MAGANLAL JAGJIWANDAS Vs. LAKHIRAM HARIDASMAL

JUDGEMENT

(1.) This appeal raises a question of some importance regarding the applicability of sec. 52 and sec. 65A of the Transfer of Property Act. A brief statement of some facts would be helpful in understanding the question. The appellant was a simple mortgagee of the property of respondent No. 2 and he filed Suit No. 80 of 1954 for the realization of his mortgage moneys by sale of the mortgaged property. A preliminary decree was passed in that suit on 29th June 1955 and a final decree was passed on 27th January 1956. The appellant filed execution application No. 18 of 1956 to execute his decree and the property was sold by auction by the Court on 20th July 1959 and was purchased by the appellant. After the appellant bad obtained the final decree on January 27 1956 as stated above respondent No. 2 gave a lease of the property to respondent No. 1 for a period of three years on 17th January 1957 and took in advance rent for the three years. The auction purchaser filed an application for obtaining actual possession of the property which he had purchased at the Court sale. This application was resisted on the ground that the tenant of the mortgagor had taken possession of the suit property by virtue of the lease dated 17th January 1957 and that since this lease was binding on the mortgagee by virtue of sec. 65A of the Transfer of Property Act actual possession of the suit property could not be given to the auction purchaser and that the tenant was entitled to the protection of the Bombay Rents Hotel and Lodging House Rates Control Act 1947 The learned Civil Judge Senior Division Baroda ordered that actual possession should be delivered to the plaintiff from the mortgagor and from his tenant. The learned Civil Judge held that sec. 65A of the Transfer of Property Act was subject to the provisions of sec. 52 of that Act and that the tenancy was created by the mortgagor after the final decree was passed and before the decree was completely satisfied and that therefore sec. 52 of the Transfer of Property Act came into operation and the tenant could not get the benefit of the lessee. The learned Civil Judge on this view ordered actual possession to be given to the auction purchaser. Against this order the tenant preferred Civil First Appeal No 264 of 1961 in the High Court which was heard and decided by Raju J. who allowed the appeal set aside the order of the learned Civil Judge and ordered that symbolical possession should be handed over to the auction purchaser. It was held by Raju J. that sec. 52 of the Transfer of Property Act did not apply to the present case and that the provisions of the Bombay Rents Hotel and Lodging House Rates Control Act applied as between the auction purchaser and the lessee of the mortgagor. Against this judgment and order the present Letters Patent Appeal has been preferred by the auction purchaser.

(2.) It would be here necessary to set out the provisions of sec. 65A of the Transfer of Property Act which are as follows :-

(3.) The question may be looked at from another aspect The question whether the party to a suit had a right to lease does not affect the question of lis pendens. Before a suit is filed the mortgagor could do all things which were permissible to him under the law but once a suit is filed the question of affecting the rights of the parties to the suit would come into prominence and the principle expressed in the maxim that pending a litigation nothing new should be introduced would come into operation. That principle is expressed in sec. 52 of the Transfer of Property Act which in effect provides that pendente lite neither party to the litigation in which any right to immovable property is in question can deal with such property so as to affect the opposite party. The section is thus intended to protect parties to a suit against alienations by the other parties during the pendency of a suit and makes the adjudication in the suit binding on transferees from parties pending suit. The broad purpose of the section seems to be to maintain a status quo unaffected by the act of any party to the litigation pending the adjudication of the subject matter of the suit. The section requires that a suit must be pending that the character of the suit must be non-collusive; that there must be a right to immovable property in question in the suit; that such a right must be directly and specifically in question; that the party other than the party making the transfer bad some right under the decree that would be passed the suit and that such a right must be affected by the transfer. The section principally requires that a right to immovable property must be directly and specifically in question in the suit. A mortgage is a transfer of an interest in specific immovable property as security for the repayment of a debt and such an interest is itself immovable property. The nature of the right that is transferred would depend upon the form of the mortgage and in a simple mortgage the transfer is made of a power of sale which is one of the component lights that make up the total right of ownership. But whatever the form of the mortgage there is no doubt about the fact that there is some transfer of some interest in the immovable property. A suit on a simple mortgage to recover the mortgage money and to get the property sold is brought in the exercise of the right which is transferred to the mortgagee-a right which is one of the several rights of ownership of immovable property and therefore is an interest in the immovable property. Such a suit is for the enforcement of the right which relates to immovable property and is thus a suit in which a right to or in relation to immovable property is in question. Moreover the mortgagor has also after the mortgage some rights in his property left in him after the mortgage and these rights would be extinguished by the sale of the property made in execution of the decree passed in a suit brought by the mortgagee in exercise of his rights of sale and whoever purchases the property at the auction sale would be entitled to the possession of the property along with the rights both of the mortgagor and the mortgagee. The right of sale of the property includes the right of possession of the property in sale and the purchaser at the auction sale in the execution of the decree passed in the suit would be entitled to apply for possession in the execution proceedings. The proceedings by way of sale the purchase by the auction-purchaser and the application by the auction-purchaser for actual possession are all the consequences of the suit for sale of immovable property which was the subject matter of the mortgage and are therefore incidents of the suit in which a right to immovable property was directly and specifically in question. The auction-purchaser at a Court sale purchases the interest of the judgment-debtor and also the interest of the mortgagee and on a sale in such a suit the whole mortgage is extinguished and the interest of the mortgagor also passes to the auction-purchaser. What thus passes to the auction-purchaser is the title of the property and also the right to have possession of the property. It is obvious that by the creation of a lease the right to possession which as stated above was included in the right of sale of the mortgaged property and the right of the auction purchaser to actual possession of the property which he had obtained in the course of proceedings which were started in execution of the decree obtained in a suit relating to immovable property would undoubtedly be seriously affected. If the lease was binding on the auction purchaser who has a right in consequence of the sale in the suit and execution of the decree to have all the rights of the mortgagee and the magistrate including the right to possession of the property he would not get the benefit of actual possession and if the lease created by the mortgagor after the suit was filed was valid and binding on the mortgagee and the auction-purchaser the right in the suit would be adversely affected. It would also appear that by the making of the lease the security of the mortgagee would also be to some extent affected because if the lease was also binding on him it would mean that although he had an unqualified right of sale wheel he filed the suit he would not get the same price of the property if the intending auction-purchaser knew that on the sale being knocked out in his favour he was not likely to get actual possession of the property. The right of sale of the mortgaged property and the right to recover the mortgage moneys out of the security and finally the right to get the title of the mortgagee as well as the mortgagor vested in the person who purchases the property including the right to actual possession of the property-all these rights are inextricably connected till the suit is finally brought to termination i. e. till the termination of all the execution proceedings that would arise out of the final decree that would be passed in the suit brought by the mortgagee for sale of the mortgaged property. We are therefore of the view that all these ingredients of sec. 52 have been satisfied in the present case and although sec. 65A gives a statutory power to the mortgagor in possession to lease the mortgaged property that section would be subject to sec. 52 of the Transfer of Property Act and when as in the present case the lease has been created after the decree was passed in the suit the provisions of sec. 52 of the Transfer of Property Act would come into operation with the result that the lease would not be binding either to the mortgagee or to the auction purchaser who has purchased all the rights to the property including the right to possession of the property. We are therefore with respect unable to agree with the reasoning of Raju J. and to hold that sec. 52 would not be applicable to the present case.