Kumar Telesara Vs. Mohan Lal  INSC 356 (1 December 1987)
B.C. (J) RAY, B.C. (J) SEN, A.P. (J)
1988 AIR 299 1988 SCR (2) 99 1988 SCC 377 JT 1987 (4) 545 1987 SCALE (2)1470
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.
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.
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.
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.
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.
the appeal, the Court on a conspectus of the various decisions of the Court on
the subject, 100 ^
The lease given by the mortgagee during the 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.
 3 SCC 79; Mahabir Cope & Ors. v. Harbans Narain Singh & Ors.,
 3 SCR 775; Hanhar Prasad Singh & Anr. v. Must. Of Munshi Nath Prasad
& Ors.,  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,
Appellate Jurisdiction: Civil Appeal No. 2524 of 1985.
the Judgment and order dated 26.11.1984 of the Rajasthan High Court in S.A. No.
12 of 1976.
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.
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.
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.
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,
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 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.
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.,  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.
respondent preferred a second Appeal being S.B.
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.
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
questions fell for consideration in Mahabir Gope and Ors. v. Harbans Narain
Singh and Ors.,  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:
general rule is that a person cannot by transfer or otherwise confer a better
title on another than he himself has. A mortgagee cannot, 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.
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.
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.
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.
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.
Harihar Prasad Singh & Anr. v. Must. Of Munshi Nath Prasad & Ors.,
 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 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
law undoubtedly is that no person can transfer property so as to confer on the
transferee a title better than what he possesses.
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
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.
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.
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 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
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.
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.
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.
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.