GOPALAN KRISHNANKUTTY Vs. KUNJAMMA PILLAI SAROJINI AMMA

JUDGEMENT

(1.) This appeal by special leave is by the defendant and it arises out of a suit for redemption of a mortgage. The appellant was the lessee in the premises which is a shop in which he was carrying on his bakery business from 1965. The plaintiff later executed a mortgage in favour of the defendant on 18-7-1974 for a consideration of Rs. 13,000/-. On expiry of the period of mortgage, the plaintiff filed a suit for redemption and recovery of possession of the premises. The defendant contested the claim for recovery of possession, inter alia, on the ground that his possession was that of a lessee, independent of the mortgage and even after redemption of the mortgage the defendant was entitled to continue in possession under the lease. The Trial Court passed a preliminary decree granting redemption and directing recovery of possession from the defendant. The first appeal by the defendant has been dismissed by the High Court. Hence, this appeal by the defendant.

(2.) The High Court has held that there was surrender of the prior lease by the defendant on execution of the mortgage by the plaintiff in his favour; and that the defendant's possession of the premises at the time of mortgage being only as mortgagee, the defendant was found to restore possession to the plaintiff on redemption of the mortgage.

(3.) In Shah Mathuradas Maganlal and Co. v. Nagappa Shankarappa Malage (1976) 3 SCC 660 , the distinction between the rights of a lessee and a mortgagee was pointed out and the conditions for the merger of the two rights were indicated. It was held that surrender of a lease takes effect like a contract by mutual consent on the lessor's acceptance of the act of the lessee; and that there must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact. Thus, the mere fact that the owner creates a mortgage in favour of the lessee is not by itself decisive to hold that the prior lease was surrendered and the possession of the earlier lessee is only that of a mortgagee on creation of the mortgage. The nature of possession, is a question of fact in each case.