NARAYAN DOGRA SHETTY Vs. RAMCHANDRA SHIVRAM HINGNE

JUDGEMENT

(1.) THE plaintiffs, who had purchased the equity of redemption in 6 of the 'khans' comprising a house, filed a suit for possession of the 6 'khans', on the ground that the mortgage which was created by their vendor in favour of the defendants, was satisfied out of the usufruct of the property at the end of ten years of its duration. The defendants contended that they were lessees of those 6 'khans' under a rent note dated August 6, 1946 for a period of 3 years, that the lease was suspended during the pendency of the mortgage, that on the expiry of the period of ten years of the mortgage the lease was revived for the rest of its term and that, therefore, the plaintiffs were not entitled to the possession of those premises. On the construction of both the mortgage deed as well as the rent note, the trial Court came to the conclusion that defendant No. 1 had surrendered his lease on the execution of the mortgage in favour of both the defendants and that, therefore, the defendants were liable to return the possession of the 6 'khans' to the plaintiffs. The plaintiffs' suit was accordingly decreed and the defendants were ordered to deliver possession of the premises to them Against that decree the defendants took an appeal to the District Court and the learned Extra Assistant Judge, who heard that appeal, concurred in the decision of the trial Court and dismissed the appeal. The defendants have now come to this Court by this second appeal.

(2.) IN support of this appeal, it was urged by Mr. Kotwal, Junior, that there possibly could not be any merger of the interests of a lessee with the interests of a mortgagee and therefore, both the Courts below were in error in observing that the lease in the present case had merged with the mortgage. He further urged that the two Courts were also in error in holding that there was a surrender of the lease on the part of defendant No. 1 on the execution of the mortgage. In support of the latter contention Mr. Kotwal relied upon the decision in Kallu v. Diwan (1902) I.L.R. 24 All. 487. On the other hand, Mr. Marathe, the learned advocate for the plaintiffs, contended that the decision of both the lower Courts was perfectly justified on the construction, both of the rent note as well as the mortgage deed. He submitted that apart from the question of merger, defendant No. 1 had surrendered his lease on account of the fact that the amount of the deposit of Rs. 90 which was made by defendant No. 1 under the rent note, was taken into account while computing the consideration of Rs. 2,500 in the mortgage and that by the terms of the mortgage, it was specifically provided that the mortgagees shall deliver possession of the mortgaged premises to the mortgagor on the expiry of the period of 10 years. Mr. Marathe relied upon Meenakshi Amma v. K.V. Narayani : AIR1957Mad212 and Sardarilal v. Ramlal in support of his contention.

(3.) THE reference by Mr. Kotwal to Kallu's case, in my opinion, is of no avail to him in the circumstances of the present case. It was held in that case that the fact of a tenant taking a mortgage of land comprised in his holding from his landlord did not of itself extinguish the tenancy by merging the rights of the tenant in those of the mortgagee, that the effect of such a mortgage on the tenant's rights would merely be that they would be in abeyance, and that when the landlord redeemed the mortgage, the parties would revert to their former position and the landlord would not be entitled to get possession of the land except by ejecting the tenant in due course of law. That there could not be a merger of the lessee's rights with those of the mortgagee in the same person, has been already explained by me in the earlier part of the judgment, and, with respect, I agree with the view expressed by the learned Judges in that behalf in that case. That case, however, is clearly distinguishable from the one before me on facts since the learned Judges nowhere in their judgments appear to have discussed the question of implied surrender of the tenancy in, the light of any express provision in the mortgage deed requiring the tenant -mortgage to deliver possession of the land to the mortgagor on redemption of the mortgage or otherwise indicating that the tenancy was no longer intended to subsist. The decisions relied upon by Mr. Marathe, on the other hand, are, with respect, correct, so far as they held that on the terms of the mortgage deed in each case, there was implied surrender of the lease, but with respect again, I am unable to agree with the observations of the learned Judges in the two cases that the lessee's estate being the lesser one had merged with the mortgagee's higher estate. As indicated above, there could not possibly be any merger of these estates in law. Truly speaking, the interest of a lessee and that of a mortgagee in reference to the same property are co -ordinate and can exist together as in the case of a lease for a period, of ten years and a simple mortgage of the same property for the same period. The lessee in such a case can continue in enjoyment of the property and he may yet have a sufficient security in that property as a mortgagee for the repayment of the money advanced by him to the owner of that property. In order to extinguish the rights of the lessee there must either be express provision in the mortgage deed to that effect or some such provision which would be inconsistent with the continuance or subsistance of the lease.