Film Corp. Ltd. & Ors. v. Sri Raja Gyan  Nath &  Ors. [1969] 3 SCC 79; Mahabir Cope & Ors. v. Harbans  Narain Singh  & Ors.,  [1952] 3  SCR 775; Hanhar Prasad Singh  & Anr.  v. Must. Of Munshi Nath Prasad & Ors., [1956] SCR  t; Asa Ram & Anr. v. Mst. Ram Kali Anr. AIR 1958 (SC) 183 and Om Prakash Garg v. Ganga Sahai & Ors. JT 1987 1 SC 245, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2524 of 1985.      From the  Judgment and  order dated  26.11.1984 of  the Rajasthan High Court in S.A. No. 12 of 1976.      Shankar Ghosh,  B.P. Maheshwari  and l3.S.  Dorpura for the Appellant.      V.M. Tarkunde, S.K. Jain, Himansu Atrey and Mrs. Probha Jain for the Respondent.      The Judgment of the Court was delivered by      RAY, J.  This is an appeal by special leave against the judgment and  order dated  26th November, 1984 in S.B. Civil Execution Second  Appeal No.  12 of  1976 whereby the appeal was allowed  and respondent  was granted  one year  time  to vacate the premises.      The facts giving rise to this appeal are as follows:-      The respondent  mortgaged the  shop belonging to him to      the defendant  Nos. 1  to 11  on 9th  May,  1950  by  a      registered  mortgage   deed.  The   possession  of  the      premises was given to the 101      mortgagees with  right to  collect rent from the tenant in payment  A  of  interest  on  the  mortgage  amount.  the mortgagees let  out the premises to the defendant petitioner during the subsistence of mortgage.      The respondent  filed a  suit  for  redemption  of  the mortgage and  for vacant possession of the said shop against the  mortgagees  i.e.  the  defendant  Nos.  l  to  11.  The appellant who  was the  tenant of  the shop was impleaded as party defendant No. 12 in the suit. The suit was decreed and the mortgage  was redeemed.  There was  an order  for giving vacant possession  of the shop by the defendant NOS l to l l to the  respondent i.e.  the owner of the shop. In Execution case  No.   126  of  1975  the  tenant  appellant  filed  an application under  Section 47  read with  Section 151 of the Code of  Civil Procedure,  1908 stating  inter alia that the decree could  not be  executed and  possession of  the  shop could not  be given  by the  mortgagees to the decree-holder respondent as the tenancy of the appellant subsisted and the same had  not been  terminated under  the provisions  of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950. This plea  was rejected  by l)  the executing  court holding inter alia that letting out of the shop to the defendant No. 12 by the mortgagees was held to be not a bona fide act made

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as a person of ordinary prudence in the course of management of the  property under  Section 76A  of Transfer of Property Act and that the relationship of the lessor and lessee could not subsist  beyond the  mortgagee’s interest  unless a  new relationship  was  created  between  the  landlord  and  the tenant-appellant. It  was aalso held that the termination of the mortagagee’s  interest put an end to the relationship of landlord and  tenant and  the provisions of the Rent Control Act could  not apply  any further. The decree was executable and the  appellant had  no interest and as such he could not resist the  execution of  the decree.  The  application  was dismissed.      Against this  judgment and order the appellant filed an appeal being  Civil Appeal  No. 13 of 197(). The said appeal was, however.  allowed on  a finding  that the provisions of Section 13(1)  of the  Rajasthan Rent  Control Act expressly ruled out  the operation of the Transfer of Property Act and a person  inducted as  a tenant  on the premises in a lawful manner could  not he  evicted except  in accordance with the provisions  of  the  Act.  The  decision  in  M/s  Sachalmal Parasram v.  Mst. Ratanbai  & Ors.,  A I R 1972 (SC) 637 and The All  India Film Corp. Ltd. and Ors. v.Sri Raja Gyan Nath & Ors., [1969] 3 S.C.C. 79 were held to be not applicable to the instant  case. The interest of the appellant as a tenant subsists even  after redemption  of the mortgage until it is terminated  in   accordance  with   the  provisions  of  the aforesaid 102 Rajasthan Premises (Control of Rent and Eviction) Act, 1950.      The respondent  preferred a  second Appeal  being  S.B. Civil Execution  Second Appeal  No. 12  of  1976.  The  said appeal was  allowed by  the High  Court relying  on the full bench decision of the High Court in 1984 R.L.R. page 709. On the prayer  of the  appellant one  year time was granted, on the expiry  of which  possession at  the said premises shall have to  be delivered.  A written undertaking to that effect had been  filed by  the appellant  in  compliance  with  the directions of the Court      The appellant  thereafter filed  the instant  appeal on special leave.      The following  two questions  come up tor consideration in this  appeal: (i)  whether a  tenant of  a mortgagee  can continue as a tenant after redemption of the mortgage decree until he  is evicted  from the  suit premises  in accordance with the  provisions of the Rajasthan V Premises (Control of Rent and  Eviction) Act,  1950; and (ii) whether the tenancy created in  favour of  the appellant  can be deemed to be an act of  ordinary prudence  on the  part of  the mortgagee in managing the  property falling  within Section  76A  of  the Transfer of Property Act.      Identical questions  fell for  consideration in Mahabir Gope and  Ors. v.  Harbans Narain  Singh and  Ors., [1952] 3 S.C.R.  775.   In  this   case  the   mortgagors   mortgaged agricultural lands with possession by ijara to the mortgagee to the  effect that  the mortgagee  would cultivate the land and take  the crops. The mortgagee during the subsistence of the mortgage  leased out  the land to a tenant. The mortgage was redeemed  on payment of the mortgage debt. The mortgagor on being opposed by the tenant to have the possession of the mortgaged  property,  filed  a  suit  for  recovery  of  the possession of  the land.  lt ultimately  came up before this Court and it was held as follows:           "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,

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         therefore, create  an interest  in  the  mortgaged           property which  will enure  beyond the termination           of his  interest  as  a  mortgagee.  Further,  the           mortgagee, 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 103           commit any act which is destructive or permanently           injurious to  the property;  see section  76, sub-           clauses (a) & (e) of the transfer of Property Act.           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           mortgage  act  in  a  manner  detrimental  to  the           mortgagor’s interests  such as  by giving  a lease           which may  enable the  tenant to 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), of the Transfer of           Property Act.                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  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."      It was held that the settlement was not a bona fide one and a  successor of  the tenant  did not  acquire  permanent right of  tenancy in  the demised  lands under Bihar Tenancy Act.      In Harihar  Prasad Singh & Anr. v. Must. Of Munshi Nath Prasad &  Ors., [1956]  S.C.R. l  where the  mortgage was in respect of agricultural lands, this Court held:-           "The law is that a person cannot confer on another           any right higher than what he himself possess, and           therefore,  a  lease  created  by  a  usufructuary           mortgagee  would   normally  terminated   on   the           redemption of  the mortgage.  Section 76(a) enacts           an exception to this rule. If the lease is one 104           which could  have been  made by  the owner  in the           course of  prudent management, it would be binding           on  the   mortgagors,  notwithstanding   that  the           mortgage has  been redeemed.  Even in such a case,           the operation  of the  lease cannot  extend beyond           the period  for  which  it  was  granted.  In  the           present case, assuming that the mortgagees had the           power under  Section 76(a.)  of  the  Transfer  of           Property Act to continue the lessees under Exhibit           2(a) as tenants on the lands after the termination           of the  period fixed therein, that would confer on           them at  best the  status of  tenants from year to

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         year and  not give  them the  right to continue in           possession   after    the   termination   of   the           agricultural  year  during  which  the  redemption           takes place."      This Court while considering the ambit of provisions of Section 76(a)  of the  Transfer of  Property Act observed in Asa Ram  and Another  v. Mst.  Ram Kali  and Another, A.I.R. 1958 (SC) 183 as follows:           "The  law   undoubtedly  is  that  no  person  can           transfer  property   so  as   to  confer   on  the           transferee a  title better than what he possesses.           Therefore, any transfer of the property mortgaged,           by the  mortgagee must cease, when the mortgage is           redeemed. Now,  S. 76(a) provides that a mortgagee           in possession must manage the property as a person           of ordinary  prudence would  manage it  if it were           his own.  Though on  the language  of the statute,           this is  an obligation  cast on the mortgagee, the           authorities have  held that  an agricultural lease           created by  him would  be binding on the mortgagor           even  though   the  mortgage  has  been  redeemed,           provided it  is of such a character that a prudent           owner of property would enter into it in the usual           course of  management. This being in the nature of           an exception,  it is for the person who claims the           benefit thereof, to strictly establish it." It has  been further observed that if there is a prohibition on mortgagee  in letting  of lands,  the lease  will not  be binding on  the mortgagors.  But  where  there  is  no  such prohibition the  parties will be thrown back on their rights under  the  Transfer  of  Property  Act,  and  lessees  must establish that  the lease is binding on the mortgagors under Section 76(a) of that Act.      The act  of the  mortgagors leasing  out the  lands  to tenants on  the terms set out in the kabuliat was held to be neither prudent  nor bona fide and as such the lease was not binding on the mortgagors. 105      In All  India Film  Corp. Ltd.  & Ors. v. Sri Raja Gyan Nath &  Ors., (supra),  the owner of the property in dispute known as Odeon Cinema mortgaged the property with possession to mortgagees.  The mortgagor, however, migrated to Pakistan in 1947. The mortgagees leased out the property to All India Film Corp.  Ltd. with option of yearly renewal for 10 years. The  property  being  an  evacuee  property,  the  Competent officer after  determining  the  mortgage  charge  sold  the property. The  respondent purchased  the property  but could not get  possession as  sub-tenants claimed  benefit of East Punjab Rent Restriction Act (3 of 1949). The purchaser fired a suit  for possession  of the property from the Head lessee and sub lessee. It was held by this Court:-           "The  termination   of  the   mortgagee   interest           terminated the relationship of landlord and tenant           and it could not, in the circumstances, be said to           run with  the land. There being no landlord and no           tenant, the provisions of the Rent Restriction Act           could not  apply any further. Nor could it be said           that when  the mortgagor  cancelled the  rent note           and authorised  the mortgagee  to find  any  other           tenant, the  intention was  to allow  expressly  a           tenancy beyond  the term  of the mortgage. In this           view of  the matter the decision of the High Court           and the  Court the  below cannot  be  said  to  be           erroneous."      Following the  above observations,  this Court  in  M/s

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Sachalmal Parasram  v. Mst.  Ratanoai and  Ors., (supra) has observed that tenancy created by the mortgagee in possession does  not   survive  the   termination  of  the  mortgagee’s interest. After  termination  of  mortgagee’s  interest  the relationship of landlord and tenant does not survive and the claim of  protection of  Tenancy Act is not available to the tenant inducted by the mortgagee. The lease was also held to be not an act of prudent management.      In the  case of  Om Parkash Garg v. Ganga Sahai & Ors., JT 1987(1)  S.C. 245.  In which  one of us was a party, this Court observed  that the  lease in question being held to be not an  act  of  prudent  management  on  the  part  of  the mortgagee  within  the  meaning  of  Section  76(a)  of  the transfer of  Property Act, 1882, the alleged lease could not subsist after  termination of the mortgage by passing of the final decree  of redemption and the appellant could not take advantage of the act as there was no subsisting lease in his favour. 106      On a conspectus of all these decisions we hold that the lease given  by mortgagee  during  the  subsistence  of  the mortgage came  to and end on the redemption of the mortgage. It is  pertinent to  mention that the question whether after termination  of   mortgagee’s  interest   on  redemption  of mortgage the  lessees can  claim the benefit of Rent Act was considered by the Full Bench of Rajasthan High Court in 1984 (R.L.R., 709)  and the High Court following the decisions of the Supreme Court has answered that "Tenant of the mortgagee in possession is not entitled to the protection of Rajasthan Premises (Control  of Rent  and Eviction)  Act, 1950 against the mortgagor  after redemption  of the  mortgage." We fully agree with this view.      There is  specific finding  by all  the courts below in the suit for redemption that the letting out of the premises to the  tenant appellant  by the mortgagees is not a prudent act done  in the  ordinary course  of the  management.  This finding being  not challenged  became final.  The mortgagor- landlord is  entitled to  get recovery  of  possession.  We, therefore, affirm  the judgment  and order of the High Court and dismiss  the appeal.  In the  facts and circumstances of the case, there will be no order as to costs. S.L.                                       Appeal dismissed. 107