MAHADEO MARUTI BHAGWAT Vs. KANTILAL KHEMCHAND GUJAR

JUDGEMENT

(1.) An interesting question of law which I thought had been settled by series of decisions of this Court as well as of the Supreme Court has been resurrected by Mr. Ajit P. Shah appearing in support of this second appeal. That question is whether a lease created by a mortgagee in possession is binding upon the mortgagor after the mortgage is redeemed. This question arises because the appellant who was defendant No. 7 in the suit details of which will be given shortly has been inducted in a part of a house bearing No. 650, situate in Ganpati AH in Wai town of Satara District by a sub-mortgagee. The entire house originally belonged to one Moti Bhiwa who mortgaged the same to one Narayan Janardhan Dhone who will hereinafter be referred to as "defendant No. 1". Defendant No. 1 in turn sub-mortgaged two different parts of the property to two different persons. One part was mortgaged to one Khemchand Rajaram Gujar who will hereinafter be referred to as "defendant No. 6." Defendant No. 6 let out a portion of the property mortgaged to him to defendant No. 7 in the year 1946. The plaintiff having purchased the property in 1967 from Moti Bhiwa, filed a suit being Regular Civil Suit No. 221 of 1968 for redemption and possession of the entire property part of which as mentioned above was let out by defendant No. 6 to defendant No. 7. That suit was decreed in terms of the compromise arrived at among the parties except defendant No. 7 and defendant No. 8. That decree in terms of the compromise was passed by the learned Civil Judge, Junior Division of Wai on 24th of December 1970. Defendant No. 7 had resisted the suit by contending that he being a tenant inducted by defendant No. 6 who had authority to induct both under the provisions of Section 76 of the Transfer of Property Act and under the deed of mortgage, he continued to be the tenant of the part of the house in his possession and he could not be evicted in the suit for redemption filed by the purchaser of the house. On the contention raised by defendant No. 7 an issue, being issue No. 10 was raised in the following terms:-- "Whether Defendant No. 7 is statutory tenant in two Khans in suit property?" Following the law laid down by this Court in Kamalakar and Company v. Gulam Shafi, the learned trial Judge rejected the plea raised by defendant No. 7 and held that he was liable to be evicted at the time of the redemption of the mortgage. Defendant No. 7 preferred an appeal, being Civil Appeal No. 44 of 1971 which was heard and dismissed by the learned Assistant Judge of Satara by his judgment and order dated 30th of September 1972. The learned Assistant Judge also naturally followed the judgment of this Court in Kamalakar and Company's case. It is this decree of eviction passed against him that is challenged by the original defendant No. 7 in this second appeal.

(2.) Mr. Ajit P. Shah, the learned Advocate appearing for the appellant, could not assail the reasoning contained in the judgments of the two Courts below which itself is based upon the law laid down by this Court in Kamalakar and Company's case. He however relied upon certain observations of the Supreme Court to be referred to hereinafter and proceeded to contend that the question whether he is protected by the provisions of the Rent Act or not may be kept out of consideration for the time being. He says that irrespective of the availability of the protection of the Bombay Rent Act if he is held to be a tenant then he cannot be evicted unless the tenancy is brought to an end by a notice of termination issued by the mortgagor or the purchaser of the property from the mortgagor. Towards the end of showing that defendant No. 7 must be held to be a tenant whose tenancy is binding upon the mortgagor Mr. Shah referred to a judgment of the Supreme Court in the All India Film Corporation Ltd. v. Raja Gyan Nath. In order to gain support from the said judgment of the Supreme Court Mr, Shah pointed out the recitals contained in the two relevant mortgage deeds. The original mortgage executed by Moti Bhiwa in favour of defendant No. 1 mentions that the mortgagee was free to take the rent of the suit property and appropriate the same towards the interest. The sub-mortgage executed by defendant No. 1 in favour of defendant No. G also makes a similar provision namely that the mortgagee was free to appropriate the rent of the house towards the interest on the loan. According to Mr. Shah, the authority contained in these two mortgage deeds necessarily implies that the mortgagor of the sub-mortgagor concurred with the lease that was to be created by the mortgagee and the sub-mortgagee. Then he referred to the judgment of the Supreme Court in All India Film Corporation's case. The facts of that case in so far as they are relevant to the present discussion are that the original owner of the property which was a cinema house had mortgaged the same in favour of two persons hereinafter referred to as the mortgagees. By a subsequent document executed, the owner-mortgagor had specifically authorised the mortgagee to give the cinema house on lease to anybody else. Thereafter the lease was executed by the mortgagees in favour of the appellant before the Supreme Court. There the question was whether this lease was binding upon the mortgagor. The Supreme Court proceeded to refer to two previous decisions of its own in Maha-bir Gope v. Harbans Narain Singh (1952 SCR 775) and Asaram v. Ram Kali (1958 SCR 986) and pointed out that the normal rule was that no person can confer on another a better title than he himself has. A necessary corollary of this rule is that the mortgagee's interest lasts only as long as the mortgagee has not been paid off and therefore on redemption of mortgage the title of the mortgagee comes to an end. A derivative title from the mortgagee must ordinarily come to an end with the termination of the mortgagee's title. The provision contained in Section 111(c) of the Transfer of Property Act was also noticed and it was held that when the mortgagee's interest is determined the lease created by the mortgagee also comes to an end. In specific words the Supreme Court pointed out:

(3.) In my opinion a proper reading of the decisions of the Supreme Court as well as of this Court upto the time the Supreme Court gave the judgment in the All India Film Corporation's case will show that the basic rule laid down in the earliest of the decision that the lease created by the mortgagee in possession cannot last beyond the period of the mortgage has not been altered at all despite the observations contained in the judgment in the All India Film Corporation's case which according to Mr. Shah lays down a new proposition of law. According to Mr. Shah, this judgment says that in the case of urban property if the mortgagor concurred in granting a lease, that lease will be binding upon the mortgagor. In my opinion, this is not a correct reading of the series of the decisions ending with the one in All India Film Corporation's case,