Ayyappan vs Karthiayani Amma and Others

K.P. Radhakrishna Menon, J.—The decree-holder in a suit for redemption of a usufructuary mortgage is the revision petitioner. The revision arises from execution proceedings.

Respondents 4 and 5 in the petition are persons claiming to be tenants under the mortgagee-1st judgment-debtor. These respondents were parties to the suit.

In the counter, respondents; 4 and 5 have raised a contention that they cannot be evicted without recourse to the provisions of the Kerala Buildings (Lease and Rent Control) Act, 1965. The Court below relying on the decision of this Court in Kumaran Nair v. Maniappan Pillay 1971 Kcr LT 269 held that respondents 4 and 5 cannot be evicted as they are tenants directly under the decree-holder. This decision however is not applicable to the facts of the case particularly because, admittedly the persons who claimed tenancy in the said case, were not parties to the compromise based on which the decree for eviction was passed whereas here respondents 4 and 5 are parties to the decree in execution. Whatever that be, in view of the decision of the Supreme Court in Sachalmal Parasram Vs. Ratnabai and Others, the case of respondents 4 and 5 that they cannot be evicted without recourse to the provisions of the Kerala Buildings (Lease and Rent Control) Act is liable to be rejected. The Supreme Court in identical circumstances has held thus :

"Tenancy created by the mortgagee in possession does not survive the termination of the mortgagee''s interest. The termination of the morrgagee''s interest terminates the relationship of landlord and tenant. There being no landlord and tenant, the tenant cannot claim the protection of Rent Control Legislation,"

Respondents 4 and 5 then raised the contention that the lease was an act of prudent management and hence the lease was binding on the petitioners.

It is true that acts done by a mortgagee bona fide and prudently may bind the mortgagor even after the termination of the title of the mortgagee. But this is an exception that flows from Section 76(a) of the Transfer of Property Act, to the general principle of law that on the redemption of a mortgage the title of the mortgagee gets automatically terminated. Ordinarily therefore on the termination of the title of the mortgagee, a derivative title from him also comes to an end. But this principle ordinarily applies only to the management of agricultural lands. It seldom has been extended to urban properties. To this again, there is an exception and that is this. The lease created by the mortgagee while in possession would continue to bind the mortgagor provided it is established that the mortgagor has concurred in the grant of the said lease. I am fortified in this view by a decision of the Supreme Court in The All India Film Corporation Ltd., and Others Vs. Sri Raja Gyan Nath and Others, In this decision the Supreme Court has held :

"That a mortgagee''s interest lasts only as long as the mortgage has not been paid off. Therefore, on redemption of the mortgage the title of the mortgagee comes to an end. A derivative title from him must ordinarily come to an end with the termination of the mortgagee''s title. The mortgagee by creating a tenancy becomes the lessor of the property but his interest as lessor is conterminus with his mortgagee interest. The relationship of the lessor and lessee cannot subsist beyond the mortgagee''s interest unless the relationship is agreed to by the mortgagor or the person succeeding to the mortgagor''s interest may elect to do so. But if he does not, the lessee cannot claim any rights beyond the term of his original lessor''s interest. To the above proposition, there is however one exception. That flows from Section 76(a) which lays down liabilities of a mortgagee in possession. This principle applies ordinarily to the management of agricultural lands and has seldom been extended to urban property so as to tie it up in the hands of lessees or to confer on them rights under special statutes. To this again there is an exception. The lessee will continue to bind the mortgagor or persons deriving interest from him if the mortgagor had concurred to grant it."

The Supreme Court has reasserted this view in the later decision in Sachalmal''s case (AIR 1972 SC 637).

Bearing the above principle of law in mind let us consider the facts of the case. It is not the case of respondents 4 and 5 that the lease in their favour is an act of prudent management. Nor have they a case that the property leased is agricultural land. For that matter they have no case that their cause is covered by the exception rioted in the above Supreme Court decision in All India Film Corporation case in that they are lessees under a lease granted by the mortgagee with the concurrence of the mortgagor. Admittedly the properties mortgaged are shop rooms, situated in an urban area. The contesting respondents therefore are not entitled to the benefits of Section 76(a) of the Transfer of Property Act.

For the reasons stated above, the C.R.P. is allowed. In the circumstances of the case no order as to costs.