Josephine and Jothirani vs Therasa Ammal

M.M. Sundresh, J.—This Second Appeal has been filed by the Plaintiffs challenging the judgment and decree of the lower appellate Court,

whereby the suit filed by them was dismissed.

The Appellants herein are the owners of the suit property. Admittedly, there was tenancy between the Appellants and the Respondent being the

landladies and tenant respectively. Thereafter, a deed was executed mortgaging the suit property under Ex.A.1 dated 19.03.1980. As per the said

deed, possession has been given in favour of the Respondent for a period of five years. The Respondent was permitted to enjoy the suit property

either by residing there or by letting out the same. After the execution of Ex.A.1, an extension deed was executed under Ex.A.7 dated

13.03.1985. As per the said deed, it has been stated that the Respondent can have the possession of the suit property for a period of 2 years and

after the same, when the Appellants pay the amount, the possession will have to be handed over to them without any objections. Basing reliance

upon the above said two documents, the Appellants filed the above suit for redeeming the mortgage and for delivery of possession.

The Respondent filed a written statement stating that there is no objection for redeeming the mortgage, but the possession cannot be taken over

by the Appellants as the Respondent continues to be a tenant. It has been further stated that there can be no merger of mortgagee with a lessee. A

specific plea has been taken that an advance of Rs. 200/- has not be paid by the Appellants and there was also no adjustments. The trial Court

decreed the suit as prayed for placing reliance on Exs.A.1 and A.7, which has been reversed by the lower appellate Court on the ground that the

merger of two transaction, namely mortgage and lease is not permissible in law and in view of the submissions made by the Appellants that what

has been stated under Ex.A.7 is nothing but the narration of Ex.A.1. Therefore, considering the above facts and circumstances of the case, the

judgment of the trial Court has been reversed by the lower appellate Court.

Challenging the judgment and decree of the lower appellate Court, formulating the following substantial questions of law, the Appellants have

come forward to file the present Second Appeal:

(1) Whether the first appellate court is legally justified in dismissing the suit for redemption after upholding the claim based on the right of

redemption?

(2) Whether the first appellate court committed an error in reversing the judgment of the trial court by holding that after the expiry of the mortgage

period the prior relationship between the parties will revive?

(3) Whether the relationship Landlord and Tenant will prevail between the parties to the suit even if there is no stipulation to that effect in the

registered mortgage deed?

(4) Whether the Appellants/plaintiffs are entitled to the reliefs of redemption, possession and mesne profits as prayed for in the plaint?

The only question for consideration in the Second Appeal is as to whether Exs.A.1 and A7 terminate the earlier tenancy between the parties or

not?

A perusal of Ex.A.1 would show that the Respondent was permitted to enjoy the suit property in pursuant to the mortgage and also can let it out

to third parties. Therefore, the recitals therein make it very clear that permission has been given to the Respondent either to reside or to let it out

during the period of mortgage. EX.A.7 specifically states that after the period of 2 years mentioned therein, and after the mortgage amount paid by

the Appellants, the suit property will have to be returned back to them. It is further to be seen that Ex.A.1 also stipulates a specific time. Therefore,

taking into consideration of Exs.A.1 and A.7, which have not been disputed or denied in so far as the execution and contents are concerned, this

Court is of the view that they clearly express the intention of the parties that they are mortgage deeds alone, particularly when there is no mention

whatsoever about the tenancy after the determination of the mortgage. Further, the mere fact that the advance amount of Rs. 200/- has not been

taken into consideration at the time of execution of Exs.A.1 and A.7 alone cannot be the reason to hold that the tenancy continues even thereafter

in the light of the express provisions contained there in.

The Learned Counsel appearing for the Respondent has made reliance upon the decision of the Hon''ble Apex Court in Sambangi Applaswamy

Naidu and Others Vs. Behara Venkataramanayya Patro and Others, . After going the through the said judgment, this Court is of the view that the

facts involved in the said case are different and hence not applicable to the case on hand. After considering the mortgage deed, the Hon''ble Apex

Court was pleased to hold that during currency of the mortgage, the liability to pay the rent to lessor/mortgagor was kept alive. Admittedly, in the

present case on hand, the Respondent has never paid any rent during the period of mortgage and on the contrary permission has been given to him

to enjoy the property as a mortgagee. It is further to be seen in the said case, no term has been fixed for redeeming the mortgage, whereas in the

present case on hand as per Ex.A.1, a period of five years has been fixed and in Ex.A.2, two years has been fixed. Therefore, considering the ratio

laid down and after going through the facts involved, this Court is of the view that the judgment relied on by the Learned Counsel for the

Respondent would in fact enure to the benefit of the Appellants. It is further to be seen that the intention of the parties can be understood by taking

into consideration the attending circumstances under which Exs.A.1 and A.7 were executed. The lower appellate Court has taken into

consideration the other materials which are not very much required. Ex.A.7 reiterates the conditions mentioned in Ex.A.1. P.W. 1 has stated that

the conditions mentioned under Ex.A.1 have been incorporated in Ex.A.7. From that, it cannot be said that the other conditions imposed and

agreed between the parties would be nullified.

this Court in Kasilinga Padayachi Vs. Kaliyaperumal Padayachi and 2 others, considered the very same ratio and has held as follows:

It is seen that the lower appellate court has not correctly appreciated the legal effect of the claim of tenancy right by the first Defendant even

after the execution of the agreement. While considering as to whether after execution of Ex.A.1, the relationship of landlord and tenant continued, it

is true that the first Defendant was a tenant under the second Defendant prior to the execution of the said document. But the recitals in Ex.A.1

clearly establish that a new relationship of mortgagor and mortgagee had been brought into existence. It is also clear that there was nothing in the

document to suggest the continuance of the relationship of landlord and tenant.

The recitals also clearly visualise that the first Defendant shall surrender possession immediately on the repayment of the amount due under the

mortgage. Therefore, it is futile to contend that the relationship of landlord and tenant was to continue even after the execution of Ex.A.1. In this

context, Learned Counsel for the Appellant rightly relies on the decision of the Supreme Court reported in Sambangi Applaswamy Naidu and

Others Vs. Behara Venkataramanayya Patro and Others, . While dealing with the question as to whether there could be a merger of the right of a

mortgagee and the tenant, the Supreme Court has observed as follows:

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 light of the surrounding circumstances of the case. It may be stated that in both the decisions of the Andhra Pradesh High Court on

which reliance was placed by the respective counsel of the parties in support of his own contention the question was ultimately decided on proper

construction of the terms and conditions of the mortgage transactions; in the earlier decision the court took the view that there was nothing in the

mortgage deed to suggest that there was an implied surrender of the lease''s rights while in the later case the court held that the terms of the

mortgage deed showed that the terms of the mortgage deed showed that the lessee had impliedly surrendered his rights. In other words, it all

depends upon whether by execution a possessory or usufructuary mortgage in favour of a sitting tenant the parties intended that there should be a

surrender of lessee''s rights or not, and only if an implied surrender of lessee''s rights could be inferred then the mortgagor would be entitled to have

delivery of physical possession uponredemption but not otherwise.

The effect of the decisions of the Supreme Court referred to above, is that the actual agreement between the parties and the recitals in the

document have to be taken into account before concluding as to whether the parties had intended relinquishment of the tenancy right. In the present

case, even though tenancy is not specifically referred to in Ex.A.1, the very fact that the mortgagee had agreed to surrender possession of the land

to the mortgagor, would necessarily lead to a presumption of implied surrender of leasehold right.

Therefore, taking into consideration of Exs.A.1 and A.7, which are the documents entered into between the Appellants and the Respondent, this

Court has got no hesitation in holding that they clearly stipulate the extinguishment of tenancy and the creation of a mortgage. It has been submitted

by the Learned Counsel on both sides that the amount which is the subject matter of the mortgage has been deposited and received by the

Respondent and this Court by order dated 11.12.1998 has decreed the suit insofar as redemption of mortgage is concerned. Insofar as the prayer

for delivery of possession, for the reasons stated above, this Court is of the view that the same also will have to be granted. Accordingly, the

substantial questions of law are answered in favour of the Appellants.

In fine, this Second Appeal is allowed and the judgment and decree of the lower appellate Court is set aside and judgment and decree of the

trial Court is confirmed by decreeing the suit. In the circumstances of the case, there is no order as to the costs. Consequently, connected M.P. is

closed.

The Learned Counsel for the Respondent seeks time for handing over the possession of the suit property. Considering the fact that

Respondent has been in possession of the suit property from 1965 onwards, time is granted for a period of six months from today for handing over

possession, on condition that the Respondent shall pay the admitted rent to the Appellants and also by filing an affidavit within two weeks from the

date of receipt of a copy of this order before this Court to that effect stating that the rent will be paid periodically and possession will be handed

over after the expiry of six months.