Durai Knitting Co. vs E. Ramasubramanian and Another

V. Sethuraman, J.—This second appeal raises an interesting question as to whether there could be a suit for possession against a tenant let in

by a usufructuary mortgagee of the property, whose mortgage has been redeemed. The facts are in a short compass. The suit property which is a

shop building situated within the Municipal limits of Tirunelveli, belonged to one Nellaiappa Pillai. He usufructuarily mortgaged the same in favour of

the first defendant under a deed of usufructuary mortgage, dated 2nd July, 1965 which is marked as Exhibit B-1 in the suit, for a sum of Rs. 3,000

redeemable on or before 1st July, 1970. The mortgagor Nellaiappa executed a sale deed. Exhibit A-1, dated 31st July, 1967 for a sum of Rs.

7,750 in favour of the plaintiff. Out of the sale consideration, a sum of Rs. 3,000 was reserved with the plaintiff to discharge the othi debt due

under Exhibit B-1. The plaintiff offered the othi amount due under Exhibit B-1 to the first defendant and asked him to hand over vacant possession

of the suit property. Since the first defendant was evading to do, the plaintiff issued a notice under Exhibit A-2 on 1st July, 1970 requiring him to

deliver vacant possession of the property on the redemption of the mortgage. The first defendant sent a reply under Exhibit A-3, dated 4th July,

1970 stating in effect that he was not in a position to give vacant possession, since the same had been let out to the second defendant. The plaintiff

thereafter filed O.P. No. 33 of 1970 on the file of the Court of the District Munsif, Tirunelveli, and deposited the othi amount. The first defendant

filed a counter-affidavit expressing his inability to deliver vacant possession, though he expressed his willingness to receive the mortgage amount

deposited. The said O.P. was dismissed on 15th September, 1970. Since the plaintiff had deposited the mortgage amount and as vacant

possession was not given by the first defendant, the plaintiff claimed to be entitled to get damages at the rate of Rs. 30 per month in lieu of interest.

The plaintiff, therefore, filed the suit for redemption and for getting vacant possession of the suit property from the defendants with damages at the

rate of Rs. 30 per mensem from 11th August, 1970 when the othi amount was deposited till delivery of possession.

The first defendant contested the suit on the ground that when the usufructuary mortgage deed was executed there was one Nallaperumal who

was enjoying the suit property and that the usufructuary mortgagee did not get actual possession of the suit property. The said tenant Nallaperumal

vacated and the shop was rented out to one Ziffree. Subsequently Ziffree vacated the shop and the first defendant rented it out to the second

defendant in January, 1969 for a sum of Rs. 55 per mensem. It was submitted that the second defendant was the tenant in the premises, and that

the plaintiff had to take appropriate proceedings against him to evict him.

The second defendant filed a separate written statement contending that he was ready and willing to attorn to the plaintiff and that since he was a

tenant, the plaintiff''s claim for possession was untenable and that the plaintiff had to take appropriate proceedings under the provisions of the Tamil

Nadu Buildings (Lease and Rent Control) Act, if he wanted to evict him.

The learned District Munsif came to the conclusion that the first defendant was not given actual possession of the suit property by the plaintiff''s

vendor Nellaiappa Pillai, that the first defendant was liable to deliver vacant possession of the suit property and that the second defendant was

liable to be evicted from the suit property. He decreed the suit accordingly, and held also that the plaintiff was entitled to claim damages at the rate

of Rs. 30 per mensem from 11th August, 1970 as claimed in the plaint.

For our present purpose it is enough to mention that the second defendant preferred an appeal viz., A.S. No. 86 of 1972 to set aside the decree

of the lower Court in so far as it was against him.

The learned Subordinate Judge, after referring to certain decisions cited before him, came to the conclusion that the second defendant had no right

to continue in possession, after redemption because his right to continue in possession would cease automatically on redemption and that,

therefore, he was liable to be evicted. He, therefore, dismissed the appeal that was filed before him.

The present appeal has been filed by the second defendant-tenant, and the contention urged on his behalf was that he was a tenant entitled to

the protection under the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act and that a civil suit did not lie for the purpose of his

eviction. The Learned Counsel for the respondents submitted that with the redemption of the usufructuary mortgage the title of the second

defendant to continue in the suit premises ended.

The short point is whether the second defendant, who was introduced by the usufructuary mortgagee, whose mortgage has been, redeemed can

continue as tenant so as to be eligible for the protection under the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, after the

date of the redemption. In Mulla''s Transfer of Property Act, Sixth Edition, at page 528 is an interesting discussion as to whether a mortgagee in

possession can by reason of Clause (a) grant a lease of the mortgaged property. After referring to several Supreme Court decisions, some of

which had not been considered in the later decisions, the learned author pointed out as follows:

In The All India Film Corporation Ltd., and Others Vs. Sri Raja Gyan Nath and Others, , the Supreme Court again considered the question. The

Court did not refer to either Harihar Prasad Singh and Another Vs. Must. of Munshi Nath Prasad and Others, or Prabhu Vs. Ramdev and Others,

. The Court observed that the principle laid down in Mahabir Gope and Others Vs. Harbans Narain Singh and Others, , that a bona fide and

prudent lease would bind the mortgagor ''ordinarily'' applies only to agricultural lands and has ''seldom'' been extended to urban property. This

observation is strictly speaking obiter, as the Court found that the lease in question was neither bona fide nor prudent in view of the long term and

the low rent. It is respectfully submitted that there is no warrant for limiting Section 76(a) to agricultural land. Whether a particular lease is bona

fide or prudent is a question of fact; obviously a lease of urban land which would confer on the lessor the protection of special statutes such as the

Rent Acts would prima facie be imprudent.

This passage would go to show that the enquiry in a case of this kind is to find out whether the lease was a prudent lease or not. The Learned

Counsel for the appellant submitted that the property had been under the lease even at the time when the usufructuary mortgage was created and

that, therefore, leasing out the shop, at a higher rent when the shop became vacant, was nothing, but a prudent act. In the absence of any proof to

the contrary this submission is prima facie acceptable.

A Full Bench of the Allahabad High Court was concerned with this very question in Tajammul Husain Vs. Mir Khan and Others, . A house,

situated within the limits of Aliganj Town Area, District Etah, belonged to one Tajamul Hussain. He mortgaged it with S and two others. The

mortgagees were to be in possession. The mortgagees, thereafter, let out the premises to one M, after taking a rent deed from him. The mortgage

was redeemed and the mortgagor in the redemption suit, it was held, could get only symbolic possession. The mortgagor thereafter filed the suit

giving rise to the appeal, which came before the Full Bench, for possession against M and other, who were the tenants on the ground that after the

redemption of the mortgage, the status of the tenants was only that of trespassers and they that were liable to be evicted from the premises in

question. After referring to several decisions of the Supreme Court, some of which have been noticed in the passage in Mulla on the Transfer of

Property Act extracted earlier, the Allahabad High Court held as follows:

The general rule that a lease executed by a mortgagee in possession would come to an end and the rights of the person holding under the same

would get extinguished on the redemption of the mortgagee is, however, subject to one exception contained in Section 76(a) of the Transfer of

Property Act which applies not only to agricultural land but also to urban immovable property. Hence, if during the subsistance of the mortgage,

the mortgagee, like an ordinary prudent man, lets out the mortgaged premises and enters into a bona fide transaction in connection therewith, in

that event the rights of such a person admitted to tenancy would not get automatically extinguished on redemption of the mortgage. The person, so

let in, would be entitled to continue in occupation of the premises as a tenant of the mortgagor after redemption. The principle, behind Section

76(a) appears to be based on the hypothesis that in case a mortgage had not been executed and the mortgagor as owner had remained in

possession, he would, have also similarly let out the premises, and, therefore, if instead of the mortgagor, the mortgagee, who came in his place,

did the same, it would be considered as binding on the mortgagor as well.

The test propounded is whether the mortgagor would have let out the suit property. In the present case there is enough evidence to show that even

at the time when Nellaiappa Pillai executed the mortgage the property was in the occupation of the tenant. Therefore, when the mortgagee, the first

defendant, let out the property to the second defendant as tenant, he was not committing any imprudent act, which is outside the scope of Section

76 (a) of the Transfer of Property Act.

A similar question came up for consideration before a Full Bench of this Court, to which I was a party, in Chandrasekaran Vs. Kunju Vanniar

and Others, . The question in that case was whether a tenant under a mortgagee could claim protection against a mortgagor under the Tamil Nadu

Cultivating Tenants Protection Act, 1955. In dealing with the question as to whether the mortgagee could confer a greater title on the tenant than

what he himself had the learned Chief Justice delivering the judgment for the Full Bench pointed out as follows:

There is no question of the usufructuary mortgagee conferring upon the tenant a higher title than what he is possessed of. What happens for

purposes of the inclusive definition ''cultivating tenant'' is that no higher title than what the usufructuary mortgagee possessed is conferred on the

cultivating tenant. But the statute intervenes at the determination of the tenancy agreement and enjoins that if the contractual tenant within the

meaning of the first part of the definition of ''cultivating tenant'' continues in possession of the land, he would be entitled to protection as a cultivating

tenant.

The principle is that the protection under the Tamil Nadu Buildings (Lease and Rent Control) Act is not derived from the usufructuary mortgagee,

but is referable to the statute. So long as the statutory protection is available, whether the tenant is inducted by the usufructuary mortgage or

anyone else, who was competent to let out the property, then the tenant could not be treated as a trespasser, but could claim rights, as a tenant

under the provisions of the said statute. I am, therefore, unable to accept the conclusion of the learned Subordinate Judge to the contrary. The

appeal is allowed with costs. No leave.