Sambangi Applaswamy Naidu & Ors Vs.
Behara Venkataramanayya Patro & Ors [1984] INSC 160 (28 August 1984)
TULZAPURKAR, V.D.
TULZAPURKAR, V.D.
THAKKAR, M.P. (J)
CITATION: 1984 AIR 1728 1985 SCR (1) 651 1984
SCC (4) 382 1984 SCALE (2)261
CITATOR INFO :
F 1991 SC2046 (6)
ACT:
Landlord and tenant relationship-Whether upon
redemption of usufructuary mortgage a tenant mortgage could be directed to
deliver the actual and physical possession of the mortgaged property to the
lessor-Mortgagor-Merger of a lease and a mortgage in respect of the same
property, whether there can be-Transfer of property Act, 1882 Sections 58, 101
and 105-Interpretation of deeds.
HEADNOTE:
Respondents, predecessor Behara
Venkataramanayya Patro executed two deeds dated 30-8-1939 and 25-8-1942 in
favour of one Sambangi Thavitinaidue, who was then a sitting tenant of the
property. In 1951 the mortgagor filed a suit for redemption of the mortgages
and obtained a preliminary decree on 31-12-1952. Subsequently, the mortgagor
died and the present respondents were brought on record as his legal
representatives. On 21-10-1963 the respondent filed an application for passing
a final decree by way of ascertainment of the amount due and for delivery of
possession upon deposit of entire dues so ascertained. The application was
resisted by the appellants on several grounds. According to them, on
redemption, relationship of landlord and tenant would revive which needed to be
protected and the delivery should be of symbolical possession only. The learned
trial judge allowed the application but on an appeal preferred, the Additional
District Judge Srikakulam took a contrary view relying upon Varada Bangar
Raju's case AIR (1965) A.P. 86 The respondents, therefore, preferred a second
appeal and the learned Single Judge of the A.P. High Court relying upon a
subsequent decision in P. Satyanarayana's case ILR (1967) A.P. 1341 set aside
the decision of the first Appellate Court. Letters Patent Appeal preferred by
the tenant mortgagees to the Division Bench of the High Court failed and hence
this appeal by Special Leave to this Court.
Allowing the appeal, the Court
HELD:1: 1 There can be no merger of a lease
and a mortgage, even where the two transactions are in respect of the same
property. [655C] 1:2 It is well-settled that for a merger to arise, it is
necessary that lesser estate and a higher estate should merge in one person at
one and the same time and in the same right and no interest in the property
should remain 652 outstanding. In the case of a lease, the estate that is
outstanding in the lessor is the reversion, in the case of a mortgage, the
estate that is outstanding is the equity of redemption of the mortgagor.
Accordingly, there cannot be a merger of a lease and a mortgage in respect of
the same property since neither of them is a higher or lesser estate than the
other. Even, if the rights of the lessee and the rights of the mortgagee in
respect of a property were to be united in one person the reversion in regard
to the lease and the equity of redemption in regard to the mortgage, would be
outstanding in the owner of the property and accordingly, there would not be a
complete fusion of all the rights of ownership in one person. [655D-F] Shah
Mathurdas Maganial & Co, v. Naogappa Shankarappa & ors A.I.R 1976 S. C.
1565 followed. Narayana Dogra Shetty v. Ramchandra Shivram Hingne 65 Bom L.R.
449, approved.
2. Whether upon redemption of usufructuary
mortgage a tenant mortgagee could be directed to deliver actual or physical
possession of the mortgaged property to the lessor mortgagor and whether the
original relationship of landlord and tenant would revive upon redemption of
usufructuary mortgage by a tenant mortgagee in possession of the mortgaged
property by delivering possession to the lessor mortgagor, will depend upon
whether there was an implied surrender of the lessee's right when the
usufructuary mortgage was executed which in turn depends upon what was the
intention of the parties at the time of the execution of the mortgage deed in
favour of the sitting tenant to be gathered from the terms of and conditions of
the mortgage transaction in light of the surrounding circumstance of the case.
[656C-D 655G-H; 656A] 2:2 In the instant case, the only effect of the execution
of usufractutary mortgage deeds was that the lessee's right were kept in
abeyance and they revive upon redemption of the mortgage. [658E] The mortgage
deed does not mention whether on redemption physical possession is, to be
delivered or symbolical possession is to be delivered to the mortgagor.
[657H] During the currency of the mortgage
the liability to pay rent to the lessor-mortgagor (albeit to be discharged by
adjustment) is kept alive. If any thing such a term clearly runs counter to any
implied surrender of the lessee's right.
There is no term fixed for redemption of
mortgage property which mean that it was open to the mortgagor to redeem the
mortgagor at any time that is to say even within a very short time and if that
be so a sitting tenant cultivating the lands under a lease, who has obliged his
lessor by advancing monies to him to tide over his financial difficulties would
not give up his right as a lessee no sooner redemption takes place, coupled
with a fact that the mortgage deed keeps alive the lessee's liability to pay rent
during the currency of the mortgage clearly suggests that no implied surrender
was intended by the parties.
653
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1339 of 1977.
Appeal by Special leave from the Judgment and
order dated the 16th September, 1976 of the Andhra Pradesh High Court in
L.P.A., No. 199 of 1975.
K. Ram Kumar for the Appellant.
A. V. Rangam for the Respondent.
The Judgement of the Court was delivered by
TULZAPURKAR, J. The short question involved in this appeal is whether upon redemption
of a usufructuary mortagage a tenant-mortgagee could be directed to deliver
actual or physical possession of the mortgaged property to the lessor
mortgagor? By reason of the grant of a limited special leave the appeal has
been confined to that question.
Facts relevant to the question may be stated:
One Behara Audinarayana Patro, the original owner of suit property executed two
usufructuary mortgage deeds dated 30.8.1939 and 25.8.1942 in favour of the
first defendant Sambangi Thavitinaidu, who was then a sitting tenant of that
property. In 1951 the mortgagor filed a suit for redemption of the mortgages
and obtained a preliminary decree on 31.12.1952. Subsequently, the mortgagor
died and the respondents were brought on record as his legal representatives.
On 21.10.1963 the respondents filed an application for passing a final decree
by way of ascertainment of the amount due and for delivery of possession upon
deposit of entire dues so ascertained. The application was resisted by the
first defendant and other defendants (the appellants before us) on several
grounds.
Inter alia the appellants contended that even
after depositing the entire amount found due to them no decree directing
delivery of actual or physical possession in favour of the respondents should
be passed but delivery of symbolical possession alone should be ordered
insomuch as the appellants' possession of the suit property as a tenant or
lessee could not be disturbed. In other words, the appellants contended that on
redemption the original relationship of landlord and tenant would revive which
needed to be protected. The learned District Munsif, Parvatipuram took the view
that the relationship 654 of landlord and tenant had ceased to subsist after
the mortgages came into existence, that the mortgage-bonds did not provide that
the said relationship would be restored or revived upon redemption and that
therefore the respondents were entitled to delivery of physical possession upon
their depositing the entire dues payable to the appellants. The
tenant-mortagees (the defendants) preferred an appeal against the order of the
learned District Munsif and the learned Additional District Judge Srikakulam
who heard the appeal took the contrary view relying upon a decision of Andhra
Pradesh High Court in Varada Bangar Raju v. Kirthali Avatharam & others and
held that the defendants-mortgagees were sitting tenants of the mortgaged
property at the time of the execution of the mortgage deeds, that there was
nothing in those deeds to suggest that their rights as lessees were
extinguished either by merger or implied surrender, that the landlord-tenant
relationship continued to exist after termination of mortgagor-mortgagee
relationship and therefore the respondents were not entitled to delivery of
physical possession; he, therefore, allowed the appeal.
The respondents preferred a second appeal to
the Andhra Pradesh High Court and the learned Single Judge relying upon a
subsequent decision in P. Satyanarayana v. Janardhan Chetty which had
distinguished the earlier decision, reversed the view of the learned Addl.
District Judge and restored the decree passed by the District Munsif. The
learned Judge took the view that the question whether the relationship of
landlord and tenant would subsist even after the execution of the usufructuary
mortgage depended upon the intention of the parties to be gathered from the
terms of the mortgage transaction and held that on the terms of mortgage-deeds
there was no doubt that the landlord-tenant relationship had ceased to exist after
the relationship of mortgagor and mortgagee came into existence and the
mortgage bonds had not specifically provided that the landlord and tenant
relationship would be restored after the redemption of the mortgages. A Letters
Patent Appeal preferred by the tenant-mortgagees to the Division Bench of the
High Court failed and hence this appeal to this Court.
Counsel for the appellants urged upon us to
accept the view taken by the learned District Judge that the two transactions
655 namely a lease and a usufructuary mortgage could co-exist and there was
nothing in the two mortgage deeds to suggest that the appellants' rights as
lessee were extinguished either by merger or by implied surrender and in that
behalf strong reliance was placed upon the earlier decision of the Andhra
Pradesh High Court in Varada Bangar Raju's ease (supra), while counsel for the
respondents contended that the High Court, both in second appeal as well as
Letters Patent Appeal, was right in restoring the learned District Munsif's decision
by relying upon the later decision in P.
Satyanarayana's case (supra) and prayed for
dismissal of this appeal.
In our view there can be no merger of a lease
and a mortgage, even where the two transactions are in respect of the same
property. It is well-settled that for a merger to arise, it is necessary that
lesser estate and a higher estate should merge in one person at one and the
same time and in the same right and no interest in the property should remain
outstanding. In the case of a lease, the estate that is outstanding in the
lessor is the reversion; in the case of a mortgage, the estate that is
outstanding is the equity of redemption of the mortgagor. Accordingly, there
cannot be a merger of a lease and a mortgage in respect of the same property
since neither of them is a higher or lesser estate than the other. Even, if the
rights of the lessee and the rights of the mortgagee in respect of a property
were to be united in one person the reversion in regard to the lease and the
equity of redemption in regard to the mortgage, would be outstanding in the
owner of the property and accordingly, there would not be a complete fusion of
all the rights of ownership in one person. This position in law as explained by
the Bombay High Court in Narayana Dogra Shetty v. Ramchandra Shivram Hingne,
has been fully approved by this Court in Shah Mathuradas Maganlal & Co. v.
Nagappa Shankarappa & Ors.
In our view the answer to the question raised
in this appeal must depend upon whether there was an implied surrender of the
lessee's rights when the usufructuary mortgage was executed in his favour by
the lessor-mortgagor.
And this obviously depends upon what was the
intention of the parties at the time of the execution 656 of the mortgage deed
in favour of the sitting tenant to be gathered from the terms and conditions of
the mortgage transaction in light of the surrounding circumstances of the case.
It may be stated that in both the decisions of the Andhra Pradesh High Court on
which reliance was placed by the respective counsel of the parties in support
of his own contention the question was ultimately decided on proper
construction of the terms and conditions of the mortgage transactions; in the
earlier decision the court took the view that there was nothing in the mortgage
deed to suggest that there was an implied surrender of the lessee's rights
while in the later case the court held that the terms of the mortgage deed
showed that the lessee had impliedly surrendered his rights. In other words, it
all depends upon whether by executing a possessory or usufructuary mortgage in
favour of a sitting tenant the parties intended that there should be a
surrender of lessee's rights or not, and only if an implied surrender of
lessee's rights could be inferred then the mortgagor would be entitled to have
delivery of physical possession upon redemption but not otherwise.
In the instant case the earlier usufructuary
mortgage deed of 1939 is not on record before us but the parties have produced
a copy of Exhibit A-3 which is the later usufructuary mortgage deed dated
23.8.1942, the terms thereof are required to be construed. It runs thus:
Exhibit A-3 "Deed of mortgage of land
accompanied by delivery of possession of land for Rs. 250 (in words two hundred
and fifty rupees) executed on 23rd August, 1942 in favour of Sambangi Taviti
Naidu, son of late Jogi Naidu' of Koppula Velama Caste, living by cultivation,
resident of Dathivalasa village, hamlet of Tummalavalasa of Parvatipuram Sub
District by Behara Adinarayana Patro, son of late Behera Narayana Patro Sista
Karnam, Inamdar resident of Markonduputti village of the same Sub District.
The amount of principal and interest due on
the promissory note executed by me in your favour previously on 24th April,
1940 for my necessity, the amount paid by you on my behalf to the Estate
towards the cist etc., due on this land and the amounts borrowed from you by
657 me in instalments subsequent thereto-all those amounts are found to be Rs.
200 and I have found due to you in this sum. The amount borrowed now for paying
the cist to the Estate and for my own maintenance is Rs. 50. In all, Rs. 250
(in words two hundred and fifty rupees). I shall pay interest at the rate of
Rs. 0-4-0 (four anna) per cent per mensum and shall discharge the principal and
interest. For this, the producer of all kinds of crops raised on the half share
of the lands previously being cultivated by you as my sub-tenant on condition
of paying 1/4 (?) share out of the Jarayathi dry and wet lands bearing No. 1
and know as "Tummulamanu Polam" which passed to me as my
self-acquired property, which has been in my possession and enjoyment till this
day, which is situate in Tummalavalasa village and the boundaries etc. of which
are given hereunder, shall be utilised for paying interest due on this deed and
the interest due on the deed executed previously on 30th August, 1939 and get
registered in the office of the Sub Registrar of Parvatipuram as No. 1148/39
and for paying the cist due to the Govt. on my behalf and obtaining receipt in
my name. The remaining amount shall be paid to me by 15th January of every year
and the receipt obtained from me. When the above mentioned principal and
interest are paid to you in full, payment shall be endorsed on this deed and
this deed shall be returned and the land mentioned herein shall be delivered
possession of to me." Three or four things become amply clear on a fair
reading of the aforesaid document (1) that though the deed commences by
reciting that possession of the land has been delivered thereunder it refers to
the fact that the original mortgage (Ist defendant) was actually cultivating
the lands as a tenant of the mortgagor on crop share basis; that is to say the
rental was payable by the tenant in the shape of a crop share; (2) that the mortgagor
had agreed to pay interest at the specified rate on the total loan of Rs. 250
and had undertaken to discharge the principal and interest;
(3) that the rental of the land payable by
the 1st defendant was to be adjusted against the interest payable by the
mortgagor under this deed as well as the earlier deed and the cist payable by
him to the Government; and excess, if any, to be paid to mortgagor; (4) that
when the principal and interest are fully repaid such payment was to be
endorsed on this deed and the deed as also the land shall be "delivered to
the 658 possession of mortgagor". It may be noted that the last portion of
the document is equivocal in that it does not mention whether on redemption
physical possession is to be delivered or symbolical possession is to be
delivered to the mortgagor. But under the terms of the deed one thing is clear
that during the currency of the mortgage the liability to pay rent to the
lessor mortgagor (albeit to be discharged by adjustment) is kept alive. If
anything such a term clearly runs counter to any implied surrender of the
lessee's rights. Secondly, there is no term fixed for redemption of mortgage
property which means that it was open to the mortgagor to redeem the mortgage
at any time that is to say even within a very short time and if that be so,
would a sitting tenant cultivating the lands under a lease, who has obliged his
lessor by advancing monies to him to tide over his financial difficulties give
up his rights as a lessee no sooner redemption takes place? In our view, it
does not stand to reason that he would do so. This circumstance coupled with a
fact that the mortgage deed keeps alive the lessee's liability to pay rent
during the currency of the mortgage clearly suggests that no implied surrender
was intended by the parties.
In the result, we are of the view that the
only effect of the execution of us ufructuary mortgage deeds in this case was
that the lessee's rights were kept in abeyance and they revived upon the
redemption of mortgage. We therefore, allow the appeal, set aside the impugned
judgments of the High Court and restore the direction given by the learned
Additional District Judge that the respondents are not entitled to delivery of
physical possession. Respondents will pay the cost of the appeal to the
appellants.
S.R. Appeal allowed.
Back