S RADHAKRISHNA NAIDU Vs. S THIRUVENKATIAH

JUDGEMENT

(1.) THE question for determination in this revision petition is whether a receiver appointed under Section 69-A of the Transfer of Property Act is bound by a contract entered into by the mortgagor with the tenant In possession of the mortgaged property subsequent to the creation of the mortgage and subsequent to the creation of the tenancy regarding the repayment of a loan taken by the landlord from the tenant, by adjustment against the rent payable. Both the single Judge of the Small Cause Court and the Bench of that Court on a new trial took the view that the sum of Rs. 650-3-3 admittedly advanced by the tenant to the landlord did not amount to a premium or advance payment of rent and consequently was not hit by Section 65-A (2) (b) of the Transfer of Property Act and the receiver was therefore bound by the agreement between the mortgagor and the tenant. All the three Judges overlooked the fact that the agreement about repayment of the advance made by the tenant to the landlord was not part of the lease transaction admittedly, this loan and the agreement for repayment of it took place after the creation of the tenancy and has nothing to do with the tenancy itself as part of it. It was an independent arrangement or agreement regarding repayment of the loan from out of the rent payable by the tenant. It is not a term of the lease and it is not also a covenant embodied in the lease transaction. Section 65-A (2) (b) deals with covenants and terms of a lease executed by a mortgagor. It does not deal with any subsequent arrangement entered into by the mortgagor with the tenant of the mortgaged property, regarding repayment of any loan which is not charged upon the property or which has no connection with the leasehold interest in the property.

(2.) COUNSEL for the respondent contended that the receiver in this case was bound to honour the arrangement entered into between the mortgagor and his tenant, because the receiver is only an agent of the mortgagor, as provided in Section 69-A clause (3) of the Transfer of Property Act.

(3.) THIS clause creates a fiction in the relationship of agent and principal between the receiver and the mortgagor. It is an accepted principle of law that a fiction should be confined to the purposes for which it was created. The language "shall be deemed to be the agent" makes it clear that the receiver is only an agent by a fiction. The fiction is created for the specific purpose of holding the mortgagor liable for the acts and defaults of the receiver appointed under Section 69-A. Certainly it does not flow from this that the receiver is bound by every agreement entered into by the mortgagor with the tenant unconnected with the transaction of lease and admittedly independent of the transaction of lease of the property in question. Clause (4) of that section is pertinent in this connection. It reads thus: