ELUMALAI PADAYACHI Vs. DISTRICT REVENUE OFFICER CUDDALORE

JUDGEMENT

(1.) IN order to appreciate the question of law that is raised in this writ appeal, we may notice a few relevant facts. The second respondent is the owner of two blocks of land; one measuring an extent of 1. 32 acres and comprised in S. Nos. 57/182, 47/4, 56/1 and 55/2 in Siruvanur village, North Arcot Dt. . The other block is an extent of 2. 02 acres and comprised in S. Nos. 56/2, 56/3, 56/4, 56/6 and 250/2 in the same village. The appellant filed an application under Sec. 4 (2) of the Tamil Nadu Agricultural Land Records of Tenancy Rights Act 10 of 1968, hereinafter referred to as the Act, for inclusion of his tenancy over these two blocks of lands in the approved records of tenancy rights relating to Siruvanur village. It was on the ground that under EX. B10, dated 14. 10. 1971, the first block of land was leased to the appellant for a cash rent of Rs. 3 ,000 for a period of five years, which worked out of Rs. 600 per year and the second block under Ex. P11 for a period of five years, for a cash rent of Rs. 900 per year. This application was resisted before the Tahsildar on the ground that subsequent to these lease deeds, the landlady borrowed a sum of Rs. 5,925 from the tenant under a promissory note dated 12. 4. 1973, and on the same date, she executed what is styled as a varthamanam document in which it was stated that in lieu of interest payable under the promissory note, the appellant will hold the property under an oral usufructuary mortgage and enjoy the income from the properties in lieu of the interest payable on the promissory note. By reason of the execution of the promissory note and the varthamanam document, the relationship of the landlord and the tenant had ceased and the possession of the parties stood altered as that of mortgagor and mortgage and therefore the appellant was not entitled to get his name recorded as a tenant under the provisions of the act. The Tahsildar , Thirukoilur , who was the Record Officer, Tenancy Rights, under the Act, accepting the contention of the landlady, held that there was no tenancy relationship between the appellant and the second respondent, that therefore he is not a tenant within the meaning of Sec. 2 (8) (a) of the Act, and in that view, rejected the application. On appeal, the Revenue Divisional Officer, Tirukoilur who is the apellate authority held that the varthamanam letter was only the counter part for the promissory note dated 12. 4. 1973 and that the varthamanam letter did not supersede the tenancy and that therefore, the appellant was a tenant within the provisions of the Act. Accordingly, he allowed the appeal, set aside the order of the Record Officer and directed the appellant to be registered as a cultivating tenant in respect of both the blocks of lands. The landlady preferred a revision petition before the District Revenue Officer, south Arcot at Cuddalore , who by his order dated 15. 2. 1978, referred the order of the Revenue Divisional officer and held that under Ex. Bl varthamanam letter, the second respondent had permitted the appellant to enjoy the property in lieu of interest and that changed the relationship between the parties and after the execution of Ex. Bl , he was holding the property only as a mortgagee and not as a tenant. IN that view, he allowed the appeal and set aside the order of the Revenue Divisional Officer. Thereafter the appellant filed W. P. No. 1057 of 1978. The learned single Judge of this Court dismissed the same by order dated 1. 8. 1970 holding that though the appellant was inducted into possession by reason of the two lease deeds, on the execution of the varthamanam letter Ex. Bl , as a corollary to the promissory note Ex. P8, the possession of the parties stood altered from that of landlord and tenant to that of mortgagor and mortgagee. It is this view of the learned Judge that is canvassed in this writ appeal.

(2.) MR. D. Raju , learned counsel for the appellant, referred to a decision of the Supreme Court and a decision of the Mysore High Court and contended that normally when a mortgage is executed in favour of the tenant, when the tenant was already in possession, the relationship of landlord and tenant does not cease, that it will be kept in abeyance during the period when the mortgage is existing and that whether the tenancy had ceased or not will generally depend on the terms of the documents and as a proposition of law, it could not be stated that in every case, the tenancy ceases. The Supreme Court had an occasion to consider a similar question in the decision reported in APPALASWAMI v. VENKATARAMANAYYA, (1984)4 S. C. C. 382: A. I. R. 1984 S. C 1728. In that case, the owner of the property executed two usufructuary mortgages in favour of a person who was then a sitting tenant of the property. The owner Jater filed a suit for redemption of the mortgage and obtained a preliminary decree. When a final decree application was made for ascertainment of the amount due and for delivery of possession on deposit of the entire dues so ascertained, the mortgagee resisted the suit on the ground that even after depositing the entire amount found due to them no decree directing delivery of actual or physical possession in favour of the owner-mortgagor should be passed but delivery of symbolical possession should be ordered inasmuch as the mortgagee's possession of the suit property as a tenant or lessee could not be disturbed. In other words, the contention of the mortgagee was that on redemption the original relationship of landlord and tenant would revive which needed to be protected. When the matter came by way of second appeal before the andhra Pradesh High Court, it was held 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. When the matter came up before the Supreme Court by way of appeal, on the legal position the Supreme court observed: "in our view, there can be no merger of a lease and a mortgage, even if the two transactions are in respect of the same property. It is well settled that for a merger to arise, it is necessary that a 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 lesser 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 merger of a lease and a mortgage in respect of the same property since neither of them is a higher or lesser estate that 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 the 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 BAGRA SHETTI v. RAMACHANDRA SHIVARAM HINGUA, (1963)65 Bom. L. R. 449, has been fully approved by this Court in SHAH MATHURADAS NAGANLAL AND CO. v. NAGAPPA SHANKARAPPA, (1976)3 s. C. C. 660: (1976)3 S. C. R. 789: A. I. R. 1976 S. C 1565. 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 of the mortgage deed in favour of the sitting tenant to be gathered from the terms and conditions of the mortgage transaction in the light of the surrounding circumstances of the case". In the earlier judgment of the Mysore High Court in MALIKARAJUNIAH v. SHIVAPPA, A. I. R. 1973 Mys. 40, Justice Jaganatha Shetty as he then was after consideration of the authorities, laid the following principles in determining the question: "upon these authorities, it seems to me that the following principles are fairly clear: (1) There cannot be a presumption that a lessee's right whether durable or otherwise is lost for ever, by implied surrender, merely on his becoming a possessory mortgagee; (2) The question whether there was an implied surrender of lessees rights on the execution of a usufructuary mortgage must be decided with reference to the protection afforded to the tenant by legislation, if any. (3) The question of co-existence of tenancy with the usufructuary mortgage has to be decided by the terms of the deeds of mortgage and lease; and (4) The tenancy rights of the possessory mortgagee would remain in abeyance during the period of mortgage and the parties would revert to their former position after the redemption. " The leraned Judge also held that though one person cannot be a tenant and also a mortgagee in possession in respect of a common property, it would be proper to hold that the lessee's right like the tenancy rights must be held to have remained in abeyance for the mortgagee's right to put an end to. It may be seen from these decisions that though in law there is no merger when a tenant becomes a mortgagee in possession, whether there was an implied surrender of the tenant's right when the usufructuary mortgage was executed in his favour would largely depend upon what was the intention of the parties at the time of execution of the mortgage deed and the actual terms and conditions of the mortgage transaction. In this case, though Exs. P10 and p11 related to agricultural leases, but not registered, there could be no doubt that on the basis of possession given to him under the documents, it is admitted that the appellant was inducted into possession under these two lease deeds and he was in possession as a tenant admits of no doubt. In fact, all the authorities proceed on the basis, including the learned single Judge that there was the relationship of landlord and tenant originally and continued till the time when the promissory note Ex. P8 and the varthamanam letter Ex. Bl were executed on 12. 4. 1973. The question for consideration is whether in view of the varthamanam letter which evidences an oral usufructuary mortgage, the relationship of the parties could be said to have been altered from that of the landlord and tenant to that of mortgagor and mortgagee as held by the learned single Judge.